Supreme Court - Daily Orders
Prajatantra Prachar Samity vs Commissioner Of Income Tax on 10 February, 2022
Bench: Uday Umesh Lalit, S. Ravindra Bhat
1
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.1273-1278 OF 2022
(@ Special Leave Petition (C) No(s).24096-24101 of 2019)
PRAJATANTRA PRACHAR SAMITY APPELLANT(S)
VERSUS
COMMISSIONER OF INCOME TAX & ANR. RESPONDENT(S)
O R D E R
1. Leave granted.
2. These appeals challenge the common judgment and order dated 24-04-2019 passed by the High Court1 in ITA Nos.58- 60/2010 and 62-64/2010.
3. The controversy in the instant case had come up before this Court on the earlier occasion in the form of Civil Appeal No.153 of 1993 when the Appeal was disposed of by this Court on 24.04.1996 with following directions:
“With a view to have satisfactory decision on all the questions arising herein, we have proposed the following course to which the counsel for both the parties have agreed. The course suggested is that while the assessee shall ask for a reference against the order dated 19.01.1990 (the substantive order of the Tribunal dismissing the appellants Signature Not Verified Digitally signed by Indu Marwah Date: 2022.02.16 appeal), the Revenue shall ask for references 18:23:17 IST Reason: against the order of rectification dated 13.12.1990 and the substantive order of the Tribunal dated 10.05.1991. If such applications are filed within 1 The High Court of Orissa at Cuttack.2
sixty days from today, the Tribunal shall refer the questions arising therein for consideration of the High Court. The above course is adopted in the particular facts of this case and with a view to outcome the several technical objections put forward by both parties. We make it clear that we intend no reflection upon the merits of the case of either party. All the questions which arise from the orders of the Tribunal aforesaid shall be open in such references which may be heard together. The High Court may consider expeditious disposal of such references.”
4. Accordingly, following three questions of law were referred by the Tribunal2 under Section 256(2) of the Income Tax Act, 1961 (“the Act”, for short) to the High Court for its opinion:
“1. Whether on facts and circumstances of the case, the Tribunal is justified in holding that the assessee is not entitled to exemption under Section 11 of the Act?
2. Whether on facts and circumstances of the case, the Tribunal was right in rejecting the method of computation of income followed by the assessee?
3. Whether on facts and circumstances of the case, the Tribunal was right in declining to grant exemption to assessee trust on a completely new ground made suo-motu without affording an opportunity to the assessee to have its say on the said ground?”
5. By order dated 15.01.2003, the third question was answered by the High Court in favour of the assessee and against the Revenue. In so far as first two questions were concerned, the High Court however remanded the matter to the 2 The Income Tax Appellate Tribunal.
3Tribunal and observed as under:
“11. Sub-S.(2) of S.254 of the Act stats that the Tribunal while rectifying mistake apparent from the record may amend any order passed by it under sub- S(1). We have already noted that in exercise of that power the Tribunal can only make changes in the original order consequent on the rectification and it cannot go further and deal with the entire appeal afresh. A perusal of the aforesaid substantive order dated 10th May, 1991, would clearly show that in the garb of rectification/amendment, the Tribunal substituted a fresh order which, in our opinion, is in excess of its jurisdiction. Therefore, having regard to the nature of the issue that was before the Tribunal and in view of what has been stated above, we think it proper to set aside that order dated 10 th May, 1991, and direct the Tribunal to consider the case on all the points arising out of the CIT’s order dated 28th Nov., 1988. While considering the matter, the Tribunal will also keep in view of the provision of Section 11(4A) of the Act which came to be inserted by the Finance Act, 1983, w.e.f. 1 st April, 1984.”
