TaxTMI 
TaxTMI 
2019 (9) TMI 201
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.... Full Bench decision of CIT vs. Sardari Lal & Co. 251 ITR 864 (Del) (FB)? (v) Whether the Appellate Tribunal was justified in not considering that after set-aside proceedings by Hon'ble high Court, the CIT(A) has not issued fresh notice of enhancement (although time barred) and followed the its earlier order without application of mind?" 2. However, vide order dated 02.05.2019, this Court allowed the application filed by the appellant for additional question of law proposed by him which are as under:- "(iii) whether the ITAT was correct to disallow Rs. 5.95 lacs, being 25% of labour charges ignoring the increasing trend in the G.P rate of 17.79% in this year as compared to 13.79% in A.y 2005-06, specially when all the expenses were vouched and verifiable being the books of accounts are duly audited u/s 44AB of the Act, in the absence of its rejection and the books have not been rejected. (iv) whether the ITAT has rightly sustained the addition of Rs. 15 lacs out of Sundry Creditors for onus of discharge of verification after 7 years, on appellant while legal observation to preserve the books of Accounts and other documents, for 6 years from the relevan....
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...., it appears that assessee filed an application along with copy of order before CIT (A) along with certain documents which have been enclosed along with this appeal and are part of record as Annexure-6. Further, notice under Section 250 was issued by the CIT (A) for hearing on 05.01.2015. Thereafter, appellant was given several opportunities on 31.12.2014, 18.02.2015, 27.02.2015, 09.03.2015, 17.03.2015 and 25.03.2015. From the order of the CIT (A), it appears that the authorised representative of the appellant appeared from time to time and furnished replies/ documents. On 31.03.2015, CIT (A) partly allowed appeal of the assessee and disallowance of Rs. 36,019/- and Rs. 20,000/- were deleted, while additions of Rs. 11.50 lacs and Rs. 15.00 lacs were confirmed. Against this order an appeal was filed by the assessee/ appellant before the Tribunal which was also partly allowed on 24.02.2016 confirming the addition of amount of sundry creditors to extent of Rs. 15.00 lacs, while disallowance on labour charges of Rs. 5.95 lacs being made. It is against this order that the present appeal has been filed by the assessee. 7. Learned senior counsel appearing for the assessee submitted tha....
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.... brought to tax after following a special procedure. The assessee contends that the powers of the Appellate Assistant Commissioner extend to matters considered by the Income-tax Officer, and if a new source is to be considered, then the power of remand should be exercised. By the exercise of the power to assess fresh sources of income, the assessee is deprived of a finding by two tribunals and one right of appeal." 9. Counsel for the assessee also relied upon a decision of the Apex Court in case of ITO v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC) which had followed the earlier decision of the Apex Court cited above. Reliance has also been placed on the decision of the Supreme Court in case of Additional Commissioner of Income Tax v. M/s. Gurjargravures (P.) Ltd. [1978] 111 ITR 1 (SC), following the earlier two decisions of the Apex Court. Counsel for the assessee vehemently argued that the power of the first appellate authority does not go beyond what has been considered by the Assessing Officer in appeal and reliance upon the decision of a Full Bench in case of CIT v. Sardari Lal and Co. [2001] 251 ITR 864 (Delhi) has been placed wherein it has been held as ....
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....ermined in the course of assessment. It is also relevant to note that in the Jute Corporation'of India Ltd.'s case (supra), the Apex Court inter alia observed as follows:- ".....The AAC, on an appeal preferred by the assessee, had jurisdiction to invoke, for the first time, the provisions of rule 33 of the Indian Income-tax Rules, 1922, for the purpose of computing the income of a non-resident even if the ITO had not done so in the assessment proceedings. But, in Shapoorji Pallonji Mistri [1962] 44 ITR 891, this Court, while considering the extent of the power of the AAC, referred to a number of cases decided by various High Courts including the Bombay High Court judgment in Narrondas Manordass [1957] 31 ITR 909 and also the decision of this Court in McMillan and Co. [1958] 33 ITR 182 and held that, in an appeal filed by the assessee, the AAC has no power to enhance the assessment by discovering new sources of income not considered by the ITO in the order appealed against. It was urged on behalf of the revenue that the words 'enhance the assessment' occurring, in section 31 were not confined to the assessment reached through a particular process but the amount which ought ....
