TaxTMI 
TaxTMI 
2010 (2) TMI 939
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....mise being now represented by his legal heir - wife Smt. Jyothikumari, wife herself is the respondent - assessee in ITA No. 258/2001 and the subject-matter of this appeal is the block assessment order passed in respect of this assessee for the block period 1.4.1985 to 18.3.1996 and in respect of her undisclosed income for this period, but the revenue passing an assessment order in the hands of this assessee more for the purpose of an alternative option as this assessee had claimed the income assessed to tax as her own income which had gone into contribution of acquiring an asset in respect of which contributions had been made by the couple, but the revenue having rejected this version of this assessee and having attributed the entire unexplained, undisclosed investment in the asset as the undisclosed income of the assessee's husband - Purushothamlal for the very block period. 3.The respondent - Smt. Jyothi Kumari in the other appeal viz. I.T.A.258/2001 is the wife of Sri. Purushothamlal. 4. The search and the follow-up action having lead to the passing of the assessment order dated 26.5.1997 under the provisions of Section 158 BC of the Act, resulting in considerable tax liab....
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....ter it was followed-up by issue of a notice under Section 158BC of the Act as on 22.6.1996. 9. It is also the version ofthe Revenue that further panchanama was drawn as. on 16.5.1996. 10. The notice under Section 158BC of the Act was followed-up by a further notice dated 19.7.1996 issued under Section 142 of the Act apprising the assessee that the case is posted to 30.07.1996. 11. The further development thereafter as recorded in the order of the Assessing Officer is extracted as below:- "In response to this notice, the assessee's representative has stated that he has filed: Returns of income for the assessment year 1995-96 and 1996-97 in Form No. 2 in response to notice u/s 158BC . On receipt of this letter, another opportunity was given to the assessee to file the Return in form No.2 for the block period 01.04.1985 to 18.03.1996 by 30.7.1996 with copy to assessee's representative Shri U.V. Mallya, Chartered Accountant, Bangalore. In response to this notice, the assessee's representative sent a telegram seeking extension of time for filing the Return till 15.08.1996. The telegram was followed by a letter from the assessee's representative wherein he has confirmed the s....
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....nd Shri Mallya, Chartered Accountants of S. Venkatesan & Co., were present and they wanted time till 27.01.97 on which date the case was posted for hearing. On 27.01.97 the assessee filed detailed written submissions contesting the various issues raised at the time of hearing which are dealt with separately in this order. The case was again posted for hearing by issue of notice u/s 143(2) and summons u/s 131 on 11.02.97. The assessee along with his representative appeared on that date and a statement was recorded on that date from the assessee. While recording the statement, the assessee sought some more time to file further details that were required for finalisation of the assessment proceedings. The assessee stated that he will file the details called for by 17.02.97. In view of the assessee's failure to file the details called for, the case was again posted for hearing by issue of notice u/s 143(2) and summons u/s 131 on 27.03.97. There was no response from the assessee. The case was again posted on 25.04.97 by issue of summons on 10.04.97. There was no response from the assessee. Therefore, another letter was issued by this office on 05.05.97 requiring certain details to final....
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....f appeal by Sri. Purushothamlal before the Tribunal under the provisions of Section 253(1)(b) of the Act. 14. Likewise, the assessment order passed in respect of the undisclosed income of Smt. Jyothi Kumari though was a protective measure by the Revenue, on the premise of this assessee having undisclosed income attributable to the unexplained part of the investment on the property at No.568, 10th Cross, Buddha Marga, Siddartha Layout, II Stage, Mysore. It is the very property in respect of which, her husband had also claimed to have made investment and the claim of the couple being that they had invested jointly for the construction of the house on this site and from out of their respective earnings. The block assessment order under Section 158BC of the Act of this assessee also was for the block period 1.4.1985 to 18.3.1996 on the premise that the actual investments on the house property was not fully disclosed as also the actual income of the assessee from her own activities. The order in the hands of Smt. Jyothi Kumari was also appealed against and the Income Tax Appellate Tribunal acting as the First Appellate Authority has allowed the appeals in full, in terms of the common....
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....d by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing] Officer." 18. Though the Tribunal it appears, did permit the assessee to raise this ground and did look into its order for a possible correction on the premise of the mistake in passing the order, nevertheless on examining the question on its merits found there was no occasion to exclude the amount from the undisclosed income of the assessee as assessed by the Assessing Officer and accordingly disposed of the Miscellaneous Petition. 19. The Tribunal examined this petition under Section 254(2) and in terms of its order dated 25.1.2002 treated the petition as allowed for the limited purpose of re-examining the appeal of the assessee only in respect of ground No. 6 as urged in the memorandum of appeal and on such examination found that, there was no occasion to vary or modify the earlier order of the Tribunal touching on this aspect of the matter and there was no occasion to set aside or modify the order of the Assessing Officer on this aspect of the matter and accordingly opined that the original order dated 4.4.2001 did not call for any modifi....
