TaxTMI 
TaxTMI 
2026 (1) TMI 1590
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.... the consideration (Rs. 8 crores) for the said transaction was made in cash and not disclosed for tax purposes. The impugned addition was made accordingly. 1.1 The assessee carried this matter in appeal and was successful in pleading his case on the ground that the actual purchase of land had not been made from one M/s Vedehi Synthetic Ltd., to whom the said impugned cash payment was supposed to have been made, but from three persons (Vijay Kumar Ishwar Lal Patel, Mahesh Kumar Ishwar Lal Patel and Hemendra Kumar Ishwar Lal Patel). It is also recorded in the impugned order that the payment to M/s Vedehi Synthetic Ltd. was actually made in FY 2013-14, both the cheque part of it and the alleged cash part of it. On the finding that the payment through cheque and alleged cash was made to M/s Vedehi Synthetics Ltd. during FY 2013-14 and thus the same could not be treated for the sake of any assessment of income during AY 2015-16,the relief is seen to have been given on this basis [paras 5.3.4 and 5.3.5 of the impugned order]. 1.2 The Revenue being aggrieved with this finding has approached the ITAT with the following grounds of appeal: - "1. Whether on facts and in circums....
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....ved an application under Rule 27 of the ITAT Rules, 1963 [hereafter "the Rules"] ostensibly in support of the impugned order, as under: - "Additional Ground No. 1 That on the facts and circumstances of the case the approval accorded under section 153D of the Act (if any) is a mechanical and arbitrary approval without there being any application of mind and also without satisfying the statutory preconditions of the Act and as such, the assessment so framed is null and void and deserves to be quashed. Additional Ground No. 2 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in sustaining the initiation of proceedings under section 153C of the Act and, further completion of assessment under section 153C/143(3) of the Act without satisfying the statutory preconditions for initiation of the proceedings and, completion of assessment under the Act, as no document pertaining or belonging to assessee was recorded in the satisfaction note. Additional Ground No. 3 That on the facts and circumstances of the case the impugned assessment order so passed is null and void, and is also in complete violation of CBDT Circular N....
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....IT V. Varas International P. Ltd. 7. 149 Taxmann 456 (Guj) KharidVechan Sangh Ltd. vs CIT. 8. 397 ITR 282 (AH) CIT vs Jindal Polyster Ltd." 2.2 The Ld. DR, on the other hand, has filed submissions, from which some portions are reproduced as under: - "Respondent may support order on grounds decided against him, 27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him." 4. As stated in the Rule above, the prerequisites and conditions for eligibility of filing application under this Rule are, as under: (i) the ground(s) should have been filed before the previous appellate authority, and (ii) the ground(s) should have been decided against the respondent in the order appealed against. 5. On perusal of the grounds of appeal taken by the respondent assessee for the Ld. CIT(A) as seen in para 3, page 2-3 of the appellate order dated 08.03.2024 (copy attached with this e-mail it can be observed that: (i) The respondent assessee had not taken any ground w.r.t. mechanical approval under section 153D of the Act (as stated in Additional....
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....any finding on the question whether the reasons were recorded or not, but having regard to the judgment of the Delhi High Court in Rohtak & Hissar Districts Electric Supply Co. (P.) Ltd. v. CIT [1981] 128ITR 52/ 5 Taxman 116, it was possible to hold that he found it against the assessee on the point. On that reasoning, it was open to the assessee to raise the question of non-recording of reasons for reopening the assessment before the Tribunal for the first time and seek to support the ultimate decision of the Commissioner (Appeals). Even the non-disclosure of the reasons could be said to be covered by grounds taken before the Commissioner (Appeals) and in the absence of any definite decision by the Commissioner (Appeals), the same conclusion would follow, namely, that it was open to the assessee to invoke rule 27 even in respect of that point...." It can be seen in the order of ITAT Delhi above that: (a) the ground was clearly expressed throughout the assessment proceedings, appellate proceedings and even before the ITAT though it was not formally filed before Ld. CIT(A) and ITAT (b) Despite the above, the CIT(A) had not given any finding on the matter ....
