TMI Blog2012 (8) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... verse decision of the CIT(A) on the said legal ground, no appeal was preferred by the assessee. Because of this reason, the Tribunal is not empowered to pass an order "thereon" on the subject matter which is not in appeal as per the appeal memo to be adjudicated upon. In any case, provisions of Rule 27 and the provisions of Sec. 253(4) do not over-lap each other; rather operate in two different situations. - IT APPEAL NOS. 866 TO 871, 1016 & 1339 (AHD.) OF 2008 - - - Dated:- 30-4-2012 - MUKUL KR. SHRAWAT, T.R. MEENA, JJ. S.K. Gupta for the Appellant. S.N. Divatia for the Respondent. ORDER Mukul Kr. Shrawat, Judicial Member In the case of Mahendra A. Patel for A.Y. 2002-03 cross appeals have been filed arising from the order of the CIT(A)-III, Ahmedabad dated 31.01.2008. For rest of the years, i.e. A.Ys. 1999-2000 2000-01, 2001-02 2003-04 Revenue is in appeal. For A.Ys. 1999-2000, 2001-02 and 2003-04 separate orders have been passed by ld. CIT(A) all dated 31/10/2007 and for A.Y. 2000-01 the date of order is 27/11/2007. In the case of Sandip M. Patel, Revenue is in appeal for AYs 1998-99 2001-02 and the orders of the ld. CIT(A) are respectively dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Objections have been decided by the learned CIT(A) against the assessee, therefore, remedy under Rule 27 of the Appellate Tribunal Rules is available to the assessee and as such no sufficient cause is disclosed in the affidavit of the assessee for explaining the delay in filing the Cross Objections. The Cross Objections of the assessee are accordingly dismissed as withdrawn with liberty to the assessee to argue the same points at the time of disposal of the departmental appeals. " 2.1 Before we proceed further, we have noticed from the order-sheets of this case that in the past these appeals were adjourned on number of occasion due to the reason that the Ld. Counsel has requested to consolidate these appeals along with an appeal of this very assessee for A.Y 2004-05(ITA No.4575/ahd/2007) and an appeal of Shri Tarun Karia for A.Y. 2004-05 (ITA No. 2310/Ahd/2010). At that time, prima-facie, it was felt that rest of the group of eight appeals, listed in the nomenclature, might be connected with A.Y. 2004-05 appeals. But the fact is that the directions of the Hon'ble Jurisdictional High Court in Tax Appeal No. 1798 of 2010 order dated 19/10/2010 pertained to A.Y. 2004-05 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09] 120 ITD 460 (Indore) 6. ITO v. Smt. Gurinder Kaur [2006] 102 ITD 189 (Delhi) 7. Dy. CIT v. Anant Raj Industries Ltd. [2010] 124 ITD 284 (Delhi) 8. Deep Chand Kothari v. CIT [1988] 171 ITR 381/[1987] 35 Taxman 223 3.1 [This para is not reproduced here as it involve minor issue] 3.2 Ld. Commissioner Mr. Gupta has also raised an interesting argument that Rule 27 simply prescribes that a respondent may support the order appealed against. However, the ld. AR is trying to agitate/attack a finding of ld. CIT(A) on the issue of jurisdiction under the guise of ITAT Rule 27. He has no legal right to agitate under Rule 27, but the only right available is to support an order appealed against. Ld. DR has placed reliance on Kanpur Industrial Works v. CIT [1966] 59 ITR (All.) and B.R. Bamasi v. CIT [1972] 83 ITR 223 (Bom.). 3.3 A legal issue has been raised pertaining to the applicability of Rule 27 of Income Tax Rules, for ready reference, reproduced below:- "Respondent may support order on grounds decided against him 27. The respondent, though he may not have appealed, may support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, enhance or annul the assessment. Therefore in exercise of those powers, the issue of validity of the provisions of Sec. 153C was decided in favour of the revenue and the impugned assessment order was not annulled. Reverting back, the law enacted and the procedure adopted in civil matters is as per the Order 41, rule 22(1), of Civil Procedure Code, to the effect that "any respondent, though he may not have appealed from any part of the decree, may not only support the decree on any of the grounds decided against him in the court below but take any cross-objection to the decree which he could have taken by way of appeal, provided he has filed such objection in the Appellate Court within one month from the date of service on him or his pleader" and it is in the form of a memorandum of appeal. This position of law has been elaborately explained by the Hon'ble Allahabad High Court in the case of Kanpur Industrial Works ( supra ) and the relevant portion is necessary to reproduce :- "The Tribunal's power, vide sub-s. (4), is to "pass such orders thereon as it thinks fit". Rule 27 of the ITAT Rules is as follows: "27. The respondent, though he may not have appealed, may supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s favour and he cannot file an appeal merely against the finding rejecting the other ground of attack. An appeal lies from the operative judgment and not from the reasons in support of it or the findings given on the issues whether of fact or law on which the operative part of the judgment is based. A successful party cannot appeal merely to have a finding given adversely to him corrected; as notwithstanding the adverse finding the operative judgment is in his favour he is not aggrieved by it and cannot gain