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....rrect that the valuation of the property should be Rs. 12,44,100 and not Rs. 17,16,000/- as per Departmental Valuation Officer report by adopting erroneously local rates and granting supervision charges of 10%? 5. Whether the Tribunal was correct in holding that the assessee was entitled to claim Rs.15,000/- towards payment of loan on vehicle when there was absolutely no proof about such payment except estimation from auto consultancy? 6. Whether the Tribunal is correct in holding that a. sum of Rs. 1,00,000/- paid to Lakshmi and admitted by the Assessee in his statement cannot be added to the income of the assessee as the assessing officer has not stated whether the document of has been availed a pro-note, or an agreement which has been referred to as document No. 17 in the assessment order? 7. Whether the peak credits of Rs.14,55,550/- which was not explained by the assessee could be allowed by the tribunal that the bank accounts are figuring in the balance sheet including the cash credits when the income of the assessee was being shown on estimate basis and no final accounts were submitted along with the return ? ITA.NO.258/2001: ....
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.... by the assessee should be accepted, that will as a consequence avoid going into the correctness of the order of the Tribunal on the merits of the order passed by the Assessing Officer and as reversed by the Tribunal. If the order of the Tribunal can, be. sustained though not on merits, even without conceding but assuming for arguments sake not on merits but only on the ground of limitation in a sense that the block assessment order passed on 26.5.1997 was one barred by the period of limitation as indicated in Section 158BE of the Act, then the order of the Tribunal can be sustained on this premise alone notwithstanding the fact that the assessee has not either preferred an independent appeal on the aspect of the Tribunal not having agreed with the stand of the assessee that the assessment order was barred by the period of limitation and also notwithstanding the fact that the assessee had neither filed a cross appeal nor cross objection in the appeals filed by the Revenue but nevertheless for the purpose of sustaining the order of the Tribunal to the extent the assessee gets relief before the Tribunal that can be sustained even by supporting the order of the Tribunal and such findi....
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....r part of the hearing of these appeals as the question was highlighted in all its hues and shades and based on several legal principles. 26. Sri. Seshachala learned Sr. Standing Counsel for the Revenue has joined issue on this aspect, contending that in the first instance the very premise which is assumed on the part of the assessee is that the provisions of Order 41 Rule 22 are attracted to an appeal under Section 260-A of the Act, is neither tenable nor stipulated in terms of the statutory provisions of Section 260-A of the Act, that it is not open to the assessee to contend that the order of the Tribunal can be supported even by pressing the arguments to contend that the assessment order was barred by limitation though the Tribunal neither examined this question nor has in any way indicated that it was a question that merits examination for an answer to set aside the block assessment order and would urge that the assessee having not preferred an appeal by itself in terms of Section 260 A of the Act raising the precise substantial questions of law on the question of limitation if it was so permissible and a shortcoming of this nature either not seeking to modify the order or n....
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.... an appeal, not only on the substantial questions of law raised and for examination of which the appeal has been admitted but also on such further questions as the Court may deem fit to frame even during the course of hearing and such questions which had not been initially formulated for an answer and questions on examination of which the appeal had been admitted but which arise in the opinion of the Court and can be examined at any point of time before the disposal of the appeal. 28. While this part of the argument is an argument based on the right given under Section 260A of the Act itself, the other part of the argument such as supporting the order of the Tribunal even in the appeals preferred by the Revenue and to the limited extent of calling in aid the question of limitation, Sri. Shankar, learned counsel for the assessee has urged that this course of defence is definitely available for the assessee in the two appeals of the Revenue on the proper understanding of the provisions of sub-Section (7) of Section 260 A of the Act which in turn has adopted the provisions of CPC as are applicable to the appeal before the High Court and so far as may be such provisions applied in t....
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....in favour of the assessees and for supporting the finding and the order, can urge before this Court, the Appellate Court, such of those issues either expressly by implication decided by the Tribunal against the assessee or even such issues which the assessee had raised for determination by the Tribunal and in this case the question of limitation before the Tribunal and which has not been expressly addressed to can also be raised and a correct answer can be sought for even when the assessees have not filed any appeals that so tar as the question of limitation is concerned to the extent of sustaining relief granted by the Tribunal in the assessees appeal before the Tribunal and though the Tribunal had not expressly opined on the question of limitation can nevertheless demonstrate before this Court that the assessing authority had no jurisdiction to pass an assessment order in terms of the provisions of Section 158BC of the Act for the reason that a period of one year had already elapsed from the date of initial search and therefore in the wake of the provisions of Section 158BE of the Act, the Assessing Authority having been prohibited or not enabled to pass block assessment order af....
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....ntial question of law involved. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate the question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit (6) The High Court may determine any issue which - (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). (7) Save as otherwise provid....
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....At the time of making an order under rule 11 of Order XLI for the hearing of a second appeal, the court shall formulate the substantial question of law as required by section 100, and in doing so, the court may direct that the second appeal be heard on the question so formulated and it shall not be open to the appellant to urge any other ground in the appeal without the leave of the court, given in accordance with the provisions of section 100. 3. Application of rule 14 of Order XLI Reference in sub-rule (4) of rule 14 of Order XLI to the court of first instance shall in the case of an appeal from an appellate, decree or order, be construed as a reference to the court to which the appeal was preferred from the original decree or order. Section 100 CPC : (1) Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law. (2) An appeal may lie under this section from an appellate decree p....
