TaxTMI 
TaxTMI 
2008 (2) TMI 641
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....act, for answering the questions referred, the facts relating to the merits of the case out of which this reference arises need not be taken note of in detail because no specific question of law on the merits of the controversy is referred to this court by the Tribunal. 3. The assessee (appellant herein) is a public sector undertaking. They filed the return of their income for the assessment year 1989-90 declaring a loss of Rs. 23,29,51,718. The Assessing Officer, while processing the return, made adjustment in relation to certain items aggregating to Rs.4,88,64,647 and worked out the loss at Rs. 18,40,87,071. Accordingly, an intimation was sent to the assessee under section 143(1)(a) ibid on September 30, 1991, wherein the Assessing Officer imposed an additional tax of Rs. 51,30,751 as per section 143(1A) of the Act. The assessee then filed an application under section 154 of the Act seeking rectification of the order of the Assessing Officer in relation to a prima facie adjustment made therein. The Assessing Officer, accordingly, considered the objections and passed an order dated March 31, 1992, under section 154 ibid whereby he revised the loss at Rs.19,76,12,164 and, a....
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....ng the order of the Commissioner of Income-tax (Appeals) which does not call for any interference. It was also urged that since the Commissioner of Income-tax (Appeals) did not decide the appeal on the merits on other prima facie adjustment made by the Assessing Officer and, hence, the case be remanded. 6. The Tribunal, by order out of which this reference arises, accepted the contention of the Revenue and ignoring the law laid down by the jurisdictional High Court of the Madhya Pradesh rendered in Premier Industries Pvt. Ltd.'s case [1997] 227 ITR 282 (MP) held that since the High Court has not taken into account the retrospective amendment made in section 143(1A) of the Act, hence the decision cannot be relied on. The Tribunal then allowed the appeal filed by the Revenue. This is what the Tribunal held : "6. We have minutely gone through the decision of the hon'ble High Court of Madhya Pradesh in Premier Industries Pvt. Ltd. [1997] 227 ITR 282 (MP). The parties did not bring to the notice of the hon'ble High Court that retrospective amendment with effect from April 1, 1989, has been brought about by the Finance Act, 1993, by which clause (a) in sub-section (1A) of....
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....not proper on the part of the Tribunal to ignore and/or decline to follow the decision of the Madhya Pradesh High Court on the ground that the High Court, while deciding the case, did not take note of certain amendments made in the Income-tax Act (i.e., in section 143(1A)). Learned counsel urged that the judicial proprietary demands that all subordinate courts/tribunals exercising powers under the supervision of the jurisdictional High Court are required to follow the decision of the High Court in letter and spirit and without making any adverse comments or finding fault with such decision. Learned counsel submitted that the proper course to deal with such situation, if it really arises in any case, is to place reliance on such decision by the Tribunal and leave the aggrieved party to pursue the matter to the High Court in appeal or reference, as the case may be, for reconsideration by a larger Bench of the concerned High Court. In reply, the learned counsel for the Revenue supported the reasoning of the Tribunal and urged for answering the question against the assessee. 10. Having heard the learned counsel for the parties and having perused the records of the case, we are ....
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....be made to this court under section 256(2) of the Act praying for direction to the Tribunal to refer the questions which, according to an aggrieved party arise out of the order of the Tribunal. These remedies though available, were not resorted to at any stage with the result that this court in its limited reference jurisdiction under section 256(1) of the Act is unable to embark upon any other issue except to confine its inquiries to the questions referred by the Tribunal. 12. Though, we may refrain ourselves from examining any other questions which, in our view, otherwise arise out of the order of the Tribunal but at the same time, we are constrained to observe that care should always be taken by the parties and in particular by the Revenue to ensure that reference is made on all referable questions of law arising out of the order of the Tribunal so that all the questions are answered in one reference by the High Court. 13. Coming now to question No. 1, which reads as under : "(i) Whether the Tribunal was justified and/or had the jurisdiction to ignore the decision of the High Court rendered in MCC No. 65 of 1993 decided on August 20, 1996 (CIT v. Premier Industries P. ....
