TaxTMI 
TaxTMI 
2010 (2) TMI 942
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....eing now represented by his legal heir-wife Smt. Jyothikumari, wife herself is the respondent-assessee in I. T. A. No. 258 of 2001 and the subject-matter of this appeal is the block assessment order passed in respect of this asses- see for the block period April 1, 1985, to March 18, 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 undis- closed 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. No. 258 of 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 May 26, 1997, under the provisions of section 158BC of the ....
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....6, 1996, when the prohibitory order in respect of a copy of the R.C. book was lifted and thereafter it was followed up by issue of a notice under section 158BC of the Act as on June 22, 1996. 9. It is also the version of the Revenue that further panchanama was drawn as on May 16, 1996. 10. The notice under section 158BC of the Act was followed-up by a further notice dated July 19, 1996, issued under section 142 of the Act apprising the assessee that the case is posted to July 30, 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 under section 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 April 1, 1985, to March 18, 1996, by July 30, 1996, with a copy to the asses- see's representative Shri U. V. Mally, a chartered accountant Banga- lore. In response to this notice, the assessee's representative sent a tele....
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.... 1996, along with notice under section 143(2) and summons under section 131, seeking clarifications on various issues that emanated at the time of search, posting the case on December 31, 1996. In response to the above notices, the assessee filed a letter on December 26, 1996, requesting time till January 10, 1997. Again, the case was posted for hearing by issue summons under section 131 on December 30, 1996, posting the case to January 10, 1997. On January 10, 1997, the assessee's representatives, Shri Venkatesan and Shri Mallya, chartered accountants of S. Venkatesan and Co., were present and they wanted time till January 27, 1997, on which date the case was posted for hearing. On January 27, 1997, 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 under section 143(2) and summons under section 131 on February 11, 1997. 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 furth....
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..... Suresh Rs. 15,000 for the purchase of vehicle 6. The unexplained part of expenses on the foreign tour undertaken by the assessee 7. Certain advances to one Mr. Moh. Rebeck 8. Certain advance to Smt. Lakshmi W/o. Gururaj Acharya 9. Invest made on movables and immovables to the tune of Rs.3,81,284 10. Cash credits in the Bank accounts of the assessee during the relevant assessment years 1991-92 to 1996-97. 13. The undisclosed income attributable to all the above sources added up to a total of Rs. 54,18,571 in terms of the assessment order, was the subject matter of appeal by Sri Purushothamlal before the Tribunal under the pro- visions 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 attri- butable 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 ....
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....plained the source for investments made in the construc- tion of the house property and the Tribunal should have taken note of this aspect of the matter for reducing the undisclosed income attributable to the unexplained investments made in respect of the house property made by the assessees. 17. Sub-sections (1) and (2) of section 254 of the Act reads as follows : "254.(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed 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 ques- tion on its merits found there was no occasion to exclude the amount from the undisclosed income of ....
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....e the burden of demonstrating the claim of the assessee that he is an HUF even though the assessee does not produce any evidence or any material to substantiate his claim regarding his status ? 2. Whether the amount of Rs. 4,90,000 received by the assessee from 60 persons for organizing Singapore trips could be treated as an expenditure without the assessee establishing the identity of these 60 persons by producing their names, addresses and presence ? 3. Whether a sum of Rs. 1,77,730 paid towards purchase of site was correctly disallowed by the Assessing Officer as the sale deed does not disclose the name of the HUF or the assessee and the assessee had adopted the status of the HUF merely to account for unaccounted investments ? 4. Whether the Tribunal is correct that the valuation of the property should be Rs. 12,44,100 and not Rs. 17,16,000 as per the Departmen- tal Valuation Officer report by adopting erroneously local rates and granting supervision charges of 10 per cent. ? 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 proo....
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.... circumstances of the case, was the Tribunal right in law in holding that the matters which are already a part of return of income, filed before the date of search, can be the subject-matter of block assessment under Chapter XIV-B of the Act ? 4. Whether, on the facts and in the circumstances of the case, the addition sustained by the Tribunal could be treated as undisclosed income under section 158B(b) of the Act and liable for assessment under Chapter XIV-B of the Act ? 23. Sri Seshachala, learned senior standing counsel for the appellant, has addressed arguments on behalf of the Revenue in the two appeals, viz., I.T. A. Nos. 257 of 2001 and 258 of 2001. Even at the threshold of his submissions a preliminary objection was raised by Sri Shankar, learned counsel for the assessee, contending that the preliminary objection now raised 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 the merits, even without conceding but assuming for argumen....
