M.G. Mukherji, C.J. - (1.) THIS is a reference application under Section 256(2) of the Income-tax Act, 1961, at the behest of the Commissioner of Income-tax, Jodhpur, asking this High Court, on being satisfied with the incorrectness of the decision of the Appellate Tribunal, directing the Appellate Tribunal to state the case and refer it to this court.
(2.) FOUR questions of law have been indicated for the purpose of such reference : "(i) Whether, on the facts and in circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that reopening of the assessment was invalid ? (ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that income from Samore Bagh property was not assessable in the hands of the assessee, the same being usufruct income, and the assessee being only an occupier of the said property ? (iii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that no interest under sections 139(8) and 217 is chargeable ? (iv) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in deciding this appeal by a Bench consisting of a single member despite the fact that income determined by the Assessing Officer exceeded Rs. 1,00,000 ?" The assessee is an individual. The assessment in this case for the assessment year 1980-81 was originally completed under Section 143(3) on January 51, 1982, on a total income of Rs. 1,12,804 as against the returned income of Rs. 14,000. The same was, however, reopened under Section 147 by issue of notice under Section 148 dated October 29, 1984. The assessee did not furnish any return of income in compliance with the said notice and, therefore, a notice under Section 142(1) was issued on March 29, 1989, in response to which it was stated that the return already filed may be treated as the return filed in compliance with the said notice. The assessee's claim in reassessment proceedings is that the property known as "Samore Bagh" belongs to a Hindu undivided family of Maharana Bhagwat Singh and the assessee was using it as his residence since 1964, This property has not been transferred to his name and hence it continued to belong to the said Hindu undivided family. The contention of the assessee was not accepted by the Assessing Officer in view of the detailed facts given in the assessment order for the assessment year 1976-77 wherein the income from "Samore Bagh" had been assessed in the hands of the assessee. In absence of any details furnished by the assessee, the Assessing Officer estimated the income of Rs. 30,000 representing the lease of land for plucking flowers and sale of fruits, etc. In appeal before the learned Commissioner of Income-tax (Appeals), it was submitted that the Assessing Officer did not inform the assessee even on a specific request which specific income had escaped assessment. It was contended that in the year 1964 the property in question was allotted by the assessee's father to the assessee for residence and that the income was utilised for the upkeep of the said property. Even the legality of the proceedings under Section 148 was challenged but the learned Commissioner of Income-tax (Appeals) overruled the same and sustained the additions made by the Assessing Officer. The assessee being aggrieved by the order of the learned Commissioner of Income-tax (Appeals) carried the matter before the Income-tax Appellate Tribunal who opined that not only the reopening of the assessment was invalid, but that the income-tax authorities had no justification to tax any amount in the hands of the assessee by way of usufruct income as an occupier of the property in question. The levy of interest under sections 139(8) and 21,7 was also set aside.
(3.) THE Department had filed an application under Section 256(1) of the Income-tax Act for making a reference of the aforesaid four questions. THE Tribunal has rejected the application on the ground that questions Nos. (i) and (ii) no doubt arise, out of the order of the Tribunal, but they are not questions of law, fit for reference. For question No. (iii), the Tribunal came to the conclusion that in view of the Rajasthan High Court judgment rendered in Multimetals' case [1991] 187 ITR 98, the question stands concluded and hence though a question of law arises, it is not fit for reference to the High Court. THE Tribunal further observed that so far as question No. (iv) is concerned, it does not arise out of the Tribunal's order though it is a different matter, i.e., the subject-matter of question No. (iv) may or may not be challenged before the High Court by way of proper writ. As and when an application was filed under Section 256(2) of the Income-tax Act a notice was served on the respondent, Shri Mahendra Singhji, who did not choose to engage any advocate and thereafter filed a written submission by registered post addressed to the Registrar of this court on December 15, 1995. It was submitted at his behest that the order of the Tribunal was wholly correct and no direction to the Tribunal was required in terms of Section 256(2). It was submitted on behalf of the respondent that there was no new material on record to support the reopening of the assessment under Section 147 and there was no jurisdiction for including the income from the Samore Bagh property in the hands of the respondent. The Commissioner of Income-tax stated that the reassessment was on the basis of wealth-tax records of the assessee which came to the knowledge of the assessing authority and as per the Commissioner of Income-tax's own admission the assessee was in possession of the property since 1964 and the respondent has been a wealth-tax assessee right since that time for a period of 20 years. The Revenue did not disturb either the income-tax or the wealth-tax assessments of the respondent. On this ground the respondent contended in his written submission that the contention of the Commissioner of Income-tax that the wealth-tax record or information about the property could come into possession of the assessing authority after the framing of the original assessment was clearly erroneous. His assertion was that the information was on the record of the Department for more than 20 years and there were no new facts which would justify the reassessment or reinquiry of the facts. ;