Judgment:
M.F. Saldanha, J.
1. We have heard learned counsel on behalf of the petitioners as also learned senior counsel who represents the contesting respondents, i.e., the assessees. We need to prefix this order by clarifying that the scope and jurisdiction of the High Court in a petition of the present type is extremely restricted. It needs to be borne in mind that the power of the High Court is circumscribed in the sense that the Tribunal in the first instance is required to consider as to whether a referable point of law on which the decision of the High Court is desirable arises in the case and once the Tribunal rejects the application under Section 256(1) the issue gets further narrowed down in so far as it is necessary for the Department to demonstrate that the order passed by the Tribunal was unjustified. We start by referring to this aspect of the law principally because learned senior counsel who represents the respondents did very vehemently submit that the appellate jurisdiction may be much wider but while considering the question as to whether a reference can be directed, the High Court will concern itself only with the quality of the order that the Tribunal has passed and in doing so, it is necessary to avoid the familiar practice of back-tracking. We refer to this aspect because it is not permissible to start reopening issues of fact or for that matter mixed questions of fact and law in support of a submission that a reference ought to be directed. What further complicates the situation as far as the present cases are concerned is the fact that for the last several assessment years, the asses-sees were following the same practice which met with disfavour and then favour at different levels and what is material is that in the immediate preceding assessment year, the Tribunal passed a detailed speaking order settingout cogent reasons in support of its decision which went against the Department. On that occasion an application under Section 256(1) was filed which came to be rejected and for reasons best known to the Department the case was not carried further. We are not on the question of estoppel but we refer to this aspect because there are serious overtones which arise therefrom the first of which is with regard to the timing of a challenge. The Tribunal in the subsequent order with which we are concerned has had occasion to point out that on identical facts in respect of identical accounting procedures and in the face of legal provisions which are absolutely similar, the Department accepted the Tribunal's verdict for the preceding year and that the Tribunal found absolutely no new material raised nor did it find any justifiable reason why a reference would be competent for the subsequent year when the Department itself abided by the position that no referable case was made out in the preceding year. Effectively this would mean, that the Department wants to put the clock back which is something that is not possible.
2. We need to also reiterate the fact that while considering the legal position, we have heard learned senior counsel who represents the respondents, who among other things drew our attention to the fact that the issue which is the subject-matter of the present petition arose for determination in the decision reported in Lakhanpal National Ltd. v. ITO : [1986]162ITR240(Guj) , wherein the Division Bench of the Gujarat High Court upheld the deducibility point that arises under Section 43B. The limited submission canvassed by learned counsel was that it is not merely the view of one or two Benches of the Tribunal but that this view has met with judicial approval and then he went on to reinforce his argument by pointing out a decision rendered by the Bombay High Court in Income-tax Appeal No. 527 of 2000, dated March 14, 2001 (CIT v. Bharat Petroleum Corporation Ltd. [2001] 252 ITR 43), the same view has been followed. We have only made a passing reference to this aspect of the law because it was vehemently argued before us that before a reference is called for, the High Court must be satisfied essentially that the view taken by the Tribunal requires serious reconsideration either because it is totally wrong or because it does not represent a correct interpretation of the law. We find it difficult to accept the submission canvassed on behalf of the Department that irrespective of the view which was current up to the earlier assessment year and which has been followed in the present instance a reconsideration of the law is still necessary. That cannot be done de hors the facts, the assessment order and the record and, within the limited scope that is available to this High Court under Section 256(2) of the Act, we do not consider it permissible. One of the submissions sought to be canvassed on behalf, of the Department essentially has its genesis in principles of accounting and it was sought to be contended that through aparticular mode or procedure of accounting which the Department does not approve of, errors have arisen and corrective action is therefore essential. The complete answer to this argument is found in the decision reported in Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT : [1997]227ITR172(SC) , wherein the court has unequivocally laid down that cases are required to be decided in consonance with the principles of law which necessarily override accounting procedures.
3. We are conscious of the fact that the Supreme Court in the decision reported in CIT v. British Paints India Ltd. : [1991]188ITR44(SC) , has clarified the position that a view or a decision taken in a particular assessment year does not create a precedent nor does it preclude a reversal of that view at a subsequent point of time. Equally, the principle is well crystallised that a wrong practice or a wrong precedent can always be corrected. There can never be any quarrel with regard to the salutary principle laid down by the Supreme Court in this decision but, in our considered view there is an inherent difficulty in the way of the Department as far as the current assessment year is concerned because we find that there is no foundational basis laid in the record for what the respondents' learned counsel seeks to argue before this court. As indicated by us earlier, it is not permissible to expand the scope of Section 256(2) which is necessarily limited.
4. Lastly, we have done a total overview of the facts and the legal position as obtains in this case for the purposes of satisfying ourselves as to whether any manifest prejudice has occurred or whether for that matter any irregularity or illegality is apparent in so far as in a taxing statute the court is basically concerned with the aspect of income escaping assessment or evasion of tax. It is nobody's case that either of these factors are present in the present situation and, consequently, in our considered view, the order passed by the Tribunal that is as far as the two assessment years are concerned, no referable case has been made out will have to be confirmed.
5. In conclusion, we only need to observe that in the Supreme Court decision referred to by us in CIT v. British Paints India Ltd. : [1991]188ITR44(SC) , the Supreme Court had occasion to observe that the ultimate test would be the question as to whether it is demonstrated that something is manifestly wrong on the part of the assessee. In this case, Mr. Dastur was at pains to demonstrate to us that as a result of the order which virtually proceeds from assessment year to assessment year there have been occasions where the assessee has been prejudiced in so far as there has been an upward revision and, secondly, he was at pains to also demonstrate that as far as the deductibility is concerned a clear reading of Section 43B would support the view that the tax paid is required to be off-set in that assessment year only. Viewed at from any angle, therefore, we see no ground on which a referencecan be directed. The petitions accordingly fail and stand dismissed. No order as to costs. We, however, clarify that the observations contained in this order hold good as far as these assessment years are concerned only.