6. Thereafter, the Tribunal by its order dated 17.06.2004, further remanded the matter to the Assessing Officer. After noting that the third question was already decided in favour of the assessee by the High Court, the Tribunal stated:
“5. After hearing both the sides, we find that the Hon’ble High Court by the present order has held that the original order passed by the Tribunal by which exemption u/s 11 was denied to the assessee required rectification because there were apparent mistakes in that order. At the same time, it was held that the order u/s 254 passed by the Tribunal was justified. In view of the aforesaid circumstances in our opinion the matter should be reconsidered again by the Assessing Office 4 in the changed circumstances of the case. Therefore, we restore the matter back to the Assessing Officer for deciding afresh the Question Nos. 1 and 2 mentioned above. While doing so, the Assessing Officer shall take into consideration of the fact that the Question No.3 referred before the Hon’ble High Court has been decided in favour of the assessee. The Assessing Officer shall also take into consideration the provision of Section 11(4A) of the Act which came into effect from 01.04.1984 by Finance Act 1983, as directed by Hon’ble High Court. In view of the above, the matter is restored to the Assessing Officer as mentioned above.”
7. By order dated 28.03.2006, the Assessing Officer held that the assessee was not entitled to exemption under Section 11 of the Act. With regard to the second question, it was observed:
“As has been discussed earlier, during the previous year assessee has resorted to deviation in following the method of accounting which was regularly followed earlier. Switchover to hybrid system of accounting was not bonafide as income cannot be deduced properly. Instead of computing income, the assessee has disclosed loss to the tune of Rs. 15,76,808/- by following a new system of accounting.” Total income was then assessed at Rs.15,79,590/- and it was directed:
“Initiated penalty proceedings under Section 271 (1)(c). Assessed under Section 143(3)/254 of the Income Tax Act on a total income of Rs.15,79,590/-.
Charge interest as per law. Issue D.N. and order to the assess.”
8. The aforestated order passed by the Assessing Officer was 5 confirmed in appeal by the CIT (Appeals) vide two separate orders passed on 18.01.2006.
9. The matter was carried further before the Tribunal by the assessee in ITA Nos.38-40 of 2007 and ITA Nos.78-80 of 2009. While entertaining these appeals, by order dated 05.05.2008, the parties were directed to furnish certain information as under:
“We find that in all these appeals, the only common issue is relating to the accountability of the income on cash basis or on acccrual basis. As per the submission of the learned AR of the assessee, the assessee has taken the income on cash basis but the Department has assessed the income on accrual basis. But as per the record, we are unable to find whether the accrued income for these particular years have subsequently been accounted by the assessee in other assessment years on cash basis or not. Hence, we direct both the parties to bring on record whether the accrued income has been assessed by the Revenue in these years are accounted by the assessee in subsequent years or not. We direct both the parties to furnish the required information within a reasonable time. The assessee is specifically directed to cooperate with the Department in getting the material required for the purpose.”
10. In response, an affidavit was filed on behalf of the assessee which:-
“3. That since then the assessee trust has brought on record the accrued income that has been assessed by the revenue in these years and is accounted in subsequent years.
………
6. The assessee trust along with its Accounts Officer and the counsel produced all relevant papers and registers before the Revenue authorities containing paper books, sundry debtors accounts and debtors ledger for verification of the same on 6 different dates as per the order view of the Revenue Officer together with his Inspector i.e. Assistant Commissioner of Income Tax, Circle I, Cuttack covering almost on week time.
7. That, the revenue authorities checked the records for almost a week by following the random sampling method, but abruptly ended the operation on the plea that further verification by the Assessing Officer regarding the income received the income accrued would be voluminous. Verification of the same by the Assessing Officer alone was not possible.”
11. A note was submitted on behalf of Revenue by the Commissioner of Income Tax, Cuttack that information required by the Tribunal could not be filed as the record was voluminous in nature.
12. The appeals were then considered by the Tribunal. While dismissing ITA Nos.38-40 of 2007 directed against the quantum, the Tribunal vide order dated 31.03.2010 stated:
“6. As far as Ground No.4 is concerned, this ground is relevant only if the assessee’s changed method of accounting from this year is found to be acceptable. Since changed method of accounting has not been accepted by the lower authorities and the assessee has not challenged this action of the lower authorities on this issue before us we find no merit in this ground taken by the assessee before us and the same is also dismissed.” By a separate order passed on the same day, ITA Nos.78-80 of 2009 directed against the penalty, were also dismissed by the Tribunal.
