TMI Blog2003 (2) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... he following point of difference with the request that the Hon'ble President may nominate a Third Member to resolve the same:-- "Whether on the facts and circumstances of the case and in law the directions given by the Vice President while setting aside the matter to the file of the Assessing Officer to re-compute the assessee's taxable income were appropriate or those of the Judicial Member were proper?" THIRD MEMBER ORDER Per Shri. V. Dongzathang, President --By this reference under section 255(4) of the Income-tax Act, 1961 the following point of difference was referred to me: "Whether, on the facts and circumstances of the case and in law the directions given by the Vice President while setting aside the matter to the file of the Assessing Officer to re-compute the assessee's taxable income were appropriate or those of the Judicial Member were proper?" 2. The facts are that the cross appeals of the assessee and the revenue came up before the Bench. The main issues taken up by the assessee are in regard to assessability of the receipt from engineering and ground handling services as income inIndiaand in the alternative the question of computation of such income to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k despite holding that the assessee's conduct does not allow it to argue its case from the premises of violation of principles of natural justice, only for the reason that being conscious of the fact that the Tribunal is the highest fact finding authority under the scheme of the Income-tax Act of 1961 and thus, in the particular case, any serious and bona fide, effort of the assessee to bring on record necessary information should not be blocked even at this belated stage as the purpose of correctly determining the taxability of an income would be in the interests of both the assessee as well as the Revenue. Thus, applying the legal maxim that justice should not only be done but also seen to be done, the restoration is being made." 7. At para 22, it was further observed as follows: "22. After referring to the above, I would merely like to confine myself to the reasons for restoration which, despite the conduct of the assessee, we have arrived at the same conclusion that it is fair and proper to both the parties concerned to finally have the full facts and figures on record before deciding the amount to be taxed. The restoration is justified in view of this fact and as has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence. 40. Thus, in the peculiar facts and circumstances where the assessee is fully in a position to give all necessary facts and figures, an assessment made de hors the relevant facts and figures in the present case would be an assessment in vacuum and would be unfair to both the parties concerned. Only in the circumstance where the assessee is being secretive and not making the necessary information available on account of some plea or the other as has been the earlier stand of the assessee during the assessment proceedings before the Assessing Officer and the CIT(A) where it has argued that it is not possible to separate the income earned from ground handling services and engineering services provided. Only in those peculiar circumstances, the Assessing Officer was fully justified to estimate the income of the assessee in the manner he had done." 10. Having observed as above in support of the setting aside of the order of the CIT (Appeals), and for restoring it to the file of the Assessing Officer for allowing reasonable opportunity to the assessee to prove its facts and figures with whatever evidence it can, the learned Judicial Member interpolated concurring order with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Hon'ble Supreme Court in the case of Kapurchand Shrimal v. CIT 131 ITR 451 to point out that speaking directions are essential. The decision of Kapurchand Shrimal is related to a case where it was a procedural requirement had not been complied with, and the lower courts had merely set aside the order for correct compliance without giving any other directions to redo the matter in accordance with the law. The Hon'ble Supreme Court held that mere setting aside of an issue was not in order and further directions for a de novo adjudication was essential. In the present case, the Hon'ble Vice-President has set aside the order and has directed to adjudicate the matter afresh in accordance with the law after allowing reasonable opportunity to the assessee. In terms of the decision of Kapurchand Shrimal, therefore, there is nothing wrong with the said direction. Thus, the very foundation of the direction of the Hon'ble Judicial Member are misconceived, as this decision of the Supreme Court does not mandate a direction in the tenor or the analysis which the learned Judicial Member has endeavoured. 2. It will be appreciated that even if, for the sake of argument, the direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the Assessing Officer had made some enquiries at the back of the appellant and there was no confrontation, and therefore, natural justice is violated. However, it was observed that since he was giving an opportunity, the lack of opportunity before the Assessing Officer was made up by his providing opportunity at the appellate stage. This observation itself is incorrect in terms of the decision of the Hon'ble Supreme Court in the case of L.K. Ratna v. Institute of Chartered Accountants (164 ITR 1). 4. On one hand, the Hon'ble Judicial Member agrees that the Assessing Officer should adjudicate the issue afresh after giving an opportunity. However, at the same time, she upholds the assessment made by the Assessing Officer and also holds that the CIT(A) was wrong in reducing the estimate made by the Assessing Officer. Refer page 8 paragraph 17 last lines, page 11 paragraph 21 and page 14 paragraph 27 of the Judicial Member's order. If on one hand, she agrees with the Assessing Officer and the CIT(A), the outcome of set aside is known. The Assessing Officer henceforth is not free to decide afresh in accordance with law. 5. The Hon'ble Judicial Member, while observing in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant had blocked information (page 5 paragraph 12 and pages 13-14 paragraph 24 and also page 24 of her order). She has also gone on to hold that the appellant had not approached the department with clean hands as if it had withheld information, it had. Whereas, it is recorded that separate accounts have not been maintained for the ground handling engineering services, the appellant had, therefore, to cull out the information from its combined accounts in India and from its global accounts (not restricted to Indian accounts only) for which the Assessing Officer himself had given opportunity of one month. Therefore, it is not a case where the appellant had information and did not furnish it. By the time the appellant could cull out the information, the Assessing Officer had already passed the order and the CIT(A) had never given opportunity to file these accounts. It is for this reason that the said accounts were presented for the first time before the Hon'ble Bench and the direction sought for de novo adjudication. 8. The appellant places reliance on the order of the Hon'ble Vice President made as rejoinder to the order of the Hon'ble Judicial Member disassociating himself w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices and the same had to be culled out from the combined accounts inIndiaand from its global accounts. The Assessing Officer gave opportunity to prepare the separate accounts within one month. The assessee could not complete the preparation of the separate accounts for the ground handling and engineering services and could not furnish the same within time. The Assessing Officer, therefore, estimated the income without any material on record. The learned CIT(A) also did not give opportunity to the assessee to file these accounts at the appellate stage. When these accounts were presented before the Tribunal, the Tribunal considered it fair and reasonable to allow reasonable opportunity to the assessee to prove its facts and figures with whatever evidence it can. The issue, therefore, is wide open and the Assessing Officer has to examine the facts and figures with whatever evidences produced before him. Therefore, it will not be in the interest of revenue to restrict and bind the Assessing Officer with certain directions as he will not be able to do justice to the computation of the income if he is not given full liberty in this regard. For the sake and in the interest of justice a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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