[2020] 18 ALR (HCD) Olympic Industries-Vs.

-Commissioner of Taxes (Kashefa Hussain J) 315

petitioner Krishna Komol used to possess the land in HIGH COURT DIVISION
question. (STATUTORY ORIGINAL JURISDICTION)
13. On the other hand the defendant examined Present
DW. 1 and in where the DW. 1 stated that the suit
property' has been leased out in favour of the 6 per­ Mr. Justice A.F.M. Abdur Rahman
sons and he also stated that the document which was and
marked as exhibit -1 series and also admitted that the Ms. Justice Kashefa Hussain
suit land originally belonged by Krishna Komol and Heard on:
his about was very much known to all. Olympic Industries
03.10.2013, Ltd, represented by its
14. Under such circumstances, it appears that no 08.10.2013 & Managing Director
legal process of law has been followed by the gov­ Mr. Mubarak Ali of
ernment before passing the impugned order to dec­ 07.11.2013
62/63, Mot ij heel
lare the suit land as intested land. Even on notice And Commercial Area,
was served upon the Krishna Komol or the local Judgment on: Dhaka.
authority to determine the where about of the said 17,h November,
Krishna Komol as required by law. ... Applicant.
2013 -Vs.-
15. Considering the above facts and circums­
tances and in the light of the decision as referred Result: The Commissioner
above, I do not find that the government has duly of Taxes Large Tax­
passed and declared the suit property as intasted Reference is allowed. payers Unit (LTU) (6th
property by operation of the provision of Section 92 Floor), Segunbagicha,
of the S.A.T. Act. And moreover the prima facie title Dhaka.
and possession and the where about of the original ...Respondent.
tenant Krishna Komol was very much present in
Bangladesh was proved by the plaintiff petitioner by 1. T. REF: APPLICATION NO. 476 OF 2008
adducing oral as well as the registered deeds ex­ WITH
ecuted by putting signature of Krishna Komol him­ RULE NO. 82 (REF:)/2009
self and his presence in Bangladesh is also supported
and corroborated by the PW. 2 the local authority the Income Tax Ordinance (XXXVI of 1984]
then chairman of the concern Union Parishad. Sections 30A and 35 (3) (4)
16. In such view of the matter, I find substance in A mere off-hand allusion or indication that a
the rule. document is not *'fully verifiable” is not adequate
IT, In the result the Rule is made absolute with­ enough and cannot be a valid reason for arriving
out any order as to costs. at a particular conclusion.
18. The impugned judgment and decree dated The High Court Division finds that in the audit
23.01.2001 (decree signed on 29.01.2001) passed by test produced by the respondents under the head of
the learned Additional District Judge, Gaibandaha in manufacturing and trading account of Biscuit unit
Other Appeal No. 113 of 1988 dismissing the appeal and Battery unit, the respondents mentioned that the
and affirming the judgment and decree dated local purchase and the expenses charged in the fac­
29.06.1988 (decree signed on 05.07.1988) passed by tory overhead of Biscuit unit and Battery unit are not
the learned Subordinate Judge, Gaibandha in Other "fully verifiable”, and, therefore, arrived at the con­
Suit No. 187 of 1985 dismissing the suit is hereby clusion that the rate of G.P. shown is not acceptable
set aside. to them. The High Court Division concern is that
Consequently the suit is decreed. while the assessing officer stating and concluding
The order of status-quo stands vacated. that the local purchases are not fully verifiable did
Send down the lower Courts records to the court not shown any cogent reasons for relying upon their
below together with a copy of the judgment and or- belief that the expenditures are not actually “verifia­
cer of this Court at once. ble". The Respondents have not shown any cogent
Ed. reason by any materials on record relevant for their
assertion as to why the local purchases and expenses
 316 The Apex Law Reports [2020] 18 ALR (HCD)
in the factory overhead are not verifiable. Our opi- sued and are not supported by any legal reasoning at
nion is that the Respondent by only stating that the all. The Tax Authority’s claims are also not sup-
said purchases and expenses are not "fully verifia- ported by any specific lawful reasoning regarding
blc " only indicate that the assessing officer is him- their assertion of lack of verifiability of the overhead
self not certain or sure about the verifiability of the expense mentioned in the trading account. The High
expenditure. It is strange that for whatever reason. Court Division is of the opinion that the Taxes Au-
the CT(A) and the Appellate Tribunal also over- thorities did not follow the provisions of Section 35
looked the fact that neither the audit report nor the especially Section 35 (2) and Section 35 (4) of the
assessment order issued by the DCT showed specific ITO which provisions are specifically regarding the
reason as to their finding that the local purchases and method of accounting to be maintained by the asses-
expenses in the factor)' overhead are not * fully veri- see-applicant.
