M/s Gilco Exports Ltd., Chandigarh V. ACIT, C-2(1), Chandigarh

ITA 1244/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6705 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Capital expenditure; Set aside
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A CHANDIGARH !, ' # , $ % & ' ( , )* # BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NO. 1244/CHD/2018 / ASSESSMENT YEAR : 2013-14 M/S GILCO EXPORTS LTD., SCO NO. 91, IST FLOOR, INDL. AREA, PHASE-II, CHANDIGARH. VS THE ACIT, CIRCLE 2(1), CHANDIGARH. ./ PAN /TAN NO: AABCG6774B / APPELLANT / RESPONDENT ! / ASSESSEE BY : SHRI VINEET KRISHAN ' ! / REVENUE BY : SMT. CHANDER KANTA, SR.DR # $ %/ DATE OF HEARING : 08.07.2019 &'() %/ D ATE OF PRONOUNCEMENT : 31 .07.2019 )-/ ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE WHEREIN THE CORRECTNESS OF THE ORDER DATED 12.07.20 18 OF CIT(A)-4, LUDHIANA PERTAINING TO 2013-14 ASSESSMENT YEARS IS ASSAILED ON THE FOLLOWING GROUNDS : 1. THAT THE ORDER PASSED UNDER SECTION 250(6) BY THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS)-4, LUDHIANA IN APPEAL NO. 2 3/ROT (10277) CHD/ IT/CIT (A)-4/LDH/ 2016-17 DATED 12.07.2018 IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING TH E ACTION OF THE ID. ASSESSING OFFICER WHO HAD MADE ADDITION OF RS. 4,22 ,124/- ON ACCOUNT OF PAYMENT OF EPF AND ESI WAS MADE LATE, THOUGH THE SA ME WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN. ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 2 OF 21 3. THAT THE APPELLANT CRAVES TO ADD, AMEND OR ALTER AN Y GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL, WITH TH E PERMISSION OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH. 2. THE LD. AR MR. VINEET KRISHAN APPEARING ON BEHAL F OF THE ASSESSEE SUBMITTED THAT THE POINT AT ISSUE IS F ULLY COVERED IN FAVOUR OF ASSESSEE BY VIRTUE OF THE ORDE R OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS HEM LA EMBROIDERY MILLS (P) LTD., 2014) 366 ITR 167 (P&H). INVITING ATTENTION TO PAGE 2 AND 3 OF THE ASSESSMENT ORDER I T WAS SUBMITTED THAT THERE IS NO DISPUTE THAT THE PAYMENT S HAVE BEEN MADE LATE IN TERMS OF THE SPECIFIC ACTS, HOWEV ER, THE FACT THAT PAYMENTS HAVE BEEN MADE BEFORE THE DUE DA TE OF FILING OF THE RETURN IS ALSO AN ACCEPTED FACT. IT W AS HIS SUBMISSION THAT THE ITAT CHANDIGARH BENCH IN ITS LA TEST ORDER DATED 29.03.2019 IN ITA 1243/CHD/2018 IN THE CASE OF M/S NEW TIME CONTRACTORS AND BUILDER P.LTD. VS D CIT (COPY FILED) FOLLOWING THE AFORESAID DECISION OF TH E JURISDICTIONAL HIGH COURT GRANTED RELIEF TO THE ASS ESSEE ON IDENTICAL FACTS AND CIRCUMSTANCES. IT WAS HIS SUBM ISSION THAT THERE IS NO CONTRARY DECISION OF THE JURISDICT IONAL HIGH COURT. 3. THE LD. SR.DR MS. CHANDER KANTA INVITING ATTENTI ON TO PARA 4.1 OF THE IMPUGNED ORDER SUBMITTED THAT THE A SSESSEE ADMITTEDLY HAD DEPOSITED AN AMOUNT OF RS. 4,22,124/ - IN EPF AND ESI LATE AND THE AO INVOKING PROVISIONS OF SECTION ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 3 OF 21 36(1)(VA) OF THE ACT MADE AN ADDITION OF THE SAID A MOUNT. RELIANCE WAS PLACED ON THE IMPUGNED ORDER IN SUPPOR T OF THE ARGUMENT THAT THE ASSESSEE'S CLAIM WAS NOT ALLOWABL E IN LAW. REFERENCE WAS MADE TO THE DECISION OF THE GUJRAT HI GH COURT IN THE CASE OF CIT VS GUJRAT STATE ROAD TRANSPORT C ORP. 366 ITR 170 (GUJ) WHICH HAD BEEN RELIED UPON BY THE CIT (A). ACCORDINGLY, RELYING ON THE SAID DECISION, IT WAS H ER SUBMISSION THAT THE ASSESSEE'S APPEAL MAY BE DISMIS SED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY ON FACTS, THERE IS NO DISPUTE THAT AS PER THE REQUIREMENTS OF THE SPEC IFIC ACTS THERE WAS A DELAY IN DEPOSITING THE EMPLOYEES CONT RIBUTION WHICH HAD BEEN COLLECTED BY THE ASSESSEE. THE FACT THAT THE AMOUNTS WERE DEPOSITED BEFORE THE FILING OF THE RET URN IS ALSO AN ADMITTED FACT AND IS NOT IN DISPUTE. THE CIT(A) HAS UPHELD THE ADDITIONS MADE IN THE IMPUGNED ORDER REL YING UPON THE DECISION OF THE GUJRAT HIGH COURT IN THE C ASE OF CIT VS GUJRAT STATE ROAD TRANSPORT CORP. 366 ITR 170 (G UJRAT)) ON WHICH HEAVY RELIANCE HAS BEEN PLACED BY THE REVE NUE. THE ASSESSEE AS NOTED, RELIES ON THE ORDER OF THE C O-ORDINATE BENCH DATED 29.03.2019 IN THE CASE OF NEW TIME CONT RACTORS AND BUILDERS WHERE THE ISSUE WAS DECIDED IN THE FOL LOWING MANNER : ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 4 OF 21 (10) WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CA SE, IT IS AN ADMITTED FACT THAT THERE WAS DELAY IN DEPOSITING THE EMPLOYE ES' CONTRIBUTION OF PROVIDENT FUND AND ESIC. HOWEVER, IT IS ACCEPTED BY THE AO THAT THE DEPOSIT WAS MADE BEFORE FILING OF THE RETURN OF INC OME ON 27.09.2013. (11) ON A SIMILAR ISSUE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HERNIA EMBROYDERY MILLS-(P.) LTD.