V. BALASUBRAMANIAN, V. P. This is Departmental appeal. assessee sold 618 shares of M/s Arjan Khimji Ginning & Pressing Co. Pvt. Ltd. during year. In return filed assessee computed capital gains in respect of these shares on basis of sale price recorded of Rs. 525 and taking as cost of shares Rs. 482 for 580 shares and Rs. 419 for 38 shares. ITO computed capital gains for assessment purposes at Rs. 2,18,738. In so doing he fixed sale price of shares by resort to s. 52(2) of IT Act at Rs. 1,045 per share. events with regard to assessment in this case have gone through rather tortuous route and based on appellate order of CIT (Appeals) dt. 27th March, 1982 has come up before Tribunal. CIT (A) in his order deleted additions made by ITO to computation of capital gain. Departmental appeal has challenged this deletion on merits. More than that it has also challenged jurisdiction of CIT (A) exercised in his order dt. 27th march, 1982 to entertain appeal as also entertaining particular grounds of appeal. return filed by assessee showed capital gains of Rs. 28,968 this w s filed on 23rd Oct., 1975. On 30th March, 1978 market price of shares was determined by Departmental valuer at Rs. 1,045 and applying provisions of s. 52 (2) ITO computed capital gains by taking sale price at Rs. 1.045. As per directions of IAC purchase price was taken at Rs. 447 as per Balance Sheet of Company dt. 31st Aug., 1969. assessee filed appeal before CIT (A) against this assessment on 19th July, 1978. While this appeal pending before CIT (A), on 28th Nov., 1979 CIT (Admn.), Passed order u/s 263 setting aside assessment and directing ITO to make fresh assessment taking cost of shares at Nil . On 19th Jan., 1980 assessee filed appeal before ITAT against order u/s 263 of CIT. In meanwhile on 30th Jan., 1980 CIT(A) dismissed assessee s appeal pending before him for reason that in view of order u/s 263 of CIT (Admn.) appeal had become infructuous. There was no fresh computation of income by ITO consequent to this order of CIT (A). On 27th Feb., 1981 Tribunal cancelled order or CIT (Admn.) under s. 263 holding that order of ITO was not prejudicial to interest of revenue. ITO passed format order giving effect to Tribunal s order 20th June, 1981. In this order be mentioned that same total income s computed in assessment year on 28th June 1978 would continue. On 10th July, 1981 assessee filed Miscellaneous Application before Tribunal praying for direction to CIT(A) to restore appeal dismissed by him as infructuous to his file and decide it on merits. Tribunal dismissed Miscellaneous Application. While holding that it has no jurisdiction to direct CIT(A) to restore appeal to his own file inter alia Tribunal observed that "a logical consequence of restoration of original assessment order could be that concerned authority may have to restore for disposal on merits first appeal against assessment order." On 27th July, 1981 Reference Application filed by CIT(A) against order of Tribunal cancelling his order under s. 263 was rejected. On 23rd July, 1981 assessee took two steps before CIT(A): one in letter requesting him to restore appeal filed by him on 19th July, 1978 for rehearing; and file appeal before him against order of ITO dt. 20th June, 1981 allegedly giving effect to order of Tribunal. It would appear that CIT(A) did not pass any order on letter mentioned above. He however, disposed of assessee s appeal presented on 23rd July, 1981 deciding matter in his favour. According to this order, entire capital gains assessed was deleted on strength of decision of Supreme Court in case of CIT vs. B. C. Srinivasa Setty (1981) 21 CTR (SC) 138: (1981) 128 ITR 294 (SC). It is this order of CIT which is in challenge before us on behalf of Department. challenge to jurisdiction of CIT(A) against entertaining appeal is raised against above background. According to ld. counsel for Department, appeal filed before CIT(A) on 19th July, 1978 by assessee had already been disposed of by CIT(A) by his order dt. 30th Jan., 1980, where he held appeal as infructuous. assessee had not pursued t h e matter before further appellate and reference authorities, which he should have done if he was aggrieved by that order. Having missed this chance to redress his grievance, assessee could not again present appeal before CIT(A). CIT(A) could not have entertained it or decide it. CIT(A) CIT(A). CIT(A) could not have entertained it or decide it. CIT(A) entertaining appeal even against order of ITO dt. 20th June, 1981 allegedly giving effect to order of Tribunal was wrong, according to ld. counsel. CIT(A), therefore, should have rejected assessee s appeal as untenable. On merits it is pointed out that computation made by authorities w s proper computation. shares involved being that of manageable companies value has to be determined on basis of established principles. valuer of Govt. on basis of such principles has correctly found value of shares as Rs. 1,045. almost collusive sale price fixation by assessee, therefore has to be ignored and applying provisions of s. 52(2) capital gain had to be computed. cost of shares was 'Nil to assessee since he did not make any payment for his purchase. For purpose of computing capital gains, cost price, therefore, has to be taken at 'Nil . decision in Srinivasa Setty s case does not apply to assessee. What assessee