1987 (11) TMI 100 - AT - Income Tax

Summary

Issues:
1. Interpretation of section 251(1)(a) of the Income Tax Act regarding the powers of the CIT (Appeals) to set aside assessments partially.
2. Whether the CIT (Appeals) erred in law by setting aside the assessment partially and not in its entirety.

Detailed Analysis:
1. The judgment deals with the interpretation of section 251(1)(a) of the Income Tax Act, specifically focusing on the powers of the CIT (Appeals) to set aside assessments partially. The revenue appealed against the order of the CIT (Appeals) for the assessment year 1981-82. The key contention was that the CIT (Appeals) erred in law by partially setting aside the assessment, invoking section 251(1)(a) of the Act. The revenue argued that the CIT (Appeals) did not have the authority to set aside the assessment piece-meal and should have either confirmed, reduced, enhanced, or annulled the assessment in its entirety. The revenue relied on legal principles from "Maxwell on the Interpretation of Statutes" to support its argument that the CIT (Appeals) lacked the power to partially set aside the assessment.

2. The assessee, an individual and a practicing advocate, challenged certain disallowances and income computation related to self-occupied property in the assessment. The CIT (Appeals) rejected the appeal regarding disallowances but set aside the assessment concerning income from self-occupied property, directing the ITO to recompute it. The revenue contended that the CIT (Appeals) erred in setting aside the assessment partially, citing section 251(1)(a) of the Act. The revenue's representative argued that the CIT (Appeals) could only set aside the assessment entirely, not in part, as per the language of the statute. The Tribunal analyzed the legislative intent behind section 251(1)(a) and emphasized that the appellate authority could issue directions to the ITO for a fresh assessment when setting aside an assessment. It was highlighted that the CIT (Appeals) could set aside only specific items requiring further investigation, rather than the entire assessment, to ensure a just and reasonable outcome.

3. The Tribunal referred to a previous judgment by the High Court of Allahabad in S. P. Kochhar v. ITO (1984) 145 ITR 255, which elucidated the powers of the AAC (Appellate Assistant Commissioner) under section 251(1)(a) of the Act. The High Court's findings emphasized that the AAC's powers were broader than those of an appellate court under the Civil Procedure Code. The AAC could correct the assessment on all matters covered by the assessment order, even to the detriment of the assessee. Importantly, the AAC could direct the ITO to consider only specific matters during a fresh assessment, indicating that setting aside an assessment did not mandate a comprehensive reevaluation of all aspects. The Tribunal concluded that the CIT (Appeals) had not erred in law by partially setting aside the assessment, as it was within the statutory framework and aligned with principles of justice and reasonableness.

In conclusion, the Tribunal dismissed the revenue's appeal, upholding the CIT (Appeals)'s decision to partially set aside the assessment and direct a reevaluation of specific aspects in accordance with section 251(1)(a) of the Income Tax Act.