COMMISSIONER OF INCOME TAX vs. ARVINDBHAI SHANTILAL

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ITR/81/1986HC GujaratGJHC24010705198626 June 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
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What did the High Court hold?

The High Court held that the addition made by the ITO of the share of profit from the firm for assessment years 1978-79 and 1979-80 in the assessee's income under section 64(1)(iii) of the Income-tax Act, 1961, could not be justified in law and on the facts of the case. The Court reached this conclusion by respectfully agreeing with its previous judgment delivered in I.T.R. No. 214/84 on 27.3.87, which had answered a similar question for an earlier year in favor of the assessee and against the revenue. The ITAT had also relied on its earlier order which was the subject of that previous reference. Therefore, the question referred to the High Court was answered in the affirmative, meaning in favor of the assessee and against the revenue. The reference was disposed of with no order as to costs.

What were the facts?

This case involves an Income Tax Reference filed by the Commissioner of Income Tax (Revenue) against Arvindbhai Shantilal (Assessee) for assessment years 1978-79 and 1979-80. The Revenue is challenging an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'C', which had upheld the assessee's position. The dispute centers on additions made by the Income Tax Officer (ITO) to the assessee's income, specifically the share of profit from a firm. The ITAT had relied on its earlier order, which was the subject of a previous reference to the High Court (ITR No. 214/84). The High Court had previously decided a similar question in favor of the assessee for an earlier assessment year.

What were the issues?

1. Whether the addition made by the ITO of the share of profit from the firm amounting to Rs. 32,648/- for assessment year 1978-79 and Rs. 28,119/- for assessment year 1979-80 in the assessee's income under section 64(1)(iii) of the Income-tax Act, 1961, can be justified in law and on the facts of the case? Assessee's Contention: The judgment does not record any specific arguments made by the assessee. However, the High Court's decision implies that the assessee's position, as upheld by the ITAT, was that the addition was not justified. Revenue's Contention: The Revenue, represented by Shri B.B. Naik, submitted that for an earlier assessment year, a similar question was raised and answered by the High Court in I.T.R. No. 214/84 on 27.3.87. The Revenue's implicit contention is that the addition made by the ITO was legally valid, and the ITAT's decision to the contrary was erroneous.

Which sections of the Income-tax Act were involved?

Section 64(1)(iii),Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 81 of 1986

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 -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus ARVINDBHAI SHANTILAL -------------------------------------------------------------- Appearance: MR BB NAIK for MR MANISH R BHATT for Petitioner NOTICE SERVED for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE A.R.DAVE and MR.JUSTICE D.A.MEHTA

Date of decision: 26/06/2001

ORAL JUDGEMENT (Per : MR.JUSTICE A.R.DAVE)

At the instance of the revenue, the following question of law has been referred to this court for its opinion by the Income Tax Appellate Tribunal, Ahmedabad Bench 'C' under the provisions of sec. 256(1) of the Income-tax Act, 1961 :

"Whether the addition made by the ITO of the share of profit from the firm amounting to Rs. 32,648/and Rs. 28,119/- for assessment years 1978-79 and 1979-80 respectively made by the ITO in the assessee's income under section 64(1)(iii) of the I.T. Act, 1961 cannot be justified in law and on the facts of the case?"

2.

Learned advocate Shri B.B. Naik has appeared for the revenue whereas nobody has appeared for the respondent assessee, though the respondent has been duly served.

3.

Learned advocate Shri Naik appearing for the revenue has fairly submitted that for the earlier assessment year in the case of the assessee itself, a similar question was raised and the said question was answered by this Court in I.T.R. No. 214/84 on 27.3. 87. Upon perusal of the judgment delivered in I.T.R. No.214/84, we find that this Court had answered a similar question for the earlier year in the affirmative i.e. in favour of the assessee and against the revenue.

4.

It is also pertinent to note that while deciding the appeal, the Tribunal had also relied upon its earlier order which was subject-matter of I.T.R. No. 214/84. 5. We are in respectful agreement with the judgment delivered in I.T.R. No. 214/84 and therefore we answer the question in the affirmative i.e. in favour of the assessee and against the revenue.

The reference is thus disposed of with no order as to costs.

(A.R. Dave, J.)

(D.A. Mehta, J.) (hn)

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