1985 (7) TMI 4 - HC - Income Tax

Summary

Issues:
1. Application by Revenue under section 256(2) of the Income-tax Act, 1961 for direction to ITAT.
2. Imposition of penalties on the assessee for assessment years 1969-70 and 1970-71.
3. Appeal to Commissioner of Income-tax (Appeals) and subsequent second appeals to Tribunal.
4. Conflict in decisions of two Members of the Tribunal regarding penalty imposition.
5. Rejection of reference to the High Court by the Tribunal.
6. Question of law regarding final decision of Tribunal on penalty imposition for 1970-71 assessment year.

Analysis:
The High Court of Madhya Pradesh addressed an application by the Revenue under section 256(2) of the Income-tax Act, 1961, seeking a direction to the Income-tax Appellate Tribunal (ITAT) to state the case and refer the question of law arising in the case. The assessee, Anwarkhan Mehboob Co., Jabalpur, filed its return late for the assessment years 1969-70 and 1970-71, leading to the Income-tax Officer imposing penalties amounting to Rs. 48,705.50 and Rs. 57,270, respectively. The assessee's appeals to the Commissioner of Income-tax (Appeals) were dismissed, prompting second appeals to the Tribunal, resulting in conflicting orders by two Members of the Tribunal regarding the imposition of penalties.

The Tribunal's decision highlighted a grievance by the assessee that it was not given a reasonable opportunity of hearing before the penalties were imposed. While one Member quashed the penalty and previous orders, the other Member directed the Income-tax Officer to provide a proper hearing and pass a fresh order. This discrepancy led to a conflict in the Tribunal's orders for the assessment year 1970-71, as no attempt to reconcile the differing decisions was made. The Revenue's application for a reference to the High Court was rejected by the Tribunal, stating no question of law arose, prompting the Revenue to approach the High Court under section 256(2) of the Act.

The High Court, noting the conflicting directions in the Tribunal's separate orders for the 1970-71 assessment year, found a question of law regarding the final decision on penalty imposition. The Court directed the Tribunal to state the case and refer the question of law for decision. The crucial question posed was whether the Tribunal had made an operative order in accordance with the law concerning the imposition of penalties for the 1970-71 assessment year. As no opposition was presented, no costs were awarded in the matter.