DIPAK KUMAR SEN J. - (1.) :
(2.) BENGAL Jute Mills Co. Ltd., the assessee, was assessed to income- tax for the asst. yr. 1971-72, the corresponding accounting year ending on the 30th June of the calendar year 1970. In the said assessment year, the assessee had sold old machinery for a consideration of Rs. 5,28,390. The assessee disclosed the receipt of the said amount and recorded it on the credit side of its balance- sheet under the head " Adjustment of capital reserve on account of machinery sold ". The auditor of the assessee gave a notice on the said item stating, inter alia, as follows: " No profit or loss on the sale of machinery and plant for Rs. 5,28,390 could be ascertained in the absence of the original cost and/or written down value of the assets sold. The sum of Rs. 5,28,390 has been adjusted against the amount of revaluation done as on June 30, 1965. " In assessing the assessee to income-tax for the said assessment year, the ITO included the said amount of Rs. 5,28,390 as profits arising on the sale of machinery. He noted that the written down value of the said machinery could not be ascertained. The assessee preferred an appeal from the assessment order to the AAC but did not challenge the inclusion of the said amount of Rs. 5,28,390 in the said appeal. From the order of the AAC, the assessee preferred a further appeal before the Tribunal. In the said appeal, one of the grounds raised before the Tribunal was as follows: " The sale proceeds amounting to Rs. 5,28,390 of machinery should not have been treated as profit. Rather the sale proceeds, in the absence of actual written down value of the machinery sold, should have been taken to be the written down value of the machinery sold." The Tribunal disposed of the said appeal by their order dated May 31, 1978, but by inadvertence the ground raised by the assessee in respect of the inclusion of the said amount of Rs. 5,28,390 was not dealt with by the Tribunal.
(3.) THE assessee subsequently filed a miscellaneous application before the Tribunal and contended that the omission of the Tribunal to deal with and give a finding on the said ground for the asst. yr. 1971-72 constituted a mistake apparent from the record and that the same be rectified under s. 254. THE miscellaneous application of the assessee was disposed of by the Tribunal by an order dated September 25, 1978. It was held by the Tribunal that the said ground raised in the asst. yr. 1971-72 had not been disposed of by the Tribunal by oversight. THE Tribunal thereafter considered and disposed of the said ground. Before the Tribunal, it was contended on behalf of the assessee that though this ground was not raised before the AAC in the relevant assessment year, the very same ground was raised before the AAC in the earlier asst. yr. 1970-71. THE said ground was also raised before the Tribunal in the said earlier assessment year and was disposed of in favour of the assessee. It was submitted that as the facts and circumstances were the same, the Tribunal should give the same decision also in the relevant assessment year. It was further submitted on behalf of the assessee that the material facts relating to the said ground were on record, viz., the balance-sheet, the profit and loss account and the note of the auditor and, therefore, no further investigation on facts was necessary and the issue could be disposed of as a question of law. It was contended on behalf of the Revenue that this ground not having been raised either before the ITO or before the AAC, the application for rectification was not maintainable and in any event, this ground cannot be agitated for the first time before the Tribunal. In support, the decision of the Supreme Court in Addl. CIT vs. Gurjargravures (P) Ltd. 1978 CTR (SC) 1:(1978) 111 ITR 1 (SC) was relied on. The said decision was sought to be distinguished on behalf of the assessee on the ground that the Supreme Court made it clear in the decision that it was not considering a case where the assessee had failed to make a claim though there was evidence on record to support such a claim. As the evidence was already on record, the ground could be raised before the Tribunal for the first time. The Tribunal accepted such a contention of the assessee. The Tribunal also noted the earlier order passed in the asst. yr. 1970-71, where an amount of Rs. 1,34,246 arising out of sale of the existing machinery belonging to the assessee was considered and dealt with by the Tribunal. In the earlier order, the Tribunal, following a circular issued by the Central Board of Revenue being Circular No. 27(19)IT/39 dated August 21, 1940, held that such profit could not be brought to assessment and deleted the addition of the said sum of Rs. 1,34,246. Following its earlier decision, the Tribunal directed deletion of the addition of Rs. 5,28,390.;