M/S SHAM LAL SAJDEH vs. CIT AMRITSAR

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ITR/61/1990HC Punjab & HaryanaPHHC01021614199010 December 2008Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE L.N. MITTAL3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that the revenue argued the matter was covered by the Supreme Court decision in Phool Chand Bajrang Lal and another v. Income Tax Officer and another, [1993] 203 ITR 456. However, due to the absence of the assessee's counsel, the Court deemed it inappropriate to answer the reference. Consequently, the reference was returned unanswered. The specific findings of the Tribunal on the validity of the notice under Section 147(1)(b) or the allowability of the salary deduction were not addressed by the High Court. No operative directions were issued, and no issues were left undecided by the High Court itself, as it did not rule on the merits.

What were the facts?

This case concerns the assessment year 1974-75 for M/s Sham Lal Sajdeh (HUF), Amritsar, the assessee, and the Commissioner of Income Tax, Amritsar, the revenue. The High Court of Punjab and Haryana was considering a reference under Section 256(2) of the Income Tax Act, 1961, arising from an order of the Income Tax Appellate Tribunal dated January 24, 1981. The Tribunal had restored the Assessing Officer's order, overturning the CIT(A)'s decision to set aside a disallowance. The original assessment had allowed a deduction for salary paid to the HUF's karta. The assessment was reopened on the grounds that this claim was wrongly allowed, based on an order for the subsequent year. The CIT(A) had found the reassessment unjustified.

What were the issues?

The High Court was asked to decide three questions of law referred by the Income Tax Appellate Tribunal: 1. Whether, on the facts and in the circumstances, the Tribunal was right in law in holding that the issue of notice under Section 147(1)(b) was valid? 2. Whether, on the facts and in the circumstances, the Tribunal was justified in law in holding that the issue of notice under Section 147(1)(b) to disallow Rs. 20,000/- paid by the HUF to Shri Sham Lal Sajdeh (Individual) was valid, when this amount had been allowed for the assessment year 1974-75 by the Tribunal's order dated November 24, 1976, which the Department had accepted? 3. Whether, on the facts and in the circumstances, the Tribunal was right in law in not directing the Commissioner of Income-tax (Appeals) to decide grounds 6 and 7 of the assessee's appeal, which contended that the salary of Rs. 20,000/- paid to Shri Sham Lal Sajdeh (Individual) for services rendered to the HUF was allowable, when the CIT(A) had allowed the assessee's appeal solely on the ground that the notice under Section 147(1)(b) was invalid and had not decided grounds 5, 6, and 7? The revenue contended that the matter was covered against the assessee by the Supreme Court judgment in Phool Chand Bajrang Lal and another v. Income Tax Officer and another, [1993] 203 ITR 456. No arguments were recorded for the assessee.

Which sections of the Income-tax Act were involved?

Section 256(2),Section 147(1)(b)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : I. T. R. No. 61 of 1990 Date of Decision : December 10, 2008. M/s Sham Lal Sajdeh (HUF), Amritsar .... CORAM : HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE L. N. MITTAL * * * Present : Ms. Naveender P. K. Singh, Senior Standing Counsel, for the Revenue. * * * ADARSH KUMAR GOEL, J. (Oral) :

1.

The questions of law, which have been referred for opinion of this Court under Section 256 (2) of the Income Tax Act, 1961 (for short, “the Act”) by the Income Tax Appellate Tribunal, arising out of its order dated 24.01.1981 in ITA No. 1193 (ASR)/1979 in respect of assessment year 1974-75 are as follows :- “1. Whether on the facts and in the circumstances of the case the Tribunal is right in law in holding that the issue of notice under section 147 (1) (b) is valid ? 2. Whether on the facts and in the circumstances of the case the Tribunal is justified in law in holding that the issue of notice under section 147 (1) (b) to disallow the sum of Rs.20,000/- paid by the Joint Hindu Family to Shri Sham Lal Sajdeh, Individual, is valid when the said amount has been allowed by the Tribunal in the said assessment year 1974-75 by their order dated 24-11-1976 and the said decision has been accepted by the Department ? 3. Whether on the facts and in the circumstances of the case the Tribunal is right in law in not directing the Commissioner

of Income-tax (Appeals) to decide grounds Nos. 6 and 7 of the grounds of appeal filed by the assessee with the Commissioner

of Income-tax (Appeals) wherein it was contended that the salary of Rs.20,000/- paid to Shri Sham Lal Sajdeh, Individual, for the services rendered to the Joint Hindu Family, is allowable, when the Commissioner

of Income-tax (Appeals) allowed the appeal of the assessee on the ground that the issue of notice under section 147 (1) (b) was not valid and did not feel the necessity of deciding the grounds Nos.5, 6 and 7 ?”

2.

In the original order of assessment, the assessee was allowed deduction in respect of salary paid to karta of the HUF. On the basis of order for the next year, the assessment was re-opened on the ground that the said claim was wrongly allowed. The CIT (A) set aside the disallowance on the ground that re-assessment was not justified. The Tribunal, however, restored the order of the Assessing Officer.

3.

Even though learned counsel for the Revenue submits that the matter is covered against the assessee, by a judgment of Hon'ble Supreme Court in Phool Chand Bajrang Lal and another v. Income Tax Officer and another, (S.C.) [1993] 203 ITR 456, but in absence of assessee, we do not consider it appropriate to answer the reference.

4.

The reference is returned unanswered. (ADARSH KUMAR GOEL) JUDGE December 10, 2008

( L. N. MITTAL ) monika JUDGE

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