COMMISSIONER OF INCOME-TAX, COMPANIES, LAHORE vs CRESCENT ART

ORDER

This is a case stated by the Lahore Bench of the Income-tax Appellate Tribunal. The following question has been framed for our consideration and reply:--- "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that mere filing of defective proceedings initiated under section 65 constitutes the passing of re- assessm ent order . Under section 65 and that the fresh Notice after making good the defects cannot be issued."

2. The facts in brief are that the original assessment in the case of the assessee-respondent, a private limited company which at the relevant time engaged itself in manufacturing and sale of Rexion cloth and imported goods, was finalized under section 59(1) of the Ordinance at an income of Rs.6,11,566. Subsequently its case was reopened on the ground that certain investments made in construction of building during the relevant assessment year i.e. 1985-86 were not disclosed. The proceeding as initiated by the issuance of a notice under section 65 on 26-2-1986 was, however, filed on 27-4-1987 inasmuch as the requisite prior approval of the C.B.R. Had not been obtained.

Subsequently on receipt of approval on 16-3-1987 a fresh notice under section 65 was issued on 10- 8-1987 and the re-assessm ent proceedings under sections 62/65 were completed at net income of Rs.12,63,919 on 29-6-1989. The assessee partly succeeded in first appeal as the reassessment order was set aside by C.I.T. (Appeals) on 20-5-1989. On further appeal, however, the Tribunal on 15-9-1990 directed cancellation of the re-assessment made under section 65. The, original assessm ent order was directed to be restored on the ground that fresh proceedings under section 65 were barred by limitation as provided for in the same provision.

3. After hearing the learned counsel for the parties we are not inclined to answer the question which even if resolved in favour of the Revenue will not effect the tax liability of the assessee. In other words the question will remain of academic interest only as rightly pointed out in the statement of the case as the Tribunal did not cancel the re-assessment order only on the aforesaid ground. Rather it was found that the addition under section 13 of the Ordinance otherwise could not have been made inasmuch as the value showed by the assessee was not "too low". In view of the Tribunal, the provisions of section 13 were attracted only where the declared investment was "too low" as compared to the actual investment determined. In the case in hand they found that the investment in the (?) valued at Rs.5,76,082 when compared with the declared value at Rs.5,07,870 could not be considered as "too low". It is a settled proposition that this Court does not answer questions of academic interest only. The question referred to this Court must have a consequence in terms of Revenue either for the department or for the assessee. Where the tax liability of an assessee will not be effected in one form or other, this Court will always refuse to answer the question.

4. As observed above, the Tribunal decided against the revenue on merits as well after earlier holding that re-opening under section 65 was barred by limitation. Therefore, even if it is held as prayed for the Revenue that the proceedings were not barred by limitation, the tax liability of the assessee will not change in any manner since on merits as well the Tribunal had found that the provisions of section 13 which were resorted to by the Revenue after reopening of the case were otherwise not attracted to the facts in hand. That being so we will refuse to answer the question.

5. Answer declined. .