J. K. Synthetics Ltd. vs Commissioner Of Income Tax
1990 Latest Caselaw 504 Del

ORDER--Question not urged at the time of hearing the appeal does not amount to.buttal evidence

HELD:

Raising a contention before the Tribunal means that the representative of the assessed or the Department actually argued that contention before the Tribunal. If a ground is taken in the grounds of appeal but the same is not argued before the Tribunal at the time of hearing the appeal under s. 254 the legal effect of that would be as if counsel or the representative of the party hs given up that ground though taken in the grounds of appeal. In such a circumstance, it cannot be said that a ground, though taken in the grounds of appeal but not urged before the Tribunal, is a contention which has been raised. Raising of the contention means urging the same at the time of hearing of the appeal itself.

Income Tax Act 1961 s.256

Reference--QUESTION ARISING FROM TRIBUNAL ORDER--Question of law argued, but not dealt with by Tribunal

HELD:

When a question of law is argued but not dealt with, then the said question, if one of law could be said to arise out of the Tribunal's order The High Court under s. 256(2), would be justified in directing the Tribunal to state the case and refer the said question. It would be implied that the contention raised by the assessed has not been accepted by the Tribunal.-CIT v. Scindia Steam Navigation Co. Ltd. (1961) ITR 589 (SC) applied.

Income Tax Act 1961 s.256

Reference--QUESTION ARISING FROM TRIBUNAL ORDER--Levy of interest under s. 216--Opportunity to object in s. 144B proceedings, whether to be given

HELD:

The question is whether the Tribunal was justified in law in holding that though the draft assessment order did not mention charging of interest under s. 216 whether the same can be leived only in the final assessment order without giving the assesse an opportunity to object to the levy in s. 144B proceedings, thus depriving him of the natural justice, this question does not arise from the order of the Tribunal. It was never argued before the Tribunal that principles of natural justice have been violated and it was also not contended thjat the petitioner had been given no opportunity to represent against the levy of interest under s. 216. In any case, the question of levy of interest under s. 216 has been remanded by the Tribunal to the ITO for fresh adjudiction. The Tribunal was, therefore, right, while dealing with the application under s. 256(1) in holding that the aforesaid question of law wid not arise from its order.

Income Tax Act 1961 s.256

JUDGMENT

B.N. Kirpal, J.

1. In this petition under s. 256(2) of the IT Act in respect of the asst. yr. 1977-78, the petitioner sought to raise 8 questions for being referred to this Court.

Vide order dt. 8th August, 1988, notice was limited to questions No. 3 and 7. The effect of this was that the Court declined to ask for reference of the other questions which were proposed. These questions No. 3 and 7 are as follows :

"3. On the facts and in the circumstances of the case, whether the learned Income-tax Appellate Tribunal was correct in law in holding that an amount of Rs. 33,802 being legal expenses not relating to income-tax matters and a further amount to Rs. 35,555 being expenses alleged to be relating to income-tax matters are covered by the provisions of s. 80VV of the IT Act and thus not admissible as revenue expenses."

"7. On the facts and in the circumstances of the case, whether the learned Income-tax Appellate Tribunal was justified in law in holding that though the draft assessment order did not mention charging of interest under s. 216 of the Act, whether the same can be levied only in the final assessment order without giving the assessed an opportunity to object the levy in s. 144B proceedings, thus depriving him of the natural justice."

2. As regards question No. 7 is concerned, in our opinion this question does not arise from the order of the Tribunal. It was never argued before the Tribunal that principles of natural justice have been violated and it was also not contended that the petitioner had been given on opportunity to represent against the levy of interest under s. 216 of the Act. In any case the question of levy of interest under s. 216 has been remanded by the Tribunal to the ITO for fresh adjudication. The Tribunal was, therefore, right, while dealing with the application under s. 256(1) that the aforesaid question of law did not arise from its order.

3. As regards question No. 3 aforesaid is concerned, this relates to two expenses of Rs. 33,802 and Rs. 35,555. As regards expenses of Rs. 35,555 are concerned, from the order of the Tribunal it appears that the assessed itself had contended that these expenses, which formed part of Rs. 46,965 referred to by the Tribunal, related to income-tax matters and would thus be covered by the provisions of s. 80VV of the Act. The question relating to this amount, therefore, cannot be called. We, however, feel that with regard to Rs. 33,802 it was contended by the assessed before the Tribunal that these expenses did not relate to income-tax matters and it was not covered by provisions of s. 80VV of the Act. The Tribunal has referred to this contention but has given no finding.

4. In our opinion, as held by the Supreme Court in CIT vs. Scindia Steam Navigation Co. Ltd. , when a question of law is argued but not dealt with, then the said question, if one of law, would be said to arise out of the Tribunal's order.

5. Learned counsel for the respondent states that this question does not rise in the form it is raised and also because the Tribunal has not examined the aspect.

6. We cannot agree with the learned counsel for the respondent because in our opinion the Supreme Court specifically referred to a situation where the question is raised and argued before the Tribunal and the Tribunal wrongly does not deal with it. If such a question is one of law, we, under s. 256(2), would be justified in directing the Tribunal to state the case and refer the said question. It would be implied that the contention raised by the assessed has not been accepted by the Tribunal. We make it clear that merely because a ground is raised in the grounds of appeal may not be regarded as being covered by the aforesaid dictum of the Supreme Court. Raising a contention before the Tribunal means, the representative of the assessed or the Department actually argued that contention before the Tribunal. If the ground is taken in the grounds of appeal but the same is not argued before the Tribunal at the time of hearing the appeal under s. 254 of the Act, the legal effect of that would be as if the counsel or the representative of the party has given up that ground though taken in the grounds of appeal. In such a circumstances it cannot be said that a ground though taken in the grounds of appeal but not urged before the Tribunal is a contention which has been raised. Raising of the contention means urging the same at the time of hearing of the appeal itself.

7. For the foregoing reasons, this application is partly allowed and, therefore, we direct the Tribunal to state the case and refer the following question of law of this Court :

"On the facts and in the circumstances of the case, whether the Tribunal was correct in law in holding that the amount of Rs. 33,802 being legal expenses was covered by the provisions of s. 80VV of the IT Act."