anything by appealing against the adverse finding. Similarly, when one of the two grounds of defence is accepted and the other is rejected, the appeal must be by the plaintiff and there can be no appeal by the defendant since the operative judgment is in his favour. When a defendant appeals he appeals from the acceptance of one ground of attack and if he succeeds the appeal must be allowed and the suit must be dismissed. But if the rejection of the other ground of attack is wrong, justice requires that the suit must not be dismissed because if there is one valid ground of attack the plaintiff must succeed. Consequently he must have an opportunity of urging in the appeal that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross-objection filed in the appeal relate to two different subject matters even though both arise out of one decree or judgment of the trial Court. The subject-matter of a cross-objection has nothing to do with the subject-matter of the appeal. On account of part of the suit being decreed and part being dismissed the decree is split up into two parts or is treated as two decrees and the appeal is from one decree and the cross-objection from the other. This is made clear by r. 22, which speaks of an appeal from part of a decree and of the decree being supported by the respondent on any of the grounds decided against him. If the plaintiff had two grounds of attack and one of them was accepted and the other rejected by the trial Court in respect of part of the claim and the defendant files an appeal from the decree passed in his favour he may support it on the other ground rejected by the trial Court. But if he wants a decree for the remaining part of the claim he must file a cross-objection in the defendant's appeal if he has not filed an appeal himself. This cross- objection is to the decree, e.g., the remaining part of the decree and not to the decree passed in his favour and form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly in favour of the assessee and partly against him. But since the assessability is indivisible the order assessing the income is treated as one indivisible order and the facts on account of which the various receipts are held to be assessable income are treated as various grounds of attack and the various facts on account of which deductions or exemptions are allowed or receipts are not treated as assessable income are treated as grounds of defence. So an assessment order is based upon allowing and disallowing grounds of defence. An appeal to the Tribunal whether by the Department or by an assessee is like an appeal by a defendant or a plaintiff from a decree accepting or rejecting the entire claim of the plaintiff. There is no scope for any cross-objection and consequently no scope for the respondent's, e.g., the assessee's or the Department's urging for reduction in the assessed income or increase in the assessed income, as the case may be. If the appellant before the Tribunal is the Department claiming increase in the assessed income all that the assessee can urge is that there should be no increase; that is the only subject-matter of the appeal. If the assessee desires reduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse finding is upheld than the favourable result of the appeal may get over-turned, (6) That a cross-objector has a legal right to support an order of the first appellate authority but no right is enshrined under Rule 27 to attack that judgment. (7) That Rule 27 sanctions a defendant only to "support" the order of CIT(A) and not permitted to "attack" the judgment. (8) That by the very language of Rule 27 a respondent can support the verdict of the first appellate authority and side by side can argue against any of the grounds held against him. This shows that the grounds against the respondent is within the circumference of the favourable judgment. Such finding or the grounds thus are linked to the final verdict of the issue decided and has a direct link with the final view taken. The ground is not independent of the issue decided, because while arriving to the conclusion, in between the process of drafting of an order, there is a possibility of taking an adverse view by rejecting any of the argument or the grounds of defence taken. (9) Lastly, how a respondent can support "any of the grounds decided against him" as worded in Rule 27?. But the Hon'ble Courts have removed this confu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an therefore be resisted on that ground and that there is no incongruity in maintaining the assessment order passed against the assessee and yet refusing to increase it on the ground that he was not liable to be assessed at all. The judgment points out however that if the Tribunal accepts the ground of defence that the assessee was not liable to be assessed, it can only refuse to increase the assessed income as only such an order would be within the scope of the appeal filed by the Department and any other order such as annulling the assessment would be outside the scope of the appeal. That judgment holds that the position of an appeal under s. 33 of the IT Act and an appeal under the CPC is identical. A Full Bench of the Madras High Court has in Venkala Rao v. Satyanarayanamurthy ILR 1944 Mad 147 : AIR 1943 Mad. 698 (FB) held that it was open to a respondent in appeal who had not filed cross-objection with regard