Travancore Titanium Products Ltd. vs Commissioner of Income Tax

V.V. Kamat, J.—In fact this court by its earlier judgment dated January 5, 1993, in Income Tax Reference No. 61 of 1988 (reported in Commissioner of Income Tax Vs. Travancore Titanium Products Ltd. (No. 1), annexure "D" to this petition) has remitted the proceedings to the Tribunal for certain specified reasons. It is observed in the following manner, after referring to the various documents, in paragraph 6 of the judgment (page 689) :

" It does not appear that these documents were tendered before the Tribunal as additional evidence in accordance with Rule 29 of the Appellate Tribunal Rules, 1963. No reason is stated for acceptance of these additional documents by the Tribunal. There is nothing on record to show whether these documents were produced before the assessing authority or before the first appellate authority at all. Be that as it may, the explanation offered before the Tribunal that the estimate was filed on June 15, 1976, on a bona fide working made on June 14, 1976, was a new plea. It does not appear to have been taken either before the assessing authority or before the first appellate authority. The first appellate authority, no doubt, referred to a manuscript calculation that was filed in paragraph 5 of its order. But, it is not clear whether the manuscript calculation is the one that is referred to by the Tribunal. We are stressing these aspects only to show that the plea put forward by the assessee before the Tribunal was a new one, based on fresh documents filed before the Tribunal for the first, time. It is by relying on the abovesaid documents that the Tribunal accepted the plea of the assessee and held that the estimate made by the assessee was a bona fide one and that it cannot be called an underestimate prepared deliberately."

This court also recorded that a plea taken before the Tribunal for the first time is the basis of the conclusion that the charge of interest u/s 216 of the Income Tax Act was unjustifiable. Further observation is that there is no material to show that the documents were admitted as additional evidence in the appeal. This court further observed that it is not possible to answer the question referred satisfactorily and properly.

When the matter was taken up by the Income Tax Appellate Tribunal as a result of the above previous order of this court, the Appellate Tribunal in its order (annexure "E") referred to the documents furnished in the nature of a paper book and observed that the said papers were already on the record of the Department and, therefore, the Departmental representative did not object to entertain the same and consider the issue on the basis of the material thus furnished.

Reading the appellate order after remittance it would be seen further, the Bench wanted to know the basis on which the production was evaluated in terms of money. It then appears that the query of the Tribunal could not be answered by the representative of the assessee.

Thereafter, it is seen that the Tribunal has observed in regard to the request for adjournments. Leaving the main thread and endorsing reluctance to grant adjournment, observing that sufficient time was available to the assessee to place all the materials before us, the Appellate Tribunal proceeded to record an abrupt observation that there is no satisfaction with regard to the basis on which advance tax was either estimated or paid off in instalments and in the process in the same spirit justified the levy of interest u/s 216 read with Section 212 of the Income Tax Act, 1961.

Not only that this abrupt conclusion is not supported by any kind of reasoning in regard thereto, it will have to be emphasised and observed that the proceeding was taken up before this court earlier--income tax Reference No. 61 of 1988 (see Commissioner of Income Tax Vs. Travancore Titanium Products Ltd. (No. 1), )-by the Revenue against an order, which was exactly contrary, passed earlier by the Appellate Tribunal, to hold that the assessee had taken reasonable care in preparing the basis for the estimate and the basis so prepared was a product of a well-informed guess work. It was also held that the estimate could not be called an underestimate or done deliberately by the assessee, ultimately leading to the contrary conclusion that levy of interest u/s 216 of the Act was unjustifiable. It was against this diametrically opposite conclusion the Revenue was aggrieved and sought relief in Original Petition No. 1152 of 1986 for a direction in regard to the reference of questions.

It is more than elementary that the matter was remitted by this court as stated above under certain circumstances and situations. It is more than clear that after remittance the Departmental representative, finding that all papers were already on record, did not object for treating the papers contained in the said paper book as admitted material placed for the first time before the Appellate Tribunal. Even in this situation the Tribunal was perfectly justified if it wanted to know certain aspects and in the process if a situation occurs during the course of the hearing and to satisfy the queries of the Bench, little accommodation is inevitable. Then that situation by itself would not lead with justification to set aside the earlier position already decided and settled and that too without any kind of reasons as we find from the impugned order.

Although the Appellate Tribunal is justified to have its queries satisfied, the course adopted in treating the situation in such a manner that any accommodation to counsel, not for his inconvenience but for collecting material to satisfy the queries of the Tribunal would be difficult to be appreciated. It may be that the Tribunal might have justifiably felt that the adjournment would be difficult in view of the matter having been remitted by this court by its earlier judgment, this position could not be justified to be the sole reason for upsetting the earlier order.

Seeing the order it must be said that it is unsupportable because there is not a single reason in support of the order much less the order being the product of total non-consideration of a contrary recent judgment of the earlier Tribunal itself.

In view of the above position we are left with no alternative other than to exercise our powers u/s 256(2) of the Income Tax Act to direct reference of questions Nos. 1 to 4 to this court after drawing up the required statement of the case. In view of the age of the proceedings, the Income Tax Appellate Tribunal, Cochin Bench, is directed to treat this proceeding as an expedited matter by this court.