Reiterating on the principle of consistency the Gujarat High Court in the case of Arvind Boards and Paper Products Ltd. Vs. Commissioner of Income-tax (137ITR635) held that it is settled law that if two interpretations of a taxing provision are possible, the interpretation, which is favourable to the assessee, should be accepted. If one High Court has taken a possible view which is favourable to the assessee, even if another possible view favourable to the Revenue can be adopted, such futile exercise is to be avoided, for, ultimately, the view in favour of the assessee might have to be taken. In the income-tax matters, which are governed by an All India statute, when there is a decision of a High Court interpreting a statutory provision, it would be a wise judicial policy and practice not to take a different view, barring, of course, certain exceptions, like where the decision is sub silentio, per incuriam, obiter dicta or based on a concession or takes a view which it is impossible to arrive at or there is another view in the field or there is a subsequent amendment of the statute or reversal or implied overruling of the decision by a High Court or some such or similar infirmity is manifestly perceivable in the decision. If one High Court has interpreted the provision or section of a taxing statute, which is an All India statute, and there is no other view in the field, another High Court should ordinarily accept that view in the interest of comity of judicial decisions and consistency in matters of application of a taxing statute.
The M P High Court in Inder Narayan Jhalani v. Union of India (2003) 128TAX440 held that nothing prevents as assessing officer to take action u/s 148 even while the prima facie adjustment made u/s 143(1) (a) is quashed by higher courts. As per the Court after such quashing such a case would be considered as a case under clause (b) of Explanation ’2′ to section 147 where no assessment is made.
The Calcutta High Court in Simplex Concrete Piles (India) Ltd. v. Dy. CIT (2002) 125TAX390 held that interpretation given by the Apex Court is the law, which has always been and must always be understood to have been there and