Commissioner of Income Tax vs Sheo Prasad Sarjug Prasad

The material facts and the proceedings leading to this reference are, inter alia, that Messrs. Sheo Prasad Sarjug Prasad, the assessee, carries on business in haldi. It was assessed to Income Tax for the assessment year 1974-75, the accounting period ending on October 24, 1973. During the assessment, a sum of Rs. 14,000 was found credited in the name of one Smt. Ramrati Devi. The assessee was asked to explain the nature and source of this deposit. It was stated that this amount had been disclosed by the said Smt. Ramrati Devi under the scheme of 1972 for helping small taxpayers. The Income Tax Officer did not accept the explanation. He found that Srnt. Ramrati Devi was the wife of the karta of the assessee, which is a Hindu undivided family, and held that the said amount was really the income of the assessee from an undisclosed source. The amount was added back to the income and taxed accordingly.

Being aggrieved, the assessee preferred an appeal before the Appellate Assistant Commissioner of Income Tax. The Appellate Assistant Commissioner noted that the Patna Bench of the Income Tax Appellate Tribunal has held that Smt. Ramrati Devi should be assessed as a small taxpayer and as a separate assessee. He accepted the explanation of the assessee and deleted the addition.

Being aggrieved, the Revenue came up in appeal before the Income Tax Appellate Tribunal. It was contended on behalf of the Revenue before the Tribunal that as the decision of the Tribunal in the case of Smt. Ramrati Devi had not been accepted by the Revenue and the matter would be taken up further, the addition made by the Income Tax Officer should be sustained. The Tribunal held that by reason of the order of the Tribunal in the case of Smt. Ramrati Devi, who was assessed to tax under the scheme of 1972, the Appellate Assistant Commissioner was justified in accepting the cash credit as being the contribution of Smt. Ramrati Devi. The appeal of the Revenue was accordingly dismissed.

On an application of the Revenue u/s 256(2) of the Income Tax Act, 1961, the following questions have been directed to be referred as questions of law arising out of the order of the Tribunal for the opinion of this court.

" (i) Whether the Commissioner of Income Tax acting u/s 263 can interfere with the order of assessment made u/s 143(1) in pursuance of the scheme to help new taxpayers in small income groups launched by the Government ?

(ii) Whether, on the facts and in the circumstances of the case, the order of the Commissioner of Income Tax setting aside the assessment made by the Income Tax Officer is valid in law ?

(iii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the scheme of the Act compels the Income Tax Officer to pass the assessment u/s 143(1) even in the case of ladies and minors, the initial capital and other things being properly investigated and proved ?

(iv) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in maintaining the deletion of the cash credit of Rs. 14,000 and not restoring the order of the Income Tax Officer ?"

At the hearing, we have heard the respective submissions on behalf of the Revenue as also the assessee. It appears to us that questions Nos. (i), (ii) and (iii), though referred u/s 256(2) of the Income Tax Act, 1961, do not really arise out of the order of the Tribunal, inasmuch as the validity or otherwise and/or implementation of the scheme of 1972 were not adjudicated or considered by the Tribunal. In view of the aforesaid, we decline to answer the said questions.

On question No. (iv), it was contended on behalf of the Revenue that the assessment of Smt. Ramrati Devi as a small taxpayer under the scheme of 1972, which was upheld by the Tribunal, has been set aside by the court in Taxation Case No. 302 of 1980 ( Commissioner of Income Tax Vs. Smt. Ram Rati Devi, ) and analogous cases by a judgment and order dated November 4, 1986. By reason of the aforesaid, it was submitted that the main ground on which the Tribunal upheld the order of the Appellate Assistant Commissioner was no longer available and, therefore, the Tribunal should reconsider the matter taking into account the subsequent order passed by this court.

It was contended on behalf of the assessee that both the Appellate Assistant Commissioner and the Tribunal having accepted the deposit in the name of Smt. Ramrati Devi as genuine and the same being a finding of fact and not challenged by the Revenue as perverse, question No. (iv) should be answered in favour of the assessee.

On a consideration of the facts and circumstances of the case, it appears to us that as this court has ultimately set aside the assessment of Smt. Ramrati Devi, the matter is at large. Such subsequent facts, which are relevant, were not before the Tribunal when it decided the appeal. In view of the aforesaid, it appears to us that the matter should be reconsidered by the Tribunal in the light of the subsequent facts as stated hereinabove.

We decline to answer question No. (iv) and remand the matter to the Tribunal for being considered afresh on the basis of the evidence on record and the subsequent facts. If necessary, fresh evidence may be directed to be adduced. There will be no order as to costs. The reference is disposed of accordingly.

Let a copy of this order be made available to the Registry of the Tribunal under the seal of this court and the signature of the Registrar of the court.