Iqbal and Co. vs Commissioner of Income Tax

G.G. Sohani, Actg. C.J.

The order in this case will also govern the disposal of Misc. Civil Cases Nos. 141, 142, 143 and 144 all of 1987.

These are applications u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

The material facts giving rise to these applications, briefly, are as follows :

The assessee is a partnership firm which was granted registration for the assessment year 1977-78. For the assessment years 1978-79 and 1979-80, the registration of the assessee was continued and the assessee was assessed u/s 143(3) of the Act in the status of a registered firm for all these years. Subsequently, on the basis of information gathered during the course of survey conducted u/s 133A of the Act in the premises of the assessee as well as in the premises of two other firms, Kamalkishore & Co., Chachrod, and Chetanswaroop Omprakash & Co., Nagda, the Income Tax Officer came to the conclusion that the assessee-firm was not genuine and the Income Tax Officer, therefore, cancelled the registration/continuation of registration granted to the assessee-firm. The Income Tax Officer, thereafter, reopened the assessments for the assessment years 1978-79 and 1979-80 and made protective assessments on the assessee-firm for both these assessment years, holding that the income assessed would be substantively included in the income of Chetanswaroop Omprakash & Co. Aggrieved by the orders passed by the Income Tax Officer, the assessee preferred appeals before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner set aside the order passed by the Income Tax Officer u/s 186 of the Act. The Appellate Assistant Commissioner also set aside the orders of protective assessments on the assessee-firm and directed the Income Tax Officer to restore the assessments originally made as substantive assessments on the assessee-firm in respect of the two assessment years. Aggrieved by the order passed by the Appellate Assistant Commissioner, the Revenue preferred appeals before the Tribunal. The Tribunal, by a common order dated May 8, 1986, allowed the appeals filed by the Revenue and set aside the orders of the Appellate Assistant Commissioner directing him to restore the appeals and to redetermine the issues arising in those appeals in accordance with law. Aggrieved by the order passed by the Tribunal, the assessee sought a reference, but as the applications made by the assessee in that behalf were rejected, the assessee has filed these applications.

Having heard learned counsel for the parties, we have come to the conclusion that the following questions of law do arise out of the orders passed by the Tribunal :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal, in view of the grounds of appeal taken before it, erred in law in setting aside the findings given by the Appellate Assistant Commissioner that the assessee was a separate entity and the assessment made in the case of the assessee should be treated as substantive ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal, in view of the grounds of appeal taken before it, erred in law in setting aside the order passed by the Appellate Assistant Commissioner whereby the order of the Income Tax Officer cancelling registration/continuation of registration of the assessee-firm was set aside ?"

The applications are, therefore, allowed. The Tribunal is directed to state the case and to refer the aforesaid questions of law to this court for its opinion. In the circumstances of the case, parties shall bear their own costs of these applications.