Law:

Section:

Section 255, read with section 64 of the Income-tax Act, 1961 [Corresponding to section 5A(7), read with section 16(3)(a)(iii) of the Indian Income-tax Act, 1922] - Appellate Tribunal - Procedure of - Whether third member can, decide only point that has been referred to him and he cannot formulate a new point for himself on which he can base his decision - Held, yes - Whether, moreover after decision of point or points referred to third member, case should go back to original Tribunal because third member has not been given any right to decide appeal - Held, yes [Matter remitted back] Assessee was the owner of dairies. FACTS It came to the notice of the ITO that a lorry which was worked by the 'K' was registered in the name of the assessee's wife who received a profit from 'K'. On being questioned, the assessee asserted that the bus belonged to his wife who had purchased it out of the money which she had received from her father at the time of his death. The assessee, however, could not produce any evidence to prove how and when the money came into the hands of his wife. The ITO, therefore, added the income derived from the said bus and paid to the assessee's wife by the 'K' as his income. On appeal, the AAC upheld the order of the ITO. When the case was heard by the Tribunal, the two members differed therefore, the matter was referred to the third member who held that the ITO was wrong in presuming that the bus belonged to the assessee and that the presumption could not legally be drawn on the materials on the record. After having recorded that finding, however, the third member formulated a new point for himself and relying on section 16(3)(a)( iii) of 1922 Act held that the bus must have been purchased from the assets transferred directly or indirectly to the wife by the husband. On reference : HELD The point of applicability of section 16(3)(a )(iii) of 1922 Act, however, had not been referred to the third member and, under section 5A(7) of 1922 Act, he was competent to decide only the point referred to him. The third member could, therefore, decide only the point that had been referred to him and he could not formulate a new point for himself on which he…

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