Income Tax Appellate Tribunal - Mumbai
Commissioner Of Income-Tax vs Andhra Valley Power Supply Co. Ltd. on 9 February, 1996
Equivalent citations: [1998]66ITD600(MUM)
ORDER
M.K. Chaturvedi, J.M.
1. The Commissioner of Income-tax, Bombay City-II, Mumbai, vide there applications under section 256(1) of the Income-tax Act, 1961 (hereinafter called 'the Act') has requested the Income-tax Appellate Tribunal (hereinafter called "the Tribunal") to refer the following identical questions, said to be questions of law, arising out of the consolidated order of the Tribunal dated 18th May, 1995, to the Hon'ble High Court for its esteemed opinion.
1. "Whether, on the facts and in the circumstances of the case, Tribunal was right in law in holing that the case of the assessee is governed by the pre-amended section 263 which put an interdict on the powers of CIT to revise the order of re-assessment made under section 147 when the order under section 263 was passed on 26-3-1993 and the Act was amended w.e.f. 1-10-1984 ?"
2. "Whether, on the facts and in the circumstances of the case the ITAT was right in law in holding that the conditions precedent for assuming the jurisdiction under section 263 did not exist in this case ?"
2. In order to avoid prejudice and hardship to the litigants, Apex Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1, has held that state issues should not be reactivated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies. This idea is also inculcated in the well known legal dictums 'INTEREST REPUBLICA UT SIT FINIE LITOM". The expression loses its terseness in translation; but the meaning in modern language is : Law suits be not protracted otherwise great oppression might be done under the colour and pretence of law.
The powers conferred on the CIT deals with the corrective measures. If the error is crept in the assessment order, and that error is prejudicial to the interest of revenue, it is open for CIT to assume jurisdiction under section 263 of the Act. Such powers can only be assumed within the time period as prescribed under the law. Tribunal examined the time lag between orders passed under section 143(3) and 263 of the Act.
3. For the relevant assessment years assessments were completed under section 143(3) of the I.T. Act, 1961. The claim of the assessee in regard to the depreciation was allowed. Thereafter, it was found by the Assessing Officer that the expenditure incurred on ash disposal was allowed as revenue expenditure. The assessment, was, therefore, reopened under section 147. Expenditure incurred on 'ash disposal' was disallowed. It was treated as a capital expenditure. The claim in regard to the depreciation and investment allowance was not disturbed.
4. The Central Board of Direct Taxes in its circular No. 402 dated November 1, 1984 stated that the limitation for passing order under section 263 stand expanded in cases where the period of limitation originally laid down in that section had not expired before 1st October, 1984. With a view to avoid litigation it was felt desirable that orders under section 263 as far as possible be passed within two years of the order sought to be revised.
5.In the case of CED v. M. A. Merchant [1989] 177 ITR 490/44 Taxman 274 (SC). It was held that power to re-assess given by the Amendment Act, cannot be treated as retrospective. This cannot be invoked in respect of assessments completed before that date. Subsequent legislation cannot affect the vested rights unless the legislation made it retrospective expressly or by necessary implication.
6. In view of the Apex Court decision, the Tribunal held that the case of the assessee is governed by the pre-amended section 263, which put an interdict on the powers of CIT to revise the order of re-assessment made under section 147. The Tribunal also followed the decision of the Apex Court rendered in the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297/64 Taxman 442, wherein it was held that the judgment in V. Jaganmohan Rao v. CIT [1970] 75 ITR 373 (SC) cannot be read to imply as laying down that re-assessment wiped out the original assessment and the re-assessment is not only confined to 'escaped assessment' or 'under assessment' but to the entire assessment for the year and starts the assessment proceedings de novo.
7. Of the three categories, namely, questions of fact, questions of law and mixed question of law and fact, section 256(1) of the Act, speaks of "questions of law" which may be required to be referred thereunder.
When the point for determination is a pure question of law, the decision of the Tribunal is open to reference. When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those finding is a question of law which can be reviewed by the Court.
All the questions of law need not be referred. Tribunal is not required to refer a question of law, if it doesn't arise out of the Tribunal's order, or if it is academic in nature. If the answer is self-evident or concluded by the decision of the Apex Court, no reference will lie under section 256(1).
8. The term 'question' connotes an interrogative sentence soliciting an answer. It may be a query or an enquiry. But it is of the essence of a "question" that it presents a doubt and demands an answer. A question arises when such an interrogatory enquiry springs into view, rises or appears.
In Bouvier's Law Dictionary, question is defined as something in controversy or which may be the subject of controversy .... when the doubt or difference arises as to what the law is on a certain state of facts, this is said to be a legal question; and when the party demurs, this is to be decided by the Court; when it arises as to the truth or falsehood of facts, this is a question of fact.
A point of law cannot be equated with the expression 'question of law'. The question must be a disputed or disputable question of law.
In the case of CIT v.Basanta Kunzar Agarwalla [1983] 140 ITR 418 (Gau.), it was held that if a point of law decided by the Tribunal is positive, certain, definite and sure, there is no obligation on the part of the Tribunal to refer the matter, as the point cannot be termed a question of law. When a decision is apparently correct and there is no scope for any debate or dispute or deference, it does not fall within the expression "a question of law", it may be stated as "an obvious conclusion reached". It is not every point of law that is required to be referred by the Tribunal to the High Court."
9. The train of litigation runs on the rails of fact and law. On facts Tribunal is the terminus. Rail of fact cannot go beyond this point. After Tribunal there runs only MONORAIL. The rail of law. So long the rail of law goes straight without any turning or zig zag, its coverage creates a point of law. Such trains do not get the green signal to go ahead. Question of law arises only when the rail of law passes through a labyrinth, a dark cave or when the route gets divided. Tribunal in such cases flags the train to proceed further.
10. The decision of the Tribunal is based on the fact that the claim of the assessee apropos the depreciation and development rebate was not disturbed when the case was reopened.
Considering the decision of the Apex Court and on the basis of the fact, it was concluded that the case of the assessee fell within the ken of preamended section 263, which put an interdict on the powers of CIT to revise the order of reassessment made under section 147.
On these premises, it was held that the conditions precedent for assuming jurisdiction under section 263 did not exist.
Therefore, there is no scope for any debate, dispute or difference on this point.
11. In view of the above, in our opinion, no referable question of law does arise out of the order of the Tribunal. Hence, we decline to accept the prayer made by the learned Commissioner of Income-tax.
12. In the result, the reference applications stand rejected.