COMMISSIONER OF INCOME TAX,LUDHIANA vs. M/S SANGRUR VANASPATI MILLS

ITA/43/2003HC Punjab & HaryanaPHHC01055528200312 October 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL9 pages
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What were the facts?

The assessee, M/s Sangrur Vanaspati Mills Ltd., filed its return for assessment year 1986-87 on June 30, 1986. A survey under Section 133A of the Income Tax Act, 1961, on October 10, 1988, revealed unaccounted transactions. The assessee offered an additional income of Rs. 23.50 lacs. The Assessing Officer completed the assessment under Section 143(3) on December 30, 1988, at a total taxable income of Rs. 88,04,474/-, charging interest under Section 215. Subsequently, the Assessing Officer waived interest of Rs. 5,44,900/- under Rule 40(5) of the Income Tax Rules, 1962. The Commissioner of Income Tax (Central), Ludhiana, vide an order dated March 15, 1991, cancelled the waiver order, holding it prejudicial to the revenue. The Assessing Officer revived the interest liability. The Income Tax Appellate Tribunal (ITAT) allowed the assessee's appeal, setting aside the CIT's order. The revenue appealed to the High Court.

What did the High Court hold?

The High Court held that the Tribunal erred in setting aside the order of the CIT. The Court noted that the assessee had not made a full and true disclosure, as evidenced by the additional income of Rs. 1 lac added in the assessment order above the surrendered amount. The Court found that the CIT had rightly exercised jurisdiction under Section 263 by holding that the waiver of interest under Rule 40(5) was erroneous and prejudicial to the interest of the revenue, as the circumstances did not justify such waiver. The Tribunal failed to provide any reasons for reversing the CIT's order. Therefore, the question of law was decided in favour of the revenue. The appeals were allowed.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in cancelling the order passed under Section 263, thereby restoring the interest waived? The revenue contended that the Tribunal erred in setting aside the CIT's order, arguing that the assessee did not make a true and full disclosure and failed to fulfill the conditions under Rule 40(5) of the 1962 Rules for waiver of interest. The assessee supported the order passed by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 133A,Section 131,Section 143(3),Section 215,Section 250(6),Section 263

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 12.10.2010 Commissioner of Income Tax (Central), Ludhiana ....Appellant. Versus M/s Sangrur Vanaspati Mills Ltd. ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rajesh Katoch, Advocate for the appellant. Mr. Pankaj Jain, Advocate for the respondent. AJAY KUMAR MITTAL, J.

1.

This order shall dispose of ITA Nos. 226 of 2002 and 43 of 2003 as common question of law and facts are involved therein. For brevity, the facts are being extracted from ITA No. 43 of 2003. 2. ITA No. 43 of 2003 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 2.5.2002 passed by the Income Tax Appellate Tribunal, Chandigarh Bench “A”, Chandigarh (hereinafter referred to as “the Tribunal”) in ITA Nos. 765 to 772/Chandi/91 for the assessment year 1986-87, proposing following substantial question of law:- “Whether, on the facts and in the circumstances of the case, the ITAT was right in law in cancelling order -2- u/s 263 restoring the inte

The order continues below.

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