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2016 (5) TMI 116 - CALCUTTA HIGH COURT

2016 (5) TMI 116 - CALCUTTA HIGH COURT - [2016] 382 ITR 424 - Validity of block assessment - whether the seized material did not disclose any undisclosed income? - addition on account of excess transportation charges received - Held that:- The assessee did not raise the issue of any addition of a sum of ₹ 1,59,38,774/- because there was no addition of the sum of ₹ 1,59,38,774/- or any part thereof. The assessee attempted to demonstrate the fallacy in the finding arrived at by the Ass .....

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He merely confirmed the order of the Assessing Officer. Therefore, the subject matter of challenge before the learned Tribunal was the addition of ₹ 2.02 crores. The learned Tribunal could either have upheld the same or could have set aside the same. The learned 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.

We are of the opinion that the addition of a sum was clearly in excess of j .....

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late Tribunal, "A" Bench, Kolkata, pertaining to the block period commencing from April 1, 1988 upto April 21, 1998, passed in I.T.(SS)A. No.103/Kol/2003, partly allowing the appeal preferred by the assessee. Aggrieved by the judgment and order of the learned Tribunal, the assessee has come up in appeal.The following questions of law were formulated at the time of admission of the appeal: "i) Whether the block assessment was valid, competent and justified in law as the seized mate .....

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; 1,59,38,664/- or any part thereof was perverse, without lawful basis, vitiated by irrelevant consideration and violative of the principles of natural justice." The facts and circumstances of the case, briefly stated, are as follows. Pursuant to search and seizure carried out in the office of the assessee, who is the sole proprietor of M/s. Vikram Carriers, a block assessment was made for a period of ten years. The Assessing Officer arrived at the following conclusion: "C. Excess clai .....

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n.. Ltd. to Vikram Carriers requesting to refund excess payment of ₹ 23,14,827/- as the assessee delivered bitumen directly to the different Bihar Govt. Road Construction Departments (RCDs), instead of transporting the same via Barauni as per agreement. Moreover, pages 25 to 27 of the seized documents VC/5 is a copy of a letter dt. 16.7.97 to Vikram Carriers from Bharat Petroleum Corpn. Ltd. for payment of the excess transportation charges paid of ₹ 60,01,379.53. It is evident from t .....

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ssed in the next para, is corroborative of not incurring such huge expenses as claimed on a/c. Therefore, the total amount of excess claim of transportation charges which comes to ₹ 1,19,20,777/- + ₹ 23,14,827/- + ₹ 60,01,380/-) = ₹ 2,02,36,984/- is treated as Undisclosed income of the assessee." The Assessing Officer was also of the opinion that the assessee had shown bogus expenditures and bogus creditors, the peak amount whereof was ₹ 1,59,38,774/-. The Asse .....

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reasons: "we hold that the addition of ₹ 2.02 crores on account of excess transportation charges received by the assessee, which are already accounted for by the assessee in its account books, cannot be made in the hands of the assessee." The Tribunal, however, proceeded to examine the correctness of the alleged bogus creditors and the bogus expenditures and held as follows: "We find that even before us, the assessee was not able to produce any evidence to prove the genuine .....

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at in block assessment, only the assessment of undisclosed income can be made on the basis of the same seized material and the issuance of notice u/s. 131 to the sundry creditors is not a seized material, we find that the argument of the Ld. Counsel is not tenable. We find that it was only due to search operations carried out against the assessee that the documents evidencing the claim of 3 oil companies regarding the excess claim of transportation charges were detected and that the account book .....

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the search had led to the conclusion that the expenses claimed by the assessee were bogus in nature. No evidence or material was produced before us to contradict the finding of the CIT (Appeals) in this regard. We find that the Revenue has produced enough evidence to prove that the expenses claimed by the assessee were bogus in nature. In this view of the matter, we hold that the Revenue authorities were justified in treating the total peak amount of outstanding balances shown against these cre .....

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and 7 are dismissed." Aggrieved by the aforesaid order, the assessee is before us in appeal under section 260A. The questions of law formulated have already been indicated above. It is not in dispute that no cross objection was filed by the revenue challenging the order of the CIT (Appeal). The CIT (Appeal) had upheld the order of the Assessing Officer. In other words, he restricted the addition to a sum of ₹ 2.02 crores. He also approved the refusal of the Assessing Officer to add th .....

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f the directions of the Dispute Resolution Panel has been preferred under sub-section (1) or sub-section (2) or subsection (2-A) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof; within thirty days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Assessing Officer (in pursuance of the directions of the Dispute Resolution Panel) or Deputy Commiss .....

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hat it was not open to the learned Tribunal to confirm the addition of the sum of ₹ 1,59,38,774/- because no such addition was made. In the absence of any such addition, there was no basis for the learned Tribunal to confirm the same. This addition was made by the learned Tribunal for the first time which the learned Tribunal could not have done. Mrs. Chatterjee, learned Advocate appearing for the revenue, drew our attention to the grounds of appeal noticed by the learned Tribunal, which a .....

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n the basis of the claim made which are not yet final and adjudicated." 6. "For that further and in any event various prejudicial findings of the Assessing Officer in respect of Sundry Creditors of the Appellant and confirmed by the Commissioner of Income- tax(Appeals) are without any basis and / or material and have been arrived at by ignoring relevant materials and evidence and are based on surmises and conjectures." 7. "For that no proper enquiry was made by the Assessing .....

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d amount is illegal, arbitrary and perverse." She submitted that the issue had been raised by the assessee himself. We are unable to accept this submission. The assessee did not raise the issue of any addition of a sum of ₹ 1,59,38,774/- because there was no addition of the sum of ₹ 1,59,38,774/- 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 .....

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matter of challenge before the learned Tribunal was the addition of ₹ 2.02 crores. The learned Tribunal could either have upheld the same or could have set aside the same. The learned 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. Reference, in this regard, may be made to a Division Bench judgment of the Bombay High Court in the case of Motor Union Insurance Co. Ltd.-vs-Commissioner of Income .....

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f 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 wid .....

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riate 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." It will be of some interest to notice section 33 of the 1922 Act, which was as follows: "Section 33. Appeals against orders of Appellate Assistant Commissioner (1) Any assessee objecting to an order passed by an Appellate Assistant Commissioner under Section 28 or Section 31 may appeal to th .....

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expiry of the sixty days referred to in sub-sections (1) and (2) if it is satisfied that there was sufficient cause for not presenting it within that period. (3) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner, and shall, except in the case of an appeal referred to in sub-section (2), be accompanied by a fee of one hundred rupees. (4) The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being hea .....

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Section 66 orders passed by the Appellate Tribunal on appeal shall be final." We already have quoted sub-section (4) of section 253. Upon comparison of section 253 with section 33 of the 1922 Act, it would appear that the Act of 1922 did not contain any express provision enabling a respondent to the appeal to file a cross objection although latently it was there. The judicial principle pressed into service by the Division Bench of the Bombay High Court was later followed by another Divisio .....

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ships 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 .....

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on 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 crossobjections 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 Ac .....

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