1979 (9) TMI 57 - HC - Income Tax

Summary

Issues:
1. Refusal of Tribunal to refer questions of law arising from its order.
2. Legality of assessment order under section 147 and Commissioner's power to revise under section 263.
3. Validity of Commissioner's order setting aside assessment and directing a fresh assessment.

Analysis:
1. The judgment addresses the refusal of the Tribunal to refer questions of law raised by the assessee regarding the assessment order. The Motion Bench admitted the application for questions 1 and 3 only, as both parties agreed that question 2 did not raise any legal issue. The court directed the Tribunal to refer the question related to the legality of the assessment made under section 147 and the Commissioner's power to revise it under section 263.

2. The case involved a non-resident assessee who filed for an income-tax clearance certificate and declared his income from inherited lands in India. However, subsequent investigations revealed investments in agricultural land and property renovations. The Income Tax Officer (ITO) issued notices for filing returns, and after discussions, accepted the declared income. The Commissioner initiated proceedings under section 263, setting aside the ITO's order and remanding for a fresh assessment. The Appellate Tribunal dismissed the assessee's contention that the assessment was made under section 147 and hence not revisable under section 263.

3. The High Court held that a question of law did arise from the Tribunal's order, directing the Tribunal to refer the specific question for the court's opinion. The court clarified that the Commissioner's observations in setting aside the assessment should not prejudice the assessee in the fresh assessment. The judgment concluded by declining the reference for the third question raised by the assessee. Justice B. S. Dhillon concurred with the decision.

In summary, the judgment addresses the refusal of the Tribunal to refer questions of law, the legality of the assessment under section 147, and the Commissioner's power to revise it under section 263. The court directed the Tribunal to refer the specific question for its opinion, ensuring fairness in the assessment process and clarifying the limited scope of the Commissioner's observations.