Thyrocare Technologies Limited vs. ITO (TDS) (Bombay High Court)

The High Court had to consider the following substantial questions of law:

(i) Whether on the facts and in the circumstances of the case and in law the findings / observations of the Tribunal that the Appellant has not “satisfactorily explained the queries”, “not produced any document to substantiate the contention” and “not discharged the burden” is perverse, contrary to the facts on record and such that no reasonable person properly instructed as to the facts and law could come to in the light of the fact that (a) there was no such grievance raised by the Respondent, (b) the Appellant had filed voluminous evidence in support of its contentions and the Tribunal never indicated during the hearing that it was not satisfied with the evidence, (c) the Tribunal appears to have totally lost sight of the said evidence and has not even made a reference to it in the impugned order leave alone discussing it?

(ii) Whether on the facts and in the circumstances of the case and law the Tribunal is justified in completely ignoring the two grounds raised by the Appellant under Rule 27 of the Incometax Rules 1962?

(iii) Whether on the facts and in the circumstances of the case and in law the Tribunal is justified in totally ignoring the binding judgment of the Delhi Bench of the Tribunal in SRL Ranbaxy Ltd. v/s ACIT (2012) 143 TTJ 265 which is similar on facts and also the other judgments cited by the Appellant?

HELD by the High Court allowing the appeal:

(i) We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by this single paragraph conclusion. There is absolutely no discussion of the law and why the coordinate Bench decision rendered at Delhi is either distinguishable on facts or inapplicable. There is no discussion, much less any finding and conclusion that the order of the First Appellate Authority is perverse or is contrary to law. There are no infirmities, much less serious errors of fact and law noted by the Tribunal in the order of the Commissioner, which the Tribunal is obliged to and which order is therefore interfered by the Tribunal. Why the Tribunal feels it is its duty and obligation to interfere with the order of the First Appellate Authority, therefore, should be indicated with clarity. We have also not seen a reference to any communication or to any document which would indicate that the six queries raised by the Tribunal on the assessee have not been answered, much less satisfactorily. The Tribunal should have, independent of the statements, referred to such of the materials on record which would disclose that the assessee has entered into such arrangements so as to avoid the obligation to deduct the tax at source. If the arrangements are sham, bogus or dubious, then such a finding should have been rendered. Therefore, we are most unhappy with the manner in which the Tribunal has decided these Appeals. We have no alternative but to set aside such order and when the last fact finding authority misdirects itself totally in law. It fails to perform its duty. It has also not rendered a complete decision. Once the Tribunal was obliged in law to examine the matter and reappraise and reappreciate all the factual materials, then it should have performed that duty satisfactorily and in terms of the powers conferred by law.

(ii) Once this duty is not performed, we can safely come to the conclusion that the Tribunal’s order is vitiated by not only total non-application of mind but also misdirection in law. We accordingly conclude and proceed to set aside the impugned order. We direct the Tribunal to hear the Appeals afresh on merits and in accordance with law after giving complete opportunity to both sides to place their versions and arguments. The Tribunal shall frame proper points for its determination and consideration and render specific findings on each of them. The Tribunal should carry out this exercise uninfluenced by any observations or conclusions in the impugned order which we have quashed and set aside.