TaxTMI 
TaxTMI 
2015 (3) TMI 1455
X X X X Extracts X X X X
X X X X Extracts X X X X
....itted an application for admitting the additional ground in all the assessment years. The ground of appeal which is common in all the assessment years read as under :- "On the facts of the case and as per law, the learned CIT(A) erred in upholding various additions made by the Assessing Officer in the returned income during the course of assessment u/s 153A read with section 143(3) of the Act, which are not based on any incriminating material found during the course of search on the appellant, and contrary to the ratio of various judicial precedents which have held that the scope of assessment which are not pending at the time of conducting of search u/s 153A of the Act, encompasses additions/ disallowance, based on incriminating material found during the course of search only." It was pleaded that assessee may be permitted to raise the additional ground which goes to the root of the matter and clearly transpires from the proceedings before the lower authorities with complete facts on record and reliance was placed on the decision of Hon'ble Supreme Court in the case of National Thermal Power Company Limited vs. CIT - 229 ITR 383 (SC). Ld. AR also relied on various deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it." She also relied on the decision of Hon'ble Delhi High Court in the case of Filatex India Ltd. vs. CIT in ITA No.269/2014 and CM No.10077/2014 order dated 14.07.2014 which is placed at pages 53 to 63 of the paper book. Reliance was also placed on the decision of Hon'ble Delhi High Court in the case of CIT vs. Anil Kumar Bhatia reported in (2012) 211 Taxman 453 (Delhi) and our attention was drawn to paras 18 to 23 of this order. Ld. DR also relied on the decision of Hon'ble Karnataka High Court in the case of Canara Housing Development Company vs. DCIT in ITA No. 38/2014 order dated 25.07.2014 which is placed at pages 82 to 99 of the paper book. Reliance was also placed on the decision of ITAT, Bangalore Bench 'C' in the case of Nandini Delux vs. ACIT reported in (2015) 54 taxmann.com 162 (Bangalore - Trib.) and the copy is placed at pages 100 to 118 of the paper book. She also submitted that assessee has not submitted all the relevant documents before the Assessing Officer and has been submitted before the CIT(A) as additional evidence by filing an application u/s 46A of Income-tax Rules. She has also drawn our attention to the statement recorded during search operation with....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was filed as Additional Evidence in violation of Rule 46A before CIT(A). Even the CIT(A) has given the finding that the ledger accounts produced show no bill numbers. Only date of challan is mentioned and supported by self made vouchers ( refer para 7.3 onwards) to support purchases. Appellant has filed PAN and copies of bills while CIT(A) has held that these are regular purchases from this party- why then was the party not available at the address given to AO or did not respond to the 133(6) notices? Delhi High Court in the case of Navodaya Castles P Ltd 367 ITR 306 has held that ".....assessee cannot simply furnish some details and remain quiet when summons issued to shareholders remain un-served and uncomplied." "Creditworthiness is not proved by showing issue and receipt of a cheque or by furnishing a copy of statement of bank account, when circumstances require that there be more evidence of a positive nature to show that the subscribers had made genuine investment or had acted....." In NR Portfolio P Ltd 264 CTR 258 Del the High Court held that "The identification of the person would include the place of work, the staff, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... CIT 2002-TIOL-279-SC-IT-LB {henceforth 'NTPC case') wherein applying its earlier decision in the case of Jute Corporation of India Ltd 2002-TIOL-1027-SC-IT-LB {for short 'Jute Corporation case} Apex Court held as under; "U/s 254 power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability......we do not see any reason why the assessee should be prevented from raising that question before the ITAT for the first time, so long as the relevant facts are on record in respect of that item ..the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee." However this decision is rendered in the context of factual short matrices of the NTPC case which were that for the first time before the Tribunal, in view of two orders of the Special Bench of the Tribunal, assessee contended that interest earned before setting up of business is not taxable. The Tribunal declined to entertain these additional groun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....never ever raised before the AO. If this important difference in factual matrices is kept in view, the hon'ble bench will be able to appreciate the Supreme Court judgment in NTPC case in its correct perspective. Had their lordships of the Supreme Court been made aware about this crucial and important difference in fact situation, their judgments in Jute Corporation case as well as in NTPC case would have been different. Thus, it is very clear that subsequent judgments of the Supreme Court need to be applied in correct perspective especially when Gurjargravures has not been overruled because in these NTPC & Jute Corporation cases while applying Kanpur Coal case inadvertently it has been over looked that in this (Kanpur Coal) case before the AO there was specific claim which he refused to entertain. Thus Revenue contends that sweeping principle cannot at all be inferred from Supreme Court judgments in NTPC & Jute Corporation cases when Supreme Court judgment in Gurjargravures case which bars raking up of an issue at a later stage, if not raised earlier, has not specifically been over ruled. Thus NTPC or for that matter Jute Corporation cases though of larger bench cannot alw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the case so as to raise and admit any additional legal ground before the Tribunal etc. we should not lose sight of the Supreme Court's own view as echoed in its various judgments. In Union of India v. Major Bahadur Singh (2006) 1 SCC 368 {para 9 & 11} Supreme Court held that the observations made in a judgment must be read in the context in which they appear to have been stated. Their lordships of the Supreme Court further held that circumstantial flexibility, one additional or different fact, may make a world of difference between conclusions in two cases. Disposal of case by blindly placing reliance on a decision was held to be not proper. With this preface, it is felt that before embarking upon to rely on NTPC case its factual matrices should not be lost sight of. For applying this judgment following needs to be cumulatively satisfied; (a) All facts relevant to the issue should have been found by the lower authorities. (b) Additional ground proposed (i) should be a question of law and (ii) it should be emerging out of the facts found out by the AO/CIT(A). (c) Additional ground should be the one which could not be raise....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ck unserved with remarks of postal authority that, "No such person at this number". No details were provided regarding sundry creditors either despite specific opportunity. Before CIT(A) however additional evidence was filed in the form of vouchers, bills, ledger accounts etc. Notwithstanding what has been mentioned above, one would notice that the Supreme Court judgments in NTPC case or Jute Corporation case are basically the result of the failure on the part of the litigants to make their lordships aware about all the relevant provisions of the Income Tax Act which becomes clear from the following observations made by the Court; "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." Their lordships were not made aware that in the Income Tax Act there are time limitations prescribed within which only an action can be taken by the assessee before the AO-e.g. revising the claims by filing revised return etc. Likewise, the AO cannot assess or re-assess some item of income after the lapse of prescribed time. These limitations are also based to a great ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) is too narrow a view to take of the powers of the Tribunal. Undoubtedly, the. Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. During the assessment year 1978-79, the assessee had deposited its funds which were not immediately required on short-term deposits with banks. Interest received on such deposits duri....