(a) Judgment---

--- Court to give reasons for the decision it gives.

Mulla Ejahar Ali v.. Government of East Pakistan PLD 1970 SC 173 ref.

(b) Income Tax Ordinance (XXXI of 1979)---

----Ss.131 & 132---Appeal---Obligation to give reasons for the decision in appeal by the Commissioner of Income Tax (Appeals)---Provisions of Ss.131 & 132 of the Ordinance though provide for the procedure to be followed by the Commissioner of Income-tax (Appeals) for making decision but do not specifically provide for giving reasons for its decision---Effect---Held principles of natural justice would be applicable to oblige the C.I.T.(A) to give reasons for his .decision as no exclusion of the principles of natural justice i.e. "to act fairly" was discernible either from 5.131 or 5.132 of the Ordinance.

Sections 131 and 132 of the Income Tax Ordinance do not specifically provide that the C.I.T.(A) shall give reasons for his decision in the appeal brought before him. The question is that: if the statute creating a decision marking body and providing for the

procedure to be followed by the said body does not specifically provide for giving reasons for its decision, is the body obliged to give reasons for its decision on any principle of law and what shall be the extent of the reasons.

It appears that the obligation to give reasons by a public law decision making body for its decision is based on "fair play action". It also appears that "fair play action" is becoming the leading principle of natural justice. The cardinal principles of natural justice are that no one shall be the judge in his own cause and the other party shall be heard.

Principles of natural justice are deemed to be incorporated in every statute unless their application has been specifically excluded. No exclusion of the principle of natural justice "i.e. to act fair" is discernible either from section 131 or section 132 of the Income Tax Ordinance.

The C.I.T.(A) was obliged to give reasons for his decision in disposing of the appeals brought before him under the Income Tax Ordinance.

Council of Civil Servants Union v. Minister of Civil Servants (1984) 3 All ER 935; Foulkes on Administrative Law, 6th Edn., p.264; R. v. Civil Servants Appeal Board: Ex parte (1988) 3 All ER 686; in wiseman v. Bornman (1969) 3 All ER 275; Cooper v. Wandsworth Board of Works (1863) 14 CBNS 180, 143 ER 414 at 420; Lonrho PLC v. Secretary of State (1989) 2 All ER 609 at 620; Lloyd v. McMahon (1987) 1 All ER 1118 and R. v. Civil Servants Appeal Board (1991) 4 All ER 310 ref.

(c) Income Tax Ordinance (XXXI of 1979)---

----Ss.131 & 132---Appeal---Reasons for decision in appeal ---Standard-- Extent--- Commissioner of Income Tax (Appeals) has to give outline reasons for his decision in appeal sufficient to show to what he was directing his mind while disposing of the appeal.

The C.I.T.(A) should give outline reasons sufficient to show to what he was directing his mind while disposing of the assessee's appeal. It may not be possible to generalise the standard of the reasons the C.I.T.(A) required to give in an appeal brought before him but the simplest standard will be that if the C.I.T.(A) sets out the issues and the contentions raised before him and the evidence on which the findings of the assessing officer are based that would be sufficient to demonstrate that he had directed hys mind to the relevant issues. There is no obligation to go into lengthy reasoning examining all points in detail or anything of that sort. Where the issues would be otiose the reasons need not be given. Where the contentions are obvious there is no need to be repetitious. Where the circumstances are such that if reasons were given they are likely to become stereotyped then the duty to be fair does not require over elaboration; in most cases it will not requiring the C.I.T.(A) to make detailed or lengthy findings. The requirement to act fairly will be deemed to have been accomplished if the order of the C.I.T.(A) indicates that while disposing of the appeals he had addressed his mind to the issues raised before him.

Javed A. Qureshi for Appellant.

Zareen Saleem Ansari, D.R. for Respondent.

Date of hearing: 12th April, 1993

ORDER

This order disposes of five appeals noted title in which a common question of law is involved, and the question is: whether the CIT (Appeals) gave adequate reasons for his decision in disposing of each of the said appeals.

Appeal No. 180/IB of 1992-93 has been disposed of by a printed order which the CIT(A) had got available with him .for disposing of appeals by filling in the blanks. The operative part of this order reads as follows:--

"The full facts are described in the body of the order. The accounts as such have not been maintained by the appellant. It is very difficult in such circumstances on my part to make any interference. No case-has also been made out by the learned representative in favour of the appellant. The appeal is, therefore, dismissed accordingly."

