1994 (11) TMI 78 - HC - Income Tax

Summary

Issues Involved:
1. Maintainability of applications under section 256(2) of the Income-tax Act, 1961.
2. Acceptance of books of account maintained by the assessee.
3. Procedure for filing reference applications when multiple appeals are disposed of by a consolidated order.

Issue-wise Detailed Analysis:

1. Maintainability of applications under section 256(2) of the Income-tax Act, 1961:

The court addressed the preliminary objection raised by the counsel for the Revenue regarding the maintainability of the applications under section 256(2). The objection was based on the fact that the applications did not specifically mention the reference applications in all the appeals. The court allowed the petitions to amend the cause title to include all reference applications, thereby surmounting the technical objection. The court clarified that a single reference application is sufficient when multiple appeals are disposed of by a consolidated order arising out of an assessment made on the assessee for one year.

2. Acceptance of books of account maintained by the assessee:

The assessee, an engineering contractor, filed returns disclosing loss for the assessment years 1979-80 and 1980-81, attributing the loss to delays in contract completion and increased costs. The Income-tax Officer estimated the profit at ten percent, based on prior years when no accounts were maintained. The Commissioner of Income-tax acknowledged the maintenance of books of account and held that the business results for the two years would be taken as nil. Both the assessee and the Revenue appealed to the Tribunal, which dismissed the assessee's appeals and allowed the Revenue's appeals, restoring the Income-tax Officer's estimate. The Tribunal's rejection of the applications for reference led to the current applications under section 256(2).

3. Procedure for filing reference applications when multiple appeals are disposed of by a consolidated order:

The court discussed the procedure for filing reference applications in cases where multiple appeals are disposed of by a consolidated order. It relied on Supreme Court decisions in Narhari v. Shanker and K. G. Khosla and Co. (P.) Ltd. v. Dy. Commr. of Commercial Taxes, which held that a single reference application is sufficient when the appeals originate from one assessment. The court emphasized that this principle applies to cases involving one assessee and one assessment year under one enactment. Separate reference applications are required for different assessment years or different enactments, even if the appeals are consolidated.

The court also referred to decisions of the Madhya Pradesh High Court and the Delhi High Court, which supported the view that a single reference application is sufficient for multiple appeals arising from one assessment. The court distinguished its view from later decisions that required separate reference applications for different years or different assessees.

Conclusion:

The court allowed the applications and directed the Income-tax Appellate Tribunal to state a case and refer the following question of law for its opinion:
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in upholding the estimate of the profits despite the assessee maintaining accounts for his business?"

The judgment emphasized the sufficiency of a single reference application for multiple appeals arising from one assessment, provided the appeals are disposed of by a consolidated order.