fiable" and have also overlooked the fact that with­ ...(15-21)
out specifying cogent reason the assessing officer
violated the provision of Section 30A of the ITO Income Tax Ordinance [XXXVI of 1984]
1984. According to principles of law and natural Section 159 (2)
justice and also under Section 30A of the ITO 1984, It a well settled law that where an authority
a mere off-hand allusion or indication that a docu- makes an order in exercise of a quasi-judicial
ment is not "fully verifiable" is not adequate function it must record its reasons in support of
enough and cannot be a valid reason for arriving at a the order it makes and every quasi-judicial order
particular conclusion. But it appears that in this case must be supported by reasons,
the Respondents did not provide any reason as to The Hi h Court Division a)so observed tha, on
why the documents are not folly verifiable and ,he im =f ,he Appc||ate Tribunal's Order being a
which they are mandatordy bound to under Section non.speaking order, ,he High Court Division is of
30A of the ITO 1984 The High Court Division also ,he Jjnion fhat it is a non speaking Order because a
'Is Perus"| of the records that both the non.speaking order is an order which arrives at its
CT(A) and the Appellate Tribunal without applying decjsjon without explaining the reasons behind the
their minds completely overlooked this most Order especially to the parties adversely affected by
important fact. This Section therefore very clearly such 0rder and the Appe|late Tribunal's order in the
envisages that no disallowance or deduction may be case jn hand s the ingredients of a non-
made without Specifying" the reason for doing so. speaking order, and is arbitrary resulting in serious
But unfortunately in the present case the DCT has vioiation 0f nalura| justice. In support of our opinion
flouted this provision and deflected from the lawful against the 0rder of the Tribunal and the other pre­
course of action which it should have taken by ceding 0rders in lhe present case and terming it a
showing lawful reason in disallowing the expenses. Non-Speaking Order the High Court Division he-
From a perusal of the order of the CT(A) and the reby cite a few |ines from the Indian Case of Sei-
Taxes Appellate Tribunal the High Court Division mens Engineering and Manufactures Co. of India
finds that both the CT(A) and the Appellate Tribunal Limited versus Unjon 0f india and another; 1976
overlooked the fact that provision of the law under rep0rted in AIR 1785 and 1976 SCR 48; wherein
Section 30A read with Section 83(2) and section 35 justjce p n. Bhagwati of the India Supreme Court
(3) (4) of the Ordinance have been violated in the inter-alia opines that it a well settled law that where
Order passed by the DCT. From a perusal of the Or- an authority makes an order in exercise of a quasi-
ders passed by the CT(A) and the Taxes Appellate judicial function it must record its reasons in support
Tribunal the High Court Division finds that the of the order it makes and every quasi-judicial order
CT(A) and the Appellate Tribunal in their respective must be supported by reasons. Justice Bhagwati and
Orders remained confined to the narrow factual as- his Judgment also goes onto emphasise and stress
pects, but did not consider the provision of law that that they must “give sufficiently clear and explicit
have to exhausted before any conclusion can be law- reasons in support of the orders made by them", and
fully arrived at by them and in this case therefore that the rule requiring reasons to be given “in sup-
their claims of non-verifiability of those expenses port of the orders made by them” and that the rule
lacks reasoning not being supported by law and un- requiring reasons to be given “in support of an order
fortunately their orders have not been lawfully is- js a basic principle of natural justice”. Therefore
 f
18 ALR (nCD) Olympic Industries-Vs.-Commissioner of Taxes (Kashefa Hussain J) 317
. reaSons and citaiions given above the High
h- Qjvision is of the opinion that to arrive upon a
^lawfully acceptable conclusion the Tax Au-
• cani,ot avoid the legal procedures to be ex-
fTd and parallelly cannot evade giving proper
Mfiins for arriving upon their conclusion and
MiU'They cannot decide by making whimsical
flfl. |oue statements rather they must act in accor­
dance with law and follow all the procedures pro­
vided by statute before they arrive at any decision
affecting anyone, be it the assessee-applicants or
whosoever. Therefore, upon the reasonings given
jhove and under the circumstances and discussions
above, the High Court Division finds that the ques­
tion as has been formulated in this instant Income
Tix Reference Application is required to be ans­
wered in the negative and in favor of the assessee-
applicant. In the result the instant IT Reference is
allowed.
