Bachittar Singh vs Commissioner of Income Tax

Rajendra Nath Mittal, J.—The Tribunal has referred the following question u/s 256(1) of the income tax Act, 1961 (''the Act''), for the opinion of this Court :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the transaction of purchase and sale in question was a finding in the nature of a trade and surplus of Rs. 15,139 was assessable to tax as the assessee''s income.

The case has a chequered history and it is not necessary to give the facts. The question relates to the profit derived from the purchase and sale of some land. The ITO was of the opinion that the transaction regarding purchase and sale of the land by the assessee amounted to an adventure in the nature of trade. Consequently, he added the income of profit from the said transaction to the total income of the assessee as business income. The assessee went up in appeal before the AAC, who affirmed the order of the ITO and dismissed the same. Against that judgment, he went up in appeal before the Tribunal. In the appeal, a difference of opinion arose between the Accountant Member and the Judicial Member. The Accountant Member came to the conclusion that the income was agricultural income and, thus, was not liable to tax. He did not advert to this aspect of the matter. The Judicial Member was of the opinion that the transaction was an adventure in the nature of trade, that the income was not agricultural income not and, therefore, it was liable to tax on both counts. As there was difference of opinion between the two members, the matter was referred to the Third Member. He affirmed the view of the Judicial Member that it was not an agricultural income. He, however, did not give any finding regarding the matter as to whether the transaction was an adventure in the nature of trade. In view of the opinion of the third member, the Tribunal dismissed the appeal vide its order dated 29-8-1975. On an application by the assessee u/s 256(1) of the Act, the above-mentioned question was referred for the opinion of this Court.

It is urged by Mr. Gupta, the learned counsel for the petitioner, that no opinion has been given by the Tribunal on the question as to whether the transaction was an adventure in the nature of trade and in spite of that the question includes that aspect. He submits that the question as framed could not be referred, as a reference can be made regarding a matter on which a finding has been recorded by the Tribunal. Mr. Ashok Bhan, the learned counsel for the respondent, has fairly admitted that no finding has been recorded by the Tribunal on this aspect of the matter and that it was the duty of the Tribunal to record a finding thereon before referring it to this Court u/s 256(1). In the circumstances, the Tribunal is required to record a finding on this aspect of the matter in the appeal. The second part of the question is inextricably mixed up with the decision of first part of the question and, therefore, it cannot be answered at this stage. Consequently, we direct the Tribunal to re-hear the appeal and dispose it of in accordance with law. It has been agreed between the learned counsel that the parties will be entitled to urge all the contentions before the Tribunal. The parties are directed to appear before the Tribunal on 7-2-1984.