1991-VIL-618-CAL-DT

Equivalent Citation: [1992] 197 ITR 718

CALCUTTA HIGH COURT

Date: 08.05.1991

COMMISSIONER OF INCOME-TAX

Vs

POLAR FAN INDUSTRIES LIMITED

BENCH

Judge(s)  : SHYAMAL KUMAR SEN., AJIT KUMAR SENGUPTA 

JUDGMENT

AJIT K. SENGUPTA J. - In this reference tinder section 256(1) of the Income-tax Act, 1961, for the assessment year 1984-85, the following question has been referred to this court :

" Whether, on the facts and in the circumstances of the case and on a correct interpretation of the provisions of section 43B of the Income-tax Act, 1961, the Appellate Tribunal was correct in law in modifying the order of the Commissioner of Income-tax passed under section 263 of the Income-tax Act, 1961, and in directing the Income-tax Officer to make fresh assessment for the assessment year 1984-85 following the decision of the Andhra Pradesh High Court in the case of Srikakollu Subba Rao and Co. [1988] 173 ITR 708 ? "

The facts relating to this reference are that the assessment of the assessee-company for the assessment year 1984-85 was completed on February 15, 1985, under section 143(3). In the balance-sheet of the assessee as on December 31, 1983, a sum of Rs. 3,79,166 had been shown as current liability. The break up of this sum showed that it included, inter alia, three sums of Rs. 21,818, Rs. 61,443 and Rs. 2,06,640 being the liability towards West Bengal sales tax, Central sales tax and sales tax liability for the branches, respectively.

Obviously, the liability represented realisation of sales tax from the customers. Sales tax realised by the traders from its customers forms part of the sales turnover. The assessee had shown sales turnover of Rs. 4,75,51,840. Obviously the sales turnover stated above did not include realisation towards the sales tax from the customers. Therefore, the three sums of Rs. 21,818, Rs. 61,443 and Rs. 2,06,640 should be added to the sales turnover for finding out the correct profit of the assessee. Similarly, sales tax paid by the assessee should be deducted. The Income-tax Officer did not include this liability stated above in the sales turnover. Therefore, there has been an underassessment. The Commissioner was of the opinion that the assessment was erroneous and prejudicial to the interests of the Revenue. Proceedings under section 263 were initiated. Overruling the objections filed by the assessee, the Commissioner held that the three sums referred to earlier constituted the income of the assessee and should be assessed as such. In that view, he set aside the assessment of the assessee and directed the Income-tax Officer to make a fresh assessment in accordance with law. Aggrieved by the order of the Commissioner of Income-tax, the assessee preferred an appeal to the Tribunal.

The Tribunal, following the decision of the Andhra Pradesh High Court in the case of Srikakollu Subba Rao and Co. v. Union of India [1988] 173 ITR 708, modified the direction of the Commissioner of Incometax to make a fresh assessment, following the decision of the Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 and the decision of the Andhra Pradesh High Court in the case of Srikakollu Subba Rao and Co. [1988] 173 ITR 708 and after affording the assessee a reasonable opportunity of being heard.

In our view, this question is now concluded by the decision of this court in the case of CIT v. Sri Jagannath Steel Corporation [1991] 191 ITR 676 in I. T. Reference No. 104 of 1989, where the judgment was delivered on December 20, 1990.

Following the said decision, the question in this reference is answered in the affirmative. The Tribunal will dispose of the appeal in the light of the principles laid down by this court in the aforesaid decision.

There will be no order as to costs.

SHYAMAL KUMAR SEN J. - I agree.

 

 

 

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