High Court Of Jammu & Kashmir
Krishan Chand Girdhari Lal & Co. vs. CIT
Sections 264, 143, 4
Asst. Year 1958-59, 1959-60, 1960-61, 1961-62
M.A. Shah, J.
Writ Petn. No. 36 of 1976
19th February, 1988
Counsel Appeared
S.P. Gupta & H.L. Bhagotra, for the Petitioner : T.S. Thakur, for the Respondents
M.A. SHAH, J.:
This writ petition is filed by the petitioner-firm praying for a writ of certiorari for the quashing of the order passed by CIT, Amritsar-1, on January 31, 1976, and for a writ of mandamus against respondent No. 2 praying for determination and the assessment of income-tax payable by the petitioner with respect to the years 1958-59, 1959-60, 1960-61 and 1961-62 relating to the working of lease known as ” Killar Forest “, Jammu and Kashmir State, in the province of Jammu or any other writ or direction as may be deemed necessary under the circumstances of the case.
It has been stated in the petition that the petitioner is a parnership firm carrying on the business of exploiting forest produce as a Government lessee in the State of Jammu and Kashmir having its principal place of business at Jammu. It is not disputed that the petitioner-firm is assessed to income-tax under the jurisdiction of the ITO, ” B ” Ward, Jammu. In the month of December, 1956, it is stated by the petitioner that it entered into a contract with the State of Jammu and Kashmir through the Forest Department of the Government for exploiting the forest known as ” Killar Forest ” for a period of 10 years. The royalty payable to the Government under the terms of the lease was of the order of Rs. 1,37,00,402. Pursuant to the said contract, on completion of the formalities, the petitioner commenced its business in timber extraction and sale thereof.
It is further alleged that the petitioner submitted its return of income for the asst. yr. 1957-58 showing a loss from business of the order of Rs. 1,33,850. For the asst. yr. 1958-59, the petitioner submitted a return of total income amounting to Rs. 9,160. Respondent No. 2, the ITO, by his order dated August 20, 1962, provisionally levied the assessment by applying a flat rate of gross profit and applied provisional rate of 33-1/3 per cent as against 5per cent adopted by the petitioner. Similarly for the asst. yr. 1959-60, respondent No. 2 applied a flat-rate of 15per cent against the rate of 10.1per cent offered by the petitioner. For the assesment year 1960-61 again, respondent No. 2 applied a rate of 20per cent provisionally as against 10.1per cent offered by the petitioner for arriving at the annual income for this year. It is stated that the ITO completed the assessments in a provisional manner subject to reassessment and to revision Later on. Thus, for the previous years, the petitioner did not choose to go in appeal against the provisional assessments. However, after the assessment order was passed for the asst. yr. 1960-61, the petitioner found that for a number of successive years, the ITO was resorting, even if provisionally, to arbitrarily high rates for computing the income and the petitioner, under these compelling circumstances, filed an appeal against the orders for the asst. yr. 1960-61 to the AAC, Jammu.
The AAC on hearing the appeal reduced the aforesaid provisional rate of 20 per cent to 12per cent. Being aggrieved against the said order of the AAC, the petitioner went in further appeal to the Tribunal. The Tribunal by its order dated September 1, 1966, with certain observations, confirmed the order passed by the AAC on August 21, 1965. For the next asst. yr. 1961-62, on the same pattern, it is alleged that the flat rate offered by the petitioner was 5per cent ; whereas the ITO preferred to apply the rate of 12-1/2 per cent. It is further submitted that the petitioner thereafter made an application to the ITO, when he passed the order with respect to the asst. yr. 1962-63 praying for reassessment and modification revising the earlier provisional determination of the assessable income for the asst. yrs. 1958-59, 1959-60, 1960-61 and 1961-62 to bring it in conformity with the overall rate of profit of 10.1per cent. The grievance of the petitioner started from here when respondent No. 2, ITO, rejected the aforesaid prayer of the petitioner for reassessment and modification or alteration on the technical plea that the assessments for the abovenoted years up to 1960-61 had become final and could not be revised at any point of time beyond the period of four years from the date on which the original assessments for these years were made. He also declined to assess and revise the provisional assessment for the year 1961-62, though the same was capable of revision.
After the order was passed by respondent No. 2 on February 27, 1971, declining to revise the assessment for the years referred to hereinabove, the petitioner was left with no alternative except to make an application to respondent No. 1, CIT, invoking his jurisdiction under s. 264 of the IT Act, 1961 (hereinafter called the Act), and revise/modify the assessment in the light of the findings and grant the relief to the petitioner available to him under law. Respondent No. 1 dismissed the said petition by his order dated December 26, 1975, for the asst. yrs. 1958-59 and 1959-60 on the ground of limitation. With regard to the asst. yr. 1960-61 followed by the order passed on January 31, 1976, on the assessment for the years 1960-61 and 1961-62, which is impugned in the present petition (sic). For the quashing of that order, the petitioner pressed into service the order passed by the CBDT, Ministry of Finance, Government of India, under the provisions of s. 119 of the Act issued on January 17, 1974, the gist of which is as follows : ” You should file fresh revision petitions for the asst. yrs. 1958-59, 1959-60 and 1961-62 before the CIT, Patiala, to whom suitable instructions have been issued. However, in the case of the asst. yr. 1960-61, the Board declined to interfere as the decision of the Tribunal is conclusive and binding. “
It is thus submitted that respondent No. 1 failed to implement in letter and spirit the directions of the CBDT while disposing of the revision petitions of the petitioner under s. 264 of the Act for the asst. yrs. 1958-59, 1959-60, 1960-61 and 1961-62. The orders, being repugnant to law and the canons of natural justice, are liable to be quashed.
