Judgment:
A.M. Sapre J.
1. This is an appeal filed by the Revenue (Commissioner of Income-tax) under Section 260A of the Income-tax Act, 1961 against an order dated August 30, 2000, passed by the Income-tax Appellate Tribunal (for brevity hereinafter referred to as 'the Tribunal'), in I. T. A. No. 475/Ind of 1995. This appeal was admitted for final hearing on the following substantial questions of law :
'1. Whether the amount received by the assessee by sale of flats/ shops made during the year and the amount of unsold stock of flats/ shops should have been also considered when the Revenue considered the value of construction made during the year to the tune of Rs. 1,11,96,287 to the opening stock/work-in-progress and the amount indicated by the progress report to the tune of Rs. 2,70,21,070 ?
2. Whether the assessment in that context made by the Revenue and the conclusion drawn by the Income-tax Appellate Tribunal is perverse and bad in law ?'
2. Heard Shri R. L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the Revenue, and Shri Mahesh Sharma, learned counsel for the assessee.
3. The issue which arises for consideration in this appeal relates to the assessment year 1992-93. The question arose before the taxing authorities as to whether the assessee should be given the benefit of one expenditure amounting to Rs. 46,97,222 in the year in question. In other words, the question was--whether the said amount of Rs. 46,97,222 be treated as unexplained investment made by the assessee in the construction of the building and if so, is it liable to be included as such in the income of the assessee or if not, is it liable to be deleted ?
4. The Commissioner of Income-tax (Appeals) accepted the version of the assessee and disagreeing with the addition made by the Assessing Officer who had treated the same to be in the nature of unexplained investment deleted the addition made. The Revenue therefore, feeling aggrieved by the deletion filed appeal to the Tribunal. The Tribunal formulated question No. 2 in these words :
'(ii) On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in deleting the addition of Rs. 46,97,222 made by the Assessing Officer on account of unexplained investment made in the construction of building.'
5. However, by the impugned order, the Tribunal answered the question in favour of the assessee and against the Revenue in these words in para. 11 :
'Para 11. A propos ground No. (ii) the Revenue has simply relied upon the order of the Assessing Officer whereas from a careful perusal of the order of the Commissioner of Income-tax (Appeals), we find that the assessee has shown the cost of construction more than the value determined by the Valuation Officer. Since the Commissioner of Income-tax (Appeals) has properly adjudicated the issue in the right perspective, we find no infirmity therein and uphold the same.'
6. It is against this finding, the Revenue is in appeal.
7. Having heard learned counsel for the parties and having perused the record of the case, we are of the opinion that this appeal deserves to be allowed resulting in setting aside of the impugned order and remand of the case to the Tribunal to again decide the same afresh on the merits.
8. In our opinion, the Tribunal did not seem to have examined the factual issue in its correct perspective. It is one thing to say that the Tribunal has a right to uphold the factual finding of the Commissioner of Income-tax (Appeals) but it is another thing to say that this has to be done after due application of mind to the facts of the case. Since the Tribunal is the last court of appeal on facts, it is expected from the Tribunal to go into the entire facts brought on record by the assessee and then return a finding as to whether the addition is capable of being upheld or not.
9. Learned counsel for the parties made a reference to the nature of expenses said to have been incurred by the assessee amounting to Rs. 1,11,96,268.48 and claimed by way of deduction towards construction activity appearing in the balance-sheet of the year in question. The submission of learned counsel for the Revenue was that these expenses cannot be claimed under the head of construction expenses because none of the heads specified against each head, even remotely relates to any construction activity. Learned counsel for the assessee defended the expenses saying that they are capable of being claimed in the current year and hence, are rightly claimed for being added in the previous year amount of Rs. 2,70,21,070.89 so as to make the total of Rs. 3,82,17,358.37. We are afraid this being a question of fact needs to be gone into in the first instance by the Tribunal in appeal. Indeed, the issue has some relevance in deciding the appeal and hence, the same can be decided more appropriately at the instance of the Revenue by the Tribunal. It is only then that this court can examine the finding on the merits.
10. An issue of fact cannot be raised for the first time in second appeal by any party to the appeal. It is for this reason that more responsibility lies on the shoulders of the Tribunal--being the last court of appeal so far as the facts are concerned to examine the case on all corners relating to the facts and then decide whether the additions are capable of being sustained or not.
11. We do possess the powers under Section 260A of the Act to remand the case again to the Tribunal for deciding the appeal on the merits. Indeed, this power is conceded to exist in us while hearing the appeal. We also feel that no prejudice is caused to the parties in remand because they will get an opportunity to defend themselves in appeal before the Tribunal and also then before this court in appeal.
12. Accordingly and in view of the aforesaid discussion, the appeal succeeds and is hereby allowed. The impugned order, dated August 30, 2000, passed by the Income-tax Appellate Tribunal in I. T. A. No. 475/Ind of 1995 is set aside. The case is remanded to the Tribunal to decide the same (appeal) on the merits afresh after granting an opportunity to the parties. It is made clear that the remand of the case (appeal) is confined to only ground No. 2 referred to supra. In all other grounds the impugned order is not set aside because the same was not challenged by the appellant. Let the appeal be decided within three months. Record of the case be sent back, if requisitioned. Parties to appear before the Tribunal and produce the order of the Tribunal on February 14, 2005.
13. No costs.