1976 (4) TMI 8 - HC - Income Tax

Summary

Issues Involved:

1. Justification of the Tribunal in remanding the case to the Appellate Assistant Commissioner of Income-tax.
2. Justification of the Tribunal in setting aside the order of cancellation of protective assessment.
3. Accrual and assessability of income derived from Seconee Tea Estate for the calendar year 1962 during the assessment year 1963-64.

Issue-wise Detailed Analysis:

1. Justification of the Tribunal in remanding the case to the Appellate Assistant Commissioner of Income-tax:

The Tribunal observed that the Appellate Assistant Commissioner (AAC) was not justified in cancelling the assessment solely on the ground that the protective assessment was not justified. The AAC was bound to decide whether the assessee, M/s. Saharaj Tea Company, was to be treated as a registered firm or as an unregistered firm during the assessment year 1963-64. The Tribunal pointed out that the AAC failed to give definite findings on whether the firm was in existence in the calendar year 1962 and whether it carried on the business during that period. Consequently, the Tribunal set aside the order of the AAC and remanded the appeal for fresh disposal in accordance with law, after making further inquiries and providing an opportunity for both parties to be heard.

2. Justification of the Tribunal in setting aside the order of cancellation of protective assessment:

The Tribunal noted that the AAC, while cancelling the protective assessment, did not consider whether M/s. Saharaj Tea Company was liable to assessment. The AAC should have determined if the business was carried on by the assessee-firm in the calendar year 1962. The Tribunal emphasized that the AAC, as a revising authority, had powers co-terminous with those of the Income-tax Officer and could have supported the assessment if it found that the business was carried on by the assessee-firm. Thus, the Tribunal held that the AAC's order was liable to be set aside and remanded the case for fresh disposal.

3. Accrual and assessability of income derived from Seconee Tea Estate for the calendar year 1962 during the assessment year 1963-64:

The Tribunal observed that the sale deed and the agreement indicated that the sale was effective from January 1, 1962, and the purchaser was entitled to the sale proceeds of the tea manufactured after that date. However, the Tribunal found that neither M/s. Saharaj Tea Company nor J. Ahmed alone was the owner of the Seconee Tea Estate in the assessment year 1962-63. The Tribunal upheld the AAC's finding that J. Ahmed was neither the owner of the tea estate nor carried on the business in the calendar year 1962, and dismissed the department's appeal in J. Ahmed's case. The Tribunal concluded that the AAC should have determined whether the firm was in existence and carried on business in the calendar year 1962, and remanded the case for further inquiries.

Conclusion:

The Tribunal acted within its jurisdiction by setting aside the AAC's order and remanding the case for fresh disposal after further inquiries. The Tribunal's decision to remand the case was based on the AAC's failure to provide definite findings on critical issues, including the existence and business activities of M/s. Saharaj Tea Company during the relevant period. The petition for referring the proposed questions of law was rejected, and no order as to costs was made.