Contesting the petition, learned counsel for the respondents in reply referred to the counter-affidavit filed on behalf of the Department at the outset and submitted that the entire petition is misconceived. In fact, the relief which could be granted to the petitioner-firm was granted by the authorities and it has no cause to agitate those findings arrived at in the writ petition. Referring to the order passed by respondent No. 2 on August 20, 1962, it is contended that it is incorrect to say that the assessment was provisional. The order was passed under s. 23(3) of the Act for the asst. yr. 1958-59 and that section does not speak of provisional assessment. The impressions of the petitioner about the provisional nature of assessment are also denied. It is contended that respondent No. 2, the ITO, being a creature of statute could not travel beyond the limitations provided under the statute and he had no power to make the provisional assessment under s. 23 (3) of the Act. Regarding the exercise of power under s. 264 of the Act, it is contended that the powers were exercised in accordance with law and on the basis of record and the circumstances which were demonstrated before the respondents and the Tribunal. No directions of the CBDT have been violated. The petition is thus liable to be dismissed and does not require any interference in the writ jurisdiction. Great stress is laid by learned counsel for the petitioner on the provisions of s. 264 of the Act which lays down the parameters within which the CIT is empowered to function so as to revise an order passed by any authority subordinate to him. Sub-s. (3) of s. 264 prescribes the period of limitation of one year from the date on which the order in question was communicated to the assessee or the date on which he otherwise came to know of it, whichever is earlier. The proviso to this sub-section empowers the CIT, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, to admit an application made after the expiry of that period. The impugned order passed on January 31, 1976, under the said section is attacked by learned counsel for the petitioner on the ground that it travels beyond the directions issued by the CBDT on January 17, 1974. Its validity is attacked on a further ground that it ignores the gross profit of 10. 1per cent as disclosed in the consolidated account submitted by the petitioner for the period of 5 years ending with March 31, 1962. Petitioner further seeks a writ of mandamus for directions to respondent No. 2, ITO, to treat the assessment for the years 1958-59, 1959-60, 1960-61 and 1961-62 as provisional and temporary and decide the case finally on reopening the said assessments.
The arguments advanced by learned counsel for the petitioner on the face of the order passed by the CIT on January 31, 1976, are fallacious. I have perused the directions of the the CBDT relied on by learned counsel, a portion of which I have reproduced hereinabove and find that the learned Commissioner has not in any manner violated the directions while exercising the powers conferred on him under s. 264 of the Act. The order passed by the ITO as held by the CIT was passed under s. 23(3) of the Indian IT Act, 1922, which pertains to the asst. yr. 1958-59, passed on August 20, 1962 and the order passed on November 30, 1963, pertains to the year 1959-60, under the similar sub-section of the 1922 Act. The Commissioner has, while disposing of the revision against the two orders separately, taken into account the argument advanced and has taken care of the observations made by the Tribunal, whereby the order of the AAC granted substantial relief to the petitioner by reducing the percentage and fixing the same as 12-1/2 per cent. The Commissioner in his order for the asst. yr. 1958-59 dealt with the objection raised and did not find any justification for interference under s. 264 of the Act in the orders passed by the ITO. Same is the position regarding 1959-60 and 1961-62, whereby the CIT refused to interfere in the light of the observations made by the Tribunal and maintained the rate of 12-1/2 per cent holding that the said percentage applied by the ITO is very reasonable. It is significant to note that the CBDT declined to interfere in the case of the petitioner for the asst. yr. 1960-61, holding that the decision of the Tribunal is conclusive and binding and directed the petitioner to file fresh revisions for the asst. yrs. 1958-59, 1959-60 and 1961-62, which were taken up for consideration by the CIT only in terms of the directions of the CBDT as they were clearly barred by limitation. It was only in terms of the directions of the Board that the revision petitions were taken up for consideration and the CIT, on the basis of the record, passed the reasoned orders. I, therefore, find that the CIT nowhere acted in violation of the orders of the Board issued on January 17, 1974. The contention of learned counsel for the petitioner on this count cannot thus be accepted. Adverting to the next contention of attack on the orders on the ground that it ignores the gross profit rate of 10.1per cent as disclosed by the petitioner in the consolidated accounts, suffice it to say that on that count too, the petitioner has no case for interference in the writ jurisdiction.
The petition suffers on this account from two infirmities. Firstly, it is not within the scope of the writ jurisdiction to interfere in the findings arrived at by the CIT on the basis of the record and the computation done by him. It is well-settled law that the High Court in writ jurisdiction cannot sit as a Court of appeal against the findings of the CIT or those of the ITO unless any error on the face of the record is shown affecting the jurisdiction of the CIT or the ITO going to the root of the case or any such patent illegality which can be demonstrated without any further arguments from the orders impugned. Learned counsel was unable to point out any such thing requiring interference in the jurisdiction exercised by the CIT or the ITO under s. 264 of the Act. Secondly, the petitioner clubbed together in the same writ petition the different orders passed for the asst. yrs. 1958-59, 1959-60 and 1960-61, all of the same date, i.e., January 31, 1976 ; whereas he should have filed separate writ petitions challenging the orders for each assessment year separately as the CIT and the ITO both dispose of the petitions and assessments by separate orders. For the two infirmities as pointed out hereinabove, I find that the petitioner is not entitled to any relief in the present writ petition. Learned counsel for the petitioner, despite taking time to place before me some authority to support his contentions, was unable to do so. No other point was demonstrated requiring any determination in this petition.
The petition, therefore, fails which is hereby dismissed with no order as to costs.
[Citation : 171 ITR 498]
