INCOME TAX OFFICER, LUCKNOW vs. M/S. S. B. SINGHAR SINGH & SONS & ANR.

CIVIL APPEAL No. 1539/1971Supreme Court[1977] 1 S.C.R. 21417 August 1976Bench: 3 JudgesAuthor: HANS RAJ KHANNA, R.S. SARKARIA, JASWANT SINGH B7 pages
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What were the facts?

The assessee, M/s. S. B. Singar Singh & Sons, was assessed to Excess Profits tax for periods ending March 31, 1945, and March 31, 1946. The assessee chose the previous year 1936-37 as the standard period, with profits of Rs. 38,703/-. The Excess Profits Tax Officer assessed tax on remaining profits, stating no adjustments were made for capital variations due to incomplete accounts. The Assistant Appellate Commissioner upheld this, noting the inability to ascertain capital variations and the lack of figures. The assessee appealed to the Income-Tax Appellate Tribunal, raising a specific ground regarding the failure to allow proper standard profits with adjustments for capital variations. The Tribunal disposed of the appeals without discussing this ground. The assessee's subsequent applications to the Tribunal and the Central Board of Revenue for rectification or reopening were rejected. The assessee then filed a writ petition for Mandamus, which the High Court allowed, requiring the Tribunal to consider the ground. The Revenue appealed this High Court order.

What did the Supreme Court hold?

The Supreme Court held that the High Court could not justifiably interfere with the appellate orders of the Income Tax Appellate Tribunal in the exercise of its extraordinary jurisdiction under Article 226 of the Constitution. The Court reasoned that the question of whether the Tribunal's omission to record a finding on the specific ground was due to the assessee's failure to urge it or a lapse by the Tribunal was a matter for the authorities under the statute. The Court found that the High Court's assumption of jurisdiction was based on the premise that a ground was urged and arbitrarily refused consideration, which was discounted by the circumstances, including the assessee's dilatory and questionable conduct. The Court noted that the assessee never categorically stated they had produced complete accounts or computations of capital variation, only that they were prepared to file them. The counsel who argued the appeals did not certify that the ground was argued. Therefore, the Court concluded it was not a fit case for the High Court to exercise its special jurisdiction under Article 226. The appeal was allowed, and the writ petition was dismissed. The Court expressly left undecided the question of whether the Appellate Tribunal had the power to review or rectify its orders.

What were the issues?

1. Whether the High Court could interfere with the appellate orders of the Income Tax Appellate Tribunal under Article 226 of the Constitution of India, given the circumstances of the case. Assessee's Contention (implied through High Court's decision and subsequent arguments): The assessee argued that a specific ground concerning standard profits and capital adjustments was raised before the Tribunal, but the Tribunal arbitrarily refused to consider it. The High Court, in its writ jurisdiction, intervened to direct the Tribunal to consider this ground. The assessee further argued that their delay in approaching the High Court was partly explained by their representations to the Board, and their sworn affidavit stated the ground was argued. Revenue's Contention: The Revenue contended that the High Court could not justifiably interfere under Article 226. They argued that the omission to record a finding on the ground was due to the assessee's failure to urge it, evidenced by the lack of complete accounts, the assessee's preparedness to file computations rather than actual filing, and the absence of certification from the arguing counsel. The Revenue maintained that the circumstances discounted the High Court's assumption that the ground was argued and arbitrarily ignored.

Which sections of the Income-tax Act were involved?

Section 66(2),Section 35

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A B c D E F G H 214 INCOME-TAX OFFICER, LUCKNOW v. M/S. S. B. SINGHAR SINGH & SONS & ANR.

August 17. 1976 [H. R. KHANNA, R. S. SARKARIA AND JASWANT SINGH, JJ.] Constitution of India, 19'5(}.-Art. 226-High Court'-if couM interfere with t/1e appellate orders of Income Tax, Appellate Tribunal under Art. 226. Since the assessec had not maintained complete ahd regular accounts for the purpose of Excess Profits tax, the Excess Profits ,Tax Officer assesSed tax on the basis of accounts of certain previous years chosen by the assessee as his "standard period", pointing out that because of this position it was not possible to make any adjustment for variations in average capital. The Assistant Appel- late Commissioner upheld the assessment order. In appeal to the Appellate Tribunal one of the specific grounds taken by the assessee was that the Excess Profits Tax Officer and the Assistant Appellate C-Ommissioner had erred in not allowing proper standard profits in accordanc<J with the standard period subject to the adjustment on account of increase and decreaSe of capital iu the relevant chargeable· accounting period and that they were prepared to file computation o

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