1988 (1) TMI 9 - HC - Income Tax

Summary

Issues:
1. Availability of alternative remedy under article 226 of the Constitution.
2. Rejection of rectification application under section 254(2) of the Income-tax Act, 1961.
3. Determination of whether a reference lies against the order rejecting the rectification application.
4. Analysis of relevant case laws on the issue of reference under section 254(2).

Issue 1:
The court considered whether there was an alternative remedy available to the petitioner under article 226 of the Constitution and if the court could refuse to exercise its extraordinary jurisdiction. The petitioner sought to quash the Tribunal's order rejecting the rectification application and restrain the recovery of tax, penalty, and other amounts.

Issue 2:
The petitioner, a registered firm, filed a return showing a loss for the assessment year 1974-75. The Income-tax Officer treated cash credits as income from undisclosed sources. Various appeals and remands followed, leading to the Tribunal reversing the Commissioner (Appeals) order and restoring the Income-tax Officer's decision. The petitioner then sought rectification under section 254(2), which was rejected by the Tribunal.

Issue 3:
The court analyzed whether a reference lies against the order rejecting the rectification application under section 254(2). The petitioner argued that no reference was maintainable against the Tribunal's order, while the respondent contended that a reference could be made under section 256(1) from the order passed under section 254(2).

Issue 4:
The court examined relevant case laws to determine the applicability of a reference against the order rejecting the rectification application. The court distinguished cases like Niranjan and Co. Ltd., Popular Engg. Co., and N. J. Dadabai, emphasizing that each case was decided on different facts and circumstances. The court concluded that a reference could be made against the order passed under section 254(2) depending on the specific facts of the case.

In conclusion, the court dismissed the writ petition, stating that the petitioner had an alternative remedy through reference under section 256(1) to the Tribunal. The court declined to exercise its extraordinary jurisdiction under article 226 of the Constitution, emphasizing that the petitioner had availed of the remedy of reference against the orders passed under sections 254(1) and 254(2).