2009 (8) TMI 11 - HC - Income Tax

Search and seizure - Block assessment - Appeal against remand order - No doubt, where material is enough, the appellate Court should normally determine the issue on merits, even if such issue has not been dealt with by the original authority. However, power of remand can be exercised when as a result of finding of the appellate authority, re-determination of issue becomes necessary. In the present case, on facts, the Tribunal held that it was necessary to have re-determination of assessment for the reasons mentioned in the impugned order. We are unable to hold that the reasons mentioned by the Tribunal for rejecting the conclusion for re-determination of issues are perverse.

Issues:
1. Justifiability of the ITAT's decision not to take a final view and remand the matter back to the Assessing Officer.
2. Existence of judicial bias in the case due to enhanced undisclosed income in the second Block assessment order.
3. Validity of ITAT's fresh observations inconsistent with the original order.
4. Justifiability of ITAT's refusal to award appropriate cost to the assessee.
5. Assessment of the necessity of re-determination by the Tribunal post-remand.

Analysis:

Issue 1:
The appellant questioned the ITAT's decision not to take a final view and remand the matter back to the Assessing Officer. The High Court emphasized that the power of remand can be exercised when re-determination of an issue becomes necessary due to the findings of the appellate authority. In this case, the Tribunal held that re-determination of the assessment was necessary based on the facts presented. The High Court concluded that the reasons provided by the Tribunal for rejecting the conclusion for re-determination were not perverse, thus dismissing the appellant's contention.

Issue 2:
The appellant raised concerns about judicial bias due to the enhanced undisclosed income in the second Block assessment order. The High Court, however, held that the mere fact that the same authority had to deal with the matter again after remand did not automatically imply judicial bias. Citing the judgment in Union of India v. Vipin Kumar Jain, the High Court clarified that the question of bias must be decided based on the facts of each case. The involvement of the officer associated with the search in making the assessment did not, by itself, indicate bias. The High Court found no substantial question of law regarding the alleged judicial bias.

Issue 3:
The appellant contested the ITAT's fresh observations inconsistent with the original order. The High Court noted that while the appellate court should generally determine issues on merits, even if not addressed by the original authority, the power of remand could be exercised when necessary. The High Court found that the Tribunal's observations and directions in the impugned order were in line with the earlier order, emphasizing the need for a reasonable profit estimation on suppressed sales based on the material available.

Issue 4:
Regarding the ITAT's refusal to award appropriate cost to the assessee, the High Court determined that the questions raised were not substantial questions of law. The High Court did not find justifiable grounds to award costs to the assessee, especially when the order of the Assessing Officer was not upheld but restored back by the ITAT.

Issue 5:
The High Court assessed the necessity of re-determination by the Tribunal post-remand. It clarified that the Tribunal's decision to remand the matter for re-determination of the assessment was based on valid reasons and not considered as perverse. The High Court dismissed the appeal, upholding the Tribunal's decision in the matter.

In conclusion, the High Court dismissed the appeal, finding that the questions raised did not constitute substantial questions of law, and upheld the ITAT's decision to remand the matter for re-determination by the Assessing Officer based on the available material and in accordance with the earlier order.

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