M/S Mahashwari Synthetics Pvt. Ltd., Hoshiarpur v. Commissioner Of Income Tax (Central), Ludhiana & Another

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.217 of 2009 (O&M)Date of decision: 11.8.2009 M/s Mahashwari Synthetics Pvt. Ltd., Hoshiarpur. -----Appellant Vs. Commissioner of Income Tax (Central), Ludhiana & another. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:-Mr. Akshay Bhan, Advocatefor the appellant. for the appellant. ----- ORDER: 1.The assessee has preferred this appeal under Section260A of the Income Tax Act, 1961 (for short, “the Act”) againstthe order dated 1.9.2008, Annexure A-4, passed by the IncomeTax Appellate Tribunal, Amritsar in I.T. (SS) No.9 (ASR)/2002 forthe assessment period from 1.4.1986 to 30.8.1996, proposing toraise questions of law mentioned in para 20 of the appeal. 2. Learned counsel for the appellant presses following questions:- “i) Whether in the facts and circumstances of the case,the ITAT was justified in not taking a final view in thematter when all facts and figures were availablebefore it, rather than again restoring the Blockassessment back to the Assessing Officer, when thethe ITAT was justified in not taking a final view in thematter when all facts and figures were availablebefore it, rather than again restoring the Blockassessment back to the Assessing Officer, when the later admittedly failed to abide by its directions asgiven in original order? ii) That in the facts and circumstances of the case, wasthe ITAT correct in holding that there was no judicialbias operating in this case qua the fact that despiterevenue’s appeal pending before the High Court, theundisclosed income was substantially enhanced insecond Block assessment order? iii) Whether in the facts and circumstances of the case,the ITAT, while restoring the matter back to theAssessing Officer, was right in making freshobservations, inconsistent with its original order,amounting to review of its earlier order?” xx xx xx xx “vi)Whether in the facts and circumstances of the case,was the ITAT justified in refusing to award appropriatecost to the assessee, more so when the order of theAssessing Officer was not upheld but again restoredback by the ITAT?” 3. There was search and seizure action in the premisesof the directors/partners of the assessee on 30.8.1996, resultingin seizure of cash, jewellery and other valuables and alsoincriminating books of account and other documents. Blockassessment was done. The matter was carried by the assesseein appeal to the Tribunal, which was disposed of vide order dated 4.12.2000, inter-alia, with the following directions:- “45.1 However, we also give some guidelines inarriving at net profit rate. The net rate can be arrivedat by applying N.P. rate accepted by the departmentin the case of the appellant or the NP rate shown by other concerns dealing in the same business ormanufacturing items of the nature as manufactured bythe appellant concern. The N.P. rate can also bearrived at by working out the income surrendered bythe appellant as undisclosed income and otherundisclosed assets found during the Block period bythe AO. The AO, however, can work out the NP ratein accordance with the facts and circumstances of thecase as well as material available on record, but heshould give due opportunity of being heard to theappellant and also such rate should be reasonable,logical and judicious based on reasonable evidence.” 4. After remand, assessment was made but theassessee again carried the matter to the Tribunal and submittedthat the order of assessment was not in accordance with theorder of remand. The Tribunal disposed of the matter by theimpugned order dated 1.9.2008, inter-alia, with the followingobservations:- 4. After remand, assessment was made but theassessee again carried the matter to the Tribunal and submittedthat the order of assessment was not in accordance with theorder of remand. The Tribunal disposed of the matter by theimpugned order dated 1.9.2008, inter-alia, with the followingobservations:- “....In our opinion, the approach of the AO treating theentire sales as undisclosed income is against thebasic principles of Income-tax law. Hence we restorethe matter to the file of the AO for estimating thereasonable profit on suppressed sales on the basis ofmaterial on record in consonance with the earlierorder of the ITAT. It is needless to say that the AO isrequired to consider the objection put before the AOvide letter cited supra in true spirit and adequateopportunity of hearing to be given by the AO to theassessee.” entire sales as undisclosed income is against thebasic principles of Income-tax law. Hence we restorethe matter to the file of the AO for estimating thereasonable profit on suppressed sales on the basis ofmaterial on record in consonance with the earlierorder of the ITAT. It is needless to say that the AO isrequired to consider the objection put before the AOvide letter cited supra in true spirit and adequateopportunity of hearing to be given by the AO to theassessee.” 5. We have heard learned counsel for the assessee. 6. It was submitted that the Tribunal should have taken afinal view and there was no justification for remand. Observationsmade in the impugned order of remand are inconsistent with thedirections in the earlier order. It was further submitted that afterremand, if same authority deals with the matter, its order will bevitiated by judicial bias, particularly when the assessing authoritywas also associated with search. 7. We are unable to hold that in the facts andcircumstances of the case, questions sought to be raised aresubstantial questions of law. 8. No doubt, where material is enough, the appellateCourt should normally determine the issue on merits, even if suchissue has not been dealt with by the original authority. However,power of remand can be exercised when as a result of finding ofthe appellate authority, re-determination of issue becomesnecessary. In the present case, on facts, the Tribunal held that itwas necessary to have re-determination of assessment for thereasons mentioned in the impugned order. We are unable to holdthat the reasons mentioned by the Tribunal for rejecting theconclusion for re-determination of issues are perverse. 9. Questions No.(i), (iii) and (vi) are, thus, not substantialquestions of law. As regards question No.(ii), we are unable tohold that merely because an authority has to deal with the matteragain, after remand, such authority suffers from judicial bias. The Tribunal rejected the contention of the appellant, relying uponjudgment of the Hon’ble Supreme Court in Union of Indiav.Vipin Kumar Jain260 ITR 1 (SC), holding that there could be noapprehension of bias merely because the authority under Section132 of the Act and the Assessing Officer is the same. Thequestion of bias has to be decided on facts of each case andmere fact that the officer associated with search, madeassessment, was not by itself a ground to impute bias. Whilemaking assessment, the Assessing Officer had to apply thejudicial norms. We are, thus, unable to hold that the questionraised is a substantial question of law. 10. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 11, 2009(CHAUDHARY )ashwani JUDGE DAYA