TaxTMI 
TaxTMI 
2018 (10) TMI 1399
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....to be rectified within the limited mandate of Section 254(2) of the Income-tax Act,1961(hereinafter called " the Act") or in the alternative prayers are made to set aside the aforesaid order of the tribunal dated 03.10.2017 in cross appeal filed by the assessee and the revenue. 2.1 The Background of the case are that tribunal has passed an detailed order with respect to ITA no. 2415 & 1295/Mum/2014 vide common orders dated 03.10.2017 wherein against cross appeals filed by both assessee and revenue, the additions to the tune of Rs. 49,17,69,925/-were confirmed by the tribunal by holding as under:- "10. We have considered rival contentions and carefully gone through the records placed on file. We have observed that the assessee is an individual running a proprietary concern under the name and style of „Shankheshwar Bullion', stated to be engaged in the business of purchase and sale of gold bars. The assessee started his proprietary concern only in the month of March, 2005 wherein registration was obtained vide TIN No. 24071301929 w.e.f. 07-03-2005 with Gujarat VAT authorities in the state of Gujarat at Ahmedabad(Gujarat), although the assessee belonged to Mumbai (Ma....
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....ity of its customers who bought gold in cash from him on the pretext that there is no requirement under law to reveal the identity of the buyer. It is pertinent to mention that each invoice of cash sale of gold bar in majority of cases issued by the assessee is on an average exceeding Rs. 3,00,00,000/- in majority of cases. The assessee never revealed the identity of person who bought gold bars in such a huge quantity by paying cash. The assessee is stated to have purchased gold bars mainly from Padamavati Bullions. The partner of said firm Padmavati Bullion confirmed the sale of gold bars to the assessee in statement recorded u/s 131 but subsequently the said partner never appeared before the authorities below when he was called by the AO as Revenue sought more information from him.. The said Padmavati Bullion purchased this gold bars/bullion from ICICI bank for which necessary documents such as purchase invoices, payments for purchases by cheque through bank, delivery challan in favour of Padmavati Bullion issued by the ICICI bank are part of the records which are placed in the paper book. However, there is no material on record as to the delivery of gold bars to the assessee and....
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....idence on record that security vaults or security personnel's were deployed by the assessee to secure highly expensive commodity being gold bars or even cash dealt/handled by the assessee. The financial statement of the assessee as at 31-03-2005 reveals that 5kg of stock of gold to the tune of Rs. 30.95 lacs was held as closing stock but there is no explanation as to how the said gold was stored/secured. Similarly, there is no explanation by the assessee that how it used to secure the movement of gold bars after its receipt from Padmavati Bullions till it is delivered to the buyer. There is also no material on record to suggest that any security vaults were hired or constructed or any security personnel were deployed by the assessee nor there is any insurance policy being taken by the assessee to secure gold bars of huge value. The material on record also clearly reveal that the capital of the M/s Padmavati Bullion from whom the assessee made purchases is in negative and is merely (-) Rs. 2.75 lacs as compared to the huge transactions in sale of gold running into Rs. 77.26 crores in March 2005 and turnover of Rs. 136.92 crores from April 2005 to 29-06-2005, aggregating to approx. R....
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....ed to be done through the government nominated agencies including approved banks. The RBI has directed these agencies who are authorized by the RBI to do due diligence/KYC and other checks and verification of the ultimate buyers of the gold so that the end use of the imported gold can be tracked, controlled and monitored and gold is handled/ utilized/ consumed by only authorized concerns for specified approved purposes and in no case it was allowed to be diverted for un-authorized use or/and to unauthorized persons. The master circular dated 01-07-2005 issued by RBI made these regulatory and controlled monitoring more stringent wherein onerous responsibilities were placed on the nominated agencies and banks to further tighten their monitoring both on suppliers as well on the importing concerns and the end users. This is mainly done by RBI to tackle/curb abuse and menace of money laundering and prohibit circulation of black money in the economy. In its circular no. 25 dated 01-10-2003, RBI has expressed unhappiness about misuse of import LC's by unauthorized agencies for importing gold and strict instructions are issued for complying with regulations/guidelines. Further str....