Appeals Nos.198, 199, 205 and 206/IB of 1992-93 have been disposed of by a similarly worded order which reads as under:--

"Mr. Javed A. Qureshi, Advocate represented this case before him. He has been heard and the facts of the case are considered. The learned counsel could not make out any case for favour of the appellant. The tax liability created is within paying capacity of the appellant. I decline to make any interference. Order of the assessing officer in the above each year is confirmed accordingly."

Although each appeal related only to one assessment year reference in the order to `in the. above each year' is not understandable.

The assessees have objected to the orders of the CIT(A) on the ground that the stereotyped order made by the CIT(A) lacks legal foundation and, since the CIT(A) failed to attend to the grounds of appeal raised before him, his order was bad in law and liable to be set aside.

I have heard Mr. Javed A. Qureshi, Advocate for the assessees and Mrs. Zareen Saleem Ansari, D.R.

The learned counsel for the assessee contended that the CIT(A) was obliged to give adequate reasons for his decision in the appeals and on account of its failure to give reasons his order is liable to be set aside. On the other hand the D.R. contended that relevant provisions of the Income Tax Ordinance do not oblige the CIT(A) to give detailed reasons for his decision, and the CIT(A) has disposed of the appals by a proper order.

So far as the Courts of law are concerned they are statutorily obliged to give reasons for their decision. Order XX, rule 4 of the Code of Civil Procedure provides that judgment of Civil Court shall contain concise statement of the case, the points for determination and the reasons for such decision. Similarly, section 367 of the Code of Criminal Procedure provides that the judgment of a Criminal Court shall, except as. otherwise expressly provided, be written by the Presiding Officer of the Court or from the dictation t of such Presiding Officer in the language of the Court or English, and shall contain point or points for determination, the decision thereon and the reasons for such decision and shall be dated and signed by the Presiding Officer; -- -- Besides the provisions of the Code of Civil Procedure and Code of Criminal Procedure the Supreme Court of Pakistan in case Mulla Ejahar Ali v. Government of East Pakistan PLD 1970 SC 173 has added gloss to the general duty of Courts of law to give reasons for their decisions in these terms:--

"If a summary order of rejection can be made in such terms, there is no reason why a similar order of acceptance saying `there is considerable substance in the petition which is accepted', should not be equally blessed. This will reduce the whole judicial process to authoritarian decrees without the need for logic and reasoning which have always been the traditional pillars of judicial pronouncements investing them with their primary excellence of propriety and judicial balance. Litigants who bring their disputes to the Law Courts with the incidental hardships and expenses involved do expect a patient and a judicious treatment of their cases and their order must be a speaking order manifesting by itself that the Court has applied its mind to the resolution of the issues involved for their proper adjudication. The ultimate result may be reached by a laborious effort, but if the final order does not bear an imprint of that effort and on the contrary discloses arbitrariness of thought and action, the feeling with painful results, that justice has neither been done nor seemed to have been done is inescapable. When the order of a lower Court contains no reasons, the appellate Court is deprived of the benefit of the views of the lower Court and is unable to appreciate the processes by which the decision has been reached."

The duty of the Law Courts to give reasons for their decisions having been affirmed, one has to examine whether the CIT(A) is also required to give reasons for his decision if he has not been specifically obligated by the statute to give reasons for his decision. For approaching to the answer to the question the most appropriate starting point will be to take note of sections 131 and 13' of the Income Tax Ordinance, 1975, which provide-for the procedure and the decision in appeal before and by the CIT(A), and the said sections read as follows.

"Section 131. Procedure in appeal.--(1) The Appellate Assistant Commissioner shall give notice of the day fixed for the hearing of the appeal to the appellant and to the Income Tax Officer against whose order the appeal is preferred and may adjourn the hearing of the appeal from time to time.

(2) The Appellate Assistant Commissioner may, before the hearing of an appeal, allow an appellant to file any new ground of appeal not specified in the grounds of appeal already filed by him on being satisfied that the omission of the ground from the form of appeal was not wilful or unreasonable.

(3) The Appellate Assistant Commissioner may, before disposing of any appeal, call for such particulars as he may require respecting matters arising in the appeal or cause further inquiry to be made by the Income Tax Officer.

(4) The Appellate Assistant Commissioner shall not admit any documentary material or evidence which was not produced before the Income Tax Officer unless he is satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the Income Tax Officer.

