Director Of Income-Tax Exemption vs Income-Tax Appellate Tribunal ...
1997 Latest Caselaw 990 Del

JUDGMENT

R. C. LAHOTI J. - By this petition under article 226/227 of the Constitution of India, the petitioner seeks quashing of the order dated November 7, 1994, passed by the Income-tax Appellate Tribunal rejecting the petitioners application under section 256(1) of the Income-tax Act, 1961, as barred by time, as also the order dated June 2, 1995, rejecting the petitioners application under section 254(2) of the Act seeking rectification in the order dated November 7, 1994.

The facts in brief. On February 21, 1994, the Tribunal passed an order remanding the matter as to the assessment of the second respondent to the Assessing Officer. The order was received by the Commissioner of Income-tax on June 9, 1994. On August 8, 1994, an application under section 256(1) of the Act seeking reference to the High Court on certain questions of law arising out of the order dated February 21, 1994, was filed. The Tribunal formed an opinion that the application, having been filed beyond the period of limitation, calculated from the date of the order of the Tribunal which was made in the presence of the departmental representative, was liable to be dismissed as the Department had failed to file any application seeking condensation of delay in filing the appeal.

The petitioner moved an application under section 254(2) of the Act seeking rectification in the order dated November 7, 1994, on the ground of the said order having been passed by overlooking the law laid down by the jurisdictional High Court, i.e., the Delhi High Court in CIT v. Arvind Construction Co. Pvt. Ltd. [1993] 193 ITR 330. This application has been rejected on the ground that section 254(2) of the Act was inapplicable for seeking rectification in an order rejecting an application under section 256(1) of the Act.

So far as the order dated November 7, 1994, rejecting the petitioners application as barred by time is concerned, the same was certainly erroneous as the limitation for filing an application under 256(1) of the Act would commence from the date of receipt of the order by the Commissioner of Income-tax, as held by the Delhi High Court in CIT v. Arvind Construction Co. Pvt. Ltd. [1992] 193 ITR 330. Ordinarily, this court would have set aside the order dated November 7, 1994, in exercise of writ jurisdiction of this court directing the Tribunal to entertain the application holding it as having been filed within limitation and adjudicate upon the same on the merits. However, on the facts and circumstances pointed out by learned counsel for the respondent-assessee, we are of the opinion that the present one is a case where the discretionary writ jurisdiction of the High Court may not be exercised in favour of the petitioner.

It is not disputed that subsequent to the passing of the order of the remand, the matter reached the Assessing Officer who passed a fresh order of assessment on March 30, 1995. The assessee Dharm Pratisthanam went in appeal and the Commissioner of Income-tax (Appeals) dismissed the appeal on January 15, 1996, upholding the order of assessment. The present petition is filed on April 26, 1996, i.e., after a lapse of about 18 months from the date of passing of the impugned order dated November 7, 1994. By this time, the assessment itself has achieved finality. Allowing this writ petition would upset a concluded order of assessment.

It is pertinent to note that the Department was not at all justified in moving the application under section 254(2) of the Act and, therefore, the Department cannot be extended any benefit of the time lost in prosecuting those proceedings. Firstly, section 254(2) of the Act was not at all attracted for seeking rectification in an order passed under section 256(1) of the Act, as held by the Delhi High Court in the case of CIT v. Kabir Das Investment Ltd. [1994] 210 ITR 898. Secondly, there is a grave doubt if at all the order rejecting the reference application as barred by time, assuming it to be wrong, could be said to be suffering from such an error apparent as may be capable of being rectified merely. The Department should have promptly and with reasonable despatch filed a writ petition challenging the order dated November 7, 1994, and sought for stay of the assessment proceedings. This was not done. No prayer was made either before the Assessing Officer or before the Commissioner of Income (Appeals) for postponing finalisation of taxation proceedings in view of the Department disputing the correctness of the order dated November 7, 1994.

The decision in the case of Kabir Das Investment Ltd. [1994] 210 ITR 898 (Delhi), is apposite on the facts of the case at hand. The facts therein were more or less similar. A writ petition disputing the correctness of the order rejecting the reference application as being barred by time was filed belatedly. The High Court of Delhi refused to take note of the time lost in pursuing the rectification proceedings which were misconceived and dismissed the writ petition on the ground of laches. Delay and laches have been held to be good ground for refusing to exercise discretionary writ jurisdiction in favour of the petitioner (See State of M. P. v. Nandlal Jaiswal, AIR 1987 SC 251 and Ashok Kumar Mishra v. Collector, Raipur, AIR 1980 SC 112).

In the case at hand, not only is there delay in filing the writ petition, but a vested right has also accrued in favour of the assessee-respondent by the order of assessment having been framed and achieved finality consequent to the order of remand, which will all be disturbed if this writ petition was to be allowed.

For the foregoing reasons, the petition is held liable to be dismissed on the ground of delay and laches. It is dismissed accordingly though without any order as to costs.