ORDER

Per Pramod Kumar, Accountant Member. - The assessment order impugned in these cross appeals is passed by the CIT(A) in the matter of block assessment proceedings. One of the grievances raised by the assessee in his appeal is as follows :—

"On the facts and circumstances of the case, the learned Commissioner (Appeals) erred in rejecting the appellant's contention that the notice under section 143(2) having been issued beyond a period of 12 months from the end of the month in which the block returns were filed, the assessment of income of the block period was invalid and without jurisdiction."

2. Learned counsel for the assessee, as a preliminary issue, raises this grievance and submits that the issue is now covered by the judgment of Hon'ble Gauhati High Court in the case of Bandana Gogoi v. CIT ( 289 ITR 28 ). Their Lordships have held that when the Assessing Officer does not issue notice under section 143(2) within one year from the end of the month in which block return is filed, it cannot be open to him to start the scrutiny assessment proceedings after the end of that period. It is submitted that as there is no contrary decision by the Hon'ble jurisdictional High Court and as indeed by any other High Court, this Tribunal must follow the Hon'ble Gauhati High Court. Amongst other things, he invites our attention to the decision to that effect by the Hon'ble jurisdictional High Court in the case of Commissioner Of Income-Tax, Vidarbha v. Smt. Godavari Devi Saraf ( 119 ITR 589 ).

3. Learned Departmental Representative, however, contends that decision of a non-jurisdictional High Court is not a binding precedent for us. Our attention is invited to the judgment of Hon'ble Bombay High Court in the case of Commissioner Of Income-Tax v. Thana Electricity Supply Ltd. ( 206 ITR 727 ) wherein Their Lordships have held so. Learned Departmental Representative submits that Godavari Devi Saraf judgment is no longer good law as it stands overruled by the later decision in the case of Thana Electricity Co. Ltd.'s case (supra). It is contended that while a non-jurisdictional High Court is not binding on us, a Special Bench decision of this Tribunal is certainly binding on us. It is submitted that this very issue has received consideration of a Special Bench of the Tribunal in the case of Nawal Kishore & Sons Jewellers (87 ITF SB 407) and the Special Bench has decided the issue against the assessee. We are thus urged to follow the Special Bench decision of the Tribunal in the case of Nawal Kishore & Sons (supra) and thus dismiss this preliminary issue raised by the assessee.

4. Having given our careful consideration to the rival submissions, we are inclined to uphold the objection taken by the assessee.

5. As observed by a Co-ordinate Bench of this Tribunal, in the case of Tej International (P.) Ltd. v. DCIT (69 TTJ 650), in the hierarchical judicial system that we have in India, the wisdom of the court below has to yield to the higher wisdom of the court above and, therefore, once an authority higher than this Tribunal has expressed its esteemed views on an issue, normally the decision of the higher judicial authority is to be followed. The Bench has further held that the fact that the judgment of the higher judicial forum is from a non-jurisdictional High Court does not really alter this position, as laid down by the Hon'ble Bombay High Court in the case of Commissioner Of Income-Tax, Vidarbha v. Smt. Godavari Devi Saraf ( 113 ITR 589 ). For slightly different reasons and alongwith some other observations on the issue, which we shall set out a little later, we are in agreement with the conclusions arrived in this case.

6. That takes us to the question whether this decision stands overruled by the Hon'ble Bombay High Court's later judgment in the case of Thana Electricity Co. Ltd. (supra), as submitted by the learned Departmental Representative.

7. It is also important to bear in mind that the question requiring adjudication by Their Lordship was whether or not decision of one of the High Courts was binding on the other High Courts. This will be clear from following observations made by Their Lordships in the beginning of the judgment :

"On a careful consideration of the submissions of the learned counsel for the assessee, we find that before taking up the issue involved in the question of law referred to us in this case for consideration, it is necessary to first decide.... whether this Court, while interpreting an all India statute like Income-tax Act, is bound to follow the decisions of any other High Court and to decide accordingly, even if its own view is contrary thereto, because of the practice followed in this Court. Because, if we are to accept this submission, it will be an exercise in futility to examine the real controversy before us...."

