1983 (11) TMI 52 - HC - Income Tax

High Court denies assessee's concession claim under Section 22, orders payment of Revenue costs.

The High Court ruled against the assessee, holding that the concession under Section 22 of the Direct Taxes (Amendment) Act, 1974, was not applicable. ... Delay In Filing Return Issues Involved:1. Applicability of concession under Section 22 of the Direct Taxes (Amendment) Act, 1974.2. Treatment of the assessee as one who filed an appeal to the Supreme Court for the assessment year 1962-63 regarding penalty under Section 271(1)(a).Analysis:Issue 1: Applicability of Concession under Section 22 of the Direct Taxes (Amendment) Act, 1974The primary issue was whether the concession provided by Section 22 of the Direct Taxes (Amendment) Act, 1974, was available to the assessee. The assessee contended that the penalty should be computed based on the unamended provisions of Section 271(1)(a) since it was an intervener in the Supreme Court case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. The Tribunal initially agreed with the assessee, holding that the benefit of Section 22 should apply, thus computing the penalty based on the pre-amendment provisions.However, the High Court analyzed the scope and object of Section 22. It noted that the amendment to Section 271(1)(a) replaced the term 'the tax' with 'assessed tax' and introduced an explanation. The purpose of Section 22 was to respect Supreme Court decisions rendered before the introduction of the Direct Taxes (Amendment) Bill, 1973. The High Court emphasized that Section 22 was meant only for cases where the Supreme Court had given a ruling adverse to the Revenue before September 3, 1973, and was specific to the particular assessment year involved in such Supreme Court decisions.The High Court concluded that the assessee, being merely an intervener and not a party to the appeal, did not fall within the scope of Section 22. Therefore, the assessee could not claim the concession provided by Section 22 of the Amending Act.Issue 2: Treatment of the Assessee as One Who Filed an Appeal to the Supreme CourtThe second issue was whether the assessee should be treated as one who filed an appeal to the Supreme Court for the assessment year 1962-63 concerning the penalty under Section 271(1)(a). The Tribunal had construed the term 'appeal' broadly, including the assessee as an intervener in the Supreme Court case, thus entitling it to the benefits of Section 22.The High Court disagreed with the Tribunal's interpretation. It referred to the Supreme Court's explanation of an intervener's role, noting that an intervener is not an appellant and cannot seek relief beyond making submissions on general questions. The High Court cited the Supreme Court's observations in M. H. Quareshi v. State of Bihar, AIR 1958 SC 731, and Khyerbari Tea Co. Ltd. v. State of Assam, AIR 1964 SC 925, which clarified that an intervener does not have the same standing as an appellant.Given that the assessee's case was not directly before the Supreme Court and was not the subject of any decision by the Supreme Court, the High Court held that the assessee could not be treated as having filed an appeal to the Supreme Court. Consequently, the assessee was not entitled to the benefits of Section 22 of the Amending Act.ConclusionThe High Court answered both questions in the negative, ruling against the assessee. The court held that the assessee was not entitled to the concession under Section 22 of the Direct Taxes (Amendment) Act, 1974, and could not be treated as one who filed an appeal to the Supreme Court for the assessment year 1962-63. The assessee was ordered to pay the costs of the Revenue, with counsel's fee set at Rs. 500.