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1994 DIGILAW 263 (KER)

Rajeswari Export House v. Commr. of Income-tax

1994-07-14

SUJATA V.MANOHAR, T.L.VISWANATHA IYER

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Judgment :- Sujatha V. Manohar, C.J. This is an application under S.256(2) of the Income Tax Act, 1961. The assessment year concerned is 1974-75 for which the relevant accounting period ended on 30-6-1973. The assessee is an exporter of handloom textiles. The Assessing Authority completed the assessment making an addition to Rs.59,430/- to the returned income alleging inflation in the purchase cost. The Inspecting Asst. Commissioner of Income Tax, Calicut-1 initiated proceedings under S.271(1)(c) of the Income Tax Act for levy of penalty. By order dated 6-3-1978, a penalty of Rs. 59,430/- was levied. The assessee took up the matter in appeal before' the Income Tax Appellate Tribunal, Cochin Bench, Ernakulam. The Appellate Tribunal upheld, inter alia, the contention of the petitioner that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty and accordingly cancelled the penalty. Against the order cancelling the levy of penalty, Revenue filed an application under S.256(1) of the Income Tax Act which was allowed. In the reference so allowed, the High Court by its judgment dated 13-3-1985 held that in view of its earlier decision in I.T.R.1 of 1979, the reference must be answered in favour of the Revenue. The matter was accordingly sent back to the Tribunal for giving effect to the judgment of the High Court under S.260 of the Income Tax Act. However, by the time the matter came up before the Tribunal for passing an order under S.260(1) of the Income Tax Act, the High Court in the case of C./.71. v. P.I. Issac and others ( ITR 793) over-ruled its decision in ITR 1 of 1979 and held that after 1-4-1976, the Inspecting Assistant Commissioner had no jurisdiction to levy a penalty. 2. The Tribunal, however, has implemented the decision of the High Court while passing orders under S.260(1) of the Income Tax Act. The present reference application under S.256(2) by the assessee is in respect of this order of the Tribunal under S.260(1) of the Income Tax Act. 3. Apart from anything else, the provision for a reference to the High Court under S.256 of the Income Tax Act is only in respect of an order passed by the Tribunal under S.254 of the Income Tax Act. The relevant provisions of S.256(1) are as follows: "256(1). 3. Apart from anything else, the provision for a reference to the High Court under S.256 of the Income Tax Act is only in respect of an order passed by the Tribunal under S.254 of the Income Tax Act. The relevant provisions of S.256(1) are as follows: "256(1). The Assessee or the Commissioner may, within sixty days of the date upon which he is served with notice of an order under S.254 require the Appellate Tribunal to refer to the High Court any question of law arising out of such order ...." Section 256(2) provides as follows: "256(2). If, on an application made under sub-section (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may, within six months from the date on which he is served with notice of such refusal, apply to the High Court " Thus both S.256(1) and S.256(2) deal with reference applications in respect of an order passed by the Tribunal under S.254. Under S.254(1): "The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit." This clearly contemplates full freedom to the Appellate Tribunal to decide the points at issue in the appeal on merit. 4. In contrast, S.260(1) provides as follows: "260(1). The High Court or the Supreme Court upon hearing any such case shall decide the questions of law raised therein ... a copy of the judgment shall be sent under the seal of the Court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment." (emphasis supplied) The order of the Tribunal under S.260(1) is, therefore, only for the purpose of passing an order in conformity with the judgment of the High Court or the Supreme Court, as the case may be. Undoubtedly, if any other questions apart from those decided in the reference remain to be decided, the Tribunal would be free to pass orders on those questions under S.254. 5. In the present case, however, the order of the Tribunal is entire! y under S.260(1) of the Income Tax Act. Undoubtedly, if any other questions apart from those decided in the reference remain to be decided, the Tribunal would be free to pass orders on those questions under S.254. 5. In the present case, however, the order of the Tribunal is entire! y under S.260(1) of the Income Tax Act. In these circumstances, the present reference application is not maintainable as there is no provision under S.256 for any reference from an order of the Appellate Tribunal under S.260(1). Moreover, since the order under S.260(1) merely carries out the judgment of the High Court, no occasion would arise for any reference under S.256 of the Income Tax Act. In the present case, there is no complaint that the order of the Tribunal under S.260(1) is not in conformity with the judgment of the High Court in the reference. A reference application from such an order is not, therefore, maintainable. The present reference application is, therefore, dismissed. In the circumstances, there will be no order as to costs.