1964 (3) TMI 125 - HC - Income Tax

Summary

Issues Involved:
1. Competency of the assessee to contest the valuation method of shares.
2. Jurisdiction of the Tribunal to entertain new questions of law.
3. Finality and binding nature of the Appellate Assistant Commissioner's order.
4. Right of appeal against fresh assessment under section 30 of the Indian Income-tax Act, 1922.

Detailed Analysis:

1. Competency of the Assessee to Contest the Valuation Method of Shares:
The primary issue was whether the assessee could challenge the method of valuation of shares laid down by the Appellate Assistant Commissioner (AAC) in an earlier order when that order was not questioned before the AAC even in the second appeal. The Tribunal held that the assessee could not raise this contention as the first order of the AAC, which laid down the valuation method, had become final and binding since no appeal was preferred against it.

2. Jurisdiction of the Tribunal to Entertain New Questions of Law:
The Tribunal refused to entertain the assessee's contention regarding the valuation principles, stating that the issue had already been determined by the AAC's first order. The Tribunal emphasized that it was not competent to challenge the first order in the course of the appeal. Mr. Sukumar Mitra, counsel for the assessee, argued that the Tribunal should allow new questions of law to be raised if they could be decided based on existing facts. However, the Tribunal maintained that the principle of valuation was already settled and could not be reopened.

3. Finality and Binding Nature of the Appellate Assistant Commissioner's Order:
The judgment underscored that the AAC's order dated February 27, 1958, which directed the valuation of shares at cost price or market price, whichever was lower, had become final and binding. The assessee did not appeal against this order within the prescribed 60 days, making it conclusive. The Tribunal and the High Court both held that this order could not be attacked in subsequent proceedings by collateral methods.

4. Right of Appeal Against Fresh Assessment Under Section 30 of the Indian Income-tax Act, 1922:
The assessee argued that it had the right to appeal against the fresh assessment under section 30, which allowed objections to the amount of income assessed. Mr. Debi Pal contended that the assessee could question the valuation method at this stage. However, the court held that while the assessee had the right to appeal, this right was subject to the finality of the AAC's earlier order. The fresh assessment was based on the principles laid down in the AAC's order, which had not been appealed against and thus could not be contested.

Conclusion:
The High Court concluded that the Tribunal was justified in not allowing the assessee to raise the contention about the valuation of shares. The AAC's order had become final and binding, and the assessee could not challenge it in subsequent proceedings. The court reframed the question to focus on whether the Tribunal was justified in its decision, answering it in the affirmative. The applicant was ordered to pay the costs of the reference to the respondent.