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....9;Measures to tackle black money in India and Abroad'. They have, in no uncertain terms, suggested that one singular proof of identity of a person for entering into finance/business transactions etc may go a long way in curbing this foul practice." Reference is also drawn to recent decision of Hon'ble Delhi High Court in the case of CIT v. D.K.Garg in ITA no 115 /2005, wherein Lordships have held that an accommodation entry provider wanting to avail the benefit of the 'peak credit' has to make a clean breast of all the facts within his knowledge concerning the credit entries in the accounts. The tax-payer has to explain with sufficient detail the source of all the deposits in his accounts as well as the corresponding destination of all payments from the accounts. The tax-payer should be able to show that money has been transferred through banking channels from the bank account of creditors to the bank account of the assessee, the identity of the creditors and that the money paid from the accounts of the tax-payer has returned to the bank accounts of the creditors. The tax-payer has to discharge the primary onus of disclosure in this regard. Their Lordships held....
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....e sources of deposits and the corresponding payments then he would not get the benefit of 'peak credit'. 19. The legal position in respect of an accommodation entry provider seeking the benefit of 'peak credit' appears to have been totally overlooked by the ITAT in the present case. Indeed, if the Assessee as a self-confessed accommodation entry provider wanted to avail the benefit of the 'peak credit', he had to make a clean breast of all the facts within his knowledge concerning the credit entries in the accounts. He has to explain with sufficient detail the source of all the deposits in his accounts as well as the corresponding destination of all payments from the accounts. The Assessee should be able to show that money has been transferred through banking channels from the bank account of creditors to the bank account of the Assessee, the identity of the creditors and that the money paid from the accounts of the Assessee has returned to the bank accounts of the creditors. The Assessee has to discharge the primary onus of disclosure in this regard. 20. While the AO in the present case did not question the working out of the peak credit b....
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.... for moving the funds to places such as offshore financial centres operating in a liberal regulatory regime. Often "front" companies are formed to accomplish this task. These companies obscure the real owners of the money through the bank secrecy laws and attorney-client privilege. The techniques used for the purpose are to lend the proceeds back to the owner as loans, gifts and etc., under invoicing the items exported to the real owner or etc. In some cases, the transfers may be disguised as payments for goods or services, thus giving them a legitimate appearance. 3. Integration This involves investment in the legitimate economy so that the money gets the colour of legitimacy. This is achieved by techniques such as lending the money through "front" companies etc. The money may be invested in real estates, business and etc. The stages at which money-laundering could be easily detected are those where cash enters into the domestic financial system, either formally or informally, where it is sent abroad to be integrated into the financial systems of tax haven countries and where it is repatriated in the form of transfers." The role of the revenue a....
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....t with clean hands and Court will not help those whose own hands are dirty. At this stage it is important to refer to provisions of Section 106 and 114(g) of the Indian Evidence Act,1872. Section 106 of the 1872 Act stipulates that burden of proving fact which is especially within the knowledge of any person is on that person. Similarly Section 114(g) of the 1872 Act stipulates that the evidence which could be and is not produces would, if produced, be unfavourable to the person who withholds it. The assessee in the instant appeal has withheld the details and identitiy of the buyers of gold bars for which the assessee is to be blamed and presumption is drawn against the assessee as it cannot be accepted that such a huge sales averaging more than Rs. 3 crores executed per one sale invoice in majority of cases by the assessee to persons whose details are not known to the assessee rather the assessee is deliberately withholding such details at his own peril and is clearly hit by Section 106 and 114(g) of the 1872 Act and presumption is drawn against the assessee that either the assessee has introduced his own undisclosed income into the bank accounts of the assessee or if the story of....