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....in not holding that the assessment order dated May 26, 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 ?" 25. Sri Shankar, learned counsel for the assessee, being conscious of the fact that a ground of this nature had not been raised along with the memo- randum of appeal and also that the Tribunal though by implication should be understood to have answered this question against the assessee, would nevertheless make a fervent appeal for remanding the matter to the Tri- bunal for recording a specific finding on this question of law, if this court is not inclined to examine the question raised for recording the answer for the limited purpose of sustaining the order of the Tribunal though not on the merits but on the question of limitation. The preliminary objection though is called as preliminary, has in fact occupied a major 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 senior standing counsel for the Revenue, has joined the issue on this aspect, conten....
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....order passed by the Tribunal. The order of the Tribunal showing recording a finding on limitation or for not having recorded a positive finding against the assessment order as having been barred by the period of limitation, the question can never be raised by the assessee and, therefore, would urge that when once the assessee can raise this ground even in its own appeal under section 260A of the Act, whether or not such ground can be urged to support the order of the Tribunal in the two appeals filed by the Revenue, i.e., in I. T. A. Nos. 257 and 258 of 2001 such arguments will definitely be available to the assessee in I. T. A. No. 277 of 2003 as it is not an appeal filed under the very provisions of section 260A of the Act and it is well settled that an additional ground involving the substantial question of law can be urged at any point of time and at any rate would draw our attention to the provisions of section 260A(4) of the Act to urge that it is always open to the court to examine 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 ....
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....e, has urged that this court has to necessarily examine the question of limitation, i.e., the block assessment order being hit by bar of limitation and if such question is examined, it can be answered for such purpose and the assessee is definitely entitled to call in aid this benefit to the extent of sustaining the order of the Tribunal on the ground of limitation also, in addition to defending the order on its merits. 29. It is such submissions which are urged for the purpose of inviting us to examine the validity of the block assessment order on the point of limitation, though the Tribunal has not expressly opined on this question against the assessee or the Tribunal has positively recorded a finding one way or the other. 30. In so far as the question of limitation is concerned, the submission of Sri Shankar, learned counsel for the assessee, is two fold. 31. It is, firstly, contended that the assessee even figuring as the respondent in the appeals preferred by the Revenue, i.e., I. T. A. No. 257 of 2001 and I.T. A. No. 258 of 2001 while defending the order of the Tribunal to the extent such order is in favour of the assessees and for supporting the....
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....of sub-section (7) of section 260A of the Act and, there- fore, would urge that cross-objection is enabled and tenable in view of sub- section (7) of section 260A of the Act even in an appeal under section 260A of the Act. 33. We can usefully extract section 260A of the Income-tax Act, the provi- sions of Order 42, Order 41, rule 22 as also section 100 of the Code of Civil Procedure as under for easy reference : "260A. Appeal to High Court.-(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be- (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Chief Commissioner or Commissioner ; (b) Omitted by the Finance Act, 1999, with effect from June 1, 1999. (c) i....
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....he decree in so far as it is based, on that finding, notwithstanding that by reason of the decision of the court on any other finding which is sufficient for the decision of the suit the decree, is, wholly or in part, in favour of that respondent. (2) Form of objection and provisions applicable thereto.-Such cross-objection shall be in the form of a memorandum, and the pro- visions of rule 1, so far as they relate to the form and contents of the memorandum of appeal, shall apply thereto . . . (4) Where, in any case in which any respondent has under this rule filed a memorandum of objection, the original appeal is with- drawn or is dismissed for default, the objection so filed may never- theless be heard and determined after such notice to the other parties as the court thinks fit. (5) The provisions relating to pauper appeals by indigent persons shall, so far as they can be made applicable, apply to an objection under this rule. Order XLII Appeals from appellate decrees 1. Procedure.-The rules of Order XLI shall apply, so far as may be, to appeals from appellate decrees. 2. Power of court to direct that the appeal be he....
