Geep Industrial Syndicate Ltd. ... vs Central Board Of Direct Taxes And ...
1987 Latest Caselaw 111 Del

JUDGMENT

Ranganathan, J.

1. These three writ petitions can be disposed of by a common order as they raise the same question.

2. The petitioner in all the three cases is Geep Industrial Syndicate Ltd., a company which has its registered office in Allahabad. The petitioner seeks to challenge the correctness of a demand raised against it for the assessment years 1972-73, 1973-74 and 1974-75. These demands were raised in consequence of orders passed by the Income tax officer giving effect to the orders of the Income-tax Appellate Tribunal in the appeals preferred against the assessments pertaining to the above assessment years. Actually the Commissioner of Income-tax (Appeals) had decided the assessed's appeals in favor of the assessed to some extent and the Tribunal dismissed the appeals filed by the Department from the orders of the Commissioner of Income-tax (Appeals). We are not here concerned with the correctness or otherwise of these orders of the Tribunal. The objection of the assessed is that while giving effect to the appellate order, the Income-tax Officer has not properly calculated the amount of interest which the assessed could be called unto to pay under the provisions of section 220(2) of the Income-tax Act. These demands in consequence of the appellate orders were raised by the Income-tax Officer, Central Circle, Allahabad.

3. For the assessment years 1972-73 to 1974-75, the assessed submitted applications under section 154. Relying on certain judicial decisions, it contended that the amount of interest included in the demand made by the Income-tax Officer should be recomputed. The Income-tax Officer rejected these applications both on merits and also by holding that the amendment sought by the petitioner did not fall within the preview of section 154 of the Income-tax Act, not being a mistake apparent from the record of the case.

4. Counsel for the Department has raised a preliminary objection to the maintainability of these petitions in this court. His submission is that the assessed is being assessed at Allahabad, that the impugned orders had been passed at Allahabad and that the petitions under article 226 of the Constitution of India, if at all, should be filed in the Allahabad High Court. It is also submitted that the assessed has a right of appeal against the orders passed under section 154 and can challenge the correctness of these order before the appellate authority within the jurisdiction of the Allahabad High Court.

5. Counsel for the petitioner, however, submits that these petitions are maintainable in this court, because, according to him, the Income-tax Officer has erroneously applied the terms of a circular bearing No. 334 dated April 3, 1982, by which the Central Board of Direct Taxes has issued instructions as to how interest chargeable under section 220(2) should be computed in cases where the assessment order undergoes changes at various stages of appeal. It is submitted that since the circular has been issued by the Central Board of Direct Taxes located in New Delhi and the petitioner is challenging the correctness of that circular, this court has jurisdiction to entertain these writ petitions. He also submits that the demands raised by the Income-tax Officer as a consequence of the appellate orders are being contested only in respect of interest and this contest cannot be raised in appeal against an order charging interest. So far as the orders under section 154 are concerned, he submits that since the Income-tax Officer has pointed out that the grounds on which the assessed challenges the levy of interest raise a controversial question regarding the applicability of section 220(2), the provisions of section 154 are not applicable and it would be futile for the assessed to challenge the said orders in appeal, as according to counsel for the petitioner, the point taken by the Income-tax Officer regarding the non-availability of section 154 in the circumstances is a valid point.

6. We are of opinion that the present writ petitions have to be dismissed on the ground that this court has no jurisdiction to entertain the same. Admittedly, the impugned orders have been passed by an authority in Allahabad and the assessed's registered office is also situated in Allahabad. We are unable to see any reason why the assessed should be permitted to invoke the jurisdiction of this court under article 226. We are unable to uphold the assessed's attempt to bring the subject-matter of the controversy within the jurisdiction of this court by a reference to the Board's circular dated April 3, 1982. We say this because the Income-tax Officer in raising the demands has not referred to the Board's circular. Counsel for the petitioner submits that since the Board's circulars binding on the income-tax officer and are as effective as the provisions of the statute or rules made there under, one should presume that the Income-tax Officer has applied the circular in computing the interest while raising the demands which are raised by it. We are unable to accept this argument. In the first place, as we have pointed out earlier, the Board's circular has not been referred to by the Income-tax Officer either directly or even casually as the basis for computation of interest and we cannot presume that he has applied the circular. On the other hand, the papers placed before us show that the officer had independently applied his mind to the issue. The assessed petitioner has not placed before us a copy of its application under section 154. But, from the order passed by the Income-tax Officer in rejecting this application, it is seen that the assessed did not raise any ground before him regarding the circular, either that the Income-tax Officer had erred in following the circular or that the circular was erroneous in any respect. On the other hand, the assessed only placed before the Income-tax Officer a decision of the Kerala High Court for submitting that the interpretation placed by the Income-tax Officer was not correct. In repelling the assessed's contention also, the Income-tax Officer has made no reference to the circular at all. He has rejected the assessed's contention on the basis of another judicial decision of the Kerala High Court in K. P. Abdul Kareem Hajee v. ITO [1983] 141 ITR 120. A perusal of the order under section 154 makes it clear beyond doubt that no question arose before the Income-tax Officer of the applicability or otherwise of the circular. We are, therefore, of opinion that though the circular of the Central Board of Direct Taxes touches upon the issue of interest computation in such cases, the decision of the Income-tax Officer has not been based on the circular but has been based on judicial decisions which have been reported subsequently.

7. Secondly, even assuming that the Income-tax Officer may have had the circular in mind, he did not treat it as conclusive and binding on himself and preferred to base his conclusion on the decisions referred to in his order under section 154. This is, therefore, a case where the circular has not been considered applicable proprio vigore. At worst, all that can be said is that the circular has also been taken into account and considered in the light of the judicial decisions referred to by the Income-tax Officer. It is clear that while a circular of the Board will be binding upon an Income-tax Officer in matters relating to the general interpretation of any provisions of the statute, the circular cannot override judicial decisions rendered on the statute. In fields which are covered by judicial decisions, the circular will not be conclusive even so far as the Income-tax Officer is concerned. In the circumstances, we are of opinion that the circular issued by the Central Board of Direct Taxes dated April 3, 1982, cannot constitute a ground for this court assuming jurisdiction in respect of a matter which clearly falls within the territorial jurisdiction of the Allahabad High Court. As recently pointed out by the Supreme Court in Union of India v. Oswal Woollen Mills Ltd. a High Court should be reluctant to interfere in matters where in territorial jurisdiction as well as the convenience of the parties render it appropriate that the assessed should move some other High Court in regard to the relief sought.

8. We express no opinion on the question whether the assessed has a right of appeal against the demands made on it or the orders purporting to be under section 154 in view of the fact that, even assuming that the assessed has no other remedy by way of appeal from these orders, the proper course for him would only be to move the Allahabad High Court and not this court. For these reasons, all these three writ petitions and applications for stay are dismissed at the show-cause stage. We, however, make no order as to costs.

9. Petitions dismissed.