9911796707
TMI Blog1999 (4) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... o of understanding entered into between the petitioner and the said karthikeyan indicated that the business was not abandoned, nor the firm dissolved and the arrangement was revocable and in that view of the matter, he invoked the provisions of section 61 of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), and held that the income arising out of the business run by the said Karthikeyan accrued to the petitioner firm. The Assessing Officer proceeded on the basis that the firm was not dissolved and the firm had the right to resume the business. The petitioner challenged the order for the assessment year 1988-89 before the Commissioner of Income-tax (Appeals) and it must be stated here that the assessment year 1988-89 is the first year of dispute. The Commissioner of Income-tax (Appeals) held that there was no power to revoke the transfer to support the inclusion of income in the hands of the petitioner firm and he therefore directed the Assessing Officer to exclude the amount included in the assessable income of the petitioner firm relating to the assessment year 1988-89. In this connection, it is relevant to notice that there were five different firms in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the petitioner before the Appellate Tribunal on June 22, 1998, that the representative appearing for the petitioner made a request before the Tribunal seeking adjournment of the matter to produce records and documents in support of the petitioner's case on the new ground raised before the Tribunal regarding the genuineness of the transactions which was not a dispute raised either before the Assessing Officer or before the Commissioner of Income-tax (Appeals) and which also was not raised by the Department pleaded that time must be granted to produce the relevant records and documents in support of the submissions made by the petitioner before the Tribunal. It is not clear what happened on the first day of hearing before the Tribunal and the Tribunal has not recorded anything in the order as to whether any such request was made and if so made, how it was disposed of. The petitioner as stated earlier has filed the petition on the next day, viz., June 18, 1998, requesting the Appellate Tribunal to grant an opportunity to the petitioner to produce the records and documents in support of its submissions. The said petition reached the Appellate Tribunal on June 22, 1998. On June 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Department also proceeded on the same basis as is clear from the grounds of appeal raised before the Appellate Tribunal wherein the Department questioned the order of the Commissioner of Income-tax (Appeals) regarding the applicability of section 61 of the Act to the facts of the case. However, when the matter came up for hearing before the Appellate Tribunal, a new ground was raised that the transactions were not genuine. It is not clear whether such a ground was raised by the Department before the Appellate Tribunal or it was suo motu raised by the Tribunal. Whatever it may be, even assuming that the entire assessment proceedings were before the Appellate Tribunal, and it had jurisdiction to deal with the entire matter of assessment, yet when the matter came up for first hearing on June 17, 1998, and when a new case was projected that the transactions recorded in the memo of understanding were not genuine transactions, the petitioner should have been given an opportunity to meet the case of the bogus nature of the transactions. It is relevant to notice that the place of the petitioner's business is at Erode and the case was argued at Chennai and it cannot be expected from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew, consists of granting an opportunity to the petitioner to say anything with documents to establish its case that the transaction was a real and genuine transaction when a new case was sprung upon it for the first time in the first hearing before the Appellate Tribunal. The further question that arises is whether the writ petition is maintainable against an order passed by the Appellate Tribunal. No doubt, there is a procedure for reference available under section 256 of the Act. Though it may be open to the petitioner to question the findings rendered by the Appellate Tribunal on the question of genuineness of transactions in such reference proceedings, in my view, the question whether the procedure adopted by the Appellate Tribunal in allowing the appeal is correct or not cannot be gone into by this court in reference proceedings in view of the limited jurisdiction of the court under section 256 of the Act and on the scope of the question that may be referred by this court by the Appellate Tribunal. In my view, once this court has come to the conclusion that there is a blatant violation of the principles of natural justice in passing the impugned order, this court sitting und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from a serious infirmity. The decision of the Supreme Court in Reckitt and Colman of India Ltd.'s case [1997] 10 SCC 379, would squarely apply to the facts of the case. In Bhagwant Kishore Sud v. ITAT [1999] 236 ITR 305, the Supreme Court no doubt has held that where an assessee can assail the correctness of an order of the Tribunal on the merits in a reference before the High Court, the High Court would be entirely justified in declining to entertain in the writ petition the questions which the assessee could have brought before the High Court through a reference application. In the said case, the Supreme Court also noticed that the assessee had sought for an adjournment before the Tribunal on the ground that its representative had suffered a heart attack and a reply was received declining the adjournment and the Supreme Court held that it was open to the assessee to assail the order of the Tribunal declining to grant adjournment in a writ petition. Applying the law laid down by the Supreme Court to the facts of the case, it is open to the petitioner to assail the order of the Tribunal where the grievance of the petitioner is that no fair opportunity was granted to the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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