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....ppealing respondent is desirous of getting a relief other than what had been obtained before the court of the first instance, then even when such respondent had not filed an independent appeal by himself/herself, can nevertheless take advantage of the appeal preferred by the other side and even figuring as the respondent in the appeal of the other side can file a cross-objection which when admitted would acquire the status of an inde- pendent appeal and could possibly get such relief to such a cross- objector if entitled to, on the merits than what was given before the court of first instance. 35. It is the first part of these two benefits which Sri Shankar, learned counsel for the assessee, would press for the exercise by the respondent- assessee and would, therefore, submit that if it is to be accepted that the assessment order was one without jurisdiction for the reason that the Assessing Officer passed the order beyond the period contemplated under the provisions of section 158BE of the Act that arguments can be pressed into service before this court also, but only to the extent of sustaining the order passed by the Tribunal but not for arguing and seeking more relief, etc. ....
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.... search was actually conducted on March 18, 1996, and even at the left hand bottom of the panchnama where the signature of panchas date is required to be affixed, one Mr. P. Nagaraj has affixed his signature and it is only on right hand part of the very column another signature of the asses- see is obtained and the date mentioned is May 16, 1996. In this state of affairs, we examine the legal issues ignoring the two panchnama relied upon by the Revenue. 38. The provisions of section 158BE of the Act reads as under : "158BE. Time limit for completion of block assessment.-(1) The order under section 158BC shall be passed,- (a) within one year from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997 ; (b) within two years from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case ....
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....ipulation of limitation is not an absolute stipulation for the period of one year from the date of the initial search, but as indicated in Expla- nation 1 to section 158BE there are certain exceptions and the period of one year is enlarged in the circumstances mentioned in clauses (i), (ii), (iii) and (iv). 40. However, as Sri Shankar, learned counsel for the assessee has urged before us that the fact situation pointed out in the present case does not come under any one of the four clauses enumerated above. We have examined the fact situation also on this aspect of the matter. We find that the assessee while had not taken the stand that the assessment was barred for mulcting the assessee with any liability in terms of a block assessment order for the period as 1995-96 to 1996-97 as the period of one year had elapsed from the date of initial search, i.e., from March 18, 1996, was not expressly urged or taken before the Assessing Officer even though the assessee had himself participated or appeared before the Assessing Officer and had been seeking for extending the time for filing of a return of the income for the block period and particularly in the background of the assessee hav....
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....ed with the question of jurisdiction as is sought to be con- tended by Sri Shankar, learned counsel for the assessee. 44. Jurisdiction is not an aspect necessarily dependent on the question of limitation as if one would agree it lacks jurisdiction, nothing else follows. But the law of limitation operates even when the court has jurisdiction to the extent that the particular court grants relief to which a person is enti- tled to in law, if the person seeking relief before the court approach the court within the stipulated period of limitation as prescribed under the statutory provision. In view of this legal position and in the wake of the enabling provisions for extending the enlarged period of limitation of one year and particularly, when the period of enlargement being not either pre- cise or definite but depending upon the facts and circumstances of each case. We are of the clear opinion that having regard to the facts, it cannot be definitely answered that the assessment order dated May 26, 1997, is one barred by the period of limitation, but nevertheless the learned counsel for the assessee having raised certain legal question of considerable impor- tance, we proceed....
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....edure in appeals from appellate decrees and orders.-The provisions of this Part relating to appeals from original decrees shall, so far as may be, apply to appeals- (a) from appellate decrees, and (b) from orders made under this Code or under any special or local law in which a difference procedure is not provided." 48. It is under this provision, the enabling provisions of Order 42 in turn Order 41 to the extent they may be applicable are all invoked. It is by now well settled that an appeal is a creature of statute and is not either a vested right or a natural right nor can it be a right by implication. 49. Though Sri Shankar, learned counsel for the assessee, has placed reli- ance on the following decisions of the Supreme Court as also other High Courts to support the submission with regard to the maintainability of a cross-objection, even in a second appeal or in an appeal of the nature of section 260A of the Act, viz., Ravinder Kumar Sharma v. State of Assam reported in [1999] 7 SCC 435 relying particularly on paras. 19 to 24 : "19. In connection with Order 41 rule 22 CPC after the 1976 amendment, we may first refer to the judgment of....
