TMI Blog2018 (10) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... umption will be drawn against the assessee in these circumstances. The tribunal has inherent powers to pass such orders as it deemed fit within mandate of Section 254(1) of the 1961 Act and confirmation of additions u/s 69C read with its proviso was justified and was within powers of the tribunal keeping in view entire factual matrix of the case before it. The powers of the tribunal u/s 254(2) is limited and is restricted to correcting mistakes apparent from records and this powers do not extend to reviewing its own order. Thus, this contention of the assessee with respect to invocation of provisions of Section 69C by tribunal in this MA also stood rejected.Both the MA’s filed by the assessee stood dismissed - MA No. 168-169/Mum/2018, ITA No. 2415 & 1295 /Mum/2014 - - - Dated:- 22-10-2018 - Shri Saktijit Dey, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Ms Rushab Mehta For the Revenue : Shri Ram Tiwari ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER These two Miscellaneous applications( hereinafter called the MA ) have been filed by assessee being MA No. 168-169/Mum/2018 arising out of ITA no. 2415 1295/Mum/2014 for asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar were to the tune of ₹ 6.85 crores in the month of March 2005 itself while the transactions of cash sales of gold bar were to the tune of ₹ 48.99 crores in the month of April, 2005. Thereafter, there was a solitary transactions of cash sale of gold bar of approx. ₹ 18.50 lacs in the month of July 2005 and thereafter said business of the assessee ceased to operate. The proprietary concern of the assessee namely Shankheshwar Bullion registration with Gujarat VAT was cancelled by Gujarat VAT authorities w.e.f. 30-09-2005(pb/page 261). The proprietary concern of the assessee namely Shankheshwar Bullion made purchases of gold bars in the subject assessment year mainly from a partnership concern namely M/s Padmavati Bullion, Ahmedabad of huge magnitude to the tune of around 796 kg in the month of April, 2005 itself which was sold by it to undisclosed customers in cash whose identities have been withheld by the assessee and the said cash from undisclosed sources have been deposited in the bank accounts of the assessee. Similarly it is observed from material on record that in the case of Padmavati Bullion from whom the assessee made purchases also started its business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank accounts of the assessee and cheques are issued to Padmavati Bullion towards purchases of gold bullion. The assessee has contended that only after receipt of the payments from buyers which is deposited in the bank, delivery of the gold to the unrevealed/undisclosed buyers is effected but there is no such evidence on records which could substantiate that the gold bars have been delivered to the undisclosed buyers only after the receipt of cash rather the records reveal opposite wherein cash sales of gold bar to the tune of ₹ 48.99 crores was shown to have been made by the assessee in the month of April, 2005 while most of the cash proceeds against said stated sale of gold bars amounting to ₹ 27.54 crores was received post April, 2005 and was received in the month of May, June, July August, 2005 which was deposited in bank of the assessee. Perusal of material on record reveals that the assessee s capital introduction in the firm is a meager sum of ₹ 87,114/- and the total capital of the assessee stood at ₹ 7,89,578/- and against this paltry capital of the assessee, the assessee has stated to have entered into huge transaction in gold bars of more than &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reference is drawn to decision of Hon ble Supreme Court in the case of Sumati Dayal v. CIT (1995) 214 ITR 801(SC). India is one of the major importer of gold in the world. The sale and purchase of imported gold including its end use is regulated, controlled and monitored by Reserve Bank of India(RBI). M/s Padmavati Bulion from whom the assessee has stated to have purchased gold bars has in turn purchased the said gold bars from ICICI Bank as is emanating from the records before us. The Gold bars sold by ICICI Bank to Padmavati Bullion is imported gold as is clearly reflected in the sale invoices and delivery challans issued by ICICI Bank in favour of Padmavati Bullion which are placed in paper book page 86-139. The said documents being invoices/challans raised by ICICI Bank in favour of Padmvati Bullion shows the prices of gold in US$(United States Dollars) and the suppliers from whom ICICI Bank imported gold bar/bullion is also clearly mentioned. The attention is drawn to the following few RBI Circulars/ guidelines/notification which regulated gold imports and its sale in India at relevant time:- 1.RBI/2004-05/30 A.P.