DIRECTOR OF INCOME-TAX (EXEMPTION) VS INCOME-TAX APPELLATE TRIBUNAL, 2000 PTD-DELHI-HIGH-COURT-INDIA 201 (1997)

(a) Income-tax---

----Reference---Application to direct reference---Limitation---Limitation starts -from date when order rejecting application under 5.256(1) was received by C.I.T. who had jurisdiction to file application---Indian Income Tax Act, 1961, S.256(2).

(b) Income-tax---

----Reference---High Court---Writ petition---Order rejecting application for reference as time-barred---Tribunal remanding matter as to assessment to Assessing Officer on 21-2-1994---Order received by Commissioner on 9-6-1994---On 8-8-1994, Revenue filing application for reference under S.256(1)---Application dismissed by Tribunal as filed beyond period of limitation---Revenue- filing application cinder S.254(2) for rectification of order, dated 7-11-1994---Application rejected on ground S.254(2) inapplicable for seeking rectification in an order rejecting an application under S.256(1)---Subsequent to order of remand, Assessing Officer passing fresh order of assessment on 30-3-1995---CIT (Appeals) dismissing appeal of assessee on 15-1-1996, upholding order of assessment---Writ petition filed after a lapse of 18 months from order, dated 7-11-1994, rejecting Revenue's application as barred by time---Assessment itself reaching finality and vested right accrued in favour of assessee---Writ petition liable to be dismissed-- Indian Income Tax Act, 1961, Ss.254(2) & 256---Constitution of India, Art.226.

On February 21, 1994, the Tribunal passed an order remanding the matter as to assessment of the respondent-assessee to the Assessing Officer. The order was received by the Commissioner of Income-tax on June 9,1994. On August 8, 1994, an application under section 256(1) of the Income Tax Act, 1961, was filed by the petitioner (Director of Income-tax (Exemption)) seeking reference to the High Court on certain questions of law arising out of the order, dated February 21,1994. The Tribunal held that the application having been filed beyond the period of limitation calculated from the date of order passed by the Tribunal, was liable to be dismissed, as the Department had failed to file any application seeking condonation of delay in filing the application. The petitioner moved an application under section 254(2) of the Act seeking rectification of the order of the Tribunal, dated November 7,1994, on the ground that the said order was passed by overlooking the law laid down by the jurisdictional High Court, i.e., the Delhi High Court in CIT v. Arvind Construction Co. (Pvt.) Ltd. (1992) 193 ITR 330. This application was rejected on the ground that section 254(2) of the Act was inapplicable for seeking rectification in an order rejecting an application under section 256(1) of the Act. On a writ petition filed for quashing the order of the Tribunal, dated November 7,1994;

Held, (i) that so far as the order, dated November 7,1994, rejecting the petitioner's application as barred by time was concerned, the same was erroneous as the limitation for filing an application under section 256(1) of the Act would commence from the date of receipt of the order by the Commissioner of Income-tax. However, on the facts and circumstances pointed out by the assessee, the writ jurisdiction of the High Court could not be exercised.

(ii) That subsequent to the passing of the order of remand, the matter reached the Assessing Officer who passed a fresh order of assessment on March 30,1995.The assessee went in appeal and the Commissioner of Inconie-tax (Appeals) dismissed the appeal on January 15,1996, upholding the order of assessment. The writ petition was filed on April 26,1996, i.e., after a lapse of about 18 months from the date of passing of the order, dated November 7,1994. By this time the assessment itself had achieved finality.

(iii) That the Department was not justified in moving the application under section 254(2) and, therefore, the Department could not be extended any benefit of the time lost in prosecuting those proceedings.

(iv) That it could not be said that the order rejecting the reference application as barred by time, assuming it to be wrong, could be said to puffer from such an error apparent as might be capable of being rectified merely. The Department should have promptly and with reasonable despatch filed a writ petition challenging the order, dated November 7,1994, and sought for stay of the assessment proceedings. This was not done. No prayer was made either before the Assessing Officer or before the Commissioner of Income-tax (Appeals) for postponing finalisation of taxation proceedings in view of the fact that the Department was disputing the correctness of the order, dated November 7,1994.

(v) That not only was there delay in filing the writ petition, but a vested right had also accrued in favour of the assessee-respondent by the order of assessment having been framed and achieving finality consequent to the order of remand which would be disturbed if the writ petition were to be allowed,

(vi) That, therefore, the writ petition was liable to be dismissed.

CIT v. Kabir Das Investment Ltd.(1994) 210 ITR 898 (Delhi) fol.

Ashok Kumar Mishra v. Collector, Raipur AIR 1980 SC 112; CIT v. Arvind Construction Co. (Pvt.) Ltd. (1992) 193 ITR 330 and State of M.P. v. Nandlal Jaiswal AIR 1987 SC 251 ref.

R. D, Jolly with Ms. Premlata Barisal for Petitioner.

Manoj Kumar for Respondents.