to the portion of the decree which had gone against him to urge in opposition to the appeal of the plaintiff a contention which if accepted by the trial Court would have necessitated the total dismissal of the suit, but the decree insofar as it was against him would s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appeal. Interestingly, in the present case though the first appellate authority has decided the issue of the applicability of the provisions of section 153C of IT Act, which was one of the ground of appeal raised by the assessee before ld. CIT(A), but even after an adverse decision of the CIT(A) on the said legal ground, no appeal was preferred by the assessee. Because of this reason, the Tribunal is not empowered to pass an order "thereon" on the subject matter which is not in appeal as per the appeal memo to be adjudicated upon. As far as the question of withdrawal of cross-objection is concerned, in our humble opinion, in the light of the above discussion, had the cross-objection was not withdrawn, even then, such a legal issue was beyond the scope of the adjudication through a cross-objection under Sec. 253(4) of IT Act because the impugned legal issue was altogether an independent as well as a separate issue, then the issue decided in favour of the assessee which are to be supported but u/s. 27 of Appellate Tribunal Rules. The applicability as also the operation of Sec. 253(4) of I.T. Act (i.e. the procedure of filing of cross-objection) is distinct than the area of op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 27 of the income-tax Rules, which provides that the respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him, takes care of the right of the assessee to sustain the order of the Commissioner. Even rest of the decisions are also on the same lines and the fine distinction; as drawn out hereinabove; have been taken care of, hence do not support the stand of the ld.AR. In our conscientious view since the assessee has not appealed against a verdict on section 153C held against him by CIT(A) and that the cross-objection, if any admissible on this issue, are also not available for our adjudication, therefore this issue is no more subjudice before us, hence cannot be entertained. The plea raised by the assessee in this regard is hereby rejected. 4. Lead Assessment Year is A.Y. 1999-2000. Ld.DR has opened the case of the Revenue by referring the facts of A.Y.1999-2000. A. Revenue s appeal (ITA No.867/Ahd/2008); r elevant grounds hereby adjudicated are as under: 1) The learned CIT(A) erred in law and on facts in deleting addition of Rs.5,00,000/- made on account of unexplained investment in purchase of land. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng paragraphs:- 7. The next ground of appeal relates to the addition of Rs.5 lakhs as unexplained investment. The A.O. noted that the assessee had purchased agriculture land from one Dhiren Raval, on 1/1/1999 and had made payment of Rs.5 lakhs to the seller in earlier years, the source of which had not been explained as the balance-sheet/capital account, etc. were not filed with the return of income. The A.O. observed that the payment towards registration and stamp duties were however reflected in the cash book of the relevant assessment year 1999-2000) and so did not make addition of the amount spent on registration/stamp duty. 7.1 . Before me, it was submitted that the appellant had agreed to purchase land of Shri Dhiren Raval, and accordingly credited his account by journal voucher entries individually, in respect of all four survey numbers i.e. 1920, 1921, 1924 and 1930 of the impugned land. There was no payment of advance as such, since the land was under dispute and was sought to be acquired by the Government under section 43 r.w.s. 32P(2) of the Land Revenue Code and it was eventually acquired also by the Government, vide the order dated 01/03/2006 of the Mamlatdar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the side of the respondent-assessee, ld.AR Mr.S.N.Divatia appeared and his only contention was that the amount in question was paid in piece-meal in the past years, therefore the investment did not belong to the year under consideration. He has pleaded that it was wrong on the part of the Revenue Department to assess the entire amount of Rs.5 lacs in A.Y. 1999-2000. 9. We have heard both the sides. We have perused the orders of the authorities below. On perusal of the sale-deeds in question, we are of the considered view that since all those sale-deeds have undisputedly been registered and the assessee has paid the registration amount, then it is difficult to accept that without passing of the sale consideration, duly stated therein, a vendor i.e. Shri Dhiren J.Raval has executed the sale in favour of the assessee. Those sale-deeds are complete in all respects and there is no ambiguity about the sale consideration agreed upon between the parties. The only reason of confusion was that the amount of consideration was mentioned as paid in cash by the purchaser in piece meal . In our opinion, the assessee wants to take the advantage of the word piece-meal by alleging that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to have considered the fact that the assessee had claimed to have received gift/loan of Rs.8,00,000/-, Rs.3,33,333/-, Rs.6,00,000/-, Rs.26,22,796/-, Rs.67,22,716/- totaling to Rs.1,10,78,845/- from his son in various assessment years from 1999-2000 to 2003-04 and that the assessee failed to establish the creditworthiness of the person form whom such huge sums were received. 