(DIR Series) Circular No. 2 dated 09-07-2004 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losing the names of ultimate buyers of gold who have allegedly bought gold through assessee, the assessee has in fact facilitated introduction of the undisclosed money of his buyers into the bank accounts of the assessee and its conversion into gold bars without disclosing their identity which also prevented end use of gold bars to be monitored. Reference is drawn to a recent decision of Hon ble Supreme Court in the case of Binoy Viswam v. UOI reported in (2017) 82 taxmann.com 211(SC), wherein Lordships have held in no uncertain terms that menace of the black money which is deep rooted in the economy need to be tackled by taking multiple actions at the same time, by holding as under : 99. Unearthing black money or checking money laundering is to be achieved to whatever extent possible. Various measures can be taken in this behalf. If one of the measures is introduction of Aadhaar into the tax regime, it cannot be denounced only because of the reason that the purpose would not be achieved fully. Such kind of menace, which is deep rooted, needs to be tackled by taking multiple actions and those actions may be initiated at the same time. It is the combined effect of these action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing peak credits for some of the credit entries by way of cheques and denying it for the other entries in cash. He also questions the practice of working out separate peak credits for cheque and cash transactions. 17. The premise underlying the concept of peak credit is the squaring up of the deposits in the account with the corresponding payments out of the account to the same person. In Bhaiyalal Shyam Bihari v. CIT (supra), the Allahabad High Court explained that benefit of peak can be given only when the assessee owns up all the cash credits in the books of accounts. It was further held: For adjudicating upon the plea of peak credit the factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter can the question of peak credit be raised. 18. In that case, it was held that as the amount of cash credits stood in the names of different persons which the Assessee had all along been claiming to be genuine deposits, withdrawals/payments to different persons during the previous years, the Assessee was, therefore, not entitled to claim the benefit of peak credit. Later in CIT v. Vijay Agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k credit is not applicable where deposits remain unexplained under Section 68 of the Act. The question of law framed by this Court, is accordingly, answered in the negative i.e. in favour of the Revenue and against the Assessee. The impugned order of ITAT is, accordingly, set aside and the order of the AO is restored to file. Reference is also drawn to the decision of Hon ble Calcutta High Court in the case of Rajmandir Estates Private Limited v Pr. CIT (2016) 386 ITR 162(Cal. HC), wherein Lordships has discussed the concept of laundering of black money as follows: In a commentary on the Prevention of Money Laundering Act, 2002 by Dr. M. C. Mehanathan published by Lexis Nexis, 2014, the steps of money laundering are described as follows:- STEPS OF MONEY-LAUNDERING Although money-laundering often involves a complex series of transactions, it generally includes the following three basic steps: 1. Placement It involves introduction of the proceeds of crime into the financial system. This is accomplished by breaking up large amounts of cash into smaller sums that are then deposited directly into a bank account, or by purchasing monetary instruments, tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e handled through special anti-money-laundering laws. Now coming back to the controversy in hand, we have observed that the assessee has allegedly made sales of gold bars to the tune of ₹ 49,17,69,925/- during the impugned assessment year wherein sale proceeds have been stated to have been received in cash from undisclosed buyers which has been deposited by the assessee in the bank account of the assessee and hence sources of these cash deposit could not be satisfactorily explained by the assessee although the same is stated to be cash received on account of cash sales of gold bars to undisclosed buyers. Thus, if the story of the assessee is to be believed then he had acted in a manner to facilitate conversion of undisclosed money of undisclosed persons to enable them to convert their undisclosed money into safe havens of gold bar at his own perils which got further aggravated by a consistent adamant and unacceptable stand of the assessee in not revealing the names of buyers of the gold bars by stating that the details of these buyers who have paid in cash for gold bar are not known to the assessee which stand of the assessee also prevented authorities below to make enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e creditors and genuineness of the cash credits. Thus, to say that no burden lay on the assessee to fulfill all the three ingredient requirements sated above before its accepted wherein one of the ingredient requirement is to establish identity of the creditor. Thus, these so called proceeds of cash sales deposited in bank accounts of