TMI Blog1990 (7) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... additions, the assessee filed an appeal before the Commissioner of Income-tax (Appeals). When the appeal was posted for hearing, the Income-tax Officer submitted an application on February 2, 1983, before the Commissioner of Income-tax (Appeals) bringing to his notice that section 37(3A) of the Income-tax Act is applicable in the instant case and that the assessment may be enhanced by the disallowance under section 37(3A) of the Act of a sum of 15% of Rs. 14,66,586 being the total of the sales commission and advertisement expenses I as reduced by a sum of Rs. 5,00,464 disallowed out of the sales commission in the assessment and the amount worked out to Rs. 2,16,987. The Commissioner of Income-tax (Appeals) did not accept the request of the Income-tax Officer. He passed the appellate order on March 31, 1983. No mention was made in the order about the request made by the Incometax Officer in his communication dated February 2, 1983, praying for the enhancement of the disallowance under section 37(3A) of the Act. Against the aforesaid order of the Commissioner of Income-tax (Appeals) dated March 31, 1983, the Revenue filed an appeal before the Income-tax Appellate Tribunal and conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner of Income-tax (Appeals) was bound to consider the request of the Income-tax Officer to enhance the assessment, and if he failed to do so without any reasonable cause, it is open to the Revenue to file a second appeal before the Tribunal from the order passed by the Commissioner of Income-tax (Appeals) in appeal. We heard counsel at length. Section 246 of the Income.-tax Act deals with appellate orders. Any assessee aggrieved by the orders specified in the said section can appeal to the Deputy Commissioner (Appeals) or the Commissioner of Income-tax (Appeals), as the case may be. Section 250 of the Act deals with the procedure in appeal. It is as follows: "250. Procedure in appeal.-(1) The Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) shall fix day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the Assessing Officer against whose order the appeal is preferred. (2) The following shall have the right to be heard at the hearing of the appeal, (a) the appellant, either in person or by an authorised representative ; (b) the Assessing Officer, either in person or by a representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kanpur Coal Syndicate [1964] 53 ITR 225, at page 229, delivering the judgment of the Supreme Court, Subba Rao J. said : "The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is coterminous with that of the Income-tax Officer. He can do what the Income-tax Officer can do and also direct him to do what he has failed to do." A Bench of, this court in Deputy CST v. Subbhalakshmi Ammal [1981] 47 STC 269, at page 271, stated the law as follows : "Under section 34 of the Act, the Appellate Assistant Commissioner, in disposing of an appeal filed against the order of assessment, may confirm, reduce, enhance or annul the assessment, set aside the assessment and direct the assessing authority to make a fresh assessment after such further enquiry as may be directed or pass such other orders as he may think fit. Once an appeal against the assessment order is before the Appellate Assistant Commissioner, he can examine the correctness not only of the ultimate computation of tax arrived at by the Sales Tax Officer, he can also revise every process which led to the ultimate computation of tax and completion of the assessment. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person assessed or surcharged ought to be charged in an amount exceeding the amount contained in the assessment or surcharge they shall charge him with the excess. It is a duty that they owe to the hidden parties to the appeal, namely, the general body of the taxpayers of this country-they shall charge him with the excess ...... The fact that the notice of appeal had been given not merely made it possible but made it obligatory upon the Commissioners that they should take certain steps, not merely or primarily in the interests of the individual appellant but in the performance of their duties imposed upon them in the interests of the general body of the taxpayers, to see what the true assessment ought to be, and that process, a public process directed to public ends, cannot be stopped at the option or the whim of the appellant who after giving notice begins to realise that if he pursues his appeal it may be the worse for him. The matter has passed out of his hands : he has given rise by his notice of appeal not merely to the opportunity but to the duty of performing a public task which may have an effect entirely opposite to that which he contemplated and desired." The above de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the submission that they ought to be so treated. This submission is based on the provisions of section 52(2) of the Income Tax Act, 1952, which it is urged impliedly precludes evidence in support of an increased assessment being produced by the Inspector of Taxes : and see the observations of Lord Diplock in In re Vandervell's Trusts [1970] 46 TC 341, at p. 372 ; [1971] AC 912, at page 942 (HL). It would be anomalous if the General Commissioners, having power under section 52(6) to make an increased assessment, had no power to admit or invite evidence adduced on behalf of the Crown, who alone would have an interest to adduce it, designed to enable the General Commissioners to exercise the power which Parliament has conferred upon them. It would also be anomalous if the Crown, adducing evidence in support of an existing assessment, was precluded by the effect of section 52(2) from adducing evidence of the taxpayer's true income because it would thereby be adducing evidence leading to an increased assessment." Similarly, in Way v. Underdown (H. M. Inspector of Taxes) [1974] 49 TC 215, 231 (CA), in disposing of a petition similar to the one raised herein, Plowman J. stated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter fairly and reasonably. It was his statutory duty to do so. On the other hand, he failed in his duty and disposed of the appeal even without adverting to the said request made by the Income-tax Officer. We are of the view that it is patent jurisdictional error. The Commissioner of Income-tax (Appeals) has abnegated in discharging the duty imposed on him by law. Since the Revenue was prejudiced by the failure of the Commissioner of Income-tax (Appeals) to discharge his statutory duty aforesaid, it is open to the Revenue (Income-tax Officer) to file an appeal from the order passed by the Commissioner of Income-tax (Appeals) and assail the same. Against the order of the Commissioner of Income-tax (Appeals), the appeal filed by the Revenue under section 253(2) of the Income-tax Act is competent and maintainable. We hold so. The fact that in the order passed by the Commissioner of Income-tax (Appeals), the request made by the Income-tax Officer was not stated will not, in any way, disable the Revenue in filing the appeal, if, as a matter of fact, a request was made to the Commissioner of Income-tax (Appeals) to set right the error or omission and enhance the disallowance. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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