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TMI Blog1998 (7) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 23(3) of the Indian Income-tax Act, 1922 (for short "the 1922 Act"), accepting all the hundi loans appearing in the books of the assessee to be genuine and allowing the assessee's claim for deduction in respect of interest thereon. Subsequently, the assessments for these three years were reopened under section 147(a) of the Income-tax Act, 1961, by issue of notices under section 148 of the Act and reassessments (referred to by the Tribunal as "supplementary assessments") were made under section 143(3) read with section 147(a) of the Act. In the reassessments, additions were made as income from undisclosed sources in respect of such hundi loans as were found from non-LBD and non-Shikhar Puri Bankers, the amount of addition having been arrived at by taking the difference between the peak of such loans on the first day and the last day of each previous year. Interest claimed in respect of such hundi loans was also disallowed on estimate as a natural corollary. The assessee preferred appeals against the reassessment orders before the Appellate Assistant Commissioner of Income-tax challenging the legality of the proceedings initiated under section 147(a) of the Act as also the merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner, the Revenue appealed to the Tribunal. The first contention of the Revenue before the Tribunal was that the legality of the proceedings under section 147(a) having been considered by the Appellate Assistant Commissioner in his earlier order and the same having been held to be legal and valid and the assessment having been set aside and remitted to the Income-tax Officer only for the limited purpose of computing the additions and disallowances afresh by re-examining the evidence in respect of the hundi loans after giving reasonable opportunity of hearing to the assessee, it was not open to the Income-tax Officer while making fresh assessment pursuant to the directions of the Appellate Assistant Commissioner to re-examine the legality of the initiation of the proceedings for reassessment. The Tribunal accepted the above contention of the Revenue and held that the Appellate Assistant Commissioner, by his order dated August 12, 1969, by which the original orders of reassessment were set aside and remitted to the Income-tax Officer, having decided the legality of the initiation of the proceedings for reassessment under section 147(a) of the Act and having held the same to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m for fresh assessment. Mr. Jetley, learned counsel for the assessee, submits that once the assessment is set aside, it is open to the Income-tax Officer to decide all the issues afresh including the issue decided by the Appellate Assistant Commissioner in the order by which the assessments were set aside. It was contended that there is no provision in the Income-tax Act which prohibits or debars the assessee from arguing or raising any issue before the Income-tax Officer on the ground that it had already been decided against the assessee by the appellate authority while remitting the matter to the Income-tax Officer. In other words, the contention of learned counsel is that once the assessment is set aside and the matter is remitted to the Income-tax Officer, the Income-tax Officer is not bound by the decision given by the appellate authority while remitting the matter. Learned counsel further submitted that once an appeal is filed against such an order, the assessee is again free to argue afresh all the issues and the appellate authority is obliged to decide every issue afresh. We have carefully considered the above submissions of Mr. Jetley, learned counsel for the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the loans. It is seen that the return of income was filed on March 20, 1969, and the assessment has been finalised on March 28, 1969, without calling upon the appellant to produce evidence in support of his claim nor the Income-tax Officer has summoned the creditors to examine the veracity of the credits appearing in the books. It is only proper that adequate opportunity is given to the appellant to adduce evidence regarding the source of the credits before any adverse inference is drawn. The assessment is, therefore, set aside to be made afresh by the Income-tax Officer according to law." It is clear from the above extracts that the Appellate Assistant Commissioner decided one of the issues raised by the assessee, i.e., the issue regarding the validity of proceedings under section 147(a) against the assessee and held that the Income-tax Officer was justified in initiating the proceedings for reassessment under section 147(a) of the Act and set aside the order and remitted the same to the Income-tax Officer only for the limited purpose of giving an opportunity to the assessee for satisfying him about the genuineness of the loans. In the course of the fresh proceedings before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of assets for the purpose of computation of capital employed. The appeal was dismissed by the Commissioner (Appeals) on the ground that controversy had been decided by the Commissioner in his revisional order itself and it was not open to the Income-tax Officer or the appellate authority in the appeal to agitate the point which had already been decided earlier by the appellate authority. The contention of the assessee that once the assessment is set aside, the Assessing Officer can proceed de novo was rejected by this court. It was observed : "The order of the Commissioner read as a whole makes it abundantly clear that the Commissioner arrived at categorical and definite findings in regard to the contentions of the assessee about inclusion of work-in-progress in the capital employed for the purpose of claiming relief under section 80J of the Act and in regard to deductibility of extra shift allowance allowed in the past from the value of fixed assets for the very same purpose and remitted the matter to the Income-tax Officer merely to perform the ministerial function of recalculating the amount of relief under section 80J." It was held : "The Tribunal, in this case, in our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and he would certainly be transgressing the limits set down by law if he were to embark upon a fresh enquiry as to the quantum of the income or the loss incurred by the petitioner." We are also supported in our above conclusion by the decision of the Calcutta High Court in Katihar Jute Mills (P.) Ltd. v. CIT [1979] 120 ITR 861. In that case, in the assessment of the assessee, a limited company owning a jute mill, for the assessment year 1955-56, under section 23(3) of the 1922 Act, a sum of Rs. 5 lakhs odd had been brought to tax as representing the price of loom hours. In the appeal before the Appellate Assistant Commissioner, the assessee had not questioned the finding about the loom hours but questioned only the treatment of certain loss in speculative transactions. After dealing with the latter point, the Appellate Assistant Commissioner observed : "in the result the assessment is set aside with the direction to the Income-tax Officer to go through the contract papers again and do the assessment afresh". Before the Income-tax Officer could take up the matter again, the Supreme Court delivered a judgment holding that proceeds from sale of loom hours were of a capital nature, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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