Real Food Products (P.) Ltd. vs Income Tax Appellate Tribunal

V. Rajagopala Reddy, J.—The petitioner-company seeks an appropriate writ to quash the order of the respondent-income tax Appellate Tribunal, Hyderabad, in M.P. No. 106/H of 1996, dated April 1, 1997, and to direct the Tribunal to dispose of the appeal afresh.

The petitioner-company is engaged in manufacture and sale of biscuits. The Assessing Officer completed the assessment for the assessment year 1990-91 by an order dated November 20, 1992, computing the book profits u/s 115J of the Income Tax Act, 1961 (for short "the Act"), at Rs. 6,19,900. Aggrieved by the said computation, the petitioner took up the matter in appeal to the Commissioner of Income Tax (Appeals) and the appeal was disposed of by an order dated July 6, 1995, confirming the assessment made by the Assessing Officer, following the decision of this court in V.V. Trans-investments (P.) Ltd. Vs. Commissioner of Income Tax, . The assessee carried the matter in further appeal before the Income Tax Appellate Tribunal, Hyderabad. The Tribunal, by an order dated November 26, 1996, disposed of the appeal by dismissing the same.

Thereupon, the assessee has filed M.P. No. 106/Hyd of 1996, u/s 254(2), of the Act, on December 6, 1996, before the Tribunal, raising grounds that the assessee''s counsel never admitted that the issue was covered by the decision in V.V. Trans-investments (P.) Ltd. Vs. Commissioner of Income Tax, , and that learned counsel had relied upon several other decisions and that the decision of the jurisdictional High Court was distinguishable on the facts. Hence, there could not have been any concession on the part of the assessee''s counsel, that the Tribunal had not referred to the submissions of the assessee''s counsel nor discussed the decisions cited by him. Thus, there was a patent mistake in the Tribunal''s order, in so far as there was not only a mistake in the statement of facts but also omission to consider the evidence filed before it in support of the submissions of the assessee, the decisions cited and the entries in the audited profit and loss account.

The Tribunal, considering the above grounds, dismissed the miscellaneous petition by an order dated April 1, 1997, holding that there was no mistake apparent on the face of the order and that the Tribunal was right in passing the order and that u/s 254(2) of the Act it was not possible to review the order of the Tribunal. Challenging the order of the Tribunal, the petitioner-company filed the present writ petition.

It was strenuously contended by learned counsel for the petitioner that the Tribunal committed a grave error in dismissing the appeal on the ground that it was admitted by the petitioner''s counsel that the issue was covered by the judgment of this court in V.V. Trans-investments (P.) Ltd. Vs. Commissioner of Income Tax, , which was wholly untrue. It is further contended that learned counsel has placed material before the Tribunal and raised several contentions in support of his case, which were not considered by the Tribunal. The main grievance of the petitioner was that the Tribunal disposed of the appeal on the concession alleged to have been made by counsel for the appellant before the Tribunal, which is a patent mistake liable to be corrected u/s 254(2) of the Act. Thus, the controversy that is to be ascertained is about what happened before the Tribunal during the arguments of appeal - whether counsel for the appellant agreed that the case was covered by the decision of the jurisdictional High Court or not. Though Sri Satyanarayana Rao, appearing for the petitioner, forcefully submits that he himself argued the matter before the Tribunal and that he never made such a concession and in fact he distinguished the case on the merits from the decision in V.V. Trans-investments (P.) Ltd. Vs. Commissioner of Income Tax, , and submitted several other arguments citing decisions in support of his case, it is significant to see that the assessee raised the same objection before the Tribunal and the Tribunal, considering the same arguments as raised here rejected the same holding that the order did not suffer from any mistake.

To consider the above submissions it is necessary to read the Tribunal''s order in appeal dated November 26, 1996, carefully. Leaving out the grounds of appeal extracted by the Tribunal, the remaining part of the judgment is as follows :

"2. The appeal was fixed for hearing and the parties were heard. During the course of hearing, the parties have fairly agreed that the issue in question is squarely covered by the decision of the jurisdictional High Court in the case of V.V. Trans-investments (P.) Ltd. Vs. Commissioner of Income Tax, .

