1995 (3) TMI 135 - AT - Income Tax

Summary

Issues Involved:
1. Cancellation of the assessment order made under section 144.
2. Admission of additional ground of appeal without giving reasonable opportunity to the Assessing Officer.
3. Deletion of addition of Rs. 1,22,500 assessed under section 69B of the I.T. Act, 1961.
4. Deletion of addition of Rs. 20,000 on account of sale of gold dust.

Issue-wise Detailed Analysis:

1. Cancellation of the assessment order made under section 144:
The CIT (Appeals) cancelled the assessment order made under section 144 on the grounds that the assessment was made on a deceased person, Sri M.N. Dutta, and not on his legal heir, Smt. Dolly Dutta. The CIT(A) admitted an additional ground of appeal stating that the assessment was null and void as notices were served on the deceased. The Tribunal found that the CIT(A) failed to consider that the return was filed by the legal representative and that notices were duly served and complied with by the legal representative. The Tribunal held that the provisions of section 159 and section 292B of the IT Act, 1961, were applicable, which allow for the assessment to be made through the legal representative, and any clerical errors in the notices do not invalidate the assessment. Consequently, the Tribunal vacated the CIT(A)'s order and restored the assessment order.

2. Admission of additional ground of appeal without giving reasonable opportunity to the Assessing Officer:
The Tribunal noted that the CIT(A) admitted the additional ground of appeal without giving the Assessing Officer (AO) a reasonable opportunity to respond, which is against the provisions of section 250(5) of the IT Act, 1961. The Tribunal found that the omission of the additional ground from the form of appeal was wilful or unreasonable, as the legal representative was aware of the facts. Therefore, the Tribunal held that the admission of the additional ground was illegal and could not be sustained.

3. Deletion of addition of Rs. 1,22,500 assessed under section 69B of the I.T. Act, 1961:
The AO had added Rs. 1,22,500 under section 69B, being the value of 500 grams of imprest gold, due to the lack of explanation in the accounts filed. The CIT(A) deleted this addition on the grounds that the assessment was null and void and that no addition was warranted as per a similar case, Sri Sukumar Dutta. The Tribunal, while vacating the CIT(A)'s order on the nullity of the assessment, upheld the deletion of the addition based on the reasoning provided in the case of Sri Sukumar Dutta, where no addition was called for when the assessment year was not the first year of business.

4. Deletion of addition of Rs. 20,000 on account of sale of gold dust:
The AO had added Rs. 20,000 on account of the sale of gold dust due to the lack of explanation. The CIT(A) deleted this addition on the same grounds as the previous issue. The Tribunal, while vacating the CIT(A)'s order on the nullity of the assessment, upheld the deletion of the addition based on the reasoning provided in the case of Sri Sukumar Dutta, where no addition was warranted on account of the estimated sale of gold dust.

Conclusion:
The Tribunal partly allowed the departmental appeal, vacating the CIT(A)'s order regarding the cancellation of the assessment and the admission of the additional ground of appeal, but upheld the deletion of the additions under section 69B and on account of the sale of gold dust based on the precedent set in the case of Sri Sukumar Dutta.