Punjab-Haryana High Court
Commissioner Of Income-Tax vs Hero Cycles (P) Ltd. on 29 November, 1995
Equivalent citations: [1996]220ITR355(P&H)
Author: R.P. Sethi
Bench: R.P. Sethi, K.S. Kumaran
JUDGMENT R.P. Sethi, J.
1. Vide an application filed under Sub-section (1) of Section 256 of the Income-tax Act, 1961, the Revenue sought reference of the following questions of law to this court for opinion :
"1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is legally justified in admitting the assessee's appeal which had already been a subject-matter of revision order by the Commissioner of Income-tax under Section 17 of the Companies (Profits) Surtax Act, 1964 ?
2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that in this case no interest is chargeable under Section 7C of the Companies (Profits) Surtax Act, 1964?"
2. The prayer was rejected, firstly, on the ground that the question of law at number 1 was covered by a judgment of the Supreme Court and question No. 2 was not at all a question of law because the same was based upon the appreciation of facts and circumstances of the case with which the Tribunal had already dealt while deciding the appeal.
3. We agree with the finding of the Appellate Tribunal so far as question No. 1 is concerned and hold that in view of the judgment of the Supreme Court in Central Provinces Manganese Ore Co. Ltd, v. CIT [1986] 160 ITR 961, there was no necessity of making of reference to this court for opinion regarding the right of the assessee to avail of the remedy of appeal despite availing the remedy of revision. However, so far as question No. 2 is concerned, the Tribunal rejected the plea of the Revenue by holding :
"After looking into the nature of disallowance made by the Assessing Officer, it was held that the assessee could not be said to have filed return showing incorrect income deliberately. The claims were noted to be bona fide and legitimate in the light of the nature of deductions. It was held that the assessee had certain genuine claims and some of these claims were found to be allowable in the assessee's appeal. Certain claims were found to be not allowable, in particular, the claim relating to sale of import entitlement amounting to Rs. 53,03,606. This claim was finally rejected on the basis of the retrospective amendment of law, with, effect from April 1, 1962, which the assessee could never anticipate or foresee. It was, therefore, held that the claim made by the assessee with respect to the import entitlement was not a false claim, though it stood disallowed on account of retrospective legislation. Similarly, certain other deductions claimed by the assessee with respect to depreciation and claim under Section 35B of the Act were also held to be of such nature which the assessee could never anticipate. In these circumstances, income shown in the return was held to be not untrue or based on incorrect estimate. The very fact that many claims were allowed at the appellate stage suggested that the computation of advance surtax made by the assessee by way of estimate, was not false to the knowledge of the assessee."
4. The Appellate Tribunal, however, did not consider the argument of the Revenue that the bona fides pleaded by the assessee could not be looked into for the purposes of determining the liability of paying interest under Section 7C of the Companies (Profits) Surtax Act, 1964, particularly, when the attention of the Tribunal was drawn to the provisions of Section 7C(1) of the Act pointing out that the only question required to he seen was whether the amount of advance surtax paid by the assessee was short of the assessed surtax.
5. Admittedly, neither the Supreme Court nor the jurisdictional court have decided the scope of Section 7(1) of the 1964 Act. In the absence of an authoritative pronouncement, the Tribunal was under a legal obligation to refer the aforesaid question to this court for opinion under Sub-section (1) of Section 25G of the Act.
6. Accordingly, this petition is allowed with a direction to the Tribunal to refer to this court, the following question of law for adjudication and opinion :
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that in this case no interest is chargeable under Section 7(1) of the Companies (Profits) Surtax Act, 1964?"