13. These orders of the Tribunal were subject matter of challenge before the High Court and the challenge was negated 7 by the High Court by its common judgment and order, presently under appeal. The basic issue regarding the method of accounting adopted by the Assessee was dealt with by the High Court in para 12 of its order which reproduced para 6 from the order passed by the Tribunal and reiterated said view.
14. We have heard Mr. Ajay Vohra, Senior Advocate in support of these appeals and Mr. Sanjay Jain, learned Additional Solicitor General for the Revenue.
15. It is quite disturbing that despite specific directions made by this Court in its order dated 24.04.1996, the matter still lies undisposed on merits.
16. As the facts on record show, after the matter was remanded to the Tribunal, it called for information in terms of which direction, affidavit was filed on behalf of the assessee and a note was submitted on behalf of the Revenue. The affidavit made the position clear and in the entirety of the process including framing of second question, the challenge with regard to the method of accounting was quite apparent. The submission advanced on behalf of the assessee was therefore required to be dealt with on merits. However, neither the affidavit nor the note referred to by the Tribunal. The conclusions arrived at by the Tribunal were thus not consistent with the order of remand passed by this 8 Court or with the direction issued by the Tribunal itself seeking certain information vide its order dated 05.05.2008. The High Court also erred in affirming the view taken by the Tribunal.
17. We therefore, set aside the orders passed by the Tribunal and the High Court and remit the matter back to the Tribunal to consider the matter afresh in the light of the order dated 24.04.1996 passed by this Court and in keeping with the direction issued by the Tribunal in its order dated 05.05.2008. ITA Nos.38-40 of 2007 and ITA Nos.78-80 of 2009 are therefore restored to the file of the Tribunal.
18. Since the matter has been pending for a long time, we direct the Tribunal to conclude the proceedings as early as possible and preferably within three months from the receipt of this order. To facilitate early disposal, the parties shall appear before the Tribunal on 28.02.2022.
19. With these observations, the appeals are allowed without any order as to costs.
.......................J. [UDAY UMESH LALIT] .....................J. [S. RAVINDRA BHAT] NEW DELHI, FEBRUARY 10, 2022.
9
ITEM NO.4 Court 2 (Video Conferencing) SECTION XI-A
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No(s).24096-24101/2019
(Arising out of impugned final judgment and order dated 24-04-2019 in ITA No. 58/2010 24-04-2019 in ITA No. 59/2010 24-04-2019 in ITA No. 60/2010 24-04-2019 in ITA No. 62/2010 24-04-2019 in ITA No. 63/2010 24-04-2019 in ITA No. 64/2010 passed by the High Court Of Orissa At Cuttack) PRAJATANTRA PRACHAR SAMITY Petitioner(s) VERSUS COMMISSIONER OF INCOME TAX & ANR. Respondent(s) Date : 10-02-2022 These petitions were called on for hearing today. CORAM :
HON'BLE MR. JUSTICE UDAY UMESH LALIT HON'BLE MR. JUSTICE S. RAVINDRA BHAT For Petitioner(s) Mr. Ajay Vohra, Senior Advocate Mr. Santosh Kumar, AOR Ms. Isha Jain, Advocate For Respondent(s) Mr. Sanjay Jain, ASG Ms. Gargi Khanna Adv Mr. Shetty Uday Kr.Sagar Adv Mr. Pranay Ranjan Adv Mr. Anukalp Jain Adv Mr. Raj Bahadur Yadav, AOR UPON hearing the counsel the Court made the following O R D E R Leave granted.
The appeals are allowed in terms of the signed order.
Pending applications, if any, shall stand disposed of.
(INDU MARWAH) (VIRENDER SINGH)
COURT MASTER (SH) BRANCH OFFICER
(SIGNED ORDER IS PLACED ON THE FILE)