We have considered the submissions of the parties, gone through the records and find that the issue in question is squarely covered by the decision of the jurisdictional High Court mentioned above, which is in favour of the Revenue and against the assessee. Therefore, the finding of the Commissioner of Income Tax (Appeals), is in order and does not require any interference.

In the result, the appeal is dismissed."

It is true, as contended, that it was stated in the order that the parties had agreed that the issue in question was squarely covered by the decision in V.V. Trans-investments (P.) Ltd. Vs. Commissioner of Income Tax, . But it should be pointed out that the appeal was not disposed of on the basis of the concession of counsel. It was clearly stated in para 3 that the Tribunal had gone through the record and found that the issue was covered by the above decision. In that view, since the decision of the jurisdictional High Court was binding upon the Tribunal, it had no other go except to follow the same and dismiss the appeal. Hence, the main grievance of the petitioner falls to the ground. Even assuming that there was a misstatement with regard to the concession of learned counsel, that was not fatal to the decision of the case. Nothing turns upon it.

However, we feel it necessary to deal with the contention as to the veracity of learned counsel''s statement before the Tribunal. In the statement of facts filed along with the appeal before the Tribunal it was clearly stated as follows :

"Notwithstanding the fact that there was a decision of the jurisdictional High Court in favour of the Revenue it is most humbly submitted that a SLP on this point was already admitted by the Supreme Court. It is therefore only with a view to keep the matter alive in the hope that the assessee might benefit by a favourable decision of the Supreme Court rendered subsequently that this appeal is filed before the Tribunal."

It is, therefore, evident that the case of the petitioner was that the issue in question was covered by the decision in V.V. Trans-investments (P.) Ltd. Vs. Commissioner of Income Tax, , and the appeal was filed only to keep the matter alive for any favourable decision of the Supreme Court which might be rendered subsequently. It was again conceded by the authorised representative of the assessee before the Commissioner of Income Tax (Appeals) that "they conceded that in view of the decision of the A.P. High Court in the case of V.V. Trans-investments (P.) Ltd. Vs. Commissioner of Income Tax, , the Assessing Officer was correct in his view ...." Considering the above statements and other facts and circumstances, the Tribunal held that there was no mistake in the order in appeal. Learned counsel did not bring to our notice any material to show that his version of the story was correct. In the absence of any such convincing reasons, this court, exercising the judicial review jurisdiction under article 226 of the Constitution, will not normally interfere with the order of the competent quasi-judicial Tribunal. One of the Members who disposed of the appeal and who was fresh in mind to recollect what has happened when learned counsel advanced his arguments, held that there was no mistake in the appellate order. It was purely a question of fact, essentially to be decided by the learned members, who had disposed of the appeal. After such a disposal was made in the impugned order and the same being purely a question of fact, the scope of this writ petition becomes very limited. For the reasons stated above, we do not see any ground to interfere with the impugned order. In fact we do not appreciate any counsel to canvass the truthfulness of a statement made in a judgment or order. There is authority for the proposition that the statement of the judge as to what happened in a court was conclusive and cannot be allowed to be controverted by any affidavit or otherwise. In Reg v. Pestonji Dinshaw 10 Bom HCR 75, it was observed as follows :

"The statement of the judge, who presides at a trial, whether it be in a criminal or civil case, is, as to what has taken place at the trial conclusive. Neither the affidavits of bystanders, nor of jurors, nor the notes of counsel, nor of shorthand writers are admissible to controvert the notes or statement of the judge."

Again, in Nagabhushanam v. Jagannaikulu, AIR 1925 Mad 1031, it was held that :

"Where a judgment contains a damaging statement against a party, a statement of an admission purporting to have been made by him, and practically conclusive of the case against him, the proper course for him to adopt, if his case is that the statement is erroneous, is to apply for a review of judgment, when the matter is fresh in the mind both of the learned judge who pronounced the judgment and the practitioners who appeared in the case."

