J.V. Gupta, J.
1. This order will dispose of Income-tax Case No. 31 of 1979, relating to the assessment year 1968-69 and Income-tax Case No. 32 of 1979, relating to the assessment year 1972-73, as the questions of law required to be referred are the same in both the cases.
2. The assessee required the Tribunal to refer three questions of law arising from the Tribunal's order dated 7th March, 1978, for the opinion of this court, but the Tribunal declined to refer any of the question as in itsopinion no question of law arises out of its said order. The three questions of law proposed by the assessee are as under :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment made by the Income-tax Officer under the provisions of Section 147 was not covered by Clause (a) of Sub-section (2) of Section 263 of the Income-tax Act, 1961, and consequently, the Commissioner was not precluded from revising the assessment order under Section 263 ?
2. Whether, in view of the facts and circumstances of the case, the Tribunal was legally right in holding that the assessment order passed by the Income-tax Officer was 'erroneous' as contemplated under Section 263 of the Income-tax Act, 1961, and therefore, the Commissioner was competent to revise the assessment ?
3. Whether the order under Section 263 as made by the Commissioner of Income-tax for setting aside the assessment with the directions to the Income-tax Officer to frame a fresh assessment under the law after making proper investigation and after giving a reasonable opportunity to the assessee to explain his case is not vitiated and illegal in view of the opinion expressed by him in the order that the explanation with regard to the source of investment in the purchase of agricultural lands is not satisfactory and should not have been accepted '
3. The Motion Bench at the time of hearing admitted the application as regards questions Nos. 1 and 3 only. It has been further observed by the Motion Bench that 'Mr. Mahajan, learned counsel for the petitioner, very fairly states that question No. 2 does not raise any question of law and, therefore, does not press for the same', and equally fairly Mr. Awasthy, learned counsel for the respondent, states that' question No. 1 may well give rise to the question of law because it does not appear to be concluded by a judgment of their Lordships of the Supreme Court'.
4. Brief facts of the case are that the assessee is a non-resident, residing in U. K. since 1955. He came to India in 1970, and for the purpose of going back to U.K., he filed an application for income-tax clearance certificate under Section 230 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). Along with that application, he filed an affidavit dated 19th June, 1974, deposing therein that he had no immovable property nor any bank account anywhere in India and he had maintained himself since his arrival in India on 27th September, 1970, on the income of his inherited lands, situated at his village Adhi. After the receipt of the application, spot enquiries were made by the inspector of income-tax which revealed that the assessee had acquired agricultural land at two places and, had also invested money on the renovation of his residential house. Meanwhile, the assessee filed another affidavit dated 31st July, 1974, in which he disclosedthe purchase of approximately 8 acres of land for Rs. 34,000 in 1967-68 (accounting year) and 20 kanals 14 marlas of land in 1971-72 (accounting year) for Rs. 65,000 which included Rs. 20,000 as pre-emption money. He disclosed the source of these investments out of his agricultural income and through loan from the financiers and his relatives. On 9th October, 1974, the ITO issued notices under Section 148 of the Act calling upon the assessee to file the returns of income for the assessment years 1968-69 and 1972-73, and the assessee filed the returns on 25th November, 1974, declaring 'NIL' income for the assessment year 1968-69 and Rs. 10,000 for the year 1972-73. The income of Rs. 10,000 declared for the second assessment year was on account of the unexplained investment which was surrendered for assessment. The ITO in his order dated 25th November, 1974, stated that the statutory notice was issued and after discussion with the assessee he accepted the income declared by the assessee. After the completion of the assessment proceedings, a notice under Section 131 was issued by the ITO to Shri Dalip Singh, father-in-law of the assessee and his statement was recorded. It will be relevant to mention here that after the issue of the notice under Section 148 and before the filing of the return on 25th November, 1974, some enquiries were also made by the inspector of the department on 1st November, 1974. As a result of these enquiries, the ITO issued notice under Section 143(2) of the Act and completed the two assessments on 26th November, 1974. Subsequently, the CIT by invoking the provisions of Section 263 started proceedings thereunder against the assessee. Ultimately, the CIT set aside the order of the ITO and remanded the case for fresh decision. In appeal before the Appellate Tribunal, it was contended by the assessee that as the proceedings in this case had been started with reference to Section 147, this was a case of reassessment made under that section, and, therefore, in view of Clause (a) of Sub-section (2) Section 263 of the Act, no order could be made against him. The other contentions giving rise to the other two questions were also made, but we are not concerned here with the same, as we are only proposing the reference of question No. 1 to this court. However, the Appellate Tribunal did not accept the assessee's contention and dismissed the appeal. The application under Section 256(1) claiming reference was also rejected.
5. After hearing the learned counsel for the parties, we are of the opinion that a question of law does arise from the order of the Appellate Tribunal dated 7th March, 1978. The learned counsel appearing on behalf of the department submitted that a question of law does not arise because the answer to the question proposed is self-evident and for that purpose he referred to various sections of the Act. We do not agree with his contention, as it is not so self-evident as contended. At this stage, we are not concerned as to what will be the answer to the question ultimately, but we are only to see at this stage as to whether a question of law does arise or not fromthe order of the Tribunal. We are of the opinion, that question No. 1 does arise from the Tribunal's order as it is evident from the reading of various provisions of the Act relevant to the ease. Thus, we direct the Tribunal to refer the following question of law to this court for its opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment made by the Income-tax Officer under the provisions of Section 147 was not covered by Clause (a) of Sub-section (2) of Section 263 of the Income-tax Act, 1961, and consequently, the Commissioner was not precluded from revising the assessment under Section 263 ?'
6. Before parting it may be made clear that the learned counsel for the assessee while arguing on question No. 3, was apprehensive that certain observations and the conclusions of the CIT after setting aside the order of the ITO and remanding the case to him, with the directions that the ITO should frame fresh-assessment after giving a reasonable opportunity to the assessee to explain his case, may not be used against him while deciding the matter by the ITO. We think these apprehensions are without any basis. However, it is made clear that any observations made by the CIT are only limited to the order passed by him and will not be used against the assessee by the ITO while deciding the matter afresh. With these observations, we decline the prayer for reference so far as the third question claimed by the assessee is concerned. No order as to costs.
B.S. Dhillon, J.
7. I agree.