TaxTMI 
TaxTMI 
2013 (9) TMI 128
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....ptional circumstances as listed in Rule 6DD(j) and hence were not disallowable u/s 40A(3)?" Counsel for the revenue as well as counsel for the respondent, agree that the first question of law is covered against the revenue, vide judgment dated 06.05.2013, passed in ITA No.720 of 2008 ("Commissioner of Income Tax Chandigarh-II v. M/s SAB Industries Limited, Sector-26, Chandigarh"). The first question of law is, therefore, answered against the revenue in terms of the aforesaid judgment. Counsel for the revenue submits that the second question of law may be re-framed and a third question of law also arises for consideration in the following terms:- "(ii) Whether the Income Tax Appellate Tribunal, exercising powers of an Appellate Authority was right in reversing findings recorded by the Assessing Officer on facts that were neither pleaded nor raised before the Assessing Officer or the CIT(Appeals)? (iii) Whether the Income Tax Appellate Tribunal could have reversed the order passed by the Assessing Officer and the CIT(Appeals), with respect to cash payment to M/s Munak International Private Limited, without reversing the findings recorded by the Assessing Officer as well as the CI....
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....ls) as well as the order passed by the Assessing Officer. The Assessing Officer disallowed Rs.1,27,979/- paid in cash in excess of Rs.10,000/- as there was no plausible explanation, for these payments. The particulars of these payments and reasons assigned by the Assessing Officer, for rejecting the explanation proferred by the assessee are as follows:- (1) A sum of Rs.40,000/- was paid to M/s Jain Suppliers Syndicate Calcutta and Rs.12,684/- to M/s Lala Jogi Dass Prem Sagar, both of Calcutta. The explanation offered by the assessee was that parties at Calcutta insisted on cash payment and their request letters are enclosed with the reply. The explanation was rejected by holding that the assessee has not enclosed the request letters and has not adduced any other independent evidence. (2) The payment of Rs.75,295/- to M/s Munak International Private Limited was disallowed on the ground that the explanation that payment was made for emergency purchases was false as purchase of marble chips and aluminum products could not be held to be an emergency purchase and even otherwise Shri R.K.Garg, Director of the assessee is a Promoter of M/s Munak International Private Limited, which is ....
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....in. But the above mentioned circular of the Board also mentions that all the circumstances spelt our therein are not exhaustive. These are only some of the exceptional circumstances where it could be said that such payments are covered under rule 6DD(j). However, in response to specific query from the Bench, the ld. Counsel submitted that the registered office of the assessee is located at Chandigarh. The contract work for which such purchases were made from Calcutta was being carried out at Port Blair. There is no material placed on record to show that the assessee had his branch office at Calcutta. These facts show that material purchased at Calcutta was to be transported to Port Blair where one has also to see the availability of the transport. No material has been placed on record to show that the parties from whom the assessee made purchases were known to the assessee or the assessee had regular transactions with them even in the past. The mere fact that one of the directos of the Company was the same from whom it made the purchases of Rs.75,000/- or so does not mean that party was known to the assessee. One has to see the urgency and the circumstances under which such payment....
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....of the Act and while appraising an order to rectify an erroneous imposition of tax or an erroneous escape of revenue. The Tribunal may, therefore, allow parties to raise fresh pleas and grounds but only if the factual foundation for the fresh plea or ground has already been laid before the Assessing Officer or the CIT(Appeals). The power, in our considered opinion, cannot be construed to confer a power so wide and unbridled, as to enable a Tribunal to disregard basic principles that govern exercise of appellate power, namely, the power to appraise orders and discern whether subordinate authorities have committed any error of law or of fact. A reference in this regard may be made to a judgment of the Hon'ble Supreme Court in National Thermal Power Co. Ltd. v. Commissioner of Income Tax, 1997(7) SCC 489, which reads as follows:- 5. Under Section 254 of the Income tax Act, 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. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible term. The purpose of the assessment proceedings before the taxing authorities i....
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....he modified second question of law is answered accordingly. As a consequence of our answer to the second question of law(as modified) it is held that the Income Tax Appellate Tribunal has erred in reversing findings of fact on the basis of facts that were neither pleaded nor raised before the Assessing officer or the CIT(Appeals) The third question of law framed by counsel for the revenue is whether the Income Tax Appellate Tribunal could have reversed orders passed by the Assessing Officer and the CIT(Appeals), with respect to cash payment to M/s Munak International Private Limited, without reversing the findings that purchase of Marble Chips and Alluminium products cannot be held to be an emergency purchase, justifying payment in cash? A perusal of findings recorded by the Assessing Officer as well as the CIT(Appeals) reveals that cash payment to M/s Munak International Private Limited was sought to be justified on the ground that it was an emergency purchase. The explanation was concurrently rejected by the Assessing Officer and the CIT(Appeals) by holding that such purchases cannot be held to be emergency purchases and even otherwise Mr. R.K.Garg, Managing Director of the as....