...(26-29)
ADVOCATES WHO APPEARED IN THESE CASE:
Mr. Sarder Jinnat Ali, Adv.
...For the Applicant.
Mr. S. Rashed Jahangir, DAG withMs. Nurun Na-
tar, AAG and Mr. Saikat Basu, A AG
...For the Respondent, I.T. Department.
JUDGMENT
Kashefa HussainJ: The instant Income Tax Ref-
wence Application arose out of an Order dated
frlO.2008 passed by the Learned Taxes Appellate
nbunal, Division Bench-4, Dhaka in an Income
>^Appeal ^°* of 2008-2009(assessment year
l ^;2007), and, as such, is now being disposed of
this judgment.
facts of the case are that the assessee-ap-
Olympic Industries Ltd, represented by its
niiJPr® ^rector. Mr. Mubarak Ali is a Public Li-
Hiat ik °mpany l'slec* w,t^ the Stock Exchange.
J!ssessee"applicant has two units of busi-
• ^ r an° those are Biscuit unit and Battery unit
|^V*h toe units, the company maintains
fellow' acc?unt f°r toe period and for the business
nr a s*m**ar method of accounting pursuant to
fen?Vl^,?ns Section 35 of the Income Tax Or-
du|y 0e ^ (hereinafter called 1TO 1984), and
Cotoe accounts audited by a Chartered Ac-
*Poit, n • ‘he assessee-applicant along with the audit
statement of accounts filed return and the
return was accepted by the concerned Tax Authori­
ties under Section 82B of the Ordinance. Subse­
quently, the case was selected for audit, and, as such,
the Deputy Commissioner of Taxes (hereinafter
called the DCT) issued notices under Section 83 (1)
and Section 79 of the Ordinance. That in response to
the said notice the authorized representative of the
assessee-applicant (hereinafter called A/R) appeared
with the books of account. In the course of hearing
the DCT examined the books of account, verified
bills with vouchers apparently to his satisfaction, but
that long after since then the DCT in absence of the
A/R rejected the book version of the trading result
on the grounds of non-verifiability of the local pur­
chase and simply to enhance income adopted a
higher rate of gross profit that is G.P. and thus
created a gap between the worked out and disclosed
G.P. and made the trading addition in Biscuit ac­
count to an amount of Taka 49,77,826/- and in Bat­
tery account to an amount of Taka. 2,06,77,077/- and
that in this way he computed a total income at taka
7,09,95,570.00.
Oil. That the assessee-applicant thereafter, being ';
aggrieved with the assessment order preferred an
appeal before the Commissioner of Taxes (Appeal) if
[hereinafter called CT(A)] challenging the propriety
and legality of making trading addition in both the
accounts i.e. the Biscuit account and the Battery
accounts.
04. That the A/R representing the applicant as­
signed cogent reasons for declining the rate of gross
profit but the CT(A) was not convinced with the
reasoning, rather he upheld the addition made by the
DCT earlier in the assessment order, as such, being
aggrieved with the order of the C.T. (A), the appli­
cant preferred an appeal before the Taxes Appellate
Tribunal stating his grounds. The assessee-appli-
canf s grounds before the Appellate Tribunal were
that the DCT erred in law as well as in facts in
making an addition of Taka 49,77,826/- in the trad­
ing account in Biscuit unit by adopting G.P. at the
rate of 21% as against the 20.20% G.P. shown by the
applicant, and, also, erred in law as well as in facts
in maintaining the addition of Taka 2,06,77,077/- in
the trading account of the Battery unit by adopting a
rate of 24% G.P. as against the G.P. of 18.98%
shown by the applicant and that these rates were also
upheld and affirmed by the C.T. (A), who in turn
also erred in law as well as in facts by upholding
such addition.
05. That the A.R. appearing before the Tribunal
submitted both the facts and the law and explained
 318 The Apex Law Reports
the causes of declining the rate of G.P. and in so
ding, produced books of accounts reflecting the
transactions and he further argued that in matters of
trading result, if is the residuary part of cost and
sales as books of accounts. The applicant also stated
that the Authorities below also could not identify
any of the expenditures which were not verifiable.
