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Commissioner of Income-tax Vs. Highway Construction Co. (P.) - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Kolkata
Decided On
Judge
Reported in(1986)15ITD66(Kol.)
AppellantCommissioner of Income-tax
RespondentHighway Construction Co. (P.)
Excerpt:
.....assessee. it has been directed to the ito that the matter should be decided in view of the special bench decision. the matter was kept open for the assessee as well as for the department. under the above circumstances, the finding of the tribunal did not give rise to any question of law nor it put any fetter on the assessing officer. once an issue is set aside to the file of the ito for reconsideration afresh, the conclusion does not give rise to any question of law [see cit v.warner hindustan ltd. [1984] 145 itr 24 (ap)].3. the facts relating to the first question are that the assessee and the department being aggrieved by the order of the aac came up before the tribunal. the appeal of the department in income-tax appeal no. 12 (gauhati) of 1979 was disposed of on 5-9-1980. the.....
Judgment:
1. By this application under Section 256(1) of the Income Act, 1961 ('the Act'), the Commissioner, Shillong, requires the Tribunal to refer the following questions, said to be questions of law, arising out of the order of the Tribunal in Income-tax Appeal No. 296 (Gauhati) of 1979 dated 9-5-1983, to the Hon'ble Gauhati High Court: 1. Whether, on the facts and in the circumstances of the case, the Tribunal, after setting aside the assessment for assessment year 1975-76 by its order dated 5-9-1980 in Income-tax Appeal No. 12 (Gauhati) of 1979 on departmental appeal, was justified in taking up the case again, on assessee's appeal against the same assessment, and in passing orders thereon again in Income-tax Appeal No. 296 (Gauhati) of 1979 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that it has got no option but to follow the decision of the High Court if no contrary decision is available 3. Whether, on the facts and in the circumstances of the case, the Special Bench of the Tribunal, which was constituted for deciding only the validity of the assessment, was justified in deciding the other issues also, raised by the assessee Subsequently, an additional question of law had been filed. The additional question of law is as hereunder: Whether, on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the order relating to the assessee's claim for treating it as industrial company for redeciding the same in the light of the decision of the Hon'ble Tribunal (Special Bench), Delhi in the case of Hydel Construction (P.) Ltd., which was not available at the time of deciding the present appeal by the Tribunal and thereby putting a fetter on the assessing officer ?" 2. The assessee is a civil contractor and is engaged in the business of builders, masonry and general construction works. The assessee claimed that it was an industrial company. The assessee before the AAC relied in Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd. [1977] 107 ITR 816 (All.) and CIT v. Commercial Laws of India (P.) Ltd. [1977] 107 ITR 822 (Mad.). The AAC did not agree. The Tribunal found that an identical issue was pending before the Special Bench, Delhi, in the case of ITO v. Hydel Construction (P.) Ltd. [IT Appeal Nos. 850, 851, 4152, 1708 and 1712 (Delhi) of 1981]. Having this fact in mind, the Tribunal set aside the order of the AAC on this issue in the following words: In view of the above fact, the orders of the authorities below on this issue are set aside and the matter is referred back to the Income-tax Officer for reconsideration in view of the decision of the Special Bench in the case of Hydel Construction (P.) Ltd. after allowing an opportunity of being heard to the assessee.

The issue has been set aside for reconsideration of the ITO. The ITO has been directed to allow an opportunity of being heard to the assessee. It has been directed to the ITO that the matter should be decided in view of the Special Bench decision. The matter was kept open for the assessee as well as for the department. Under the above circumstances, the finding of the Tribunal did not give rise to any question of law nor it put any fetter on the assessing officer. Once an issue is set aside to the file of the ITO for reconsideration afresh, the conclusion does not give rise to any question of law [see CIT v.Warner Hindustan Ltd. [1984] 145 ITR 24 (AP)].

3. The facts relating to the first question are that the assessee and the department being aggrieved by the order of the AAC came up before the Tribunal. The appeal of the department in Income-tax Appeal No. 12 (Gauhati) of 1979 was disposed of on 5-9-1980. The reference filed in this connection was also rejected under Reference Appeal No. 113 (Gauhati) of 1980 dated 26-5-1981. The assessee's appeal was taken subsequently by the Bench and as conflicting views were taken, the matter was referred for constituting a Special Bench to the President.

The President constituted a Special Bench. However, an objection was taken that once the departmental appeal has been disposed of, the assessee's appeal cannot be taken up. This was objected to by the assessee's counsel on the ground that the assessee has an inherent right to appeal if the assessee is aggrieved by the order of the appellate authority. Both the parties relied on a number of decisions.

The Tribunal considered the arguments of the parties in its order in paragraphs 6 to 9 and did not agree with the department.