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....ue of the Revenue claiming that a mahazar lifting of a prohibitory order as on 16.5.1996 is an action in continuation of initial search on 18.3.1396, whereas learned counsel for the assessee would join issue on this aspect and would submit that a mere lifting of prohibitory order as on 16.5.1996 without anything more particularly, when any seizure or impounding of any document etc., by itself will not be in the nature of a search proceedings conducted on that day and therefore, would urge that only the date of search 18.3.1996 and nothing more and if 18.3.1996 is to be taken as the date of search, then the assessment order passed as on 26.5.1997 is definitely barred in terms of Section 158BE as the period contemplated in terms of Section 158BE ended on 31.3.1997 and therefore an order dated 16.5.1996 is definitely bad in law etc. It is this factual premise which is made use of for urging the legal submissions relating to the provisions of Order 41 Rule 22, Order 42 in turn r/w Section 260 A (7) of the Act. 36. Though on facts the question as to whether search ended on 18.3.1996 or it continued up to 16.5.1996 there is no clear recording of finding by the Tribunal and in the wake....
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....ry, 1997. (2) The period of limitation for completion of block assessment in the case of the other person referred to in section 158BD shall be- (a) one year from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995 but before the 1st day of January 1997; and (b) Two years from the end of the month in which notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. Explanation 1: In computing the period of limitation for the purposes of this section:- (i) the period during which the assessment proceeding is stayed by an order or injunction of any court; or (ii) the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-s....
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....ccept the version of Sri. Shankar, learned counsel for the Assessee that the assessment order was barred by limitation in terms of Section 158BE of the Act for the purpose of holding that the assessment was barred by time limitation prescribed under Section 158BE of the Act. 41. In fact, we notice from the assessment order that the assessee had appeared before the Assessing Officer even after 31.3.1997 i.e., when the case had been posted on 25.4.1997 and the issue of summons on 10.4.1997 and when the assessee did not appear in response to subsequent letter dated 5.5.1997 from the Revenue, appearance of the assessee on 12.5.1997 and seeking for an adjournment till 16.5.1997 would virtually estop the assessee from contending that on the present facts in terms of Section 158BE of the Act, the Assessing Officer could not have passed the block assessment order for the said period. We also draw support from the first part of Clause 3 of Explanation (1) of Section 158BE of the Act which reads as under :- "Time taken in reopening the whole or any part of the proceedings or giving an opportunity to the assessee to be re-heard under the proviso to section 129; or" which would indica....
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....(7) of Section 260 A of the Act is concerned it may be examined as one leading to such possibility if it crosses three stages. 46. Firstly, the provisions of Order 41 Rule 22 is applicable to a cross-objection enabled in an appeal against original decrees even as indicated in the very provision. It is a right given to a non-appealing respondent to defend a decree which the non-appealing respondent would have obtained before the Court of first instance and to the extent of merely defending in terms of the first part and for getting more relief in terms of second appeal of this provision. If first appeal in terms of Section 96 of CPC is not the same as the second appeal in terms of Section 100 of CPC. 47. While the substantive provision for filing an appeal is the judgment and decree of the original Court, question is as to whether under Section 96 and the procedure governing the filing of such an appeal, is in terms of Order 41 of CPC. The substantive provision for filing a second appeal to the High Court can be compared to Section 260 A of the Act for the purpose of present examination. The procedure for disposal of the second appeal before the Court is provided for in Order ....
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....f the Full Bench of the Madras High Court in Venkata Rao case. The Commission had also accepted the view of the Calcutta High Court in Nrisingha Prosad Rakshit v. Commrs. of Bhadreswar Municipality that a cross-objection was wholly unnecessary in case the adverse finding was to be attacked. The Commission observed that the words "support the decree" appeared to be strange and "what is meant is that he may support it by asserting that the ground decided against him should have been decided in his favour. It is desirable to make this clear". That is why the main part of Order 41 Rule 22 was amended to reflect the principle in Venkata Rao case as accepted in Chandre Prabhuji case. 20. So far as the explanation was concerned, the Law Commission stated (p. 298) that it was necessary to "empower" the respondent to file cross-objection against the adverse finding. That would mean that a right to file cross-objections was given but it was not obligatory to file cross-objections. That was why the word "may" was used. That meant that the provision for filing cross-objections against a finding was only an enabling provision. 21. These recommendations of the Law Commission are reflected ....
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....f sustaining the decree to the extent the lower court had dismissed the suit against the defendant-respondent. The filing of cross-objection, after the 1976 Amendment is purely optional and not mandatory. In other words, the law as stated in Venkata Rao case by the Madras Full Bench and Chandre Prabhuji case by this Court is merely clarified by the 1976 Amendment and there is no change in the law after the amendment. 24. The respondents before us are, therefore, entitled to contend that the finding of the High Court in regard to the absence of reasonable and probable cause or malice - (upon which the decree for pecuniary damages in B and C Schedules was based) can be attacked by the respondents for the purpose of sustaining the decree of the High Court refusing to pass a decree for non-pecuniary damages as per A Schedule. The filing of cross-objections against the adverse finding was not obligatory. There is no res judicata. Point 1 is decided accordingly in favour of the respondent-defendants. 50. We find that the question as to whether a cross-objection is tenable in a second appeal to the High Court was not a question, which was examined in this judgment of the Supreme Cou....
