High Court Of Madhya Pradesh : Indore Bench
National Textile Corporation Ltd. vs. CIT
Section 256(2)
Deepak Verma & A.M. Sapre, JJ.
IT Ref. No. 52 of 1997
15th April, 2005
Counsel Appeared
Miss Vandana Kasrekar, for the Petitioner : R.L. Jain with Miss Veena Mandlik, for the Respondent
ORDER
By the court :
This is an application made under s. 256(2) of IT Act by the assessee consequent upon the dismissal of their application made under s. 256(1) of the Act by the Tribunal by order dt. 12th May, 1997 passed in RA No. 11/Ind/1997 which in turn arises out of an appellate order dt. 27th Dec., 1996 passed in ITA No. 778/Ind/1992. It is the case of applicant that Tribunal ought not have dismissed their application made under s. 256(1) of the Act for making a reference to this Court on the questions proposed but should have allowed the same by making the reference under s. 256(1) ibid. According to applicant, the questions proposed are referable questions and being questions of law arising out of the aforesaid appellate order, the same need to be decided by this Court in its reference jurisdiction conferred by s. 256(1) of the Act.
2. The applicant has proposed following three questions of law which according to applicant do arise out of the aforementioned order and are thus referable one : (i) Whether, in the facts and in the circumstances of the case, the Tribunal has erred in law in not following the decision of the Madhya Pradesh High Court in MCC No. 65/1993 decided on 20th Aug., 1996 in the case of CIT vs. Premier Industries (P) Ltd., which was binding on the Tribunal? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal has erred in law in confirming the demand for additional tax when proper adjustments could not be made in the return because the year in question was the first year in which the amendments became applicable and the return was filed by the accounts officer of NTC who was ignorant of the amendments and was not assisted by a qualified tax consultant and when the return was for a loss & even after adjustments it was still a return for loss and no tax was payable ? (iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in observing that the various adjustments as made by the AO were not objected to by the assessee before the CIT(A) when such ground was specifically raised in the grounds of appeal before CIT (A) ? Notice of this application was served on the respondents. They are served and duly represented. Heard Miss Vandana Kasrekar, learned counsel for petitioner, and Shri R.L. Jain, learned senior counsel with Miss Veena Mandlik, learned counsel for respondent. Having heard learned counsel for parties and having perused record of the case, we are inclined to allow the application in part and in consequence direct the Tribunal to refer the questions framed by us as indicated infra. In our considered view, the question of law does arise out of the order of Tribunal and hence the same should have been referred to this Court for answer on merits.
We need not take note of facts in detail as it is now for the Tribunal to draw a statement of case with reference to entire facts and findings rendered by the taxing authorities including the Tribunal. Suffice it to say, the question arose before the Tribunal in an appeal filed by the Revenue (CIT) as to whether a decision rendered by the High Court in MCC No. 65/1993, CIT vs. Premier Industries, decided on 20th Aug., 1996 [reported at (1998) 146 CTR (MP) 187—Ed.] should be followed or not on a particular point which was being debated in appeal amongst several other points. The Tribunal declined to follow the law laid down by this Court essentially on the ground that it does not lay down correct principles of law because it has not taken into consideration certain amendments brought on statute book which had bearing over the controversy involved therein. Having thus observed in para 6 of appellate order dt. 27th Dec., 1996, the Tribunal allowed the appeal filed by Revenue and decided the issue in favour of assessee (sic). It is this question the assessee proposed to the Tribunal for being referred to this Court to answer which having been declined, the same is reiterated in this application. In our considered opinion, the manner in which the Tribunal has dealt with the issue so far as precedents of judicial propriety in following decisions of High Court is concerned, the same should have been referred to this Court for examination. It is, in our humble opinion, an issue which High Court alone has to decide and not for the Tribunal to decide. We have our own reservations as to whether Tribunal could make comment on the decisions of High Court and having done so, whether judicial propriety permitted the Tribunal to ignore the decision and take its own view. All these issues need to be decided by the High Court in a reference under s. 256(1) ibid. In view of aforesaid discussion, the application is allowed. The Tribunal is directed to make the reference to this Court under s. 256(1) of the Act on following questions of law to be answered by this Court :
(i) Whether Tribunal was justified or/and had the jurisdiction to ignore the decision of High Court rendered in MCC No. 65/1993 decided on 20th Aug., 1996 on the ground that it does not lay down correct principles of law on the issue involved therein ?
(ii) Assuming that Tribunal was so right in their observations, even then what was the procedure which the Tribunal should have followed in such eventuality?
(iii) Having held that the decision of High Court rendered in MCC No. 65/1993 is not correct, whether Tribunal was justified in proceeding to decide the issue against the assessee in conflict with the view taken by the High Court ?
11. Let the statement of case be sent within three months along with all necessary documents/judgments/orders passed by taxing authorities and High Court to enable this Court to answer the questions on merits. No costs.
[Citation : 286 ITR 496]
