1995 (5) TMI 68 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 10 lakhs on account of alleged investment in the purchase of a lottery ticket.
2. Whether the AO was bound to act on the directions of the CIT(A) in making the fresh assessment.
3. Compliance with the provisions of s. 144B in framing the assessment.

Analysis:

Issue 1: Addition of Rs. 10 lakhs
The dispute revolved around the addition of Rs. 10 lakhs to the income of the assessee, an individual, on the grounds that the winning lottery ticket was not purchased by the assessee but by the actual winner. The AO presumed the purchase price of the ticket to be Rs. 10 lakhs, which the assessee allegedly invested from undisclosed income. The CIT(A) initially remitted the matter to the AO for further investigation, but later set aside the assessment order. The AO, in the fresh assessment, concluded that the assessee failed to prove the genuineness of the winning ticket, leading to the addition of Rs. 10 lakhs. However, the appellate tribunal found that the AO did not collect any fresh material to support a different view, rendering the addition unwarranted. The tribunal held that the AO was bound by the CIT(A)'s findings, which were final as they were not challenged, and deleted the addition of Rs. 10 lakhs.

Issue 2: Compliance with CIT(A) directions
The contention arose regarding whether the AO was duty-bound to act on the directions of the CIT(A) in making the fresh assessment. The tribunal held that the AO was legally obligated to follow the CIT(A)'s findings from the first appellate order, as they had not been challenged. Despite not subscribing to the CIT(A)'s view, the tribunal emphasized that the AO was bound by the appellate authority's decision, and the addition of Rs. 10 lakhs could not be repeated without establishing the case as perceived by the CIT(A).

Issue 3: Compliance with s. 144B provisions
The assessee argued that non-compliance with s. 144B rendered the assessment invalid. However, the tribunal dismissed this contention, noting that s. 144B was not in force when the fresh assessment was conducted. As it was procedural and omitted from the statute book at the time, the AO was not required to adhere to its provisions. Consequently, the tribunal upheld the assessment made by the AO in accordance with the CIT(A)'s directions.

In conclusion, the tribunal partly allowed the appeal, deleting the addition of Rs. 10 lakhs due to lack of fresh evidence supporting it and emphasizing the binding nature of the CIT(A)'s findings on the AO. The tribunal also dismissed the argument regarding non-compliance with s. 144B, as it was not applicable at the time of the assessment.