Full Judgment
VIMAL GANDHI, J. M. :
These two appeals by the assessed for the asst. yrs. 1990-91 and 1991-92 are directed against orders of CIT(A), Faridabad upholding application of s. 44AC of the IT Act.
2. The assessee, a registered firm in the two years under appeal, carried on business of purchase and sale of country liquor and Indian made foreign liquor. The assessed disclosed income based on regular books of accounts. The Assessing Officer (AO) was of the view that income in respect of sale of country liquor is to be determined under provision of s. 44AC(1)(a) and for determining expenditure, provisions of s. 44AC(3) were to be applied. The AO, thereforee, determined profit of the assessed not with reference to books of accounts but by applying provisions of s. 44AC of IT Act.
3. Being aggrieved by above decision, the assessed filed appeal before CIT(A), Faridabad and relied upon decision of jurisdictional High Court in the case of Satpal Tdg. Co. vs . Excise & Taxation Commissioner . The learned CIT(A) did not follow above decision as according to him the said decision was subject matter of further appeal before the Supreme Court which was yet to be decided. He, thereforee, upheld computation of assessees income under s. 44AC of IT Act with small modifications here and there. The claim of assessment on the basis of regular books of accounts under ss. 28 to 43C was not accepted. The assessed has come up in appeal and relied upon decision of Honble Punjab & Haryana High Court in the case of Satpal & Co. (supra). It has further been pointed out that in asst. yr. 1989-90, the income of assessed from similar business has been computed by the AO vide order dt. 27th March, 1995 with reference to regular books of accounts and not under s. 44AC of the Act. In the above order, the AO took note of decision in the case of Satpal & Co. (supra) as also of Honble Supreme Court granting stay of operation of judgment in the case of Union of India vs . A. Sanyasi Rao & Ors. : [1993]202ITR584(SC) . The AO further noted that stay earlier granted was vacated by Honble Supreme Court vide dt. 1st Nov., 1993 and, thereforee, decision of Punjab & Haryana High Court in the case of Satpal & Co. (supra) has become final. The learned counsel appearing for the assessed prayed that directions be issued to the AO to compute income under s. 28 to 43 of the IT Act as directed by Honble jurisdictional High Court.
4. The learned Departmental Representative opposed above submissions. She argued that income was rightly directed to be computed under s. 44AC of the Act. According to her, decision in the case of Satpal & Co. (supra) was not final and issue was pending before Honble Supreme Court. She further placed on record decision of Tribunal, D Bench, Delhi dt. 30th Aug., 1994 in the case of Madan Lal Vijay Kumar & Co., Ghaziabad wherein the Bench held that income disclosed by liquor contractor as per books of accounts was taxable beyond provisions of s. 44AC of IT Act. The excess income assessed under s. 5 of the Act under the Head 'other sources' was held to be not assessable.
5. On careful consideration of rival submissions of parties, we are of view that Bench has no choice but to apply decision of Honble jurisdictional High Court in the case of Satpal & Co. (supra). Their Lordship of Punjab& Haryana High Court in the above case directed that income of liquor dealers is to be computed under ss. 28 to 43C of IT Act. The Revenue has not been able to place any material on record to show that binding force of above decision has in any way been affected on account of subsequent order passed by Honble Supreme Court. The decision of jurisdictional High Court is to be followed and applied by all authorities acting within the umbrella of the High Court. In the light of above, we direct the AO to compute assessees income under ss. 28 to 43C of IT Act with reference to books of accounts maintained by the assessee. The impugned orders of lower authorities are set aside and the matter restored to the file of AO for making fresh assessment in the light of above observations and after affording reasonable opportunity of being heard to the assessee.
6. In the result, both the appeals are allowed for statistical purposes.