(S UPRA) HELD AS UNDER: 'THE SECOND PROVISO TO SECTION 43B OF THE INCOME-TA X ACT, 1961, OMITTED BY THE FINANCE ACT, 2003, WITH EFFECT FROM APRIL 1, 2004, WAS CLARIFICATORY IN NATURE AND WAS TO OPERATE RETROSPE CTIVELY. THUS, THE ASSESSEE, FOR THE ASSESSMENT YEAR 2003-04, WAS ENTI TLED TO DEDUCTION IN RESPECT OF THE EMPLOYER'S AND EMPLOYEES' CONTRIBUTI ONS TO THE EMPLOYEES' STATE INSURANCE AND PROVIDENT FUND AS THE CONTRIBUTIONS HAD BEEN DEPOSITED PRIOR TO THE FILING OF THE RETURN UNDER SECTION 139(1).' SO RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY TH E HON'BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID REFERRED TO CASE, THE IMPUGNED ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CI T(A) IS DELETED. (12) IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. 4.1 A PERUSAL OF THE ABOVE ORDER PASSED BY THE CO-O RDINATE BENCH SHOWS THAT ULTIMATELY THE ASSESSEE RELIES ON THE DECISION OF THE JURISDICTIONAL HIGH COURT AS OPPOSE D TO THE DECISION RENDERED BY A NON JURISDICTIONAL HIGH COUR T RELIED UPON BY THE REVENUE. IN ORDER TO PUT THE LEGAL PRIN CIPLES IN PERSPECTIVE, IT WILL NOT BE OUT OF PLACE TO REFER T O THE WELL UNDERSTOOD LEGAL POSITION THAT THE DECISION OF THE APEX COURT IN TERMS OF ARTICLE 141 OF THE CONSTITUTION OF INDI A, NOT ONLY AS A MATTER OF JUDICIAL DISCIPLINE BUT AS A CONSTIT UTIONAL MANDATE IS A BINDING PRECEDENT FOR ALL COURTS AND T RIBUNALS IN THE COUNTRY. THE SAID ARTICLE IN UNAMBIGUOUS TE RMS LAYS DOWN THAT THE LAW DECLARED BY THE SUPREME COURT SHALL BE BINDING ON ALL COURTS WITHIN THE TERRITORY OF INDIA . NO DOUBT THERE IS NO SUCH SIMILAR PROVISION QUA THE HIGH COU RTS, ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 5 OF 21 HOWEVER, THERE CAN BE NO DISPUTE OR CONFUSION ON TH E IMPACT OF ARTICLE 227 OF THE CONSTITUTION WHICH VESTS THE HIGH COURT WITH THE POWER TO SUPERVISE THE FUNCTIONS OF THE TR IBUNALS AND AUTHORITIES WITHIN ITS TERRITORIAL JURISDICTION . THE IMPORT AND IMPACT OF THE SAID ARTICLE HAS BEEN ADDRESSED O VER THE YEARS IN MANY LANDMARK DECISIONS. THUS, TO OUR UNDERSTANDING WE BELIEVE THAT IT IS WELL UNDERSTOOD AND ACCEPTED THAT FOR ANY AUTHORITY WITHIN ITS TERRITOR IAL JURISDICTION SUBJECTED TO ITS SUPERINTENDENCE, THE DECISION RENDERED BY THE HIGH COURT IS A BINDING PRECEDENT T O BE FOLLOWED. THE SAID PRINCIPLE, WE FIND LOOKING AT T HE DECISION ARRIVED AT IN THE IMPUGNED ORDER PERHAPS NEEDS TO B E ADDRESSED AND RE-ITERATED AGAIN. REFERENCE IN THIS CONTEXT MAY BE MADE TO THE DECISION RENDERED BY THE APEX CO URT IN THE CASE OF EAST INDIA COMMERCIAL CO. LTD. V COLLECTOR OF CUSTOMS, AIR 1962 (S.C) 1893 WHERE IT WAS HELD AS FAR BACK AS IN 1962 ' THAT THE LAW DECLARED BY THE HIGHEST COURT IN THE STATE IS BINDING ON AUTHORITIES OR TRIBUNALS UNDER ITS SUPERINTENDENCE AND THEY CANNOT IGNORE IT.' FOR ADDRESSING THE POSITION OF THE HIGH COURT, REFERENCE MAY BE MA DE TO THE DECISION OF THE APEX COURT IN THE CASE OF BARADAKANTA MISHRA V. BHIMSEN DIXIT AIR 1972 SC 2466 WHEREIN THE COURT HELD THAT IT WOULD BE ANOMALOUS TO SUGGEST THAT A TRIBUNAL OVER WHICH A HIGH COURT HAS SUPERINTENDENCE CAN IGNORE T HE LAW ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 6 OF 21 DECLARED BY IT AND IF A TRIBUNAL CAN DO SO, ALL THE SUBORDINATE COURTS CAN EQUALLY DO SO, FOR THERE IS NO SPECIFIC PROVISION AS IN RESPECT OF SUPREME COURT, MAKING THE LAW DECLARE D BY THE HIGH COURT BINDING ON SUBORDINATE COURTS. THE COURT FURTHER OBSERVED THAT IT IS IMPLICIT IN THE POWER OF SUPERV ISION CONFERRED ON A SUPERIOR TRIBUNAL THAT ALL THE TRIBU NALS SUBJECT TO ITS SUPERVISION SHOULD CONFIRM TO THE LAW LAID D OWN BY IT. IF THE TRIBUNALS DEFY THEIR JURISDICTIONAL HIGH COURT, THERE WOULD BE CONFUSION IN THE ADMINISTRATION OF LAW . AT THIS POINT, WE MAY ALSO REFER TO THE DECISION OF THE ALLAHABAD HIG H COURT IN K. N. AGARWAL V. CIT [1991] 189 ITR 769 WHEREIN THE COURT FELT THE NEED TO ADDRESS THE IMPORT AND NECESSITY F OR THE ASSESSING OFFICERS TO FOLLOW THE JUDGEMENTS OF THE COURT, IT WAS OBSERVED- 'INDEED, THE ORDERS OF THE TRIBUNAL AND THE HIGH COURT ARE BINDING UPON THE ASSESSING OFFICER A ND SINCE HE ACTS IN A QUASI JUDICIAL CAPACITY, THE DISCIPLIN E OF SUCH FUNCTIONING DEMANDS THAT HE SHOULD FOLLOW THE DECIS ION OF THE TRIBUNAL OR THE HIGH COURT, AS THE CASE MAY BE. THE COURT IN CLEAR UNAMBIGUOUS TERMS HELD ADDRESSING THE ASSESSI NG OFFICER THAT, HE CANNOT IGNORE MERELY ON THE GROUND THAT THE TRIBUNAL'S ORDER IS THE SUBJECT MATTER OF REVISION IN THE HIGH COURT OR THE HIGH COURT'S DECISION IS UNDER APPEAL BEFORE THE SUPREME COURT. THE COURT HELD THAT, PERMITTING HIM TO TAKE SUCH A VIEW WOULD INTRODUCE JUDICIAL INDISCIPL INE, WHICH ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 7 OF 21 IS NOT CALLED FOR EVEN IN SUCH CASES. IT WOULD LEAD TO A CHAOTIC SITUATION'. 