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Issues involved: The judgment involves a reference u/s 256(1) of the Income-tax Act, 1961 regarding the Tribunal's decision to give a finding on the merits of the case without the Appellate Assistant Commissioner doing so.
Summary: The relevant assessment year is 1972-73. The Income-tax Officer rejected the firm's registration application, deeming it non-genuine. The Appellate Assistant Commissioner refrained from deciding on the merits, stating further inquiry was needed. The case was remanded to the Income-tax Officer for the directed inquiry. The Revenue appealed to the Tribunal solely against the remand order. The Tribunal, disagreeing with the remand, proceeded to decide on the merits, upholding the refusal of registration. The assessee, aggrieved by the Tribunal's decision, sought this reference. The Tribunal's role was limited to assessing the correctness of the remand order, as the Revenue did not contest the merits before the Tribunal. The Tribunal erred in deciding on the registration without the Appellate Assistant Commissioner first doing so, especially since the Revenue did not raise this issue in their appeal. The Tribunal should have annulled the remand order and directed the Appellate Assistant Commissioner to decide on the merits. Therefore, the reference is decided in favor of the assessee, ruling that the Tribunal should have remanded the case for the Appellate Assistant Commissioner to decide on the merits. In conclusion, the Tribunal's decision to assess the case on its merits instead of remanding it to the Appellate Assistant Commissioner was deemed unjustified, and the reference is answered in favor of the assessee.
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