10.1. It was noted by the AO that the assessee has received an amount of Rs.8 lacs from his son Shri Biral M.Patel alias Gulu, stated to be an NRI and staying in USA. A confirmation letter of the son was filed through his father. It was explained that the payment was made by the son through his NRE account with Punjab National Bank. On perusal of the return of income filed by the son in India, it was noted by the AO that a small amount of Rs.40,690/- was declared for A.Y. 1998-99. It has also been noted by the AO that in past five-six years, son had made huge gifts and loans to various family members. A chart was made by the AO through which it was demonstrated that in A.Ys. 1999-2000 upto 2003- 04 the son had gifted or given loan of a total amount of Rs.1,44,22,123/-. AO has also noted that the source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring relevant assessment year. (Addition Rs.8,00,000) 11. The matter was carried before the first appellate authority. 12. It was argued before the ld.CIT(A) that the requisite details, such as, confirmation, source, i.e. NRE account of Punjab National Bank and the identification of the person along with the relationship with the assessee, i.e. father son, have duly been placed on record but the AO has rejected all those evidences without any basis and taxed the amount in the hands of the assessee. It was vehemently contested that the amount in question was passed through normal banking channels and the source was duly explained. On due consideration of the evidences on record, ld.CIT(A) has decided the issue in assessee s favour as under:- 6.2. The contentions were carefully considered. In his letter (copy filed during appeal proceedings), the donor, Biral Patel has stated that he worked on a salary of 2000$ per month between 1988 to 1992 and saved the entire money. In 1993, he also purchased a house by taking loan and earning net rental income of 1000$ from per month. In 1995, he invested in a partnership from running a store which he purchased from the other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was clarified before us that the AO has wrongly presumed that the income declared by the assessee in India for A.Y. 1998-99 of Rs.40,690/- was the only income of the said son. It was clarified that the return was filed in India in respect of the interest income earned in India. In addition to the said income earned in India, the son is subjected to tax in USA. An information about a tax debt with the Florida Department of Revenue and therefore a Notice for collection by AMO Recoveries is placed on record. In respect of the source of funds, it was claimed that the assessee has sold a Convenient Store, therefore sated to be in possession of sufficient funds. Even ld.CIT(A) has noted that the impugned amount was received by a cheque No.858287 of NRE Account No.10372 with Punjab National Bank. On account of these facts and the corroborative evidences, we hereby hold that such issue was dealt with by the Hon ble Gujarat High Court in the case of Murlidhar Lahorimal(supra), wherein it was opined that the donor having confirmed the gift and explained the source thereof, the onus on the donor, i.e. the assessee u/s.68 was discharged. Further, in the case of Nemichand Kothari(supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re me, it was submitted that the A.O. had erroneously taken the amount of gift received by the appellant from his son, Biral alias Gulu Patel at the quantum of Rs.67,22,616/-. The A.O. had not given the details of this quantum/its break up. In fact, the gift received in the period relevant to A.Y. 2003-04 amo8unted to Rs.37,10,986/- which were received directly from USA and deposited in the bank amount No.9394 of the appellant, in Punjab National Bank and its break up was as under: Date Amount Mode 20/5/2002 Rs.8,29,801/- From USA 7/11/2002 Rs.14,42,634/- From USA 10/12/2002 Rs.9,60,100/- From USA 27/12/2002 Rs.4,78,451/- From USA These gifts were credited in the aforementioned bank account, copies (bank account of which had been filed before the A.O. and also furnished in the appeal proceedings. Photo copies of the two pay-in-slips of the Punjab National bank had also been furnished. As per the one, the amount of 1000$ was deposited on 26/11/2002 in the Punjab National Bank account of the appellant. This amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale consideration. 