06. The assessee-applicant also submitted before
the Tribunal that the DOT is bound to serve notice to
the assessee-applicant under Section 30A of the Or-
dinance, if it appeared to him that some of the ex-
penditures required further verification, but the DCT
did not send any such notice to the assessee-appli­
cant and consequently verification was not done by
the Tax Authorities:
07. The assesssee-applicant in his application
also stated that the learned A/R argued before the
Taxes Appellate Tribunal that the observation made
by the DCT in the trading account was based on his
own surmise, conjectures and his own perception
and he did not bring any such issue of non-verifia-
bility of expenditures to the notice of the assessee-
applicant by issuing a notice as is mandatorily re-
auired under Section 30A of the ITO, and, therefore,
the assessee-applicant was deprived of any opportu-
nity to explain his situation and the facts and cir-
cumstances appertaining to it but that the Tribunal
after hearing both sides issued a modified order by
which order the Tribunal only partially reduced the
rate of G.P. in both the units from 21% to 20.50%
but affirmed the rest of the findings of the DCT and
of the CT (A).
08. In the instant IT Reference Application the
following question of law has been formulated
seeking an opinion of this Court.
Question
09. Whether in the facts and in the circumstances
of the case the Tribunal under Section 159 (2)/35(3)
was justified in not accepting trading version of the
applicant in violation of Section 35(3) of IT Ordin­
ance 1984 and without pinpointing the number of
voucher which were not verifiable.
10. Upon serving of notice, the Learned Assistant
Attorney General Ms. Nurun Nahar along with
Leamed AAG Mr. Saikat Bashu appeared on behalf
of the Taxes Department and filed an Affidavit-in-
Reply in the instant IT Reference Application. In the
Affidavit-in-RepIy, the respondent stated that the
Reference Application is untenable and the assess-
ment officer lawfully assessed the return under Sec-
tion 82B(3)/83(2) of IT Ordinance 1984 and that
[2020] 18 ALR (HCD)
also the Tax authorities properly and lawfully fol­
lowed the provision of Section 28,29 and 30 of the
IT Ordinance 1984. The Respondents in their Reply
also stated that the CT(A) and the Taxes Appellate
Tribunal also lawfully passed the order in pursuance
of Section 156 and 159 of the 1T0 taking into cog-
nizance the actions of the DCT and the grievances of
thc Applicant. In the Affidavit-in-Reply, the Res-
pondents have repeatedly stated that the assessment
officer has properly assessed the return under Sec-
**on S2B(3)/83(2)/l 56/159 of the IT 30 and Demand
Notice 0-T. 15) on the assessee-applicant.
11. The Learned Advocate Mr. Sarder Jinnat Ali
appearing on behalf of the assessee-applicant argued
that the assessment officer arbitrarily imposed the
rate of tax in the manufacturing trading account in
aspect of the G.P. earned without pinpointing the
,aw- The Authorities did not mention any specific
reason not accepting the account books and the
documents shown and therefore, by not showing
reasons violated the mandatory provisions of Section
^OA of the IT Ordinance. The Learned Advocate
farther persuades that the DCT in his Assessment
0rder C0ljld not PinPoint or show any discrepancy or
anomafy in the method of accounting under the rele­
vant provisions of Section 35 of the Ordinance,
12. On the other hand, the learned Assistant At-
tomey General on behalf of the respondent submits
that the Orders of the CTA and the Appellate Tri-
bunal was passed accordingly within the ambits of
law following the provision of section 82B
(3)/83(2)/l 56/159 of ITO and that the Orders were
,awfulIy Passed- The Learned AAG also submits that
the issues raised by lhe assessee-applicant are basi-
cally factual matters and therefore cannot be a sub­
ject of adjudication here.