8. One of the propositions that Their Lordships took note of was that 'the decisions of the High Court on the subordinate Courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction (but) it does not extend beyond its territorial jurisdiction.' Their Lordships in the same paragraph also noted that 'A Division Bench of the High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court', and 'if one Division Bench differs with another Division Bench of the same High Court, it should refer the case to a larger Bench'. Having thus noted the proposition, Their Lordships proceeded to 'analyse the decisions of this Court, on which reliance has been placed by the learned counsel for the assessee, in support of his contention that decision of any other High Court on all India statute like Income-tax Act, is binding even on this Court and on the Tribunals outside jurisdictions of that High Court'. On Godavari Devi Saraf's case (supra), which was delivered by a Division Bench of equal strength of this very Hon'ble High Court, Their Lordships took note of revenue's stand as follows :

"Referring to the observations of Godavari Devi (supra), that an all India Tribunal acting anywhere should follow the decisions of any other High Court on the point, it was submitted by the counsel of the revenue that this observation itself would show that the High Court was aware of the fact that different High Courts were not bound by the decisions of each other and, as such, there may be contrary decisions of different High Courts on the same point."

9. The issue of consideration was thus confined to the question whether or not a High Court decision is binding on another High Court or not. That admittedly was the core issue decided by Their Lordships. As for the binding nature of non-jurisdictional High Court decisions on the Tribunal, the observations made by Their Lordships were no more than obiter dictum and in this very judgment, Their Lordships have held that even in the case of Hon'ble Supreme Court judgments, which are binding on all Courts, except Supreme Court itself, but 'what is binding, of course, is the ratio of the decision and not every expression found therein'. Their Lordships have also referred to the oft quoted judgment of the Hon'ble Supreme Court in the case of CIT v. Sun Engg. Works (P.) Ltd. ( 198 ITR 297 ) wherein it is held that 'it is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of question under consideration, and treat it to be complete law declared by this Court." [Emphasis supplied].

10. In this light, and bearing in mind the fact that limited question before Their Lordships was whether or not decision of one of the High Courts is binding on another High Court, it would appear to us that ratio decidendi in Thana Electricity Co. Ltd. (supra), is on the non-binding nature of a High Court's judgment on another High Court. In any case, this Division Bench did not, and as stated in this judgment itself, could not have differed with another Division Bench of the same strength in the case of Godavari Devi Saraf (supra). Therefore, it cannot be open to a subordinate Tribunal like us to disregard any of the judgments of the Hon'ble Bombay High Court, whether in the case of Thana Electricity Co. Ltd. (supra) or in the case of Godavari Devi Saraf. It is indeed our duty to loyally extend utmost respect and reverence to the Hon'ble High Court, and to read these two judgments by the Division Benches of equal strength of the Hon'ble jurisdictional High Court, i.e., in the cases of Thana Electricity Co. Ltd. (supra) and Godavari Devi Saraf (supra), in a harmonious manner.

11. Let us now take a look at the Hon'ble jurisdictional High Court's judgment in the case of Godavari Devi Saraf (supra). In this case, question before Their Lordships was as follows :

"Whether, on the facts and circumstances of the case, and in view of decision in the case of A.M. Sali Maricar ( 90 ITR 116 ), the penalty imposed on the assessee under section 140A(3) was legal?"

12. The specific question before Their Lordships was whether the Tribunal, while sitting in Bombay, was justified in following the Madras High Court decision holding the relevant section as unconstitutional. Hon'ble High Court concluded as follows :

"It should not be overlooked that Income-tax Act is an all India statute, and if a Tribunal in Madras has to proceed on the footing that section 140A(3) was non-existent, the order of penalty under that section cannot be imposed by any authority under the Act. Until a contrary decision is given by any other competent High Court, which is binding on the Tribunal in the State of Bombay (as it then was), it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land .......... an authority like Tribunal has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision on that issue by any other High Court ....."

