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2004 DIGILAW 972 (RAJ)

Commissioner of Income Tax v. Maliram Puranmal

2004-07-14

RAJESH BALIA, SHASHI KANT SHARMA

body2004
Judgment Rajesh Balia, J.-These three reference applications under Section 25 6(2) of the IT Act, 1961, are filed for three asst. yrs. 1973-74, 1972-73, 1975-76, respectively seeking a direction to the Tribunal, Jaipur Bench, Jaipur, to state the case and refer certain question in each application said to be a question of law arising out of Tribunal’s appellate order passed in ITANos. 1828, 1829 and 183 1/Jp/1995 in the case of the same respondent-assessee by a common order. The reference applications Nos. 5/1996, 4/1996 and 7/1996 under Section 256(1) were all rejected by a common order dt. 24th Feb., 1997, along with RANo. 6/Jp/1996. 2. The questions raised in all the three reference applications are identical, and, therefore, we propose to decide the three applications by a common order. 3. The case has a chequered history of multiple rounds of litigations and since the question raised in these applications is already subject-matter of a reference made to this Court under Section 256(1) by the Tribunal at the earlier stage and is pending before this Court, and about which there is no dispute that the questions referred to in the case of the assessee in DB IT Ref Appin. No. 4/1992 are all questions of law, there is no difficulty in arriving at a conclusion that the Tribunal’s order in question too does give rise to questions of law which are required to be referred to this Court. 4. In view of the above admitted position, the Tribunal has clearly erred in declining to make the reference vide order dt. 24th Feb., 1997. The principle in dealing with the application under Section 256 is well-settled that if any question of law arises out of the Tribunal’s order, the same has to be referred to the High Court for its decision unless the same can be said to have become academic or answer to which is self -evident, or settled by the decision of apex Court. Either of circumstances does not exist in the present case. 5. The learned counsel for the respondent contends that since the question has already been subject-matter of reference in DB IT Ref Appin. No. 4/1992, and which is yet to be decided, there is no requirement to raise the same issue second time at the later stage of the proceedings and multiplying the proceedings. 6. 5. The learned counsel for the respondent contends that since the question has already been subject-matter of reference in DB IT Ref Appin. No. 4/1992, and which is yet to be decided, there is no requirement to raise the same issue second time at the later stage of the proceedings and multiplying the proceedings. 6. Having given our thoughtful consideration, we are of the opinion that in the present case, the aforesaid contention of the learned counsel cannot be sustained. It is not in dispute that DB IT Ref Appin. No. 4/1992 arose out of order passed by the Tribunal, setting aside the assessment order and remanding the matter to the assessing authority for making assessment afresh in the light of guidelines laid down by the Tribunal in that order. The guidelines laid down by the Tribunal for making fresh assessment order had given rise to questions of law which are subject-matter of Reference Appin. No. 4/1992. 7. Theassessment orders originally framed under Section 143(3)/148 for asst. yrs. 1972-73, 1973-74, 1974-75 and 1975-76 as well as orders passed by CIT(A) by relying on the statement of account submitted by Mr. John Ashlyn of Salas, S.A., Geneva, was set aside by the Tribunal’s order dt. 14th Feb., 1990, in ITA Nos. 9, 10, 11 and 12/1987 with the direction to the AO to allow reasonable opportunity to the assessee to submit the evidence which is being used against the assessee by the Department. It was also directed that assessment order should be reframed by the AO in light of the direction given in the case of Shri H.C. Bader in the appellate order dt. 1st May, 1989. 8. In pursuance of the aforesaid direction, the assessments were reframed on 20th March, 1992. However, the CIT(A) again set aside the orders vide his order dt. 15th Sept., 1992, in Appeals Nos. 145, 146, 155 and 144/1992-93 on the ground that the AO has not followed the directions contained in earlier order dt. 14th Feb., 1990, in the case of the present assessee and order dt, 1st May, 1989, in the case of Shri H.C. Bader referred to above. Pursuant thereto, assessment orders were again framed by the AO on 28th Feb., 1995 (asst. yr. 1975-76). The present applications are outcome of the said assessment order. 9. 14th Feb., 1990, in the case of the present assessee and order dt, 1st May, 1989, in the case of Shri H.C. Bader referred to above. Pursuant thereto, assessment orders were again framed by the AO on 28th Feb., 1995 (asst. yr. 1975-76). The present applications are outcome of the said assessment order. 9. The question in brief which arises for consideration in this case is whether information supplied by a foreign national in the form of accounts of the assessee appearing in the books of the said foreign national, which are duly authenticated by the Consulate General of India at Geneva on 17th Sept., 1980, in accordance with the rules of Government of India Diplomatic and Consular Officers (Oath and Fees) Act, 1948, after seeing the originals from the said foreign national cannot be acted upon as evidence by the ITO unless the original documents or accounts book are produced or the author or the accounts book is produced for cross-examination by the assessee as demanded by him. 10. In the present case, the bone of contention is that the AO has made certain additions on the basis of information supplied by one Mr. John Ashlyn of Salas, S.A., Geneva. The said Mr. Ashlyn had supplied copies of the accounts of assessee appearing in the books of MIs Salas, S.A., Geneva which were duly certified/attested by consul under the provisions of the Act of 1948, alleging that there has been under-invoicing in the case of transactions undertaken with the assessee and other jewellers named in the statements. 