C.I.T RTK vs. M/S DABRIWALA STEEL & ENGG.CO.

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ITR/47/1993HC Punjab & HaryanaPHHC01021950199302 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT had followed the judgment of the Hon'ble Supreme Court in T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50, which held that the power of rectification under Section 154 cannot be exercised to rectify an error which is debatable. Since the Tribunal's order was based on a binding precedent from the Supreme Court, the High Court found itself unable to hold that any question of law arose for consideration. Consequently, the reference was returned unanswered. The operative direction was to return the reference unanswered, meaning the ITAT's decision was affirmed.

What were the facts?

The assessee, M/s Dabriwala Steel & Engg. Co., Faridabad, was assessed on January 29, 1983. Subsequently, the Assessing Officer (AO) passed a rectification order under Section 154 of the Income-tax Act, 1961. This order disallowed an amount of Rs. 13,31,784 claimed as provision relating to June 1972 to December 1977 and Rs. 52,711 claimed on account of previous years' adjustments. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted this disallowance. The Income Tax Appellate Tribunal (ITAT), Delhi Bench, upheld the CIT(A)'s order. The Commissioner of Income Tax, Haryana, Rohtak (the revenue), sought a reference to the High Court on a question of law.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the CIT(A) who deleted the disallowance of Rs. 13,31,784/- on account of provision relating to June, 1972 to December 1977 and Rs. 52,711/- on account of previous years adjustments by holding that the issues involved are highly debatable and the assessing officer was not competent to exercise his power to pass rectification order u/s. 154 of the Income-tax Act, 1961? Assessee's contentions: The issues involved were highly debatable, and therefore, the AO was not competent to exercise his power to pass a rectification order under Section 154 of the Income-tax Act, 1961. The assessee relied on the Supreme Court judgment in T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50. Revenue's contentions: The revenue argued that the ITAT was not right in law in upholding the CIT(A)'s deletion of the disallowance and that the AO was competent to pass the rectification order.

Which sections of the Income-tax Act were involved?

Section 154

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.47 of 1993 Date of decision: 02.11.2006 The Commissioner of Income Tax, Haryana, Rohtak. ---Applicant Vs. M/s Dabriwala Steel & Engg. Co., Faridabad. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Mr. Yogesh Putney, Advocate for the revenue. -----

ORDER: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Delhi Bench, New Delhi, arising out of its order dated 04.12.1991 in I.T.A. No.2254/Del/1988 in respect of assessment year 1980-81:- “Whether on the facts and in the circumstances of the case, ITAT is right in law in upholding the order of the CIT(A) who deleted the disallowance of Rs.13,31,784/- on account of provision relating to June, 1972 to December 1977 and Rs.52,711/- on account of previous years adjustments by holding that the issues involved are highly debatable and the assessing officer was not competent to exercise his power to pass rectification order u/s. 154 of the Income- tax Act, 1961?” The assessee was assessed on 29.01.1983, but, thereafter, an amount of Rs.13,31,784/- claimed on account of provision to Haryana Electric Department and a sum of Rs.52,711/- claimed on account of the previous years’ adjustments were disallowed by passing an order of rectification under Section 154 of the Income-tax Act, 1961. The Tribunal accepted the plea of the assessee that I.T.R. No.47 of 1993 on a debatable issue power of rectification could not be exercised as held by the Hon’ble Supreme Court in T.S. Balaram, ITO v. Volkart Bros., ( 1971)82 ITR 50. We have heard learned counsel for the revenue. The Tribunal having followed the judgment of the Hon’ble Supreme Court, we are unable to hold that any question of law arises for consideration.

Accordingly, the reference is returned unanswered. ( ADARSH KUMAR GOEL ) JUDGE November 02, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e

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