1984 (5) TMI 42 - HC - Income Tax

Summary

Issues Involved:
1. Cancellation of registration under Section 185 of the I.T. Act.
2. Validity of recovery proceedings during the pendency of referred cases.
3. Interpretation of the final disposal of appeals under Sections 254, 256, 259, and 260 of the I.T. Act.
4. Continuation of stay order during the pendency of referred cases.

Detailed Analysis:

1. Cancellation of Registration under Section 185 of the I.T. Act:
The petitioner, a firm of transport contractors, was initially granted registration under Section 185 of the I.T. Act, 1961, for the assessment year 1971-72. This registration continued for the years 1972-73 to 1976-77. However, the Income-tax Officer, A-Ward, Alwaye, later canceled this registration. The petitioner appealed to the Commissioner of Income-tax (Appeals), Ernakulam, but the appeals were dismissed. Subsequently, the petitioner filed second appeals before the Appellate Tribunal, which were also dismissed.

2. Validity of Recovery Proceedings During the Pendency of Referred Cases:
Following the dismissal of the appeals by the Appellate Tribunal, the Revenue initiated recovery proceedings. The petitioner argued that since certain questions of law were referred to the High Court and were pending consideration, the appeals before the Tribunal were not "finally disposed of." Therefore, the stay of recovery proceedings ordered by the Appellate Tribunal should still be in force, rendering the recovery proceedings incompetent and without jurisdiction.

3. Interpretation of the Final Disposal of Appeals under Sections 254, 256, 259, and 260 of the I.T. Act:
The court examined the relevant sections of the I.T. Act:
- Section 254(1) allows the Appellate Tribunal to pass orders on appeals.
- Section 254(4) states that orders passed by the Appellate Tribunal on appeal shall be final, except as provided in Section 256.
- Section 256 outlines the procedure for referring questions of law to the High Court.
- Section 259 mandates that the High Court's decision on referred cases be in accordance with the opinion of the majority of judges.
- Section 260(1) requires the Appellate Tribunal to pass orders necessary to dispose of the case conformably to the High Court's judgment.

The court clarified that the jurisdiction of the High Court in answering a reference under Section 256 is consultative or advisory, not appellate or revisional. The decision rendered by the Appellate Tribunal under Section 254(1) is final, subject to it being reopened or revived to comply with an order under Section 256 read with Section 260.

4. Continuation of Stay Order During the Pendency of Referred Cases:
The petitioner contended that the stay order granted by the Appellate Tribunal should remain operative until the High Court's decision on the referred cases and the consequential orders by the Appellate Tribunal under Section 260(1). The court rejected this argument, stating that once the Appellate Tribunal passes an order under Section 254(1), it is final unless reopened or revived to comply with a High Court order under Section 256 read with Section 260. The court emphasized that the Appellate Tribunal exercises its appellate powers judicially and fairly when passing consequential orders and may consider unresolved points or aspects not concluded by the High Court or its earlier decision.

Conclusion:
The court concluded that the petitioner's contentions lacked merit. The original petition was dismissed with costs, including counsel's fee of Rs. 250. The court affirmed that the stay order by the Appellate Tribunal does not remain operative during the pendency of referred cases in the High Court, and recovery proceedings initiated by the Revenue were valid.