Financial Daily from THE HINDU group of publications
Saturday, Oct 05, 2002
Convergent cases, divergent decisions
T. C. A. Ramanujam
IT IS not uncommon to find High Courts render conflicting judgments on common issues of law. These days, courts seem to be in a hurry to give judgments then and there. Counsels on either side have no time to verify the authorities cited. The result is that, within a year or two, the very same Bench of a High Court contradicts itself when deciding cases. And different Benches of the same High Court are forced to render different judgments.
The Mahalingam case
In this case (176 CTR 464 Madras), the assessments of Mahalingam a leading industrialist of Coimbatore for 1979-80, 1980-81 and 1981-82 were completed but taken up for revision by the Commissioner of Income-Tax (CIT), acting under powers vested under Section 263 of the Income-Tax Act, 1961. The assessments were completed on January 25, 1983. The revision order was passed on March 25, 985. The Taxation Laws (Amendment) Act, 1984 extended the limitation for passing the order under Section 263 from two years from the date of the assessment order to two years from the end of the financial year in which the assessment was made.
The Central Board of Direct Taxes (CBDT) advised its officers to complete pending proceedings under the pre-amended law as for as possible to avoid controversy and litigation. The High Court ruled that inasmuch as the revision order was passed after more than two years from the date of the assessment order, the benefit of the circular should be extended to the assessee. In view of this, the High Court quashed the Commissioner's revisional order.
The G. D. Gopal case
Here (176 CTR 466), the assessments G. D. Gopal were completed for the assessment years 1980-81 and 1981-82 on December 21, 1982. Under the pre-amended law, the Commissioner can act under Section 263 on or before December 21, 1984. The Commissioner, however, passed the revision order only in March 1985 and this is saved under the amended law. If the Mahalingam decision is right, then the Gopal case must be decided against the Revenue.
The case was hotly contested in the Madras High Court. It was conceded that the amendment made to Section 263, extending the time limit, was only procedural in nature and to be considered retrospective. Circulars, it was however contended, are binding on the Department as per the ruling of the Supreme Court in the UCO Bank case (237 ITR 889).
The CIT (Coimbatore) filed an affidavit in the course of the proceedings before the Madras High Court asserting that the circular cannot be considered as generally followed and that it may not always be possible to act under Section 263 within two years from the date of the assessment order in spite of best efforts. It was pointed out in this affidavit that in such cases, the Department takes recourse to the amended provision of the law.
The High Court considered the Mahalingam ruling and pointed out that any judgment of a coordinate Bench should be treated as binding provided such judgment decided a certain position of law or takes a certain view of law. The factual circumstance of concession by the Department through its counsel in the Mahalingam case was not available to the court in the Gopal case.
In view of the clear-cut affidavit made on behalf of the Department to the effect that it is not in all the cases that the circular is followed, the court observed that even if the circular is to be followed, then also it cannot divest the revisional authority of its power and if such power is used, such exercise cannot become illegal. The circular itself was advisory and stated that as for as possible, the order should be passed in terms of the old amended law. The words "as for as possible" clearly postulates the existence of cases where advantage can be taken of the extended time limit available under the amended law.
It was argued for the assessee that a differential treatment cannot be given to two assessees, one following the circular and another deprived of the advantage of the circular.
The High Court rejected the argument observing that there can be no question of discrimination based on circulars. Facts differ from case to case. The language of the circular itself was clear enough. The Punjab High Court had considered this matter in the Manjula Sood (227 ITR 873) case and had chosen to ignore the circular. The Madras High Court, however, did not consider it necessary to take stock of judgments cited by the Revenue.
In its view, the Mahalingam case cannot be considered to have taken any particular view of law nor can it be said that the judgment decided anything.
There you are: More or less similar facts, same law, same High Court, different judgments.
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