4. The department has sought to refer question No. 1 as arising out of the finding of the Tribunal. The assessee and the department filed two separate appeals. The appeal of the department was disposed of by the Tribunal without considering the objection of the assessee in its grounds of appeal. The Tribunal considered the provisions of Sections 253 and 254 of the Act and the decision in CIT v. Walchancl & Co. (P.) Ltd. [1967] 65 ITR 381 (SC) and came to the conclusion that the Tribunal was right in entertaining the appeal of the assessee. Once there is an appeal by the assessee, the appeal of the assessee cannot be ignored only on the ground that the departmental appeal has been disposed of. The right of appeal to the department and to the assessee is available separately. Therefore, the reference of the question as suggested by the department is only of the academic nature and, hence, the same is not referred for the opinion of the Hon'ble High Court.

5. The facts relating to the second question are that the ITO passed the assessment order under Section 143(3) of the Act on 30-3-1978. The assessee claimed that according to Section 143(3)(a), it was the duty of the ITO to compute the total income or loss of the assessee in the assessment and he should have determined the sum payable by the assessee or refundable to it on the basis of such assessment. According to the assessee, as the sum refundable or payable by the assessee was not determined by the ITO, the assessment completed on 30-3-1978, was invalid. The assessee relied on S. Mubarik Shah Naqshbandi v. CIT [1977] 110 ITR 217 (J & K). It was also indicated by the assessee, inter alia, that no contrary decision of any other High Court is available and, therefore, the decision in S. Mubarik Shah Naqshbandi's case (supra) was of a binding nature. The assessee relied on 113 ITR 559 (sic). The departmental representative, on the other hand, relying on the various decisions and referring to the records, urged that the ITO not only computed the total income of the assessee but also determined the sum payable and/or refundable by it and, therefore, the assessment made by the ITO was not invalid.

6. The Tribunal accepted the legal position urged by the assessee that if the assessment has been completed without determining the tax payable and/or refundable by the assessee, the assessment order may be invalid. The conclusion of the Tribunal was based on the decision in S.Mubarik Shah Naqshbandi''s case (supra) and the Tribunal indicated that it was binding upon the Tribunal in view of the decision in 113 ITR 559 (sic). However, the Tribunal considered the case on merit and found that the ITO has determined the tax payable by the assessee and, therefore, it concluded that the assessment made by the ITO was a valid one. This finding on merit has been accepted by the department as well as by the assessee.

7. The Commissioner through question No. 2 has indicated that whether the decision in S. Mubarik Shah NaqshbandVs case (supra) was binding in view of the decision in 113 ITR 559 (sic). Without going into the controversy whether this is a question of law or not the reference of such question is only of academic nature when the finding of the Tribunal on merit is in favour of the department and against the assessee. Moreover, the finiding of the Tribunal on merit that the assessment made by the ITO is a valid one, had been accepted not only by the department but also by the assessee. Under the circumstances, the reference of such question is of academic nature and, hence, the same is not referred to the Hon'ble High Court.

8. The facts relating to the third question are that a Special Bench was constituted to conclude whether an assessment without determining the tax payable and/or refundable is a valid or invalid one. The Special Bench while taking this ground of the assessee has also decided the other grounds. The Commissioner through the third question has indicated that the Special Bench would have only decided the issue for which the Special Bench was constituted and not the other issues which were arising out of the order of the Tribunal. The Tribunal as constituted by the President, may hear the appeal of the assessee or the department. The Special Bench was constituted no doubt on a particular issue, but the appeal of the assessee was before the Bench and a larger Bench was competent to hear the appeal of the assessee. If the larger Bench has heard all the grounds of the assessee, possibly there could not by any objection either by the assessee or by the department. Moreover, whether the appeal should be heard by Division Bench or a larger Bench is not a question of law. Therefore, even question No. 3 cannot be referred for the opinion of the Hon'ble High Court.

1. I join with my learned brothers in refusing to refer question Nos. 1 to 3 for the reasons given by them. The same is, however, not the position in respect of additional question raised by the revenue. It is, in my opinion, a question of law and should, therefore, be referred for the opinion of the Hon'ble High Court My reasons for holding so are as follows: 1. The decision of the Delhi Special Bench in Hydel Construction (P.) Ltd. (supra) had not been given when the present order was passed. The reasoning of the said case and its conclusion were, therefore, unknown. Could a case be decided in this manner by the Tribunal is, in my opinion, a question of law 2. The direction of the Tribunal, in my opi nion, obliges the ITO to follow the ratio of the above case, whatever it be, and whenever it may come. The assessee does have a chance of hearing and may, therefore, resist it, if it does not suit him. The ITO has not been left with such a discretion. He has been directed 'to reconsider the case' not de novo in accordance with law, but 'in view of the decision of the Special Bench in the case of Hydel Construction (P.) Ltd.'. Whether such a direction by which the ITO is bound but not the assessee, is correct is, in my opinion, a question of law.

3. Then, against the aforesaid decision in Hydel Construction (P.) Ltd.'s case (supra) a reference has already been allowed by the Delhi Bench to the Hon'ble Delhi High Court. A reference should, therefore, be allowed here also, more particularly, when the ITO is being directed to reconsider the matter 'in view of the decision of the Special Bench in case of Hydel Construction (P.) Ltd.'.


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