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....age of the rule, however, requires some modification because a person cannot support a decree on a ground decided against him. What is meant is that he may support the decree by asserting that the matters decided against him should have been decided in his favour. The rule is being amended to make it clear. An Explanation is also being added to rule 22 empowering the respondent to file cross-objection in respect to a finding adverse to him notwithstanding that the ultimate decision is wholly or partly in his favour.' Mookerjee J. observed in Nishambhu Jana case (see p. 689) that the amended rule 22 of Order 41 of the Code has not brought any substantial change in the settled principles of law' (i.e. as accepted in Venkata Rao case) and clarified (page 691) that 'it would be incorrect to hold that the Explanation now inserted by Act 104 of 1976 has made it obligatory to file cross-objections even when the respondent supports the decree by stating that the findings against him in the court below in respect of any issue ought to have been in his favour'. 22. A similar view was expressed by U. N. Bachawat J. in Tej Kumar Jain v. Purshottam, AIR 1981 MP ....
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....ced by Sri Shankar, learned counsel for the asses- see, on many other judgments of the Supreme Court as well as the High Courts as under including Subba Reddy's case. All these authorities do not advance the submission to hold that a cross-objection is tenable in a second appeal such as an appeal under section 100 of the Code of Civil Procedure. The other authorities relied upon by Sri Shankar, learned counsel for the assessee, for this proposition are as follows : (1) Superintending Engineer v. B. Subba Reddy reported in [1999] 4 SCC 423 ; (2) American Pipe Company v. State of U. P. reported in [1983] AIR 1983 Cal 186 ; (3) Gaddem Chinna Venkata Rao v. Koralla Satyanarayanamurthy reported in [1943] AIR 1943 Mad 698 [FB] ; (4) CIT v. Deepak Aggarwal reported in [2009] 308 ITR 116 (Delhi) ; and (5) Municipal Corporation of Delhi v. International Security and Intelligence Agency Ltd. reported in [2004] 3 SCC 250. 52. We find none of these judgments/authorities have examined the question of tenability of cross-objection in an appeal under section 100 of the Code of Civil Procedure or in a like provision, but are all questions examin....
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.... Even where the appeal is withdrawn or is dismissed for default, cross-objection may nevertheless be heard and determined. (5) The respondent even though he has not appealed may support the decree on any other ground but if he wants to modify it, he has to file cross-objection to the decree which objections he could have taken earlier by filing an appeal. Time for fling objecting which is in the nature of appeal is extended by one month after service of notice on him of the day fixed for hearing the appeal. This time could also be extended by the court like in appeal. (6) Cross-objection is nothing but an appeal, a cross-appeal at that. It may be that the respondent wanted to give a quietus to the whole litigation by his accepting the judgment and decree or order even if it was partly against his interest. When, however, the other party challenged the same by filing an appeal the statute gave the respondent a second chance to file an appeal by way of cross-objec- tion if he still felt aggrieved by the judgment and decree or order. (24) In the present case, as noted above, the respondent did not file any appeal under section 39 of the Act in the High Co....
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.... reading of these provisions shows that in all the appeals filed under section 39, the provisions of the Code of Civil Procedure, 1908, would be applicable. This would include the appli- cability of Order 41 including the right to take any cross-objection under rule 22 thereof to appeals under section 39 of the Act." and, therefore, having regard to the language of section 39 of the Arbi- tration Act, 1940, the Supreme Court ruled that section 39 being in the nature of first appeal and with the provisions of Order 41 having been made applicable rule 22 of Order 41 was also attracted and applicable to an appeal under section 39 of the Act. However, in the present situation, we find such is not the case in so far as sub-section (7) of section 260A of the Act is concerned for the reason that the provisions of section 260A of the Act are more comparable to an appeal under section 100 of the Code of Civil Procedure rather an appeal under section 96 and even hearing in so far as the second appeal is concerned not all provisions of Order 41 are made automatically applicable to an appeal under section 100 both in terms of Order 42 read with section 108 of the Code of Civil Proced....
