1983 (8) TMI 48 - HC - Income Tax

Summary

Issues:
1. Whether the Commissioner of Income-tax was right in ignoring the direction given by the Income-tax Appellate Tribunal while exercising jurisdiction under s. 264 of the I.T. Act, 1961.

Analysis:
The petitioner, a partnership-firm, filed a return for the assessment year 1976-77 showing income at Rs. 31,430. The Income Tax Officer (ITO) assessed the income at Rs. 40,630 after certain additions. The Assistant Commissioner enhanced the income to Rs. 67,397. The Tribunal found the accounts incomplete and invoked the proviso to s. 145(1) of the I.T. Act for best judgment assessment. The Tribunal set aside the orders and directed a fresh assessment not exceeding Rs. 67,397. The ITO, on remand, disallowed certain expenses, resulting in a net income of Rs. 77,206, later reduced to Rs. 67,397 as per the Tribunal's direction. The Commissioner, in a revision under s. 264, determined the income at Rs. 66,160, disregarding the Tribunal's direction to consider comparable cases.

The petitioner contended that the Commissioner erred in ignoring the Tribunal's direction to consider comparable cases while determining income. The High Court held that the ITO's jurisdiction was limited by the Tribunal's direction, and he was bound to follow it meticulously. The Commissioner's decision to disregard comparable cases based on the data furnished by the assessee was deemed incorrect. The Court emphasized that the scope of revision could not expand beyond the limits set by the Tribunal. Consequently, the Commissioner's order was set aside, and the matter was remitted for fresh disposal in accordance with the Tribunal's direction.

In conclusion, the High Court allowed the writ petition, highlighting that the Commissioner's deviation from the Tribunal's direction was erroneous. The judgment reiterated the importance of adhering to directions issued by higher authorities in the assessment process, emphasizing the limited scope of revision jurisdiction. The matter was remitted for fresh consideration in line with the Tribunal's directives.