The AO had
treated excess claim of certain
transportation expense amounting to
Rs2.02 crores as undisclosed Income of
the assesse. He also
opined that the assessee had shown bogus expenditures and bogus creditors, the
peak credit whereof was Rs. 1.59 crores. He, however, did not treat said amount
as undisclosed income on ground that said amount was less than the amount of
excess claim of transportation charges and, therefore, no separate addition was
made on this account. CIT A upheld order of AO
The Tribunal
reversed addition of Rs. 2.02 crores on ground that said charges were already
accounted for by the assessee in its account books and, therefore, could not be
taxed. The Tribunal, however, confirmed addition of Rs. 1.59 crores on account
of bogus expenditures
Held by High Court
that :It was not open to the Tribunal to confirm the addition of the sum of
Rs. 1.59 crores because no such addition was made. In the absence of any such
addition, there was no basis for the Tribunal to confirm the same. This
addition was made by the Tribunal for the first time which the Tribunal could
not have done.
|
The assessee
did not raise the issue before the Tribunal of any addition of a sum of Rs.
1.59 crores because there was no addition of the sum of Rs. 1.59 crores or any
part thereof. The assessee attempted to demonstrate the fallacy in the finding
arrived at by the Assessing Officer by holding at one place that there was an
undisclosed income of Rs. 2.02 crores and at another place by holding that
there was an undisclosed income of Rs. 1.59 crores. When the Assessing Officer
had not made the addition of Rs. 1.59 crores, the assessee had no occasion to
challenge the same. When the assessee carried the matter to the Commissioner
(Appeals), the latter, without anything more, could have enhanced the addition.
But the Commissioner (Appeals) did not do so. He merely confirmed the order of
the Assessing Officer. Therefore, the subject matter of challenge before the
Tribunal was the addition of Rs. 2.02 crores. The Tribunal could either have
upheld the same or could have set aside the same. The Tribunal chose to set
aside that addition. The matter should therefore have come to an end in the
absence of any cross objection by the revenue.
References:
1.
State of
Kerala v. Vijaya
Stores [1979] 116 ITR 15 (SC)
Division Bench
judgment of the Bombay High Court in the case of Motor Union Insurance Co. Ltd. v. CIT [1945] 13 ITR 272, wherein the following views were
expressed:
'Apart
from statute, it is elementary that if a party appeals, he is the party who
comes before the Appellate Tribunal to redress a grievance alleged by him. If
the other side has any grievance, he has a right to file a cross-appeal or
cross-objections. But if no such thing is done, the other party, in law, is
deemed to be satisfied with the decision. He is, of course, entitled to support
the judgment of the first Officer on any ground open to him, but he is not
entitled to raise a ground so as to work adversely to the appellant and in his
favour. Apart from that, the section, in our opinion, does not permit the
course adopted by the Tribunal in this case. Under S. 31, when the Legislature
thought of giving power to the Appellate Assistant Commissioner to enhance the
assessment, it has in terms enacted that. In our opinion, that fact is against
the contention that the words of S. 33(4) are wide enough to include a power of
enhancement, without an appeal by the Commissioner. The, word
"thereon" used in S. 33(4) only means "on the appeal,"
which must mean on the grounds raised in the appeal. Read in that way, the
sub-section only gives power to the Appellate Tribunal to give its decision and
pass orders in respect of all grounds urged (which must be on behalf of the
appellant) in respect of the decision, appealed against. In deciding those
grounds it can pass appropriate orders. But, in our opinion, it is not open to
the Tribunal itself to raise a ground or permit the party, who has not
appealed, to raise a ground, which will work adversely to the appellant.'
The judicial
principle pressed into service by the Division Bench of the Bombay High Court
was later followed by another Division Bench of the Bombay High Court in the
case of New India Life
Assurance Co. Ltd. v. CIT [1957] 31 ITR 844, and the same view was also endorsed by
the Apex Court in the case of State
of Kerala v. Vijaya Stores [1979] 116 ITR 15. Their Lordships
were considering the question in connection with the powers of the Sales Tax
Appellate Tribunal which was similar to the provisions of section 33 of the
Income Tax Act of 1922 and this is what Their Lordships observed:
'The
normal rule that a party not appealing from a decision must be deemed to be
satisfied with the decision, must be taken to have acquiesced therein and be
bound by it, and, therefore, cannot seek relief against a rival party in an
appeal preferred by the latter, has not been deviated from in sub-s. (4)(a)(i)
above. In other words, in the absence of an appeal or cross-objections by the
department against the AAC's order the Appellate Tribunal will have no
jurisdiction or power to enhance the assessment. Further, to accept the
construction placed by the counsel for the appellant on sub-s. (4)(a)(i) would
be really rendering sub-s. (2) of s. 39 otiose, for if in an appeal preferred
by the assessee against the AAC's order, the Tribunal would have the power to
enhance the assessment, a provision for cross-objections by the department was
really unnecessary. Having regard to the entire scheme of s. 39, therefore, it
is clear that on a true and proper construction of sub-s. (4)(a)(i) of s. 39
the Tribunal has no jurisdiction or power to enhance the assessment in the
absence of an appeal or cross-objections by the department. It is true that the
two Bombay decisions reported in[1945] 13 ITR 272 and [1957] 31 ITR 844, on which the High Court has relied, have
been rendered in relation to s.33(4)of the Indian I.T. Act, 1922, but, in our
View, the said provision of I.T. Act is in pari malaria with the provision of
s. 39(4) of the Kerala General Sales Tax Act, 1963. Moreover, the Bombay High
Court has pointed out in those decisions that s. 33(4) merely enacted what was
the elementary principle to be found in the Civil Procedure Code that the
respondent who has neither preferred his own appeal nor filed cross-objections
in the appeal preferred by the appellant, must be deemed to be satisfied with
the decision of the lower authority and he will not be entitled to seek relief
against a rival party in an appeal preferred by the latter. In the first
mentioned case, the elementary principle is stated at page 282 of the report
thus:
"Apart
from statute, it is elementary that if a party appeals, he is the party who
comes before the Appellate Tribunal to redress a grievance alleged by him. If
the other side has any grievance, he has a right to file a cross-appeal or
cross-objections. But, if no such thing is done, the other party, in law, is
deemed to be satisfied with the decision. He is, of course, entitled to support
the judgment of the first officer on any ground open to him, but he is not
entitled to raise a ground so as to work adversely to the appellant and in his
favour."'
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