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Smt. Kamala Jindal Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Kolkata
Decided On
Judge
Reported in(1984)10ITD882(Kol.)
AppellantSmt. Kamala Jindal
Respondentincome-tax Officer
Excerpt:
.....assessee took up the appeal therefrom before the aac on the following six grounds : 1. that the learned income-tax officer erred in allowing deduction of rs. 5,855 instead of rs. 48,742 representing municipal tax levied by the corporation of calcutta in computing income from house property. 2. that the learned income-tax officer erred in not allowing vacancy claim of rs. 4,171 (relating rent of rs. 10,650) in computing the income from house property. 3. that the learned income-tax officer erred in law as well on fact in assessing capital gains at rs. 63,512 in respect of two 3-bedroom flats sold by the appellant and her husband jointly. 4. that the learned income-tax officer erred in law in assessing a sum of rs. 30,658 recovered by the appellant from 3 co-owners of the flat at jindal.....
Judgment:
1. The proceedings, out of which this appeal of the assessee relating to the assessment year 1974-75 arises, have chequered carrier. The ITO framed the assessment for the assessment year 1974-75. The assessee took up the appeal therefrom before the AAC on the following six grounds : 1. That the learned Income-tax Officer erred in allowing deduction of Rs. 5,855 instead of Rs. 48,742 representing municipal tax levied by the Corporation of Calcutta in computing income from house property.

2. That the learned Income-tax Officer erred in not allowing vacancy claim of Rs. 4,171 (relating rent of Rs. 10,650) in computing the income from house property.

3. That the learned Income-tax Officer erred in law as well on fact in assessing capital gains at Rs. 63,512 in respect of two 3-bedroom flats sold by the appellant and her husband jointly.

4. That the learned Income-tax Officer erred in law in assessing a sum of Rs. 30,658 recovered by the appellant from 3 co-owners of the flat at Jindal House, representing their respective share of municipal taxes.

5. That the learned Income-tax Officer erred in allowing deduction under Section 80T at the rate of 25 per cent instead of at the rate of 35 per cent.

6. That the learned Income-tax Officer erred in not allowing deduction under Section 80G on donation of Rs. 4,400 to charitable institution : (a) That the learned Income-tax Officer erred in not allowing credit for Rs. 13,000, being advance tax paid by the appellant.

(b) That the learned Income-tax Officer erred in charging interest under Section 215 amounting to Rs. 19,250 without allowing credit for Rs. 13,000, as noted above, without deducting tax on capital gains and in not exercising discretion vested in him under Rule 40 of the Income-tax Rules, 1962.

The AAC, by order dated 10-2-1978 in Appeal No. 421/C-II/76-77, considered only Ground No. 3 of the assessee and set aside the assessment. The order is short and is reproduced below : One of the grounds of appeal in this case is that the ITO was not justified in assessing capital gains at Rs. 63,512. The assessee along with her husband sold two 3-bedroom flats on the sixth and seventh floors of Jindal House for a sum of Rs. 1,92,000, which included the price of two car parking spaces. The cost of two flats and two car parking spaces had been shown by the assessee at Rs. 1,45,574. The Income-tax Officer has not accepted the sale price of the flats as shown by the assessee on the basis of the Valuation Officer's Report ; he has taken the price of the two flats and car parking spaces at Rs. 2,72,638. The capital gains amounted to Rs. 1,27,024. The assessee, being 72 owners of it (sic), the capital gain assessed in her hand was Rs. 63,512.

2. The authorised representative pointed out that here is a case where the ITO should have obtained the approval of the IAC, as per provision of Section 52(2). But the said thing was not done here.

From the assessment records, it is found that the contention of the authorised representative is correct. The ITO also admitted that by mistake, the approval of the IAC was not obtained. In view of the above position, I am of the opinion that as proper procedure was not adopted by the ITO, while computing the capital gains arising on sale of two flats, the assessment should be set aside. The ITO is directed to recompute the total income of the assessee after observing proper procedure and after allowing necessary opportunities to the assessee.

From the said order of the AAC, the assessee filed appeal before the Tribunal on the following three grounds : 1. That the learned Appellate Assistant Commissioner erred in law in setting aside the assessment instead of cancelling the assessment.

2. That without prejudice to the Ground No. 1, the learned Appellate Assistant Commissioner should have accepted the capital gains disclosed by the appellant on the ground that the Income-tax Officer invoked provisions of Section 52(2) without obtaining prior approval of the Inspecting Assistant Commissioner.

3. That the learned Appellate Assistant Commissioner erred in not adjudicating the other grounds of appeal raised by the appellant.

The Tribunal maintained the order of the AAC and dismissed the appeal- vide order, dated 13-9-1979, in IT Appeal No. 810 (Cal.) of 1978-79.