13. It is thus clear that while the issue before the Hon'ble High Court in Thana Electricity Co. Ltd.'s case (supra) was whether or not a High Court should follow another High Court, whereas in Godavari Devi Saraf's case (supra), Their Lordships dealt with the issue whether or not a non-jurisdictional High Court is to be followed by a Bench of the Income-tax Appellate Tribunal. To that extent, and irrespective of some casual observations on the applicability of non-jurisdictional High Court judgments on subordinate courts and Tribunals, these two decisions deal in two different areas. As we have noticed earlier also, in Thana Electricity Co. Ltd.'s case, a note was taken of Godavari Devi Saraf's judgment and neither the said judgment was dissented nor overruled. In any event, in Thana Electricity Co. Ltd.'s case, Hon'ble Court was alive to the fact, which was acknowledged in so many words, that a Co-ordinate Bench decision cannot be overruled. In this view of the matter, it is difficult to hold, as has been strenuously argued before us by the learned Departmental Representative, that the Hon'ble Bombay High Court's judgment in the case of Godavari Devi Saraf's case stands overruled by Their Lordship's judgment in the case of Thana Electricity Co. Ltd.'s case. The only way in which we can harmoniously interpret these judgments is that these decisions deal with two different issues and ratio decidendi of these decisions must be construed accordingly.

14. Let us also see this issue from a different perspective. Even if we are to assume that it is possible to interpret that Godavari Devi Saraf's decision stands overruled by judgment in the case of Thana Electricity Co. Ltd.'s case, one cannot be oblivious to the fact that an interpretation is indeed possible to the effect that even non-jurisdictional High Court's judgment, for the reasons set out above, is binding on the Tribunal. This non-jurisdictional High Court's judgment is in favour of the assessee. Now, as held by the Hon'ble Supreme Court's judgment in the case of CIT v. Vegetable Products Ltd. ( 88 ITR 192 ), when two interpretations are possible, one in favour of the assessee must be adopted. For this reason, in our humble understanding, the plea of the assessee deserves to be accepted.

15. We may, however, add that the observations that we have made are particularly with reference to the legal position in the jurisdiction in Hon'ble Bombay High Court, as the view so taken in Godavari Devi Saraf's case (supra) has not found favour with Hon'ble Karnataka High Court as well as Hon'ble Punjab and Haryana High Court, in the case of Patil Vijay Kumar v. Union of India ( 151 ITR 48 ) and CIT v. Ved Prakash ( 178 ITR 332 ). The observations made in this order are subject to this rider and, therefore, while we agree with the conclusions arrived at by a Co-ordinate Bench in Tej International (P.) Ltd. (supra), our reasons are not exactly the same as adopted by our distinguished colleagues.

16. There is one more issue raised by the learned Departmental Representative. He submits that we must decide all the issues raised in this appeal and urges us not to leave the matter by deciding only the preliminary issue. We are unable to approve this contention of the learned Departmental Representative either. The issue is covered by a Special Bench decision in the case of Rajul Kumar Bajaj v. ITO ( 69 ITD SB 1 ) which holds that once the issue is decided on the question of jurisdiction, it is not necessary to address the merits of the matter as well. Respectfully following the Special Bench decision, we reject the contention of the learned Departmental Representative. We are not really concerned with as to what should be done in ideal situation, but, as at present and given the fact that the assessment itself is quashed, we see no need to address matters which are rendered academic in the present context.

17. In this view of the matter, we are inclined to uphold the preliminary objection raised by the assessee. As rightly pointed by the learned counsel, Hon'ble Gauhati High Court has held that when the Assessing Officer does not issue notice under section 143(2) within one year from the end of the month in which block return is filed, it cannot be open to him to start the scrutiny assessment proceedings after the end of that period. A view indeed seems possible that it is not necessary that each of the block assessment return must be subjected to the scrutiny of the Assessing Officer. According to this school of thought, in the scheme of things is they exist today, assessment by scrutiny is an option available to the Assessing Officer and it is not always required to be followed in all the block assessment cases. We, however, see no need to go into all these issues. Suffice to say that respectfully following the Hon'ble Gauhati High Court's judgment in the case of Bandana Gogoi (supra) and having noted the position that notice under section 143(2) was admittedly not issued within one year from the end of the month in which block assessment return was filed, we quash the assessment proceedings.

18. In the result, appeal filed by the assessee is allowed.

19. As far as the appeals filed by the Assessing Officer are concerned, these appeals challenge the part relief granted by the CIT(A) to the assessee in respect of additions made by the Assessing Officer. However, as we have quashed the very assessment proceedings, these grievances are only academic in nature. We dismiss these grievances are infructuous.

20. In the result, the appeal filed by the Assessing Officer is dismissed.

21. To sum up, while the appeal filed by the assessee is allowed, the appeal filed by the Assessing Officer is dismissed. It was so pronounced in the open court upon conclusion of hearing of these appeals.

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