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.... principles that emerge above the applicability of Order 41 Rule 22 in the context of Section 41 or Arbitration Act 1940 which is an appeal in the nature of a first appeal, as in second appeal under Section 96 of CPC though may be limited on certain aspects as under the Arbitration Act is quite apt to the present situation and if one can draw sustenance to the observation contained in para-24, we have to inevitably conclude that cross-objection as contemplaced in Rule 22 Order 41 of CPC are not tenable in an. appeal under Section 100 CPC even in terms of Order 42 of the Code. Paragraph 23 and 24 reads as under :- "23. From the examination of these judgments and the provisions of Section 41 of the Act and Order 41 Rule 22 of the Code, in our view, the following principles emerge: (1) Appeal is a substantive right. It is a creation, of the statue. Right to appeal does not exist unless it is specifically conferred. (2) Cross-objection is like an appeal. It has all the trappings of an appeal. It is filed in the form of memorandum and the provisions of Rule 1 of Order 41 of the Code, so far as these relate to the form and contents of the memorandum of ap....
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....as placed reliance, we find that this judgment has only reiterated with regard to the nature of right for claiming a right of appeal as observed in para 14, which is as under :- "14. Right of appeal is creature of statue. There is no inherent right of appeal No appeal can be filed, heard or determined on merits unless the statute confers right on the appellant and power on the court to do so. Section 39 of the Act confers right to file appeal, insofar as the orders passed under this Act are concerned, only against such of the orders as fall within one or other of the descriptions given in clauses (i) to (vi) of sub-section (1) of Section 39. Parliament has taken care to specifically exclude any other appeal being filed, against any order passed under the Act but not covered by clauses (i) to (vi) abovesaid, by inserting the expression "and from no others" in the text of sub-section (1). Clause (a) of Section 41 extends applicability of all the provisions contained in the Code of Civil Procedure, 1908 to (i) all proceedings before the court under the Act, and (ii) to all the appeals, under the Act However, the applicability of such of the provisions of the Code of Civil Procedure....
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....tent it is in favour of the respondents and which is appealed against before this Court in this appeal is available to the assessee on all grounds which may be otherwise available to either answer against the assessee in appeal by the Tribunal. However, we are aware that the principles of natural justice even otherwise, would require that if a person who has obtained some benefit or relief is to be deprived of that benefit or relief he should have an opportunity to defend that possession. The minimum that is expected in law and procedure is that a person is given an opportunity before being deprived of any benefit or relief which a person had already obtained. 57. It is for this reason that we have examined the merits of the submission that the assessment order was barred by the provisions of Section 158BE of the Act and Sri. Shankar, learned counsel for the assessee was permitted to make submission on that aspect of the matter on an examination of the factual position and the statutory provisions as pointed out m Section 158BE of the Act, particularly, prescribing the period of one year and indicating the situations wherein the period of one year is enlarged. We have examined a....
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.... matter! 63. Except for such claim the record placed by the assessee does not reveal any systematic business by the so called HUF in fact was not to the knowledge of the Revenue nor had the HUF made its presence felt in terms of any returns filed in respect of the income attributable to any business profits from the business activities indicated etc. The HUF had never figured as an assessable entity or as a person for the purpose of Income-tax Act though the assessee was regularly assessed to tax and even the wife of the assessee was also a regular assessee and both had been filing their returns periodically in their individual capacity. The expenses of a HUF was never disclosed nor offered claim by both the assessees. 64. In this state of affairs, we notice that a finding recorded by the Tribunal assuming it to be on a fact by the Tribunal to the effect that there was an HUF and certain investments said to be explained by the assessee in whose returns it was found as unexplained to be the income of the HUF and in turn gift given to the assessee is nothing short of a perverse finding or inference not tenable in law nor stipulated on material available. The reasoning of the Tr....
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....search from 18.3.1996 and for passing the block assessment order dated 26.5.1997. Submission is that even if the assessee is not enabled to urge this as a ground in a possible cross-objection when the assessee could have filed in the appeals of the Revenue, but if the provisions were attracted by the first part of Rule 22 of Order 41 as the assessee could have raised this ground by way of a defence to sustain the order of the Tribunal and even if that is not possible the assessee should now be permitted, even if it is to be held not possible, the assessee can definitely seek for raising additional grounds in his own appeal, which is again attracted against the order of the Tribunal though initially only on the question of difference of value and on the question of availability of a sum of Rs. 3.10,000/- being the sale proceeds of a car which the assessee pressed earlier and which proceeds count in the investment which had been invested in the construction of building and such other questions. Limitation was not a question but in the light of the enabling proviso to sub-section (4) r/w sub-section (6) of Section 260 A of the Act, Such additional ground/question should always be perm....
