COMMISSIONER OF INCOME-TAX V. KASHIRAM TEXTILE MILLS P. LTD.

ITR/53/1987

AI Insights

The case involves a reference by the Income Tax Appellate Tribunal to the High Court of Gujarat concerning the legality of penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961, following directions issued by the IAC under section 144-A. The Tribunal had previously held that the IAC was not justified in issuing these directions, which led to the initiation of penalty proceedings. The High Court had earlier decided in ITR No. 66/84 that the IAC was empowered to issue directions under section 144-A, but the Tribunal had not resolved the appeal on merits despite this decision. The High Court, therefore, did not answer the current reference and directed the Tribunal to decide the appeal expeditiously.

• Counselvise Citation: [2001] 140 COUNSELVISE.COM (IT) 677957 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 27-07-2001
• Assessment Year: misc
• Other Referred Cases: ITR No. 66/84
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R K PATEL
• Assessee Lawyers: B B NAIK; MANISH BHATT
• Keywords: Directions; Income Tax; Penalty; Reference; Tribunal; IAC
• Section: 271(1)(c); 256(1); 144 A

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 53 of 1987 For Approval and Signature: Hon'ble MR.JUSTICE A.R.DAVE and Hon'ble MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO @ COMMISSIONER OF INCOME-TAX Versus KASHIRAM TEXTILE MILLS P. LTD. -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 53 of 1987 MR BB NAIK for MR MANISH R BHATT for Petitioner No. 1 MR RK PATEL for the Respodnent 1 -------------------------------------------------------------- CORAM : MR.JUSTICE A.R.DAVE and MR.JUSTICE D.A.MEHTA Date of decision: 27/07/2001 ORAL JUDGEMENT (Per : MR.JUSTICE A.R.DAVE) At the instance of the revenue, the following question of law has been referred to this Court for its opinion by the Income Tax Appellate Tribunal, Ahmedabad Bench 'B' under the provisions of sec. 256(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). \"Whether, in law and on facts, the Tribunal was right in holding that since the IAC was not justified in issuing the directions u/s 144-A of the I.T. Act, 1961 the penalty u/s 271(1)(c) of the I.T. Act, 1961 cannot be sustained?\" 2. Learned advocate Shri B.B. Naik has appeared for the revenue whereas learned advocate Shri R.K. Patel has appeared for the respondent assessee. 3. looking to the facts of the case, it is necessary to narrate history with regard to the case also. 4. Under the provisions of sec. 144-A of the Act, the IAC had exercised his power and thereafter penalty proceedings under sec. 271(1)(c) of the Act had been initiated. In the present reference, this Court has to examine whether the penalty proceedings under the provisions of sec. 271(1)(c) can be sustained. 5. Before dealing with the above-referred reference, it is pertinent to note that I.T.R. No. 66/84 was filed in this Court at the instance of the revenue. In the said reference, the following question was referred to this Court as question No. 1. \"Whether, on the facts and circumstances of the case the Tribunal was right in law in holding that the IAC cannot issue directions u/s 144-A during the pendency of a reference before him u/s 144-B(4)?\" 6. So far as ITR No. 66/84 is concerned, this Court decided the said reference on 18th July 1995 and opined that the IAC was empowered to issue directions under sec. 144-A of the Act. Thus, the said question was answered in favour of the revenue and against the assessee. While deciding the reference, this Court also directed the Tribunal to decide the appeal on merit as the appeal had not been decided in view of the fact that there was a doubt whether the IAC could have issued directions under sec. 144-A of the Act. 7. We have been informed by the learned advocates that inspite of the direction given by this Court on 18th July 1995 in ITR No. 66/84, the Tribunal has not decided the appeal pending before it on merits. 8. Now, as already stated hereinabove, it has been held that the IAC was empowered to issue directions under sec. 144-A of the Act, the Tribunal will have to examine validity of the directions given by the IAC or in other words, the appeal will have to be decided on merits; and thereafter, the Tribunal will have to examine whether the penalty proceedings initiated by the I.T.O. under the provisions of sec. 271(1)(c) of the Act are legal and proper, and also decide the appeal in penalty proceedings on merits. 9. As we have been informed that till today the Tribunal has not given effect to the order passed in ITR No. 66/84, in our opinion, it would not be possible to answer the question which has been referred to us in the present reference. 10. In the circumstances, we decline to answer the question and direct the Tribunal to take appropriate decision in pursuance of the directions given by this Court in ITR No. 66/84 as expeditiously as possible. The reference thus stands disposed of accordingly with no order as to costs. (A.R. Dave, J.) (D.A. Mehta, J.) (hn) "