4.2 IN SIMILAR VIEW, IT WOULD ALSO BE APPROPRIATE T O REFER TO THE DECISION OF THE HON'BLE ANDHRA PRADESH HIGH COU RT IN THE CASE OF STATE OF A.P. V. CTO (1988) 169 ITR 564 (A.P) WHERE THE COURT HELD THAT IT IS IMPERMISSIBLE FOR THE AUT HORITIES AND THE TRIBUNALS TO IGNORE THE DECISIONS OF THE HI GH COURT OR TO REFUSE TO FOLLOW THE DECISIONS OF THE HIGH CO URT ON THE PRETEXT THAT AN APPEAL IS PENDING IN THE SUPREME CO URT OR THAT STEPS ARE BEING TAKEN TO FILE AN APPEAL. ADDRE SSING THESE OFT REPEATED PLEAS, THE COURT WENT ON TO CLEA RLY OPINE AND HOLD THAT 'IF ANY AUTHORITY OR THE TRIBUNAL REFUSES TO FOLLOW ANY DECISION OF THE HIGH COURT ON THE ABOVE GROUNDS, IT WOULD BE CLEARLY GUILTY OF COMMITTING CONTEMPT OF T HE HIGH COURT AND IS LIABLE TO BE PROCEEDED AGAINST.' THE RESORT TO THE DECISION OF ANOTHER HIGH COURT BY THE FIRST APPELLA TE AUTHORITY IGNORING THE DECISIONS OF THE JURISDICTIO NAL HIGH COURT, THE COURT HELD, RUNS COUNTER TO JUDICIAL DIS CIPLINE. A PERUSAL OF DECISIONS WOULD SHOW THAT THE CONSTANT T HREAD WHICH BINDS THESE DECISIONS IN SIMILAR CATEGORY OF DECISIONS AS PER THE CONSTANT REFRAIN IS THAT IT IS WELL SETT LED THAT THE DECISION OF A HIGH COURT WILL HAVE THE FORCE OF BIN DING PRECEDENT ONLY IN THE STATE OR TERRITORIES ON WHICH THE COURT HAS JURISDICTION. IN OTHER STATES OR OUTSIDE THE TE RRITORIAL ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 8 OF 21 JURISDICTION OF THAT HIGH COURT IT MAY, AT BEST, HA VE PERSUASIVE VALUE FOR OTHER HIGH COURTS. HOWEVER, AS FAR AS THE ITAT IS CONCERNED, A LONE DECISION OF ANY HIGH COURT OF THE COUNTRY BEING HIGHER IN HIERARCHY IN THE SCHEME OF THINGS BECOMES A BINDING PRECEDENT FOR THE ITAT WHE REVER THE BENCH OF THE ITAT MAY BE SITUATED. HOWEVER, AT THE SAME TIME IN THE FACE OF THE DECISION OF THE JURISDICTIO NAL HIGH COURT NO AMOUNT OF STRETCHING OF THE DOCTRINE OF STARE DECISIS, CAN JUDGMENTS OF ONE HIGH COURT BE GIVEN THE STATU S OF A BINDING PRECEDENT SO FAR AS OTHER HIGH COURTS OR TRIBUNAL WITHIN THEIR TERRITORIAL JURISDICTION ARE CONCERNED. IT IS WELL SETTLED THAT ANY SUCH ATTEMPT WILL GO CO UNTER TO THE VERY DOCTRINE OF STARE DECISIS AND ALSO THE VARIOUS DECISIONS OF THE SUPREME COURT WHICH HAVE INTERPRETED THE SCO PE AND AMBIT THEREOF. THE ISSUE AS FAR AS THE PRESENT PRO CEEDINGS ARE CONCERNED, CAN BE SAID TO HAVE BEEN ADDRESSED B Y THE SAID DECISION. IN THE FACTS OF THE PRESENT CASE, W E HAVE A DECISION OF THE JURISDICTIONAL HIGH COURT WHICH STA NDS IN THE EYES OF LAW AND WE ALSO HAVE A DECISION OF THE NON- JURISDICTIONAL HIGH COURT ON WHICH THE LD. CIT(A) H AS PLACED RELIANCE. CONSIDERING THE FACT THAT THE ASSESSEE I S WITHIN THE TERRITORIAL JURISDICTION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT AND THE LD. CIT(A) AN AUTHORITY ALSO WIT HIN THE TERRITORIAL JURISDICTION OF THE HON'BLE PUNJAB & HA RYANA HIGH ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 9 OF 21 COURT, WE FIND THAT THE CIT(A) IN THE FACTS OF THE PRESENT CASE HAS ERRED IN RELYING UPON THE DECISION OF THE NON- JURISDICTIONAL HIGH COURT IGNORING THE BINDING PREC EDENT AVAILABLE. 4.3 REFERENCE MAY ALSO BE MADE TO THE DECISION O F THE HON'BLE GUJRAT HIGH COURT IN THE CASE OF AIR CONDITIONING SPECIALISTS PVT. LTD. VS. UNION OF INDIA & ORS. (19 96)221 ITR 739 (GUJ.) WHERE THE SAID ISSUE CAME UP FOR CONSIDERATION. THE COURT IN UNAMBIGUOUS TERMS ADDRESSING THE SETTL ED POSITION HELD THAT THE COMMISSIONER OF INCOME TAX I S A TRIBUNAL SUBJECT TO THE SUPERVISORY JURISDICTION OF THE HIGH COURT UNDER ARTICLE 227 OF THE CONSTITUTION. HENCE, HE IS BOUND TO OBEY THE LAW DECLARED BY THE HIGH COURT. T HE COURT IN CLEAR TERMS HELD THAT IT WAS NOT OPEN TO THE COM MISSIONER OF INCOME TAX TO IGNORE THE DECISION OF THE JURISDI CTIONAL HIGH COURT OR REFUSE TO FOLLOW IT ON THE GROUND THA T THE VERDICT HAD NOT BEEN ACCEPTED BY THE DEPARTMENT AND THAT THE MATTER WAS CARRIED FURTHER AND WAS PENDING BEFO RE THE SUPREME COURT. THE COURT HELD THAT WHEN A POINT IS CONCLUDED BY A DECISION OF THE COURT, ALL SUBORDINA TE COURTS AND INFERIOR TRIBUNALS WITHIN THE TERRITORY OF THE STATE AND SUBJECT TO THE SUPERVISORY JURISDICTION OF THE HIGH COURT ARE BOUND BY IT AND MUST SCRUPULOUSLY FOLLOW THE SAID D ECISION IN LETTER AND SPIRIT. ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 10 OF 21 4.4 SIMILARLY IN CIT VS. G. DALABHAI & CO226 ITR 922, THE HONBLE GUJARAT HIGH COURT AGAIN RECORDED ITS ANGUISH IN THE FACE OF THE OBDURACY OF THE OFFICERS AND REMARKED BEFORE PARTING WITH THE CASE, WE NOTICE WITH ANGUISH THE L ANGUAGE USED BY THE INCOME TAX OFFICER IN HIS ASSESSMENT OR DER SAYING THAT WITH DUE RESPECT TO THE DECISION OF TH E GUJARAT HIGH COURT, I DO NOT FOLLOW THE SAME . THE INCOME TAX OFFICER IN NOT FOLLOWING THE DECISION OF THE GUJARAT HIGH C OURT WITHIN WHOSE SUPERVISORY TERRITORY HE WAS FUNCTIONI NG, IS FAR FROM SATISFACTORY. THE COURT HELD THAT IT IS THE LEAST WE CAN SAY. THE MINIMUM DECORUM OF THE SYSTEM OF HIERA RCHY THAT TRIBUNALS IN THE ADMINISTRATION OF JUSTICE AND THEIR JUDICIAL SUBORDINATION TO THE HIGH COURT OF THE TER RITORY IN WHICH THEY FUNCTION REQUIRES THAT THEY RESTRAIN IN THE USE OF PROPER EXPRESSION WHILE FOLLOWING OR NOT FOLLOWING THE DECISION OF THE HIGH COURT. 4.5. THE APEX COURT WAY BACK IN 1984 ADDRESSED IN C LER TERMS IN BISHNU RAM BORAH AND ANOTHER VS. PARAG SAIKIA & ORS. AIR 1984 SC 898 HELD THAT THE BOARD OF REVENUE ANY OTHER SUBORDINATE TRIBUNAL IS SUBJECT TO THE WRIT J URISDICTION OF THE HIGH COURT UNDER ARTICLE 226 OF THE CONSTITUTIO N. JUST AS THE JUDGMENTS AND ORDERS OF THE SUPREME COURT HAVE TO BE FAITHFULLY OBEYED AND CARRIED OUT THROUGHOUT THE TE RRITORY OF INDIA UNDER ARTICLE 142 OF THE CONSTITUTION, SO SHO ULD BE THE ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 11 OF 21 JUDGMENTS AND ORDERS OF THE HIGH COURT BY ALL INFER IOR COURTS AND TRIBUNALS SUBJECT TO THEIR SUPERVISORY JURISDIC TION WITHIN THE STATE UNDER ARTS. 226 AND 227 OF THE CONSTITUTI ON. THE BOARD OF REVENUE CANNOT REFUSE TO CARRY OUT THE DIR ECTIONS OF THE HIGH COURT. (1961) 1 SCR 474, FOLL. (PARA 12) 4.6 IN THIS GENRE, IT MAY NOT BE OUT OF PLACE TO RE FER TO THE OFT QUOTED DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS THANA ELECTRICITY SUPPLY LTD. (1994) 206 ITR 727 (BOM) OR ALTERNATELY IN THE GENRE OF CASES BEING CITED, IT IS NECESSARY TO ALSO REFER TO THIS DECISION WHEREIN TH E COURT WHILE ENUNCIATING THE GENERAL PRINCIPLES WHICH ARE IN REGARD TO PRECEDENTS HELD THAT THE DECISIONS OF THE HIGH C OURTS ARE BINDING ON THE SUBORDINATING COURTS AND AUTHORITIES OR TRIBUNALS IN ITS SUPERINTENDENCE THROUGHOUT THE TER RITORIES IN RELATION TO WHICH IT EXERCISE JURISDICTION. FOR READY REFERENCE, THE RELEVANT GENERAL PRINCIPLES ARE EXTR ACTED HEREUNDER : (A) THE LAW DECLARED BY THE SUPREME COURT BEING BINDING ON ALL COURTS IN INDIA, THE DECISIONS OF THE SUPREME COURT ARE BINDI NG ON ALL COURTS, EXCEPT, HOWEVER, THE SUPREME COURT ITSELF WHICH IS FREE TO REVIEW THE SAME AND DEPART FROM ITS EARLIER OPINION IF THE SITUATION SO WARRAN TS. WTIAT IS BINDING IS, OF COURSE, THE RATIO OF THE DECISION AND NOT EVERY EXP RESSION FOUND THEREIN. (B) THE DECISIONS OF THE HIGH COURT ARE BINDING ON THE SUBORDINATE COURTS AND AUTHORITIES OR TRIBUNALS UNDER ITS SUPERINTENDE NCE THROUGHOUT THE TERRITORIES IN RELATION TO WHICH IT EXERCISES JURIS DICTION. IT DOES NOT ATTEND BEYOND ITS TERRITORIAL JURISDICTION. (C) THE POSITION IN REGARD TO THE BINDING NATURE OF THE DECISIONS OF A HIGH COURT ON DIFFERENT BENCHES OF THE SAME COURT, MAY B E SUMMED AS FOLLOWS : (I) A SINGLE JUDGE OF A HIGH COURT IS BOUND BY THE DECISION OF ANOTHER SINGLE JUDGE OR A DIVISION BENCH OF THE SAME HIGH C OURT. IT WOULD BE ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 12 OF 21 JUDICIAL IMPROPRIETY TO IGNORE THAT DECISION. JUDIC IAL COMITY DEMANDS THAT A BINDING DECISION TO WHICH HIS ATTENTION HAD BEEN DR AWN SHOULD NEITHER BE IGNORED NOR OVERLOOKED. (II) A DIVISION BENCH OF A HIGH COURT SHOULD FOLLOW THE DECISION OF ANOTHER DIVISION BENCH OF EQUAL STRENGTH OR A FULL BENCH OF THE SAME HIGH COURT. IF ONE DIVISION BENCH DIFFERS FROM ANOTHER DIVISION BENCH OF THE SAME HIGH COURT, IT SHOULD REFER THE CASE TO A LARGER BE NCH. (III) WHERE THERE ARE CONFLICTING DECISIONS OF COUR TS OF CO-ORDINATE JURISDICTION, THE LATER DECISION IS TO BE PREFERRED IF REACHED AFTER FULL CONSIDERATION OF THE EARLIER DECISIONS. (C) THE DECISION OF ONE HIGH COURT IS NEITHER BINDING P RECEDENT FOR ANOTHER HIGH COURT NOR FOR COURTS OR TRIBUNALS OUTSIDE ITS TERRITORIAL JURISDICTION. (D) THE DECISION OF ONE HIGH COURT IS NEITHER BINDING P RECEDENT FOR ANOTHER HIGH COURT NOR FOR COURTS OR TRIBUNALS OUTSIDE ITS OWN TERRITORIAL JURISDICTION. IT IS WELL-SETTLED THAT THE DECISION OF A HIGH COURT HAVE THE FORCE OF BINDING PRECEDENT ONLY IN THE STATE OR TER RITORIES ON WHICH THE COURT HAS JURISDICTION. IN OTHER STATES OR OUTSIDE THE TERRITORIAL JURISDICTION OF THAT HIGH COURT IT MAY, AT BEST, HAVE ONLY PERSU ASIVE EFFECT. BY NO AMOUNT OF STRETCHING OF THE DOCTRINE OF STARE DECISIS, CAN JUDGMENTS OF ONE HIGH COURT BE GIVEN THE STATUS OF A BINDING PRECEDENT SO FAR AS OTHER HIGH COURTS OR COURTS OR TRIBUNALS