Analysis, Income Tax

Per Incuriam Cases

Per Incuriam cases are those which have been pronounced in ignorance of existing law or precedents and hence no longer hold any precedential value. Per incuriam cases can blindside practitioners if they are unaware of their status, since the Courts will not accept them as binding or even persuasive precedents. Here’s a list of per incuriam cases along with the cases holding them to be per incuriam to help avoid such a pitfall.

Per Incuriam Case:

Commissioner of Wealth Tax vs. Suresh Seth | Supreme Court

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the offence relating to the omission to file the WT returns was a continuing offence?”

Court’s Answer: No. The court opined that for an offence to be a continuing offence with regard to omission, there must a be a positive duty on the person to do an act and there must be an obligation to continue to do the act.

Held Per Incuriam in:

Smt. Maya Rani Punj vs. CIT | Supreme Court

“The question that remains for consideration now is as to whether the default of non-filing of the return within the time stipulated by law is not a continuing offence.”

Court’s Answer: The court that non-filing of returns on time would be a continuing offence as intended by the legislature, and it commences from the date of default and continues month after month until compliance is made, and the default comes to an end.

“We are inclined to agree with counsel or the Revenue that the conclusion reached in Suresh Seth’s case (supra) is contrary to law. Jain Brothers’ case (supra) was not referred to at all in Suresh Seth’s case. On the facts found in Suresh Seth’s case where the returns for the asst. yrs. 1964-65 and 1965-66 had been filed on 18th March, 1971, and for which assessment was made on 22nd March, 1971, the ratio of Jain Brothers’ case (supra) would have been fully applicable. Though Jain Brothers’ case was with reference to the IT Act, 1961, the provisions of s. 18(1) (a) of the WT Act, as amended, brought in a similar provision and a sum equal to 2 per cent of the tax for every month during which the default continued with an optimum of 50 per cent of the tax due becomes payable. As rightly pointed out in Jain Brothers’ case (supra), the question of imposition of penalty would arise only after assessment of tax is made and, therefore, in Suresh Seth’s case (supra) on the analogy of the ratio accepted by this Court in Jain Brothers’ case the amended provisions would become applicable.”

Per Incuriam Case:

CIT vs. M.N. Chatterjee | Patna High Court

The question before the court was that in cases where penalty was imposed for concealment of income, whether the applicable law would be the one in force on the date of initiation of penalty proceedings or the law applicable on the date of filing of return.

Court’s Answer: The law applicable would be one in force on the date of initiation of penalty proceedings.

Held Per Incuriam in:

CIT vs. Popular Medical Hall | Patna High Court

“Whether the date of decision of the authority to initiate penalty proceeding would govern the relevant law applicable for quantification of penalty or the law ruling at the date of filing the return on which date the Act of concealment took place?”

Court’s Answer: The court held that the law applicable on the day the concealment took place, i.e., the day of filing of return, would govern the case.

“…the Supreme Court had already decided the matter in the case of Brij Mohan vs. CIT (1979) 12 CTR (SC) 198 : (1979) 120 ITR 1 (SC). That case related to concealment of income. In that case it was categorically laid down that in the case of concealment of income, the law which was in force on the date of filing of the return would be applicable as the concealment of income has been made on the date inaccurate particulars were furnished in the return of income. In the case of M.N. Chatterjee (supra), the aforesaid decision of the Supreme Court in Brij Mohan (supra), has not at all been referred to. Therefore, the ratio of the decision in the case of M.N. Chatterjee (supra) laying down contrary law is per incuriam and consequently the same is not binding upon this court.”

Per Incuriam Case:

CIT vs. C. Tharian & Sons | Kerala HC

“Whether, on the facts and in the circumstances of the case, the assessee is entitled to weighted deduction under cls. (i) and (ii) of s.35B(1)(b) of the IT Act, 1961?”

Court’s Answer: The court held that the burden to prove that the expenses were incurred “outside India” for specified activities performed “outside India” was on the assessee,  though payment may be made in India, in order to claim weighted deduction under s. 35B of the Act. It was held that the assessee should prove that the commission paid was wholly and exclusively for the specified activities carried on outside the country.

Held Per Incuriam in:

CIT vs. Kerala Nut Food Co. & Ors. | Kerala High Court

“The sole question that arises for consideration in these cases is whether the assessees are eligible for weighted deduction under s. 35B of the IT Act in respect of commission payments made to the agents in India in the sales of the assessees’ goods outside India.”

Court’s Answer: Yes. The Court cited a Special Bench decision of the ITAT and a CBDT circular affirming said decision to hold that weighted deductions would be available to the assessee for these payments.

“In the said cases, it does not appear that the decision of the Special Bench of the Tribunal in J. Hemchand & Co.’s case or the Circular of the CBDT, dt. December 28, 1981 (annexures H and H-1) were brought to the notice of this Court. No mention is made about the decision of the Special Bench aforesaid ; nor about the aforesaid circular of the CBDT which has accepted the decision of the Special Bench of the Tribunal, whereby the interpretation of the provisions of s. 35B of the Act made by the Special Bench was concurred with. The decision of the Special Bench in J. Hemchand & Co.’s case and the acceptance thereof by the CBDT, by issuing the circular, are cogent and relevant factors. In so far as the said circular is beneficial to the assessee, it should be given effect to and s. 35B of the Act should be understood in that light and given effect to only in that perspective. It is also brought to our notice that the dictum in C. Tharian’s case (supra) was explained by the Bombay High Court in CIT vs. Sahney Steel & Press Works P. Ltd. (supra).

In these circumstances, the decision of this Court in C. Tharian’s case (supra) and the decisions following the same are distinguishable and should be understood as rendered only “per incuriam”.”

Written by Siddharth P. Sharma, Associalte Product Manager @ Riverus

Also Read: Per Incuriam Cases – II

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