11. The assessee had taken the stand that the information supplied by said Mr. Ashlyn is forged and fabricated and demanded production of originals and call Mr. Ashlyn to cross-examine him on his statement given to officer of Enforcement Department. Neither of request was granted. But acting upon the said information submitted by Mr. Ashlyn, certain additions have been made. Said Mr. John Ashlyn had given his statement on oath on 15th Sept., 1980, which was recorded by the enforcement authorities and IT authorities and authenticated on 17th Sept., 1980, wherein he has given details of the modus operandi in relation to under-invoicing done by various jewellers of Jaipur. It was also pleaded that on earlier occasion in the case of CIT vs. R.Y. Durlabhji relating to asst. yr. It was also pleaded that on earlier occasion in the case of CIT vs. R.Y. Durlabhji relating to asst. yr. 1968-69, the High Court has rejected to direct a reference under Section 256(2), when the Tribunal had set aside the additions. 12. It is on the aforesaid premise, certain additions were made in the income declared by the assessee by the AO in the first instance. The Tribunal in the first instance, in its orders dt. 14th Feb., 1990, for asst. yrs. 1972-73, 1973-74 and 1975-76 had directed that the assessee should be given proper opportunity of verifying the truthfulness and the correctness of the statement of Mr. John Ashlyn. The documents were also to be examined on the basis of which the additions have been made to the income of the assessee. The Tribunal earlier thereto has issued similar directions on 1st June, 1989, in the case of H.C. Bader, where assessment was also framed on the basis of very same material. 13. It is for that reason, certain questions of law were referred to this Court which arose out of the order dt. 14th Feb., 1990. Amongst other questions, the following questions were referred to this Court: Whether the provisions of CPC for issuing of summoning foreign national is possible under law under Sections 75 and 77 nw Order 26, Rule 5, CPC? Whether the Tribunal was justified in observing that production of original document is required even when the copies have been attested from original documents by Consulate General of India? Whether the Tribunal was justified in holding that there is nothing on record to establish that the Department had carried out any checking in record to veracity of the statement made by John Ashlyn? 14. Subsequent to the remand order passed by the Tribunal, the assessing authority has again made the additions. On the basis of the said material, the CIT(A) had affirmed the additions made by the assessing authority on that account and on further appeal, the Tribunal vide its order dt. 15th Dec., 1995, has deleted such additions on the ground that assessment order has been made without complying with the aforesaid directions by the AO. 15. On the basis of the said material, the CIT(A) had affirmed the additions made by the assessing authority on that account and on further appeal, the Tribunal vide its order dt. 15th Dec., 1995, has deleted such additions on the ground that assessment order has been made without complying with the aforesaid directions by the AO. 15. In the aforesaid circumstances, it is apparent that since after remand, the final orders have been passed by the assessing authority on the basis of the same material and that has already ultimately merged into the order passed by the Tribunal, it would be essential to raise same questions and deciding the case arising out from the final order as has been raised earlier lest any complications may arise in giving effect to the final order that may be passed in IT Ref Appin. No. 4/1992 though learned counsel for the respondent is right in his submission that answer in that case would be only one. 16. While considering the application under Section 256(2), the scope of inquiry is to see whether any question of law arises out of the order of the Tribunal and whether it has not become academic to the decision of the case in the present case. In the aforesaid circumstances, it cannot be said that the questions arising out of the order of the Tribunal have become of academic importance nor it can be said on admitted grounds that the question of law do not arise from the order of the Tribunal. 17. Accordingly, all the three applications under Section 256(2) of the IT Act, 1961, are liable to be allowed. 18. However, we are of the opinion that the question suggested by the assessee (sic-Revenue) does not bring out the real controversy arising in the case and are required to be reframed and to be raised in the same form as are raised in IT Ref Appln. No. 4/2002, along with the following question: “Whether, in the facts and circumstances of the case, the Tribunal was justified in deleting the addition made by AO only on the ground that the order has not been passed after complying with the directions in earlier order without itself deciding the issue on merit ?“ 19. No. 4/2002, along with the following question: “Whether, in the facts and circumstances of the case, the Tribunal was justified in deleting the addition made by AO only on the ground that the order has not been passed after complying with the directions in earlier order without itself deciding the issue on merit ?“ 19. Accordingly, we allow the three applications and direct the Tribunal in each case to state the case and refer the following questions of law arising out of its appellate order dt. 15th Dec., 1995, for its decision: “(i) Whether the provisions of CPC for issuing of summoning foreign national is possible under law under Sections 75 and 77 nw Order 26, Rule 5, CPC? (ii) Whether the Tribunal was justified in observing that production of original document is required even when the copies have been attested from original documents by Consulate General of India? (iii) Whether the Tribunal was justified in holding that there is nothing on record to establish that the Department had carried out any checking in record to veracity of the statement made by John Ashlyn? (iv) Whether, in the facts and circumstances of the case, the Tribunal was justified in deleting the addition made by AO only on the ground that the order has not been passed after complying with the directions in earlier order without itself deciding the issue on merit ?“ No order as to costs.