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Commissioner of Income-tax Vs. Panduranga Engineering Co. - Court Judgment

SooperKanoon Citation

Subject

Direct Taxation

Court

Andhra Pradesh High Court

Decided On

Case Number

Referred Case No. 42 of 1988

Judge

Reported in

[1997]223ITR400(AP)

Acts

Income Tax Act, 1961 - Sections 28, 142(1), 143(2), 144, 144(1) and 185(5)

Appellant

Commissioner of Income-tax

Respondent

Panduranga Engineering Co.

Appellant Advocate

Deokinandan and ;J.V. Prasad, Advs.

Respondent Advocate

K.M.L. Majele and ; Y. Ratnakar, Advs.

Excerpt:


.....products of livestock but even derivative items (derived from a product of livestock) are intended to be product of livestock for the purpose of the act. thus the term ghee is to be interpreted on the basis of expression products of livestock as defined in section 2(xv) of the act. whatever products are declared as such by the government by notification, they become products of livestock for purpose of the act. consequently it was held that ghee is the product of livestock and by reason of power conferred under section 3(1) read with section 3(3) of the act on them it is competent for the government to declare ghee as product of livestock for the purpose of regulating its purchase and sale, in any notified market area. [per p.s. narayana, j,(dissenting)]if livestock or agricultural produce and the categories thereof had been specified in the statute itself by appending in the schedule or otherwise, that would stand on a different footing from the present provisions of the act which contemplate the issuance of notifications in accordance with the procedure ordained by the provisions specified supra. in view of the clear definition of the livestock and products of livestock, the..........it is penal in nature in that the consequences are very serious to the assessee and that is why discretion is conferred on the assessing officer by requiring him to give a second opportunity. a penal provision must always be interpreted strictly and if two views are possible, the benefit should go to the assessee.case law analysis:cit v. krishnamma and co. (1955) 28 itr 273 (ap) and sheth (j. m.) v. cit (1965) 56 itr 293 (mad) followed. c. k. abdul khader and co. v. ito (1983) 141 itr 159 (ker) and phoolchand ramsahai v. cit (1979) 117 itr 631 (mp) relied.application:not to current assessment years.a. y.:1982-83 income tax act 1961 s.144income tax act 1961 s.185income tax act 1961 s.186

Judgment:


ASSESSMENT--Whether assessment under section 144 should necessarily be followed by cancellation of registration of firm.

Ratio:

There is no rule that in every case where a best judgment assessment was suffered by the assessee, the assessing officer must invariably pass an order refusing to continue the registration of the firm.

Held:

There is no inference that in every case where a best judgment assessment was suffered by the assessee, the assessing officer must invariably pass an order refusing to continue the registration of the firm for the assessment year in question. Cancellation of the registration should only be after complying with the principles of natural justice, which necessarily implies that if the assessing officer is satisfied with the explanation offered by the assessee, he may drop the proposal to cancel the registration. Withdrawal of the benefit of registration in respect of an assessment year results in serious consequences. It is penal in nature in that the consequences are very serious to the assessee and that is why discretion is conferred on the assessing officer by requiring him to give a second opportunity. A penal provision must always be interpreted strictly and if two views are possible, the benefit should go to the assessee.

Case Law Analysis:

CIT v. Krishnamma and Co. (1955) 28 ITR 273 (AP) and Sheth (J. M.) v. CIT (1965) 56 ITR 293 (Mad) followed. C. K. Abdul Khader and Co. v. ITO (1983) 141 ITR 159 (Ker) and Phoolchand Ramsahai v. CIT (1979) 117 ITR 631 (MP) relied.

Application:

Not to current assessment years.

A. Y.:

1982-83

Income Tax Act 1961 s.144

Income Tax Act 1961 s.185

Income Tax Act 1961 s.186




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