WIT HIN THEIR TERRITORIAL JURISDICTION ARE CONCERNED. ANY SUCH ATTEMPT WILL G O COUNTER TO THE VERY DOCTRINE OF STARE DECISIS AND ALSO THE VARIOUS DECI SIONS OF THE SUPREME COURT WHICH HAVE INTERPRETED THE SCOPE AND AMBIT TH EREOF. THE FACT THAT THERE IS ONLY ONE DECISION OF ANY ONE HIGH COURT ON A PARTICULAR POINT OR THAT A NUMBER OF DIFFERENT HIGH COURTS HAVE TAKEN I DENTICAL VIEWS IN THAT REGARD IS NOT AT ALL RELEVANT FOR THAT PURPOSE. WHA TEVER MAY BE THE CONCLUSION, THE DECISIONS CANNOT HAVE THE FORCE OF BINDING PRECEDENT ON OTHER HIGH COURTS OR ON ANY SUBORDINATE COURTS OR T RIBUNALS WITHIN THEIR JURISDICTION. THAT STATUS IS RESERVED ONLY FOR THE DECISIONS OF THE SUPREME COURT WHICH ARE BINDING ON ALL COURTS IN THE COUNTR Y BY VIRTUE OF ARTICLE 141 OF THE CONSTITUTION. 4.7 SIMILAR TO THE POSITION DISCUSSED ABOVE WITH RE GARD TO THE BINDING NATURE OF JUDICIAL PRECEDENT, THE COURT S OPINION ON JUDICIAL DISCIPLINE ALSO NEED BE REFERRED TO AS HELD IN THE DECISION OF THE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. KAMALAKSHI FINANCE CORPORATION LTD. AIR 1992 SC 711 WHEREIN THE COURT HELD THAT JUDICIAL DISCIPLINE RE QUIRES THAT DECISION OF HIGHER AUTHORITY SHOULD TO BE FOLL OWED IN THE ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 13 OF 21 CASE OF QUASI-JUDICIAL AUTHORITY AND, THEREFORE, A LOWER OFFICER IS BOUND TO FOLLOW THE DECISION OF THE HIGH ER AUTHORITY E.G. ASSESSING OFFICER IS BOUND TO FOLLOW THE DECIS ION OF THE TRIBUNAL PARTICULARLY SO IN THE CASE OF THE SAME AS SESSEE. THIS PRINCIPLE REQUIRES THAT DECISIONS OF HIGHER AU THORITIES SUCH AS TRIBUNAL SHOULD BE FOLLOWED BY LOWER OFFICE RS, VIZ., CIT(A) AND ASSESSING OFFICER. EVEN DECISION OF THE TRIBUNAL, NOT A JURISDICTIONAL TRIBUNAL, IS REQUIRED TO BE FO LLOWED BY THE LOWER AUTHORITY. SOMETIMES, AN ARGUMENT IS MADE AND ALSO PUT ON RECORD THAT THE DEPARTMENT HAS NOT ACCE PTED THE DECISION OF THE TRIBUNAL AND APPEAL HAS BEEN PREFER RED TO THE HIGH COURT. THE RESORT TO SUCH LANGUAGE HAS NOT MET JUDICIAL APPROVAL. THE COURT HAS HELD UNLESS THE O RDER OF THE HIGHER AUTHORITY IS STAYED IN APPEAL, IT OPERAT ES AS A VALID BINDING DECISION TO THE LOWER AUTHORITY NOT O NLY IN THE CASE OF THE SAME ASSESSEE BUT ALSO IN OTHER CASES W HERE THE SAME LAW POINT IS INVOLVED. REFERENCE MAY ALSO BE M ADE TO THE SPEAKING OBSERVATION OF THE APEX COURT IN THE S AID DECISION ADDRESSING THE BINDING PRECEDENT OF HIGHER COURTS WHERE THE COURT FELT THE NEED TO HOLD THAT, IT CANNOT BE TOO VEHEMENTLY EMPHASIZED THAT IT IS OF UTMOST IMPORTAN CE THAT IN DISPOSING OF THE QUASI-JUDICIAL ISSUES BEFORE THEM, REVENUE OFFICERS ARE BOUND BY THE DECISION OF THE APPELLATE AUTHORITIES. THE COURT WHILE HOLDING THAT THE ORDER OF THE APPEL LATE ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 14 OF 21 COLLECTOR IS BINDING ON THE ASSISTANT COLLECTORS WO RKING WITHIN HIS JURISDICTION WENT ON TO HOLD THAT; THE ORDER O F THE TRIBUNAL IS BINDING UPON THE ASSISTANT COLLECTORS A ND THE APPELLATE COLLECTORS WHO FUNCTION UNDER THE JURISDI CTION OF THE TRIBUNAL. THE PRINCIPLES OF JUDICIAL DISCIPLINE REQ UIRE THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD B E FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES. THE ME RE FACT THAT THE ORDER OF THE APPELLATE AUTHORITY IS NOT A CCEPTABLE TO THE DEPARTMENT THE COURT HELD; IN ITSELF AN OBJECTIONABLE PHRASE AND IS THE SUBJECT MATTER OF AN APPEAL CAN FURNISH NO GROUND FOR NOT FOLLOWING IT UNLESS ITS OPERATION HA S BEEN SUSPENDED BY A COMPETENT COURT. IF THIS HEALTHY RUL E IS NOT FOLLOWED, THE RESULT WILL ONLY BE UNDUE HARASSMENT TO ASSESSEE AND CHAOS IN ADMINISTRATION OF TAX LAWS. 4.8 THE SAID PRINCIPLE HAS BEEN RE-ITERATED OVER TH E YEARS IN A NUMBER OF CASES. REFERENCE MAY ALSO BE MADE TO T HE DECISION OF THE APEX COURT IN THE CASE OF BHOPAL SUGAR INDUSTRIES VS. INCOME TAX OFFICER, BHOPAL [AIR 1961 SC 182] WHEREIN AT PAGE 622 IT WAS HELD ; (A) IF A SUBORDINATE TRIBUNAL REFUSES TO CARRY OUT DIRECTIONS GIVEN TO IT BY A SUPERIOR TRIBUNAL IN THE EXERCISE OF ITS APPEL LATE POWERS, THE RESULT WILL BE CHAOS IN THE ADMINISTRATION OF JUSTICE AND WE HAVE INDEED FOUND IT VERY DIFFICULT TO APPRECIATE THE PROCESS OF REAS ONING BY WHICH THE LEARNED JUDICIAL COMMISSIONER WHILE ROUNDLY CONDEMN ING THE RESPONDENT FOR REFUSING TO CARRY OUT THE DIRECTIONS OF THE SUPERIOR TRIBUNAL, YET HELD THAT NO MANIFEST INJUSTICE RESUL TED FROM SUCH REFUSAL. ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 15 OF 21 4.9 IT MAY ALSO BE APPROPRIATE TO REFER TO THE REC ENT DECISION DATED 28.03.2017 OF THE APEX COURT IN CIT(A) NO.2315/2007 IN THE CASE OF DCIT VS M/S RAGHUVIR SYNTHETICS LTD. , AHMEDABAD. A PERUSAL OF THE SAID DECISION WOULD SHOW THAT THE ISSUE FOR CONSIDERATION BEFORE THE APEX COURT I N THE SAID DECISION WAS WHETHER A PARTICULAR ADJUSTMENT MADE B Y THE AO U/S 143(1)(A) OF THE ACT HELD TO BE AN IMPERMISS IBLE ADJUSTMENT BY THE FIRST APPELLATE AUTHORITY ON ACCO UNT OF THE FACT THAT THE ISSUE WAS DEBATABLE WAS CORRECT O R NOT. THE VIEW OF THE CIT(A) ON FURTHER CHALLENGE BY THE REVENUE BEFORE THE ITAT AND THE HIGH COURT WAS CONSISTENTLY UPHELD. THE ISSUE WAS CARRIED IN APPEAL BEFORE THE APEX COU RT. THE APEX COURT HELD THAT IN VIEW OF THE DECISIONS OF TH E JURISDICTIONAL HIGH COURT ON THE SAID ISSUE AVAILAB LE ON THE DATE WHEN THE DECISION OF THE CIT(A), ITAT AND THE HIGH COURT WERE CONSIDERED, THE ISSUE COULD NOT BE SAID TO BE DEBATABLE THE ADJUSTMENT MADE BY THE ASSESSING OFFI CER IN TERMS OF THE BINDING PRECEDENT OF THE JURISDICTIONA L HIGH COURT WAS HELD TO BE PERMISSIBLE. IT WAS HELD THAT AS FAR AS THE COURTS AND TRIBUNAL WITHIN THE TERRITORIAL JURI SDICTION OF GUJRAT HIGH COURT WERE CONCERNED IN THE FACE OF THE BINDING PRECEDENTS AVAILABLE IN THE DECISIONS OF THE GUJRAT HIGH COURT ITSELF AVAILABLE ON THE ISSUE IN THE CASE OF AHMEDABAD MFG. & CALICO (P) LTD. VS CIT (1986) 162 ITR 800 (G UJ) AND ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 16 OF 21 ALEMBIC GLASS INDUSTRIES LTD. V CIT (1993) 202 ITR 214 (GUJ) THE ISSUE COULD BE SAID TO BE WELL SETTLED AND THER E WAS NO DEBATE. FOR THE PURPOSES OF THE PRESENT ORDER, THE RATIO OF THE DECISIONS IS NOT RELEVANT, HOWEVER FOR THE SAKE OF COMPLETENESS, IT MAY BE NOTED THAT THESE DECISIONS HELD THAT THE NATURE OF EXPENDITURE BEING CONTEMPLATED BY THE ASSESSING OFFICER WAS A CAPITAL EXPENDITURE. IN THE CIRCUMSTANCES, CONSIDERING THE FACT THAT THE REGIST ERED OFFICE OF THE ASSESSEE IN THE FACTS OF THE SAID CASE WAS I N THE STATE OF GUJRAT, THE APEX COURT HELD THAT THE LAW LAID DO WN BY THE GUJRAT HIGH COURT IN THE AFORESAID DECISIONS WAS BI NDING. ACCORDINGLY, THE COURT HELD THAT IT CAN BE SAID THA T AS FAR AS FOR AN ASSESSEE WITHIN THE JURISDICTION OF THE GUJR AT HIGH COURT, THE ISSUE COULD NOT BE CONSIDERED TO BE DEBA TABLE. IN VIEW THEREOF, THE ORDERS OF THE CIT(A), ITAT AS WEL L AS THE DECISION OF THE HON'BLE GUJRAT HIGH COURT WERE SET ASIDE AS HAVING BEEN WRONGLY HELD THAT FOR AN ASSESSEE, IN T HE JURISDICTION OF THE STATE HIGH COURT, THE ISSUE COU LD BE CONSIDERED TO BE DEBATABLE. FOR READY REFERENCE, P ARAS 11 AND 12 OF THE AFORESAID DECISION ARE EXTRACTED HERE UNDER : 11. EVEN THOUGH IT IS A DEBATABLE ISSUE BUT AS GUJA RAT HIGH COURT IN THE CASE OF AHMEDABAD MFG. & CALICO (P) LTD. (SUPRA) HAD TAKEN A VIEW THAT IT IS CAPITAL EXPENDITURE WHICH WAS SUBSEQUENTLY FOLLOWED BY A LEMBIC GLASS INDUSTRIES LTD. V. CIT (SUPRA ) AND THE REGISTERED OFFICE OF THE RESPONDENT ASSESSE E BEING IN THE STATE OF GUJARAT, THE LAW LAID DOWN BY THE GUJARAT HIGH COUR T WAS BINDING. (SEE TAYLOR INSTRUMENT COM. (INDIA) LTD. V. COMMISSIONER OF INC OME TAX - (1998) 232 ITR 771, COMMISSIONER OF GIFT TAX V. J.K. JAIN - (1998) 230 ITR 839, COMMISSIONER OF INCOME ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 17 OF 21 TAX V. SUNIL KUMAR - (1995) 212 ITR 238, COMMISSIONER OF INCOME TAX V. THANA ELECTRICITY SUPPLY LTD. - (1994) 206 ITR 727, INDIAN TUBE COMPANY LTD. V. COMMISSIONER OF INCOME TAX & ORS. - (1993) 203 ITR 54, COMMISSIONER OF INCOME TAX V. P.C. JOSHI & B.C. JOSHI - (1993) 202 ITR 1017 AND COMMISSIONER OF INCOME TAX, WEST BENGAL, CALCUTTA V. RAJA BENOY KUMAR SAHA S ROY - (1957) 32 ITR 466). THEREFORE, SO FAR AS THE PRESENT CASE IS CO NCERNED, IT CANNOT BE SAID THAT THE ISSUE WAS A DEBATABLE ONE. 12. IN VIEW OF THE ABOVE SUBMISSIONS, IN OUR CONSIDERED VIEW THE ORDER PASSED BY THE CIT (APPEALS), THE INCOME TAX APPELLATE TRIBUNA L AND ALSO THE ORDER OF THE GUJARAT HIGH COURT IMPUGNED HEREIN CANNOT SUSTAIN A ND ARE SET ASIDE AS THEY HAVE WRONGLY HELD THAT THE ISSUE WAS DEBATABLE AND COULD NOT BE CONSIDERED IN THE PROCEEDINGS UNDER SECTION 143 (1) OF THE ACT. 4.10 AT THIS POINT, IT MAY BE SALUTARY TO AGAIN REFER TO THE DECISION OF GUJRAT HIGH COURT IN AIR CONDITIONING SPECIALISTS (P) LTD. V. UNION OF INDIA AND ORS. (1996) 221 ITR 739 (GUJ. IN THE FACTS OF THE SAID CASE THE ASSESSEE HAD FILED W RIT OF MANDAMUS SEEKING QUASHING AND SETTING ASIDE OF THE ORDER PASSED BY CIT, BARODA. THEIR LORDSHIPS IN THE FACT S OF THE SAID CASE HELD ; WE MAY, HOWEVER, ADD THAT IT WAS NOT OPEN TO THE SE COND RESPONDENT (CIT) TO IGNORE THE LAW LAID DOWN BY THIS COURT WHEN IT WAS AN INFERIOR TRIBUNAL SUBJECT TO THE SUPERVISORY JURISDICTION OF THIS COURT. IT WAS NOT PROPER ON HIS PART NOT TO FOLLOW BINDING DECISION OF THIS COURT O N THE GROUND THAT THE