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....es was realized in the months of May,June,July and August 2005 which does not inspire confidence. The genuineness of the business of gold bars carried on by the assessee of such huge magnitude keeping in view background of the assessee based on material on record and infrastructure facilities maintained by the assessee as well no experience in this field itself cast serious shadow of doubt on the genuineness of said business carried on by the assessee. The onus was on the assessee to prove genuineness of the business of gold bars conducted by the assessee. Reference is drawn to decision of Hon'ble Supreme Court in the case of Sumati Dayal(Supra). Provisions of Section 68 of the Act is a special provisions and is a deeming provision which cast obligation on the assessee to satisfactorily explain the cash credits appearing in books of accounts of the assessee by revealing identity, creditworthiness of the creditor and genuineness of the transaction which has not been fulfilled by the assessee and burden cast on the assessee is not fulfilled by the assessee in the instant case as detailed above. Provisions of Section 68 as were applicable for relevant assessment year are reproduced he....
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....nt of law in Section 106 of the Evidence Act. "106. Burden of proving fact especially within knowledge.-When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him". 6. In a catena of judgments Supreme Court held that requirement of Section 106 is that the person concerned has to adduce such evidence as is supposed in the ordinary course of business to be within his power. If the shares were sold and sale proceeds were received in cash the assessee could have produced the sold note. The assessee could have also applied for issuance of summons both to the broker and the buyer. He could have led evidence through them proving the transaction of share. Similarly he could have applied for issuance of summons for examining the debtor who had allegedly repaid the money in cash and it could have been said that the assessee did whatever was within his power, but the assessee did not discharge his burden. Law requires the assessee to satisfy the Assessing Officer. Satisfaction of the Assessing Officer cannot be of a higher or lower level than the satisfaction of any person of ordinary prudence. If the assessee has taken steps ....
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....ng the course of appellate proceedings, the appellant could bring no material or evidence on record in support of his contentions. I also find no substance in the argument that, since the AO has not rejected the books of account, the provisions of section 68 have no application. There is no requirement in law that books should be rejected before invoking the provisions of Section 68. In view of the above, I am of the opinion that the AO has rightly held that the appellant has failed to explain the source of the cash deposits totalling to Rs. 32,17,784/-. The addition made by the AO is confirmed. The grounds raised by the appellant are liable to be dismissed." 8. The judgement of the Assessing Officer and the CIT(A) disclose in no uncertain terms that the evidence including steps which the assessee could have taken were not resorted to. Therefore, the Assessing Officer was entitled in law to draw an adverse inference which is authorized by Section 114(g) of the Evidence Act which permits a presumption as follows: "That evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;" 9. For the reasons aforesa....
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....nk account and consequently sources of incurring expenditure by way of purchases claimed by the assessee in its Profit and Loss Account of Rs. 48.78 crores could not be satisfactorily explained by the assessee and onus cast u/s 69C was not satisfied which will make amount covered by such expenditure represented by purchases of gold bars to be deemed income of the assessee under the deeming fiction of Section 69C. The said Section 69C is further controlled by proviso which has an overriding effect and provides that notwithstanding anything contained in any other provision of the 1961 Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. Thus, Section 69C read with proviso makes it abundantly clear that the amount represented by expenditure incurred by the assessee towards purchases of gold bars constitute income within deeming fiction of 69C of the 1961 Act. Thus, we set aside the order of learned CIT(A) and confirm the addition to the tune of Rs. 49,17,69,925/- (Rs Forty nine crores seventeen lacs sixty nine thousand nine hundred and twenty five only ) for detailed reasons as cited above. Thu....
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....m 512(Cal. HC) e) Hon'ble Karnataka High Court decision in the case of P M Abdulla v. ITO (2015) 60 taxmann.com 52(Kar.) f) Hon'ble Punjab and Haryana High Court decision in the case of Self Knitting Works v. CIT (2014) 27 taxmann 253(P & H HC) g) Hon'ble Karnataka High Court decision in the case of Smt Rekha Krishanraj v. ITO (2013)215 taxman 159(Kar.), wherein SLP filed was also dismissed by Hon'ble Supreme Court in the case of Rekha Krishanraj v. ITO (2017) 85 taxmann.com 256(SC) The tribunal also referred to stringent RBI circulars issued from time regulating import and utilisation of gold while coming to aforesaid conclusions. The tribunal also referred to provisions of Section 106 and 114(g) of Indian Evidence Act,1872 to come to conclusion that the assessee is withholding evidences and preventing enquiry wherein presumption will be drawn against the assessee in these circumstances. As we would see later in this order that the assessee has filed these two MA's wherein an attempt is made to get the decision of the tribunal reviewed within the limited mandate of Section 254(2) of the 1961 Act which is not permissible. The assessee has made follo....