was dealing in was not self-generated asset. It was asset of value which had cost. Even if assessee had not purchased shares he had received same by usual modes of transmission of property. cost of original owner, therefore, should be treated as cost to him at best even if original cost could not be treated as 'Nil . assessee s ld. counsel has pointed out that this was case of great inequity apart from illegality perpetrated on him. assessee has filed appeal before CIT(A). In view of order of CIT under s. 263, if CIT(A) dismissed appeal as infructuous that was correct since there was no subsisting order of ITO. Even so assessee took care to file appeal to Tribunal against order of CIT(A). By time this matter came up before Tribunal, ITO had already pursuant to Tribunal s decision in order under s. 263 restored his order of assessment. inavoidable consequence was, according to counsel, that there was order of ITO subsisting and against which assessee had substantial grievance. circumstances mentioned, therefore, in order of CIT dismissing his original appeal as infructuous had disappeared. Even otherwise when ITO s order was restored under his order dt. 20th June, 1981, grievance arose to assessee. There was assessment order involving this grievance. assessee was, therefore, entitled to file appeal to CIT(A). It was this appeal which was decided in his favour. CIT(A) has correctly exercised his jurisdiction. On merits also matter has been properly decided. It is also pointed out that application for restoring appeal is also pending before CIT(A). details pointed out above clearly indicate that assessee has not received justice at hands of authorities. It is not necessary to question legality of CIT exercising his jurisdiction and cancelling order of assessment pending on appeal before CIT(A) when same matter which he considered in his order under s. 263 was involved. When every time matter is pending decision before CIT(A), CIT(Adm.) were to exercise his jurisdiction in respect of this matter under s. 263 and cancel order of ITO, this could be put to worst possible misuse. Anticipating adverse decision from CIT(A) he could easily cancel ITO s order and awaited jurisdiction being exercised by another CIT(A) who would pass favourable order. Certainly jurisdictional limits of CIT(Adm.) and (Appeals) cannot be regarded as so fixed under statute. Even if, therefore, he assumed that legally CIT(Adm.) could pass order under s. 263 when matter is pending appeal before CIT(A), both from point of view of equity and justice making of such order would be improper. If CIT(Adm.) found that ITO in respect of point pending before CIT(A) had dealt with case in very lenient manner, perhaps he could resort to other remedies like presenting proper case before CIT(A) for enhancement of assessment. Certainly it would be improper for him to cancel assessment taking away as it would very foundation of appeal pending before CIT(A), thus making him ineffective. We are not sure whether against such background CIT(A) has properly dismissed assessee s appeal against original assessment as infructuous. Be that as it may, when CIT s order under s. 263 has been cancelled and original assessment has been restored grievance of assessee subsists and his remedy before CIT(A) cannot be thwarted. In law where right of appeal subsists and it is not properly persuaded, order against which there is right of appeal becomes final. In that sense ld. order against which there is right of appeal becomes final. In that sense ld. counsel for Department is correct in urging that if assessee had not filed appeal against order of CIT (A), he has lost his remedy. We find, however, that assessee did file appeal against this order of CIT (A) to ITAT. appeal, however, was withdrawn by assessee and Tribunal dismissed it on that score, ld. counsel for assessee has pointed out before us that this appeal was withdrawn by assessee only because CIT (A) in dealing with appeal filed by him against order of ITO giving effect to Tribunal s order, had given relief which he wanted. case of assessee, therefore, is that withdrawal of appeal was on firm understanding that he had received complete relief from CIT (A) himself. Even though we do not fully accept this contention of assessee, we are not in position to throw it out also because claim now made before us by Department is that CIT(A) could not have entertained assessee s second appeal. We find that this objection was not raised by Department before CIT (A) himself. Apart from vice of proper objection to jurisdiction not having been taken at earliest at proper stage essentially for its valid consideration by not taking objection before CIT (A), Department has caused considerable loss of time and money also to assessee. If against this background we were to accept Department s contention that CIT (A) ought not have entertained appeal, it would be clearly situation of kettle calling pot black. Be that as it may even this contention of Department to our mind is untenable. assessee did appeal to Tribunal against CIT (A) s order. It is true that he withdrew appeal, but this appears to have been done since he was involved into believing that relief given by CIT (A) in his order dt. 27th March, 1982 especially when Department did not object to jurisdiction was available to him. We do not