C I T vs. M/S MANGILAL DIDWANIA

ITR/104/1998HC RajasthanRJHC01022863199826 April 2006Author: RAJESH BALIA,RAJENDRA PRASAD VYAS4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the question of whether the Assessing Officer (AO) made a proper inquiry with due application of mind is a question of fact, dependent on the specific facts and circumstances of each case. The Tribunal, after considering the material on record, was satisfied that the AO had conducted proper inquiries before passing the assessment order and had applied his mind to the relevant material. Therefore, the Tribunal's finding that the CIT was not justified in invoking Section 263 was a finding of fact and did not give rise to any question of law. Consequently, the Tribunal's order rejecting the application for reference under Section 256(1) was not erroneous. The application moved by the Revenue under Section 256(2) was dismissed.

What were the facts?

The Revenue (CIT, Jodhpur) sought a reference to the High Court under Section 256(2) of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Jaipur. The ITAT had upheld an earlier order of the Commissioner of Income Tax (CIT) which had set aside the assessment order passed by the Assessing Officer (AO) for assessment year 1990-91. The CIT had invoked Section 263, holding that the AO's assessment order dated 30.12.1992 was erroneous and prejudicial to the interest of revenue due to lack of proper inquiry. The assessee, M/s Mangilal Didwania, had submitted a reply to the Section 263 notice. The ITAT, however, found that the AO had indeed made proper inquiries before framing the assessment, and therefore, the CIT's invocation of Section 263 was unjustified.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was justified in law in quashing the order under Section 263 of the I.T. Act passed by the Commissioner of Income Tax? The Revenue contended that the ITAT erred in quashing the CIT's order, as the CIT had correctly found the assessment order to be erroneous and prejudicial to the revenue due to the AO's lack of proper inquiry. The Revenue argued that the assessment was completed in undue haste without adequate investigation. The assessee, through its counsel, argued that the ITAT's finding that the AO had conducted proper inquiries and applied his mind to the relevant material was a finding of fact, and therefore, no question of law arose for reference to the High Court. The ITAT's order was based on its own appreciation of the material on record.

Which sections of the Income-tax Act were involved?

Section 256(2),Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR JUDGMENT CIT, JODHPUR VS. M/s Mangilal Didwania. D.B. INCOME TAX REF. CASE NO.104/1998 against the order dated 15.1.1998 passed by Income Tax Appellate Tribunal, Jaipur in R.A. No.242/JP/97 for assessment year 1990 – 91. Date of judgment : 26th April, 2006 PRESENT HON'BLE MR. JUSTICE RAJESH BALIA HON'BLE MR. JUSTICE R.P. VYAS Mr. K.K. Bissa for the appellant. Mr. Sanjeev Johari for the respondent. ------- BY THE COURT:- (Per Hon'ble Mr. Rajesh Balia, J.) Heard learned counsel for the parties. The application has been moved under Section 256(2) of the Income Tax Act, 1961 by the Revenue seeking a direction to the Tribunal to state the case and refer the following question as question of law arising from the order dated 26.5.1997 of the Tribunal passed in the ITA

2 No.1343/JP/95 relating to assessment year 1990-91:- “Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was justified in law in quashing the order under Section 263 of the I.T. Act passed by the Commissioner of Income Tax? The Assessing Officer had passed the assessment order on 30.12.1992. The

The order continues below.

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