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....n order. The assessee can always avail alternative remedy provided under the 1961 Act by filing an appeal with Hon'ble High Court u/s 260A of the 1961 Act. c) It is the contention of the assessee in this MA that the AO accepted the GP of 4% to 5% in remand report. The tribunal considered the totality of the circumstances and the case laws relied upon by tribunal are cited in the order. The tribunal has come to conclusion that huge amount of cash was deposited in the assessee's bank accounts from undisclosed sources and it was infact laundering of undisclosed moneys which the assessee is not coming forward to reveal the truth and deliberately withholding evidence to shield underneath undisclosed income. The onus cast on the assessee was not discharged and the tribunal came to conclusion that additions to the tune of Rs. 49,17,69,925/- keeping in view factual matrix of the case were justified. The tribunal relied upon following case laws and also on RBI circulars which were flouted by the assessee, details of which are elaborately discussed in tribunal order. The case law relied by tribunal to come to conclusion are as under: a. Hon'ble Supreme Court decision in the....
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....d within short period of time as VAT number also stood cancelled by Gujarat VAT authorities. The assessee was held to be withholding evidences and shielding certain persons and preventing enquiry. The assessee could not discharge its burden u/s 68 of the 1961 Act and hence additions were confirmed by tribunal. If the assessee is aggrieved by well reasoned order of the tribunal, it has alternative effacious remedy provided under the 1961 Act which the assessee can always avail but we cannot review our own order within limited mandate of Section 254(2) of the 1961 Act. The tribunal in its order also confirmed the additions by invoking provisions of Section 69C as an alternative as in the opinion of the tribunal the assessee could not satisfactorily explain the source of making payments for the purchases because the payments were made from cash deposited in the assessee from so called cash sales of gold made by the assessee to undisclosed buyers which was disbelieved by the tribunal. The tribunal invoked deeming fiction of provisions of Section 69C of the 1961 Act read with proviso to Section 69C. The assessee has submitted that tribunal could not invoke its powers as are contained in....
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....er dated 22/02/2017 in terms of impugned para 7 of the said Order quoted above. Therefore, the aforesaid proposed substantial question of law No.2 need not be answered at this stage as the question of actual taxability of the said alleged excess fair market value of the shares buy-back under Section 2(22)(e) of the Act would depend upon such inquiry which is yet to be undertaken and completed. Therefore the aforesaid substantial question of law No.1 only as reformulated by us, as to whether the Tribunal was justified in making such directions vide para 7 of the Order or not, is the question which we will discuss and answer as below. 22. Section 254 of the Act which delineates the powers of the Tribunal is quoted below to the relevant extent for ready reference:- "Orders of Appellate Tribunal 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. (1A)** ** &n....
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....d Tribunal on an appeal though held that the additions in the hands of the Assessee under Section 68 of the Act could not be sustained but, the Tribunal proceeded to add the aforesaid amounts as unexplained income of the Assessee under Section 69-A of the Act, a different provision. In the appeal filed before the High Court, the Division Bench of the Allahabad High Court held in para-15 that the use of word 'thereon' (under Section 254 of the Act) is important and it reflects that the Tribunal has to confine itself to the questions which are arising or are the subject matter in the appeal and it cannot travel beyond the same. The power to pass such orders 'asthe Tribunal thinks fit' can be exercised only in relation to the matter that arises in the appeal and it is not open to the Tribunal to adjudicate any other question or an issue which is not in dispute and which is not the subject matter of the dispute in appeal. The appeal of the Assessee was thus allowed and the additions made under Section 69-A of the Act by the Tribunal were set aside. 26. In the said judgment of the Allahabad High Court, it is true that the Tribunal cannot travel beyond the subjec....
