COMMISSIONER OF INCOME-TAX Vs. SHADI LAL PURI

JUDGEMENT

(1.) THROUGH the medium of this writ petition (sic), the Revenue has prayed for issuance of a direction to the Income-tax Appellate Tribunal, requiring it to state the case and refer the same to this court in terms of the prayer made in the application filed under Sub-section (1) of Section 256 of the Income-tax Act, 1961. The Appellate Tribunal, vide its order dated August 1, 1990, had accepted the appeal of the assessee and set aside the order of assessment, holding that no case was made out for addition of a sum of Rs. 97,746 as had been done by the income-tax authorities. It is submitted that the questions of law, formulated in the present petition are such questions of law, which are required to be referred to this court for adjudication. In support of his submissions, learned counsel for the petitioner has relied upon the decision in CIT v. S. P. Jain [1973] 87 ITR 370 (SC ).

(2.) THE jurisdiction of the High Court can be invoked under Section 256 of the Income-tax Act for interpretation of any provision of the statute or for settlement of a legal controversy, not adjudicated earlier. The jurisdiction conferred upon this court is purely advisory and was never intended to secure general interpretation or guidance than to grant relief in any particular case.

(3.) THE CIT v. Chander Bhan Harbhajan Lal [1966] 60 ITR 188 ; AIR 1966 SC 1490, the apex court while dealing with the old Income-tax Act held that when the question of law raised is not substantial and the answer to the question is self-evident, the High Court is not bound to require the Tribunal to refer the question. It was further held that where in the facts and circumstances of the case a question of law arises, the Tribunal under Sub-section (1) of the main section is bound to draw up a statement of the case and refer the question to the High Court. However, where the Tribunal refuses to do so and the High Court is moved under Section 66 (2) of the old Act, the position becomes different. The sub-section confers a discretion on the High Court and if the High Court is of the opinion that though a question of law arises, it is not substantial or that it is well settled, it can reject the petition. The use of the word "may" in Sub-section (2) of Section 256 of the Act is intended to give wide discretion to the High Court to require the High Court to make the reference only in such cases where all the conditions are strictly complied with. In a specific case where the amount involved is meagre but the question of law raised is substantial, the High Court may decline to require the Tribunal to make a reference on the ground that such reference was likely to amount to punishing the assessee. It is true, that the assessee under the Act is bound to pay the tax under law, but the provisions of the Act are not intended to be punitive, to be exercised at the whim or caprice of some authority under the Act. The object of the enactment can be achieved if a rational approach, as stated hereinabove, can be adopted. Applications under Section 256, which are filed in routine and without definite material or proper application of mind, deserve to be dismissed at the initial stage lest it may not unnecessarily burden the assessee, who has been absolved of his liability by the speaking orders passed by the Appellate Tribunal particularly when they are based on the law already settled.