Commissioner of Income Tax vs Rieta Biscuits Co. P. Ltd.

Rajesh Bindal, J.—In this reference, the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "the Tribunal"), vide its order dated July 11, 1988, arising out of I.T.A. No. 502/Chandi/87 has referred the following question of law u/s 256(1) of the Income Tax Act, 1961 (for short "the Act), for the assessment year 1982-83 for opinion of this Court:

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the proceedings once filed under the provisions of Section 263, on an issue, fresh proceedings u/s 263 cannot be initiated, within the time limit allowed under the law, even if the later proceedings are initiated on a different issue?

Briefly noticed, the facts are that vide order dated June 2, 1984, passed u/s 143(3) of the Act, the assessment was completed at nil income. Vide agreement dated August 31, 1977, the assessee-company leased out its land, building and plant and machinery to M/s. Bakemans Home Products, a partnership firm and while framing the assessment, the lease income of the assessee-company was wrongly assessed as business income. Accordingly, the investment allowance of Rs. 7,23,723, other expenses amounting to Rs. 50,111 and extra shift allowance on plant and machinery amounting to Rs. 1,15,865 were wrongly allowed by the Inspecting Assistant Commissioner (Asstt). As the above deductions were not admissible against the lease income, proceedings u/s 263 of the Act were initiated by the Commissioner of Income Tax (for short "the CIT"). In March, 1986, notice was issued to the assessee for the assessment year 1982-83 to show cause as to why assessment order be not modified by passing suitable remedial orders. The proceedings initiated were subsequently filed. The Commissioner of Income Tax, vide order dated March 25, 1987, reinitiated proceedings under the provisions of Section 263 of the Act and directed the Inspecting Assistant Commissioner (Asstt.), Patiala, to frame a fresh assessment according to law after affording proper opportunity of hearing to the assessee. Being aggrieved, the assessee filed the appeal before the Tribunal who, vide order dated July 11, 1988, accepted the appeal and set aside the order of the Commissioner of Income Tax holding it to be without jurisdiction.

A perusal of the order of the Tribunal shows that there is a finding of fact that earlier proceedings initiated u/s 263 of the Act and the proceedings initiated subsequently were not on different issues as the same relate to only one issue. The perversity of these findings is not an issue in the present case.

While deciding ITR No. 35 of 1991 (CIT v. Rieta Biscuits Co. Pvt. Ltd. arising out of orders passed by the Tribunal for the assessment year 1983-84 on the issue of entitlement to deductions u/s 32A of the Act, the issue was decided in favour of the assessee and against the Revenue.

Keeping in view the principles of consistency once the issue on the merits has been decided against the Revenue on the same issue during the subsequent assessment years, we do not deem it appropriate to take a different view on a technical reason.

Accordingly, without specifically opining on the issue on the merits, the reference is decided against the Revenue.

Reference is disposed of accordingly.