JUDGMENT A.B. Pal, J. 1. This is the second round of litigation for the writ Petitioner, who is a transport contractor by profession and claimed to have been doing transportation works under the Food Corporation of India (for short 'FCI'), Respondent herein for a number of years. In response to a Notice Inviting Tender (for short 'NIT') dated 16.4.2004, he submitted his tender on 11.5.2004 and became one of the three selected carrying contractors on 27.9.2004. As required, he submitted along with his tender all required documents including experience certificate, certificate of financial status from the banker, latest balance sheet audited by Chartered Accountant, documents of movable and immovable property and other necessary papers including bank draft of Rs. 17,53,000/-, followed by negotiation, acceptance of the rate and security deposit. But though he complied with all the requirements, work order in his favour was not issued while other two carrying contractors were given the work order without delay. On 7.10.2004 he was asked by the Respondent corporation to intimate the present status of his income tax clearance in view of the communication received from the Assistant Commissioner of Income Tax, Silchar Circle, that an amount of Rs. 1,20,41,869/- was due from him towards income tax/super tax/penalty etc. and on that account a notice under Section226(3) of the Income Tax Act, 1961 (for short 'Act') was served on the District Manager of the Corporation. In reply to the said letter of the Respondent Corporation, the Petitioner informed the third Respondent on 25.10.2004 that the Commissioner of Income Tax (Appeal) had passed an order on 13.3.2003 revising his tax liability to Rs. 39,50,865/- only out of which he had paid Rs. 8,08,996/- leaving a balance liability of Rs. 31,41,869/-. Another sum of Rs. 2,50,000/- was paid by him later further reducing the balance to Rs. 28,91,869/-. He also informed that for further relief, he filed an appeal before the Income Tax Appellate Tribunal at Guwahati, which was pending and that he filed Anr. appeal to the Income Commissioner (Appeal), Shillong against the penalty of Rs 90,00,000/ - imposed before revised assessment of tax. It was specifically mentioned in the said letter that on 15.9.2004 and 19.10.2004 hearing by the Income Tax Commissioner (Appeal) was concluded and he was waiting for the judgment. appeal to the Income Commissioner (Appeal), Shillong against the penalty of Rs 90,00,000/ - imposed before revised assessment of tax. It was specifically mentioned in the said letter that on 15.9.2004 and 19.10.2004 hearing by the Income Tax Commissioner (Appeal) was concluded and he was waiting for the judgment. As regards the attachment notice under Section 226(3) of the Act, the Petitioner clarified that the Income Tax Authority, Silchar by subsequent communication dated 8.10.2004 had kept in abeyance the said notice. On 27.12.2004, the Assistant Commissioner of Income Tax addressed a letter to the District Manager of the Respondent Corporation with request to allow the Petitioner any kind of work and also make payment to him unless the Income Tax Authority specifically requests to stop payment. But on 26.3.2005 the Respondent Corporation again asked the Petitioner to clarify some more points on his profit and loss statement as on 31.3.2004, attachment notice under Section 226(3) of the Act dated 16.8.2004 of the Income Tax Authority regarding arrear income tax liability of Rs. 1,20,41,869/- and the balance sheet of the financial year 2003-04. On 1.4.2005 the Petitioner in his letter addressed to the Senior Regional Manager of the Respondent Corporation clarified those points unsuccessfully followed by the communication from the corporation to him cancelling the acceptance of the tender after reassessment of his financial standing in consideration of his income tax liability of rupees 1.2. crore as per notice under Section226(3) of the Act. 2. The said order of cancellation dated 6.5.2005 was put under challenge in W.P. (C) No. 198 of 2005 and this Court (T. Vaiphei, J) on 14.9.2005 held that the impugned letter did not suffer from any illegality or procedural impropriety or irrationality. This decision about the impugned letter has been taken by this Court after detailed discussion on the specific queries raised by the Respondent No. 3 in his letter dated 26.3.2005 and the reply of the Petitioner dated 1.4.2005 backed by following observations: This cannot be an answer to the queries raised by the Respondent No. 3 in the aforesaid letter. On the contrary, this reply is contrary to or inconsistent with his explanation given in his letter dated 25.10.04. By this letter, the Petitioner has not even denied that the liability of the Income Tax arrear outstanding against him is Rs. 1.18 crore. On the contrary, this reply is contrary to or inconsistent with his explanation given in his letter dated 25.10.04. By this letter, the Petitioner has not even denied that the liability of the Income Tax arrear outstanding against him is Rs. 1.18 crore. He does not even