1992 (6) TMI 13 - HC - Income Tax

Division Bench dissent, per incuriam, assessment validity for 1968-69, stare decisis, judicial discipline

Commissioner Of Income-Tax Versus BR. Constructions

Commissioner Of Income-Tax Versus BR. Constructions - [1993] 202 ITR 222, 113 CTR 1, 73 TAXMANN 473 Issues Involved:1. Circumstances under which one Division Bench can differ from the view of an earlier Division Bench.2. Application of the doctrine of per incuriam by a co-ordinate Division Bench.3. Validity of assessment made on the assessee for the assessment year 1968-69.Summary:Issue 1: Circumstances under which one Division Bench can differ from the view of an earlier Division BenchThe judgment emphasizes the importance of certainty and uniformity in the rule of law, citing the doctrine of stare decisis which means 'to abide by former precedents.' A Division Bench must respect another Division Bench of co-ordinate jurisdiction. If it differs, the case should be referred to a Full Bench to avoid unnecessary conflict and confusion. A single judge or Benches of High Courts cannot differ from the earlier judgments of co-ordinate jurisdiction merely because they hold a different view on the question of law. Differing from the earlier judgment is permissible only if it is erroneous or results in manifest injustice. Issue 2: Application of the doctrine of per incuriam by a co-ordinate Division BenchA decision is given per incuriam when the court has acted in ignorance of a previous decision of its own or of a court of co-ordinate jurisdiction which covered the case before it. The Division Bench in Choudry Brothers' case [1986] 158 ITR 224 treated the judgment in Ch. Atchaiah's case [1979] 116 ITR 675 as per incuriam on the ground that the earlier Division Bench did not notice significant changes in the charging section. However, the judgment clarifies that merely because the conclusion arrived at did not have the concurrence of the latter Bench, the earlier judgment cannot be called per incuriam. The rule of per incuriam is of limited application and should be applied only in rare cases.Issue 3: Validity of assessment made on the assessee for the assessment year 1968-69The Full Bench addressed the question referred by the Income-tax Appellate Tribunal regarding the validity of the assessment made on the assessee for the assessment year 1968-69. The assessee was a firm carrying on business in contracts, and its status was that of a registered firm till the assessment year 1967-68. The Income-tax Officer assessed the assessee as an unregistered firm for the assessment year 1968-69. The Tribunal accepted the assessee's contention that the Income-tax Officer had exercised his option of assessing the income in the hands of the partners and could not assess the same income again in the hands of the unregistered firm.The Full Bench held that section 4 of the Income-tax Act, 1961, embodies the same principle as contained in section 3 of the Indian Income-tax Act, 1922. The change in the phraseology of section 4 is one of form and does not change the substance of the charge under the old Act. The assessing authority has the option to assess the total income of the unregistered firm either in its hands or in the hands of the partners, and this option remains the same under section 4 of the new Act. The question was answered in the negative, against the Revenue and in favor of the assessee.The judgment concludes by emphasizing the importance of judicial discipline and the rule of precedent, stating that certainty and uniformity in the administration of justice are of paramount importance.