Industrial Co. Ltd v. Commissioner Of Income-Tax[[1]]Was Alsocited Before Us

HON'BLE SRI JUSTICE L.NARASIMHA REDDYAND HON’BLE SRI JUSTICE CHALLA KODANDA RAM REFERRED CASE No.171 OF 2000 ORDER:- (per Hon’ble Sri Justice L. Narasimha Reddy) This reference is made by the Hyderabad Bench-B of the IncomeTax Appellate Tribunal through order dated 03.11.1998 inR.A.No.358/Hyd/1994 in I.T.A.No.923/Hyd/1991, at the instance of therevenue. 2) The facts in brief are that M/s. R.C.R Trust, and G.V. FamilyTrust, filed separate returns for the assessment year 1988-89 showingthe income of the respondent from the trusts. The respondent in turn,filed a separate return showing his income from other sources. 3) Since all the three returns are in respect of the respondent, theIncome Tax Officer has chosen to process the returns that reflected theincome from the trust under Section 143(1) of the Income Tax Act (forshort, “the Act”) and passed an order dated 25.10.1988. TheCommissioner of the Income Tax however scrutinized the assessmentorder and took the view that the assessment ought to have beencomprehensive in respect of all the three returns by clubbing together. Accordingly, he passed an order dated 21.3.1991, in exercise of theprovisions under Section 263 of the Act. 4) Aggrieved by the order of the Commissioner, the respondentfiled I.T.A.No.923/ID/Hyd/1991 before the Tribunal. In its order passedin the appeal, the Tribunal took the view that it is always open for theIncome Tax Officer to process, either the returns filed on behalf of the Trust, or by the beneficiary and the occasion to reopen the same inexercise of power under Section 263 of the Act would arise only whenthe order of the Income Tax Officer is found to be erroneous andprejudicial, insofar as it has resulted in phenomenal loss to therevenue; and that such event did not take place in the instant case. Not satisfied with the outcome of the order of the Tribunal, the revenuesought reference and accordingly reference is made with the followingquestions of law:- 1. “Whether, on the facts and in the circumstances of thecase, the ITAT was correct in law in canceling the order u/s263 of the Income-tax Act passed by the CIT holding that theorder u/s 143(1) was neither erroneous nor prejudicial to theinterests of Revenue?” 2. “Whether, on the facts and in the circumstances of thecase, the ITAT was correct in law in canceling the order u/s263 of the Income-tax Act passed by the CIT and allowingthe appeal of the assessee?” 5) Heard Sri S.R. Ashok, learned Senior Counsel for the revenueand Dr. C.P. Ramaswami, learned counsel for the respondent atlength. The judgment of the Supreme Court reported in Malabar Industrial Co. Ltd., vs. Commissioner of Income-tax[[1]]was alsocited before us. 6) However, we are of the view that the necessity to deal with thematter in detail is obviated on account of the fact that the tax impact inthe instant case, even if the contention of revenue is accepted is lessthan Rs.8,000/-. In view of the circulars issued by the Central Board ofDirect Taxes from time to time, and the mandates under Section 268Aof the Act, the matter does not warrant adjudication. We thereforedecline to answer the questions as unwarranted and unnecessary. 7) Accordingly, both the questions of law as set out above aredeclined to be answered. __________________________________ JUSTICE L. NARASIMHA REDDY Date:24.06.2014.Gk ____________________________________ JUSTICE CHALLA KODANDA RAM HON'BLE SRI JUSTICE L.NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM REFERRED CASE No.171 OF 2000 Gk Date:24.06.2014. [1]Vol.243 (2000) page 83.