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Issues Involved:
1. Whether it was open to the assessee to raise the question of non-liability to be assessed under the Act at the appellate stage when no such contention was raised before the Income-tax Officer who made the assessment under section 23(4). 2. Whether the Appellate Assistant Commissioner had the power to pass a remand order. 3. Whether the Appellate Assistant Commissioner, who heard the appeal after the remand report had been made in compliance with the remand order duly made by the Appellate Assistant Commissioner, had the power to ignore that report on the ground that the remand was not properly made, as it was beyond the jurisdiction of the Appellate Assistant Commissioner who made it. Detailed Analysis: Issue 1: Raising Non-Liability at Appellate Stage The court examined whether the assessee could raise the question of non-liability to be assessed at the appellate stage despite not raising it before the Income-tax Officer. The court found that there was no provision in the Act that restricted the assessee from denying his liability to be assessed at the appellate stage. The court emphasized that the powers of the Appellate Assistant Commissioner are extensive and encompass the entire assessment. The court noted that Section 30 specifically provides for an appeal on the ground of non-liability to be assessed, and Section 31(2A) allows the Appellate Assistant Commissioner to consider any ground of appeal not specified initially. Thus, the court answered this question in the affirmative, favoring the assessee. Issue 2: Power to Pass a Remand Order The court addressed whether the Appellate Assistant Commissioner had the authority to pass a remand order. It was established that the Appellate Assistant Commissioner indeed has the power to pass a remand order under Section 31(2). However, the court clarified that the extent of this power in a quantum appeal arising from an order under Section 23(4) is limited. The court referenced several precedents, including the Bombay High Court's decision in Girdher Javer and Co. v. Commissioner of Income-tax, which highlighted that while the Appellate Assistant Commissioner can direct a remand for a proper best judgment assessment, this power should not be used to bypass the provisions of Section 27. The court thus answered this question in the affirmative. Issue 3: Ignoring the Remand Report The court examined whether the Appellate Assistant Commissioner, who heard the appeal after the remand report was submitted, had the authority to ignore that report on the grounds that the remand was improperly made. The court held that it was not within the jurisdiction of the succeeding Appellate Assistant Commissioner to question the remand order made by his predecessor. The court emphasized that any final order passed by the Appellate Assistant Commissioner is subject to appeal to the next higher authority, the Appellate Tribunal. If the remand order was erroneous, it should have been challenged in a superior tribunal rather than being ignored by the succeeding Appellate Assistant Commissioner. The court thus answered this question by stating that the succeeding Appellate Assistant Commissioner should carry out the order made by his predecessor and leave any jurisdictional issues to be addressed by a higher tribunal. Conclusion: The court concluded that: 1. It was open to the assessee to raise the question of non-liability to be assessed at the appellate stage. 2. The Appellate Assistant Commissioner had the power to pass a remand order, although its use is limited in quantum appeals arising from Section 23(4) assessments. 3. The succeeding Appellate Assistant Commissioner did not have the authority to ignore the remand report on jurisdictional grounds and should have adhered to the remand order made by his predecessor.
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