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....ease and in particular when such situation arises before them (page 235 of 2004 AIR) : "8. Under the constitutional scheme as framed for the judiciary, the Supreme Court and the High Courts both are courts of record. The High Court is not a court 'subordinate' to the Supreme Court. In a way the canvass of judicial powers vesting in the High Court is wide inasmuch as it has jurisdiction to issue all prerogative writs conferred by article 226 of the Constitution for the enforcement of any of the rights conferred by Part III of the Constitution and for any other purpose while the original jurisdiction of the Supreme Court to issue prerogative writs remains confined to the enforcement of fundamental rights and to deal with some such matters, such as Presidential election or inter-State disputes which the Constitution does not envisage being heard and determined by High Courts. The High Court exercises power of superintendence under article 227 of the Constitution over all subordinate courts and tribunals ; the Supreme Court has not been conferred with any power of superintendence. If the Supreme Court and the High Courts both were to be thought of as brothers in the administrat....
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....urt and initiate proceedings in direct violation of the law so declared ? Answering the question in the negative, their Lordships ruled that the Tribunal cannot ignore the law laid down by the High Court on a particular issue. Their Lordships, speaking through Subba Rao (as his Lordship then was and later C. J. I.), held as under (at pages 1904 and 1905) : "The Division Bench of the High Court held that a contravention of a condition imposed by a licence issued under the Act is not anoffence under section 5 of the Act. This raises the question whether an administrative tribunal can ignore the law declared by the highest court in the State and initiate proceedings in direct violation of the law so declared. Under article 215, every High Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself. Under article 226, it has a plenary power to issue orders or writs for the enforcement of the fundamental rights and for any other purpose to any person or authority, including in appropriate cases any Government, within its territorial jurisdiction. Under article 227, it has jurisdiction over all courts and tri....
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.... not brought to their notice. It was held that it is not only a matter of discipline for the High Court in India, it is the mandate of the Constitution as provided in article 141 of the Constitution of India that the law declared by the Supreme Court shall be binding on all courts within the territory of India. In conclusion, the Supreme Court set aside the order of the High Court and held as under (page 136 of 110 Comp Cas) : "It is impermissible for the High Court to overrule the decision of the apex court on the ground that the Supreme Court laid down the legal position without considering any other point. It is not only a matter of discipline for the High Courts in India, it is the mandate of the Constitution as provided in article 141 that the law declared by the Supreme Court shall be binding on all courts within the territory of India. It was pointed out by this court in Anil Kumar Neotia v. Union of India, AIR 1988 SC 1353, that the High Court cannot question the correctness of the decision of the Supreme Court even though the point sought before the High Court was not considered by the Supreme Court." 19. Further, in para 11, it was ruled as under (page 136....
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....late Assistant Commissioner were bound to follow the decision of this court in Hasanali Khanbhai and Sons' case [1987] 165 ITR 195 (Guj). If they failed to do so, it would undermine the respect for the law laid down by the High Court and the constitutional authority of the High Court and their conduct would, therefore, be apprehended by the principles underlining the law of contempt. Under the circumstances, it must be held that both the Income-tax Officer and the Appellate Assistant Commissioner were within their powers in rectifying the orders in the manner they have done." 21. In the light of the aforesaid pronouncement of law laid down by the Supreme Court and the High Court and explained by Salmond in his book as to what should be the approach of courts/tribunals when any decision of Supreme Court and/or the High Court, i.e., superior court is cited before them, it is clear that all courts/tribunals functioning in a State are bound by the law laid down by the State High Court. It is neither permissible nor legal for any court and tribunal to comment upon the decision of the Supreme Court/High Court. Similarly, it is also not permissible for the Tribunal to comment upon....
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....ch are those distinguishing features due to which the said decision can have no application have to be specifically stated in the order. Such distinction is permissible in law because counsel may in his wisdom place reliance on several decisions in support of his submissions. It is for the court/tribunal to decide as to why a particular decision has no application to the facts of a case under consideration. Indeed, here lies the application of mind of the author of the decision to analytically discuss the cases on facts involved in the case cited by a party and then compare the same with the facts of the case before the Tribunal and then record the note of dissent. In doing this exercise, which is an integral part of judgment writing for recording a finding one way or other, the court/tribunal does not comment upon the ratio decidendi of the said decision nor holds that it does not lay down the correct principle of law. On the other hand, the Tribunal accepts the decision as laying down the correct principle of law but respectfully records its dissent due to dissimilarity in facts of both the cases. 24. In our opinion, therefore, the Tribunal had no jurisdiction to comment upon th....