Holding

A higher court must record reasons even when affirming a lower authority’s order, and failure to do so violates fair procedural requirements.

Summary

Mangalore Ganesh Beedi Works appealed to the Supreme Court against a Karnataka High Court order that affirmed the Income‑Tax Appellate Tribunal’s findings without providing any discussion or reasons. The appeals were filed under section 260‑A of the Income Tax Act, 1961. The Supreme Court held that even when a higher court merely affirms a lower authority’s order, it must record reasons to satisfy the requirements of fair procedure. The Court observed that failure to give reasons amounts to denial of justice, citing Alexander Machinery (Dudley) Ltd. v. Crabtree. Consequently, the Supreme Court disposed of the appeals and remitted the matter to the High Court to reconsider specific questions (iii, v, and vii) afresh, along with other issues covered in a related civil appeal.

Issues considered

Whether a higher court must record reasons when affirming an order of a lower tribunal.
Whether the absence of reasons violates the principles of fair procedure and justice.
Whether the High Court’s affirmation of the Tribunal’s order without discussion is valid.
Whether the specific questions (iii, v, vii) raised by the revenue need fresh adjudication.

Legislation cited

Income Tax Act, 1961s. 260-A

Subjects

Income TaxSection 260-AAppellate ProcedureReasons for JudgmentAffirmationFair ProcedureHigh CourtSupreme CourtTax Assessment

Judgment

.._
A MIS. MANGALORE GANESH BEEDI WORKS
v. ..
THE COMMISSIONER OF INCOME TAX, MYSORE AND ANR.

JANUARY 28, 2005

B [RUMA PAL, ARIJIT PASA VAT AND C.K. THAKKER, JJ.]

Judgment-High Court affirming Tribunal's order-Without any
discussion on the issues involved-Reasons for the judgment not recorded-
Held, recording of reasons is a part affair procedure-Reasons/or affirmation
c have to be recorded-Matter remitted to High Court-Practice and Procedure.

The present appeals by assessee and CA No. 4232 of 2003 were filed
challenging the order of the High Court in the appeals under s.260-A of
the Income Tax Act, 1961.
D Besides the issues raised in CA No. 4232 of 2003, it was contended ~
for the appellant that conclusions arrived at by the High Court were
without any discussion and reasons. ..
Disposing of the appeals and remitting the matter to the High Court,
the Court.
E
HELD : t. So far as the issues covered by judgment in CA No. 4232
of 2003 etc. etc. are concerned, the order shall cover these appeals also.
[884-A)
2. In addition, question Nos. (iii), (v) and (vii) as noted in High
Court's judgment are concerned, need to be adjudicated afresh. It is true,
-;. .
in an order of affirmation repetition of reasons elaborately may not be -~

necessary. But even then the argument advanced and the points urged have
to be dealt with. Reasons for affirmation have to be indicated, though in
appropriate cases they may be briefly stated. Recording of reasons is a
part of fair procedure. [884-A-BJ
Alexander Machinery (Dudley) Ltd. v. Crab/res, (1974) LCR 120, relied
on. i"
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 767-768 of
2005.
882
MANGALOREGANESH BEED! WORKS v. C.l.T. (PASA YAT . .I.] 883
_,. From the Judgment and Order dated 19.12.2002 of the Karnataka High A
Court in LT.A. Nos. 69 and 70 of 200 I.
_,
Harish N. Salve, Joseph Vellapally, Manu Nair and Dhruv Dewan for
Mis, Suresh A. Shroff & Co., for the Appellant.

M.L.Venna, Pritesh Kapur, Satya Mitra and B.V. Bairam Das for the B
Respondents.

The Judgment of the Court was delivered by

ARIJIT PASAYAT, J. Leave granted.
c
These appeals by the· assessee are directed against the judgment rendered
by a Division Bench of the Kamataka High Court in appeals purported to be
under Section 260A of the Income Tax Act, 1961 (in short the 'Act'). The
appeals were filed by the revenue questioning correctness of certain
conclusions arrived at by the Income-Tax Appellate Tribunal, Bangalore Bench
(in short the 'Tribunal') in appeals filed by the assessee as well as the revenue. D
+ The dispute relates to the assessment year 1995-96. The relevant factual
J details have been noted in Civil Appeal No. 4232 of 2003 and other cases.
(M Janardhan Rao v. Joint Commissioner of Income Tax etc. etc.) disposed
of today, and are not repeated here. The assessee was described as A.0.P.-
E
3 by the revenue authorities in the concerned assessment proceedings.

Questioning correctness of certain conclusion by the Tribunal, revenue
had preferred appeals before the High Court. The High Court has held that
the Tribunal's views in respect of Question Nos. (iii), (v) and (vii) as
formulated were not in order, and accordingly allowed the appeals filed by F
the revenue in part. The basic issues which form the core dispute have been
dealt with in the appeals filed by the assessees and disposed of, as noted
supra, today.

Learned counsel for the appellant submitted that the conclusions of the
High Court have been arrived at without any discussion and reasons have not G
been indicated as to why seal of approval was being put on the findings
recorded by the Tribunal.

Per contra, learned counsel for the revenue supported judgment of the
High Court. According to him, when views of Tribunal and first appellate
authority were being affinned, there was no need to record reasons separately. H
884 SUPREME COURT REPORTS [2005] I S.C.R.
.....
A So far as the issues covered by judgment in C.A. No. 4232 of 2003 etc.
etc. as noted above, are concerned, the order shall cover these appeals also.
.....
In addition, question Nos. (iii), (v) and (vii) as noted in High Court's
judgment are concerned, need to be adjudicated afresh. It is true in an order
of affirmation, repetition of reasons elaborately may not be necessary. But
B even then the arguments advanced, points urged have to be dealt with. Reasons
for affirmation have to be indicated, though in appropriate cases may be
briefly stated.

Recording of reasons is a part of fair procedure. Reasons are harbinger
between the mind of maker of the decision in the controversy and the decision
c or conclusion arrived at. They substitute subjectivity with objectivity. As
observed in Alexander Machinery (Dudley} ltd. v. Crabtree, (1974) L.C.R.
120, failure to give reasons amounts to denial of justice.

In the aforesaid background, we remit the matter to High Court to
D consider question Nos. (iii), (v) and (vii) afresh along with other matters
covered by judgment in C.A. No. 4232 of 2003 etc. etc. disposed of today.
-+
Appeals are accordingly disposed of with no order as to costs.
\.

R.P. Appeals disposed of.