Calcutta High Court
Income-Tax Officer, "A" Ward And Ors. vs R.L. Rajghoria on 16 March, 1978
Equivalent citations: [1979]119ITR872(CAL)
Author: M.M. Dutt
Bench: M.M. Dutt
JUDGMENT D.C. Chakravorti, J.
1. This appeal by the Income-tax Officer, "J" Ward, District V(A), is from the decision of Sabyasachi Mukharji J. () taken on an application under Article 226 of the Constitution of India wherein the propriety of an order of the Income-tax Appellate Tribunal dated October 15, 1971, was challenged.
2. The case of the petitioners-respondent stated succinctly is as follows : The respondent, who is a businessman, deals in share transactions also. He has income from different sources. The ITO, "J" Ward, District V(A), Calcutta, assessed the respondent's total income, being Rs. 49,928, under Section 143(3) of the I.T. Act, 1961, in respect of the assessment year 1962-63. In his return for the relevant year the respondent had shown a loss of Rs. 23,100 in share transactions on the ground that he purchased through a share broker 15,000 ordinary shares of M/s. Hindusthan Motors Ltd. on 5th of March, 1962, for Rs. 3,17,400. The said shares were thereafter sold through another broker for Rs. 2,94,300 on March 29, 1962, and the respondent thus incurred a loss of Rs. 23,100 during the period from March 5, 1962, to March 29, 1962.
3. The ITO concerned held that the transaction in question was of a speculative nature and the assessee was accordingly not entitled to set off the said loss of Rs. 23,100 against any income other than speculative income.
4. From the aforesaid decision of the ITO, the respondent preferred an appeal before the AAC of Income-tax, "J" Range, and the AAC by his order dated May 15, 1969, affirmed the order of the ITO.
5. On being aggrieved by the said order of the AAC, the respondent went up in appeal before the Income-tax Appellate Tribunal and the grounds taken by him in that appeal were as follows :
"1. For that on the facts and in the circumstances of the case, the learned Appellate Assistant Commissioner was not justified in confirming the order of the Income-tax Officer in treating the loss of Rs. 23,100 in share account as speculative loss.
2. For that the learned Appellate Assistant Commissioner has erred on both points of law as well as on facts."
6. The Tribunal held that the transaction in question could not be termed as a speculative transaction and the departmental authorities were not justified in treating the said loss as a speculative loss. In this view of the matter, the Tribunal sent the case on remand to the AAC requiring him to decide whether the loss in question was a capital loss or a trade loss in the hands of the assessee.
7. On being aggrieved by that part of the Tribunal's order whereby it remanded the case to the AAC requiring him to decide the question whether the loss in question was a capital loss or a trade loss, the respondent made an application under Article 226 of the Constitution of India challenging the propriety of the order of the Tribunal in that regard. The principal ground which was taken before the learned judge on behalf of the present respondent was that the Tribunal exceeded its jurisdiction in sending the matter on remand and requiring the AAC to decide whether the loss in question was a capital loss or a trade loss, for, such a question was not within the scope of the appeal before the Tribunal.
8. Sabyasachi Mukharji J. took the view that the Tribunal clearly acted beyond its jurisdiction and that the petitioner before him, i.e., the present respondent, was entitled to the relief claimed. In that view of the matter, the learned judge set aside that part of the Tribunal's order whereby the AAC was directed to find out whether the loss was a capital loss or not. He, however, affirmed the rest of the order of the Tribunal.
9. Two questions were raised in this appeal on behalf of the revenue department. In the first place, it was urged that the Tribunal could not be said to have exceeded its jurisdiction in sending the matter back on remand for determination of the question whether the loss was a capital loss or a trade loss inasmuch as such a question was within the jurisdiction of the Tribunal. In the second place, it was contended that the writ application made by the present respondent was not maintainable inasmuch as an alternative remedy was available to him.
