- (1.) We have heard learned counsel appearing for the parties.
(2.) On 26.03.2015, we passed an order re-framing the question of law under Section 256(2) of the Income Tax Act, 1961 (for short, 'the Act') as follows : A request has been made to direct the office to treat the case as Reference, and not an Application for Reference, as the Reference was called for by Division Bench of this Court, hearing tax matters, on 05.03.2009, and the statement of case has been referred by the Tribunal. We order accordingly. In the Reference Application, following question of law was raised before the Tribunal:- Whether on the facts and in the circumstances of the case, the Tribunal was right in quashing the CIT's order under section 263 of the I.T. Act, 1961 The Tribunal had rejected the Reference, on the ground that no question of law arises. The Division Bench of this Court, however, felt that the question of law arises, and had called for the records. We are unable to appreciate, as to how the question framed in the order dated 05.03.2009, can be treated to be question of law. The question of law is a question, which arises from the facts of the case, on the applicability and interpretation of the relevant provisions of law, to arrive at a conclusion, which needs to be settled by the Court, or may have any cascading effect on the assessments to be made in subsequent years. It is an accepted principle in taxation, that assessment every year is a separate assessment, and that, for which the previous assessment will not bind the Assessing Authority. In the present case, it is submitted that the Tribunal allowed the appeal, on the ground that in the previous years, the Settlement Commission had decided the matter in favour of the assessee, and by which, the matter relating to ownership of M/s. Saroj International was decided. As regards M/s. Vimal Trading Corporation, the Tribunal followed the earlier years, on which the finding was accepted by the Revenue. Section 256(2) of the Income Tax Act, 1961, gives powers to the High Court to re-frame the question of law, and thus, considering the facts and circumstances of the case, we re-frame the question of law as follows:- Whether the Tribunal erred in law, in setting aside the order of the CIT, on the ground that the ownership of M/s. Saroj International was decided by the Settlement Commission, whereas the order of the Settlement Commission is not the adjudication of the rights, and is by way of settlement, which is not binding for the subsequent years The parties are allowed two weeks' time to prepare the matter. List for hearing on 22.04.2015.
(3.) It is submitted by learned counsel appearing for the Revenue that the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') erred in law in not setting aside the order passed by the CIT (A) under Section 263 of the Act, in the interest of the Revenue. The order of the CIT (A) was perfectly justified order, inasmuch as, the proceedings, relating to the assessment year 1982-83, were not subject matter of settlement before the Settlement Commission. The CIT (A) had relied on the facts brought out in the search operations to the effect that Shri S.M. Saraf was running the business of M/s. Saroj Saraf, and in the statements recorded by the Officer on 13.05.1981, and the Income Tax Officer, SCC-I, Jaipur on 19.03.1980, Miss Saroj Saraf had shown her ignorance about the business done in the name of M/s. Saroj International. The Assessing Authority had made only protective assessment on Miss Saroj Saraf, holding that the income should regularly be clubbed in the hands of Shri S.M. Saraf. For the assessment year 1980-81, the Income M/s. Saroj International had been clubbed in the hands of the assessee. It is submitted that since in the previous years, it was held that the business was being done by Shri S.M. Saraf in the name of his daughter, the order of the Income Tax Officer was required to be set aside in the interest of the Revenue.;