TaxTMI 
TaxTMI 
1999 (7) TMI 101
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....lcutta, erred in the directing the Deputy Commissioner to delete the following disallowances of the payment of gratuity for the assessment years 1986-87 and 1987-88 respectively : (i) Rs. 3,591 for assessment year 1986-87 (ii) Rs. 29,134 for assessment year 1987-88 3. That, on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals)-I, Calcutta, erred in deleting the disallowance of Rs. 3,07,000 for the assessment year 1986-87 under section 30A(3) of the Income-tax Act." 3. So far as the assessment year 1985-86 is concerned, the assessment was originally completed by the Assessing Officer on 11-3-1988, in which he rejected the method of accounting as followed by the assessee in its construction business, viz., Completed Contract Method. After introducing his own method, the Assessing Officer computed the total income of the assessee in accordance with the said method imposed by him wherein he made certain disallowances also. This order of the Assessing Officer was set aside by the Commissioner of Income-tax (Appeals) by his order dated 23-10-1989. The relevant portion of the said order of the CIT(A) is being extracted below : "3.... It ....
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....he judgments cited at appropriate place. On the basis of the above arguments and taking into consideration the reliance placed on different judgments, the CIT(A) came to the conclusion that the Assessing Officer had acted in excess of his jurisdiction, while passing the fresh assessment order, in seeking to tax by way of disallowance the expenditure either in part or in full incurred under the abovementioned three heads. On this ground alone, the CIT(A) deleted the three disallowances, as mentioned above. 6. The action of the CIT(A) in this regard is being challenged before us by the department. It is being contended by the learned Departmental Representative (DR) that inasmuch as the original assessment made on 11-3-1988 had fully been set aside by the CIT(A), it was within the powers of the Assessing Officer, while framing the assessment afresh, to take into consideration all the aspects of the assessment and to make such disallowances which had not been made in the original assessment. On the other hand, Shri S.R. Das, the ld. counsel for the assessee, contends that, firstly, the original assessment was not set aside fully by the CIT(A) inasmuch as he had set aside that assessm....
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....re him were not considered by the CIT(A) inasmuch as the assessment itself was set aside. The CIT(A) added another sentence to emphasise that the assessment was set aside to be made afresh. It is thus clear that the CIT(A) actually set aside the entire assessment impugned before him. He was of the opinion that unless the dispute relating to applicability of the method of accounting on 'completed contract basis' was resolved, it would not be possible to look into any of the aspects involved in the assessment. indeed, if the contention of the assessee about application of 'completed contract method' of accounting was to be accepted, the entire face as well as the basis of the assessment would get changed which is found to be the fact in the instant case. After the assessment was set aside by the CIT(A), the Assessing Officer, on examination, accepted the method of accounting followed by the assessee and proceeded to tackle the matter of making assessment of the taxable income of the assessee from the figure of the net profit arrived at on the basis of the method resorted to by the assessee and made certain disallowances of expenses debited by the assessee to its accounts in accordanc....
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....ther points not dealt with by the first appellate authority in the remand order. A perusal of the facts of this particular case would show that although the expression "set side" was used by the first appellate authority, there was, however, a specific direction to the Assessing Officer to go through the contract papers again and to the assessment afresh. Therefore, it has got to be held in that particular case, that the setting aside was partial and for a limited purpose only. Hence that judgment would also not be applicable to the present case before us. 9. Shri S.R. Das, the ld. counsel for the assessee, tried to rely on a judgment of the Bombay High Court in the case of D.M. Neterwalla v. CIT [1980] 122 ITR 880, at page 886. In that particular case, the powers of the Tribunal in an appeal filed by the Department before it were considered and it was held that the Tribunal can allow the department to raise a new contention before it for the first time. 10. The ld. counsel for the assessee further argued that when the assessment is set aside and the Assessing Officer makes a fresh assessment thereafter, his powers would be limited to the powers of the appellate authority which h....
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....irbheram Daluram, the earlier judgment of the Supreme Court, in the case of Rai Bahadur Hardutroy Motilal Chamaria was not cited before the Supreme Court. 11. We find much substance in this argument of Shri S.R. Das. We also find that the judgment in the case of Nirbheram Daluram was delivered by the Supreme Court simply by following another judgment of the Supreme Court in the case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688, in which case the issue before the Supreme Court had been completely different, viz., whether the appellate authority could consider a complete by new point not raised before the authorities below till then. Again, considering that the earlier judgment of the Supreme Court had been delivered by a higher Bench, we are of the opinion that the said judgment in the case of Rai Bahadur Hardutroy Motilal Chamaria would still hold good. 12. However, it can be seen that the abovementioned judgment of the Supreme Court in the case of Rai Bahadur Hardutroy Motilal Chamaria speaks of a new source of income which was not considered in the assessment. In the appellate order impugned before us, the CIT(A) has extracted the detailed discussion made by Kanga and....
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....though at the stage of reassessment, the Assessing Officer may be considered to be not having the power of covering completely new source of income and tackling the question of allowability of expenses relating thereto, inasmuch as the CIT(A), at the stage of deciding the original appeal, also did not have any power of causing enhancement of on such new source of income. Ultimately, therefore, we disagree with the view expressed by the CIT(A) that the Assessing Officer travelled beyond his jurisdiction in making fresh disallowances in the reassessment order. We, thus, reverse his decision in this regard. Since, again, the CIT(A) did not decide the appellate grounds on those issues before him on merits, we restore the matter back to his file and direct him to examine all the three issues under consideration on merits and pass appropriate order thereon. 13. So far as the assessment years 1986-87 and 1987-88 are also concerned, the issue is exactly similar. In the assessment year 1986-87, the Assessing Officer made fresh disallowances in respect of payment of gratuity to the extent of Rs. 3,591 and of an amount of Rs. 3,07,000 under section 40A(3). It is evident that these disallowan....