ITAT Is Last Fact Finding Authority And Bound To Follow Directions Issued By High Court in Pith and Substance: Rajasthan High Court

The Rajasthan High Court has held that the Income Tax Appellate Tribunal (ITAT) is the last fact-finding authority and is bound to follow the directions issued by the High Court in pith and substance.

The division bench headed by Chief Justice Pankaj Mithal and Justice Anoop Kumar Dhand has held that the direction of the High Court in remanding the matter to the Tribunal was to verify the distance of the land from the outskirts of the city and, if necessary, take the help of the Revenue Authority. The ITAT, without taking help from the Revenue Authority, simply remanded the matter to the Assessing Authority for the purposes of recording its finding with regard to the distance of the land in question from the outskirts of the city of Jaipur. It was completely in derogation of the spirit of the order of the High Court.

The issues that arose before the authorities were with regard to the capital gains on the sale of a particular plot of land allegedly situated outside the municipal limits of Jaipur, which was agricultural land and was sold to Quality Resorts and Hospitality Limited. The department contended that it was within municipal limits and was not agricultural land. Therefore, its sale proceeds are amenable to capital gains.

The matter travelled up to the High Court by way of an income tax appeal. The High Court disposed of the appeal with the direction that the ITAT will consider the distance of the land in question from the outskirts of Jaipur City in light of the notification dated January 6, 1994. The court directed that, if necessary, the ITAT make a request to the Revenue Authority, not below the Deputy Collector, to verify the distance of the land from the outskirts of Jaipur City. The matter was remanded to the ITAT.

The Tribunal has remanded the matter to the assessing authority for the simple reason that the verification of the distance required proper and supporting evidence, which was not provided to it. If the Tribunal could have requested the revenue authority, as directed by the High Court, to make the measurement and submit the report, acting upon the report could have recorded its finding rather than remanding the matter to the assessing officer.

The court held that the Tribunal itself could have recorded the finding with regard to the distance of the land from the outskirts of Jaipur City itself rather than remanding the matter to the Assessing Authority or may have requested the Assessing Authority to make the measurements and to submit a report for the purposes of recording the findings.

Case Title: Pooja Agarwal Versus Commissioner of Income Tax-1

Case No: D.B. Income Tax Appeal No.38/2020

Date: 02/11/2022

Counsel For Appellant: Advocate Archit Bohra

Counsel For Respondent: Advocates Anuroop Singhi and N.S. Bhati

Citation: 2022 LiveLaw (Raj) 253 

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