THE COMMISSIONER OF INCOME TAX vs. M/S SATPAL PANDIT

ITA No. 60 of 1999 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 60 of 1999 Date of Decision: 30.9.2010 The Commissioner of Income Tax ....Appellant. Versus M/s Satpal Pandit & Co. ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Vivek Sethi, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. The instant appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 26.2.1999 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No. 515(ASR)/1985 for the assessment year 1981-82, proposing the following substantial question of law:- “Whether, on the facts and in the circumstances of the case, the Ld. Tribunal was right in law in allowing the Misc. Application of the assessee and recalling its order holding that the remaining grounds and issues are to be decided in order to give justice to

ITA No. 60 of 1999 -2- the assessee as well as the revenue particularly when neither there is any ground/issue of the revenue having remained undecided nor there is any cross objections etc. having been filed by the assessee?” 2. Briefly the facts necessary for deciding the present appeal are that the assessee following the calendar year as its previous year filed return declaring total income of Rs.1,35,550/- for the assessment year 1981-82 on 30.6.1981. The assessment was completed on 24.9.1984 and a total income of Rs.3,32,035/- was assessed by the Assessing Officer. Against the said assessment, the assessee approached the Commissioner of Income Tax (Appeals) [in short “the CIT (A)”] by way of appeal and the CIT (A) vide order dated 17.5.1985 while allowing the appeal annulled the assessment order being barred by limitation. Against the order of the CIT (A), the revenue filed an appeal and the Tribunal vide order dated 8.11.1994 upheld the order of the CIT (A). Against the order of the Tribunal, the revenue filed reference application for drawing the statement of the case and referring the question of law to this Court. The Tribunal vide order dated 17.10.1995 referred the question of law to this Court. This Court vide order dated 29.9.1997 passed in ITR No. 142 of 1996 decided the question of law in favour of the revenue and against the assessee. In pursuance to the judgment of this Court, the Tribunal allowed the appeal of the revenue vide order dated 23.12.1997. Thereafter, on assessess's application, the Tribunal vide order dated 26.2.1999 recalled its order holding that the remaining grounds and issues were to

ITA No. 60 of 1999 -3- be decided. Hence, the present appeal by the revenue. 3. We have heard learned counsel for the revenue. 4. It is undisputed that the assessee had filed an appeal against the assessment order dated 30.6.1981 before the CIT(A) raising challenge to the additions made by the Assessing Officer. It was during the course of hearing of appeal that the assessee moved an application dated 20.5.1985 challenging the validity of the assessment order for the assessment year in question on the ground of limitation. The CIT(A) had accepted the aforesaid plea of the assessee and had annulled the assessment. However, the CIT(A) had not adjudicated the controversy on merits. Revenue had challenged the order of the CIT(A) and ultimately as noticed earlier, this court in ITR No. 142 of 1996 (The Commissioner of Income-Tax, Jalandhar v. M/s Sat Pal Pandit & Co. Chahar Bagh, Jalandhar) decided on 29.9.1997, had adjudicated the legal issue in favour of the revenue whereupon the Tribunal passed order allowing the appeal of the revenue under Section 260 of the Act. Since the Tribunal had decided the appeal on legal ground of limitation in consonance with the order of this Court, the order that was required to be passed was to remand the case to the CIT (A) to decide the appeal of the assessee on merits which had remained untouched while passing order dated 17.6.1985 by the CIT(A). The assessee noticed the aforesaid mistake apparent on the record of the Tribunal in its order dated 23.12.1997 and filed an application under Section 254(2) of the Act for rectification which was rectified vide order dated 26.2.1999 by recalling order dated 23.12.1997 and fixing the case for deciding the other issues in the appeal.

ITA No. 60 of 1999 -4- 5. After the reference was answered by the High Court, the Tribunal was required to pass an order under Section 260(1). It order to discern the scope of Section 260(1), it would be material to reproduce Section 260 which at the relevant time existed as under:- “260. Decision of High Court or Supreme Court on the case stated.- (1) The High Court or the Supreme Court upon hearing any such case shall decide the questions of law raised therein, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and a copy of the judgment shall be sent under the seal of the Court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conforming to such judgment. (2) The costs of any reference to the High Court or the Supreme Court which shall not include the fee for making the reference shall be in the discretion of the court.” 6. According to the aforesaid provision, the High Court or the Supreme Court after deciding the question of law referred to it, is required to deliver its judgment containing the grounds on which such decision is founded and a copy is to be sent to the Registrar of the appellate Tribunal so that necessary orders to dispose of the case in conformity with the judgment is passed. When the Tribunal disposes of the appeal conforming to the decision of the High Court or the Supreme Court, the Tribunal exercises its appellate powers. In other words, the

ITA No. 60 of 1999 -5- Tribunal retains all the powers which are there at the time of hearing of the original appeal. In the present case, the CIT (A) had only decided the question of limitation and had not touched the merits of the additions made by the Assessing Officer while disposing of the appeal, aggrieved against which, the revenue had approached the Tribunal. The question of law was answered in favour of the revenue and, thereafter, the Tribunal was required to remand the case to the CIT (A) for adjudication on merits. However, this was not done by the Tribunal while passing the order on 23.12.1997. Accordingly, the Tribunal while passing order under Section 254(2) of the Act had revived the appeal in order to do justice between the parties and to pass appropriate orders thereon. 7. No illegality or perversity could be pointed out in the order passed or the approach of the Tribunal which may call for interference by this Court. The substantial question of law as proposed is answered against the revenue. 8. Accordingly, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE September 30, 2010 (ADARSH KUMAR GOEL) gbs JUDGE