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.... one year is enlarged. We have examined and answered such submissions also in the wake of the view expressed in the earlier part of this order. We are of the clear opinion, that even on complying with the principles of natural justice and the prayer of the respondent-assessee to defend the order on the question of limitation also the submission of the respondent does not stand scrutiny in accepting the same as expressed earlier. 58. It is, therefore, that the question of limitation cannot be pressed into service or it does not hold the defence set up on behalf of the assessee even to the limited extent of defending the order of the Tribunal to the extent, the relief was granted. 59. That inevitably takes us to the merits of the contentions urged on behalf of the Revenue attacking the order of the Tribunal on the questions for- mulated in the memorandum of appeal for examination of which questions these appeals of the Revenue have been admitted. 60. We shall take up the questions in seriatim and examine the submissions made on these questions also. 61. As discussed earlier the questions though are several in number they are essentially revolvi....
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....as a Hindu undivided family and certain investments said to be explained by the assessee in whose returns it was found as unexplained to be the income of the Hindu undivided family 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 Tribunal towards the end of paragraph 17 reads as under : "17. We have gone through the entire facts and thoroughly perused the assessment order. The assessee has given a clear account of transactions as to widen amounts pertaining to money-lending business ; punting business and double entries, etc. When such facts and figures are furnished by the assessee it is the bounden duty of the Assessing Officer to counter such statement, if he wants to disbelieve the version of the assessee, in which he failed. The Assessing Officer further failed to discharge the burden cast on him to prove that there was no Hindu undivided family. In this view of the matter, only the amount admitted by the assessee under the money-lending business alone has to be assessed, but not the other amounts." 65. On the other hand, the Assessing Off....
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....f 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) read with sub-section (6) of section 260A of the Act, Such additional ground/question should always be per- mitted to be raised and even the courts can also admit such questions and answer the questions and if such is the statutory provision the assessee should be permitted to raise this question. It is, therefore, such additional grounds sought to be urged in the assessee's appeal, i.e., I. T. A. No. 277 of 2003, the question of limitation is sought to be agitated before this court to contend that the assessment order is bad in law. 68. We have bestowed our attention to the prayer for raising additional grounds. While we are not inclined to accept the submission of SriShankar, learned counsel for the assessee, that the statutory provisions particularly, subA-section (4) read with sub-section (6) of section 260A ....
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....on 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 general but even here for the purposes of considering the supporting point of limitation it is inevitably linked to the date on which the cause of action arises which depends upon the facts and circumstances of each case and can be different in respect of each litigant in respect of income-tax matters, which is in respect of each assessee. If so, the question of limitation being not a pure question of law and being a mixed question of law and facts and the assessee having got an opportunity to plead this before the original authority as the assessee was quite aware that no block assessment order had been passed even as on March 31, 1997, and on the other hand the assessee havi....
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....s it now prevails after the 1976 amendment to the Code of Civil Procedure. 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 having granted the relief sought for by the non- appealing person through an independent appeal to maintain a cross- objection which can achieve the purpose of maintaining an independent appeal and though such a party might have missed the bus and had not filed the appeal which is to be filed or to maintain such an appeal through the cross-objection in the appeal filed by either contestant to the original proceedings. 76. While we find such is the scope of a cross-objection filed under the pro- visions of Order 41, rule 22 which is expressly applicable to first appeals or in the sens....
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....re 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 cannot 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 Bench decision of the Orissa High Court in the case of Sridhar Ghose v. Harimohan Sahu reported in [1964] 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 Kerala High Court in the case of Palasseri Vela- yudhan v. Palasseri Ithayi reported in [1994] AIR 1994 Ker 267, however, to the limited extent of the cross-objection also conforming to the require- ments of a section 100 appeal. 81. We have bestowed our attention to these two authorities of the Orissa High Court as well as the Kerala High Court. On an independent analysis also we find that with a second appeal being not the same as a first appeal ....
