MESSRS LASSANI BROTHERS vs THE COMMISSIONER OF INCOMETAX AND oTHERss
This appeal arises from a judgment of the Lahore High Court dismissing the appellant's application under section 66(1) of the Income-tax Act, 1922. The core legal question concerned whether the High Court failed to exercise its jurisdiction in accordance with law by dismissing the reference application without answering the referred question of law regarding the sustainability of a penalty imposed under the Income-tax Act, 1922. The Supreme Court dismissed the appeal, holding that the High Court committed no infirmity or misapprehension, as the appellant's counsel had failed to press or question the power to impose the penalty before the High Court, and a court cannot be expected to decide a referred question not urged before it. The key principle laid down is that the High Court is not bound to answer a question of law in a reference application if the party concerned chooses not to press or argue the same during the hearing.
- Whether the High Court is required to answer a question of law in a reference application when the party concerned does not press or argue the point before it?
- Whether an application under section 66(1) of the Income-tax Act, 1922 can be dismissed if the counsel fails to question the imposition of penalty during the hearing?
- Section 66(1), Income-tax Act 1922
- Section 34, Income-tax Act 1922
- Section 18-A, Income-tax Act 1922
- Section 28(1)(b), Income-tax Act 1922
1. ' ASLAM RIAZ HUSSAIN, J.-This appeal is directed against the judgment of the Division Bench of the Lahore High Court dated 28-10-1971, dismissing the appellant's application under section 66(1) of the Income-tax Act, 1922.
2. 2.Facts leading to the appeal are, briefly, that the appellant is a whole sale dealer in cloth. He filed his Income-tax Return for the year 1963-64 under the Self-Assessment Scheme, showing his income as Rs, 7,131. Subsequently, however, he filed a revised Return showing the income for the said year as Rs, 10,000. The Income-tan Officer initiated proceedings under section 34 of the Income-tax Act and issued notice to the appellant. The appellant filed a revised Return showing the income as Rs, 27,171. The Income-tax Officer, however, assessed the income of the appellant for the said year as Rs, 4,27,922, and imposed a penalty of Rs, 35,000, under section 18-A of the said Act.
3. The appellant filed an appeal against this order before the Appellate Assistant Commissioner, Lyallpur (now Faisalabad) which was allowed vide order dated 16-9-1969. Thereupon the Income- tax Officer went up in appeal to the Income-tax Appellate Tribunal which was accepted and the imposition of penalty of Rs, 35,000, was restored. Messrs Lasani Brothers thereupon filed a Reference before the High Court.
4. ' The question of law raised in the Reference Application is stated in paragraph 11 of the appellant's Application under section 66(1) of the Income-tax Act, 1922. It reads as follows:- "Whether on the facts and in the circumstances the penalty imposed under section 28(1)(b) of the Income-tax Act is sustainable in law,".
5. 3.After hearing the learned Counsel for the parties the High Court dismissed the Reference with the following observation:- "learned counsel for the petitioner has not been able to show us any reason why this very reasonable order of the Tribunal should be set aside. The power to impose the penalty has not been questioned before us.
6. ' This petition has no legs to stand upon and is, therefore, dismissed in limine.''
4. Feeling aggrieved the appellant filed a petition for leave to appeal before this Court and leave was granted to him on 4-7-1972 in the following words: - "It appears that on an application under section 66(1) of the Income-tax Act the Lahore High Court instead of answering the question referred to it, dismissed the application on the ground that the petitioner has failed to give any reason why the very reasonable order of the Tribunal should be set aside. The High Court appears to suffer from a misapprehension that it could decide by way of appeal the order of the Tribunal. We grant leave to consider whether the High Court has exercised its jurisdiction in accordance with law 5.We have heard the learned counsel for the parties at considerable length and have also gone through the impugned judgment.
7. 6.No doubt one of the grounds on which the High Court dismissed the Reference was that the appellant's counsel had failed to give reasons as to why very reasonable order of the Tribunal should be set aside, but we notice that the High Court has also observed that the power to impose the penalty by the Income-tax Officer bad not been questioned before it by the counsel representing the appellant. It cannot therefore be said that the impugned judgment suffers from any infirmity or 'misapprehension' as observed in the ing Order. The High Court) cannot be expected to decide a question referred to it in the Reference ,B Application if the party concerned does not choose to press it before High/ Court.
8. 7.In this view of the matter we do not consider it a fit case for interference by this Court. The appeal is consequently dismissed. No order as to costs. Appeal' dismissed.