2022 (2) TMI 1240 - SC - Income Tax

Exemption u/s 11 - method of computation of income followed by the assessee - HELD THAT - It is quite disturbing that despite specific directions made by this Court in its order the matter still lies undisposed on merits. As the facts on record show, after the matter was remanded to the Tribunal, it called for information in terms of which direction, affidavit was filed on behalf of the assessee and a note was submitted on behalf of the Revenue. The affidavit made the position clear and in the entirety of the process including framing of second question, the challenge with regard to the method of accounting was quite apparent. The submission advanced on behalf of the assessee was therefore required to be dealt with on merits. However, neither the affidavit nor the note referred to by the Tribunal. The conclusions arrived at by the Tribunal were thus not consistent with the order of remand passed by this Court or with the direction issued by the Tribunal itself seeking certain information vide its order - The High Court also erred in affirming the view taken by the Tribunal. We therefore, set aside the orders passed by the Tribunal and the High Court and remit the matter back to the Tribunal to consider the matter afresh in the light of the order passed by this Court and in keeping with the direction issued by the Tribunal in its order - Since the matter has been pending for a long time, we direct the Tribunal to conclude the proceedings as early as possible and preferably within three months from the receipt of this order.

Summary

Issues:
Challenging common judgment of High Court in ITA Nos.58-60/2010 and 62-64/2010.

Analysis:
1. Background and Previous Directions:
- The case previously came before the Court in Civil Appeal No.153 of 1993, where specific directions were issued to resolve the questions raised by both parties.
- Three questions of law were referred to the High Court under Section 256(2) of the Income Tax Act, 1961 for consideration.

2. High Court's Decision and Remand:
- High Court answered the third question in favor of the assessee but remanded the first two questions back to the Tribunal.
- High Court found that the Tribunal exceeded its jurisdiction by substituting a fresh order instead of rectifying the original order.
- The matter was further remanded to the Assessing Officer for fresh consideration in light of High Court's directions.

3. Assessing Officer's Decision and Appeal:
- Assessing Officer held that the assessee was not entitled to exemption under Section 11 of the Act.
- The decision was confirmed by the CIT (Appeals) in separate orders.
- The assessee appealed to the Tribunal challenging the method of accounting and income computation.

4. Tribunal's Decision and High Court Challenge:
- Tribunal dismissed the appeals related to quantum and penalty.
- High Court upheld the Tribunal's decision, prompting the current appeal.

5. Supreme Court's Ruling:
- Supreme Court found discrepancies in the Tribunal and High Court's decisions.
- Set aside the orders and remitted the matter back to the Tribunal for fresh consideration.
- Directed the Tribunal to conclude the proceedings within three months from the receipt of the order.

6. Conclusion:
- The appeals were allowed without any order as to costs, emphasizing the need for a prompt resolution of the pending matter.
- The Supreme Court's decision aimed to ensure compliance with previous directions and a fair consideration of the issues involved.

This detailed analysis outlines the legal journey of the case, highlighting the key decisions made by various authorities and the ultimate ruling by the Supreme Court, emphasizing the need for a thorough reconsideration of the matter in line with the original directions provided.