the assessee are cash credits appearing in the books of accounts of the assessee sources of which are not satisfactorily explained by the assessee keeping in view detailed factual matrix of the case discussed by us in preceding para s of this order and mandate and onus cast under Section 68 on the assessee is not fulfilled. The genuineness of these cash receipts could not be satisfactorily proved by the assessee as there is no third party evidences to substantiate the authenticity of these cash deposits as no details of the said persons to whom cash sales were allegedly made by the assessee was revealed by the assessee. It is incomprehensible and unacceptable that the assessee having issued cash sales invoices of average value of around ₹ 3 crores per single invoice in majority of case and at the same time the assessee is claiming that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is a devise used to convert undisclosed income/money into gold bars without disclosure of the identity of depositor of cash in bank accounts, and thus burden cast on the assessee u/s 68 did not stood discharged and the said cash credit will be deemed to be income of the assessee from the undisclosed income chargeable to tax within deeming fiction of Section 68 of the 1961 Act, which in the instant case we hold this issue against the assessee and in favour of Revenue based on factual matrix of the case detailed above. Reference is made to the decision of Hon ble Calcutta High Court in the case of CIT v. Sanjay Jain (2015) 55 taxmann.com 512(Calcutta), wherein Lordships held as under: 5. The judgements cited by Mr. Bagaria, according to us, have no application to the facts and circumstances of the case. It is not in dispute that alleged sale of share by the assessee was through the broker M/s. M.L. Dhingra Asociates that in fact is the case of the assessee as would appear from the order of the Tribunal. The name of the person to whom the shares were, in fact, sold has not been disclosed. The sale proceeds were admittedly received in cash. In case of sale of shares by a bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been permitted and that was not also a case of Section68. Section 68 is squarely applicable in this case because the money was found credited in the books of accounts of the assessee and the assessee was unable to satisfy the Assessing Officer by adducing proper evidence. Which evidence was not adduced by the assessee will appear from the judgement of the Assessing Officer which reads as follows: It is further found that assessee has shown cash receipt from M.L. Dhingra Associates for ₹ 10,61,834.44 and from sale of shares amounting to ₹ 21,55950/-. In course of hearing A/R of the assessee as well as the assessee was requested to produce the documentary evidence in support of his claim regarding receipt of above cash but no documentary evidence has been filed. Neither any one from M/s. M.L. Dhingra Associates was produced nor any confirmation filed. No request to issue summon made. 7. The Commissioner of Income Tax rejected an appeal preferred by the assessee agreeing with the views of the Assessing Officer opined as follows: I have perused the assessment order and considered the submission of the appellant. The AO has mentioned in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another angle, the assessee could not satisfactorily explain the sources of expenditure incurred by the assessee towards purchases to tune of ₹ 48.78 crores during the subject assessment year as the payments for these purchases are stated to be made out of cash deposited in bank accounts out of so called cash sales of gold made by the assessee of which identity of the buyers is not revealed by the assessee. Provisions of Section 69C as were applicable for impugned assessment year are reproduced below:- [Unexplained expenditure, etc. 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year :] [Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood closed. The assessee did not had any infrastructure and experience to deal in huge quantities of gold bars. The VAT registration also stood cancelled by Gujarat VAT authorities in short span of time. The assessee also could not evidence movement of gold bars with respect to its alleged business. The alleged sales of more than ₹ 55 crores were made in cash to undisclosed customers and cash got deposited in assessee s bank account from undisclosed persons. The alleged sales per invoice were for more than ₹ 3.00 crores per invoice which were allegedly cash sales to undisclosed customers. The assessee was not having capacity of its own as the concern was started with a meagre capital of less than ₹ 1.0 lacs and it was also found to be extending credit to the tune of ₹ 27.54 crores to undisclosed persons which was also disbelieved by the tribunal after considering the entire factual matrix of the case in its totality. The detailed conclusion of the tribunal were extracted above. The tribunal while coming to conclusion that the concern was laundering undisclosed money for