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....n 260 A of the Act, having regard to the present set of facts that is against the order of the assessing authority, an appeal lies directly to the Tribunal which acts as the First Appellate Authority but when it comes to the question of a lis which is adversarial in nature i.e., as though the parties are joining issues on some questions, it should be taken that the Tribunal is the original authority before which issues can arise and on such premise has also urged that the appeal under Section 260 A of the Act could be taken as first appeal and not a second appeal, we are not very impressed by these submissions for the reason that the very contention on the question of limitation is that the assessing authority could not have passed block assessment order in terms of Section 158BC in view of the limitation provided under Section 158BE of the Act. The objection to the question of limitation should be raised at the earliest, particularly when it is to be found, that on the peculiar facts and circumstances of the given case there cannot be a generalization of the question of limitation being applicable to all cases. It is no doubt true that the statute has prescribed the limitation in ....
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....ave to negative the contention and proceed to examine the merits of the order passed by the Tribunal. 74. On the question of maintainability of a cross-objection in a second appeal even in terms of Section 100 of CPC, we have examined the question with the aid of decided cases, even cases decided by Courts other than referred to and relied upon by the learned counsel for the parties. 75. While our examination or has indicated that there are good number of judgments of the High Courts and even the Supreme Court indicating the scope of the provisions of Order 41 Rule 22 and even with reference to the provision as it now prevails after the 1976 amendment to CPC. The scope of Order 41 Rule 22 after the amendment is explained to be of two implications. The first part is to enable a non-appealing respondent to defend the order in appeal even by supporting the order by contending that the issues decided against the respondent should have been decided in favour of the respondent by the order under appeal even without filing a positive appeal or a cross appeal The second part is to enable a non-appealing respondent who could have filed an appeal to the extent of Original Court not hav....
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....considerable, we have not been able to come across direct authorities to hold a cross objection as contemplated under Order 41 Rule 22 is tenable in an appeal from an appellate decree also. 79. While there are no direct or specific authorities of the Supreme Court on the question to hold that a cross objection in terms of Order 41 Rule 22 is tenable in a second appeal particularly, such a question having been not raised nor made an issue in the several authorities placed before us by the learned counsel and the other authorities, which we had occasion to refer to are only incidentally touching upon the aspect and in the wake of the provisions of Order 41 Rule 22 as it occurs as part of the procedure regulating the filing of a regular first appeal, it cannon be by implication extended under order 42, to attribute a right of filing a cross-objection in a section 100 appeal also. 80. A Single Beach decision of the Orissa High Court in the case of Shridhar Ghose v. Hari Mohan Sahu AIR 1964 ORISSA 141, while opines that a cross-objection in terms of Order 41 Rule 22 is not tenable in a second appeal. A contrary view appears to have been taken in a Single Bench Decision of the Kera....
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....e also for a good measure examined the possibility of a cross-objection in terms of Order 41 Rule 22 of CPC being entertained in an appeal under Section 280A of the Act and on such examination and we notice our examination only indicates to the contrary, that when a cross-objection is not tenable even in an appeal under Section 100 of CPC, it is afortiari so in an appeal under section 260-A of the Act. 84. We find that the provisions of sub-section (7) of Section 260A of the Act on which Sri. Shankar, learned counsel for the assessee has placed considerable reliance to contend that cross-objections are tenable even in an appeal under Section 230A of the Act, also only enables the provisions of Code of Civil Procedure relating to the appeal to the High Court being made applicable only as far as may be and subject to the other provisions in this Section or in the Act also. Sub-section (7) of Section 260 A of the Act figuring towards the end of the Section "Expressly providing for the procedure to be followed, it should be understood to be only in respect of the procedural aspects of Order 42 that is made applicable and even there to the extent it may be made applicable. While even....
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....oss-objection. It is on an over all examination of all these aspects, we hold that a cross-objection is not permitted in an appeal under Section 260 A of the Act. 88. Though Sri. Shankar, learned counsel for the assessee has placed considerable reliance on the Division Bench judgment of the Kerala High Court in the case of Dy. CIT v. S.T.N. Textiles Ltd. [2002] 257 ITR 161/]2003] 131 Taxman 73, particularly, on the observations as contained at Page 166 reading as under :- "One other contention urged by learned counsel is that this expenditure could be treated as revenue expenditure under section 37 of the Income-tax Act and the matter may be adjudicated in that manner. Learned counsel, Mr. P.K. Ravindranatha Menon, appearing for the Revenue, submits that no separate appeal is filled by the assessee claiming this relief. The question of considering the present claim that it would be a revenue expenditure cannot be adjudicated. We are of the view that there is no prohibition in the statute preventing the examination of the said contention as to whether the present claim be treated as revenue expenditure. Sub-section (7) of section 260A reads as follows: "Save as otherwise....
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....ng decided against him. 90. Here while we have to disagree with the generalization of the principle that all provisions relating to Code of Civil Procedure would apply when an appeal is preferred under Section 260 A of the Act for the simple reason that even under sub-section (7) of Section 260 A of the Act, not only all the provisions relating to all the appeals is made applicable, but it is only such provisions relating to appeals of High Court and appeals to the High Court and even here only to the extent of they being applicable or made applicable and enabled under sub Section (7) and subjected to further condition that it is so safe for application on a reading of all other provisions of Income Tax Act. A sweeping generalization to the effect they being made the basis for acceptance, even the Court maintains a distinction between the first appeal and second appeal and all appeals are generalized under the code. Be that as it may, with great respect to Kerala High Court we are unable to subscribe to the view taken in this judgment and on the other hand we indicate our views, on this aspect as above. Reliance placed by Sri. Shankar, learned counsel for the assessee, on the de....
