Judgment 1. THIS is a reference under s. 66(1) of the Indian IT Act, 1922. The assessee is a shareholder of several limited companies. The assessment years are 1954-55, 1955-56, 1956-57 and 1957-58. The corresponding accounting years are years ending on 31st July, 1953, 1954, 1955 and 1956 respectively. We are concerned in this reference principally with the asst. yr. 1954-55. For this assessment year the assessee had claimed a loss of Rs.9,40,467 on account of depreciation in the value of shares in the stock and Rs.28,518 on sale of shares. 2. THE ITO by his order dt. 29th Nov., 1957, disallowed the first loss and allowed the second loss only to the extent of Rs. 20,853. THE ITO was of the view that the only shares which were held for not less than 24 months before the sale could be taken as part of the assessees' trading stock. He also held that the holding of shares in 9 companies which according to him were associated concerns of M/s Surajmull Nagarmull were not part of the assessees' trading stock. About the remaining companies the ITO agreed to value the opening and closing stock at the cost price or market price whichever was lower and made the assessment accordingly. THE AAC did not accept the segregation by the ITO of shares in the companies which were associated concerns of M/s Surajmull Nagarmull. He thought that all the shares held by the assessee whether of associated concerns or not became part of the trading stock of the assessee on 1st Aug., 1952. THE AAC accordingly set aside the assessment of the ITO and directed him to make a fresh assessment on the basis that the assessee became a dealer in shares on 1st Aug., 1952. He further directed that the cost or the market price whichever was lower should be the basis of valuation on and from 1st Aug., 1952. THE Department did not challenge the finding of the AAC that all the shares of the assessee became its trading stock on 1st Aug., 1952. THE assessee also did not challenge his direction that the cost or the market price whichever was lower should be the basis of the valuation for all the shares. The ITO, when the matter came back to him, made a fresh assessment by his order dt.31st July, 1958, on the basis of valuation prescribed by the AAC. THE assessee also did not challenge his direction that the cost or the market price whichever was lower should be the basis of the valuation for all the shares. The ITO, when the matter came back to him, made a fresh assessment by his order dt.31st July, 1958, on the basis of valuation prescribed by the AAC. 3. THE assessee went again to the AAC. Its grievances this time were confined to certain arithmetical errors in the order of the ITO and wrong application of the principles laid down by the AAC in respect of certain shares. 4. THE assessee then came up before the Tribunal with the contention that in respect of shares in two of the companies, viz., Naskarpara Jute Mills Co. Ltd. and West Bengal Jute Co. Ltd., the IT authorities were not justified in valuing the shares in the opening stock at cost price which was admittedly lower than the market price and that on the date on which the shares became a part of the trading stock, the shares should have been valued at market price so that loss on account of sales would have been higher. THE Department on the other hand contended before the Tribunal that the shares in dispute were not a part of the assessees' trading stock on 1st Aug. 1952. The Tribunal took the view that the respective contentions aforesaid of the assessee and of the Department were determined by the first order of the AAC made on 27th Feb., 1958, and since there was no appeal against that order either by the assessee or by the Department, no part of it could be challenged in the course of the appeal before the Tribunal. It is further pointed out by the Tribunal that the assessee's challenge to the principle of valuation was not thrown even when the AAC was considering the matter for the second time. The Tribunal in these circumstances refused to entertain the assessee's contentions relating to principles of valuation. 5. It is further pointed out by the Tribunal that the assessee's challenge to the principle of valuation was not thrown even when the AAC was considering the matter for the second time. The Tribunal in these circumstances refused to entertain the assessee's contentions relating to principles of valuation. 5. THE following question of law has arisen in this reference:- "Whether, on the facts and in the circumstances of the case, it was competent for the assessee to contend that in respect of certain shares the method of valuation of shares laid down by the AAC in his earlier order was not correct, when that order of the AAC was not questioned before the AAC even in the second appeal ?" 