C. K. BANEEJI, J.

( 1 ) THIS reference under Section 66 (1) of the Indian I. T. Act, 1922 (hereinafter referred to as "the Act") is at the instance of the assessee, Katihar Jute Mills (P.) Ltd. , Howrah. The relevant assessment year is 1955-56 for which the relevant accounting year is the calandar year 1954. The facts found by and/or admitted before the Tribunal areas follows : the assessee is a limited company owning a jute mill. The original assessment under Section 23 (3) of the Act was made on the 27th January, 1960. In the said assessment a sum of Rs. 5,22,450 was brought to tax representing the price of loom hours.

( 2 ) THE assessee preferred an appeal before the AAC with regard to two points, namely, (1) treatment of the loss in speculative transactions, and (2) certain disallowances out of expenses. The AAC disposed of the appeal in the following terms :" Before the Income-tax Officer the contract papers were not produced. These are now produced. I have examined the account books also. I find that these are genuine business transactions and losses. However, since the Income-tax Officer has not examined the vouchers and the contract papers, I set aside the assessment with a direction to the Income-tax Officer to make the assessment again after going through the contract papers and other vouchers. The next contention in the appeal regarding certain disallowances was not pressed. There is no merit in this contention and the claim is rejected. In the result, the assessment is set aside with a direction to the Income-tax Officer to go through the contract papers again and do the assessment afresh. "

( 3 ) THUS the assessment went back to the ITO to be made afresh, which was not made by the ITO till 27th September, 1965. It appears, that in the meantime on the 25th April, 1965, the Supreme Court delivered its judgment in CIT v. Maheshwari Devi Jute Mills Ltd. [1965] 57 ITR 36 holding that the proceeds from sale of loom hours were of a capital nature, not assessable as income. The assessee, therefore, filed a revised return on 7th September, 1965, claiming that the sum of Rs. 5,22,450 representing the sale proceeds of loom hours was not taxable. The ITO was of the view that this claim of the assessee could not be considered at that stage because in the original assessment made on the 27th January, 1960, the said sum of Rs. 5,22,450 was included in the income of the assessee and the assessee did not prefer any appeal against this issue before the AAC. The ITO was also of the view that in view of the specific direction of the AAC to confine the enquiry to speculation loss only, he had no power at all to add to or allow any other item of income or expenditure. The ITO, accordingly, rejected the assessee's request for excluding the sum of Rs. 5,22,450 and passed a fresh assessment order dated 27th September, 1965.

( 4 ) THE assessee being aggrieved, preferred an appeal before the AAC and urged that once the assessment was set aside, the whole assessment was to be made afresh and that the correct income had to be computed in accordance with the law. It was also urged that the assessee was entitled to furnish a revised return claiming certain receipts as not taxable, if in law they were so. The AAC found in favour of the assessee and held that the sum of Rs. 5,22,450 was a capital receipt not liable to tax. The AAC held that the receipt of Rs. 5,22,450 arising out of sale of loom hours was not taxable.

( 5 ) THE revenue being aggrieved by the order of the AAC appealed before the Tribunal. The Tribunal held that having regard to the terms of Section 31 (3) (b) of the Act and having regard to the language of the order passed by the AAC, the ITO had jurisdiction only to look into the point that had been before the AAC relating to the speculative losses and that the ITO had no power to travel outside the scope of the remand order. There was no dispute about the sum of Rs. 5,22,450 before tbe ITO or before the AAC and it was not op

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