COMMISSIONER OF INCOME TAX vs MEHTA CUT PIECE CLOTH HOUSE

G.S. SINGHVI, J.

The assessee-firm is dealing in cloth. After completion of assessment under s. 143(3) of the IT Act, 1961 for the asst. yr. 1978-79 on the total income of Rs. 31,660, the AO proposed an addition of Rs. 22,849 on the ground that inflated purchases made by the assessee were disapproved by IAC in the proceedings under s. 144A of ''1961 Act''. The CIT invoked powers under s. 263 of ''1961 Act'' and passed an order adverse to the assessee. The assessee filed an appeal before the Tribunal. The same was accepted by the Tribunal vide its order dt. 27th Sept., 1995. Reference application filed by the Revenue was dismissed by the Tribunal.

In the meantime, the AO completed fresh assessment on 14th March, 1985 in terms of the directions given by the CIT under s. 263 of ''1961 Act''. The assessee filed appeal before the AAC, which was accepted by the said authority on the ground that the order passed by the AO on an earlier occasion has been set aside by the Tribunal. Once again the Department filed appeal before the Tribunal and the Tribunal dismissed the same vide order dt. 31st May, 1989. Reference application filed by the petitioner was also dismissed by the Tribunal.

We have heard Shri S.S. Mahalan, learned counsel for the petitioner. None has appeared on behalf of the assessee.

Shri Mahajan has brought to our notice the fact that in the proceedings arising out of ITA No. 333/ChJ83 which related to asst. yr. 1978-79 this Court has allowed the application filed by the Revenue for reference of the question of law and urged that this petition should also be accepted and the Tribunal be directed to make reference of the question of law proposed by the petitioner.

In our opinion, Shri Mahajan is right in submitting that the question posed by the petitioner is a question of law which deserves to be answered by the High Court.

We, therefore, allow the petition and direct the Tribunal to refer the following question of law for the opinion of the High Court : ''

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the action of the AAC in cancelling the assessment order framed by the AO on 14th March, 1985 under s. 143(3) in pursuance of order passed under s. 263 by the CIT when the Tribunal has already referred the question to the Hon''ble High Court for its esteemed opinion against its own order dt. 12th Dec., 1986 in R.A. No. 236/Chd/85 arising out of ITA No. 333/Chd/83T''

We further direct the Tribunal to draw up the statement of the case and send the records of the case to the High Court.

OPEN