M.P.SINGH, J. - (1.) FOR the asst. yr. 1979-80, the ITO passed an order of assessment. He estimated the net profit as Rs. 22,65,000 (Rupees twenty two lac and sixty five thousand only) on the estimated sale of Rs. 7.5 crores and took Rs. 1,50,000 (Rupees one lac and fifty thousand only), as initial investments. The order of the assessment was set aside in appeal by the CIT(A) and the matter was remanded to the ITO for fresh assessment with an observation that another opportunity be given to the assessee to cross-examine Ratan Lal. Against the remand order of the CIT(A), the assessee as well as the Revenue filed appeals before the Tribunal. IT Appeal No. 703/JP/83 filed by the assessee was allowed in part and ITA No. 717/JP/83 filed by the Department was dismissed vide order dt. 10th June, 1985. The order of the Tribunal dt. 10th June, 1985 was served on the Department on 20th June, 1985. It filed an application under S. 256(1) of the IT Act, 1961 in regard to its appeal No. 717/Jp/83 on 20th Aug., 1985 before the Tribunal seeking reference to be made to the High Court on questions No. 1, 2 and 3 mentioned therein, which runs as follows : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition made by the ITO without fully considering the material on record and facts as well as circumstances of the case? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in entertaining new additional evidence without affording the Department an opportunity to rebut the same. This is against the principles of natural justice and equity. 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition made by ITO as no substantial cash, jewellery, investments etc., were found during search and seizure operations, which the assessee could not satisfactorily explain."
(2.) THEREAFTER an application for amendment of the said reference application was filed on 16th Dec., 1985 stating the following five questions of law to be referred to the High Court as arising out of both the appeals No. 703/Jp/83 and 717/Jp/83 : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in exceeding its jurisdiction in deleting the addition of Rs. 24.15 lakhs in violation of clear language of s. 253(1) of the IT Act when the CIT(A) has only set aside the orders of the ITO without disposing that addition on merits. 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the three concerns namely, Industrial Chemicals, Jodhpur, Amarchand Agarwal and Co., Jodhpur and Sunder and Co. Jodhpur were not really the business concerns of the assessee on the face of substantial material placed on record and not properly rebutted by the Tribunal? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition made by the ITO without fully considering the material on record and facts as well as circumstances of the case including those mentioned in question No. 1, above. 4. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in entertaining new additional evidence without affording the Department an opportunity to rebut the same. This is against the principles of natural justice and equity. 5. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition made by the ITO as no substantial cash, jewellery, investments, etc., were found during search and seizure operations, which the assessee could not satisfactorily explain." The Tribunal rejected the application under S. 256(1) filed by the Revenue on 28th Oct., 1987. Aggrieved against that, the present application under S. 256(2) has been filed by the CIT in this Court. The Tribunal while rejecting the application has recorded a finding that the questions No. 1 and 2 in the amended application are entirely new and are barred by limitation; regarding remaining three questions, finding was recorded that they do not involve any question of law, so no reference could be made to the High Court. Shri Sandeep Bhandawat, appearing on behalf of the Department, has conceded that questions No. 1 and 2 are new questions and they have been rightly rejected by the Tribunal as barred by limitation. He further conceded that questions Nos. 3, 4 and 5 are questions of fact so he could not challenge the finding on those three questions as well. His only contention in the case was that since the CIT(A) had not decided the matter on merit and has only remanded the case to the assessing authority for fresh assessment, the Tribunal had no jurisdiction to decide the reference application and the only course open for it was to remand the matter to the CIT(A) to decide it on merit. In support of his contention, he has referred to a judgment reported in Prem Agencies vs. CIT (1988) 67 CTR (Raj) 11 : (1988) 173 ITR 110 (Raj) : TC 8R.558. In that case, the ITO rejected the application for registration of a firm. On appeal, the appellate authority expressed the view that some further enquiry was to be made and, therefore, the matter was remanded to the ITO. The Tribunal on appeal against the remand order, held that the order of remand was not justified and decided the matter itself on merit holding that the order of the assessing authority refusing to register the firm was justified. On reference, the High Court held that the appeal before the Tribunal was only confined to the limited question of legality of the remand order passed by the Asstt. CIT. The Tribunal was not justified in deciding the question of registration on merit, without the same having been decided by the first appellate authority.
(3.) THE submission of the learned counsel appearing on behalf of the Department appears to be sound but the ratio of law enunciated by the Division Bench in the case of Prem Agencies (supra) will not be applicable in the instant case because here the Revenue itself filed an application under s. 256(1) before the Tribunal praying for a reference instead of praying for quashing the remand order passed by the CIT(A). From the order of the Tribunal nowhere it appears that the case set up by the Revenue before it was confined only to examine the legality of the remand order. On the other hand, this point was given up and it wanted a decision on the reference application which has been done. Once the Revenue submitted to the jurisdiction of the Tribunal for getting a finding on the reference application and it having been decided against it, the order could not be challenged on the ground of jurisdiction. This is not one of those cases where there was inherent want of Tribunal's jurisdiction to decide the reference application. If the Revenue decided to get a finding on the reference application and not challenged the remand order it is not open for it to challenge the same held in reference under S. 256(2). Accordingly, we find no merit in the submission raised by the learned counsel appearing on behalf of the Revenue, and the application is hereby rejected.;