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Commissioner of Income-tax Vs. Jagadhri Electric Supply and Industrial Co. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Case No. 43 of 1976
Judge
Reported in[1983]140ITR504(P& H)
ActsIncome Tax Act, 1961 - Sections 263 and 263(1)
AppellantCommissioner of Income-tax
RespondentJagadhri Electric Supply and Industrial Co.
Excerpt:
- sections 80 (2) & 89 & punjab motor vehicles rules, 1989, rules 85 & 80: [t.s. thakur, cj, jasbir singh & surya kant, jj] appeal against orders of state or regional transport authority imitation held, a stipulation regarding the period of limitation available for invoking the remedy shall have to be strictly construed. that is because any provision by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply..........are unable to agree with this contention of the learned counsel. it is a different matter that the question referred to this court is ultimately answered in favour of the assessee and it is found that the principles of natural justice were violated, but it is difficult to hold that in every case the question of violation of the principles of natural justice is a question of fact. keeping in view the facts and circumstances of this case, we find that the application of the principles of natural justice do raise a question of law. in this view of the matter, we are of the opinion that question no. (1) in both the mandamus petitions is a question of law which should have been referred by the tribunal for the opinion of this court and we direct the tribunal to do so.6. as regards question.....
Judgment:

Dhillon, J.

1. The assessment year is 1966-67. The assessee-firm derived income from supply of electricity to the town of Jagadhri, known as Yamunanagar. The ITO assessed the compensation received in the different years. The ITO granted continuation of registration and in doing so, he failed to notice that the share allocation amongst the partners was made in contravention of the clauses of the partnership deed, for, even losses were allocated amongst the minors as per the profit and loss appropriation account.

2. Since both the actions of the ITO were erroneous and prejudicial to the interests of the Revenue, a notice under Section 263 of the I.T. Act, 1961 (hereinafter referred to as 'the Act'), was issued to the assessee by the Addl. Commissioner in order to assess the entire compensation in one year, as also to cancel registration. After giving the assessee an opportunity of being heard, the Addl. Commissioner by his order under Section 263 of the Act dated October 13, 1972, set aside the assessment made by the ITO and directed him to do it afresh. By a separate order under Section 263 of the Act on the same day, continuation of registration allowed to the assessee-firm was also cancelled.

3. Against the order of the Addl. Commissioner the assessee preferred an appeal to the Appellate Tribunal. The Appellate Tribunal set aside both orders of the Addl. Commissioner. While passing the said order, the Tribunal observed that the order of the Addl. Commissioner was vitiated for violation of the principles of natural justice. The Tribunal found that the assessee's written application made on October 13, 1972, for adjournment had been rejected by the Addl. Commissioner. However, according to the Revenue, this finding of the Tribunal is not correct as the principles of natural justice have not been violated.

4. At the instance of the Revenue and so also of the assessee in the matter of cancellation of registration and so also in the matter of quantum of assessment, various questions of law have been referred to this court for its opinion, which are the subject-matter of Income-tax Reference No. 14 of 1976 and Income-tax References Nos. 66 and 67 of 1975 [CIT v. Jagadhri Electric Supply & Industrial Co.--see p. 490 supra)]. At the instance of the Revenue, the Tribunal refused to refer the question of law which, according to the Revenue, arose as far as the quantum matter is concerned and in the registration matter, the Tribunal refused to refer one of the questions. In these two petitions, i.e., Income-tax Cases Nos. 43 and 44 of 1976, the Revenue has prayed that the Tribunal be directed to refer the following questions of law to this court for its opinion :

I. T. Case No. 43 of 1975 :

(1) Whether, on the facts and in the circumstances of the case, considering that the assessee had submitted his detailed written objections and had also been given personal hearing through its partner and the express provisions of Section 263(1) of the Income-tax Act, the Appellate Tribunal was right in law in holding that the principles of natural justice had been violated by the Additional Commissioner of Income-tax in not granting an adjournment of the hearing ?

(2) If the answer to question No. (1) is in the affirmative whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in not remanding the case to the Commissioner for deciding the matter afresh after giving the assessee sufficient opportunity of being heard and/or with such other directions as it thought fit to give ?'

I. T. Case No. 44 of 1976 :

'(1) Whether, on the facts and in the circumstances of the case, considering that the assessee had submitted his detailed written objections and had also been given personal hearing through its partner and the express provisions of Section 263(1) of the Income-tax Act, the Appellate Tribunal was right in law in holding that the principles of natural justice had been violated by the Additional Commissioner of Income-tax in not granting an adjournment of the hearing ?'

(2) If the answer to question No. (1) is in the affirmative, whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in not remanding the case to the Commissioner for deciding the matter afresh after giving the assessee sufficient opportunity of being heard and/or with such other directions as it thought fit to give ?'

5. After hearing the learned counsel for the parties and taking into consideration the facts and circumstances of the case, we are of the opinion that the questions of law sought to be referred at the instance of the Revenue in these two mandamus petitions do arise for being referred to this court for its opinion. As far as the first question in both the mandamus petitions is concerned, it involves the question whether the principles of natural justice were violated by the Addl. Commissioner by passing the order. Mr. Ashok Bhan, the learned counsel for the assessee, contends that the question whether the principles of natural justice have been violated in a given case, is essentially a question of fact, which was determined by the Tribunal. We are unable to agree with this contention of the learned counsel. It is a different matter that the question referred to this court is ultimately answered in favour of the assessee and it is found that the principles of natural justice were violated, but it is difficult to hold that in every case the question of violation of the principles of natural justice is a question of fact. Keeping in view the facts and circumstances of this case, we find that the application of the principles of natural justice do raise a question of law. In this view of the matter, we are of the opinion that question No. (1) in both the mandamus petitions is a question of law which should have been referred by the Tribunal for the opinion of this court and we direct the Tribunal to do so.

6. As regards question No. (2) this question in a modified form as question No. (1) has already been referred for the opinion of this court in Income-tax References Nos. 66 & 67 of 1975 [CIT v. Jagadhri Electric Supply & Industrial Co. (see p. 490 supra)], but in the other connected reference, i.e., Income-tax Reference No. 14 of 1976, the Tribunal refused to refer this question for the opinion of this court. As to whether the Appellate Tribunal was justified in law in not remanding the case to the Commissioner for deciding the matter afresh after giving the assessee sufficient opportunity of being heard, is essentially a question of law and it is for this reason that this question of law has been referred to this court for its opinion though in a modified form in I.T.R. Nos. 66 67 of 1975. We do not find any reason not to ask the Tribunal to refer this question of law for the opinion of this court in I.T. Ref. No. 14 of 1976, especially when the same question in a little modified form has been referred for the opinion of this court in the connected reference.

7. For the reasons recorded above, we direct that this question of law be also referred for the opinion of this court in both, the cases and the modified question of law (No. 1) on this aspect of the matter, which has been referred for the opinion of this court in Income-tax References Nos. 66 and 67 of 1975, be deleted. We order accordingly. The supplementary statement of the case may be submitted by the Tribunal to this court within two months and all the cases may then be put up for hearing. Civil Writ Petition No. 1036 of 1977, be also listed along with these cases. There shall be no order as to costs.


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