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....even these two judgments do not constitute any direct authority to hold that a cross-objection is tenable in a Section 100 appeal to the High Court. The other principles underlying the enabling provisions of Order 41 Rule 22 to file cross-objection is that the party who had succeeded in part, before the Court of first instance and who contends that success should nevertheless be enabled to seek for improvement when the party who has not received full relief before of the Trial Court chooses to file an appeal to improve his prospects or to deprive the contestant even from the limited relief that the other party would have obtained before the Trial Court and it is only to give a second round of opportunity to a non-appealing party, who is content with limited success or failure but is dragged before the appellate court, gets a fresh opportunity to shrug off even the adverse part of the trial court even such a party had himself not filed an appeal, the enabling provisions of Rule 22 of Order 41 are put on the statute, but such an enabling provision to file a cross-objection in a second, appeal under section 100 CPC is neither the possibility nor the intention of legislature in Rule 1 ....
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.... belonging to the Hindu Undivided Family and not to an individual and it was for the assessee to have made good the source of acquisition even in the hands of the Hindu Undivided Family also and when the existence of the very Hindu Undivided Family is not made good, the further question recedes to the background and accordingly the question as formulated in paragraph-17 of the memorandum of appeal has to be necessarily answered in favour of the revenue and against the assessee. 95. With regard to the question posed for our answer in paragraph-18 of the memorandum of appeal i.e., relating to valuation of the property and submission in this regard by Sri Seshachala, learned senior standing counsel appearing for the revenue is that the valuation by the department was based on sound principles and the deletions by the tribunal are not justified in law; that the Tribunal has committed an error in not only allowing a deduction of 15% purporting to be due to the differences in legal valuation method and CPW valuation method which the Tribunal presumes to have been adopted by the Departmental Valuation Officer and further deduction of 10% towards supervisory charges by the assessee hims....
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....,86,000/- etc., and with the claim of the assessee towards deduction for self supervision being totally not tenable, particularly, as the assessee could have neither had the time to supervise in his multifarious activities nor had any expertise and therefore it is only a claim for saving certain things and not a genuine claim and the tribunal has gone beyond its brief in imagining such things for the assessee and allowing such deductions and reducing the value of Rs. 17,16,000/- to Rs. 12,44,100/- is totally not warranted in law and therefore all questions could be answered in favour of the revenue and against the assessee. 100. We notice that the difference between the two valuations is hardly around Rs.30,000/- and in such state of affairs, if the assessee's claim towards self supervision is found not tenable, we do not find the matter warranted such detail examination by the Tribunal and that too by giving various reasons. 101. With regard to the submission of Sri Shankar, learned counsel for the assessee that difference in valuation cannot be subject matter for block assessment on the premise that it is some undisclosed income and with respect to this view taken by the le....
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....und by the Tribunal being amount justifying acceptability in the hands of the assessee as an investment source of which was found to be accepted by the Tribunal. We do not find any substantial question of law arising in respect of Rs. 15,000/- and therefore the question of law is rejected. This question is answered in favour of the assessee and against the revenue. 106. In so far as the addition of Rs. 1,00,000/- as an unexplained investment and amount advanced to one Smt. Lakshmi Gururaj Acharya, while the assessee also did not dispute the transaction, the explanation which had not even found merit with the assessing officer was that a sum of Rs.50,000/- had been repaid by Sri Gururaj and that had been recycled etc., and therefore balance amount if at all could have been locked into was not acceptable as the claim was not supported by any receipt etc., owing from Gururaj - husband of Lakshmi. 107. The Tribunal on this issue has reversed the finding with a rather perverted reasoning to hold that there is no concrete evidence to support the view taken by the assessing officer. 108. It is not for the assessing officer to produce some negative evidence, but for the assessee w....
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....concept and scheme of block assessment under section 1583C of the Act, it is not as though the income or the undisclosed income is unearthed for each year of the block period. The entire block period is taken to be as one unit and the entire undisclosed income of the block period is brought to tax as a part of one assessment order. 112. While submissions of both learned counsel for the revenue and learned, counsel for the assessee per se merits acceptance on legal principles, the question is as to whether the assessing officer had committed an error warranting interference by the tribunal to conclude that on the premise that the cash credits could be explained from the source of the income of the Hindu Undivided Family, some income earned by the assessee from Singapore trip collections and amount drawn by the assessee from the chit group and also as part of home loan from Canara Bank and cash gifts received from the relatives, we find that the assessee had net put forth such claims before the assessing authority but was rest content in claiming that the method of arriving at the peak cash credit was not tenable; that it worked for each year and this claim projected for the entir....
