1966 (1) TMI 26 - SC - Income Tax

Whether the discretion of the Tribunal has been properly exercised in a given case in refusing to allow a question to be raised which has not been set forth in the memorandum of appeal, would normally not be a question of law? Held that - Unable to accept the argument of Mr. Pathak that the new plea sought to be raised did not necessitate enquiry into facts which had not been investigated. The new plea is based on a two-fold assumption of facts--that a Hindu undivided family existed in the relevant previous year and that the income which was sought to be assessed in proceedings under section 34(1)(a) was the income of that family. The first may only be founded on evidence, and the second is contrary to the admissions made by Manji Dana. Appeal dismissed.

Summary

Issues:
1. Assessment of income in the status of an individual vs. Hindu undivided family.
2. Tribunal's discretion in allowing new points to be raised during appeal.
3. Interpretation of section 25A(3) of the Income-tax Act regarding assessment of income for Hindu undivided families.

Analysis:
1. The appellant filed a return as an individual but was assessed as a Hindu undivided family. Subsequently, a notice was issued for escaped income assessment as an individual. The Tribunal refused to consider the argument that the individual assessment was invalid due to the initial assessment as a Hindu undivided family. The High Court upheld this decision, emphasizing the importance of raising all relevant points at earlier stages of appeal.

2. The Tribunal justified its decision based on Rule 12 of the Appellate Tribunal Rules, which restricts raising new grounds unless permitted. The appellant argued that the Tribunal erred in not considering the statutory provision of section 25A(3) of the Income-tax Act, which limits assessment changes for Hindu undivided families without a partition order. However, the Court found that the Tribunal's decision was valid as the new plea required factual investigation not previously explored.

3. The Court clarified that the Income-tax Officer has the authority to assess income based on individual status even if the previous assessment was under a Hindu undivided family. The appellant's admission of income as individual allowed the Officer to proceed with the assessment. The plea to invalidate the assessment under section 34(1)(a) was rejected as it relied on assumptions contradicted by the appellant's submissions.

In conclusion, the Court dismissed the appeal, emphasizing the importance of presenting all relevant arguments at the appropriate stages of appeal. The decision highlighted the discretion of the Tribunal in allowing new points and affirmed the Income-tax Officer's authority to assess income based on individual status, even after a previous assessment as a Hindu undivided family.