U.N. Bhachawat, J.
1. This is a reference under Section 256(1) of the I.T. Act, 1961 (for short hereinafter referred to as 'the Act') at the instance of the assessee.
2. The relevant assessment year is 1971-72.
3. The assessee was a partner in the firm, M/s. Vimalchand Premchand Sarafa, Ujjain. He constructed a house in the accounting year relevant to the assessment year. He declared expenses of Rs. 65,803 and filed a report of the valuer showing the estimated cost of construction at Rs. 69,402. He explained that he had borrowed Rs. 7,000 from the Life Insurance Corporation of India and invested in the construction. The ITO accepted the explanation and completed the assessment at a total income of Rs. 22,470. In doing so, the ITO included some income from the self-occupied portion (SOP). The assessee, in appeal, argued that the ITO was not justified in estimating the annual letting value (ALV) of self-occupied portion (SOP). The AAC accepted the contention, set aside the assessment and directed the ITO to apply his mind afresh to the problem and reprocess the whole matter after giving sufficient opportunity to the assessee and pass a fresh assessment order according to law. Meanwhile, the ITO received some complaint about tax evasion by the assessee. He made enquiries and was informed that the investment in the construction of the house was much more than estimated by the assessee's valuer. He reported the matter to the Departmental Valuation Officer and then came to the conclusion that the cost of construction was Rs. 1,12,300. Consequently, the assessee was asked to explain why the difference in this calculation should not be treated as the assessee's income from undisclosed sources ; details were also asked from the assessee about the time of construction of the house and the receipts for the purchase of material, etc. Thereafter, considering all the facts and circumstances of the case, the ITO added back a sum of Rs. 56,299 to the declared income of the assessee as investment from undisclosed sources.
4. On appeal before the AAC, it was argued that the ITO could not go into the question of investment in the property afresh when the case was sent back to him only for reconsidering the value of self-occupied portion since he had already accepted the valuation of the investment in construction at the time of the original assessment. The addition was also challenged on merits. The AAC, however, rejected these contentions raised on behalf of the; assessee. The assessee went in second appeal before the Tribunal where these points were re-agitated. The Tribunal partially allowed the appeal inasmuch as it reduced the addition by Rs. 26,300, but rejected all other contentions. It held that the assessment was set aside as a whole and, therefore, the ITO's powers for a fresh assessment were not limited. It also took the view that otherwise also the ITO had the jurisdiction to reopen the assessment on his being of the opinion that some income had escaped assessment, because the earlier assessment was set aside on May 8, 1974.
5. On these facts as already stated, at the instance of the assessee. the Tribunal has referred the following question as a question of law for answer to this court :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the change in the cost of construction of the house when the Income-tax Officer had accepted the cost on the basis of the authorised valuer's report and it was not a contested issue before the AAC in the earlier appeal ?'
6. The above question referred to this court by the Tribunal is a little bit obscure and does not pinpoint the real issue in controversy between the parties. The controversy between the parties as is obtainable from the order of the Tribunal was 'that the ITO could not go into the question of investment in the property itself when the matter had been sent to him only for reconsidering the annual value of SOP. Moreover, he had already accepted the original assessment and he could not reopen the same matter.' Therefore, on the point of clarity and to pinpoint the real issue in controversy, between the parties, we reframe the question of law as under, which . in fact brings out the essence of the question already referred to us :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that after the remand by the Appellate Assistant Commissioner, the Income-tax Officer had the jurisdiction to go into the question of investment in construction ?'
7. It was argued by the learned counsel for the assessee that the appeal before the AAC was by the assessee, being aggrieved only with that part of the assessment order whereby the ITO had taken the ALV of the SOP at Rs. 2,500 which appeal was accepted and the case was sent back to the ITO for the limited purpose of the disposal of the question of ALV of SOP after a due application of mind. His submission was that this is the correct interpretation of the order of the AAC in the context of the appeal of the assessee and the grievance therein. His argument was that in view of this interpretation of the order of the AAC, the ITO had a limited question for determination before it, that is, of ALV of SOP, he had no jurisdiction to travel beyond that and determine afresh the amount of investment in property, as if the whole matter was at large before him.
8. The learned counsel for the assessee relied on the decision of the Andhra Pradesh High Court in P. Subbarao and Co. v. AAC : 35ITR673(AP) and of the Bombay High Court in CIT v. Indo-Aden Salt Works Co. : 36ITR429(Bom) .
9. The learned counsel for the department in his argument in counter contended that the order of the AAC had not limited the scope of the jurisdiction of the ITO by any specific direction, vide his order of remand, the whole of the assessment order of the ITO was set aside, it was remanded to the ITO after setting aside his order of assessment to dispose of the entire assessment proceedings in any manner he deemed fit as if there was no assessment order and thus the whole matter was at large. He argued that of course while so disposing, the ITO had to bear in mind the question of ALV and SOP. The learned counsel for the department placed reliance in support of his argument on the decision of the Madras High Court in CIT v. Seth Manicklal Forma : 99ITR470(Mad) .
10. The whole controversy centres round the interpretation of the order of the AAC dated May 8, 1974 (annex. B) whereby he sent back the case to the ITO for a fresh assessment. We would, therefore, like to set out the order herein below for a proper appreciation of the question involved.
'The appellant is aggrieved at the Income-tax Officer taking self-occupied value of house property at Rs. 2,500. Shri G.B. Das, the learned A.R. of the appellant, states that the construction of house went on to the next accounting year also. Under the circumstances, the Income-tax Officer was wrong in taking the value of house property for self-occupied portion. There is considerable force in appellant's contention. The assessment order is set aside with the direction to the Income-tax Officer to apply his mind afresh to the problem and process the whole matter after giving sufficient opportunity to the appellant and frame an assessment order in accordance with law.'
11. The expression 'the assessment order is set aside' is followed by the expression 'and process the whole matter...and frame an assessment order in accordance with law'. Thus, the order of the AAC, in unequivocal terms without leaving any ray of doubt, makes it transparently clear that the order of assessment of the ITO was set aside and the whole matter, without any limitation, was at large before the ITO. In short as a sequel to the order of the AAC, the assessment order of the ITO dated February, 28, 1974 (annex. A) was non est.
12. In the decisions in Pulipati Subbarao's case : 35ITR673(AP) and Indo-Aden Salt Works Co.'s case : 36ITR429(Bom) the matter was decided interpreting the order of remand. The orders of remand in the respective cases were, on interpretation, held to have limited the jurisdiction of the authority to which the case was remanded. In Seth Manicklal's case : 99ITR470(Mad) on interpreting the order of remand, while holding that the assessment order, was set aside, it did not place any restriction on the powers of the ITO in making the fresh assessment and the whole matter was at large, and it was also held that once the assessment order is, set aside no fetters on the powers of the ITO can be put. In the instant case, it is not necessary for us to go into this latter question to answer the question at hand. Any how all the decisions referred to by the parties are unanimous on this point that if the assessment order is set aside as a whole, the whole matter is at large before the ITO and he can make a fresh assessment as if there was no previous assessment. We have already held that the assessment order dated February 28, 1974, of the ITO was as a whole set aside and it was non est.
13. In this view of the matter, we answer the question, as re-framed by us in the affirmative, that is, in favour of the department and against the assessee. We make no order as to costs.