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....esult in the appeal of Revenue failing. It was urged, following the case of Smt. Gurinder Kaur, reported in 102 ITD 189 (Del-Trib) where it has been recorded that when the CIT(A) has not recorded any finding on the question whether the reasons were recorded or not, but having regard to the judgment of the Hon'ble Delhi High Court in Rohtak & Hissar Districts Electric Supply Co. (P.) Ltd. v. CIT reported in 128 ITR 52, it may be held that the finding was against the assessee on this point. On this reasoning, it is open to the assessee to raise the question of non-recording of reasons for reopening the assessment before the Tribunal for the first time and thereby seek to support the ultimate decision of the CIT(A). The Ld. AR also relied on the case of New India Life Assurance Co. reported in 31 ITR 844 (Bom), to canvass the point that if the respondent has not challenged the order of the trial court by filing a cross-appeal or cross-objections then he is presumed to be quite content with the decision given by the trial court. Therefore, under these circumstances, his only right is to support the decision of the trial court, not only on the grounds contained in the judgment of the....
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....of CIT(A) by assailing his findings on issues that had been decided against him. The Ld. AR also relied on the cases listed in the extract of his application under Rule 27 (supra). 3.1 The crux of the Ld. AR's arguments were that though the assessee had raised a generic ground (Ground number 2 in Form 35- supra) challenging the assessment in general, but it was worth emphasizing that the issue of irregularity in grant of approval u/s 153D of the Act was vigorously challenged before the CIT(A) and this particular issue had been glossed over and not specifically decided in the impugned order. The fact of no specific decision had to imply a decision against the assessee. Thus, the invocation of Rule 27 was justified, as the plethora of case laws relied upon by him supported such a view. 3.2 It was also averred that it was now a settled position that approval u/s 153Dof the Act could not be given in a mechanical manner and the cases of Shiv Kumar Nayyar (supra) and many others relied upon by him, supported that view. It was pointed out in pages 4 to 30 of the paper book that the relevant approvals u/s 153D of the Act were given in a bunched-up manner and also suffered from other ....
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....lant. The ITAT has its own set of Rules, where both the appellant as well as the respondent are given various rights in order to protect their respective interests. An appellant can not only raise all his grievances through grounds of appeal raised by him in the appeal memo but he also has a right to raise additional grounds of appeal, with the leave of the tribunal. The ITAT Rules extensively provide for the rights of a respondent at many stages. In cases where a party gets a substantial relief by the CIT(A) and prefers not to go in appeal, despite there being certain adverse findings of the CIT(A) against him, then the respondent can file cross objections even after the expiry of limitation period provided for appeals. At this stage we need to discuss the rationale of such a provision. The powers of the Tribunalare the same as those of an appellate court under the Code of Civil Procedure. The Civil Procedure Code. Order XLI, rule 22, Civil Procedure Code, states: "(I) Any respondent, though he may not have appealed from any part of the decree, may not only support the decree on any of the grounds decided against him in the court below, but take any cross objection to the....
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....as the merits of the case. The CIT(A) came to the conclusion that the assessee was entitled to some relief in respect of the quantum and so he granted relief partially. However, the reopening was held to be valid. There was a further appeal at the instance of the department. During the hearing of the appeal, the assessee raised the objection before the Tribunal that the proceedings under s.147 were entirely without jurisdiction. On behalf of the department, it was contended before the Tribunal that the assessee was not competent to raise this objection as he had not filed an independent appeal against the adverse findings of the CIT(A). It is in this context that the High Court had to go into the scope of the powers of the Tribunal while dealing with an appeal before it. After referring to the powers of the Tribunal to grant leave to the appellant, to raise additional grounds, the Hon'ble Court interpreted Rule 27 and observed: "Turning to rule 27 which permits the respondent before the Tribunal to support the order of the Appellate Assistant Commissioner on any of the grounds decided against him, it seems to be clear that this is a right conferred upon him. The Tribunal h....
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....t portion of the Appellate Assistant Commissioner's order which was favourable to it." The principle underlying this decision is that the Tribunal has no power to enlarge the scope of the appeal before it by permitting either the appellant or the respondent to urge grounds which would have the effect of destroying the finality of that portion of the order of the original authority which had not been appealed against by either of the parties. But this does not mean that the respondent should be denied the opportunity of supporting a decision in his favour which has come up on appeal on a ground decided against him by the authority whose decision is challenged. 5.2 In CIT v. Mahalakshmi Textile Mills Ltd reported in 66 ITR 710 (SC), after referring to the corresponding provision in the 1922 Act (section 33 (4) of the Act), the Hon'ble Supreme Court held as follows: "Under sub-section (4) of section 33 of the Indian Income-tax Act, 1922, the Appellate Tribunal is competent to pass such orders on the appeal 'as it thinks fit'. There is nothing in the Income-tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. ....