which onus was not discharged by the assessee, and evidences withheld relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to the tune of ₹ 27.54 crores to undisclosed buyers. The tribunal came to conclusion that the concern was a device to launder undisclosed black money and evidences were deliberately withheld to prevent enquiry. This contention of the assessee of non consideration of remand report is an desperate attempt to some how wriggle out of well reasoned order passed by tribunal and the said contention stood rejected. b) It is the contention of the assessee in this MA that there was no requirement to disclose the names of customers to whom invoices of more than ₹ 3 crore per invoice was raised by the assessee as it is claimed that TCS provisions came much later. The tribunal has come to conclusion that this whole device of opening and closing of the concern within short span and indulging in transaction of more than ₹ 55 crores in cash sales to undisclosed parties within two months is an device to launder undisclosed money with an intent to evade income-tax. The onus was very heavy on the assessee to prove that it has capacity and capability to undertake the transaction of this magnitude within short span of time which the assessee miserably failed to discharge. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein SLP filed was also dismissed by Hon ble Supreme Court in the case of Rekha Krishanraj v. ITO (2017) 85 taxmann.com 256(SC) The tribunal cannot within limited mandate of Section 254(2) review its own order and this contention is also rejected. d) The assessee has also raised contention of non applicability of Section 68 by contending that it is not applicable to cash sales disregarding that the tribunal in its order has disbelieved the entire spectrum of activities of alleged purchase and sale of gold bars of huge magnitude undertaken by the assessee in short span of time of two months by considering it as smoke screen to launder undisclosed money. The alleged sales were cash sales to undisclosed persons and per invoice raised by the assessee was more than ₹ 3 crores in sixteen transactions in short span of time of two months to undisclosed persons. The attempt to get the order of tribunal reviewed within limited mandate of Section 254(2) is visible but we are afraid that we cannot accede to this contention of the assessee, which also stood rejected. e) Double taxation of sales. The assessee has contended in this MA that sales are taxed twice. We failed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The tribunal has thus disbelieved the entire spectrum of activities of purchase and sale of gold as smoke screen to introduce undisclosed income in the banking system. The powers of the tribunal are very wide and it can pass such orders as it deem fit under the circumstances within mandate of Section 254(1). The tribunal exercised its powers u/s 254(1) while invoking provisions of Section 254(1) to confirm additions u/s 69C read with proviso to Section 69C as the circumstances existed which called for tribunal to invoke powers u/s 254(1) as the assessee was found indulging in money laundering. Reference is drawn to decision of Hon ble Karnataka High Court in the case of Fidelity Business Services India Private Limited v. ACIT reported in (2018) 95 taxmann.com (Kar. HC) which has duly considered the decision of Hon ble Allahabad High Court in the case of Mrs Sarika Jain(supra), wherein the Hon ble Karnataka High Court held as under:- 19. We have heard the learned counsels at length and given our thoughtful consideration to the rival contentions and the case laws cited at the bar. 20. We are essentially called upon to decide the ambit, scope and parameters of the powers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the Appellant - Assessee, Mr. Percy Pardiwala was that the powers of the learned Tribunal are circumscribed and restricted by the words thereon , used in juxtaposition with the words as it thinks fit . 24. He submitted that the Tribunal cannot exceed the parameters or the grounds of the appeal raised by the aggrieved Appellant Assessee Company and what issue has neither been raised by the Assessee Company nor by the Revenue, cannot be dealt with or suo motu taken up by the learned Tribunal and such an exercise in excess of its jurisdiction as has been done in para 7 of the impugned Order quoted above, deserves to be quashed and set aside by this Court. 25. He relied upon the decision of the Division Bench of the Allahabad High Court in the case of Smt. Sarika Jain v. CIT [2017] 84 taxmann.com 64/249 Taxman 625 (All) wherein dealing with the case of a partner who introduced a Capital of ₹ 12,20,000/- in the Partnership Firm and explained that Capital contribution to have been received by her as 'Gifts' and the donors of such 'Gifts' were also produced before the Assessing Authority and even though the Assessing Officer held that the 'Gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Authority as the case may be, requiring him to hold further inquiry and to dispose of the case on the basis of such inquiry, but the jurisdiction of the Tribunal is confined only to the subject matter of the appeal. 