COMMISSIONER OF INCOME TAX Vs. MAHAVAR TRADERS

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue and the following question of law has been referred by the Tribunal for answer of this court, which reads as under :

(2.) THE assessee/non-applicant is a firm which derived income from purchase and sale of forest products and also from rice milling. THE Commissioner of Income-tax, on verification of the income-tax record, came to the conclusion that the assessment was erroneous and prejudicial to the interest of the Revenue for the following reasons ;

(3.) AGGRIEVED against the aforesaid order of the Commissioner of Income-tax, dated June 25, 1983 (annexure "B"), the assessee approached the Tribunal and the Tribunal examined the matter in detail and found that so far as the first question regarding investment allowance under Section 32A was concerned, even the assessee himself did not press the relief and withdrew that relief. Therefore, in any case, so far as the orders of the Commissioner of Income-tax and the Income-tax Officer are concerned to that extent they have become final. Now, the only question remains regarding the enquiry into the investment allowance under Sections 80HH and 80J. For that, the Commissioner of Income-tax only observed that further enquiry was required to be made in this matter. But because on the prima facie evidence, it was found that the assessment was prejudicial to the interests of the Revenue, no adverse observation whatsoever was made by the Commissioner of Income-tax and he only made an observation with certain enquiries pertaining to transfer of assets of the unit whether this was a new unit or old unit, i.e., it was old wine put into new bottle or he is entitled to the benefit of Section 80HH, Likewise, under Section 80J whether he is entitled to 20 per cent. relief of capital employed in the unit as admissible to the assessee or not in view of the conditions laid down in Section 80J. But the Tribunal, instead of approaching the matter in the proper perspective, have on their own started making enquiries and found that the order passed by the Income-tax Officer is correct. This approach of the Tribunal was not warranted at all. After going through the order of the Income-tax Officer, it appears that the Income-tax Officer has not examined the matter in the light of the conditions laid down for grant of relief under Sections 80HH and 80J. Certain conditions have been laid down in both the sections and the Income-tax Officer should have examined the assessee on the basis of the conditions and thereafter recorded the finding whether they are entitled to the benefit of Section 80HH or 80J. But, instead of this, the Income-tax Officer only proceeded to assess the liability of the assessee and that was not the correct approach. The Income-tax Officer should have examined the matter in the light of the conditions mentioned in both the sections before granting relief. We are of the opinion that the Commissioner of Income-tax has not given any finding, but only remanded the case back to the Income-tax Officer for reassessment after complying with the conditions laid down for grant of benefit under Sections 80HH and 80J. Therefore, the finding recorded by the Tribunal appears to be not correct because all the materials which ought to have been utilised by the Income-tax Officer were not there and it is not understandable that how the Tribunal have on their own, assessed the situation. Therefore, we are of the opinion that the view taken by the Tribunal is not correct and we answer the aforesaid question in favour of the Revenue and against the assessee. The Income-tax Officer may examine the matter afresh in the light of the decision of the Commissioner of Income-tax without taking notice of any adverse observations, if any, made by the Commissioner of Income-tax.