Shri. Vimal Gandhi,
The Income Tax Appellate Tribunal.
ITAT has always been known for the high quality of its orders. Our orders have received praise form judge including sitting judge of the Supreme Court, who sit in appeal over them. However, of late I am concerned to note that some of the High court has criticized our lack of quality, detailed reasoning, non-recording of basic or vital facts and the arguments etc. I know that these are only exception to the general rules that we pass well-reasoned and speaking order. I am also aware of the pains and efforts taken by Members in general to pass quality orders and that wherever they slip, it is not intentional. It is however, unfortunate that adverse publicity is sought to be given only to the small percentage of orders, which suffer in quality. I am afraid that an Uninformed person may draw wrong conclusions form such publicity and may be misled to think that we are, in general not passing proper and speaking orders. That is a situation, which I want to avoid, if I can help it. I want to remove this impression whither it is carried by higher courts or by the public or the members of the Bar. I, therefore, thought it necessary to take measures to ensure that every single order we pass meets the requirements of a speaking order. One such measure which was actively debated and decided in the conference of the Vice-Presidents recently held in Mumbai was to reduce the monthly disposal-target to 50, but with the understanding the a Members will pay utmost attention to the quality of the orders they pass and will not give room for any criticism from any quarters.
I am enclosing certain broad guidelines, which are by no means exhaustive, for your consideration and they may be kept in view while passing the orders, as far as possible. Undoubtedly, most of our orders conform to these guidelines in general, but as Hon’ble Justice Ashok Bhan said in our recent conference, we should always be open to suggestions for improvement in our work. I also appreciate that each one of us has his or her own style of writing the orders and it is not my intention to interfere with the same; but within this broad framework, you will agree that there are certain basic features which we all can observe while drafting our orders and it is my endeavour to point out to some of them in the enclosed guidelines. For your information, I may state that these guidelines have been culled from several decided cases and observations of the Judges. In drawing your attention to the guidelines it is certainly not my intention to interfere in your decision-making process or your judicial independence or discretion or in your judicial conscience or wisdom. I reiterate that your judicial independence is as important to me as the quality of your orders. The enclosed guidelines are brought to your notice only with the hope that they may help you improve the quality of your work, irrespective of the view you take about the case. I am sure they will be read and understood in the spirit. If you consider that the quality of your order can improve by adopting any other measure, which does not find a place in the enclosed guidelines, you are free to do so, for, our ultimate common objective is to pass speaking, well-reasoned and well-structured orders and to give a good account of ourselves before the public.
It is also my desire that from January 2008 each one of you may send at least two orders every monthly which according to you are your best orders of that month. This may enable me to assess your work and the quality of the order that will be kept in mind while writing Annual Confidential Reports. These orders may be sent to me through your Vice-President.
I have been also disturbed to see huge pendency for disposal for more than one month of 789 appeals as on 01.12.2007. Individual Members are having large appeals of more than 40 in some cases. I depreciate their casual approach adopted in this matter.
I am sure that the ITAT will not give room for any criticism regarding the quality of its orders in future. I seek your cooperation in this. With my best wishes and greetings for a very happy new year, I remain.
Encl: As above
Income-tax Appellate Tribunal.
GUIDELINES TO BE KEPT IN VIEW BY THE MEMBERS OF THE ITAT WHILE DRAFTING ORDERS:-
1 The order should be self-contained. It may be better, for the sake- completeness if there is as brief description of the assessee, his business method of accounting etc. as a preface to the order, There should be clear recording of the facts as found by the AO, This may by followed by the findings of the first appellate authority against which the appeal is preferred.
2 There should be reference to all the arguments addressed before the bench ad the pages of the paper book, if and which were referred to and the citation is the case – law.
3. It shall be the endeavour of the Members to record clear findings of fact in the order as the tribunal is the ultimate fact – finding body. These findings may be supported by reference to the evidence on record and wherever possible to may be better to refer to the paper-book in which the evidence is compiled.
4. The bench may also give reasons as to how the statutory provision is application to the factual findings. Their reasoning may be supported by reference to the case – law wherever necessary.
5. If it is possible to do so, reproduction of long passages for the order of the income-tax authorities and the case-law may be avoided for sake of brevity. It is generally felt that Members can give a better account of themselves if they explain in their own words. The finding and reasoning contatinded in the orders of the income – tax authorities,. This is not hard and fast rule but it is being suggested not only for the sake of brevity of the order but it may also demonstrate application of mind, There may however be case where the members may feel that it is absolutely essential to reproduce the relevant portions verbatim. In which case it should not be avoided Member may use their discretion in this regard.
6. The Members may, if they consider fit, summarize the c0ontroversy in their own words(instead of merely reproducing the grounds of appeal) which may have the advantage to indicating to the readers that have appreciated and understood the controversy in the right perspective.
7. Members may consider whether it is absolutely necessary to burden the order with long extracts form the judgment. But if they are found necessary to be extracted then the same should be duly acknowledged with proper citation. The citation should be full and clear and should not be unnecessarily abbreviated. If the bench considers a judgment to be not applicable the distinguishing features may be clearly brought out, without superficial.
8. If the Members are following an earlier order of the tribunal either in the case of the same assessee or in some other case, the practice of merely referring to the earlier order and saying that it is followed may not meet the requirement of judicial order. Several High courts have deprecated this practice. Therefore it is absolutely necessary that wherever an earlier order of the Tribunal is being followed, firstly full reference to the order along with details such as the date of the earlier order, the ITA No. name of the assessee, assessment year and the concerned Bench may be given without fail. Further what was the issue before the earlier bench. How, it was resolved, what was the line of reasoning adopted and how the fact match with the facts of the present year and the case before the tribunal, should be at least briefly explained in the order so that it becomes self-contained order and there is no need to call for and look into the earlier order for such details. It may also help the high court before whom an appeal is filed to appreciate the order of the tribunal without reference to the earlier order.
9. The decision of the members should be intelligible to any reader of the order and his can be achieved if the conclusion is explained properly and logically by giving, reasons, supported both the factual finding and the relevant authorities. More than the correctness of the ultimate conclusion which is for the higher courts to decide, it is process of reaching that conclusion which should be considered more important and which should be easily discernible form the order.
10. The practice of using strong or unduly critical expressions and remarks (in the orders) against the actions of the income tax authorities or the argument of the counsel as well as the department representative should be avoided at all costs. Similarly use of intemperate or derogatory language while referring to other orders of the tribunal should also be scrupulously avoided. Member may note that while referring to High courts, the general practice for lower courts or tribunal is to refer to them as “Hon’ble High Court” and not as “learned High Court” which is found used by some Members.
11. When a Member is agreeing with the view taken by the first appellate authority, even then it may be better to give detailed reasons for the conclusion and explain as to why he is agreeing with the order of the first appellate authority mere mentioning of the fact that he is agreeing with the conclusion of the CIT(A) may not suffice and at times it is likely to be termed as non-application of mind by the higher courts.
12. Proper attention may be paid to structuring, paragraphing and sequencing the order. Repetition may be avoided if possible.
13. If after the hearing of the case and while holding discussions or writing the order, any statutory provision or judgment of order is noticed (which was not referred to in the course of the hearing) which is contrary to the impression, if any given the court or which has material bearing on the outcome of the case, the same must be put to the parties by fixing the case for clarification and the order should be passed only after obtaining the clarifications. If is an indispensable requirement of the concept of justice that the parties shall not have the feeling that decision are taken at their back.