mention that following his appeal before the Commissioner of Income Tax (Appeal, Shillong), income tax arrear outstanding against him have been reduced from Rs. 1,20,41,869.00 to Rs. 31,41,869.00. Under the circumstances, I am of the considered view that no materials were shown by the Petitioner to the Respondent No. 3 to persuade him to come to the conclusion that the Income Tax arrear outstanding against him is not Rs. 1,20,41,869.00 or Rs. 1.18 crore, but Rs. 31,41,869.00. The view taken by the Respondent No. 3 in the impugned decision is on the basis of the information furnished to him by the income tax authority and the advise apparently received by him and according to his perspectives and calculations. The Respondent No. 3 cannot then be accused of not taking into account relevant materials or of taking into account irrelevant consideration in taking the decision to cancel the appoint of the Petitioner as the Transport Contractor for the transportation works given in the NIT. But after holding that the impugned letter of cancellation dated 6.5.2005 suffered from no illegality or procedural impropriety or irrationality, this Court finally gave following directions: 1. The Respondents, particularly, the Respondent No. 3, shall allow the Petitioner to produce additional materials to substantiate his claim that his income tax arrears are not more than Rs. 31,41,869/- as on 26.3.2005. 2. Such additional materials/evidence shall be produced by the Petitioner before the Respondent No. 3 within 10 days of the receipt of this judgment. 3. If such materials/evidence are produced within 10 days as aforesaid, the Respondent No. 3 shall consider the impugned decision in accordance with law and take a fresh decision thereon by passing a speaking order within twenty days of the receipt of such said materials/evidence and 4. Pending such decision, the interim order dated 30.5.05 shall continue. 3. If such materials/evidence are produced within 10 days as aforesaid, the Respondent No. 3 shall consider the impugned decision in accordance with law and take a fresh decision thereon by passing a speaking order within twenty days of the receipt of such said materials/evidence and 4. Pending such decision, the interim order dated 30.5.05 shall continue. In continuation, further direction recorded therein is that reconsideration by the Respondent No. 3 after receipt of the additional materials as noted above, should be keeping in mind the value of the work order and the security deposit of the Petitioner in para 10 of the judgment, it has been observed: If the Income tax arrears of the Petitioner actually turns out to be Rs. 31,41,869/- or less as on 26.3.2005 and not Rs. 1.18 crore, as believed by the Respondent No. 3, keeping in mind the value of the work order and the security deposit of the Petitioner, it will be quite irrational on the part of the former to conclude that the Petitioner is financially not sound enough to execute the transportation contract in question to the satisfaction of the Corporation. In order to emphasise the settled legal principle that every decision of the State or its instrumentality must be informed by reasons, fairness and non-arbitrariness, the Respondents have been reminded in the following words: Non-arbitrariness or high-handedness are antithesis to the principles of administrative law. Hyper-technical or undue rigidity in approach must be avoided by public authorities in this era of liberalization and transparency. 3. Following the directions of this Court noted above, the Petitioner herein submitted a representation on 20.9.2005 with additional materials explaining that by assessment order dated 10.9.2003 of the Income Tax authority his tax liability came down to Rs. 31,41,869/- only, copy of which was enclosed therewith. A second representation was made on 1.12.2005 by the Petitioner when there was no response to the first one and then finally the Respondent Corporation informed the Petitioner by letter dated 5.12.2005 that a speaking order in pursuance to the direction of this Court was passed by the Senior Regional Manager on 17.10.2005, copy of which was enclosed with that communication. The relevant part of the said speaking order shows that the income tax liability of the Petitioner as on 26.3.2005 was only Rs. The relevant part of the said speaking order shows that the income tax liability of the Petitioner as on 26.3.2005 was only Rs. 26,82,668/-, but the penalty as on that date was rupees 90 lakh making the total liability to Rs. 1,16,82,668/-. The relevant part of the said order is quoted below: (IV) From the additional materials/evidences furnished, it transpires that the Income Tax arrears of the Petitioner as on 26.3.05 is to the tune of Rs. 1,16,82,668/- which is as under: i) Balance payable as per I/I Deptt. Communication Dtd. 22.9.05 ….. Rs. 31,41,869/- ii) Payments paid upto 26.3.05 as per I.T.O. dtd. 22.9.05 ……. (-) Rs. 4,59,201/- iii) Balance I.T. as on 26.3.05 …… -Add- Rs. 26,82,668/- iv) penalty as on 26.3.05 …… (+) 90,00,000/- v) Total arrear/liability As on 26.3.05. Rs. 1,16,82,668/- This order dated 17.10.2005, which has been communicated to the Petitioner on 5.12.2005 is under challenge in the present writ petition. 