SWARAJ ENGINES LTD. vs. CIT, CHANDIGARH

ITA/890/2008HC Punjab & HaryanaPHHC01080928200803 August 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY2 pages
AI SummaryDismissed

What were the facts?

The assessee, Swaraj Engines Limited, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated July 11, 2008. The appeal pertained to the assessment year 1996-97. The assessee proposed to raise substantial questions of law concerning the initiation of proceedings under Section 147 and the Tribunal's disregard of a co-ordinate bench's judgment. The amount in dispute is not specified. The procedural history involves the assessee's appeal to the High Court after the ITAT's order.

What did the High Court hold?

The High Court noted that the assessee did not press the first substantial question of law. For the second question, the assessee's grievance was that the Tribunal had incorrectly recorded their argument. The assessee contended that their actual submission was regarding the treatment of interest income. The Court observed that the assessee's remedy for such a grievance, i.e., an error in recording arguments, lies in moving the Tribunal itself. Consequently, the Court held that no substantial question of law arose for consideration under Section 260A of the Act. The appeal was disposed of on this procedural ground, without deciding the merits of the substantive issues. No issue was expressly left undecided, as the appeal was disposed of on the lack of a substantial question of law.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the initiation of proceedings under Section 147 of the Income Tax Act, 1961, pursuant to the judgment in CIT Vs. Sterling Foods (1999) 237 ITR 579 (SC), is covered within the phrase 'reasons to believe'. 2. Whether the Tribunal's order is sustainable for disregarding a co-ordinate bench's judgment, given the facts and circumstances. The assessee's contentions were: 1. The assessee did not press the first question. 2. Regarding the second question, the assessee argued that their contention was wrongly recorded by the Tribunal. Their actual contention was that interest income, if not covered under Section 80-I, should be accounted for as income from business or other sources, after adjusting for interest paid. The revenue's arguments are not recorded.

Which sections of the Income-tax Act were involved?

Section 260A,Section 147,Section 80-I

AI-generated summary — verify with the full judgment below

(1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: 3.8.2009 Swaraj Engines Limited ..........Appellant Versus Commissioner of Income Tax, Chandigarh ..........Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Mr. Pankaj Jain, Advocate for the appellant. **** ADARSH KUMAR GOEL, J. (Oral) 1.. The assessee has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order of Income Tax Appellate Tribunal, Chandigarh Bench dated 11.7.2008 passed in ITA No. 208/Chandi/2006 for the assessment year 1996-97, proposing to raise following substantial questions of law:- (i) Whether on the true and correct interpretation of the ITR 579 (SC) is covered within the words “reasons to believe”? (ii)Whether under the facts and circumstances of the case the Tribunal order is sustainable in having disregard to the judgment of Co-ordinate Bench?

I.T.A. No. 89

The order continues below.

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