COMMISSIONER OF INCOME-TAX VS RAMPURSHOTTAM AGRAWAL, 2000 PTD-GUJARAT-HIGH-COURT-INDIA 2546 (1997)

Income-tax---

----Reference---Assessment order set aside by CIT on revision on the ground that Assessing Officer had failed to consider whether a particular amount belonged to assessee---Fresh assessment order adding amount to income of assessee---Commissioner (Appeals) deleting addition---Revenue not challenging order of CIT (Appeals) ---Assessee appealing against order of CIT under 5.263---Tribunal setting aside order of CIT---Tribunal could not be directed to refer to High Court question whether order of revision made by CIT was valid since Revenue had not challenged order of CIT (Appeals) deleting addition made by ITO---Indian Income Tax Act, 1961, S.256.

In search and seizure operations against the assessee cash was seized. The assessee stated that out of that cash Rs.1,75,000 was given to him by his brother. This statement was accepted by the Assessing Officer and assessment was made. The Commissioner of Income-tax set aside the assessment order under section 263 of the Income Tax Act, 1961. The de novo assessment order was made by the Income-tax Officer against the assessee, adding the amount of Rs.1,75,000 as income but, in the appeal filed by the assessee against that order, the Commissioner (Appeals), by his order dated December 28, 1990, came to the conclusion that the source of cash of Rs.1,75,000 had been satisfactorily explained by the assessee and, therefore, it could not be treated as unexplained income. The appellate authority, therefore, deleted the addition of Rs.1,75,000 from the income of the assessee. This order of the Commissioner of Income-tax (Appeals) had not been challenged in appeal. The assessee appealed against the order of the Commissioner of Income-tax passed under section 263 before the Tribunal and the Tribunal by its order, dated February 14, 1994, set aside the order of the Commissioner made under section 263. On an application to direct reference under section 256(2):

Held, dismissing the application, that any exercise that may be undertaken for deciding the question as to whether the Commissioner had jurisdiction under section 263 of the Income Tax Act, 1961, or riot would be an exercise in futility and purely an academic exercise, since the Revenue had not challenged the order of the Commissioner of Income-tax (Appeals) deleting the addition of Rs.1,75,000 made by the Income-tax Officer.

Manish R. Bhatt for the Commissioner.

R. K. Patel for the Assessee.

JUDGMENT

The applicant wants this Court to answer two questions suggested in paragraph 3 of the application under section 256(2) of the Income Tax Act, 1961. These questions are as under:

"(1) Whether, the Tribunal is right in law and on facts in holding that the assessment order had merged with the appellate order and, therefore, the Commissioner could not invoke the jurisdiction under section 263 of the Act, when the, Assessing Officer had not at all considered the amount of Rs.1,75,000 and the said point was also not agitated by the assessee before the appellate authority?

(2) Whether, the Tribunal is right in law and on facts in setting aside the order passed by the Commissioner under section 263 whereby he has directed the Assessing Officer to redo the assessment?"

The relevant facts are that in search and seizure operations under section 132 of the Act at the assessee's residence and business premises cash amount of Rs.2,08,606 was detected, out of which Rs.2 lakhs were seized. At the time of search, the assessee had stated that out of that amount a sum of Rs.1,75,000 was given to him by his brother, Vedprakash, and the rest belonged to his wife and mother. During the proceedings under section 132(5), the assessee contended that the said amount was cash of the International Exim Corporation brought by Shri Premchand who looked after cash of that firm and the rest of the amount of Rs.15,000 and Rs.19,000 was of his wife and mother, respectively. The Assessing Officer completed the assessment on March 31, 1983, adding Rs.34,000 being the amount that belonged to the wife and the mother of the assessee in his total income. The Commissioner in exercise of his power under section 263 set aside that assessment order on January 15, 1985, and directed the Income-tax Officer to do the assessment afresh after making necessary enquiries.

The assessee appealed against the order of the Commissioner passed under section 263 before the Tribunal, and the Tribunal by its order, dated February 14, 1994, holding that the Income-tax Officer had concluded in the assessment order under section 143(3) that a sum of Rs.1,75,000 had been satisfactorily explained by the assessee and that the Income-tax Officer had made deep enquiries into the matter, set aside the order of the Commissioner which was made under section 263.

It, however, appears that after the direction was given under section 263 by the Commissioner to the Income-tax Officer to proceed afresh the Income-tax Officer had proceeded with the matter afresh since there was no stay granted of that order of the Commissioner. The de novo assessment order was made against the assessee, but in the appeal filed by the assessee against that order, the Commissioner (Appeals), by his order, dated December 28, 1990, partly allowing the appeal, came to the conclusion that the source of cash of Rs.1,75,000 had been satisfactorily explained by the, assessee and, therefore, it was not fair and reasonable to treat the same as unexplained income. The appellate authority, therefore, deleted the addition of Rs.1,75,000 from the income of the assessee. It is stated on behalf of the Revenue that the Revenue has not challenged the said order of the Commissioner of Income-tax (Appeals) which has been made in favour of the assessee after the matter was remanded by the Commissioner of Income-tax by an order under section 263. In this view of the matter, any exercise that may be undertaken for deciding the questions as to whether the Commissioner had jurisdiction under section 263 or not would be an exercise in futility and purely an academic exercise which we do not propose to undertake. This application is, therefore, ,rejected. Rule is discharged with no order as to costs.

M.B.A./4119/FC Application rejected.