1982 (5) TMI 9 - HC - Income Tax

Summary

Issues:
1. Ex parte assessment under section 144 of the Income Tax Act, 1961.
2. Disputed income sources and validity of estimates.
3. Tribunal's powers under section 254(1) in dealing with appeals.
4. Applicability of legal precedents on appellate jurisdiction.

Analysis:

The judgment pertains to an ex parte assessment under section 144 of the Income Tax Act, 1961, for the assessment year 1970-71. The assessee, Sri Vishnu Kumar Gupta, filed his return late, leading to the Income Tax Officer (ITO) making an ex parte assessment on November 27, 1972. The assessment included income from various sources, such as share income, interest income, and salary income. The assessee challenged the validity of the estimates made by the ITO, particularly regarding income from money-lending business, interest income, and salary income. The Tribunal upheld some estimates but allowed the appeal in part, considering the lack of material to support certain income sources. The Tribunal's decision was rendered on February 19, 1975.

Regarding the powers of the Tribunal under section 254(1) in dealing with appeals, the assessee moved an application under section 256(1) of the Act, which was rejected by the Tribunal. Subsequently, an application under section 256(2) was filed before the High Court, leading to the Tribunal being directed to refer a question for opinion. The question revolved around the Tribunal's competence to consider material not before the ITO during an ex parte assessment. The Tribunal's rejection of another application under section 254(2) was also noted.

The High Court analyzed the Tribunal's powers under section 254(1) and cited legal precedents to establish that the Tribunal has broad powers akin to an appellate court under the Civil Procedure Code. It was clarified that the Tribunal can review evidence not present during the initial assessment. The Court disagreed with the Tribunal's view that it could not consider fresh material post the ex parte assessment. The Court highlighted that the Tribunal's failure to address a legal question raised before it is deemed as dealt with and forms part of its order.

In conclusion, the High Court held that the Tribunal erred in its interpretation of its powers and confirmed the Tribunal's competence to consider additional evidence post the ex parte assessment. The judgment favored the assessee, emphasizing the Tribunal's authority to review evidence beyond the initial assessment. The assessee was awarded costs amounting to Rs. 250.