4. I have heard Mr. B. R. Bhattacharjee, learned senior counsel, assisted by Mr. Somik Deb, learned Counsel for the Petitioner and Mr. D. K. Biswas, learned Counsel for the Respondent. 5. The submission advanced by Mr. B. R. Bhattacharjee, learned senior counsel for the Petitioner is that the income tax clearance is admittedly not a legal requirement while filing a tender for the purpose of obtaining commercial contract as decided by the Govt. of India in the Ministry of Finance and Company Affairs communicated to all the Chief Commissioners of Income Tax and Director Generals of Income Tax by letter dated 13.2.2003. He, however, did not dispute that a huge income tax liability may constitute an important factor in considering and assessing the financial standing of a carrying contractor. As after consideration of the additional materials the Respondent Corporation has found that the tax liability of the Petitioner as on 26.3.2005 stood at Rs. 26,82,668/- only, the penalty of Rs. 90,00,000/-, which cannot be legally said to be a tax liability, should not have weighed in consideration and assessment by the Respondent corporation while passing the impugned order. In support of this submission, Mr. Bhattacharjee has placed reliance on Section 221 of the Act, which provides as follows: 221. 26,82,668/- only, the penalty of Rs. 90,00,000/-, which cannot be legally said to be a tax liability, should not have weighed in consideration and assessment by the Respondent corporation while passing the impugned order. In support of this submission, Mr. Bhattacharjee has placed reliance on Section 221 of the Act, which provides as follows: 221. [(1) When an Assessee is in default or is deemed to be in default making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under Sub-section (2) of Section 220, be liable, by way of penalty, to pay such amount as the [Assessing] officer may direct, and in the case of a continuing default, such further amount or amounts as the [Assessing] Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears; Provided that before levying any such penalty, the assessed shall be given a reasonable opportunity of being heard; [Provided further that where the Assessee proves to the satisfaction of the [Assessing] Officer that the default was for good and sufficient reasons, no penalty shall be levied under this Section.] [Explanation: For the removal of doubt, it is hereby declared that an Assessee shall not cease to be liable to any penalty under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax.] (2) Where as a result of any final order the amount of tax, with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty levied shall be cancelled and the amount of penalty paid shall be refunded. 6. Controverting this submission of Mr. Bhattacharjee, Mr. D. K. Biswas, learned Counsel for the Respondent Corporation submits that even if for argument's sake it is admitted that the penalty cannot be included into the tax liability in terms of Section 221 of the Act, the fact remains that the total financial liability of the Petitioner comprising tax and penalty amounts to more than rupees one crore, which is certainly an important factor for the Respondent Corporation to consider whether financial standing of the Petitioner is sound enough to undertake the contract work. Such a consideration as to whether the Petitioner is financially sound to undertake the contract work falls within the exclusive realm of the Respondent Corporation, which cannot be brought under the judicial review. 7. Be that as it may, it may be noticed that the Assistant Commissioner of Income Tax, Silchar made an order on 16.9.2005 regarding the penalty of Rs. 90,00,000/-, which was brought down to Rs. 30,00,000/- only under Section 251 / 158BFA(2) of the Act (Annexure-20 to the writ petition). It would appear therefrom that the original assessment of the Petitioner was completed on 31.1.2002 determining undisclosed income of Rs. 1,49,08,641/- and a penalty order was passed on 23.7.2002 imposing a penalty of Rs. 90,00,000/-. Being aggrieved, the asses-see preferred appeal against the said assessment order. The appeal was allowed and the original assessment order was revised on 10.9.2003 computing a revised undisclosed income to Rs. 53,97,356/- in the light of the order passed by the appellate authority on 13.3.2003. After that order revising the tax liability, the question of reducing the penalty came to be decided in view of the provision of Section 221 of the Act, which provides that the total amount of penalty shall not exceed the amount of tax in arrear. In the said letter, it has been observed that since the total income of the Assessee had undergone a change, he was entitled to get relief on quantum of penalty. Accordingly, a penalty of Rs. 30,00,000/- only was imposed. It would thus appear that when by order dated 13.3.2003 the undisclosed income was revised to Rs. 53,97,356/-, the tax liability was fixed at Rs. 31,41,869/- only as shown in the order impugned herein. After deducting the amount paid the balance liability came down to Rs. 26,82,668/-. As the reduced penalty is only Rs. 30,00,000/-, the total liability an on 22.9.2005 came to Rs. 61,41,869/- only. Therefore, the impugned order showing tax liability of Rs. 90,00,000/- is apparently erroneous and shows non-application of mind on the part of the Respondent Corporation. 