think, therefore, that on this ground jurisdiction of CIT (Admn.) can be displaced. More than above, there are decisions to effect that orders passed by ITO giving effect to appellate order could also be basis of appeal filed to CIT (A). Normally such appeal can be supported where in giving effect to appellate orders, ITO has to make original decision such as freshly compute income, apply on investigation as per directions, fresh percentage of profit. Etc. We do not however see why even otherwise fresh liability arises to assessee on account fo giving effect to order appeal does not lie to CIT (A). In present case, CIT s order under s. 263 cancelled ITO s order and extinguished liability to tax of assessee. order of ITO giving effect to Tribunal s order cancelling s. 263 order of CIT again created fresh liability, even though all this happened in pursuance of Tribunal s order grievance of assessee to assessment order even though restored does justify filing appeal to CIT (A). He has, therefore, property exercised his jurisdiction. Even otherwise assessee has filed application on 23rd July, 1981 before CIT (A) requesting him to restore appeal decided by him to his file in view of basic error involved in decision. CIT (A) dismissed appeal as infructuous, since there was no order of ITO. After ITO s order was restored in pursuance of Tribunal s order, this position is incorrect, there was assessment order of ITO. CIT(A) was, therefore, bound to rectify this mistake and take appeal on his file and decide it according to merits. CIT (A) has not disposed of this application. Even if we were to hold that appeal against order of ITO dt. 20th Jun, 1981 does not lie to CIT (A), we would certainly have in circumstances outlined in detail above directed CIT (A) to dispose of pending application dt. 23rd July, 1981. net result would have been same viz., CIT (A) deciding appeal again resulting in same as was passed by him on 27th march, 1982. validity of appeal, therefore, has to be upheld. ld. Departmental counsel pointed out before us that assessee s appeal against order of CIT (A) dt. 30th Jan., 1980 was filed by assessee very much out of time somewhere in July, 1981.The Tribunal would have dismissed this appeal in limine as time barred. By withdrawing this appeal, therefore assessee could not be said to have in law exercised due diligence with regard to filing of appeal. Looking to circumstances, this contention cannot be accepted. valuable remedy of appeal available to assessee cannot be lost on account of several situations involving procedure of questionable validity. On merits ld. counsel for Department has pointed out that proper value as per Valuer s report has to be substituted for collusive sales price adopted by assessee. Even though assessee has not purchased shares by himself, it is not as if nobody paid for shares. assessee s predecessor did it. Shares are also not self-generated assets. decision in case of Srinivasa Setty (supra) does not apply even if Nil cost cannot be adopted and for shares their cost would be not as high as claimed form liability. For assessee it is pointed out that he did not purchase shares. Before 1st Jan., 1954 these shares were acquired by Shri Bhawanji Khimji, father of Karta of assessee HUF On 3rd Oct., 1969 Shri Bhawanji Khimji, threw shares in common hotch potch of HUF consisting of himself and his son. partial partition of family on 26th Jun., 1970 brought 830 shares to assessee-HUF. balance of 38 share were received on partial partition by Bhawanji A. Khimji reverted to he assessee-HUF on his death on 27th Sept., 1970. Since shares were thrown into hotch potch of family prior to 1969, provisions of sub-cl. (iv) of s. 49 (1) would not apply. This was not case of gift, inheritance, devolution, etc. what assessee-HUF, therefore, received was without any cost to it. Alternatively it is pointed out that at best market value of shares as on date of receipt by assessee should be recorded as his cost. Reference is made in this connection to decisions in case of CIT vs. Solomon (1933) 1 ITR 324 (Rang), Francis Vailabarayar vs. CIT (1960) 40 ITR 426 (Mad), CIT vs. Groz-Beckert Saboo Ltd. (1979) 8 CTR (SC) 155: (1979) 116 ITR 125 (SC) and CIT vs. Ashwin M. Patel (1983) 144 ITR 566 (Guj). Such market value was Rs. 482 for 580 shares and Rs. 419 for remaining 38 shares. ld. Departmental counsel interpreting provisions of s. 49 has pointed out that even on basis of throwing into common hotch potch at some stage, shares cannot be said to be having no cost. Cost of predecessor was clearly to be considered. Support for this is derived from Explanation to s. 49. On consideration of facts, we do no accept assessee s contention that shares have not original cost. provisions of s. 49 including Explanation thereto, while applying to he facts of present situation indicate that assessee had incurred cost for shares. In view of multiple transfers and other changes such as throwing into common hotch potch involved we would fix value of shares at market price to assessee on date he received it. In present case, it would be figures of Rs. 482 and Rs. 419 as shown by ld. counsel for assessee. We therefore, direct that capital gains be adopted at figure of Rs. 28,968 returned by assessee on this basis. appeal is partly allowed. *** FIRST INCOME TAX OFFICER v. HENS B. KHIMJI