2008 (12) TMI 426 - AT - Income Tax

Tribunal rules on precedent & jurisdiction in tax appeal: CIT v. Sun Engineering Works not applicable

Export Credit Guarantee Corpn. (India) Ltd. Versus Income-tax Officer

Export Credit Guarantee Corpn. (India) Ltd. Versus Income-tax Officer - [2009] 33 SOT 12 (MUM.) (URO) Issues Involved:1. Applicability of the decision of the Hon'ble Supreme Court in CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297.2. Jurisdiction of the Tribunal to raise a ground or permit the respondent to raise a ground adversely affecting the appellant when no cross-appeal or cross-objection has been filed.Issue-wise Detailed Analysis:1. Applicability of the Decision in CIT v. Sun Engineering Works (P.) Ltd.:The assessee contended that the decision in Sun Engineering Works (P.) Ltd. was inapplicable as the issues in the current appeal had not attained finality. The Supreme Court in Sun Engineering Works held that a matter which had reached finality could not be reopened in reassessment proceedings. The assessee had appealed against the original assessment on book profit under section 115JA and the levy of interest under sections 234B and 234C, and these matters were pending before the Tribunal when the reassessment notice was issued. Thus, these issues had not been concluded and could be validly raised in reassessment proceedings. The Tribunal agreed, emphasizing that the decision in Sun Engineering Works should be read in the context of the specific facts and legal questions before the Court. Since the issues in the present appeal were still under litigation and had not reached finality, the ratio of Sun Engineering Works was deemed inapplicable.2. Jurisdiction of the Tribunal to Raise a Ground or Permit the Respondent to Raise a Ground Adversely Affecting the Appellant:The assessee argued that the Tribunal could not raise a ground or permit the Department to raise a ground adversely affecting the appellant when no cross-appeal or cross-objection had been filed by the Department. This argument was supported by several judicial pronouncements, including Motor Union Insurance Co. Ltd. v. CIT, New India Life Assurance Co. Ltd. v. CIT, and State of Kerala v. Vijaya Stores. These cases established that if the respondent (the Department in this case) had not filed a cross-appeal or cross-objection, they were deemed satisfied with the decision of the lower authority and could not seek relief adversely affecting the appellant. The Tribunal accepted this argument, noting that the Department had not appealed against the CIT(A)'s order nor filed any cross-objection. Therefore, it was not within the Tribunal's jurisdiction to raise or permit the Department to raise a ground adversely affecting the assessee. The Tribunal distinguished the case from National Thermal Power Co. Ltd. v. CIT, where the issue was whether the Tribunal could entertain an additional ground of appeal raised by the assessee, not the Department.Conclusion:The Tribunal concluded that both preliminary issues were decided in favor of the assessee. The appeal on merits was to be refixed and heard by the Bench. The Tribunal emphasized that a case is a precedent only for what it explicitly decides, and the ratio decidendi of Sun Engineering Works was not applicable as the issues in the present case had not reached finality. Furthermore, the Tribunal held that it had no jurisdiction to raise or permit the Department to raise a ground adversely affecting the assessee in the absence of a cross-appeal or cross-objection by the Department.