Commissioner of Income Tax vs Murardan Bharat and Co.

By the Court

Heard learned counsel for the parties.

The petitioner, in this appeal challenges the order passed by the Tribunal, Jaipur Bench, Jaipur, in Misc. Appln. No. 9/Jp/1998 filed by the appellant Commissioner for rectification of orders passed by the Tribunal in ITA No. 501/Jp/91, dated 2-5-1997.

The present appeal concerns the assessment of income of M/s Murardan Barhat & Co., Gunga, Distt. Barmer. In the income of assessee-firm originally the income of M/s Murardan Barhat & Co. (Canal Works) was also included by holding the said firm to be not a genuine firm but merely a front of the assessee-respondent and that has resulted in assessment of the firm as unregistered firm. The Tribunal in its order referred to the fact that in appeal filed by M/s Murardan Barhat & Co. (Canal Works) for the assessment year 1985-86 in two appeals filed by M/s Murardan Barhat (Canal Works), Gunga, for the assessment year 1985-86 namely, ITA Nos. 1532 & 1533/Jp/1990, the Tribunal has categorically held that the said firm to be genuine firm and on that basis the inclusion of income of M/s Murardan Barhat & Co. (Canal Works) in the income the respondent-assessee-firm was excluded for the assessment year 1985-86. It is in connection with this finding an application u/s 254(2) of the Income Tax Act, 1961, was moved by the revenue stating that the foundation for holding the aforesaid ''Canal Works'' firm to be genuine has apparently been recorded on wrong premises inasmuch as in ITA Nos. 1532 and 1533/Jp/1990 the firm has not been held to be genuine. The application has been rejected by the Tribunal by the impugned order, hence this appeal.

Learned counsel for the revenue has taken us through the orders passed by the Tribunal in ITA No. 1532 & 1533/Jp/1990 for the assessment year 1985-86, dated 27-3-1990, to urge that reference to the aforesaid judgment as having recorded finding of the genuineness of the firm whose income has been excluded from the assessee-firm is apparently erroneous inasmuch as no such finding has been reached by the Tribunal in that order.

Having carefully read that order, we are of the opinion that contention of the learned counsel for the revenue is not well founded, it is apparent that while the assessing officer has held the said firm (Canal Works) to be not a genuine, but merely a front of the respondent- assessee, it has treated that firm is part and parcel of the assessee-firm and included the income thereof in the income of respondent-assessee. However, as a protective measure the said firm was also assessed independently as unregistered firm.

The said appeal has arisen out of aforesaid protective assessment and treating firm to be unregistered one. While dealing with the submission of the assessee, the Tribunal has observed as under :

"The learned counsel has placed on record the assessment/appellate orders of the lower authorities wherein the main firm has been held to be genuine. Further, for assessment year 1985-86 the Canal Works firm has been held to be genuine whereas in case of P.C.P. Works firm the matter has been set aside for fresh consideration for the assessment years 1985-86, 1986-87 and 1987-88. The learned D.B. has not been able to enlighten us as to whether the department has preferred second appeal against these orders or not. Moreover, in neither of the cases before us the learned Commissioner (Appeals) has dealt with this issue and hence the ground raised does not arise out of the order appealed against. We, therefore, decline to deal with it and reject the same."

From the aforesaid, it is apparent that Tribunal has stated as fact that for the assessment year 1985-86, the lower appellate authority in separate appeal has held that M/s Murardan Barhat & Co. Gunga (Canal Works) to be genuine firm. It has also further held that there is no information whether any appeal against that order either has been filed or that order has been set aside.

Even today, the learned counsel for the revenue is not in a position to say the finding recorded by the appellate authority for the assessment year 1985-86 in the case of M/s Murardan Barhat & Co. (Canal Works), Gunga, has been set aside. Although he has filed appeal.

Obviously there has been a finding of appellate authority about the genuineness of the said firm of which the Tribunal has taken note of, although itself has not recorded an independent finding.

In these circumstances, we are of the opinion that no rectifiable mistake affecting substance of the decision has been committed by the Tribunal in its appellate order ITA No. 501/Jp/1991. The fact that finding was not recorded by the Tribunal in ITA Nos. 1532 & 1533/Jp/1990 itself does not make the order apparently erroneous for rectifying Tribunal''s order in ITA No. 501/Jp/1991 which otherwise correctly states that the firm M/s Murardan Barhat & Co. (Canal Works) has been held to be genuine firm by the appellate authority.

Accordingly, this appeal fails and is hereby dismissed with no order as to costs.