9911796707
TMI Blog1982 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee committed default and, hence, the ITO made an ex parte assessment under s. 144 of the Act on November 27, 1972. The share income from M/s. Radhey Lal Devicharan was taken at Rs. 30,932. Apart from that, income from money-lending business was taken at Rs. 7,700. Under the head Other sources the following interest income was taken : Rs. 1. Interest from Sheo Kumar Gupta 1,500 2. Interest from M/s. Devicharan Commercial Corporation 5,400 3. Interest from M/s. Ram Kumar Ram Krishna Company 6,945 4. Interest from Ram Kumar Gupta and Company 6,734 5. Interest from M/s. Radhey Lal Devicharan 3,273 Besides this interest income, salary income from M/s. Devicharan Commercial Corporation was taken at Rs. 1,480. The total income thus determined was Rs. 65,530.. The assessee's appeal having failed, he took up the matter in further appeal before the Income-tax Appellate Tribunal (hereafter " the Tribunal ") and disputed, income from money-lending, interest income under the head " Other sources " and income from salary. It may be noted that the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included the amount of interest received by him from the firm. Therefore, the interest income could not have been separately assessed. In the result, the appeal was partly allowed. This decision was given on 19th February, 1975. Thereafter, the assessee moved an application under s. 256(1) of the Act, which was rejected by the Tribunal, and then he moved an application under s. 256(2) before this court. This court by its order dated November 21, 1977, directed the Tribunal to state a case and refer the following question for its opinion: " Whether the Income-tax Appellate Tribunal was right in its view that in dealing with an ex parte assessment it was not competent to take into account the material which was not before the Income-tax Officer when he framed the assessment although the material placed before it went to the root of the matter inasmuch as no income was earned from the various sources which have been subjected to tax in the hands of the applicant ? " It may be noted that pending the disposal of the reference application, the assessee moved an application under s. 254(2) of the Act before the Tribunal. It was stated in that application that the Tribunal had omitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Indian I.T. Act, 1922, equivalent to s. 146 of the 1961 Act, the AAC could only consider the quantum of tax imposed but he could not go into the question about the propriety of passing the best judgment assessment. In Gaurishanker Kedia v. CIT [1963] 49 ITR 655 (Bom) as well, it was held by the Bombay High Court that the only limitation on the appellate jurisdiction is that the propriety of proceedings of best judgment assessment could not be questioned when no steps had been taken for setting aside the best judgment assessment. The same view has been taken by the Andhra Pradesh High Court in Sundermul Co. v. CIT [1967] 66 ITR 277, and by the Madras High Court in M. M. Muthuwappa v. CIT [1962]46 ITR 1107. The Bombay High Court in Girdher Javer Co. v. CIT [1953] 24 ITR 540 expressed itself thus on this point (p. 547): " It must be borne in mind that when the books of account are produced by the assessees and the assessment is an ordinary normal assessment under section 23(2), unless the books are rejected under section 13, the assessment proceeds on the basis of the books produced by the assessees. Under section 23(4) the assessment is according to the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in practice it may be in extremely rare cases that the Appellate Assistant Commissioner would direct the Income-tax Officer to look into the books of account of the assessee which the assessee has failed to produce, however rare the cases may be, we have got to answer the question of law on the provisions of the statute and not from the point of view of its practical application." We express our respectful agreement with these observations. Also see Arjan Dass v. CIT [1978] 112 ITR 480 (P H) and S.R. Kalani v. CIT [1979] 120 ITR 163 (MP). It would be seen, therefore, that no limitation has been placed on the powers of the AAC or the Appellate Tribunal conferred under s. 251(1) or s. 254(1). The only limitation on their appellate jurisdiction which can be inferred from the decided cases is that they cannot go into the question of propriety of the ex parte proceedings and the best judgment assessment. The quantum of assessment, the quantum of tax or the question of registration of a firm can always be gone into. We may note that the learned standing counsel as well did not seriously dispute this legal proposition. The Tribunal was, therefore, mistaken in its view that it had no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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