6. MR. Sukumar Mitra, learned counsel for the assessee, has argued before us that the Tribunal has jurisdiction to allow any new question to be raised for the first time in the appeal before it, and should allow such a question to be raised if it is a question of law which can be decided on the facts already on record. Learned counsel has relied on a number of authorities in support of this proposition. MR. Mitra urged further that, as a matter of public policy, the Tribunal should have taken into account the decision of the Bombay High Court in CIT vs. Bai Shirinbai K. Kooka (1956) 30 ITR 753 (Bom). The principle of valuation of shares laid down in this decision was contrary to the view taken by the AAC. The decision incidentally has now been approved by the Supreme Court in CIT vs. Bai Shirinbai K. Kooka (1962) 46 ITR 86 (SC). On behalf of the respondent the propositions of Mr. Mitra were not disputed but it was urged that they did not apply to the controversy raised in the present case. 7. THIS is a case in which an assessment was made by the ITO. The assessee preferred an appeal to the AAC against the decision of the ITO. The AAC by his order made on 27th Feb., 1958, allowed the appeal. The assessee was held to be a dealer in shares w.e.f 1st Aug., 1952, and directions were given to the ITO to value the shares as the assessee's stock-in-trade on the basis of the original cost or the market price, whichever was lower. The AAC by his order made on 27th Feb., 1958, allowed the appeal. The assessee was held to be a dealer in shares w.e.f 1st Aug., 1952, and directions were given to the ITO to value the shares as the assessee's stock-in-trade on the basis of the original cost or the market price, whichever was lower. The AAC, it is well known, can under s. 31 (3)(b) make an order setting aside the assessment of the ITO and asking the ITO to make a fresh assessment as the AAC may direct. THIS is exactly what the AAC did in the instant case. Under s. 33 of the Indian IT Act, the assessee, if it was aggrieved by this order of the AAC, could prefer an appeal to the Tribunal within 60 days of the date on which the order was communicated to it. No such appeal was preferred and the time-limit prescribed, therefore, had expired. 8. THE matter went back to the ITO to determine the values of the shares in accordance with the principles laid down by the AAC by his order dt. 27th Feb., 1958. THE ITO made two of his orders of reassessment on 31st July, 1958, and two other orders on 7th Aug., 1958. The assessee preferred an appeal against the ITO's orders of 31st July, 1958, and 7th Aug., 1958, to the AAC. The appeals were filed on 9th Sept., 1958. When these appeals were heard by the AAC, no complaint was made on behalf of the assessee as to the method or principle of valuation. The assessee's contentions were confined to arithmetical errors and other grounds. The AAC by his order dt. 29th Nov., 1958, accepted some of the assessee's contentions and gave reliefs on the basis thereof. 9. THE assessee then appealed to the Tribunal from the AAC's order of 29th Nov., 1958. We have looked into the grounds of appeal which by the consent of parties has been tendered as an exhibit in this reference and marked "A". We do not find that any challenge to the principle of valuation suggested by the AAC has been specifically made in these grounds of appeal in the light of the aforesaid decision of the Bombay High Court. When the matter, however, was heard by the Tribunal, the point was sought to be raised and the Tribunal refused to entertain the contention. 10. When the matter, however, was heard by the Tribunal, the point was sought to be raised and the Tribunal refused to entertain the contention. 10. ON these facts, we are unable to come to the conclusion that the Tribunal has arbitrarily exercised its discretion against the assessee. The first order of the AAC laying down the method or principle of valuation made on 27th Feb., 1958, had become final and binding on the parties since no appeal was preferred against it. That order, in our opinion, was not open to attack in the assessees' appeal against the AAC's order of 29th Nov., 1958. In other words the assessee not having pursued his statutory remedies in respect of the first order of the AAC made on 27th Feb., 1958, should not be allowed to attack that order by collateral methods. We may incidentally refer to two decisions, one of the Privy Council and the other of the Supreme Court, in this connection. In CIT vs. Tribune Trust (1948) 16 ITR 214 (PC) the respondent claimed in its assessment for the year 1932-33 that as its income was derived from property held under trust wholly for charitable purposes, it was exempt from tax under s. 4(3)(i) of the Indian IT Act. The High Court's decision went against the assessee and an appeal was preferred to the Judicial Committee. Pending the appeal, the assessments relating to six subsequent years as well as supplementary assessments for 1931-32 and 1936- 37 were made in accordance with the High Court's judgment and the assessee paid the tax assessed. The Privy Council with respect to the asst. yr. 1932-33 decided in favour of the assessee holding that its income was exempt from tax under s. 4(3)(i). The assessee then applied to the Commissioner under s. 33 requesting him to cancel all the assessments and to grant a refund of the tax paid. The Commissioner granted the refund for the year 1932- 33 only which was the subject-matter of appeal to the Judicial Committee and refused to reopen the other assessments on this ground that the assessee did not keep them alive by having them included in the reference to the Privy Council. This question