Section 1.32. Decision in appeal.-..(1) In disposing, of an appeal, the Appellate .Assistant Commissioner may,--

(a)in the case of an order of assessment,--

(i)set aside the assessment and direct the assessment to be made afresh after making such further inquiry as the Appellate Assistant Commissioner may direct or the Income Tax Officer thinks fit;

(ii)confirm, reduce, enhance or annul the assessment;

(b)in the case of an order imposing a penalty, confirm, set aside or cancel such order or enhance or reduce the penalty; and

(c)in any other case, pass such order as he thinks fit.

(2)The Appellate Assistant Commissioner shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has been given a reasonable opportunity of showing cause against such enhancement or reduction, as the case may be.

(3)Where, as the result of an appeal, any change is made in the assessment of a firm or an association of persons or a new assessment of a. firm or an association of persons is ordered to be made, the. Appellate Assistant Commissioner may authorise the Income Tax Officer to amend accordingly any assessment made on any partner of the firm or any member of the association.

(4)On the disposal of an appeal, the Appellate Assistant Commissioner shall communicate the order passed by him to the appellant and to the Income Tax Officer and the Commissioner.

(5)Where no order under subsection (1) is made before the expiration of three months from the end of the month in which the appeal. Is presented, the relief sought through the said appeal shall be deemed to have been given and all the provisions of this Ordinance shall have effect accordingly:

Provided that, where the hearing of appeal is adjourned for any period on the request of the appellant the said period shall be excluded while computing the aforesaid period of three months:

Provided further that nothing contained in this subsection shall apply to any appeal presented before the first day of January, 1992.

(6)The provisions of subsection (5) shall not apply unless a notice by the appellant stating that no order under subsection (1) has been made is personally served by the appellant on the Appellate Assistant Commissioner not less than thirty days before the expiration of the period of three months.

It is obvious that sections 131 and 132 of the Ordinance do not specifically provide that the C.I.T.(A) shall give reasons for his decision in the appeal brought before him. The question is that: if the statute creating a decision-making body and providing for the procedure to be followed by the said body does not specifically provide for giving reasons for its decision, is the body obliged to give reasons for its decision on any principle of law and what shall be the extent of the reasons.

It appears that the obligation to give reasons by a public law decision making body for its decision is based on "fair play action". It also appears that "fair play action" is becoming the leading principle of natural justice. Every one knows that the cardinal principles of natural justice are that no one shall be the judge in his own cause and the other party shall be heard. Lord Roskill in Council of Civil Servants Union v. Minister of Civil Servants (1984) 3 All ER 935 (HL), however, has observed that the use of the phrase `principles of natural justice' is "no doubt hallowed by time and much judicial repetition, but it is a phrase often widely misunderstood and therefore, as often misused. His Lordship, therefore suggested that the phrase "perhaps might now be allowed to find a permanent resting-place and be better replaced by speaking of a duty to act fairly". The judicial authority is firm that principles of natural justice are deemed to be incorporated in every statute unless their application has been specifically excluded. No exclusion of the principle of natural justice "i.e. to act fairly" is discernible either from section 131 or section 132 of the Income Tax Ordinance.

All leading text books on administrative law are unanimous that public decision-making bodies should give reasons for their decisions unless the nature of the decision is such that it would be inappropriate to give reasons. Foulkes in Administrative Law (6th Edition), page 264 wirtes: "It is, in general, desirable that reasons should be given for decisions. The giving of reasons is one of the fundamentals of good administration. In case R. v. Civil Servants Appeal Board ex parte Bruce (1988) 3 All ER 686 (QB) Lord May stated "the obligation on a Tribunal to give reasons arises from application of principles of natural justice". The House of Lord in Wiseman v. Bornman (1969) 3 All ER 275 said:

"Natural justice requires that the procedure before any tribunal which is acting judicially shall be fair in all the circumstances, and I would be sorry to see this fundamental general principle 'degenerate into a series of hard and fast rules. For a long time the Courts have, without objection from Parliament, supplemented procedure laid down in legislation where they have found that to be necessary for this purpose. But before this unusual kind of power is exercised it must be clear that the statutory procedure is insufficient to achieve justice and that to require additional steps would not frustrate the apparent purpose of the legislation.

