TMI Blog1992 (3) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and the income of the sub-contractors was assessed in the hands of the appellants. In other words, the sub-contractors were treated by the Assessing Officer as benamidars of the appellants. The Assessing Officer was of the view that this arrangement was entered into by the appellants with a view to reduce the incidence of taxation. The Assessing Officer was also of the view that the entire profit of the contract works at Boggulavagu and Yeleswaram belongs to the appellants. This finding of the Assessing Officer was based on books of account, documents and other materials seized from one Sri A. Suryanarayana on 27-7-1984 from Room No. 51, Tajmahal Hotel, Abids road, Hyderabad. The said room in the hotel was registered in the name of Sri A. Suryanarayana. On the basis of the books of account, documents and other materials seized, the Assessing Officer came to the conclusion that these books of account, though maintained in the name of sub-contractors, in fact belonged to the appellants. He accordingly made various additions in the case of the appellants. 3. In the case of M/s. Prasad Co., the present appeal is against the assessment for assessment year 1982-83. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , yet, the CIT (Appeals), without following the said order, issued certain directions to the Assessing Officer to re-examine the issue afresh. 6. The appellants are aggrieved. The learned counsel for the appellants, Sri A. Satyanarayana, attended and argued that the CIT (Appeals) erred in setting aside the assessments to be redone de novo by investigating the case in the manner suggested by the CIT (Appeals). Instead, he should have followed the order of the Tribunal which squarely covers the issue, and should have deleted the additions made by the Assessing Officer. The CIT (Appeals) further erred in not following the findings of the Tribunal in appellants own case on the same facts for assessment year 1983-84 to the effect that the appellant had nothing to do with the books seized from Sri A. Suryanarayana, that the appellant had given away the contract on sub-lease, that the sub-contractors separately and that the appellant had earned only 1% royalty from the sub-contractors on the gross bills receipts. In the opinion of the learned counsel, the CIT (Appeals) is bound by the findings of the Income-tax Appellate Tribunal which is the final fact finding authority under the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontracts, constitution of the sub-contractor firms, books of account of the sub-contractor firms, receipt of bills amounts by them less royalty due to the assessee-firms etc., and there was no evidence whatsoever on record to indicate that the sub-contractor firms were bogus and put up as a front for the appellants. He also points out that the appeals in the case of the sub-contractor firms came up for decision before the Income-tax Appellate Tribunal. The Tribunal, following its decision in the case of Prasad Co., and Prasad Construction Co., vide its order dated 30-7-1991, held that the subcontractor firms were genuine. In this regard, the order of the ITAT in I.T.A. Nos. 2778, 2780 2783/Hyd./1988 and 2779, 2781 2782/ Hyd./1988 dated 31-12-1991, has been placed before us for our consideration. In the said appellate order, the sub-contractor firms were held to be genuine firms and doing the business on their own without having any connection with the appellants before us. On these facts, the CIT (Appeals) was not legally correct in setting aside the assessments and directing the Assessing Officer to do further investigation to displace the findings of the Tribunal arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey were executed by various sub-contractors and they were given only 1 per cent royalty. All the sub-contractor firms were assessed to income-tax and their genuineness was accepted by the revenue authorities. In regard to the production of basic records, we have noted that basic record for 1985-86 and 1986-87 as submitted by Shri A. Suryanarayana Raju was stated to be lost along with the earlier years records in floods which occurred in October 1983 (paper Book A- 138). R24 of the seized material shows the existence of sub-contractors. We have also noticed that investment has been accepted by the department in the hands of the sub-contractor. Now, what the department has sought to assess is only the profit earned by the firm. Department has also not proved the beneficial ownership. There is no evidence to show that the profits earned by the sub-contractor has come to the appellant as such. The ordinary rule is that the apparent state of affairs is real unless the contrary is proved. Onus probandi appropos the transaction said to have been sham is on those who assert it. This is in consonance with the well known dictum " incumbit probatio qui dicit, non qui negat ". It means burden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those books is contrary to the canons of law. We, therefore, direct the Assessing Officer to delete the additions made on the basis of seized books." From the above, it is clear that the issue in the present appeals is squarely covered by our decision which we respectively follow. 11. Judicial propriety demands that the order of the Tribunal should not only be respected but it should be followed by a lower authority. If the authority subordinate to the Tribunal is allowed to pick up holes, gaps or some infirmities or is of the view that different line of thinking is possible, then there will be a judicial chaos and there will not be any finality to litigation. This process, if permitted, will lead to unnecessary harassment to the taxpayer which is not envisaged by the statute. A care ful reaing of the order of the CIT (Appeals) shows that his directions to the Assessing Officer are to " fill up the gaps " and to " overcome " the decision of the Income-tax Appellate Tribunal. This, in our view, is not permitted by law. In our considered opinion, the CIT (Appeals) is duty bound to follow the decision of the Income-tax Appellate Tribunal. This issue has been settled by the Ape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken under section 35E (1) or (2) to keep the interests of the department alive. If the officers ' view is the eorrect one, it will no doubt be finally upheld and the revenue will get the duty, though after some delay which such procedure would entail. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matter which, if allowed to become widespread, could result in considerable harassment to the assesseepublic without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." In view of the decision of the Supreme Court, it is settled that the decision of a higher authority is binding on a lower authority in the judicial hierarchy. The CIT (Appeals) is, therefore, bound by the decision of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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