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

ITR/53/1987HC GujaratGJHC24011786198719 July 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryRemanded

What were the facts?

This case involves an Income Tax Reference filed by the revenue (Commissioner of Income-tax) against the assessee, Kashiram Textile Mills P. Ltd. The reference arises from an order of the Income Tax Appellate Tribunal (ITAT). The core issue revolves around penalty proceedings initiated under Section 271(1)(c) of the Income-tax Act, 1961, following directions issued by the Inspecting Assistant Commissioner (IAC) under Section 144-A of the Act. A previous reference (ITR No. 66/84) had addressed whether the IAC could issue directions under Section 144-A during a pending reference under Section 144-B(4). This Court, in that prior reference decided on July 18, 1995, held that the IAC was empowered to issue such directions, and directed the ITAT to decide the appeal on merits. However, it was informed that the ITAT had not yet decided the appeal on merits despite this direction.

What did the High Court hold?

The High Court declined to answer the question referred to it. The Court noted that a previous reference (ITR No. 66/84) had established that the IAC was empowered to issue directions under Section 144-A. However, the ITAT had not yet decided the appeal on merits as directed by the High Court in that previous reference. The Court stated that before examining the validity of the penalty proceedings under Section 271(1)(c), the ITAT must first decide the appeal on merits, which includes examining the validity of the directions given by the IAC. Since the ITAT had not yet done so, the High Court found it impossible to answer the current reference. The Court directed the ITAT to take appropriate decisions in pursuance of the directions given in ITR No. 66/84 expeditiously. No issue was expressly left undecided, but the current reference could not be answered due to procedural non-compliance by the ITAT.

What were the issues?

1. 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? (Question of law and fact, turning on Sections 144-A and 271(1)(c) of the Income-tax Act, 1961). Assessee's contention: The penalty under Section 271(1)(c) cannot be sustained because the IAC was not justified in issuing the directions under Section 144-A. (Implied from the question referred). Revenue's contention: The penalty under Section 271(1)(c) can be sustained. (Implied from the question referred and the fact that the revenue filed the reference). The revenue also relies on the High Court's previous decision in ITR No. 66/84, which held that the IAC was empowered to issue directions under Section 144-A.

Which sections of the Income-tax Act were involved?

Section 144-A,Section 271(1)(c),Section 256(1),Section 144-B(4)

AI-generated summary — verify with the full judgment below

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

The order continues below.

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