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TMI Blog1991 (2) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Bank and the A Bank of India for purchase of foreign exchange totalling 1832,000. The balance of the pounds932,617, namely, pounds 100,617, was to be met by the petitioner from its own resources. These purchases were also made by the petitioner from the said bank at the rate of Rs. 13.33 : pound1. On June 6, 1966, the rupee was devalued and the rate of exchange became Rs. 21 : pound1. Between the petitioner and Hindusthan Motors, the petitioner converted the import bills raised by it at the pre-devaluation rate, viz., at Rs. 13.33 : pound1. In the circumstances, it is contended by the petitioner that there was no profit made by the petitioner out of the said transaction. It made the required foreign exchange available to Hindusthan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the difference in the pre-devaluation and post devaluation rates of exchange. The petitioner preferred an appeal from the said assessment order. The Appellate Assistant Commissioner considered the findings of the Income-tax Officer which in brief were as follows: (i) that the transaction of sale of the foreign exchange between the petitioner and Hindusthan Motors was in contravention of the Foreign Exchange Regulation Act, (ii) the transaction was collusive, (iii) the sale should have been effected at the post-devaluation rate. Therefore, on the basis of what the Income-tax Officer thought should have been the rate of exchange, notional income was added to the petitioner's returned income. The Appellate Assistant Commissioner dealt wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same but that could not be made a ground for making the addition as has been done in the assessment order. The simple and unassailable facts of the case are that the appellant has agreed to sell to Hindusthan Motors 1932,617 for the purpose of imports at the pre-devaluation rate and this contract has been fulfilled in the post-devaluation period at the pre-devaluation rate as per the terms of the contract. Except the marginal amount arising from the difference between the buying and selling rates, no other income has accrued to the bank. The addition is, therefore, totally unjustified and deleted." In other words, the Appellate Assistant Commissioner found that the facts were admitted, i.e., that the rates of purchase and sale of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and in the circumstances of the case, the order of remand by the Tribunal was legal and valid ?" The reference application was disposed of by a judgment delivered on September 1, 1981/September 3, 1981 (United Commercial Bank v. CIT [1982] 137 ITR 434, 445), with the following observations : "On behalf of the Revenue, it was stressed that the assessee was not able to produce the books. That is true. For that, the Income-tax Officer was entitled to draw adverse inference and come to his own conclusion. As a matter of fact, he did in this case and the Appellate Assistant Commissioner had observed that even assuming that there was any contravention of the provisions of the Foreign Exchange Regulation Act, no income had been derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l has not at all considered the conclusion of the Appellate Assistant Commissioner in conformity with the decision of the High Court under section 256(1). The Tribunal has, on the other hand, elaborately considered its own powers to remand a case for the purpose of obtaining further evidence. The Tribunal has further considered the nature of the evidence that would be required and why the evidence before the Tribunal was not adequate. Accordingly, the Tribunal remanded the matter back to the Income-tax Officer directing him to " Verify whether the foreign currency of 1932,617 or any part thereof was sold or used during the relevant accounting year and to bring to tax the profits calculated at post-devaluation rate only on the foreign curren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this would not prejudice the petitioner to take steps in accordance with law for challenging the order dated September 29, 1988. On April 9, 1990, this writ application was filed. It is contended on behalf of the respondents that the application is liable to be rejected on the following grounds : (1) that disputed questions of fact were involved; (2) that if the order under section 256(1) had not been complied with by the Tribunal, the petitioner should have gone back to the reference Bench for clarification or directions ; (3) no prejudice would be caused to the petitioner if the first impugned orders were given effect to. I am unable to accept any of the contentions of the respondents. It is a matter of record whether the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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