COMMISSIONER OF INCOME TAX vs. NIRMA CHEMICALS WORKS,

ITA/9/1999HC GujaratGJHC24024748199904 October 1999Author: HONOURABLE MR. JUSTICE B.C.PATEL,HONOURABLE MR. JUSTICE P.B.MAJMUDAR5 pages
AI SummaryDismissed

What were the facts?

The Commissioner of Income Tax (CIT) filed an application before the Income Tax Appellate Tribunal (ITAT) requesting a reference on two questions of law concerning an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The ITAT rejected this application. Consequently, the CIT filed an application before the High Court of Gujarat, Ahmedabad, seeking a direction to the ITAT to raise and refer these questions of law. The questions pertained to the ITAT's confirmation of the CIT(A)'s order, specifically regarding the time-barring of an action under Section 154 and the deletion of additions made by the Assessing Officer (AO). The assessee is Nirma Chemicals Works.

What did the High Court hold?

The High Court held that no referable question of law arose from the ITAT's order, and therefore, the application was rejected. Regarding Question 1, the Court noted that the CIT(A) had considered various expenses under Section 37(3A) and concluded that expenditure on printing and distribution of calendars did not fall under its mischief. The CIT(A) deleted the addition made by the AO. The Court found that if the Revenue believed the CIT(A)'s order required rectification or clarification regarding other items, they should have approached the appropriate authority or the Tribunal. The Court found no merit in the argument that the CIT(A) deleted only a part of the deletion. Regarding Question 2, the Court observed that the CIT(A) had correctly noted that the AO's action under Section 154, to rectify a mistake in the assessment order dated 26.3.1987, was time-barred as it was passed on 18.3.1992, beyond the permissible period ending 31.3.1991. Furthermore, the CIT(A) had also deleted a disallowance of Rs.6,08,905, indicating that there was no mistake apparent from the record on merits. Therefore, the addition of Rs.3,50,586 made by the AO was rightly deleted.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income Tax (Appeal) holding that action under Section 154 had become time-barred in view of the fact that the said order was passed with reference to the order giving effect to the Commissioner of Income Tax (Appeal)'s order? 2. Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income Tax (Appeal) deleting the additions made by the Assessing Officer of Rs.3,50,586/-? Revenue's contentions: For Question 1: The CIT contended that the CIT(A) allowed expenses only with regard to the printing of calendars, and therefore, the AO was justified in his interpretation. The Revenue argued that not all items were taken into consideration and that if the CIT(A)'s order required rectification, the appropriate authority or the Tribunal should have been approached. Assessee's contentions: Not recorded in the judgment. For Question 2: The CIT contended that the AO was justified in adding Rs.3,50,586/-. The CIT(A) had pointed out that the AO proceeded to rectify an alleged mistake apparent from the record under Section 154, which should have been done by 31.3.1991, but the impugned order was passed on 18.3.1992, making it time-barred. The CIT(A) also noted that even for the disallowance of Rs.6,08,905, it was deleted, suggesting no mistake was apparent on merits.

Which sections of the Income-tax Act were involved?

Section 256,Section 154,Section 37(3A)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX APPLICATION No 9 of 1999

For Approval and Signature:

Hon'ble MR.JUSTICE B.C.PATEL and Hon'ble MR.JUSTICE P.B.MAJMUDAR ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? YES

2.

To be referred to the Reporter or not? YES :

3.

Whether Their Lordships wish to see the fair copy : NO of the judgement? NO 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? NO 5. Whether it is to be circulated to the Civil Judge? : NO NO

The order continues below.

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