13. On hearing both sides and from perusal of the
documents and materials on records, we find that the
assessment officer in his Annexure -
A) of the application did not actually mention or
allege any discrepancy or any inconsistencies on the
part of the assessee-applicant, neither in the books of
account nor in any other documents submitted by the
assessee-applicant. We also find that the DCT did
not pinpoint or specify any inconsistency in the me-
thod of accounting. The DCT if he actually believed
that the expenditures in the Trading Accounts of the
Biscuit Unit and the Battery Unit were not fully veri-
fiable, under the circumstances then, he ought to
have pointed out and specified any defects, anoma-
lies or inconsistencies which might have appeared in
the record. The legal provision for pinpointing any
2020] 18 ALR (HCD) Olympic Industries-Vs.-Commissioner of Taxes (Kashefa Hussain J) 319
efect is provided for in Section 35(4) of the Income
ax Ordinance. Similarly Section 35 (2) of the Or-
inance enumerates a provision for the authorities
lemselves to come up with their own prescription
r methodology to maintain accounts, documents etc
nd which methodology have to be complied by the
ssessee-applicant. But in this case, it is quite appar-
nt from the records that the authorities could not
how any discrepancy or inconsistency by the asses-
ee-applicant in following the method of accounts.
14. The authorities also did not point out any vi-
lation of Section 35 (4) of the Ordinance, Section
5 of the IT Ordinance reads as below;
Method of accounting. -
(1)A1I income classifiable under the head
[“Agricultural income”], "Income from business
or profession or "Income from other sources
shall be computed in accordance with the method
of accounting regularly employed by the asses-
see-
(2) Notwithstanding anything contained in
sub-section (1), the Board may, ion the case of
any business or profession, or class of business
or profession, or any other source of income, or
any class of persons, by a general or special or-
der, direct that the accounts and other documents
shall be maintained in such manner and form,
and that payments of commercial transactions
recorded m such manner, as may be prescribed
or as may be specified in such direction; and the-
reupon the income of the assessee shall be com-
puled on the basis of the accounts maintained
payments made and transactions recorded accor-
d,nS'y*
(3) Without prejudice to the preceding sub-
sections, every public or private company as
defined in [the Companies Act, 1913 (VII of
1913) or ^*>8 (>^8 to* ^ audit report nor the assessment order issued by the
[ and every registered firm whose capital
on the last day of any income year was not less
than five lakh taka,] shall, with the return of
income required to be filed under this Ordinance
for any income year, furnish a copy of the
trading account, profit and loss account and the
balance sheet in respect of that income year
certified by a chartered accountant.
(4) Where -
(a) no method of accounting has been
ularly employed, or if the method employed is
such that, in the opinion of the Deputy
Commissioner of Taxes, the income of the
assessee cannot be properly deducted therefrom ;
or
(b) in any case to which sub-section (2) ap­
plies, the assessee fails to maintain accounts,
make payments or record transactions in the
manner directed under that sub-section; or
(c) a company [or a registered firm] has not
complied with the requirements of sub-section
(3);
the income of the assessee shall be computed
on such basis and in such manner as the Deputy
Commissioner of Taxes may think fit.
15. From our perusal of the documents and mate-
rials on record we find that in the audit test produced
by ,he respondents under the head of manufacturing
an(j trading account of Biscuit unit and Battery unit,
die respondents mentioned that the local purchase
ancj the expenses charged in the factory overhead of
Biscuit unit and Battery unit are not “fully yerifia-
ble", and, therefore, arrived at the conclusion that
the rate of G.P. shown is not acceptable to them,
ifi. Our concern is that while the assessing officer
stating and concluding that the local purchases are
not fu|jy verifiable did not shown any cogent reasons
for re|yjng upon their belief that the expenditures are
not aclua||y "verifiable". The Respondents have not
shown any COgent reason by any materials on record
re|evant for their assertion as to why the local
purchase5 and expenses in the factory overhead are
not verjfiable. Our opinion is that the Respondent by
Qn, statjng that the said purchases and expenses are
no, jully ve„y;Me ■■ on|y indicate that the assessing
officer is himself not certain or sure about the
verifiability of the expenditure. It is strange that for
whatever reason, the CT(A) and the Appellate
Tribunal also overlooked the fact that neither the
DCf showed specific reason as to their finding that
*e local purchases and expenses m the factory
overhead are not fully verifiable and have also
overlooked the fact that without specifying cogent
reason the assessing officer violated the provision of
Section 30A of the ITO 1984.
17. According to principles of law and natural
justice and also under Section 30A of the ITO 1984,
a mere off-hand allusion or indication that a docu­
ment is not "fully verifiable ” is not adequate enough
and cannot be a valid reason for arriving at a partic­
ular conclusion. But it appears that in this case the
Respondents did not provide any reason as to why
320 The Apex Law Reports
the documents are not fully verifiable and which
they are mandatory bound to under Section 30A of
the 1TO 1984.