28. The Tribunal by the impugned Order before the Calcutta High Court had held that for AY 1962-63, the loss of ₹ 23,100/- in shares transactions on the ground that the Assessee purchased through a Share Broker 15 Ordinary shares of M/s. Hindustan MotorsLimited on 05/03/1962 for ₹ 3,17,400/- and the said shares were sold through another broker for ₹ 2,94,300/- on 29/03/1962 and thus the Assessee incurred a loss of ₹ 23,100/- for the said year, the learned Tribunal held that though the said loss in sale and purchase of the shares could not be termed as 'speculative transactions' and the lower Authorities were not justified in treating the said loss as 'speculative loss' but however, the Tribunal remanded the case back to the first Appellate Authority, AppellateAssistant Commissioner (AAC) requiring him to decide whether the loss in question was a 'capital loss' or a 'trade loss' in the hands of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal thus proceeded on a new ground not taken by the lower Authorities or urged by the Department before the Tribunal, such a direction could not have been given by the learned Tribunal. 31. This judgment of Co-ordinate Bench of the Karnataka High Court to the extent of the Tribunal being bound to decide the issues within the subject matter of the appeal applies to the case before us on all fours. On merits of the case also, the view of the Tribunal about additions made on account of change of method for valuation of Closing Stock, having neutral tax effect was required to be interfered with. Therefore, this judgment does not support the contention of the assessee before us in any manner. 32. The learned counsel for the Assessee Company, Mr. Pardiwala also relied upon the decision of the Bombay High Court in the case of Pokhraj Hirachand v. CIT [1963] 49 ITR 293. The Division Bench of Bombay High Court held that the expression 'thereon' occurring in Section33(4) of the 1922 Act means 'on the subject matter of appeal' before the Tribunal and reading the relevant Rules 22 and 27 of the Income Tax Rules governing the procedure before the Tribunal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorities or Dispute Resolution Panel (DRP) in the first instance and therefore, the Tribunal being the final Appellate body under the Act, has not only the power but a duty to see that all related aspects of the subject matter are properly inquired into by the Assessing Authority, to meet the ends of justice and interest of the Revenue. The Tribunal has made the remand of the case to the Assessing Authority with certain directions to inquire into the fair market value of the shares bought back by the Assessee Company and no valid exception can be taken to the same by the Assessee. 45. He further submitted that the Assessee Company should have nothing to fear or hide, if the shares have been bought back from its Holding Company at a fair market value and if such a buy-back has been undertaken by the Assessee Company in accordance with the provisions of the Companies Act and also the provisions of the Income Tax Act and on the conclusion of the fresh inquiry now to be undertaken in pursuance of para 7 of the Order of the Tribunal also, the Assessee Company may not be ultimately held liable to tax under the Act and therefore, it would be premature to curtail or shoot down such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 33(4) of the Act to pass such Orders 'as it thinks fit'. 49. Similarly in the case of Kapurchand Shrimal v. Commissioner of Income Tax [1981] 131 ITR 451/7 taxmann 6 (SC), the Hon'ble Supreme Court held that the Appellate Authority has the jurisdiction as well as duty to correct all errors in the proceedings under appeals and to issue, if necessary, appropriate directions to the Authorities against whose decisions the appeal is preferred, to dispose of the appeal or any part of the matter afresh unless forbidden from doing so by the statute. While rejecting the appeal of the Assessee, the Hon'ble Supreme Court directed the Tribunal to further direct the Income Tax Officer (ITO) to make fresh assessments after holding an enquiry under Section 25-A(1) of the Act regarding the partition of Hindu Undivided Family (HUF) corresponding to Section 171 of the Income Tax Act, 1961. 