1985 (1) TMI 17 - HC - Income Tax

Summary

Issues:
1. Whether the Tribunal was correct in its decision regarding the Commissioner's authority to revise the assessment order based on the Income-tax Officer's findings and the Tribunal's decision for the assessment years 1970-71 and 1971-72?
2. Whether the Tribunal was justified in including only 1/7th of the share income from a firm in the hands of the assessee for the assessment year 1973-74, considering the previous court decision?

Analysis:
The judgment pertains to a case where the Tribunal was tasked with determining the correctness of the Commissioner's decision to revise the assessment order for the year 1973-74 based on the findings of the Income-tax Officer and the Tribunal's decision for the assessment years 1970-71 and 1971-72. The assessee, a partner in a firm, contended that she was liable only for 1/7th of the share income from the firm. The Tribunal initially held in favor of the assessee, assessing only 1/7th of the share income. However, a subsequent court decision disagreed, ruling that the entire income from the firm should be taxed in the assessee's hands. The Commissioner issued a notice to revise the assessment order for 1973-74, which was challenged before the Tribunal. The Tribunal, considering the previous court decision, set aside the revisional order of the Commissioner and upheld the 1/7th share income assessment. The Revenue appealed this decision, leading to the current judgment.

Regarding the first issue, the Tribunal initially believed that the Commissioner's decision to revise the assessment order was unjustified as the Tribunal's decision for the earlier assessment years was in force. However, the court noted that a subsequent court decision had overturned the Tribunal's earlier ruling, making the Commissioner's notice to revise the assessment valid. The court emphasized that the subsequent court decision should be considered declaratory and the law applicable at the time of the notice issuance. Consequently, the court held that the Tribunal erred in concluding that the Commissioner was not justified in proposing the revision, ruling in favor of the Revenue on this issue.

Concerning the second issue, the court referenced a previous court decision stating that the entire share income from the firm should be included in the assessee's hands. Given this precedent and the consistent application of this ruling, the court decided in favor of the Revenue on the second issue as well. The judgment concluded by granting leave to appeal to the Supreme Court, considering the ongoing appeal related to the previous court decision.