8. As already noted above, this Court has already held that if the income tax arrears of the Petitioner actually comes down to be Rs. 31,41,869/-, it would be quite irrational on the part of the Respondent Corporation to conclude that Petitioner is financially not sound enough to undertake the transportation contract. 8. As already noted above, this Court has already held that if the income tax arrears of the Petitioner actually comes down to be Rs. 31,41,869/-, it would be quite irrational on the part of the Respondent Corporation to conclude that Petitioner is financially not sound enough to undertake the transportation contract. That apart, a further submission has been made on behalf of the Petitioner that a sum of Rs. 62,76,500/- of the Petitioner is lying with the Respondent Corporation being security money in connection with various contract works, which is more than the liability of the Petitioner towards income tax and penalty and, therefore, there cannot be any good reason for the Respondent corporation to take a view that the Petitioner is not financially sound enough to undertake transportation works. 9. The final submission made on behalf of the Petitioner is that the carrying contract was only for two years and during this long legal battle about one and half years have already elapsed. If the work order is now issued by the Respondent corporation, the Petitioner would get the benefit of this contract business only for few months and if the financial standing of the Petitioner for carrying reduced volume of work for few months is considered keeping in mind his liability towards income tax as well as the security amount lying with the Respondent corporation, the impugned decision cannot be said to be informed by good reasons and fairness. 10. From the above discussions, it would be apparent that as back as on 13.3.2003 the undisclosed income of the Petitioner was drastically reduced to Rs. 53,97,356/- on which tax liability was passed to Rs. 31,41,869/- only and this document was made available to the Respondent corporation by the Petitioner herein as noted above. Thus after the additional materials made available following the order of this Court, the Senior Regional Manager of the Corporation had no reason to hold that the penalty remained at Rs. 90,00,000/-, which is contrary to Section 221 of the Act. It is not in dispute the Petitioner was selected as one of the carrying contractors after he was found competent in all respect except the income tax notice, which acted as the only spanner. 90,00,000/-, which is contrary to Section 221 of the Act. It is not in dispute the Petitioner was selected as one of the carrying contractors after he was found competent in all respect except the income tax notice, which acted as the only spanner. It is apparent from the stand of the Respondents that but for this spoiler they were always willing to issue the work order to the Petitioner in whose credit they had issued several certificate of good performances. In such a position it remains non-apparent why the order dated 13.3.2003 of the Income Tax authority reducing the tax liability to Rs. 31,41,869/- only and corresponding reduction of penalty by operation of Section221 of the Act or why the communication dated 8.10.2004 of the Income Tax Authority keeping in abeyance their notice dated 16.8.2004 under Section 226(3) of the said Act received no consideration from the Respondents. It stands to no reason why in the face of all such materials they remained stuck to their gun. The impugned order thus suffers from the vice of non-application of mind while making fresh assessment on the basis of the additional materials placed before the corporation. 11. For the above reasons, the impugned order of the Respondent corporation dated 17.10.2005 communicated to the Petitioner on 5.12.2005 is unsustainable in law and, therefore, the same is quashed. As the Petitioner has been found by the Respondent corporation to be suitable in all other aspects for offering the tender work except the income tax liability, which has been wrongly construed and misapplied, it is hereby provided that the Respondent corporation shall issue work order forthwith in favour of the Petitioner, not later than ten days from the date of passing of this judgment in order to enable him to do some part of the carrying contract and derive some benefits therefrom, which he is legally entitled to. 12. With the above observations and directions, this writ petition is allowed. Having regard to the facts and circumstances of the case, there shall be no order as to cost. Petition allowed