CIT, PATIALA vs. M/S GANESH STEEL INDS.

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ITR/254/1995HC Punjab & HaryanaPHHC01032317199508 July 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal was not right in law in cancelling the order passed under Section 263 of the Income Tax Act by the Commissioner of Income Tax. The Tribunal's reasoning that an assessment order, once appealed against, could not be revised under Section 263 was found to be erroneous. The Court noted that the revenue's submission regarding the clarificatory amendment in 1989, which made the power under Section 263 exercisable even if an order of assessment had been the subject of an appeal, was not disputed by the assessee's counsel. This amendment was retrospective and covered the present case. Therefore, the question of law is answered in favour of the revenue and against the assessee. The ITAT's order is set aside, and the reference is disposed of accordingly.

What were the facts?

The assessee, M/s. Ganesh Steel Indus., Mandi Gobindgarh, claimed investment allowance under Section 32-A of the Income Tax Act, 1961, for a weighbridge, which was allowed by the assessing officer for assessment year 1982-83. The Commissioner of Income Tax (CIT), Patiala, invoked his jurisdiction under Section 263 of the Act, setting aside the assessment order and directing re-examination of the claim. The assessee appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT cancelled the CIT's order under Section 263, relying on its earlier decision in Yash Pal Garg & Company (P) Limited. The ITAT's reasoning was that once an assessment order had been appealed, it could not be revised under Section 263. The revenue has referred a question of law to the High Court arising from the ITAT's order dated 8.1.1992.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in cancelling the order passed under Section 263 of the Income Tax Act by the Commissioner of Income Tax? Assessee's contention: The assessee argued that the ITAT's decision was correct because once an assessment order has been appealed against, it cannot be subjected to revision under Section 263 of the Act. The ITAT followed its earlier order in Yash Pal Garg & Company (P) Limited. Revenue's contention: The revenue argued that the ITAT erred. They contended that there were earlier differing views on whether Section 263 revision was permissible after an appeal. However, a clarificatory amendment in 1989 provided that Section 263 powers could be exercised even if an assessment order was under appeal. This amendment was retrospective and covered cases filed on or before 1.6.1988, thus applying to the present case. The revenue relied on Commissioner of Income Tax Vs. Shri Arbuda Mills Ltd. (1998) and Commissioner of Income Tax Vs. Ratilal Bacharilal and sons (2006).

Which sections of the Income-tax Act were involved?

Section 32-A,Section 263

AI-generated summary — verify with the full judgment below

(1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: 8.7.2009 The Commissioner of Income Tax, Patiala ..........Applicant Versus M/s. Ganesh Steel Indus., Mandi Gobindgarh ..........Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Mr. Rajesh Katoch, Advocate for the applicant. Mr. Pankaj Jain, Advocate for the respondent. **** ADARSH KUMAR GOEL, J. (Oral)

1.

The Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh has referred following question of law for opinion of this Court, arising out of its order dated 8.1.1992 in ITA No. 142/Chandi/87, for the assessment year 1982-83:- “Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in cancelling the order passed under Section 263 of the Income Tax Act by the Commissioner of Income Tax?”

2.

The assessee is running a rolling mill and claimed investment allowance in respect of weight bridge under Section 32-A of the Income Tax Act, 1961 (in short, 'the Act'), which was allowed by the assessing authority. Against the order of assessment, appeal of the assessee was (2) decided. Thereafter, the Commissioner of Income Tax invoked his jurisdiction under Section 263 of the Act and set aside the assessment order and directed the Assessing Officer to re-examine the claim of the assessee and give reasons for the allowance. Appeal of the assessee was, however, allowed by the Tribunal following its earlier order in the case of Yash Pal Garg & Company (P) Limited, ITA No. 724/Chandi/87, for assessment year 1982-83 dated 7.1.1992, annexed as Annexure 'C' to the statement of the case, without examining the objection of the revenue that investment allowance was not admissible on the weigh bridge, in view of Clause (b) of sub Section 2 of Section 32-A of the Act, as the weigh bridge was not machinery or plant used in manufacture or production of an article or thing nor it is used for the purpose of business of generation or production of electricity.

3.

The Tribunal held that once order of assessment had been appealed against, the same could not have been thereafter subjected to revision under Section 263 of the Act.

4.

We have heard learned counsel for the parties.

5.

Learned counsel for the revenue submits that there were earlier two views on the subject and in the clarificatory amendment in the year 1989, it was provided that power under Section 263 of the Act could be exercised even if an order of assessment had been subject matter of appeal. The amendment was, on its terms, retrospective and covers every appeal, which may have been filed on or before or after 1.6.1988 and, thus, the present case was covered by the said amendment. This amendment was not noticed by the Tribunal. He also relies upon the judgment of Hon'ble the Supreme Court in Commissioner of Income Tax Vs. Shri Note:-Whether this case is to be referred to the Reporter .......Yes/No

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