RSWM LTD. vs. A.C.I.T.INV CIRCLE,BHILWARA

On 8th January 2010 following two substantial questions of law were framed by this Court :- “(i) Whether the Income Tax Appellate Tribunal can decide the case on merit, even if the Commissioner (Appeal) has dismissed the appeal on technical grounds? (ii) Whether there can be some other market value of the electricity except that fixed by the Electricity Board in the State of Rajasthan?”

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The relevant assessment year is 1972-73. The Income Tax Officer rejected the application for registration of the firm coming to the conclusion that no genuine firm has come into existence. The assessee appealed to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner took the view that some further enquiry into facts was necessary without which the question of genuineness of the firm could not be decided. Accordingly, the Appellate Assistant Commissioner did not decide the matter on merits and remanded the case to the Income Tax Officer for making a further enquiry as directed. The Revenue, being aggrieved by the order of remand made by the Appellate Assistant Commissioner, preferred an appeal to the Tribunal. The grounds of appeal indicate that the only grievance made in the appeal filed to the Tribunal, was against the remand made by the Appellate Assistant Commissioner to the Income Tax Officer. The relief claimed in the appeal was only to this extent, or, in other words, to set aside the order of remand. The Tribunal, however, after coming to the conclusion that the remand to the Income Tax Officer was not justified and that the existing material was sufficient to decide the case on merits, proceeded to decide the case itself on merits and held that the refusal of registration was justified. Aggrieved by this decision of the Tribunal instead of remand by the Tribunal to the Appellate Assistant Commissioner for deciding the appeal on merits, this reference has been made at the instance of the assessee.

As earlier indicated, the appeal by the Revenue to the Tribunal was merely for quashing the remand order passed by the Appellate Assistant Commissioner on the ground that no further enquiry by the Income Tax Officer was necessary and the case could be decided on merits by the Appellate Assistant Commissioner on the existing material. In such a situation, the scope of the appeal before the Tribunal was merely consideration of the correctness of the order of remand made by the Appellate Assistant Commissioner since even the Revenue, while preferring the appeal, did not agitate the merits of the case for decision by the Tribunal. In such a situation, the Tribunal, after reaching the conclusion that the material present was sufficient for deciding the question of (Uploaded on 26/08/2025 at 02:33:22 PM) (Downloaded on 27/10/2026 at 11:15:47 PM)

Consequently, the reference is answered in favour of the assessee and against the Revenue by holding that the Tribunal was not justified in giving a finding on the merits of the case instead of remanding the case to the Appellate Assistant Commissioner for decision of the case on merits.”

Therefore we agree with Mr. Jhanwar that the Tribunal having come to the conclusion that Commissioner(Appeals) was not justified in dismissing appeal on technical ground should have remanded the matter to Commissioner(Appeals) to decide second question of law framed by this Court, which is on merits.

Therefore, to the extent that Tribunal has decided the case on merits, we hereby quash and set aside the order. The matter be sent to Commissioner(Appeals) to decide whether there can be some other market value of electricity except that fixed by Electricity Board in the State of Rajasthan.

The Commissioner(Appeals) shall dispose the appeal on or before 31st October 2025. 6. All rights and contentions of the parties on merits are kept open.

Appeal disposed. (SANDEEP TANEJA),J (K.R. SHRIRAM),CJ 26-divyaP/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 26/08/2025 at 02:33:22 PM) (Downloaded on 27/10/2026 at 11:15:47 PM)