1967 (7) TMI 10 - HC - Income Tax

Tribunal having set aside the assessment was justified in directing the ITO to reassess the share income of the non-resident after due notice to the assessee firm as representing the non-resident partner - Tribunal has authority under s. 33(4) to direct the AAC or the ITO to hold a further enquiry and dispose of the case on the basis of such inquiry

Summary

Issues:
Assessment of non-resident partner's share of income on the assessee under section 23(5)(a) - Validity of assessment procedure - Tribunal's power to set aside assessment and direct reassessment.

Analysis:
The judgment pertains to an assessment made for the assessment year 1958-59, involving a registered firm with a non-resident partner. The Income-tax Officer assessed the non-resident partner's share of income on the assessee under section 23(5)(a), applying the rate as if assessed on the partner personally. The assessee contended that the assessment was invalid as the procedure under section 22 was not followed. The Appellate Assistant Commissioner upheld the assessment, but the Tribunal found merit in the contention, stating that a specific notice should have been given to the assessee before such assessment. The Tribunal set aside the assessment and directed the Income-tax Officer to reassess after due notice to the assessee as representing the non-resident partner.

The main issue revolved around the Tribunal's authority to direct a reassessment. The Tribunal's power under section 33(4) allows it to pass orders on appeals in the widest terms. Subsection (5) of section 33 further supports the Tribunal's authority to order a new assessment of a firm after setting aside the impugned assessment. The judgment cited the case of Hukumchand Mills Ltd. v. Commissioner of Income-tax, where the Supreme Court affirmed the Tribunal's extensive powers to direct further inquiries and disposal of cases. Therefore, the Tribunal had the power to set aside the assessment of the non-resident partner's share of income and instruct the Income-tax Officer to conduct a fresh assessment after providing due notice to the assessee.

In conclusion, the court affirmed the Tribunal's authority to direct reassessment in this case. The judgment highlighted the broad powers granted to the Tribunal under section 33(4) and (5), emphasizing its ability to set aside assessments and order fresh assessments. The assessee was directed to bear the costs of the reference to the Commissioner.