Commissioner of Income Tax vs Permali Wallance Ltd.

Shukla, J.—This order shall dispose of Miscellaneous Civil Cases Nos. 105 to 112 of 1978 as well, as the questions are common in all these cases.

The Commissioner, Madhya Pradesh-I, Bhopal, has filed this application u/s 256(2) of the I.T. Act, 1961, praying that the Appellate Tribunal, Indore Bench, may be directed to send the statement of case and refer certain questions said to be questions of law arising out of its order dated March 31, 1977.

Assessment years relevant for these cases are 1965-66 to 1971-72. The ITO had framed assessments for the assessment years in question wherein depreciation and development rebate had been allowed to the assessees. Later, the ITO sought to rectify his assessment order u/s 154 of the I.T. Act. He issued notice dated December 14, 1977, mentioning the mistakes sought to be rectified and fixed the matter for hearing on the very next day, i.e., December 15, 1977. The assessee represented that the time given to it to submit its reply was insufficient as it had to consult its tax consultant at Bombay. The assessee also submitted its reply on the alleged mistakes which the ITO had proposed to rectify. However, the ITO did not extend the time on the ground that the matter was getting time-barred and passed the order of rectification u/s 154 of the Act on December 15, 1977, withdrawing the development rebate and depreciation and adding the amount in the total income of the assessee.

This order was challenged by the assessee before the AAC, who partly allowed the appeal. Both the parties appealed against the common order of the AAC. The grievance of the assessee was firstly that the rectification order passed by the ITO was bad because reasonable opportunity was not given to the assessee to show cause against the proposed rectification and, secondly, the issue on which the ITO reopened was a debatable question, and, therefore, there was no error apparent which could give jurisdiction to the ITO for rectification u/s 154 of the Act. The Department''s grievance was that the AAC was in error in giving relief to the assessee in respect of the additions made by the ITO acting u/s 154 of the Act.

The Appellate Tribunal allowed the assessee''s appeals and dismissed the departmental appeals. The Appellate Tribunal held that a reasonable opportunity was not afforded to the assessee and also that the issues reopened by the ITO purporting to act u/s 154 of the Act, were debatable and there was no error apparent.

After hearing the learned counsel, we are of opinion that no question of law arises out of the order of the Tribunal and, therefore, a direction u/s 256(2) of the I.T. Act, 1961, for stating the case and referring the proposed questions cannot be given. The finding that a reasonable opportunity was not given to the assessee is a finding of fact. Similarly, the various issues which the ITO reopened purporting to act u/s 154 of the Act were highly debatable and this aspect could not be disputed before us.

We, therefore, reject the applications filed by the Revenue u/s 256(2) of the I.T. Act. There shall be no order as to costs.