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.... in an appeal under section 100 of the Code of Civil Procedure, it is a fortiori so in an appeal under sec- tion 260A 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 con- siderable reliance to contend that cross-objections are tenable even in an appeal under section 260A 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 260A of the Act figuring towards the end of the section "Expressly providing for the pro- cedure 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 in Order 42 not all pro- visions of Order 41 are made applicable, the scope of the provisions of Order 42 are being made applicable to an appeal under section 260A of the Act should necessarily be read as a provision in providing for creating sub- stantive rights. ....
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....rable reliance on the Division Bench judgment of the Kerala High Court in the case of Deputy CIT v. S. T. N. Textiles Ltd. reported in [2002] 257 ITR 161 (Ker), 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 filed by the asses- see 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 pre- venting 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 provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.' This....
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....e would apply when an appeal is preferred under section 260A of the Act for the simple reason that even under sub-section (7) of section 260A 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 con- dition that it is so safe for application on a reading of all other provisions of the 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 the 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 decision of the Calcutta High Court in Income-tax 124, 438 cannot also advance the submissions made on behalf of the assessee to contend that a cross-ob....
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....y 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 of the Code of Civil Procedure is neither the possibility nor the intention of the Legislature in rule 1 of Order 42 of....
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....to be 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 sub- mission 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 jus- tified in law ; that the Tribunal has committed an error in not only allowing a deduction of 15 per cent. purporting to be due to the differences in legal valuation method and CPW valuation method which the Tribunal pre- sumes to have been adopted by the Departmental Valuation Officer and further deduction of 10 per cent. towards su....
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....epartmental Valuation Officer was not paid as indicated by the valuer of the very assessee, namely, at Rs. 16,86,000, 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 the subject....
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....estion in favour of the assessee and we do not want to examine the further aspects on this question having regard to the insignificant amount that too as found 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 lakh as an unexplained investment and amount advanced to one Smt. Lakshmi Gururaj Acharya, while the asses- see 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, the balance amount if at all could have been looked 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 per- verted reasoning to hold that there is....
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....e appellant-Revenue has submitted that the cash credits are worked out for the years within the block period bank-wise and year-wise, the submission of Sri Shankar, learned counsel for the assessee, is that in the concept and the scheme of block assessment under section 158BC 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 the 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 ha....
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....m to furnish within such time not being less than fifteen days ; (ii) in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997, serve a notice to such person requiring 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 subA-section (1) of section 142, setting forth his total income including the undis- closed 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 undis- closed 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 far as may be, apply : (c) the Assessing Officer, on....
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....nt, that income which had not been assessed earlier by the assessee not having so disclosed it as income can be definitely brought to tax and the block period whether or not the assessee is so willing or otherwise and even when the information relating to the existence of some undisclosed unassessed income being part of an asset was available for the earlier years. 119. We would like to indicate that an assessment for the 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 lead- ing 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 shou....
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....t has gone off at a tangent in accepting the other explanations given by the assessee and that too most of it for the first time put forth before the Tribunal and, therefore, the finding of the Tribunal on this aspect of the matter with regard to setting aside the entire peak cash credit of Rs. 14,55,550, parti- cularly, on 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. ....
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....he aggregating the peak cash credits for the years in question are added it works out to Rs.31,88,314 and there is nothing wrong in the Assessing Officer adopting this figure as unexplained investments credits of the assessee in the two accounts of the bank and bringing this amount to tax is the inevitable course for the Assessing Officer and the Tribunal having reversed this finding not on relevant consideration but on extraneous con- siderations such as attributing some source of income to the credits while the actual withdrawal were not properly accounted and when the with- drawals 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 it 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 the block period, quite naturally that amount could have gone int....
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....ubstan- tial question of law, that question can be discarded, but not to answer a question on any material not examined and answered by the Tribunal or the authorities, and inviting our attention to such material/statement placed before the High Court for the first time and for answering the ques- tions, which has no bearing or relevance to such material. 132. The arguments as now addressed before us, had been sought to be addressed before the Tribunal 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 asses- see" 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 karta 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 ....
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....e undisclosed income for any part of it alone should be taken and not as discovered for any other part of the block period, so long as the same income is not taxed twice but only once. 134. We are quite aware that in tax parlance, particularly, in income-tax, an income which has suffered tax once, cannot be taxed again in the hands of the same assessee is a well accepted principle, but the question is as to whether it had suffered tax and for the purpose 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 SriShankar, 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 Tr....