18. We also find from our perusal of the records
that both the CT(A) and the Appellate Tribunal
without applying their minds completely overlooked
this most important fact.
Income Tax Ordinance 1984, Section 30A is as
follows;
{SEC-30A:PROVlSlON FOR DISALLOWAN­
CE.- Notwithstanding anything contained in Sec­
tions 28,29 and 30, the Deputy Commissioner of
Taxes shall not make any disallowance or deduction
for any year from any claim made by an assessee in
the trading account or profit or loss account without
specifying reason for such disallowance or deduc­
tion.}
emphasis underlined
19. This Section therefore very clearly envisages
that no disallowance or deduction may be made
without "specifying ” the reason for doing so.
20. But unfortunately in the present case the DCT
has flouted this provision and deflected from the
lawful course of action which it should have taken
by showing lawful reason in disallowing the ex­
penses. From a perusal of the order of the CT(A) and
the Taxes Appellate Tribunal we find that both the
CT(A) and the Appellate Tribunal overlooked the
fact that provision of the law under Section 30A read
with Section 83(2) and section 35 (3) (4) of the Or­
dinance have been violated in the Order passed by
the DCT. From a perusal of the Orders passed by the
CT(A) and the Taxes Appellate Tribunal we find
that the CT(A) and the Appellate Tribunal in their
respective Orders remained confined to the narrow
factual aspects, but did not consider the provision of
law that have to exhausted before any conclusion
can be lawfully arrived at by them and in this case
therefore their claims of non-verifiability of those
expenses lacks reasoning not being supported by law
and unfortunately their orders have not been lawfully
issued and are not supported by any legal reasoning
at all. The Tax Authority’s claims are also not sup­
ported by any specific lawful reasoning regarding
their assertion of lack of verifiability of the overhead
expense mentioned in the trading account.
21. We are of the opinion that the Taxes Authori­
ties did not follow the provisions of Section 35 espe­
cially Section 35 (2) and Section 35 (4) of the 1TO
which provisions are specifically regarding the me-
thod of accounting to be maintained by the assessee-
[2020] 18 ALR(HCD)
applicant. The authorities in this case, did not pin­
point any defect in respect of the audit account of the
asscssee-applicant, and, as such, arbitrarily dis­
allowed the expenditure, and, therefore, did not act
within the ambits of the law. They have disallowed
the expenses in the Biscuit Unit and the Battery Unit
of the Trading Account and refuted the claims of the
asscssee-applicant. But before doing so, they under
the provisions of law ought to have specified the
defects if any in the methodology of the accounts
maintained by the assessee-applicant under the pro­
vision of Section 35 (3) (4) of the 1T0 1984, But in
this case they did not follow any of the provisions.
The underlying principles of these provisions are
that ‘defects' in accounting or the methodology fol­
lowed and which may consequently lead to an erro­
neous accounting of expenses whatsoever, have to
specified and pinpointed. A mere vague statement,
as in the instant case regarding the "non-verifiabil­
ity" of expenses will not suffice and cannot stand
upon lawful ground. These principles, that defects if
there are any, have to be pointed out in respect of the
audit account of the assessee for disallowing the
expenses have been already decided by this court in
Titas Gas (T&D) Company Ltd -V- Commissioner
of Taxes in 53 DLR Daze-209 and in the case of
Eastern Hardware Store -V- Commissioner of Taxes
in 54 DLR pape-125. In the case we are dealing
with here, the Tax authorities did not mention any
discrepancy or any inconsistency in any statement or
in the documents or books of account or any other
documents specified by the assessee-applicant and,
therefore, without specification, the assessee-appli­
cant can not be lawfully disallowed such expenses
on the basis of surmise only. Further the Authorities
did not raise any allegation of any deviation on the
part of the assessee-applicant from the provisions of
Section 35 (2) (3) of the Ordinance nor could they
show the applicability of Section 35 (4) of the Or­
dinance. The assessee-applicant was not given any
chance or opportunity as is required under Section
30A of the Act, and no notice was sent by the DCT
under Section 30A of the Ordinance. It appears that
the CT(A) and the Appellate Tribunal have affirmed
the Order of the DCT excepting the order of a little
modification in the Order of the Appellate Tribunal
where the Tribunal only very perfunctorily and me-
chanically reduced the rates of GP in both the Units,
that is the Biscuit Unit and the Battery Unit, from
21% to 20.50% in Biscuit Unit and from 24,o to
22% in Battery Unit. The Appellate Tribunal onW in
a very offhand manner alluded that the rate of OP.