50. Mr. Aravind also relied upon the Division Bench decision of the Madras High Court in the case of CITv. Indian Express (Madurai) (P.) Ltd., [1983] 140 ITR 705/13 Taxman 441 (Mad.) which inter alia, also relied upon the decision of the Apex Court in the case of Mahalakshmi Textile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd other proceedings under the Act. The Primary purpose of the statue is to levy and collect the Income-tax. This is based on the cardinal principle, which has been incorporated as a veritable constitutional provision, that no tax can be levied or collected save under authority of law. The task of an appellate authority under the taxing statute, especially a non-departmental authority like the Tribunal, is to address its mind to the factual and legal basis of an assessment for the purpose of properly adjusting the taxpayer's liability to make it accord with the legal provisions governing his assessment. Since the be-all and end-all of the statutory provisions, especially those relating to the administration and management of income-tax, is to ascertain the taxpayer's liability correctly, to the last pie, if it were possible, the various provisions relating to appeal, second appeal, reference and the like can hardly be equated to a lis or dispute as arises between the two parties in a civil litigation. Although the income-tax statute makes the department or its officer's figure as parties in appeal proceedings, they are not in the strict sense what are called by American ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction to pass 'such orders on the appeal as it thinks fit', without adding any gloss of their own to the expression. In Nelliappan's case (supra), as well as Mahalakshmi Textile Mills' case (supra), the Supreme Court had even used phrases which are reminiscent of the language which English judges have used while describing a tax appeal. The Supreme Court observed that the Tribunal is not precluded from 'adjusting' the tax liabilities of the assessee in the light of its findings merely because the findings are inconsistent with the case pleaded by the assessee. English judges have regarded a tax appeal, not as a lis, but as a process of further adjustment of taxpayer liability vide Lord Hewart in Rex v. Special CIT [1935]20 TC 381 (CA); Greer L.J. in IRC v. Sneath [1932] 17 TC 149 (CA); Romer L.J. in the same case, Sneath (supra) and Lord Wright M.R. in Rex's case (supra). 23. In Rex's case (supra), Lord Hewart, CJ. laid down the nature of an appeal in tax matters as under: In my opinion, the argument of the learned Attorney-General is absolutely correct, and the argument upon the other side is manifestly based, as he said, upon a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the discussion in the present case: An appellate authority under the taxing enactments sits in appeal, only in a manner of speaking. What it does functionally, is only to adjust the assessment of the appellant in accordance with the facts on the record and in accordance with the law laid down by the Legislature. An appeal is a continuation of the process of assessment, and an assessment is but another name for adjustment of the tax liability to accord with the taxable event in the particular taxpayer's case. There can be no analogy or parallel between a tax appeal and an appeal, say, in civil cases. A civil appeal, like a law suit in the Court of first instance out of which it arises, is really and truly an adversary proceeding, that is to say, a controversy or tussle over mutual rights and obligations between contesting litigants ranged against each other as opponents. A tax appeal is quite different. Even as the assessing authority is not the tax payers opponent, in the strictly procedural sense of the term, so too the appellate authority sitting in appeal over the assessing authority's order of assessment is not strictly an arbitral Tribunal deciding a conteste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lordships in brackets. The use of the word possibly and putting these words in brackets shows that only an observation has been made and the effect of it cannot be taken that any law has been laid down. The word possibly is clearly indicative of it. ** ** ** In the light of the above discussion, our answer to the question is that the Tribunal was not justified in refusing to entertain the plea of the Department that the income from the lease rent of the cinema building was assessable under the head Income from other sources instead of under the head Income from house property on the grounds mentioned in the question referred to us. Our answer to the question is, therefore, in the negative, in favour of the Revenue and against the assessee. The parties are left to bear their own costs of the reference' Other Relevant Case laws: 53. In the case of National Thermal Power Co.Ltd. v. CIT [1998] 229 ITR 383 (SC), the Hon'ble Supreme Court following its earlier view in Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688/[1990] 53 Taxman 85 (SC), held as under:- In the case of Jute Corporation of India Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. 