1972 (8) TMI 9 - HC - Income Tax

Tribunal cannot deal with a subject-matter which has been considered by the assessing authority but not challenged before the Appellate Assistant Commissioner by the assessee in an appeal before the Tribunal in relation to other items of dispute. It will be a fortiori a case where an assessee did not seek to challenge a particular item before the Appellate Assistant Commissioner or before the Tribunal at the original stage but seeks to challenge the same at a later stage by way of additional grounds. We therefore hold that the Tribunal is justified in refusing to excuse the delay in filing the additional grounds of appeal dealing with a new subject-matter

Summary

Issues:
1. Deduction of bad debts under the Madras Agricultural Income-tax Act, 1955 for assessment years 1962-63 and 1963-64.
2. Treatment of sale proceeds of shade trees as revenue receipts.

Analysis:

Issue 1: Deduction of Bad Debts
The assessees claimed a deduction of Rs. 2,375 as bad debts for the assessment year 1962-63 under section 5(e) of the Madras Agricultural Income-tax Act, 1955. However, the claim was disallowed by the authorities due to lack of proof regarding the genuineness of the expenditure and the irrecoverability of the advanced amounts. The court noted that the assessees failed to provide details of the persons to whom the advances were made and the efforts taken to recover them. The court held that without establishing the truth of the expenditure and the irrecoverability of the amounts, the claim for deduction as bad debts cannot be allowed. Thus, the court upheld the decision of the authorities to disallow the deduction.

Issue 2: Treatment of Sale Proceeds of Shade Trees
The assessees sold shade trees from their plantation and included the proceeds in their returns as revenue receipts for both years. However, they later sought to challenge the assessability of these amounts as revenue receipts after a Supreme Court decision clarified that such proceeds were capital receipts. The assessees applied to the Tribunal to raise additional grounds of appeal on this issue. The Tribunal rejected the applications, stating that the assessees should have raised the issue earlier and that the delay in filing the additional grounds was not excusable. The court emphasized that the Tribunal's jurisdiction to entertain new subject matters in additional grounds of appeal depends on whether the issue was previously raised before the lower authorities. Since the assessees did not challenge the treatment of the sale proceeds before the Appellate Assistant Commissioner or in the original appeals filed before the Tribunal, the court agreed with the Tribunal's decision to refuse the delay in filing the additional grounds. Therefore, the court dismissed both tax cases with costs.

In conclusion, the court held that the assessees failed to provide sufficient evidence to support their claims for deduction of bad debts and that the Tribunal was justified in rejecting the delay in filing additional grounds regarding the treatment of sale proceeds of shade trees.