1981 (9) TMI 77 - HC - Income Tax

Summary

Issues Involved:
1. Justification of Tribunal in setting aside the order of the Appellate Assistant Commissioner (AAC) relating to the cash credit of Rs. 40,000 in the assessment year 1965-66.
2. Tribunal's jurisdiction and power to remand a case.

Summary:

1. Justification of Tribunal in Setting Aside the Order:
The Tribunal was justified in setting aside the order of the AAC relating to the cash credit of Rs. 40,000 in the assessment year 1965-66. The Income-tax Officer (ITO) found a cash credit entry in the name of M/s. Surekha Jute Co. and concluded it was a "bogus loan" due to the firm's lack of means and its role as a "name-lender." The ITO treated the amount as income from "undisclosed sources" u/s 68 of the I.T. Act. The Tribunal upheld the assessee's contention that the ITO violated s. 142(3) by not providing an opportunity to rebut the statements of Shri Bidyananda Surekha. The Tribunal directed the AAC to make a fresh enquiry, following principles from a similar case, Assam Forest Products (P.) Ltd. [1977] 110 ITR 558 (Gauhati).

2. Tribunal's Jurisdiction and Power to Remand a Case:
The Tribunal has broad powers u/s 254 of the Act but is constrained by the word "thereon," limiting it to decide only the points raised before it. The Tribunal can admit additional evidence u/s 255(6) read with r. 29 of the I.T. (Appellate Tribunal) Rules, 1963, and has the power to remand a case u/r 28. The Tribunal must exercise this power judiciously. The Tribunal's decision to remand was based on the need for a full-scale enquiry after providing the assessee with the statements of Shri Bidyananda Surekha. The Tribunal's order was in line with the principles established in Assam Forest Products (P.) Ltd. [1977] 110 ITR 558 (Gauhati).

Contentions Raised by the Assessee:
1. No material or evidence before the ITO to call upon the assessee to explain the entries u/s 68.
2. Statements of Shri Bidyananda Surekha were not material or admissible.
3. Tribunal should have allowed the appeal if in doubt about the genuineness of the transactions.
4. Tribunal should have decided the case on the documents produced by the assessee.

Court's Decision on Contentions:
1. The contention was not raised before the Tribunal; the existence of material was admitted by the assessee.
2. There is no legal bar to using such materials to form the requisite opinion by the ITO.
3. The Tribunal's neutral observation and decision to remand for further enquiry were justified.
4. The Tribunal's decision to remand for a full-scale enquiry was appropriate and not an abuse of power.

Conclusion:
The Tribunal exercised its power of remand in a disciplined and responsible manner, consistent with its earlier decision in Assam Forest Products (P.) Ltd. Therefore, the answer to the question is in the affirmative, in favor of the Revenue and against the assessee. There is no order as to costs.