In Timmalapalli Virabhadra Rao Vs. Sokalchand Chunilal and Others, , after elaborate discussion of several decisions on the point, relying upon the two decisions in Reg v. Pestonji Dinshaw 10 Bom HCR 75 and Nagabhushanam v. Jagannaikulu, AIR 1925 Mad 1031, it has been observed as follows (page 797) :

"(8) Now, if we examine its ''raison d''etre'' the rule that a statement in a judgment as to what happened in Ct. should not be allowed to be controverted is seen to rest on a number of salutary reasons. One is that to depart from it and to allow such statements when they are deliberately made in judgments to be challenged would be to draw the presiding officers of Cts, into the controversy between the parties, a process which must inevitably and in the long run lead to embarrassment, if not demoralisation all round. Especially when the parties are rich and obstinate, vakils appearing for them would be subjected to a degree of pressure to swear to affidavits which is not to be encouraged. Confidence in the impartiality of the officers presiding in the Cts. of justice is the very foundation of our judicial system and indeed of any civilised system and if such officers are dragged into the battle of allegations and counter allegations that is appropriate only to the role of litigants, their detachment and the confidence which such detachment inspires will be seriously impaired. Mr. Narasaraju, however, contended that to lay down the rule in the hard form in which it has been done in the Bombay case Reg. v. Pestonji Dinshaw 10 Bom HCR 75, would be to set a premium on carelessness and inexactitude. But when we realise that the number of litigants runs into hundreds of thousands while judicial officers are relatively a handful that as a rule a judicial officer has no interest in a case beyond seeing that it is terminated and that they receive a training and are subject to a discipline from which litigants are immune, the evil which Mr. Narasaraju apprehends is surely much the smaller one.

(9) I think that when there is any controversy between the parties the statement made by the judge should be accepted as final and conclusive."

However, exceptions to the rule laid down in Reg v. Pestonji Dinshaw, 10 Bom HCR 75, were mentioned in the above case in Timmalapalli Virabhadra Rao Vs. Sokalchand Chunilal and Others, as follows (page 798) :

"(10) It is however easy to visualise situations to which the rule laid down in the Bombay case Reg v. Pestonji Dinshaw 10 Bom HCR 75, would have no application. One would be where there is an enquiry into an accusation of misconduct against a judicial officer in relation to a particular case. Another would be where there is in reality no controversy at all between the parties and it is apparent from the affidavits of the advocates on both sides that the learned judge fell into an accidental error."

A Constitutional Bench of the Supreme Court of five judges in Union of India (UOI) Vs. T.R. Varma, authoritatively held that in a dispute as to what has happened before a court or Tribunal, the statement of the Presiding Officer is generally taken to be correct. Learned judge Venkatarama Aiyar J., delivering the judgment, observed as follows (page 884 and page 238 of 13 FJR) :

"(8) We have thus before us two statements, one by Mr. Byrne and the other by the respondent, and they are in flat contradiction of each other. The question is which of them is to be accepted. When there is a dispute as to what happened before a court or Tribunal, the statement of the Presiding Officer in regard to it is generally taken to be correct, and there is no reason why the statement of Mr. Byrne should not be accepted as true.

He was admittedly an officer holding a high position, and it is not suggested that there was any motive for him to give false evidence. There are moreover, features in the record, which clearly show that the statement of Mr. Byrne must be correct."

In view of the above decisions, we have to give credence to the statement of the learned member and to take what was stated in the judgment as incontrovertibly a true fact.

It is next contended by learned counsel for the petitioner that the appellate order was vitiated on the ground that the Tribunal failed to discuss all the contentions raised by learned counsel before it and to give reasons for coming to the conclusion which it did.

We apprehend that it is not permissible for counsel to raise this contention u/s 254(2) of the Act. If learned counsel finds the order defective on this ground, the remedy lies elsewhere and certainly not by way of a miscellaneous petition u/s 254(2) of the Act. This aspect was well considered by the Tribunal in the impugned order. It clearly held that it had not discussed the facts and the statements in detail as, according to them, the issue has been covered by the jurisdictional High Court decision in V.V. Trans-investments (P.) Ltd. Vs. Commissioner of Income Tax, . We do not, therefore, propose to interfere with the impugned order on this ground, either.

For the above reasons, the writ petition is dismissed at the admission stage.