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....iring him to furnish within such time not being less than fifteen days but not more than forty-five days, as may be specified in the notice a return in the prescribed form and verified in the same manner as a return under clause (i) of sub-section (1) of section 142, setting forth his total income including the undisclosed income for the block period : Provided that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapter : Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return; (b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143 section 144 and section 145 shall, so for as may be, apply; (c) the Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment; (d) the assets seized under section 132 or requisitio....
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....closed unassessed income being part of an asset was available for the earlier years. 119. We would like to indicate that an assessment for block period in terms of section 158BC of the Act is not based on the same principles as an assessment in the course of reopening in terms of sections 147 and 148 of the Act. Under section 147 of the Act, while income escaping assessment for the earlier years can be brought to tax either by a reassessment after an earlier assessment was over or for the first time also, but within the time stipulations as indicated in section 149 of the Act and if it is for a shorter period and only on fresh information and it presupposes information leading to the possible income after it was not assessed to tax unless there is information and cannot be by looking into the very information or return filed by the assessee, such a limitation we are afraid cannot and should not be read into for the assessment in the block period in terms of section 1 58BC of the Act. 120. Submission of Sri Shankar, learned counsel for the assessee proceeds on the premise that it is analogous to the applicability of the provisions of section 147 of the Act for reassessment. ....
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....n the premise that the assessee had a sum of Rs.27 lakhs available with him as an indisputable fact on the premise that the bank deposits and withdrawals had been accounted for, in the sense, that had been reflected in the returns filed earlier is not a reason that either appeals to us or can merit acceptability. 124. It is virtually begging the question as it is the amount of Rs. 27,15,600/- which is an amount from out of which the assessee is required to explain the income part of it and that having not been done, mere availability in itself is not the criteria but what part of the available amount had been indicated to be from out of the disclosed income is the criteria and the assessee having not disclosed the income part which had gone into such investments and with the assessing officer having arrived at by a method of peak cash credit to be at Rs. 14 lakhs etc., from out of those deposits there was no way that the tribunal could have reversed that finding of the assessing authority. 125. Sri Shankar, learned counsel for the assessee very vehemently contended that not only the assessment of income on peak cash credit basis is very erroneous, but even while computing the....
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....vant consideration but on extraneous considerations such as attributing some source of income to the credits while the actual withdrawal were not properly accounted and when the withdrawals were not demonstrated to have been recycled, the Tribunal had no reason to reverse the well recorded finding of the assessing officer on this aspect of the matter. 127. We have bestowed our attention to the rival arguments on this aspect. While it is true that the assessee if is attributed to have some income and which is taken as the peak cash credit and treated as undisclosed income of the year in question, could have demonstrated that some part of it has been recycled for the deposits made during the subsequent years within block period, quite naturally that amount could have gone into the purpose of computing the peak cash credits for the subsequent years, the actual recording on this aspect by the assessing officer that the assessee did not come forward with any evidence worthwhile to accept this claim and the Tribunal instead of addressing this aspect has given some other reasoning to reverse the finding of the assessing authority. 128. If the Tribunal should have found as a matter o....
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....al also, but we notice that the Tribunal simply accepts the arguments, purporting to be on examination of facts, without adverting to any material supporting the claim and on an assumption that "one cannot dispute the availability of cash of Rs. 27,15,600/- with the assessee" which is based on the premise that the assessee had generated this kind of income from a variety of his activities, such as Singapore trips, amounts received from Vishandas being the kartha of the Hindu Undivided Family and the amounts drawn from the chit transaction. When none of them had been made good before the assessing authority, there is no way of the Tribunal attributing such sources of income to the assessee for the purpose of concluding that the assessee had cash of Rs. 27,15,600/- which even on a very liberal view appears to be rather ambitious for the assessee and rather impertinent on the part of the Tribunal to record such a finding. Attributing availability of an amount of Rs. 27,15,600/- in the hands of the assessee which had never been accounted for and even when the assessee had been borrowing from the banks for the purpose of investment for the construction of house etc., does not appeal to ....
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....ose of arriving at a possible undisclosed income of the block period if the method as adopted by the assessing officer does not militate against the method and manner of arriving at a possible undisclosed income, there is no way of the Tribunal disturbing the undisclosed income arrived at by the assessing officer and irrespective of what the tribunal has done, the arguments addressed by Sri Shankar, learned counsel for the assessee to accept only the peak cash credit for each year separately does not appeal to us for acceptance. 135. If the assessee who had the opportunity to demonstrate that this very income had been recycled for further credits made in the bank accounts had failed to do that, it was not for the tribunal to invent possibilities not demonstrated before it to hold that there was no undisclosed income or to opine in any other manner and even if the assessee to contended, as is now submitted by Sri Shankar, learned counsel for the assessee that it could have been only the peak which is the one peak for the entire block period. 136. There can be only one peak and not several peaks, but in the very scheme of the Income Tax assessments and the manner of computing u....