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....her own income without examining any material or recording a finding as to why the Assessing Officer con- clusion that this income had not been generated by the assessee was not correct ?" 140. The appeal has its origin to a block assessment order passed in the hands of the respondent-assessee, who is wife of one Purushothamlal, pursuant to a search conducted in the premises of the said Purushothamlal as on March 18, 1996. With the respondent in this appeal also being an assessee under the provisions of the Act and the officials having, 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 May 26, 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 ....
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....he appeal. 145. It is aggrieved by this order the present appeal has been filed by the Revenue on the substantial questions of law as indicated earlier. 146. It is the case of the Revenue that the Tribunal should have assessed the income claimed to be the income of the assessee only in the hands of her husband, Purushothamlal, and as an unexplained income in the hands of Purushothamlal, as the assessee did not have a real or acceptable source of income from her so-called tailoring activity and without examining this aspect, simply could not have allowed the appeal of the assessee to hold that the income 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 construc- tion of house property in respect of which the assessee had claimed 50 per cent. contribution, the assessee's claim had been rejected 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....
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....nce-sheet appended to the return. It is indicated therein that the capital account of the assessee as on March 31, 1994 was Rs 4,05,005.50 and it is well supported by the income generated in terms of the return of income filed for the earlier years. 152. To this extent, Sri Seshachala, learned standing counsel for the appel- lant-Revenue, does not dispute the factual premise and facts and figures as mentioned in the balance-sheet attached to the return of income filed by the assessee for the assessment year 1994-95. 153. A perusal of the balance-sheet and the orders passed by the assessing authority and the Tribunal, does not indicate that the so-called unexplained income of Rs. 3,81,284 is only made once by the assessee and that 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 Purushothamlal, 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 ques....
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....sment under Chapter XIV-B of the Act ? 4. Whether, on the facts and circumstances of the case, the addi- tion sustained by the Tribunal could be treated as undisclosed income under section 158B(b) of the Act and liable for assessment under Chapter XIV-B of the Act ?" 157. In the course of the hearing of the appeal, Sri A Shankar, learned counsel for the appellant-assessee, has made a prayer to permit the asses- see to raise additional questions such as questions relating to the period of limitation operating against the Revenue in terms of section 158BE of the Act for passing block assessment order as on May 26, 1997, in respect of a search which was conducted on March 18, 1996. 158. Though such a question was, in fact, canvassed and Sri Shankar, 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., I. T. A. 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 January 21, 2010, for raising the following additional ....
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....he attention of the Tribunal, at the instance of the assessee, in the absence of a direct appeal against the impugned order of the Tribunal, the present appeal, purporting to be directed against the order declining to review the main order on the limited question of addition or otherwise of Rs. 3.10 lakhs, the question of limitation now sought to be raised as an additional substantial question of law by raising additional grounds should not be permitted and the application should be rejected. 162. Irrespective of the technical objections raised by the learned counsel for the Revenue and though the question of limitation in the present case is not a pure question of law but is a mixed question of fact and law, nevertheless, we permit the question being raised only for the purpose of satisfying ourselves as to 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, s....
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....d by the searching officer, as decided in the case of CIT v. T. S. Chandrashekar [2009] 17 DTR (Karn) 194 cannot advance the case of the assessee in the present situation to answer the question in favour of the assessee. Therefore, we hold that there is no need for further examination of this judgment for the purpose of answering the question posed in the present appeal. 165. In so far as the substantial question occurring at para. 20 of the memorandum of appeal, is concerned as we have already answered this question in favour of the Revenue and against the assessee, while answer- ing the questions raised in the earlier two appeals of the Revenue, it is so answered here again. 166. With regard to the question that occurs at para. 21 of the memorandum of appeal, i.e., the question relating to the Tribunal confirming the addi- tional sum of Rs. 3.10 lakhs as an amount not properly explained by the assessee, notwithstanding the amount being claimed as proceeds attribut- able 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, parti- cularly as it is contended by Sri A, Shankar, learned....