as determined by the CT(A) "appears to be on the
 2020] 18ALR(HCD) Olympic Industries-Vs.-Commissioner of Taxes (Kashefa Hussain J) 321
ligher side. It appears to us that the Order of the
Appellate Tribunal has been a mindless exercise so
nuch so that, on the one hand he condones and sup-
>orts the decision of the CT(A) by stating that the
2T(A)’s decision "in not accepting (he trading ver-
ion in fully tenable in principle ", and yet strangely
ie decides to reduce the rates of GP stating that they
ire a bit on the higher side. The Appellate Tribunal
'ailed to realize the paradox he has created by his
tatement and our concern is that if the Appellate
Tribunal is of the opinion and firmly believes that
he CT(A)’s decision in not accepting the trading
version of the assessee-applicant’s is fully tenable in
principle, then why did he at all modify the rates of
3.P. as affirmed by the CT(A). This unfortunately
>nly shows a total misapplication of mind, apathy
ind inconsistency of the Appellate Tribunal.
22. Moreover, after a perusal of all the orders,
documents and the other materials placed before us,
we find that the tax authorities did not mention or
even allude to any violation of provisions of the re­
levant law by the assessee-applicant wherefrom, they
could have deduced the reasons for upholding their
decisions and maintaining their views. The authori­
ties have not even alleged anywhere in their respec­
tive Orders that proper method of accounting pre­
scribed under the provision of Section 35 of the
ITO 1984 was not followed by the assessee-appli­
cant. The Taxes Authorities did not allege any viola­
tion of any of the provisions of Sections 35 (2) of the
Ordinance.
23. It is our view that even to arrive upon a con­
clusion based on facts, the tax authorities can not
avoid or evade the legal procedure to be undertaken
and which have to be exhausted before reaching
their conclusions and therefore either the DCT or the
CT(A) or the Appellate Tribunal cannot decide upon
and reach their conclusion by making vague state­
ments only, without specification of the relevant law
which they presume to have been violated. Neither
did they apply or show any reason to the assessee-
applicant for an order of disallowance and which is
mandatorily required to be complied with by the Tax
authorities under Section 30A of the Ordinance.
Moreover, they could not pinpoint any defect under
the books of account under Section 35 (3) nor could
they specify any defect discrepancy or inconsistency
in the method of accounting employed by the asses­
see-applicant under section 35 (4) of the Ordinance,
fhe Appellate Tribunal have excepting for a slight
modification of the Order given by the CT(A), found
the rest of the Order otherwise tenable but did not
. ALR Forma=41 [HCD1
give its reasons for finding such order tenable and,
therefore, our findings is that it is a "non speaking
order" on the part of the Appellate Tribunal.
Another pertinent question of law which seeks our
attention is the provision of Section 159 (2) which
the assesssee-applicant have included in the question
formulated by them.
24. Section 159 (2) of ITO reads as under;
Disposal of appeal by the Appellate Tri­
bunal.-
(2)Before disposing of any appeal, the Appel­
late Tribunal may call for such particulars as it
may require respecting the matters arising in the
appeal or cause further enquiry to be made by
Deputy Commissioner of Taxes.
25. The portion relevant for our purpose is Sec­
tion 159 (2) of the Ordinance. Section 159 (2) re­
quires that before disposing the Appeal, the Appel­
late Tribunal "may” call for such particular as it
‘may’ require for matters arising in the appeal or for
purposes of further enquiry. Our view is that though
the word 'may' superficially suggests a discretio­
nary power of the Tribunal, but in the instant case
the Tribunal should have applied a judicious mind
exercising this discretion positively by calling for
such particulars for the sake of further enquiry since
the preceding two orders that of the DCT and CT(A)
did not contain the particulars that which have led
them to their finding. The tax authorities should have
followed the principles of natural justice and ought
to have afforded an opportunity to enlighten him of
the reasons for their decision. Furthermore
particulars shall be asked for purposes of further
enquiry, when the materials on records do not suffice
for doing Justice and particularly when it is obvious
that due to lack of proper enquiry into the matter,
there is a chance that one party may be adversely
affected by an order relying upon this view held by
us, we are of the opinion that by not calling upon the
particulars required for matters arising in the appeal
and for the purpose of further enquiry the Appellate
Tribunal also violated the underlying principle enu­
merated in Section 159 (2) ,and, thus, made a tra­
vesty ofjustice.