of refund in respect of the other assessments ultimately came up before their Lordships of the Judicial Committee. This question of refund in respect of the other assessments ultimately came up before their Lordships of the Judicial Committee. Their Lordships upheld the view of the Commissioner on the ground that those other assessments were not nullities but were valid and effective until they were set aside. In Bhopal Sugar Industries Ltd. vs. ITO (1960) 40 ITR 618 (SC) the Tribunal gave certain directions to the ITO. The assessee applied to the ITO to give effect to the decision of the Tribunal; but the officer misreading the direction of the Tribunal wrote back on 24th March, 1955, saying that no relief could be given to the assessee. The assessee applied to the Judicial Commissioner of Bhopal for issue of a writ to compel the ITO to carry out the directions of the Tribunal. The Judicial Commissioner found that the ITO had acted arbitrarily and in violation of the Tribunal's direction. He proceeded, however, to consider the correctness of the Tribunal's order and held that there was no manifest injustice done to the assessee. The Supreme Court found that the ITO by his letter dt. 24th March, 1955, virtually refused to carry out the directions which the superior Tribunal had given him in the exercise of its appellate powers in respect of an order of assessment made by him and such refusal was in fact a denial of justice. The order of the Tribunal having become final, it was not open to the Judicial Commissioner to hold that the order was wrong. As the ITO had failed to carry out a legal duty imposed on him such a failure was destructive of a basic principle of justice and a writ of mandamus should issue ex debito justitiae to compel him to carry out the directions given by the Tribunal. 11. THE reason why I have cited above the two cases is that in the present reference also the order of the AAC passed on 27th Feb., 1958, was not challenged in accordance with law having regard to the provisions of s. 31(3)(b) and s. 33 of the Indian IT Act, 1922. That order having become final and binding on the parties, in our judgment, it was not open to the Tribunal to hold, when it was challenged in a collateral proceeding, that the order was wrong. 12. MR. Debi Pal, learned counsel appearing as junior to MR. That order having become final and binding on the parties, in our judgment, it was not open to the Tribunal to hold, when it was challenged in a collateral proceeding, that the order was wrong. 12. MR. Debi Pal, learned counsel appearing as junior to MR. Sukumar Mitra, tried to approach the problem before us from a different aspect. He said that the original order of assessment having been set aside by the order of the AAC there was a fresh assessment by the ITO. Against this fresh assessment the assessee had a right to appeal under s. 30 of the IT act. The assessee under s. 30 had the right to object to the amount of income assessed under s. 23 or to deny his liability to be assessed under the Act. In such a case, MR. Debi Pal argued, that even if the direction given by the AAC in his first order was not challenged by way of an appeal before the Tribunal, in the second assessment stage, the assessee was entitled to question the valuation of the shares while objecting to the amount of income assessed. MR. Debi Pal said to us that if at this second stage before the AAC the assessee could have raised his objection to the method or principle of valuation it could also raise the same point before the Tribunal, subject, however, to the condition that the examination of the point raised did not involve investigation into new facts. We are unable to accept this argument of Mr. Debi Pal. The assessee undoubtedly had a right of appeal under s. 30 against the fresh assessment made by the ITO pursuant to the direction of the AAC but this right of appeal was subject to the finality of the order of the AAC dt. 27th Feb., 1958. That order, as I have said, was made under s. 31(3)(b) and was open to appeal under s. 33. 13. IN view of the judgment we have delivered in this reference, we feel that the question referred to us should be reframed. Learned counsel appearing for the parties do not dispute our power of reframing. IN our opinion, the question which was suggested by the Commissioner (at page 73 of the paper-book) is the more appropriate question that arises on the facts and circumstances of this case. Learned counsel appearing for the parties do not dispute our power of reframing. IN our opinion, the question which was suggested by the Commissioner (at page 73 of the paper-book) is the more appropriate question that arises on the facts and circumstances of this case. This question is as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not allowing the assessee to raise the contention that in respect of the shares in Naskarpara Jute Mills Ltd. and the West Bengal Jute Co. Ltd., the ITO and the AAC were not justified in valuing the said shares in the open stock at the cost price which was lower than the market price ?" 14. OUR answer to the reframed question is in the affirmative. The applicant will pay to the respondent the costs of this reference. MASUD, J.: I agree.