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.... same in accordance with law...." It is very clear that the pleadings of the respondent under Rule 27 cannot be said to be outside the scope of Tribunal on matters to be heard. The Hon'ble Gujarat High Court, in the case of Principal Commission of Income Tax,Vadodara-II v. SunPharmaceuticals Industries Ltd reported in 86 taxmann.com 148 (Gujarat), observed as follows: "11. To put the controversy beyond doubt, Rule 27 of the Rules makes it clear that the respondent in appeal before the Tribunal even without filing an appeal can support the order appealed against on any of the grounds decided against him. It can be easily appreciated that all prayers in the appeal may be allowed by the Commissioner (Appeals), however, some of the contentions of the appellant may not have appealed to the Commissioner. When such an order of the Commissioner is at large before the Tribunal, the respondent before the Tribunal would be entitled to defend the order of the Commissioner on all grounds including on grounds held against him by the Commissioner without filing an independent appeal or cross-objection." Similar issue came-up before Division Bench of this Court in case of Daho....
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.... effect to only for the purpose of sustaining the order in appeal and dismissing the appeal and cannot be made use of to disturb or to set aside the order in favour of the appellant. This proposition was held by the Bombay High Court in the case of B.R. Bamasi v. CIT (1972) 83 ITR 223 (Bom). It was stated that the assessee could use the argument only to sustain the order of the AAC but not to get further relief and have the assessment itself annulled and thus adversely affect the appellant and place it in a worse position than if it had not appealed at all. 5.5 At this stage we need to discuss the case of Sanjay Sawhney Vs. PCIT, reported in 116 taxmann.com 701 (Del), sinceit is not only a binding precedent butit also lucidly sets out the scope and limitations of Rule 27. Before extracting relevant passages from this case law, a brief mention of the facts is needed since such an exercise would compare and even contrast the facts there and in the case before us. In the Sanjay Sawhney case in the appeal before CIT(A), besides challenging the additions made by the Assessing Officer on merits, the assessee also raised legal grounds qua the validity of the reassessment proceedings un....
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....e had succeeded before the CIT (A) in the ultimate analysis.(emphasis added). Not having filed a cross objection, even when the appeal was preferred by the Revenue, it does not mean that an inference can be drawn that the Respondent- assessee had accepted the findings in part of the final order, that was decided against him. Therefore, when the Revenue filed an appeal before the ITAT, the Appellant herein (Respondent before the Tribunal) was entitled under law to defend the same and support the order in appeal on any of the grounds decided against it. The Respondent - assessee had taken the ground of maintainability before Commissioner (Appeals) and, therefore, in the appeal filed by the Revenue, it could rely upon Rule 27 and advance his arguments, even though it had not filed cross objections against the findings which were against him. The ITAT, therefore, committed a mistake by not permitting the assessee to support the final order of CIT (A), by assailing the findings of the CIT(A) on the issues that had been decided against him. The Appellant - assessee, as a Respondent before the ITAT was entitled to agitate the jurisdictional issue relating to the validity of the reassessme....
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.... assessee by the Ld. CIT(A) on the basis of findings given in para 5.3.5 as under: "5.3.5 In view of the above, It m found that the documents, found and scaled from a very senior personnel of the Group i.e. GM Finance and the transactions recorded were also corroborated partly with the books of the appellant except the payments made in cash. Thus, the document cannot to# hi Id as dumb document and it is very much Incriminating in nature. Further, it is also evident that the payments done through cheques were made In the FY 2013-14 to M/s VedehiSothetic Ltd., thus, as a natural corollary it is obvious that the cash transaction(r) had been also made in the same FY i.e. 2013-14. In a normal business parlance also the cash transactions are made first since, the cheque payments are made at the time of any agreement/ contract and also to ensure safety of the amount to be received by the seller. The excel sheet seined thus, clearly exhibit that part 'A' is the payment made through the bank and part 'B' is the cash payment made in the F.Y. 2013-14 by the appellant to Vedehi Synthetics Limited. There is no other evidence on record which shows that the cash payments were made in the....