1995 (4) TMI 4 - SC - Income Tax

Power of tribunal - Tribunal remanded the matter to the Income-tax Officer for making a fresh assessment - application by assessee u/s 256(1) asking the Tribunal to refer the questions - Supreme Court is not inclined to go into this question of competency of Tribunal at this stage

Summary

Issues:
- Tribunal's refusal to state the questions of law as suggested by the assessee.
- Competence and justification of the Tribunal in entertaining and deciding the preliminary point raised by the Revenue.
- Competence and justification of the Tribunal in setting aside the assessment and remanding the matter to the Income-tax Officer.
- Power of the Tribunal to make orders enhancing the assessable income of the assessee.
- Interpretation of rule 11 of the Income-tax (Appellate Tribunal) Rules.

Analysis:
The case involved appeals against the Gujarat High Court's decision not to direct the Tribunal to state the questions of law suggested by the assessee. The assessee had appealed against an order of assessment for the years 1969-70 and 1970-71, claiming deductions disallowed by the Income-tax Officer, which were later allowed by the Appellate Assistant Commissioner. However, the Revenue challenged this decision before the Tribunal, raising a preliminary point regarding the taxation of income from agriculture and related expenses. The Tribunal accepted this objection, set aside the assessment, and remanded the matter to the Income-tax Officer for a fresh assessment, emphasizing the need to segregate agricultural income from non-agricultural income.

The assessee sought to refer specific questions of law to the Tribunal under section 256(1), which were declined by both the Tribunal and the High Court. The issue of whether the Tribunal had the power to entertain and decide on the preliminary point raised by the Revenue, which was not part of the original grounds of appeal, was contested. The assessee argued against the Tribunal's authority to enhance the assessable income, a power typically held by the Appellate Assistant Commissioner. The dispute also involved differing opinions among High Courts on the Tribunal's powers in such matters.

The legal counsels presented arguments regarding the Tribunal's powers, with the Revenue relying on a previous court decision and rule 11 of the Income-tax (Appellate Tribunal) Rules, which allows the Tribunal to permit fresh grounds of appeal or raise questions suo motu. However, the Supreme Court declined to delve into the issue, as the matter had been remanded for a fresh assessment by the Income-tax Officer. The Court emphasized that if the assessee disagreed with the new assessment, they could pursue legal remedies, including raising the questions in question. Consequently, the appeals were dismissed with observations, and no costs were awarded in this case.