M/S AJAY ELECTRONICS vs. PRINCIPAL COMMISSIONER OF INCOME TAX-1

Facts

The petitioner, M/s. Ajay Electronics, filed a writ petition before the Punjab and Haryana High Court. This petition arose from an order sheet of an appeal pending before the Income Tax Appellate Tribunal (ITAT). The appeal before the ITAT was a result of a previous High Court judgment in ITA No. 286 of 2014, decided on 15.09.2016, which had remanded the case back to the ITAT for a fresh decision on merits. The petitioner sought liberty from the ITAT to approach the High Court for directions to admit additional legal grounds in support of the CIT(A)'s order, as per Rule 27 of the Income Tax Rules. The ITAT granted this liberty. The petitioner's present writ petition argues that the ITAT failed to consider their submissions regarding additional grounds.

Held

The High Court held that the liberty sought by the petitioner amounts to seeking a review of the High Court's own order dated 15.09.2016, which cannot be permitted in a separate set of proceedings. The Court found the petitioner's plea to be an attempt to forestall the proceedings before the ITAT, which was not appreciated. The Court further stated that the previous judgment was passed after hearing both parties and examining all legal submissions. Consequently, the High Court dismissed the writ petition as an abuse of the process of the court, imposing costs of Rs. 20,000/- on the petitioner. It was clarified that the ITAT shall proceed to decide the appeal on merits as previously directed. No specific issue was left undecided; the petition was dismissed on procedural grounds.

Key Issues

1. Whether the petitioner is entitled to seek a review of the High Court's previous order dated 15.09.2016 in a separate writ petition proceeding, by seeking to raise additional legal grounds before the ITAT in support of the CIT(A)'s order under Rule 27 of the Income Tax Rules? Assessee's Contention: The petitioner argued that the Tribunal ought to have allowed them to raise additional legal grounds in support of the order passed by the CIT(A) in terms of Rule 27 of the Income Tax Rules, and that the Tribunal failed to take notice of their submissions, necessitating their application for liberty to approach the High Court. Revenue's Contention: No arguments were recorded for the respondent (Revenue).