AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 218
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in making the enhancement without giving notice to the assessee. 2. The learned Commissioner (Appeals) erred in enhancing the total income by Rs. 3296000/-. 3. The learned Commissioner (Appeals) erred in law as well on facts to issue directions to the A.O. suggesting enhancement of income for the assessment year not in appeal. 4. The learned Commissioner (Appeals) erred in rejecting the claim of service tax amounting to Rs. 8212939/- paid before the due date of return. 5. The order of the CIT (Appeals) erred in restricting the disallowance of wages to Rs. 257722/-. 6. The order of the CIT (Appeals) sustaining the addition of Rs. 2,00,000/- on account of lumpsum disallowance out of transportation charges and site expenses." 3. The assessee is a proprietor of M/s. Gayatri Constructions which is engaged in the business of execution of contract work of erection, fabrication, maintenance and labour supply on contract basis. The assessee filed return of income for AY 2012-13 in question declaring total income of Rs. 1,32,95,560/-. The books of accounts were audited under s. 44AB of the Act. The case of the assessee was subjected to scrutiny assessment. The AO inter alia obser....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es. 8. The ground nos. 1 & 2 concern enhancement of total income by Rs. 32,96,000/-. 8.1. In this regard, it is the contention of the assessee that the order of the first appellate authority is contrary to facts and law because: (i) the enhancement for AY 2012-13 in question and similar directions to the AO suggesting enhancement for the earlier years, without giving any notice to the assessee is in total disrespect to the ratio laid down by the Hon'ble Supreme Court in CIT vs. Rai Bahadur Harduttroy Motilal Chamaria (1967) 66 ITR 443 (SC). (ii) In view of the bar created by section 251 read with section 150(2), the CIT(Appeals) has no jurisdiction to issue 'directions' to the AO suggesting enhancement of income concerning other assessment years not in appeal before him and his action in this regard is opposed to the ratio of the SC in ITO v. Murlidhar Bhagawan Das (1964) 52 ITR 335 (SC). (iii) The issue of service tax was a matter of agitation in AY 2011-12 and consequently, the assessment order in that year on the issue of service tax stood merged with the first appellate order of the then CIT(Appeals) and hence the present incumbent had no jurisdiction to review th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the assessee in this regard is that the CIT(A) has no jurisdiction to issue directions to the AO suggesting enhancement of income for the assessment years not pending before him in appeal and hence such directions given by him for the A.Y. 2010-11 onwards while sitting in appellate jurisdiction for AY 2012-13 is contrary to the scope of powers conferred upon him under s. 251(1) of the Act. Consequently, such directions to the AO for exploring additions in the earlier years towards disallowances out of service tax claims and interest thereon are bad in law at the threshold and thus unsustainable. This is more so on account of fact that Section 251 r.w.s. 150(2) of the Act does not save the time limit prescribed under s. 149 of the Act in respect of escaped assessment for the years other than that which is subject matter of appeal. 9.2. Section 251 of the Act stipulates exercise of power conferred upon the CIT(A) in respect of appeals pending before him. The first appellate authority may thus inter alia enhance the assessed income of the assessment year in appeal but however such power of enhancement does not extend to other assessment years. Conjunctively, we also advert to Secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of adjudication of present dispute. Section 251 of the Act as noted earlier restricts the scope of powers to the appeal before it. The CIT(A) cannot travel to other assessment years. Similarly, to invoke Section 150(1) of the Act, it is incumbent upon the CIT(A) to demonstrate the fact that the finding/direction in question is necessary for disposal of the issue before him. To be a necessary finding, it must be directly involved in the disposal of the case. Similarly, to be a direction as contemplated by Section 150/S. 153 of the Act, it must be an express 'direction' necessary for disposal of the case before the concerned authority. 9.5. On reading of the first appellate order, it is evident that findings of the CIT(A) seeks to travel beyond the A.Y. 2012-13 in question and seeks to displace the completed assessment of the other years (some of which have already become time barred at the time of passing of original assessment order in appeal) by giving directions to the AO to take remedial actions towards service tax allowed in earlier assessment years. Such findings and directions are outside the scope of powers entrusted under S. 251 as well as S. 150(1) of the Act. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion or not being properly instructed, is over assessed, the authorities under the Act are required to ensure that only legitimate tax dues are collected. This is the view which flows from innumerable judgments including CIT vs. Shelly Products (2003) 261 ITR 367 (SC), S.R. Koshti vs. CIT (2005) 276 ITR 165 (Guj), Ester Industries vs. CIT (2009) 185 TAXMAN 266 (Delhi) and CIT vs. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 349 ITR 336 (Bom). The essence of these decisions are that mere admission on the part of the assessee with respect to an addition/disallowance in its original return or in revised return would not ipso facto bar an assessee from claiming an expense or disputing an addition if it is otherwise permissible under law. It is thus well settled that if a particular income is not taxable under the Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. The Revenue authorities cannot enforce untenable actions of the assessee against it which led to declaration of income of higher amount incorrectly. It is thus open to assessee to show that it was over assessed under erroneous impression of law or facts even if it is attributable to the mistake....