DEPARTMENT HAD NOT ACCEPTED THAT DECISION AND HAD F ILED AN APPEAL AND THE MATTER WAS PENDING IN THE SUPREME COURT. IT CANNOT BE DISPUTED AND IS NOT DISPUTED THAT THE SECOND RESPONDENT IS A 'TRIBUNAL' SUBJECT TO THE SUPERVISORY JURISDICTION OF THIS COURT UNDER ART. 227 OF THE CONSTITUTION. HENCE, HE IS BOUND TO OBEY THE LAW DECLARED BY THIS COURT. THE APEX COURT OF THE COUNTRY IN NO UNCERTAIN TERMS HELD THAT THE LAW DECLARED BY A HIGH COURT IS BINDING ON ALL SUBORDIN ATE COURTS AND TRIBUNALS WITHIN THE TERRITORY TO WHICH IT EXERCISES JURISDIC TION. IN BHOPAL SUGAR INDUSTRY VS. ITO (1960) 40 ITR 618 (SC) : AIR 1961 SC 182, THE ITO (SUBORDINATE AUTHORITY) REFUSED TO CARRY OUT THE CL EAR AND UNAMBIGUOUS DIRECTIONS OF THE TRIBUNAL (SUPERIOR AUTHORITY). DE PRECATING IT, THEIR LORDSHIPS OF THE SUPREME COURT OBSERVED : ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 18 OF 21 'SUCH REFUSAL IS IN EFFECT A DENIAL OF JUSTICE, AND IS FURTHERMORE DESTRUCTIVE OF ONE OF THE BASIC PRINCIPLES IN THE A DMINISTRATION OF JUSTICE BASED AS IT IS IN THIS COUNTRY ON A HIERARCHY OF CO URTS. IF A SUBORDINATE TRIBUNAL REFUSES TO CARRY OUT DIRECTIONS GIVEN TO I T BY A SUPERIOR TRIBUNAL IN THE EXERCISE OF THE APPELLATE POWERS, THE RESULT WI LL BE CHAOS IN THE ADMINISTRATION OF JUSTICE'. A DIRECT QUESTION AROSE BEFORE THE HON'BLE SUPREME COURT IN EAST INDIA COMMERCIAL CO. LTD. VS. COLLECTOR OF CUSTOMS AIR 1962 SC 1893. IN THAT CASE, PROCEEDINGS WERE INITIATED BY COLLECTOR OF CU STOMS AGAINST PETITIONER- COMPANY ON ALLEGATIONS THAT IT HAD VIOLATED CONDITI ONS OF LICENCE AND ILLEGALLY DISPOSED OF GOODS AND THEREBY COMMITTED A N OFFENCE PUNISHABLE UNDER THE CUSTOMS ACT . THE HIGH COURT CONFIRMED THE ORDER OF ACQUITTAL PASSED BY THE TRIAL COURT HOLDING THAT IT CANNOT BE SAID THAT 'A CONDITION OF THE LICENCE AMOUNTED TO AN ORDER UNDER THE ACT' AND , THEREFORE, NO OFFENCE WAS COMMITTED BY THE COMPANY. THE HIGH COURT ALSO P ASSED AN ORDER DIRECTING THE SEIZED GOODS TO BE SOLD AND THE SALE PROCEEDS TO BE DEPOSITED IN THE COURT. AFTER THOSE PROCEEDINGS, A NOTICE WAS IS SUED BY THE COLLECTOR ON THE COMPANY TO SHOW CAUSE WHY THE AMOUNT SHOULD (NO T) BE CONFISCATED AND PENALTY SHOULD NOT BE IMPOSED. IT WAS CONTENDED ON BEHALF OF THE COMPANY THAT ONCE THE HIGH COURT DECIDED THAT THE BREACH OF CONDITION OF LICENCE COULD NOT BE SAID TO BE A BREACH OF ORDER, THE COLL ECTOR HAD NO JURISDICTION TO ISSUE SHOW-CAUSE NOTICE. IT WAS SUBMITTED THAT THE DECISION OF A HIGH COURT ON A POINT WAS BINDING ON ALL SUBORDINATE COURTS AN D INFERIOR TRIBUNALS WITHIN ITS TERRITORIAL JURISDICTION. THE NOTICE WAS , THEREFORE, LIABLE TO BE QUASHED. THE PRECISE QUESTION BEFORE THE HON'BLE SU PREME COURT WAS AS TO WHETHER OR NOT THE DECISION RENDERED BY A HIGH COUR T WOULD BIND ALL SUBORDINATE COURTS AND INFERIOR TRIBUNALS WITHIN IT S TERRITORIAL JURISDICTION. IT WAS ARGUED THAT THERE WAS NO PROVISION SIMILAR TO ART. 141 OF THE CONSTITUTION MAKING THE LAW DECLARED BY A HIGH COUR T, BINDING ON ALL COURTS AND TRIBUNALS WITHIN ITS TERRITORIAL JURISDICTION. CONSIDERING RELEVANT PROVISIONS OF THE CONSTITUTION AND POWER OF HIGH CO URT, SUBBARAO, J. (AS HE THEN WAS), OBSERVED: 'THIS RAISES THE QUESTION WHETHER AN ADMINISTRATIVE TRIBUNAL CAN IGNORE THE LAW DECLARED BY THE HIGHEST COURT IN THE STATE AND INITIATE PROCEEDINGS IN DIRECT VIOLATION OF THE LAW SO DECLARED. UNDER ART. 215 EVERY HIGH COURT SHALL BE A COURT OF RECORD AND SHALL HAVE ALL THE POWERS OF SUCH A COURT INCLUDING THE POWER TO PUNISH FOR CONTEMPT OF ITSELF. UNDER ART. 226 , IT HAS A PLENARY POWER TO ISSUE ORDERS OR WRITS FOR THE ENFORCEMENT OF THE FUNDAMENTAL RIGHTS AND FOR ANY OTHER PURPOSE TO ANY PERSON OR AUTHORITY, INCLUDING IN APPROPRIATE CASES ANY GOVER NMENT WITHIN ITS TERRITORIAL JURISDICTION. UNDER ART. 227 , IT HAS JURISDICTION OVER ALL COURTS AND TRIBUNALS THROUGHOUT THE TERRITORIES IN RELATION TO WHICH IT EXERCISES JURISDICTION. IT WOULD BE ANOMAL OUS TO SUGGEST THAT A TRIBUNAL OVER WHICH THE HIGH COURT HAS SUPER INTENDENCE CAN IGNORE THE LAW DECLARED BY THE COURT, AND START PROCEEDINGS IN DIRECT VIOLATION OF IT. IF A TRIBUNAL CAN DO SO, ALL THE ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 19 OF 21 SUBORDINATE COURTS CAN EQUALLY DO SO, FOR THERE IS NO SPECIFIC PROVISION, JUST LIKE IN THE CASE OF SUPREME COURT, MAKING THE LAW DECLARED BY THE HIGH COURT BINDING ON SUBORDINATE C OURTS. IT IS IMPLICIT IN THE POWER OF SUPERVISION CONFERRED ON A SUPERIOR TRIBUNAL THAT ALL THE TRIBUNALS SUBJECT TO ITS SUPE RVISION SHOULD CONFORM TO THE LAW LAID DOWN BY IT. SUCH OBEDIENCE WOULD ALSO BE CONDUCIVE TO THEIR SMOOTH WORKING, OTHERWISE THE RE WOULD BE CONFUSION IN THE