HINDUSTAN AERONAUTICS LTD. versus COMMISSIONER OF INCOME TAX KARNATAKA-I, BANGALORE

Citation: [2000] SUPP. 1 S.C.R. 230 · Decided: 11-05-2000 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

Judgment (excerpt)

A 
B 
HINDUSTAN AERONAUTICS LTD. 
v. 
COMMISSIONER OF INCOME TAX 
KARNATAKA-I, BANGALORE 
MAY 11, 2000 
[S. RAJENDRA BABU AND Y.K. SABHARWAL, JJ.] 
Income Tax Act 1961-Section 264-Revision by assessee before ClT-
in respect of part of an order made by AAC-Appea/ in respect of part of the 
C order under challenge by Revenue before Tribunal-Whether revision before 
CIT in respect of part of the order maintainable-Held No-what becomes 
merged in the order of the Tribunal is the order made by AAC in its entirety 
and not in part. 
D 
Practice and Procedure·-lncome tax Act 1961-Section 119-Circulars 
issued by CBDT-Held, are not binding when there is a contrary declaration 
of law by the Supreme Court or High Court. 
For the assessment year 1970-71, the assessee filed its return before 
the ITO who disallowed certain deductions claimed by the appellant on various 
E grounds. Against the assessm1mt order of the ITO, the assessee filed an appeal 
before the Appellate Assistant Commissioner which was partly allowed. Both 
the Revenue and the assessee preferred second appeals before the Income 
Tax Appellate Tribunal, to the extent each one of them was aggrieved. The 
assessee withdrew its appeal before the Tribunal with liberty reserved to it to 
approach the Commissioner of Income Tax in a revision under Section 264 of 
F the Act. The Tribunal, dismissed. the appeal filed by the Revenue on merits. 
The assessee filed revision petition under section 264 of the Alit before 
the Tribunal The Commissioner dismissed the revision petition on the ground 
that he has no power to revise any order under Section 264 as the order had 
G been made the subject to appeal to the Appellate Tribunal. 
Assessee filed a Writ Petition challenging the order made by the 
Commissioner. The Single Judge, who considered the matter, directed the 
Commissioner to entertain the Revision Petition filed by the assessee in terms 
of Circular No. XVl/11/69 issued by the Central Board of Direct Taxes and 
H examine its case on merits. An appeal was preferred by the Revenue before 
no 
·-
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HINDUSTAN AERONAUTICS LTD. v. C.l.T. 
231 
the Division Bench. 
The Division Bench following a decision in C.l.T. v. Hindustan 
Aeronautics, 157 ITR 315, of the Full Bench of the High Court held that the 
Revision filed by the appellant could not be maintained and the Commissioner 
A 
was justified in dismissing the same. The Division Bench held that the 
Commissioner of Income Tax cannot entertain assessee's Revision Petition B 
under Section 264 preferred from a part of the order of the Appellate Assistant 
Commissioner against which the assessee is aggrieved, during the pendency 
or after the disposal, as the case may be, of the Department's Second appeal 
before the Income Tax Appellate Tribunal preferred against another part of 
the order where the subject matter of the appellate and revisional proceedings C 
are not the same but relates to distinct matters. 
In appeal to this Court it was contended by the assessee that the 
circulars issued by the Board under Section 119 of the Act is binding on the 
Commissioner in terms of which he was bound to examine the revision of the 
appellant on merits and the order of the Single Judge merely gives effect to D 
such a course. Revenue contended that the circulars or instructions given by 
the Board are no doubt binding in law on the authorities under the Act but 
when the Supreme Court or the High Court had declared the law on the 
question arising for consideration it will not be open to a Court to direct that 
a circular should be given effect to and not the view expressed in a decision E 
of the Supreme Court or the High Court. 
HELD: 1. Section 264(4) of the Income Tax Act, 1961 provides that the 
Commissioner shall not revise any order under this Section in a case where 
the order has been made the subject of an appeal to the Appellate Tribunal. 
What becomes final in such a proceeding is the order made by the Appellate F 
Tribunal which is a superior forum than that of the Commissioner and the 
order which is the subject matter of an appeal cannot be divided into two parts, 
one which is the subject matter of the appeal and the other which was not in 
issue in the appeal before the TribunaL What becomes merged in the order 
of the Tribunal is the order made by the Appellate Assistant Commissioner G 
in its entirety and not in part. Indeed wherever the legislature intended to 
make a distinction in such circumstance

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