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....gle Judge came to be upheld by the Division Bench. 29. We beg to differ, with great respects, for two reasons. Firstly, the said judgment does not deal with the Appellate powers of the Tribunal and Writ jurisdiction was exercised to quash the Order of the Tribunal and secondly, we feel, the directions given by the Tribunal to examine the aspect whether loss on account of shares was in the nature of 'Capital loss' (if shares were held over a particular period) or a 'Trade loss' (if the assessee was engaged in the regular activity of purchase and sale of shares) was perfectly within its powers under Section 254(1) of the 1961 Act or Section 33(4) of the old 1922 Act. 30. Similarly, the learned counsel for the Assessee, Mr. Pardiwala submits that the Division Bench of the Karnataka High Court itself in the case of Karnataka State Forest Industries Corn. Ltd. v. CIT [1993] 201 ITR 674/[1994] 72 Taxman 19 had held that the power of the Tribunal under Section 254 of the Act can be exercised only in relation to the grounds raised in the appeal and the Tribunal cannot go beyond the scope of the appeal and decide the question which does not form the subject....
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....aise under Rule 12 and the contentions raised by the Respondent before the Tribunal in support of the Order made by the Appellate Assistant Commissioner(AAC). 33. Similarly the Division Bench of the Gujarat High Court in the case of Deepak Nitrite Ltd. v.CIT [2008] 175 Taxman 230/175 Taxman 230 held that the Tribunal on its own could not have undertaken the exercise without first deciding the controversy brought before it by the parties, where the Assessing Officer disallowed the loss on sale of investments holding that the transaction was a colourable device to reduce the taxable income but, the Commissioner of Income Tax (Appeals) allowed the Assessee's claim and on the appeal filed by the Revenue, the Tribunal restored the issue of quantification of such loss to the Assessing Officer for fresh adjudication, it was held that when the Assessing Officer and Commissioner of Income Tax (Appeals) had not undertaken the issue of quantification of loss on sale of investments and there was no such ground raised by the Revenue in the appeal filed by it before the Tribunal, the Tribunal on its own could not have undertaken the said exercise. 34. For the aforesaid reas....
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....upport of his submissions which are also briefly discussed below. 47. In CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 (SC), the Hon'ble Supreme Court held that there is nothing in the Income Tax Act which restricts the Tribunal to the determination of the questions raised before the Departmental Authorities. All questions whether of law or of fact, which relate to the assessments of the Assessee may be raised before the Tribunal. If any reasons recorded by the Departmental Authorities in rejecting the contentions raised by the Assessee but the grant of relief to the Assessee on another ground is justified, it would be open to the Departmental Authorities and the Tribunal and indeed they would be under a duty to grant that relief. The right of the assessee to such a relief is not restricted to the plea raised by him. 48. In the case before the Hon'be Apex Court, the Assessee spent Rs. 93,215/- for introduction of "Casablanca conversion system" in its Spinning Plant for manufacture and sale of cotton yarn. Substantially, this involved replacement of certain roller stands and fluted rollers fitted with rubber aprons to the spinning machinery, remov....
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....cts and the penultimate Authority on law touching the assessment and other proceedings under the Act and has the plenary jurisdiction in the matters of assessment. It held that the task of an Appellate Authority under the taxing Statute, especially a non-Departmental Authority like the Tribunal, is to address its mind to the factual and legal basis of an assessment for the purpose of properly adjusting the tax payer's liability to make it accord with the legal provisions governing his assessment and to ascertain the tax payer's liability correctly to the last pie, if it were possible. 51. The Division Bench of the Madras High Court also relied upon the earlier Full Bench decision of the Madras High Court itself in the case of State of Tamil Nadu v. Arulmurugan & Co. [1982] 51 STC 381 (FB) to hold that the function of the Appellate Authority is same and co-extensive with that of the Assessing Authority and the Appellate proceedings are continuation of the Assessment proceedings, therefore, the Appellate Authority can itself enter the arena of assessment, either by pursuing further investigation or causing further investigation to be done. It can do so on its own ini....
