These appeals are preferred against an order of the
Gujarat High Court declining to direct the Tribunal to state the questions of
law as suggested by the assessee. The questions of law suggested by the assessee
are :
"1. Whether, on the facts and in the circumstances of
the case and on a proper interpretation of section 254; the Tribunal was
competent and justified in entertaining and deciding the preliminary point
raised by the Revenue.
2. Whether, on the facts and in the circumstances of the
case and on a proper interpretation of section 254, the Tribunal was competent
and justified in setting aside the assessment and restoring the matter to the
Income-tax Officer in the manner in which it has done."
Against the order of assessment for the assessment years
1969-70 and 1970-71, the assessee filed an appeal claiming certain deductions
which were disallowed by the Income-tax Officer. The Appellate Assistant
Commissioner allowed those deductions. The order of the Appellate Assistant
Commissioner was challenged by the Revenue by way of an appeal before the
Tribunal. When the matter came up before the Tribunal for final hearing, the
Revenue raised, what is termed, a "preliminary point" to the effect
that the Income-tax Officer while computing the income of the assessee-company
had erroneously brought to tax income from agriculture and had also
correspondingly allowed certain expenses in connection with the agricultural
operations. It was argued that the assessee had earned income from agriculture
which was not subject to tax and that by allowing expenses which were connected
with the agricultural activities, the Income-tax Officer committed an error in
making the assessment. The Tribunal accepted the said preliminary objection,
allowed the appeal and remanded the matter to the Income-tax Officer for making
a fresh assessment. The Tribunal observed :
"Allowance or otherwise of the claim for various
expenses made before us, in our opinion, would depend entirely on the question
whether the impugned expenses are closely related to the agricultural activities
of the assessee or not. We also feel that it will be unfair to deal only with
the aspect regarding agricultural expenses without taking into consideration the
fact that the assessee has also largescale income from agriculture. It is,
therefore, necessary, in our opinion that the income relating to the
agricultural activities of the assessee-company must be segregated and only
non-agricultural income should be brought to tax. Since this aspect of the
matter has been overlooked by the Income-tax Officer, we think that in the
interest of justice, we must set aside these assessments and restore the matter
to the file of the Income-tax Officer so that he may remake the assessments in
accordance with law, in the light of our above observation."
The assessee filed an application under section 256(1)
asking the Tribunal to refer the above questions which, on being declined, it
went to the High Court which also declined the assessee's request.
Mr. P. H. Parekh, learned counsel for the assessee,
contended that the point which has been accepted by the Tribunal and the matter
remanded was not open to the Revenue in the said appeal and should not have been
allowed to be raised. He submitted that the said ground was not even raised in
the grounds of appeal before the Tribunal and was raised for the first time at
the time of hearing of the appeal. Learned counsel submitted that the order of
assessment may well result in enhancement of the tax payable by the assessee and
that such a course is not open to the Tribunal, though it can be done by the
Appellate Assistant Commissioner. Learned counsel submitted that there is a
sharp difference of opinion among the High Courts on the powers of the Tribunal
to make orders which have the effect of enhancing the assessable income of the
assessee. These submissions are met by Mr. J. Ramamurthy, learned counsel for
the Revenue, relying principally upon the decision of this court in CIT v. Assam
Travels Shipping Service [1993] 199 ITR 1. Mr. Ramamurthy relies upon rule 11 of
the Income-tax (Appellate Tribunal) Rules which empowers the Tribunal not only
to permit a party to raise fresh grounds of appeals but also to raise such
questions suo motu if it thinks appropriate in the circumstances of the case.
We are, however, not inclined to go into this question at
this stage. The matter has been remanded. Let the Income-tax Officer make an
assessment. If the assessee feels aggrieved with the assessment, he can adopt
the remedies provided by law wherein he can raise, inter alia, the present
questions as well. In this view of the matter, we do not think it necessary to
examine the question of power of Tribunal in this matter.
The appeals are accordingly dismissed with the aforesaid
observations. No costs.