19.1. Apropos to ground No.2.1, on M/s.Kalgi, etc. a police raid on 26/08/2003 was conducted and certain documents were found to be belonging to the assessee. A warrant of authorization u/s.132A of the IT Act was thereupon issued on 22/10/2003. On the basis of those documents, proceedings u/s.153C of the Act in the case of assessee were initiated. A satisfaction note was also made. The said satisfaction note is dated 27/03/2006; reproduced below:- This case has been assigned to the undersigned as per the order u/s.127(1) of the I.T.Act passed by the CIT Central-II, Ahmedabad being No.CIT (CEN)-II/127(1)/Kalgi Gr. Royal Gr./2005-06 dated 01/03/2006. In the case of Kalgi group of cases, a Police raid was conducted on 26/08/2003 at the premise of M/s.Kalgi, Old Sharda Mandir Road, Ellisbridge, Ahmedabad. The assets and documents seized by the Police were requisitioned by the Department u/s.132A of the I.T. Act on 22/10/2003. The warrant of authorization u/s.132A contained the name of Shri Tarun D.Karia, Dinesh Babulal Thakkar M/s.Kalgi. After verification of seized documents, it is noted that certain papers/documents seized as details given below pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search nor during the course of survey any valuable article was either found or seized, however, AO had framed the assessment on the assessee by invoking the provisions of section 153C of the IT Act. Rather, a finding was given that for all relevant years, returns were originally filed and processed and there was no additional material which was found and could be held belonging to the assessee. Naturally, this decision do not apply on the facts of this case because undisputedly this assessee has not filed the return of income in the past and that the material referred did belong to the assessee. 19.4. Ld.AR has also placed reliance on Sinhgad Technical Education Society vs. ACIT (2011) 57 DTR 241(ITAT Pune Bench) and the opening remark was that there was absence of incriminating material. A search u/s.132 was carried out in the case of one N, (President of the Assessees Society) and the AO has issued notice u/s.153C of the Act but in the impugned notices there was no mention of incriminating information and it was silent insofar as discovery of material relating to the assessee was concerned. Rather, it was found that the satisfaction note was very general one. On those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld by the assessee in the said property. As per AO, documentary evidences, such as, Banakhatnama/Power of Attorney could not be produced. It was also noted that the said property was not reflected in the return filed by the assessee for the block period of earlier years. As per AO, the assessee had failed to prove any right over this property. About payment of AUDA, the observation of the AO was that the payment through payment-slips was not made by the assessee himself. Those payments were made on behalf of the assessee. The AO has finally held as under:- In view of above discussion, it cannot be said that the assessee has made any payment whether in the nature of cost of acquisition or improvement cost in respect of said property. It is also held that assessee could not prove that he had the right in this property by virtue of which he was entitled for showing capital gain. It is a case in which assessee has received certain amount from some persons for a undisclosed purpose which could not be explained by the assessee. Therefore, total amount of Rs.41,30,550/- received in cash and by cheque is held to be income from undisclosed sources and brought to tax. As the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard the submissions of both the sides, we are of the view that the documents which were filed before the ld.CIT(A) were not before AO and so the investigation has not been done. There is a reference that the assessee was subjected to search earlier as well. At that time there was a disclosure of investment in properties along with cash and jewellery. Whether that list contained the land in question, i.e. Chandlodiya land has been verified? The assessee has filed return of wealth. In those returns, there was a mention of agricultural land at Chandlodiya, Survey No.149. There was an advance by the assessee in the past but whether that advance was supported by any written agreement has also not been proved or disproved. The initial investment also require investigation for the reason that as per the Wealth Tax returns the investment was declared at Rs.2,15,000/- for Agriculture land at Chanlodia S.No.149) but the cost of acquisition for Captal Gain purpose was claimed at Rs.4,30,000/-. In the absence of certain documents which were yet to be called for examination, at present it was uncertain whether the land was developed by the assessee having ownership right. There was a refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credited in the Bank Account No.9397 with Punjab National Bank and the transaction was through banking channel. Therefore, on the same lines, we hereby confirm the findings of ld.CIT(A) and dismiss this ground of the Revenue for both the years. 24. Apropos Ground No.2 in Assessment Year 1998-99, the AO has noted that by clearing a sum of Rs.41,30,000/- was found credited in Bank Account No.9397 with PNB on 25/07/1997. As per AO, no explanation was offered in respect of the said credit entry. However, the contention of the assessee was that on one hand, there was a credit entry on 25/07/1997, but on the other hand, that entry was reversed on 26/09/1997 as the cheque was not honoured. On that ground, ld.CIT(A) has held that since no amount was received by the assessee, therefore there was no reason for making the impugned addition in the hands of the assessee. Considering the facts of the case and the material placed on record, we find no infirmity in the view taken by the ld.CIT(A), hence dismiss this ground of the Revenue. In result, Revenue s appeals in the case of Sandip M.Patel are dismissed. 25. As a result, we summarize the result are as under:- (i) Revenues appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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