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....ving, in the course of the search, purported to have unearthed some materials leading to detection of a possible undisclosed income of the respondent-assessee, it had resulted in a block assessment order dated 26-5-1997 [Annexure-B]. The salient feature of this block assessment order is that the assessee had been assessed to undisclosed income of Rs. 9,67,090 as undisclosed income referable to the period 1991-92 to 1996-97. The additions made for the different years are as under: Year Amount in Rupees 1991-92 1,60,200 1992-93 4,78,800 1993-94 2,88,700 1994-95 1,02,700 1995-96 3,23,000 1996-97 1,02,150 resulting in a tax liability of Rs. 5,80,254/- on the assessee. 141. The assessees stand was that she, as wife of Purushothamlal, had separate and independent income prior to the date of search of the premises of Purushothamlal; that she had filed return of income for the year 1995-96 in the normal course, towards the difference in the cost of construction of the house property jointly with her husband and other amount, was in a sum of Rs. 3,81,284/-, as unexplained investment made by the assessee for the four assessment years in questio....
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....ncome addition could not have been made in the hands of the assessee for the block period based on the search. 147. Sri M V Sheshachala, learned standing counsel for the appellant-revenue has contended that while the investment made in the construction of house property in respect of which the assessee had claimed 50% contribution, the assessee's claim had been received and it has been brought to tax in the hands of her husband Purushothamlal and to this extent, there is no question of the assessee being asked to pay any further burden of tax as her undisclosed income. 148. However, in so far as the amount of Rs. 3,81,284/- is concerned, submission is that the tribunal taking the view that the amount cannot be treated as an undisclosed income of her husband Purushothamlal, particularly in the wake of the present assessee having filed her return of income for the earlier years prior to the date of search and having earned some income and offered it to tax and that income being sufficient to sustain assessee's explanation on this aspect, the finding based on the premise that the assessee had an independent source of income and from out of that income she had made investment, wh....
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....3,81,284/- is only made once by the assessee and that has already been accounted properly and in this view of the matter, of the two questions raised in this appeal by the revenue, while the first question has become academic, as the revenue itself has accepted that the entire income assessed in the hands of Purushotamlal - husband of the present assessee - and therefore there is no question of bringing that income to tax again in the hands of the present assessee, in so far as the second question is concerned, it has to be necessarily answered in the affirmative and in favour of the assessee and against the revenue. 154. Accordingly ITA No 258 of 2001 is dismissed. BE: ITA No 277 OF 2003: 155. This appeal by the assessee directed against the order passed by the tribunal in two appeals that had been preferred by the assessee and his spuse Ms Jyothi Kumari, is against that part of the order of the tribunal, wherein the assessee was denied relief to the extent of confirmation of addition of Rs 3.10 lakh, an amount which the assessee claimed as income generated from the sale of a car, which was not accepted by the revenue and instead treated it as undisclosed income of the as....
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....ankar, learned counsel for the appellant-assessee, who figure as respondent in the two appeals filed by the revenue and disposed of as above i.e. ITA Nos 257 and 258 of 2001, we have examined the questions independently therein. For the sake of record, we have formally allowed the prayer of the appellant-assessee, made in this appeal through a memo dated 21-1-2010 for raising the following additional substantial questions of law: 1. Whether the Tribunal was justified in law in not giving a finding in respect of the issue of limitation for passing the order of Block Assessment after having noticed the contentions in its order on the facts and circumstances of the case? 2. Whether was the Tribunal justified in law in not holding that the assessment order dated 26.05.1997 is barred by limitation in accordance with the provisions of section 158BE of the Income Tax Act on the facts and circumstances of the case. 159. The arguments substantially overlapped one another and all questions, except the question relating to acceptability of the source of investment of Rs 3.10 lakh as one attributable to sale of a motor car owned by the assessee, have virtually ....
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.... whether the question of limitation would have totally come in the way of the assessing authority passing block assessment order and if there was absolutely a bar in law against passing assessment order on a period of limitation, which is not made dependent on any other aspect, but only on the ascertainment of definite dates and being capable of only one possibility, such questions cannot be examined, nevertheless, we permit to raise such question in this appeal and examine the appeal on the basis of such question also. 163. We have already indicated that in so far as the question of limitation is concerned, it was not a pure question of law but a mixed question fact and law, in the present situation and particularly having regard to the language of Section 158BE of the Act and the indication provided therein to compute the period of limitation, in an elastic manner and not in a rigid manner of a watertight compartment and having found that in the facts and circumstance of the assesses's case and particularly having regard to the conduct of the assessee in seeking for further time, even to file a return of income in respect of the undisclosed income for the block period after th....
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.... properly explained by the assessee, notwithstanding the amount being claimed as proceeds attributable to sale of a car owned by the assessee, we find that the assessing authority as well as the tribunal have gone wrong on this aspect, particularly as it is contended by Sri A Shankar, learned counsel for the assessee that this amount had figured in the returns filed by the assessee for the earlier years and been accepted by the revenue, as attributable to the sale of a car. 167. With this position being not disputed by Sri Sheshachala, learned standing counsel for the revenue, the amount cannot constitute an undisclosed source of investment to treat it as an income on the premise of unexplained source for further investment. Therefore, we have to necessarily answer this question in favour of the appellant-assessee and against the revenue. To this extent, we set aside the findings of the tribunal as well as that of the assessing authority, and hold that the addition of a sum of Rs 3.10 lakh to the undisclosed income of the assessee is not justified and the assessment order warrants correction to this extent. The assessing authority to effect the correction and to implement and gi....