JAORA SUGAR MILLS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is a petition under Articles 226 and 227 of the Constitution of India.

(2.) THE material facts giving rise to this petition are as follows : THE petitioner is a limited company carrying on business at Jaora, THE petitioner-company filed its return of income for the assessment year 1972-73 on July 31, 1972, the accounting year having ended on October 31, 1971. THE ITO, respondent No. 3, completed the assessment on February 14, 1975, Under Section 143(3) of the I.T. Act (hereinafter referred to as " the Act"). THE respondent No. 3 allowed a rebate of Rs. 3,98,290 as admissible deduction, being business expenditure. THE rebate claimed by the company and allowed was at Rs. 10 per quintal paid to M/s. Madanlal Nandlal on the sales of sugar. THE petitioner filed an appeal against the order of assessment to the AAC, Special Range, Indore, Under Section 246(c) of the Act which was partly allowed on May 22, 1975. It is not in dispure that the claim for rebate made by the petitioner and allowed by the ITO was not the subject-matter of the appeal and the same was not considered by the AAC in appeal.

(3.) THE learned counsel for the department contended that in the present case the order of assessment passed by the ITO in so far as it related to the allowing of the rebate paid by the petitioner to M/s. Madanlal Nandlal as business expenditure was not merged in the order passed by the AAC in appeal because the same was not a subject-matter of appeal and was not considered by the AAC and, therefore, the Commissioner had jurisdiction to initiate proceedings Under Section 263 of the Act. He also contended that the Commissioner had acted on his own initiative and the allegation of the petitioner that he acted on the dictates of the IAC (Audit) has no basis whatsoever. THE learned counsel for the department further contended that the petitioner having failed to avail of the normal remedy provided by the Act of applying to the Tribunal Under Section 256(1) of the Act to state a case to this court, this petition under Article 226 of the Constitution is liable to be dismissed on this ground alone.