JUDGMENT

R. C. LAHOTI, J.---By this petition under Article 226/227 of the Constitution of India, the petitioner seeks quashing of the order, dated November 7,1994, passed by the Income-tax Appellate Tribunal rejecting the petitioner's application under section 256(1) of the Income Tax Act, 1961, as barred by time, as also the order, dated June 2, 1995, rejecting the petitioner's application under section 254(2) of the Act seeking rectification in the order, dated November 7,1994.

The facts in brief. On February 21,1994, the Tribunal passed an order remanding the matter as to the assessment of the second respondent to the Assessing Officer. The order was received by the Commissioner of Income-tax on. June 9,1994. On August 8,1994 an application under section 256(I) of the Act seeking reference to the High Court on certain questions of law arising out of the order, dated February 21,1994, was filed. The Tribunal formed an opinion that the application, having been filed beyond the period of limitation, calculated from the date of the order of the Tribunal which was made in the presence of the departmental representative, was liable to be dismissed as the Department had failed to file any application seeking condonation of delay in filing the appeal.

The petitioner moved an application under section 254(2) of the Act seeking rectification in the order, dated November 7,1994, on the ground of the said order having been passed by overlooking the law laid down by the jurisdictional High Court, i.e., the Delhi High Court in CIT v. Arvind Construction Co. (Pvt.) Ltd. (1993) 193 ITR 330. This application has been rejected on the ground that section 254(2) of the Act was inapplicable for seeking rectification in an order rejecting an application under section 256(1) of the Act.

So far as the order, dated November 7,1994, rejecting the petitioner's application as barred by time is concerned, the same was certainly erroneous as the limitation for filing an application under 256(1) of the Act would commence from the date of receipt of the order by the commissioner of Income-tax, as held by the Delhi High Court in CIT v. Arvind Construction Co. (Pvt.) Ltd. (1992) 193 ITR 330. Ordinarily, this Court would have set aside the order, dated November 7,1994, in exercise of writ jurisdiction of this Court directing the Tribunal to entertain the application holding it as having been filed within limitation and adjudicated upon the same on the merits. However, on the facts and circumstances pointed out by learned counsel for the respondent-assessee, we are of the opinion that the present one is a case where the discretionary writ jurisdiction of the High Court may not be exercised in favour of the petitioner.

It is not disputed that subsequent to the passing of the order of the remand, the matter the Assessing Officer who passed a fresh order of assessment on March 30,1995.The assessee Dharm Pratisthanam went in appeal and the Commissioner of Income-tax (Appeals) dismissed the appeal on January 15,1996, upholding the order of assessment. The present petition is filed on April 26, 1996. i.e., after a lapse of about 18 months from the date of passing of the impugned order, dated November 7,1994. By the time, the assessment itself has achieved finality. Allowing this writ petition would upset a conclude order of assessment.

It is pertinent to note that the Department was not at all justified in moving the application under section 254(2) of the Act and, therefore, the Department cannot be extended any benefit of the time lost in prosecuting those proceedings. Firstly section 254(2) of the Act was not at all attracted for seeking rectification in an order passed under section 256(f) of the Act, as held by Delhi High Court in the case of CIT v. Kabir Das Investment Ltd. (1994) 210 ITR 898. Secondly, there is a grave doubt if at all the order rejecting the reference application as barred by time, assuming it to be wrong, could be said to be suffering from such an error apparent as may be capable of being rectified merely. The Department should have promptly and with reasonable despatch filed a writ petition challenging the order, dated November 7,1994, and sought for stay of the assessment proceedings. This was not done No prayer was made either before the Assessing Officer or before the Commissioner of Income (Appeals) for postponing finalisation of taxation proceedings to view of the Department of disputing the correctness of the order, dated November 7,1994.

The decision in the case of Kabir Das Investment Ltd. (1994) 210 ITR 898 (Delhi), is apposite on the facts of the case at hand. The facts therein were more or less similar. A writ petition disputing the correctness of the order rejecting the reference application as being barred by time was filed belatedly. The High Court of Delhi refused to take note of the time lost in pursuing the rectification proceedings which were misconceived and dismissed the writ petition on the ground of laches. Delay and lashes have been held to be good ground for refusing to exercise discretionary writ jurisdiction in favour of the petitioner (See State of M: P. v. Nandlal Jaiswal AIR 1987 SC 251 and Ashok Kumar Mishra v. Collector, Raipur AIR 1980 SC 112).

In the case at hand, not only is there delay in filing the writ petition, but a vested right has also accrued in favour of the assessee-respondent by the order of assessment having been framed and achieved finality consequent to the order of remand, which will all be disturbed if this writ petition was to be allowed.

For the foregoing reasons. the petition is held liable to be dismisses; on the ground of delay and laches. It is dismissed accordingly though without any order as to costs.

M.B.A./3269/FCPetition dismissed.