Ram Ji Dass and Co. vs Commissioner of Income Tax

The Income Tax Appellate Tribunal, Amritsar, has referred the following question of law for the opinion of this Court u/s 256(1) of the Income Tax Act, 1961 (for short, "the Act") in compliance with the order of this Court dated December 2, 1998, and arising out of the order of the Tribunal in C. O. No. 101 (ASR)/1993 in I. T. A. No. 801 (ASR)/1993) dated August 31, 1999, for the assessment year 1990-91:

(i) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in dismissing the cross-objections filed by the assessee on the ground that while deciding the Revenue''s appeal the Tribunal had already considered the question relating to the rate of profits and had upheld the same and it could not be reexamined thereafter in the assessee''s cross-objections.

The Assessing Officer rejected the books of account and assessed net profit at 10 per cent. of the turnover. On appeal, the net profit rate was reduced to 9.25 per cent. The Department filed appeal before the Tribunal and the assessee filed cross-objections. The appeal of the Department was dismissed but cross-objections of the assessee were not considered on the merits, while dismissing the appeal of the Department. The assessee applied for recalling of the order and for decision of the cross-objections on the merits. This prayer was rejected with the following observations:

15.3 It is observed that the Tribunal vide its order dated April 18, 1995, have already dismissed the appeal of the Revenue whereby they had agitated the relief given by the learned Commissioner of Income Tax (Appeals). In the process, the Tribunal upheld the net profit rate of 9.25 per cent. as applied by the learned Commissioner of Income Tax (Appeals). Since appeal in I. T. A. No. 801 (ASR)/93 filed by the Department has not been recalled, the earlier order of the Tribunal stands in this behalf accordingly, we see no reason to interfere with the orders of the learned Commissioner of Income Tax (Appeals) as already upheld by the Tribunal.

We have heard learned Counsel for the parties.

Learned Counsel for the assessee submits that while deciding the appeal of the Department, the Tribunal only considered whether reduction of the net profit rate from 10 per cent. to 9.25 per cent. was justified or not and not the question whether said rate should be further reduced to 6.29 per cent., as sought by the assessee. Reliance has been placed on Hari Shankar Rastogi Vs. Sham Manohar and Others, , about the scope of cross-objections.

From a perusal of the impugned order, it is clear that the view point of the assessee put forward by way of cross-objections was not considered on the merits. Accordingly, the question referred has to be answered in favour of the assessee and against the Department. The cross-objections of the assessee are, thus, required to be heard and decided on the merits.

Reference is disposed of.