10. In support of his first contention, Mr. Pal, learned advocate appearing for the appellant, placed reliance on the Supreme Court decision in Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232. Our attention was drawn to an observation made by Ramaswami J. in the Supreme Court case referred to above to the effect that the powers of the Tribunal in dealing with an appeal are expressed in Section 33(4) of the Act (meaning Indian I.T. Act, 1922) in the widest possible terms. It may be noted here that Section 254(1) of the I.T. Act of 1961, which governs the present case, is couched in the same language as appears in Section 33(4) of the Indian I.T. Act of 1922. The analysis that follows will clearly indicate that the Supreme Court case referred to above can be of no assistance to the present appellant. In the Supreme Court case referred to above, Ramaswami J. did accept the legal position that the word "thereon" (appearing in Section 33(4) of the Indian I.T. Act, 1922, and Section 254(1) of the I.T. Act, 1961), "of course, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal" (p. 237). There can be no doubt that according to the decision of the Supreme Court the Tribunal has the power of remanding a case to the AAC or the 1TO, as the case may be, requiring him to hold further enquiry and to dispose of the case on the basis of such enquiry. But the jurisdiction of the Tribunal is confined only to the subject-matter of the appeal.
11. Sub-section (1) of Section 254, which confers on the Tribunal jurisdiction to hear appeals from a decision of the AAC, is as follows :
"254. (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit."
12. A Division Bench of this court in CIT v. Calcutta Discount Co. Ltd. [1971] 82 ITR 941 (Cal), after reviewing the decisions of different High Courts and after taking note of the decision of the Supreme Court in Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232, on the question of the scope of jurisdiction of the Tribunal under Section 33(4) of the Indian I.T. Act, 1922, held that the word "thereon" in Section 33(4) restricted its jurisdiction to the subject-matter of the appeal before the Tribunal and the subject-
matter of appeal consists of the memorandum or grounds of appeal, the additional grounds, if any, allowed by the Tribunal and the grounds, if any, urged by or on behalf of the respondent to support the order under appeal. It is further laid down therein that if the Tribunal does not allow a particular ground to be urged that ground could never be included or considered to be a part of the subject-matter of the appeal. In the present case, the question that was decided by the ITO and the AAC was whether the loss in question was speculative loss or trade loss. The question whether the loss was capital loss or revenue loss did never arise before the ITO or the AAC. Now, a reference to the grounds taken in appeal before the Tribunal which have been quoted at length earlier in our judgment would show unmistakably that the question as to whether the loss of Rs. 23,100 was speculative loss was the only question which was sought to be agitated before the Tribunal. Admittedly, the question whether the loss was a capital loss was neither included in the grounds taken before the Tribunal originally nor permitted to be taken subsequently by the Tribunal. The Tribunal in deciding the case went out of its way and though the question whether the loss was a capital loss was not within the scope of its authority did take up that question and the determination of that question necessitated the sending of the case on remand to the AAC. In the circum-stances aforesaid, the learned judge rightly held that the Tribunal exceeded its jurisdiction in requiting the AAC to decide the question whether the loss was a capital loss or a revenue loss. We, accordingly, hold, in agreement with Sabyasachi Mukharji J.. that the impugned part of the order of the Tribunal ought to be set aside.
13. The only other question, as already indicated, that was raised in this appeal on behalf of the appellant is that the writ petition was not maintainable inasmuch as the respondent did have an alternative remedy. In the present case, the writ petition was entertained by this court and a rule nisi was issued thereon. Further, the writ petition was finally heard and decided. Ordinarily, when a person aggrieved by an order has an alternative remedy a writ petition ought not to be entertained. But after once a writ petition is entertained and is heard and decided by the High Court it cannot be said that the High Court had no jursidiction to entertain the writ petition though it could have refused to exercise its jurisdiction in view of the adequate alternative remedy the petitioner had. J. C. Shah J., while delivering the judgment in L. Hirday Narain v. ITO , observed as follows (p. 31) :
"An order under Section 35 of the Income-tax Act is not appealable. It is true that a petition to revise the order could be moved before the Commissioner of Income-tax. But Hirday Narain moved a petition in the High Court of Allahabad and the High Court entertained that petition. If the High Court had not entertained his petition, Hirday Narain could have moved the Commissioner in revision, because at the date on which the petition was moved the period prescribed by Section 33A of the Act had not expired. We are unable to hold that because a revision application could have been moved for an order correcting the order of the Income-tax Officer under Section 35, but was not moved, the High Court would be justified in dismissing as not maintainable the petition, which was entertained :
and was heard on merits."
14. In the circumstances aforesaid, the appeal ought to be dismissed and it is accordingly dismissed. There will be no order as to costs.
M.M. Dutt, J.
15. I agree.