55. In the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232, the Hon'ble Supreme Court held that Rules 12 and 27 of the Appellate Tribunal Rules, 1946 are not exhaustive of the powers of the Tribunal and words pass such orders as the Tribunal thinks fit including all the powers (except possibly ! the power of enhancement). The Court itself expressed its doubt over the power of enhancement of the assessment or tax liability of the assessee in the said judgment which was later on explained by the Rajasthan High Court in the case of (supra). The relevant extract from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point. The decision of the AAC is on the subject-matter of the appeal. The subject-matter of the appeal may be capable of challenge on various grounds. Some of which might have been raised and some not. Those raised might have been dealt with, or some of them might not have been dealt with, but a decision on the subject-matter is an implied decision on all matters which are raised and which could have been raised, whether dealt with or not. Merely because a ground has not been raised, though it could be raised in support of the relied sought in the appeal, it cannot be said that it cannot be raised before the Tribunal. Such a ground can be raised provided it falls within the contours of the subject-matter of the appeal before the AAC. 57. The Calcutta High Court in the case of Khaitan Paper and Industries Ltd. v. CIT [2005] 273 ITR 234/148 Taxman 326 held that Section 254(1) of the Act empowers the Tribunal to recall its previous Order where the Assessee could not be present at the time of hearing and hear the Appeal again on merits even though there is no express provision in this regard yet as an ancillary jurisdiction under Section 254 of the Act, the Tribunal is empowered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back by the Assessee from its major share holding Mauritius Holding Company is not beyond the jurisdiction of the learned Tribunal and the said remand direction of the Tribunal to hold such an enquiry not only falls within the ambit and scope of the subject matter of the appeal filed by the Assessee by which he claimed that the remittance by the Assessee Company to its Mauritius Holding Company could not be taxed as dividend, forgetting the aspects relating to Clause (e) of Section 2(22) of the Act and therefore the said directions were within the subject matter or the issues raised by the Assessee and making a direction to hold an enquiry into the aspect of fair market value of shares cannot be said to be beyond the subject matter of the appeal. The said directions cannot be said to be per se amounting to taxability of the said pay-out by the Appellant Assessee as 'Dividend' but the same would depend upon the nature of enquiry to be conducted by the Assessing Authority and findings arrived at in pursuance of the said direction. The power to remand including for conducting an enquiry in the aspect of the matter which was not earlier adjudicated upon by the lower Authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the first Appellate Authority could do in the matter of assessment, the Tribunal cannot be said to have any lesser power to do so. 63. Section 254 of the Act, in our opinion, does not have any narrower scope to put fetters on the powers of the Tribunal as is sought to be canvassed before us that the Tribunal could not have exceeded the grounds raised before it by the Appellant Assessee. The Appellant may be either Assessee or Revenue before the Tribunal and the Tribunal has also powers to allow fresh ground of appeal or allow the other party to the appeal to file its cross objections and even suo motu Date of Judgment :23-07-2018 I.T.A.No.512/2017 M/s. Fidelity Business Services India Pvt. Ltd., Vs. Assistant Commissioner of Income-Tax, Anr. pass appropriate Orders 'thereon' and therefore the words 'as it thinks fit' in our opinion, confer wide powers upon the Income Tax Appellate Tribunal to pass such Orders on the subject matter of appeal 'as itthinks fit' whether the issue is raised by either party to the appeal or not. The Tribunal is not bound to decide the appeal in a particular or narrower manner or limited to the grounds raised in the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of transaction was not ascertainable otherwise readily and the said aspect of the matter was not admittedly looked into by the Authorities below before the appeal was decided by the learned Tribunal. Therefore, even though the some findings were given by the Tribunal in favour of the Assessee that the said pay-out for buy-back of the shares at an abnormally high price was not taxable under Section 115-O or Section 115-QA read with its Explanation and Section 2(22)(d) of the Act as per the contention raised by the Assessee before the Tribunal, the Tribunal was perfectly justified in directing an enquiry into the fair market price of the share of the Assessee Company which could have an implication of taxability under Section 2(22)(e) of the Act or otherwise. 69. However, since we are not deciding the question of taxability here, as the factual foundation for the same is not there and we are not expressing any opinion on the taxability on such findings upon an enquiry which may now be held by the Assessing Authority in pursuance of the directions of the learned Tribunal. Therefore that question is left open. 70. The Mauritius route of tax avoidance and evasion is a hugely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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