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....ed to any disallowances or additions made by Assessing Officer but it extends to whole of proceedings. 12. He further submitted that assessee filed its return of income along with balance-sheet, profit and loss account and audited books of account in the assessment proceedings, in which he claimed deduction on account of labour expenses and sundry creditors. CIT (A) has power to look into such deductions claimed by assessee in his return as well as any credits in its books of account which assessee does not claim to be its income. 13. Reliance has been placed upon the decision of the Apex Court in case of Commissioner of Income Tax vs. Nirbheram Deluram [1997] 91 Taxman 181 (SC), CIT vs. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC) as well as Jute Corporation of India vs. CIT [1991] 187 ITR 688 (SC), in which the Apex Court in depth considered the power of the Appellate Assistant Commissioner while exercising power under Section 251 of the Income Tax Act. Further, the Apex Court in Jute Corporation of India (supra) distinguished the judgment passed in case of Gurjargravures (P.) Ltd. (supra) and held as under:- "4. Section 31 of the Income-tax Act, 1922 ('the Act') a....
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..... This decision does not directly deal with the question which we are concerned. Power to enhance tax on discovery of new source of income is quite different than granting deduction on the admitted facts fully supported by the decision of this Court. If the tax liability of the assessee is admitted and if the ITO is afforded opportunity of hearing by the appellate authority in allowing the assessee's claim for deduction on the settled view of law, there appears to be no good reason to curtail the powers of the appellate authority' under section 251(1)(a) of the Act. 6. In Gurjargravures (P.) Ltd.'s case (supra) this Court has taken a different view, holding that in the absence of any claim made by the assessee before the ITO regarding relief, he is not entitled to raise the question of exemption under Section 84 of the Act before the AAC hearing appeal against the order of the ITO. In that case the assessee had made no claim before the ITO for exemption under Section 84, no such claim was made in the return nor any material was placed on record supporting such a claim before the ITO at the time of assessment. The assessee for the first time made claim for exemption under S....
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.... factors justifying raising of such new plea in appeal, and each case has to be considered on its own facts. If the AAC is satisfied he would be acting within his jurisdiction in considering the question so raised in all its aspects. Of course, while permitting the assessee to raise an additional ground, the AAC should exercise his discretion in accordance with law and reason. He must be satisfied that the ground raised was bona fide and that the same could not have been raised for good reasons. The satisfaction of the AAC depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose." 14. A division Bench of this Court in case of Commissioner of Income Tax v. Kashi Nath Candiwala [2005] 144 Taxman 840 (All.) relying upon the judgment of Nirbheram Deluram (supra) and Jute Corporation of India (supra) held that in view of Explanation to Section 251 of the Act the appellate authority is empowered to consider and decide any matter arising out of proceedings in which the order appealed against was passed. "7. We have heard Sri A.N. Mahajan, learned standing counsel for the revenue and nobody has app....
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....Sri Krishna Agarwal, learned counsel for the Revenue. 19. Before proceeding, a glance of provisions of Section 251 of the Act is necessary, which is extracted hereasunder:- "251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers-- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. (2) The Commissioner (Appeals) shall not e....
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.... 23. The argument of the counsel for the assessee relying upon the decision of the Apex Court in case of Shapoorji Pallonji Mistry (supra), Rai Bahadur Hardutroy Motilal Chamaria (supra) and Sardari Lal & Co. (supra) cannot be accepted as the said judgments have their very basis where the Appellate Assistant Commissioner had made addition or deletion on the basis of new source of income, but present case is not of new source of income, as CIT (A) has relied upon the books of accounts submitted by the assessee along with his return and had claimed expenditure made by him in profit and loss account and claim of sundry creditors shown in balance-sheet. 24. The Apex Court while dealing with the power of the Appellate Assistant Commissioner under Section 251 of the Act had in case of Nirbheram Deluram (supra) and Jute Corporation of India (supra) had held that power of Appellate Assistant Commissioner is coterminous with that of Income Tax Officer and he can do what the Income Tax Officer can do and also direct him to do what he has failed to do. 25. In the present case, the CIT (A) had deleted addition made by the Assessing Officer and had made two additions of the labour charge....