Facts of the Case

The Revenue filed a petition under Section 256(2) of the Income-tax Act, 1961 seeking a direction to the Income Tax Appellate Tribunal (ITAT) to state the case and refer certain questions of law to the Delhi High Court.

The dispute related to Assessment Year 1985-86. The Assessing Officer had made an addition of Rs. 55,17,015/- on account of alleged bogus purchases. The Tribunal deleted the said addition. Aggrieved by the Tribunal’s decision, the Revenue sought reference of questions of law to the High Court for adjudication.

 

Issues Involved

The Revenue sought reference of the following questions:

  1. Whether, on the facts and circumstances of the case and in law, the Tribunal erred in deleting the addition of Rs. 55,17,015/- made by the Assessing Officer on account of bogus purchases?
  2. Whether, on the facts and circumstances of the case and in law, the Tribunal erred in not properly appreciating the facts gathered during the assessment proceedings by the Assessing Officer?

 

Petitioner’s Arguments (Revenue)

The Revenue contended that:

  • The Tribunal wrongly deleted the addition of Rs. 55,17,015/- made by the Assessing Officer.
  • The Tribunal failed to properly appreciate the material and facts collected during the assessment proceedings.
  • The issues raised involved substantial questions of law warranting consideration by the High Court through a reference under Section 256(2) of the Act.

 

Respondent’s Arguments (Assessee)

The assessee supported the order of the Tribunal and opposed the Revenue’s request for reference.

It was contended that:

  • The Tribunal had correctly appreciated the facts and evidence available on record.
  • No further question requiring interference or reconsideration by the High Court arose beyond the question ultimately framed by the Court.

 

Court Order / Findings

After hearing learned counsel for both parties, the Delhi High Court noted that a similar order had been passed on the same day in ITC No. 17/2000 pertaining to Assessment Year 1986-87.

Following the said order, the Court directed the Tribunal to state the case and refer the following question of law for the opinion of the High Court:

“Whether the Tribunal was correct in law in deleting the addition of Rs. 55,17,015/- made by the Assessing Officer on account of alleged bogus purchases?”

The Court further directed that all documents forming part of the paper books filed before the Tribunal and relied upon by either party should form part of the case referred to the High Court.

 

Important Clarification

  • The High Court did not decide the merits of the addition relating to alleged bogus purchases.
  • The Court only held that the issue gave rise to a referable question of law.
  • Accordingly, the Tribunal was directed to prepare a statement of the case and refer the framed question for adjudication by the High Court.
  • The petition was disposed of with no order as to costs.

Relevant Section Involved

  • Section 256(2), Income-tax Act, 1961 – Power of the High Court to direct the Income Tax Appellate Tribunal (ITAT) to state a case and refer a question of law for the opinion of the Court.

Link to Download the Order

https://delhihighcourt.nic.in/app/case_number_pdf/2002:DHC:17582-DB/DKJ30102002ITC182000_104748.pdf

 

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