26. IVow on the point of the Appellate Tribunal’s
Order being a non-speaking order, we are of the opi­
nion that it is a non speaking Order because a non­
speaking order is an order which arrives at its deci­
sion without explaining the reasons behind the Order
especially to the parties adversely affected by such
322 The Apex Law Reports
Order and the Appellate Tribunal’s order in the case
in hand possess all the ingredients of a non-speaking
order, and is arbitrary resulting in serious violation
of natural justice. In support of our opinion against
the Order of the Tribunal and the other preceding
Orders in the present case and terming it a Non-
Speaking Order we hereby cite a few lines from the
Indian Case of Seimens Engineering and Manufac­
turing Co. of India Limited versus Union of India
and another; 1976 reported in AIR 1785 and 1976
SCRJ8\ wherein Justice P.N. Bhagwati of the India
Supreme Court inter-alia opines that it a well settled
law that where an authority makes an order in exer­
cise of a quasi-judicial function it must record its
reasons in support of the order it makes and every
quasi-judicial order must be supported by reasons.
Justice Bhagwati and his Judgment also goes onto
emphasise and stress that they must “give suffi­
ciently clear and explicit reasons in support of the
orders made by them", and that the rule requiring
reasons to be given "in support of the orders made
by them" and that the rule requiring reasons to be
given "in support of an order is a basic principle of
natural justice".
27. Therefore from the reasons and citations
given above we are of the opinion that to arrive upon
a valid, lawfully acceptable conclusion the Tax Au-
thorities cannot avoid the legal procedures to be ex-
hausted and parallelly cannot evade giving proper
reasoning for arriving upon their conclusion and
findings. They cannot decide by making whimsical
and vague statements rather they must act in accor­
dance with law and follow all the procedures pro-
vided by statute before they arrive at any decision
affecting anyone, be it the assessee-applicants or
whosoever.
20. Therefore, upon the reasonings given above
£
lateds&ES»;iE£:
in this instant Income Tax Reference Applica- r “»;wi“
whose share ,s hEbeen
tion is required to be answered in the negative and in
favor of the assessee-applicant.
29. In the result the instant IT Reference is al-
lowed.
Accordingly, the question as has been formulated
by the Respondent in this instant Reference Appli-
cation is required to be answered in the negative and
in favor of the assessee-applicant.
The connected Rule being No. 82(Ref:)/2009 is
hereby disposed of accordingly.
However, there shall be no order as to costs.
Ed.
[2020] 18 ALR (HCD)
HIGH COURT DIVISION
(STATUTORY ORIGINAL JURISDICTION)
Present:
Justice Muhammad Khurshid Alam Sarkar
Sumaiya Kazi
Judgment on: Chowdhury and
07/01/2020 another
...Petitioners
Result: -Vs.-
Dismissed. Homeland Life In­
surance Company
Limited and others
...Respondents
COMPANY MATTER NO. 2KO OF 2017
Companies Act[XVIIl of 1994 ]
Section 43
Whether forfeiture of share is permitted in
the law.
If there is a provision of forfeiture of shares in
any statutory law or in the AoA containing the
procedures of forfeiting the shares, the BoD of a
company must exhaust the procedural tor
malities in forfeiting the shares, for, the powe
to forfeit share of a shareholder is considered b;
the Courts to be a draconian power, which i:
why, the Courts are always in favour of seeint
thal whenever AoA of a company empowers it!
BoD to forfeit an unpaid/paid-up share, the saic
power is being exercised by the BoD of a coni
pany upon observing all the formalities of natu-
ral justice, that is to say, after being confirmee
receivHed,to be forfeited
beinS Proposed
thereafter, the said shareholder has alsc
been afforded an opportunity to resist the for-
feiture either by paying off the money due or b\
complying with the BoD’s directives, as th<
case may be, and the aforesaid duty of the BoE
of a company is more onerous if it wants to for-
fejt the paid-up shares
...(35;
In the scheme of our Companies Act. forfei­
ture is permitted subject to compliance with the
provisions regarding reduction of share capital