G.G. Sohani, J.@mdashBy this reference u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), the Income Tax Appellate Tribunal, Indore Bench, has referred the following questions of law to this court for its opinion :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that, in fact, the old and new plans giving the numbers of the plots were produced for the first time before it so that the Appellate Assistant Commissioner could not have appreciated the point thoroughly and in further holding that the Appellate Assistant Commissioner was not in a position to comment upon the said evidence ?
(2) Whether, on the facts and in the circumstances of the case, the assessee having filed certified copies of registered sale deeds as comparative cases for calculating the fair market value before the Income Tax Officer and referred in proceedings u/s 144B before the Inspecting Assistant Commissioner and fully dealt with in the speaking order of the Appellate Assistant Commissioner, the Tribunal was right in holding that the Appellate Assistant Commissioner was not in a position to comment upon the said evidence ?
(3) Whether, on the facts and in the circumstances of the case, and having held that Section 52(2) could not be applied since there was no material with the Department especially in the case of four plots, the Tribunal was justified in directing the Appellate Assistant Commissioner to reconsider the question of the sale price of all the plots ?
(4) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in bifurcating the value of the land and the structures in respect of the sale of Band House ?
(5) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in rejecting the assessee''s claim that the Rasoda building being part of Rajgarh Palace, which was exempt from Income Tax by virtue of Board''s Notification No. 31 dated May 14, 1954, S.R.O. 1619 issued under the Part B States (Taxation Concessions) Order, 1950, was not liable to tax on capital gains on sale ?"
2. The material facts giving rise to this reference, briefly, are as follows :
3. The assessee is assessed in the status of an individual. While framing the assessment of the assessee for the assessment year 1973-74, the Income Tax Officer rejected the contention advanced by the assessee that capital gains arising from sale of plots of land, forming part of Rajgarh, Kothi, official residence of the assessee, who was an erstwhile Ruler of Rajgarh State, were exempt from tax. The Income Tax Officer did not also accept the sale price of those plots as disclosed by the assessee. The Income Tax Officer resorted to the provisions of Section 52(2) of the Act and estimated the market value of the plots and the capital gains arising from the sale of those plots and held the assessee liable to tax accordingly. Aggrieved by the order passed by the Income Tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner upheld the finding of the Income Tax Officer that the capital gains derived from the sale of plots were not exempt from tax. The Appellate Assistant Commissioner, however, held that the Income Tax Officer was not justified in refusing to accept the sale price of the plots of land as shown in the registered deeds of sale. The Appellate Assistant Commissioner accordingly partly allowed the appeal and directed the Income Tax Officer to compute the capital gains as indicated in his order. Aggrieved by the order passed by the Appellate Assistant Commissioner, the Department preferred an appeal before the Tribunal. The Tribunal observed that the dispute raised by the assessee before the Appellate Assistant Commissioner required a deeper probe. The Tribunal, therefore, held as follows :
"In the above circumstances, there is no alternative but to have a fresh look on the entire matter. We, therefore, accept the departmental contention in this behalf and direct that the Appellate Assistant Commissioner shall consider the question of sale price of these plots afresh."
4. The Tribunal, therefore, allowed the appeal preferred by the Department and remanded the matter to the Appellate Assistant Commissioner for deciding it afresh. Aggrieved by the order passed by the Tribunal, the assessee sought reference and that is how the aforesaid questions of law have been referred to this court for its opinion.
5. At the time of hearing, learned counsel for the parties agreed that the first three questions framed by the Tribunal do not bring out the real controversy between the parties. The main issue raised by the assessee was that when the entire material was on record before the Appellate Assistant Commissioner who had decided the matter, whether the Tribunal was justified in remanding the case to the Appellate Assistant Commissioner for deciding it afresh. We have, therefore, reframed these questions as follows :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in remanding the case to the Appellate Assistant Commissioner for deciding it afresh ?"
6. Now, it is true that u/s 254 of the Act, the Tribunal has power to pass such order as it thinks fit and, therefore, the Tribunal has undoubtedly power to remand the case to the Appellate Assistant Commissioner for deciding it afresh. The question for consideration is whether the Tribunal has legally exercised the discretion in making the order of remand. In this connection, we may usefully refer to the following observations in
"It is true that Section 33(4) has granted a very wide statutory discretion to the Income Tax Appellate Tribunal in disposing of an appeal but the discretion given under this section to the Income Tax Appellate Tribunal is a judicial discretion which must be exercised in accordance with legal principles, and not in an arbitrary or capricious manner. The principle to be applied in such a case is pointed out by Lord Halsbury in Susannah Sharp v. Wakefield [1891] AC J 73 . ''An extensive power is confided to the justices in their capacity as justices to be exercised judicially ; and "discretion" means when it is said that something is to be done within the discretion of the authorities that that something is to be done according to the rules of reason and justice, not according to private opinion : Rooke''s case [1598] 5 C R. 100; according to law and not humour. It is to be, not arbitrary, vague, and fanciful, but legal and regular......'' "
7. We respectfully agree with the aforesaid observations.
8. In
9. Keeping in view the aforesaid principles, let us turn to the facts of the instant case. The Appellate Assistant Commissioner had before him the entire material on record, the receipts issued on behalf of the assessee in respect of the agreements entered into by the purchasers, the sale deeds executed by them and the sale deeds of plots of land in the neighbourhood for showing comparative sales. All this material was considered by the Appellate Assistant Commissioner, The Tribunal was not right in holding that the old and the new plans giving the numbers of the plots were produced for the first time before the Tribunal. Remitting the case to the Appellate Assistant Commissioner for having "a fresh look on the entire matter" was not justified. It would not be a sound exercise of discretion by an appellate authority to remit a case to the subordinate authority for writing such order as would, in the opinion of the appellate authority, be a proper and better order. On the facts and in the circumstances of the case, therefore, the Tribunal, in our opinion, was not justified in remanding the case to the Appellate Assistant Commissioner for deciding it afresh.
10. As regards question No. (4) referred to this court by the Tribunal, that question does not arise out of the order passed by the Tribunal. The sale of Band House was a piece of evidence which the Income Tax Officer and the Appellate Assistant Commissioner had appreciated with a view to determine the market value of the plots of land sold by the assessee. The Tribunal has not given any finding in that behalf. Hence, no question of law, as framed by the Tribunal, arises out of the order passed by the Tribunal. We, therefore, decline to answer that question.
11. Regarding question No. (5) referred to this court by the Tribunal, learned counsel for the parties agreed that the matter was covered by a decision of this court in
12. Reference answered accordingly.
13. In the circumstances of the case, parties shall bear their own costs of this reference.
