Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that because of the order of the High Court of Madhya Pradesh in Misc. Petition No. 15 of 1975 dt. 10th July, 1980, there was no scope for considering the first additional ground of appeal which was to the effect that the AAC had no jurisdiction to entertain the appeal against the impugned order of the ITO ?

High Court Of Madhya Pradesh

CIT vs. Balchand Malviya

Section 254(1)

Asst. Year 1953-54, 1954-55, 1955-56, 1956-57

G.G. Sohani, Actg. C.J. & M.D. Bhatt, J.

Misc. Civil Case No. 408 of 1982

17th October, 1986

Counsel Appeared

B.K. Rawat, for the Petitioner : Y.S. Dharmadhikari, for the Respondent

G.G. SOHANI, ACTG. C.J.:

By this reference under s. 256(1) of the IT Act, 1961 (hereinafter referred to as the Act), the Tribunal, Jabalpur Bench, Jabalpur has referred the following question of law to this Court for its opinion:

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that because of the order of the High Court of Madhya Pradesh in Misc. Petition No. 15 of 1975 dt. 10th July, 1980, there was no scope for considering the first additional ground of appeal which was to the effect that the AAC had no jurisdiction to entertain the appeal against the impugned order of the ITO ?”

2. The material facts, giving rise to this reference briefly are as follows : The assessee was assessed to income-tax under the provisions of the Indian IT Act, 1922 (hereinafter referred to as the 1922 Act) in the status of an HUF for the asst. yrs. 1953-54, 1954-55, 1955-56 and 1956-57. It was urged before the ITO on behalf of the assessee that a partition in the joint family had taken place but that claim put forward by the assessee under s. 25A of the 1922 Act was rejected by the ITO. Aggrieved by the order passed by the ITO the assessee preferred an appeal before the AAC. The AAC set aside the order passed by the ITO and directed the ITO to make the assessment in the manner provided by sub-s. (2) of s. 25A of the 1922 Act. Thereafter the ITO passed orders on 8th July, 1974 for the assessment years in question. In pursuance of the assessment orders passed on 8th July, 1974 demand notices were issued by the ITO to all the members of the HUF, who filed a petition in this Court which was registered as Misc. Petition No. 15 of 1975 praying that the assessment orders passed by the ITO be quashed and the demand notices which were issued in pursuance of these orders be also quashed. During the pendency of that petition, the Karta of the HUF have also filed appeals against the assessment orders passed on 8th July, 1974 by the ITO and the order dt. 17th Jan., 1979, passed by the AAC the appeals were allowed. This fact was brought to the notice of this Court when Misc. Petition No. 15 of 1975 was being heard. A Division Bench of this Court by its order dt. 10th July, 1980 while disposing of the petition held as follows: “In view of the facts stated above, the relief claimed in the petition for quashing of the assessment orders dt. 8th July, 1974 passed by the ITO for the years 1953-54, 1955-56, 1956-57 and 1958-59 does not survive because these orders have already been set aside by the AAC in appeal. As a consequence of the setting aside of these assessment orders by the AAC, the demand notices issued for the years 1956-57 and 1958-59 become invalid and cannot be enforced by the Department. These notices have, therefore, to be quashed.”

In the meanwhile, aggrieved by the orders passed by the AAC, the Revenue had preferred appeals before the Tribunal. When these appeals preferred by the Revenue before the Tribunal against the orders of the AAC came up for consideration, an additional ground was sought to be raised before the Tribunal on behalf of the Revenue that the appeals preferred by the assessee before the AAC were not maintainable. While dealing with this contention, the Tribunal held that in view of the order of this Court in Misc. Petition No. 15 of 1975, there was no scope for considering the issue raised by the Revenue that the appeals before the AAC were not competent. Aggrieved by this order passed by the Tribunal, the Revenue sought reference and it is at the instance of the Revenue that the aforesaid question of law has been referred to this Court for its opinion.

Having heard the learned counsel for the petitioner, we have come to the conclusion that this reference must be answered in the affirmative and against the Revenue. If the Tribunal were to hold as urged by the Revenue that the AAC had no jurisdiction to hear the appeals in question the effect of that order would be revival of the demand notices issued by the ITO which have been quashed by this Court by its order dt. 10th July, 1980 in Misc. Petition No. 15 of 1975. The order that would be passed by the Tribunal would in that case be inconsistent with the decision of this Court in Misc. Petition No. 15 of 1975. The Revenue could have urged before this High Court in Misc. Petition No. 15 of 1975 that the orders passed by the AAC in appeal were without jurisdiction but the Revenue did not choose to do so. Under these circumstances, the Tribunal, in our opinion, was right in holding that in view of the order passed by this Court in Misc. Petition No. 15 of 1975, there was no scope for considering the question as to whether the AAC had no jurisdiction to entertain the appeal against the impugned order of the ITO.

For all these reasons, our answer to question referred to this Court is in the affirmative and against the Revenue. In the circumstances of this case, parties shall bear their own costs of this reference.

[Citation : 172 ITR 46]

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