High Court refuses to answer referred question on additional rebate ground, case sent back to Tribunal for review

The High Court declined to answer the referred question regarding the Appellate Assistant Commissioner's decision to entertain an additional ground for rebate on export profit. The case was sent back to the Tribunal for further examination in light of a 1955 circular mandating officers to assist taxpayers in claiming reliefs. No costs were awarded for this reference.

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Issues Involved:
1. Whether the Appellate Assistant Commissioner (AAC) erred in law in entertaining the additional ground regarding the allowance of rebate on export profit at 2% on the export sales made by the assessee during the relevant years.

Summary:

Issue 1: Entertaining Additional Ground by AAC
- The primary issue was whether the AAC erred in law by entertaining an additional ground for the allowance of rebate on export profit at 2% on the export sales made by the assessee during the relevant years, despite this ground not being raised earlier before the Income-tax Officer (ITO).
- The assessment year under reference is 1965-66. The assessee, a limited company engaged in the manufacture of cotton textiles, claimed a rebate at 2% on export sales during the appeals before the AAC, although this claim was not raised before the ITO.
- The AAC allowed the point to be raised and directed the ITO to verify the export sales and allow the rebate under the relevant sections of the Finance Act of 1964 and 1965.
- The department, aggrieved by the AAC's order, appealed to the Income-tax Appellate Tribunal, which upheld the AAC's decision, stating that the assessee was entitled to the rebate under the relevant Finance Act sections.
- The Tribunal found no dispute that the assessee's case was covered by the relevant section of the Finance Act of 1965 and would have been entitled to the rebate had the claim been made before the ITO.

Legal Precedents and Circulars:
- The Supreme Court's decision in Addl. CIT v. Gurjargravures P. Ltd. [1978] III ITR 1 was cited, which held that the AAC could not entertain a claim not made before the ITO if there was no material on record supporting such a claim.
- The Supreme Court's earlier decision in CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 was also referenced, emphasizing that the AAC cannot travel outside the record to find new sources of income.
- A circular from the Central Board of Revenue issued in June 1955 (Circular No. 14 (XI-35)) was considered, which mandates that officers should assist taxpayers in claiming and securing reliefs, even if not claimed by the assessee.

Conclusion:
- The High Court declined to answer the referred question, stating that the matter should be examined by the Tribunal in light of the 1955 circular, which obligates the ITO to guide the assessee in claiming reliefs if the proceedings or particulars before him indicate entitlement.
- The case was sent back to the Tribunal to determine whether the ITO should have advised the assessee to claim the relief under s. 2(5)(a)(iii) of the relevant Finance Act based on the particulars before him during the original assessment proceedings.
- No order as to costs was made for this reference.

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