Law:

Section:

Section 254(1) of the Income-tax Act, 1961 - Appellate Tribunal - Orders of - All basic facts required for disposal of a matter were already on record - Whether tribunal would be justified in remanding case to AAC for further investigation of facts and for fresh disposal - Held, on facts, no FACTS The assessee-bank (according to the reports appearing in the press) had been charged of contravention of the Foreign Exchange Regulation Act, 1947, for entering into a contract of forward sale for £ 9,32,617 with H. Ltd. at Rs. 13.33 per pound and not at the rate prescribed by the Foreign Exchange Dealers' Association of India as effective from 8-6-1966. In pursuance of the contract, the assessee was alleged to have purchased pound sterling to the extent of £ 8,32,000 prior to the date of devaluation of the rupee, i.e., 8-6-1966, from the Reserve Bank and two other banks, and for the balance of £ 1,00,617, the assessee agreed to make delivery out of its own resources. With the devaluation of the Indian rupee, with effect from 8-6-1966, the effective rate of exchange became Rs. 21 per pound, but the assessee valued the total amount of £ 9,32,617 at the previous rate of Rs 13.33 per pound. The ITO considered the entire transaction as of a collusive and colourable nature, and held that the entire sale of £9,32,617 made after 6-6-1966 to H. Ltd. should be revalued in accordance with the post-devaluation rate of exchange. The ITO, accordingly, added back the resultant difference, holding it to be undeclared devaluation profits for the year 1966. On appeal, the AAC deleted the additions on the ground that the charge under the Income-tax Act was on the real income of the assessee and not on some imaginary income which the assessee could have earned in the opinion of the ITO. The AAC was further of the view that if the transaction was made in contravention of the Foreign Exchange Regulations, the assessee would pay the penalty for the same, but that could not be made a ground for making the impugned additions. On the revenue's appeal, the Tribunal observed that while the additions made by the ITO were entirely based on the press reports without reference to the necessary…

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