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TMI Blog1984 (12) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... sik on 1-7-1971. For acquiring these lands, the above parties had invested Rs. 70,000. Later on, these lands were divided into plots with certain changes and were ultimately sold realising profits which, according to the assessee, were Rs. 21,790 for 1974-75 and Rs. 22,900 for 1975-76. With this information, the ITO issued notices under section 148 of the Income-tax Act, 1961 (' the Act '), to the AOP on 28-9-1977. Notices were served on 5-10-1977 and in response, the AOP filed nil returns. The returns were duly processed and resulted in assessment dated 31-3-1982. The objections taken before the ITO are summarised in para 3 of the ITO's order and the ITO's reply is contained in paras 4 to 6 of the order. The first contention was that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78] 113 ITR 602 (Mad.) is not correct. There is also contrary view expressed in a number of judgments, in particular as follows : Rodamal Lalchand v. CIT [1977] 109 ITR 7 (Punj. Har.), Mahendra Kumar Agrawalla v. ITO [1976] 103 ITR 688 (Pat.), Punjab Cloth Stores v. CIT [1980] 121 ITR 604 (Delhi), Sudsons Construction Co. v. Addl. CIT [1983] 140 ITR 634 (Delhi). Shri Walvekar specially referred to the case of Jain Bros. v. Union of India [1970] 77 ITR 107 (SC). Shri Walvekar admitted that the Bombay High Court judgment in CIT v. V. H. Sheth [1984] 148 ITR 169 has actually referred to the Board's circular and held that once a member is assessed, the AOP cannot again be assessed. He, however, explained that in this judgment the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 ITR 675 (AP) and CIT v. C. Ratan Co. and S.N. Agarwalla [1981] 128 ITR 39 (Cal.) as also the following judgments in favour of the assessee : CIT v. Pure Nichitpur Colliery Co. [1975] 101 ITR 79 (Pat.), CIT v. Blue Mountain Engg. Corpn. [1978] 112 ITR 839 (Mad.), Ramanlal Madanlal v. CIT [1979] 116 ITR 657 (Cal.), Laxmichand Hirjibhai's case and CIT v. Karkhana Zinda Tilismath [1980] 123 ITR 814 (AP). While admitting that a contrary view has been taken in the following cases, viz., Mahendra Kumar Agrawalla's case, Punjab Cloth Stores' case, Jupiter Foundry Machines (Knives) v. CIT [1977] 109 ITR 92 (Punj. Har.) and Deccan Bharat Khandsari Sugar Factory v. CIT [1980] 123 ITR 802 (AP), Shri Gadgil laid more stress on the fact that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the association may not be possible or it may be that such assessment may lead to evasion of tax. It would be open to the Income-tax Officer then to assess the individual members on the shares received by them. The duty of the Income-tax Officer is to administer the provisions of the Act in the interests of public revenue, and to prevent evasion or escapement of tax legitimately due to the State. Though an executive officer, engaged in the administration of the Act, the function of the Income-tax Officer is fundamentally quasi-judicial. The Income-tax Officer's discretion to bring to tax either the income of the association collectively or the shares of the members of the association separately is not final ; it is subject to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty of the appellate authorities, as mentioned above, to give a finding as to whether such an option if exercised, is correctly exercised. From the facts above, we hold that in fact no such option has been exercised. The AAC, therefore, fell into an error in annulling the assessments. In the case law, relied upon by Shri Gadgil, there was no dispute about the actual exercise of the option. Hence, that case law is not applicable to the facts of this case. 11. Accordingly, we hold in the interest of justice that the matter should be sent back to the AAC, who should examine the main question, viz., whether there was an AOP doing business. 12. The AAC should also examine the alternative contention regarding the existence of adventure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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