[JCIT v. Saheli Leasing
and Industries Ltd., (2010) 324 ITR 170 (SC)]
On return being filed by the
respondent-assessee, an order u/s.143(3) of the Act was passed on February 28,
1998, showing a total income of Rs. Nil for A.Y. 1995-96.
During the course of
assessment proceedings, it was noticed that the assessee had claimed
depreciation, which was held to be incorrect. Thus, an amount of Rs.24,22,531
was disallowed out of depreciation. Penalty proceedings u/s.271(1)(c) of the Act
were initiated. In response to the show-cause notice issued by the Revenue, the
assessee filed its reply denying the allegations and contending that no penalty
can be imposed on it, when the returned income was nil.
The Deputy Commissioner of
Income-tax, Special Range-2, Surat on the basis of the discussion in the order
held that the assessee was liable to pay penalty, with reference to such
additions to income to be treated as its total income, with reference to
Explanation 4(a) to S. 271(1)(c) of the Act.
Accordingly, the penalty was
levied on concealed income of
`24,22,531 at the
minimum rate of 100 per cent of tax sought to be evaded. Thus, a penalty of
`11,14,364 was imposed on the assessee.
Feeling aggrieved thereby,
the assessee preferred an appeal before the Commissioner of Income-tax
(Appeals). Considering various judgments of the Tribunal and the High Courts,
the appeal of the assessee came to be dismissed and the penalty levied on it
stood confirmed.
The assessee preferred
further appeal before the Income-tax Appellate Tribunal, Ahmedabad. The
Tribunal, on the strength of an earlier order passed by a Special Bench of the
Ahmedabad Tribunal in the case of Apsara Processors (P) Ltd. in ITA No. 284/Ahd./2004,
dated December 17, 2004, came to the conclusion that no penalty can be levied if
the returned income and the assessed income is loss. Accordingly, the orders
passed by the Assessing Officer as well as the Commissioner of Income-tax
(Appeals) were set aside and quashed and the penalty imposed on the assessee was
deleted. It was this order of the Tribunal which was carried further by filing
appeal u/s.260A of the Act in the High Court, which met the fate of dismissal by
the Division Bench.
However, the Division Bench
in its wisdom thought it fit to dispose of the appeal as under :
“Admitted facts are that the
appellant had filed return showing loss and the income is also assessed as ‘nil
income’. When the return was shown as loss as well as assessment of income is
also nil, no penalty u/s.271(1)(c) of the Income-tax Act is attracted. No case
is made out for admission of the appeal. The appeal stands dismissed at the
admission stage.
(Sd.)………………………….
Judge
(Sd.)………………………..
Judge”
On a further appeal, the
Supreme Court found that the Division Bench of the High Court in the impugned
order had decided the question of law as projected before it in the appeal
preferred u/s.260A of the Act, in a most casual manner. The order was not only
cryptic, but did not even remotely deal with the arguments which were sought to
be projected by the Revenue before it.
The Supreme Court observed
that it had, time and again, reminded the Courts performing judicial functions,
the manner in which judgments/orders are to be written but, it was, indeed,
unfortunate that those guidelines issued from time to time were not being
adhered to.
The Supreme Court further
observed that no doubt it is true that brevity is an art, but brevity without
clarity is likely to enter into the realm of absurdity, which is impermissible.
The Supreme Court therefore,
before proceeding to decide the matter on the merits, reiterated few guidelines
for the Courts, while writing orders and judgments to follow the same,
clarifying that the guidelines were only illustrative in nature, not exhaustive
and could further be elaborated looking to the need and requirement of a given
case :
(a) It should always be
kept in mind that nothing should be written in the judgment/order, which may
not be germane to the facts of the case. The ratio decided should be clearly
spelt out from the judgment/order.
(b) After preparing the
draft, it is necessary to go through the same to find out, if anything,
essential to be mentioned, has escaped discussion.
(c) The ultimate finished
judgment/order should have sustained chronology, regard being given to the
concept that it has readable, continued interest and one does not feel like
parting or leaving it midway. To elaborate, it should have flow and perfect
sequence of events, which would continue to generate interest in the reader.
(d) Appropriate care
should be taken not to load it with all legal knowledge on the subject as
citation of too many judgments creates more confusion than clarity. The
foremost requirement is that leading judgments should be mentioned and the
evolution that has taken place ever since are pronounced and thereafter, the
latest judgment, in which all previous judgments have been considered, should
be mentioned. While writing judgment, psychology of the reader has also to be
borne in mind, for the perception on that score is imperative.
(e) Language should not be
rhetoric and should not reflect a contrived effort on the part of the author.
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