TMI Blog1994 (3) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of his principal, the late Rana. Thus the assessee was having under his name several shares of limited companies. The value of shares standing in the name of the assessee, but apparently on behalf of Rana, was worth about Rs. 38 lakhs in the year 1961-62. There were income-tax recoveries against Rana and the Department in their efforts to recover the income-tax dues issued garnishee order on the assessee, because his books showed Rana as creditor. The assessee did not make any payment. So the Department attached his property at New Delhi. Against the attachment and recovery proceedings, the assessee took two lines of action. He denied his owing any money to Rana and disputed the validity of the garnishee proceedings. The reason given for his denial was that although he did owe money to the late Rana to begin with, with the passing away of Rana on May 12, 1960, and the legal heirs having not filed their claim with the assessee, the same had got barred by limitation and hence nothing had remained due by him to Rana. The other step was in respect of his own assessments. Since the books of account showed large credits, they were subject to scrutiny by the Department. In fact, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inclusion of Rs. 28,51,593 for that year. He was satisfied that it was correctly includible as per this settlement. In respect of the assessment years 1966-67 and 1967-68, the assessee had second thoughts about the acceptance of these additions as per the settlement. He appealed to the Appellate Assistant Commissioner who accepted the contention that the settlement With the Commissioner of Income-tax or the furnishing of the revised return was no bar to seeking exclusion of the amount. The Appellate Assistant Commissioner set aside the order of the Income-tax Officer and directed him to make a fresh assessment after examining the assessee's contention. The Department went in appeal against the order of the Appellate Assistant Commissioner but the Tribunal upheld the Appellate Assistant Commissioner's action. The Income-tax Officer started the assessment proceedings again. This time the assessee did not co-operate. The Income-tax Officer completed the assessment ex parte in which he included the disputed amounts. Again the assessee went up in appeal. The Commissioner of Income-tax(Appeals) opined that when the Department was proceeding against the assessee on the merits of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not ; or (b) the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year. " The Department moved an application under section 256(1) of the Act for drawing up a statement of the facts of the case and stating the following questions for the opinion of the High Court : (For the assessment year 1966-67) : " 1.Whether, on the facts and in the circumstances of the case and having accepted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion of the High Court were questions of fact and no question of law arose out of the appellate order of the Tribunal. During the course of its order, the Tribunal has also expressed an opinion that the Department ought to have either challenged the earlier order of the Tribunal or sought for a reference therefrom, failing which the matter was concluded by the earlier order of the Tribunal. At this juncture, a very significant fact deserves to be taken note of in the matter of assessment for the assessment year 1965-66. The assessee having lost before the Tribunal had filed a writ petition under articles 226 and 227 of the Constitution which was disposed of by this court by order dated August 29, 1983. The decision is reported as M. R. Dhawan v. CIT [1984] 149 ITR 160. This court held (headnote) : " It was clear from an examination of the application for settlement that the assessee admitted that the impugned amount represented a trading liability and claimed deduction of the same. The deduction had not been allowed earlier but it was allowed under the settlement. There had thus been an allowance for trading liability satisfying the first requirement under section 41. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supreme Court dealing with pari materia provisions contained in section 66(2) of the Indian Income-tax Act, 1922, held (headnote) : " When an application was made under section 66(2) to the High Court for an order directing the Tribunal to state a case and refer a question of law arising out of its order, the High Court could not deal with it by answering that question." In CIT v. Managing Trustee, Jalakhabai Trust [1967] 66 ITR 619 (SC), their Lordships have held : " The High Court in dealing with the application under section 66(2) of the Act is not called upon to decide whether the question may ultimately be decided in favour of the assessee ; the High Court had only to consider whether a question of law which may be supported by reasonable argument, arose out of the order of the Tribunal. " In our opinion, the earlier order of the Tribunal had not decided anything. It had only confirmed an order of remand made by the Appellate Assistant Commissioner. The Income-tax Officer was to make an assessment afresh. The merits of the contentions raised by either party were left at large before the assessing authority. Till the assessment was made and the liability of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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