The matter, therefore, went back to the ITO for reframing the assessment. The ITO kept his findings intact recorded in the original assessment, which were assailed by the assessee in appeal before AAC in Ground Nos. 1 to 4, 5 and 6. He simply reconsidered the point regarding capital gains in respect of sale of two flats in respect of which Ground No. 3 was taken in appeal before the AAC and, thus, completed the reassessment. The assessee again filed appeal from the said reassessment order, which was heard by the Commissioner (Appeals). It was contended by the assessee before the Commissioner (Appeals) that the ITO should have considered the points covered by the remaining five grounds of appeal taken before the AAC, which were not at all touched upon by the AAC while disposing of the appeal. The Commissioner (Appeals), placing reliance upon judgment of the Supreme Court in CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 and judgment of the Calcutta High Court in the case of Katihar Jute Mills (P.) Ltd. v.CIT [1979] 120 ITR 861, held that the ITO rightly refused to reconsider the points covered by the remaining five grounds of appeal taken before the AAC and, as such, dismissed the appeal.

2. Now in this appeal, the contention of the learned counsel of the assessee is that the ITO was not justified in deciding to reconsider the points covered by those five grounds of appeal. According to the learned counsel, it should have been spelled out from the order of the AAC that he had set aside the entire assessment and the ITO was required to reframe the assessment on all the points. In support, the learned counsel placed reliance upon the judgment of the Allahabad High Court in Abhai Ram Gopi Nath v. CIT [1971] 79 ITR 339.

3. The learned departmental representative, on the other hand, supported the order of the Commissioner (Appeals) and further argued that those five grounds of appeal should be taken as decided by the AAC against the assessee, more so when the Tribunal also did not direct the AAC to decide those grounds. The assessee having not pursued those five grounds, the learned departmental representative argued that they are deemed to have had been decided against him and they have become final.

4. After careful consideration of the arguments for both the sides, we find no justification in holding that those five grounds, not at all dealt with by the AAC, are deemed to have been decided against the assessee. In the case of Scindia Steam Navigation Co. Ltd. (supra), question of law was raised before the Tribunal and the Tribunal failed to deal with it. In that context, the Hon'ble Supreme Court held that the said question must be deemed to have been dealt with by the Tribunal. Such is not the situation in the instant case. In those five grounds of appeal before the AAC, the assessee had raised mixed questions of law and fact and the AAC did not at all touch them. It, therefore, cannot be said that those grounds were deemed to have been dealt with by the AAC. Since the AAC was silent on those five grounds, the question of filing appeal against the order of the AAC on those ground could not arise and, therefore, even if the assessee would not have taken a ground of appeal before the Tribunal as to those grounds having not been decided by the AAC, it was of no consequence. The AAC, in fact, decided only part of the appeal which he should have not done.

The case of Katihar Jute Mills (P.) Ltd. (supra) has been misplaced by the Commissioner (Appeals). In that case, there was appeal before the AAC only on a particular point, which was decided by the AAC. In that context, the Hon'ble Calcutta High Court held that the point, as on which no appeal was filed before the AAC, could not be permitted to be agitated in the reassessment proceedings. Here the grounds were specifically taken and the AAC skipped over them. Thus, those five grounds have been left undecided and the assessee cannot be made bound by the findings of the ITO in the original assessment proceedings on those points.

5. We do not agree with the learned counsel for the assessee that the order of the AAC setting aside the assessment meant reconsideration by the ITO of all the points including those covered by the five grounds not at all touched by the AAC. The case of Abhai Ram Gopi Nath (supra), relied upon by the learned counsel for the assessee, is not in point here. In that case, there was a clear direction to make a fresh assessment. In the instant case, the ITO was directed to recompute the total income of the assessee after observing the provisions of Section 52 of the Incometax Act, 1961. Thus, we find that the ITO was correct in refusing to reconsider the points covered by those five grounds of appeal, while making recomputation of income. The order of the Tribunal is patently confined to the Ground No. 3 decided by the AAC and it was not extended to the other grounds. Thus, the remaining five grounds still remained to be decided on the file of the AAC.6. Under such situation, we cannot leave the assessee in a precarious condition. On one hand, this appeal was not fully disposed of by the AAC and on the other, the ITO is precluded from reconsidering his original findings on the points covered by those five grounds of appeal. The assessee should have taken an objection before the ITO prior to commencement of reassessment proceedings that the five grounds taken by him, should be first decided by the AAC. He did not take such objection. Then he did not raise such ground before the Commissioner (Appeals) and so also before us. However, this is a glaring mistake of procedure against which relief has to be granted to the assessee without entering into technicalities of procedure. We are, therefore, inclined to grant relief to the assessee. In this context, the following observations of the Hon'ble Supreme Court in CIT v.Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 are pertinent : ... All questions whether of law or of fact which relate to the assessment of the assessee maybe raised before the Tribunal : If for reasons recorded by the departmental authorities in rejecting a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal and indeed they would be under a duty, to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him. (p. 713) 7. The proceedings are, therefore, ordered to be relegated at the stage at which the AAC left those 5 grounds undecided. The order of the Commissioner (Appeals), dated 8-10-1982 and the assessment order, dated 31-10-1980, are set aside. The case is set aside to the file of the AAC with a direction to record findings on all the five grounds left by him and thereafter the case shall go back to the ITO for reframing the assessment according to the directions contained in the order dated 10-2-1978 of the AAC and any other direction which the AAC may give after hearing the 5 grounds. The AAC and the ITO shall give opportunity of being heard to the assessee.


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