Rajasthan High Court - Jodhpur
Rswm Ltd vs A.C.I.T.Inv Circle,Bhilwara ... on 22 August, 2025
[2025:RJ-JD:37690-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Income Tax Appeal No. 87/2009
RSWM Ltd. Formerly known as Rajsthan Spinning & Weaving
Mills Ltd. Kharigram, Gulabpura, Bhilwara through its Vice
Precident Mr. vimal Arora s/o Late Sh. Krishna Lal Arora Aged
about 50 years.
----Appellant
Versus
Assistant Commissioner of Income Tax(Inv), Circle, Bhilwara
----Respondent
For Appellant : Mr. Sanjay Jhanwar, Sr Adv through
VC with Mr. Dhruv Gehlot
For Respondent : Mr. K.K Bissa
HON'BLE THE CHIEF JUSTICE MR. K.R. SHRIRAM
HON'BLE MR. JUSTICE SANDEEP TANEJA
Order
22/08/2025
1. On 8th January 2010 following two substantial questions of
law were framed by this Court :-
"(i) Whether the Income Tax Appellate Tribunal can
decide the case on merit, even if the Commissioner
(Appeal) has dismissed the appeal on technical grounds?
(ii) Whether there can be some other market value of
the electricity except that fixed by the Electricity Board in
the State of Rajasthan?"
2. Shri Jhanwar submitted that first question is answered by a
Coordinate Bench of this Court in Prem Agencies vs.
Commissioner of Income Tax1. It was submitted that Court has
held that once Tribunal reaches a conclusion that dismissal of
appeal on technical ground was not correct then the matter should
be remanded to appellate authority to consider on merits because
1 (1988)173ITR110(Raj)
[2025:RJ-JD:37690-DB] (2 of 3) [ITA-87/2009]
the same has not been decided by the appellate authority. Paras 1
to 4 of the judgment reads as under :-
"1. This reference at the instance of the assessee is
under Section 256(1) of the Income Tax Act, 1961, for
decision on the following question of law :
"Whether, on the facts and in the
circumstances of the case, the Tribunal was
justified in giving a finding on the merits of the
case, when the Appellate Assistant
Commissioner did not apply his mind and did
not give any finding on the merits of the
case?"
2. The relevant assessment year is 1972-73. The
Income Tax Officer rejected the application for
registration of the firm coming to the conclusion that no
genuine firm has come into existence. The assessee
appealed to the Appellate Assistant Commissioner. The
Appellate Assistant Commissioner took the view that
some further enquiry into facts was necessary without
which the question of genuineness of the firm could not
be decided. Accordingly, the Appellate Assistant
Commissioner did not decide the matter on merits and
remanded the case to the Income Tax Officer for
making a further enquiry as directed. The Revenue,
being aggrieved by the order of remand made by the
Appellate Assistant Commissioner, preferred an appeal
to the Tribunal. The grounds of appeal indicate that the
only grievance made in the appeal filed to the Tribunal,
was against the remand made by the Appellate
Assistant Commissioner to the Income Tax Officer. The
relief claimed in the appeal was only to this extent, or,
in other words, to set aside the order of remand. The
Tribunal, however, after coming to the conclusion that
the remand to the Income Tax Officer was not justified
and that the existing material was sufficient to decide
the case on merits, proceeded to decide the case itself
on merits and held that the refusal of registration was
justified. Aggrieved by this decision of the Tribunal
instead of remand by the Tribunal to the Appellate
Assistant Commissioner for deciding the appeal on
merits, this reference has been made at the instance of
the assessee.
3. As earlier indicated, the appeal by the Revenue
to the Tribunal was merely for quashing the remand
order passed by the Appellate Assistant Commissioner
on the ground that no further enquiry by the Income
Tax Officer was necessary and the case could be
decided on merits by the Appellate Assistant
Commissioner on the existing material. In such a
situation, the scope of the appeal before the Tribunal
was merely consideration of the correctness of the
order of remand made by the Appellate Assistant
Commissioner since even the Revenue, while preferring
the appeal, did not agitate the merits of the case for
decision by the Tribunal. In such a situation, the
Tribunal, after reaching the conclusion that the material
present was sufficient for deciding the question of
[2025:RJ-JD:37690-DB] (3 of 3) [ITA-87/2009]
registration of the firm and, therefore, no further
enquiry by the Income Tax Officer was called for, it
should have, accordingly, quashed the remand order
made by the Appellate Assistant Commissioner and
required the Appellate Assistant Commissioner to
decide the appeal afresh on merits. The Tribunal was,
therefore, not justified in proceeding to decide the
question of registration on merits itself without the
same having been decided first by the Appellate
Assistant Commissioner and that point not having been
agitated in the appeal filed by the Revenue before the
Tribunal.
4. Consequently, the reference is answered in
favour of the assessee and against the Revenue by
holding that the Tribunal was not justified in giving a
finding on the merits of the case instead of remanding
the case to the Appellate Assistant Commissioner for
decision of the case on merits."
3. Therefore we agree with Mr. Jhanwar that the Tribunal having
come to the conclusion that Commissioner(Appeals) was not
justified in dismissing appeal on technical ground should have
remanded the matter to Commissioner(Appeals) to decide second
question of law framed by this Court, which is on merits.
4. Therefore, to the extent that Tribunal has decided the case
on merits, we hereby quash and set aside the order. The matter
be sent to Commissioner(Appeals) to decide whether there can be
some other market value of electricity except that fixed by
Electricity Board in the State of Rajasthan.
5. The Commissioner(Appeals) shall dispose the appeal on or
before 31st October 2025.
6. All rights and contentions of the parties on merits are kept
open.
7. Appeal disposed.
(SANDEEP TANEJA),J (K.R. SHRIRAM),CJ
26-divyaP/-
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