M/S.RAMJI DASS & CO. vs. THE COMMISSIONER OF INCOME TAX

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ITR/201/1999HC Punjab & HaryanaPHHC01038654199909 November 2009Author: MR. JUSTICE GURDEV SINGH,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Tribunal was not right in dismissing the assessee's cross-objections without considering them on merits. The Court observed that the Tribunal's earlier order, which dismissed the revenue's appeal, had upheld the net profit rate of 9.25% as applied by the CIT(A). However, the assessee's cross-objections, which sought a further reduction in the profit rate, were not considered. The Court found that the assessee's viewpoint put forward by way of cross-objections was not considered on merits. Therefore, the question referred was answered in favour of the assessee and against the Department. The cross-objections of the assessee were required to be heard and decided on merits. The reference was disposed of with this direction.

What were the facts?

The assessee, M/s Ram Ji Dass & Co., is challenging an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 1990-91. The Assessing Officer rejected the assessee's books of account and assessed net profit at 10% of turnover. The Commissioner of Income Tax (Appeals) reduced this rate to 9.25%. The revenue appealed this reduction to the ITAT, and the assessee filed cross-objections seeking a further reduction to 6.29%. The ITAT dismissed the revenue's appeal, thereby upholding the 9.25% profit rate. However, the assessee's cross-objections were not considered on merits. The assessee's subsequent application to recall the order and have the cross-objections decided on merits was rejected by the ITAT.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in dismissing the cross-objections filed by the assessee on the ground that while deciding the revenue's appeal, the Tribunal had already considered the question relating to the rate of profits and had upheld the same, and it could not be re-examined thereafter in the assessee's cross-objections? (Question of law) Assessee's contentions: The assessee argued that the Tribunal, while deciding the revenue's appeal, only considered the reduction of the net profit rate from 10% to 9.25% and did not examine the assessee's claim for a further reduction to 6.29%. The assessee relied on Hari Shankar Rastogi versus Sham Manohar and others (2005) 3 Supreme Court Cases 761 regarding the scope of cross-objections. Revenue's contentions: The judgment records no specific arguments from the revenue on this point.

Which sections of the Income-tax Act were involved?

Section 256(1)

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Cause title — parties, addresses and appearances
ITR No. 201 of 1999 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No. 201 of 1999 (O&M) Date of decision: November 9, 2009 M/s Ram Ji Dass & Co. Abohar ...Appellants Versus The Commissioner of Income Tax, Patiala. ...Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present: Mr. Animesh Sharma, Advocate, for the assessee. Ms. Savita Saxena, Advocate, for the revenue.

ORDER

1.

Income Tax Appellate Tribunal, Amritsar, has referred the following question of law for the opinion of this Court under Section 256 (1) of Income Tax Act, 1961 (for short, “the Act”) in compliance of order of this Court dated 2.12.1998 and arising out of the order of the Tribunal in C.O. No. 101 (ASR)/1993 in ITA No. 801 (ASR)/1993) dated 31.8.1999 for the assessment year 1990-91:- “(i) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in dismissing the cross- objections filed by the assessee on the ground that while deciding the revenue's appeal the Tribunal had already considered the question relating to the rate of profits and had upheld the same and it could not be re-examined there after in assessee's cross objections”.

2.

The Assessing Officer rejected the books of account and assessed net profit @ 10% of the turn over. On appeal, net profit rate was reduced to 9.25%. The Department filed appeal before the Tribunal and the assessee filed cross-objections. The appeal of the Department was dismissed but cross-objections of the assessee were not considered on merits, while dismissing the appeal of the Department. The assessee applied for recalling of the order and for decision of cross-objections on merits. This prayer was rejected with the following observations:- “15.3 It is observed that the Tribunal vide its order dated 18.4.1995 have already dismissed the appeal of the Revenue whereby they had agitated the relief given by the learned CIT (A). In the process, the Tribunal upheld the net profit rate of 9.25% as applied by the learned CIT (A). Since appeal in I.T.A. No. 801 (ASR)/93 filed by the Department has not been recalled, the earlier order of the Tribunal stands in this behalf accordingly, we see no reason to interfere with the orders of the learned CIT (A) as already upheld by the Tribunal.”

3.

We have heard learned counsel for the parties.

4.

Learned counsel for the assessee submits that while deciding

the appeal of the Department, the Tribunal only considered whether reduction of the net profit rate from 10% to 9.25% was justified or not and not the question whether said rate should be further reduced to 6.29%, as sought by the assessee. Reliance has been placed on Hari Shankar Rastogi versus Sham Manohar and others (2005) 3 Supreme Court Cases 761, about the scope of cross objections.

5.

From perusal of the impugned order, it is clear that the view point of the assessee put forward by way of cross-objections was not considered on merits. Accordingly, question referred has to be answered in favour of the assessee and against the Department. The cross-objections of the assessee are, thus, required to be heard and decided on merits.

6.

Reference is disposed of. (ADARSH KUMAR GOEL) JUDGE November 9, 2009 (GURDEV SINGH ) prem

JUDGE

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