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1987 (8) TMI 139 - AT - Income Tax

Issues Involved:
1. Applicability of Section 263 of the Income-tax Act, 1961.
2. Adequacy of the Income Tax Officer's (ITO) enquiries and investigations.
3. Application of precedents from the Allahabad High Court and Punjab and Haryana High Court.
4. Rejection of decisions from the Supreme Court and High Courts.
5. Consistency with previous Tribunal decisions.

Detailed Analysis:

1. Applicability of Section 263 of the Income-tax Act, 1961
The primary issue was whether the Tribunal was correct in holding that the provisions of Section 263 were not applicable and in cancelling the order of the Commissioner of Income-tax (CIT). The Tribunal concluded that the assessment orders made by the ITO were neither erroneous nor prejudicial to the interest of revenue. The CIT had set aside the assessments under Section 263, believing they were made in haste without necessary enquiries. However, the Tribunal found that the CIT had not demonstrated how the ITO's orders were prejudicial to the revenue. Consequently, the Tribunal cancelled the CIT's order under Section 263 and restored the ITO's assessments.

2. Adequacy of the Income Tax Officer's Enquiries and Investigations
The second issue revolved around whether the ITO's failure to make enquiries and investigations regarding the assessee's versions was sufficient to deem the ITO's order erroneous and prejudicial to the revenue. The Tribunal held that mere failure to conduct certain enquiries did not automatically make an order erroneous and prejudicial to the revenue. The CIT had not shown that the ITO's alleged errors resulted in a loss of revenue. Therefore, the Tribunal found no useful purpose in referring this question to their lordships.

3. Application of Precedents from the Allahabad High Court and Punjab and Haryana High Court
The third issue questioned whether the Tribunal correctly applied the decisions of the Allahabad High Court in J.P. Srivastava & Sons (Kanpur) Ltd. v. CIT and the Punjab and Haryana High Court in CIT v. R.K. Metal Works. The Tribunal found these questions vague and full of ambiguity, deeming them unsuitable for referral. The Tribunal noted that the CIT had not provided sufficient evidence to show that the ITO's assessments were erroneous or prejudicial to the revenue.

4. Rejection of Decisions from the Supreme Court and High Courts
The fourth issue was whether the Tribunal was legally justified in rejecting the decisions of the Supreme Court and High Courts cited in the CIT's order under Section 263. The Tribunal found that the CIT had not demonstrated how these decisions were applicable to the present case. The Tribunal's interpretation of the ratio decidendi in these cases was deemed correct, and thus, the questions were considered unsuitable for referral.

5. Consistency with Previous Tribunal Decisions
The fifth issue questioned whether the Tribunal's previous decisions, which found the CIT's orders under Section 263 legally correct in similar circumstances, indicated that questions of law arose from the Tribunal's order. The Tribunal found that the questions proposed for the assessment years 1982-83 and 1983-84 were similar to those for 1981-82 and were equally ineligible for referral.

Conclusion:
The Tribunal dismissed the CIT's applications for all three years, finding no eligible questions for referral to the High Court. The Tribunal held that the CIT had not demonstrated that the ITO's assessments were erroneous or prejudicial to the revenue. Consequently, the Tribunal cancelled the CIT's order under Section 263 and restored the ITO's assessments. The Third Member concurred, emphasizing that the findings were pure findings of fact and did not give rise to any question of law.

 

 

 

 

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