The principles and procedures are to be applied which, in any particular situation or set of circumstances, are right and just and fair. Natural justice, it has been said, is only "fair play in action". Nor do we wait for directions from parliament. The common law has abundant riches: there may we find that BYLES, J., called "the Justice of the common law" (Cooper v. Wandsworth Board of Works (1863) 14 CENS 180 at 194,143 ER 414 at 420:'

In another case LONRHO PLC v. Secretary of State (1989) 2 All ER 609 at 620 the House of Lords said:

"The only significance of the absence of reasons is that if all other known facts and circumstances appear to point overwhelmingly in favour of a different decision, the decision-maker, who has given no reason cannot complain if the Court draws the inference that he had no rational reason for his decision:"

Yet in another case LLOYD v. McMAHON (1987) 1 All ER 1118 at 1161 the House of Lords explained the obligation of decision-makers to give reasons for their decisions in these terms:--

"'My Lords, the so-called rules of natural justice are not engraved on tablets of stone. To use the phrase which better expresses the underlying concept, what the requirements of fairness demand when any body, domestic, administrative or judicial, has to make a decision which will affect the rights of individuals depends on the character of the decision-making body, the kind of decision it has to make and the statutory or other framework in which it operates. In particular, it is well established that when a statute has conferred on any body the power to make decisions affecting individuals, the Courts will not only require the procedure prescribed by the statute to be followed, but will readily imply so much and no more to be introduced by way of additional procedural safeguards as will ensure the attainment of fairness."

The Court of Appeal of England in a quite recent judgment reported as R. v. Civil Servants Appeal Board (1991) 4 All ER 310 having reviewed the entire law regarding obligations of a Tribunal to give reasons for its decision has concluded that every Tribunal performing public functions is required to give reasons for its decision which requirement is engraved not only in the principles of natural justice but also in an obligation to maintain the highest standard of public administration including the administration of justice. The Court concluded that "fairness requires a tribunal to give sufficient reasons for its decision to enable the parties to know the issues to which the tribunal addressed its mind". I would, therefore reject the learned D.R.'s. contention that the CIT(A) was not obliged to give reasons for his decision in disposing of the appeals brought before him under the Income Tax Ordinance for the only reason that the relevant provisions of the Ordinance do not specifically oblige him to give reasons for his decision in appeals.

The next question which perhaps is more important than the question of "obligation to give reasons" is what reasons are sufficient in any particular case. What reasons are sufficient in any particular case must of course depend upon the facts of the case. The reasons are not deficient because every process of reasoning is not set out. The Chief Justice of England Lord Lone in R. v. Immigration Appeal Tribunal ex parte Khan (Mahmood) laid down the standard of reasons a public decision-making body is required to give for its decision in these terms:--

"The important matter which must be borne in mind by tribunals in the present type of circumstances is that it must be apparent from what they state by way of reasons first of all that they have considered the point which is at issue between the parties, and they should indicate the evidence upon which they have come to their conclusions. Where one gets a decision of tribunal which either fails to set out the issue which the tribunal is determining either directly or by inference, or fails either directly or by inference to set out the basis on which it has reached its determination on that issue, then that is a matter which will be very closely regarded by this Court, and in normal circumstances will result in the decision of the tribunal being quashed. The reason is this. A party appearing before a tribunal is entitled to know, either expressly stated by it or inferentially stated, what it is to which the tribunal is addressing its mind. In some cases it may be perfectly obvious without any express reference to it by the tribunal; in. other cases it may not. Second, the appellant is entitled to know the basis of fact on which the- conclusion has been reached. Once again in many cases it may be quite obvious without the necessity of expressly stating it, in other cases if may not."

Judged by the above standard the C.I.T.(A) should have given outlined reasons sufficient to show to what he was directing his mind while disposing of the assessee's appeal. Perhaps it may not be possible to generalise the standard of the reasons the C.I.T.(A) is required to give in an appeal brought before him but the simplest standard will be that if the C.I.T.(A) sets out the issues and the contentions raised before him and the evidence on which the findings of the assessing officer are based would be sufficient to demonstrate that he had directed his mind to the relevant issues. It must be accepted that there is no obligation to go into lengthy reasoning examining all points in detail or anything of that sort. It may also be pointed out that where the issues would be otiose the reasons need not be given. Where the contentions are obvious there is no need to be repetitious. Where the circumstances are such that if reasons were given they are likely to become stereotyped then the duty to be fair does not require over elaboration; in most cases it will not require the C.I.T.(A) to make detailed or lengthy findings. The requirement to act fairly will be deemed to have been accomplished if the order of the C.l.1-J3) indicates that while disposing of the appeals he had addressed his mind to the issues raised before him. Judged by the above standard of giving reasons by the public law decision-making bodies for their decisions I am of the view that the CIT(A) failed to give adequate reasons while disposing of the appeals.

The orders of the CIT(A) in the appeals noted title are set aside for decisions of the appeals afresh in accordance with law and in the light of the observations recorded in this order.

M.BA./2352/T Order accordingly.