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....t raised as a dispute, but any point which goes into the adjustment of the taxpayer's liability. In that sense, a view prevails, even in England that the authorities sitting in appeal in a tax case cannot be regarded as deciding a lis, but they are only engaged in an administrative act of adjusting the taxpayer's liability. Under our fiscal jurisprudence, we may regard the appellate authorities as exercising quasi-judicial functions in the same sense as a taxing officer does. But, even so, the proceedings before them lack the basic elements of adversary proceedings. It, therefore, follows that the discussion and the scope of the appellate jurisdiction of the Tribunal and other authorities under the tax code cannot be pursued by drawing a parallel to civil litigation with particular reference to appeals from decrees, and the like. The insistence on one party to appeal being entitled to the fruits of finality, as it is called, and the appellate authority being con-find (sic! confined) to the subject matter of the appeal, are all ideas which might have relevance if the discussion centres in purely civil litigation and such like adversary proceedings as in an industrial dispute....
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.... private persons are engaged in litigation. It is of course, totally different." (p. 382) In Sneath's case (supra), Greer, L.J. gave a similar description of the true position of a tax appeal in the following words: "I think, the estimating authorities, even when an appeal is made to them, are not acting as judges deciding the litigation between the subject and the Crown. They are merely in the position of valuers whose proceedings are regulated by statute to enable them to make an estimate of the income of the taxpayer for the particular year in question." (p.164) Romer, L.J. in the same case, held as under: "The appeal is merely another step taken by the Commissioners, at the instance of the taxpayer, in the course of the discharge by them of their administrative duty of collecting the surtax." (p.168) Rex's case (supra), went to the Court of Appeal and there Lord Wright MR reiterated the position in the following passage in his judgment: "I may note here at once that in making the assessment and in dealing with the appeals, the Commissioners are exercising their statutory authority and their statutory duty which they ....
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....pellate authority is very much committed to the assessment process. The appellate authority can itself enter the arena of assessment, either by pursuing further investigation or causing further investigation to be done. It can do so on its own initiative, without being prodded by any of the parties. It can enhance the assessment, taking advantage of the opportunity afforded by the taxpayer's appeal, even though the appeal itself has been mooted only with a view to a reduction in the assessment. These are special and exceptional attributes of the jurisdiction of a tax appellate authority. These attributes underline the truth that the appellate authority is no different, functionally and substantially, from the assessing authority itself." 25. It seems to us, therefore, that both on principle and on precedent, there is no reason why the Tribunal must be precluded from handling a point which appertains the assessee's assessment merely because nobody else had handled it before it has not occurred either to the assessee or to the department to raise and urge that point at earlier stages of the proceedings." We respectfully agree with the aforesaid view of the M....
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....orpn. of India Ltd. v. CIT [1991] 187 ITR 688/[1990] 53 Taxman 85 (SC), held as under:- "In the case of Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688, this court, while dealing with the powers of the Appellate Assistant Commissioner observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. This court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good re....
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....ity of the assessee in the said judgment which was later on explained by the Rajasthan High Court in the case of (supra). The relevant extract from the said judgment in Hukumchand Mills Ltd. case (supra) is quoted below for ready reference:- "The powers of the Appellate Tribunal in dealing with appeals are expressed in section 33(4) of the Income-tax Act in the widest possible terms. The word "thereon" in section 33(4) restricts the jurisdiction of the Tribunal to the subject matter of the appeal. The words "pass such order as the Tribunal thinks fit" include all the powers (except possibly the power of enhancement) which are conferred on the Appellate Assistant Commissioner by section 31. Consequently, the Tribunal has authority under section 33 to direct the Appellate Assistant Commissioner of the Income-tax Officer to hold a further enquiry and dispose of the case on the basis of such enquiry. Rules 12 and 27 of the Appellate Tribunal Rules, 1946, are not exhaustive of the powers of the Tribunal. They are merely procedural in character and do not, in any way, circumscribe or control the power of the Tribunal under section 33(4)." 56. The Full ....