ADMINISTRATION OF LAW AND RESPECT FOR LAW WOULD IRRETRIEVABLY SUFFER. WE, THEREFORE, HOLD THAT THE LAW DECLARED BY THE HIGHEST COURT IN THE STATE IS BINDING ON AUTHOR ITIES OR TRIBUNALS UNDER ITS SUPERINTENDENCE AND THAT THEY C ANNOT IGNORE IT EITHER IN INITIATING A PROCEEDING OR DECIDING ON THE RIGHTS INVOLVED IN SUCH A PROCEEDING.' THE ABOVE VIEW HAS BEEN REITERATED BY THE SUPREME C OURT IN A NUMBER OF SUBSEQUENT DECISIONS ( SEE PADMANABHA SEITY VS. PAPIAH SEITY AIR 1966 SC 1824, KAUSHALYA DEVI VS. LAND ACQ. OFF ICER, AURANGABAD AIR 1984 SC 892, BISHNU RAM BOHRA VS. PARAG SAIKIA AIR 1984 SC 898). IN OUR OPINION, SUBMISSION OF THE LEARNED COUNSEL F OR THE PETITIONER IS WELL FOUNDED AND DESERVES TO BE UPHELD. IT IS NOT E VEN THE CASE OF THE DEPARTMENT THAT THE DECISION OF THIS COURT IN BHARA T TEXTILES WORKS (SUPRA) HAS BEEN STAYED BY THE HON'BLE SUPREME COUR T. HENCE, SO FAR AS THIS COURT IS CONCERNED, THE POINT IS CONCLUDED. IT IS SETTLED LAW THAT UNLESS AND UNTIL DECISION IS REVERSED BY A SUP ERIOR COURT, IT HOLDS THE FIELD. IT ALSO CANNOT BE GAINSAID THAT TH E SECOND RESPONDENT IS AN INFERIOR TRIBUNAL SUBJECT TO SUPERVISORY JURI SDICTION OF THIS COURT AND THIS COURT CAN EXERCISE JURISDICTION OVER HIM BY INVOKING ART. 227 OF THE CONSTITUTION. IN OUR CONSIDERED VIEW, THEREFORE IT WAS NOT OPEN TO THE SECOND RESPONDENT TO IGNORE THE DECISION OF THIS COURT OR TO REFUSE TO FOLLOW IT ON A SPECIOUS PLEA OF VERDICT BEING NOT ACCEPTED BY THE DEPARTMENT AND TH AT MATTER WAS CARRIED FURTHER AND WAS PENDING BEFORE SUPREME COUR T. IN BARADAKANTA VS. BHIMSEN DIXIT AIR 1972 SC 2465, WHEN A MEMBER OF SUPERIOR JUDICIAL SERVICE FUNCTIONING AS COMMISSION ER OF HINDU RELIGIOUS ENDOWMENTS, ORISSA, REFUSED TO FOLLOW THE DECISION OF THE HIGH COURT, CONTEMPT PROCEEDING HAD BEEN INITIATED AGAINST HIM AND HE WAS PUNISHED BY THE HIGH COURT. WHEN THE MATTER WAS CARRIED BY T HE APPELLANT TO THE SUPREME COURT, DISMISSING THE APPEAL AND EXTENDING FURTHER THE PRINCIPLE LAID DOWN IN THE DECISION OF EAST INDIA COMMERCIAL CO. LTD. (SUPRA), THE COURT HELD : 'THE CONDUCT OF THE APPELLANT IN NOT FOLLOWING PREV IOUS DECISION OF THE HIGH COURT IS CALCULATED TO CREATE CONFUSION IN THE ADMI NISTRATION OF LAW. IT WILL UNDERMINE RESPECT OF LAW LAID DOWN BY THE HIGH COUR T AND IMPAIR THE CONSTITUTIONAL AUTHORITY OF THE HIGH COURT'. ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 20 OF 21 14. IN THIS CONNECTION WE MAY EMPHASISE THAT IT WOU LD INDEED BE APPROPRIATE TO KEEP IN MIND THE FOLLOWING OBSERVATI ONS OF LORD DIPLOCK IN CASELL & CO. LTD. VS. BROOME & ANR . 1972 (1) ALL ER 801 : 'IT IS INEVITABLE IN A HIERARCHICAL SYSTEM OF COURT S THAT THERE ARE DECISIONS OF THE SUPREME APPELLATE TRIBUNAL WHICH D O NOT ATTRACT THE UNANIMOUS APPROVAL OF ALL MEMBERS OF THE JUDICIARY. WHEN I SAT IN THE COURT OF APPEAL I SOMETIMES THOUGHT THE HOUSE OF LO RDS WAS WRONG IN OVERRULING ME. EVER SINCE THAT TIME THERE HAVE BEEN OCCASIONS, OF WHICH THE INSTANT APPEAL ITSELF IS ONE, WHEN, ALONE OR IN COMPANY, I HAVE DISSENTED FROM A DECISION OF THE MAJORITY OF THIS H OUSE. BUT THE JUDICIAL SYSTEM ONLY WORKS IF SOMEONE IS ALLOWED TO HAVE THE LAST WORD AND IF THAT LAST WORD, ONCE SPOKEN, IS LOYALLY ACCEPTED'. WE ARE VERY CLEAR AND WE HAVE NO DOUBT IN OUR MINDS THAT WHEN A POINT IS CONCLUDED BY A DECISION OF THIS COURT, ALL SUBORDIN ATE COURTS AND INFERIOR TRIBUNALS WITHIN THE TERRITORY OF THIS STATE AND SU BJECT TO THE SUPERVISORY JURISDICTION OF THIS COURT ARE BOUND BY IT AND MUST SCRUPULOUSLY FOLLOW THE SAID DECISION IN LETTER AND SPIRIT. SINCE THE SECON D RESPONDENT HAS NOT DECIDED THE MATTER IN ACCORDANCE WITH LAW LAID DOWN BY THIS COURT IN THE CASE OF BHARAT TEXTILES WORKS (SUPRA), THE ORDER PA SSED BY HIM REQUIRES TO BE QUASHED AND SET ASIDE. (EMPHASIS SUPPLIED) 5. THUS, ON A CONSIDERATION OF THE POSITION OF LAW AS REPEATEDLY ENUNCIATED BY THE DIFFERENT HIGH COURTS AS WELL AS THE APEX COURT, WE HOLD THAT THE CIT(A) HAS ERRED I N IGNORING THE DECISION OF THE JURISDICTIONAL HIGH COURT ON TH E ISSUE AND RELYING UPON THE DECISION OF THE NON JURISDICTI ONAL HIGH COURT WHEN HE WAS DUTY BOUND TO FOLLOW THE BINDING PRECEDENT AVAILABLE OF THE JURISDICTIONAL HIGH COUR T IN THE CASE OF HEMLA EMBROIDERY MILLS P.LTD. (SUPRA) WHICH DECISION STANDS IN THE EYES OF LAW AS ON DATE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IS ALLOWED. S AID ORDER ITA 1244/CHD/2018 A.Y. 2013-14 PAGE 21 OF 21 WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEA RING ITSELF. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY,2019. SD/- SD/- ( $ % & ' ( ) ( ! ) (ANNAPURNA GUPTA) (DIVA SINGH) )* #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER