1987 (11) TMI 99 - AT - Income Tax

Summary

Issues Involved:
1. Whether the assessment for the assessment year 1980-81 is nullity in the eyes of law.
2. Whether the provisions of section 80VV of the Income-tax Act, 1961 are applicable and the Commissioner of Income-tax (Appeals) was right in sustaining disallowance of Rs. 7,950 out of Rs. 12,950 paid by way of professional charges.
3. Whether the appeal is required to be refixed to gather correct facts due to contrary facts found by the learned Judicial Member without reference to the Accountant Member.

Detailed Analysis:

1. Nullity of Assessment for AY 1980-81:

Appellant's Argument:
The assessee argued that the assessment was not completed within the time allowed under section 153 of the IT Act. The assessment order dated 10th December 1982 was followed by a notice of demand dated 27th April 1983, indicating a refund due. The assessee contended that no tax computation was provided with the assessment order, thus making the assessment incomplete and invalid.

Department's Argument:
The Department contended that the assessment was legally completed on 10-12-1982, with ITNS 150A prepared on the same date. The delay in issuing the refund was due to procedural checks by the IAC, which were completed by 26-4-1983.

Tribunal's Findings:
The Tribunal found that the tax calculation form, ITNS 150A, was not provided to the assessee, and there was no evidence that it was prepared or signed on 10-12-1982. The delay in issuing the refund suggested that the Department wanted to utilize the assessee's money without cost. The Tribunal concluded that the assessment was not completed as per law and annulled it.

Dissenting Opinion:
The Judicial Member disagreed, stating that the documentary proof on record showed the assessment was completed on 10-12-1982. The delay in issuing the refund did not invalidate the assessment. The Judicial Member upheld the assessment's validity.

Third Member's Decision:
The Vice President noted the conflicting facts and emphasized the need to determine correct facts before applying the law. The case was referred back to the Bench for rehearing to establish the facts accurately.

2. Applicability of Section 80VV:

Appellant's Argument:
The assessee argued that the professional charges of Rs. 12,950 included comprehensive services beyond proceedings before the Income-tax Officer, and thus, not all of it should fall under section 80VV.

Department's Argument:
The Department maintained that section 80VV, being a specific provision, overrides the general provisions of section 37. They cited the decision in Mohan Meakin Breweries Ltd., asserting that no allowance could be considered under section 37.

Tribunal's Findings:
The Tribunal allowed Rs. 5,000 under section 80VV and apportioned the remaining Rs. 7,950 between sections 37 and 80VV. They concluded that Rs. 3,975 should be allowed under section 37, and the balance Rs. 3,975 should be disallowed under section 80VV.

Dissenting Opinion:
The Judicial Member held that section 80VV's specific provisions override section 37. He concluded that the entire amount of Rs. 7,950 was subject to section 80VV, and no further deduction under section 37 was allowable.

Third Member's Decision:
Given the conflicting conclusions, the Third Member emphasized the need to refix the case for rehearing to determine the correct facts before applying the law.

3. Refixing the Appeal for Correct Facts:

Tribunal's Findings:
The Tribunal found that the two Members did not come to a common conclusion on the facts. As a fact-finding authority, the Tribunal must determine facts correctly before applying the law. Therefore, the third question was deemed essential.

Third Member's Decision:
The Third Member agreed that the case should be refixed for rehearing to determine the correct facts and then apply the law. Consequently, questions 1 and 2 became infructuous and were not answered.

Conclusion:
The appeal was allowed in favor of the assessee with respect to the nullity of the assessment and the applicability of section 80VV. However, due to conflicting facts, the case was referred back to the Bench for rehearing to establish the correct facts before applying the law.