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....aring and hear the Appeal again on merits even though there is no express provision in this regard yet as an ancillary jurisdiction under Section 254 of the Act, the Tribunal is empowered to do so. The relevant extract from the Head Note of the said judgment is quoted below for ready reference:- "The tribunal has the power to recall its previous order where the petitioner has made out a case that he was prevented from being present at the hearing of the appeal. The power of setting aside an ex parte order and thereby affording an opportunity of being heard to the aggrieved party is not the same as the power of review. When adequate and reasonable grounds for omission to appear at the hearing are made out to the satisfaction of the Tribunal, it is only a question before the Tribunal as to the adequacy of that opportunity of being heard which sub section (1) of section 254 of the Income-tax Act, 1961, enjoins to be given before the Tribunal to enable it to pass orders in the appeal. In other words, though not by any express provision, yet ancillary to the jurisdiction given by section 254 of the Income-tax Act, the Income-tax Appellate Tribunal has power to restore ....
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....ority and findings arrived at in pursuance of the said direction. The power to remand including for conducting an enquiry in the aspect of the matter which was not earlier adjudicated upon by the lower Authorities, cannot, in our considered opinion, be questioned by the Assessee or the Revenue. 60. The words "as it thinks fit" employed in Section 254 of the Act is only bound by the requirement of giving an opportunity of being heard to the parties to the appeal. 61. Section 254(1) of the Act clearly stipulates that 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 emphasis on the word 'thereon' sought to be placed by the learned counsel for the Assessee, Mr. Pardiwala on the basis of case laws relied upon by him as against the words 'as it thinks fit' is slightly misplaced. The emphasis while analyzing the powers of the Tribunal should be on the words 'as it thinks fit' rather than on the word 'thereon'. The word 'thereon' only relates to the 'subject matter' of the appeal in first part of the Sub-section (1) and there....
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....appeal 'as itthinks fit' whether the issue is raised by either party to the appeal or not. The Tribunal is not bound to decide the appeal in a particular or narrower manner or limited to the grounds raised in the appeal before it. The confines or boundary limit is only "subject matter" of the appeal. 64. The powers of the Tribunal are not limited or circumscribed by the grounds raised before it and any order on the subject matter of appeal can be passed if it is found to be necessary, expedient and relevant by the learned Tribunal. 65. Truth being the cherished ideal and ethos of India, pursuit of Truth should be the guiding star of the entire justice system. For justice to be done, truth must prevail. It is truth that must protect the innocent and it is truth that must be the basis to punish the guilty. Truth is the very soul of justice. Therefore truth should become the ideal to inspire the courts to pursue. This can be achieved by statutorily mandating the courts to become active seekers of truth. It is of seminal importance to inject vitality into our system. Concern for and duty to seek the Truth should not become the limited concern of the Courts or ....
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....ility on such findings upon an enquiry which may now be held by the Assessing Authority in pursuance of the directions of the learned Tribunal. Therefore that question is left open. 70. The Mauritius route of tax avoidance and evasion is a hugely suffered phenomenon in our Country. It also resulted in a huge tax controversy in the case of Vodafone in which even after the decision of the Hon'ble Apex Court in favour of the Assessee in 2012, there was a retrospective amendment of law and the said matter is still being debated in the international Arbitration between India and the Vodafone and even the Indo Mauritius DTAA has now been amended recently by adding certain Protocols in the said DTAA with effect from 01/04/2017 seeking to plug the loopholes for the tax evasion through misuse of the erstwhile DTAA of 1983 between India and Mauritius, but it has been a route of tax evasion and money laundering in the past. 71. However, as we are not required to go into taxability aspects of the matter at this stage, as indicated above and we are not proposing to answer the substantial question of law No.2 raised by the Appellant Assessee in the present appeal regarding ....