TMI Blog2022 (9) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 - SUPREME COURT ] , considering powers of an appellate authority under the Income Tax Act, 1961, observed that the Appellate Commissioner while disposing of an appeal against an order of an Income Tax Officer has plenary powers. The scope of his power is co-terminous with that of the Income Tax Officer. He can do all that Income Tax Officer can do and also direct him to do what he has failed to do. If the Income Tax Officer has the option to assess one or other of the entities in the alternative, the Appellate Assistant Commissioner can direct him to do what he should have done in the circumstances. The Apex Court observed that the Appellate Commissioner in disposing of such an Appeal could confirm, reduce, enhance or annul the assessment and he may also set aside the assessment and direct the Income Tax Officer to make a fresh assessment. A Full Bench of Madras High Court in State of Tamil Nadu Vs. Arulmurugan and Company [ 1982 (11) TMI 143 - MADRAS HIGH COURT ] had the occasion to consider a similar issue with respect to C forms declaration. It was observed therein that though the expression appeal and assessment may be different, but the difference lies only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l has correctly and for sufficient cause exercised its discretion and directed the Appellate Authority to take into consideration the Respondent-Debtor s claim for consessional rate of tax with respect to the transactions stated in the said C forms issued by M/s Varsha Controls Gear. No fault can be found with the order of the Tribunal nor is there any perversity. Appeal dismissed. - MAHARASHTRA VALUE ADDED TAX APPEAL NO.3 OF 2021 IN VAT SECOND APPEAL NO.101 OF 2014 - - - Dated:- 8-9-2022 - DHIRAJ SINGH THAKUR AND ABHAY AHUJA, JJ. Mr. Himanshu B. Takke, AGP for the Appellant-State. Mr. Ratan Samalo for the Respondent. JUDGMENT : (PER ABHAY AHUJA, J.) 1. This is an Appeal preferred by the State of Maharashtra challenging the judgment and order dated 15th January, 2020 passed by the Maharashtra Sales Tax Tribunal in VAT Second Appeal No.101 of 2014 under Section 27 of the Maharashtra Value Added Tax Act, 2002 (for short the MVAT Act, 2002 ) proposing the following substantial questions of law :- (a) Whether the Sales Tax Tribunal on the true and proper construction of Section 23(5) of Maharashtra Value Added Tax, 2002, was justified in holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transactions were not covered under the Assessment Order passed under Section 23(5) of the MVAT Act, 2002. 5. Aggrieved by the same, the Respondent-Dealer filed an Appeal before the Maharashtra Sales Tax Tribunal contending that the C forms issued by M/s. Varsha Controls Gear be taken into consideration and the same be accepted and a refund of Rs.1,59,934/- be issued. The Tribunal affirmatively answering the question that the Appellate Authority had erred in disallowing the Respondent-Dealer s claim for concessional rate of tax regarding the C forms issued by M/s. Varsha Controls Gear, allowed the Appeal of the Respondent-Dealer and remanded the matter back to the Appellate Authority for giving a decision on merits after taking into consideration the legal aspects discussed in the said order. 6. The Tribunal referred to various decisions with regard to the scope of the powers of the Appellate Authority observing that the same were very wide and not just confined to consider only the points raised by the assessee in the grounds of Appeal or urged at the time of hearing of the Appeal. It observed that the assessee is entitled to move the Appellate Authority for permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity. The appellate proceedings are an extension of assessment proceedings or a continuation of the assessment and it does not matter that a power is or is not conferred by any provision in the taxing statute. He refers to the following decisions in support of his contentions :- (i) Santoshi Tel Utpadak Kendra Vs. Deputy Commissioner of Sales Tax And Another, (1981) 3 Supreme Court Cases 466. (ii) State of Tamil Nadu Vs. Arulmurugan and Company (And Another Case), 1982 SCC OnLine Mad 367. (iii) Commissioner of Income Tax, U.P., Lucknow Vs. Kanpur Coal Syndicate, Kanpur, AIR 1965 SC 325. Learned Counsel submits that therefore the Tribunal has correctly allowed the Appeal of the Respondent-Dealer and, therefore the present Appeal ought to be dismissed. 10. We have heard Mr. Himanshu Takke, learned AGP for the Appellant-State and Mr. Ratan Samalo, learned Counsel for the Respondent-Dealer and with their able assistance, we have perused the papers and proceedings in the matter. 11. There is no dispute with respect to the facts in this matter. The issue that arises for our consideration is whether an Appellate Authority has the power to consider a claim mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in Goetze (India) Limited v. Commissioner of Income Tax, (2006) 157 Taxman 1. 11(A). In Jute Corporation of India Limited v. CIT, for the assessment year 1974-75 the appellant did not claim any deduction of its liability towards purchase tax under the provisions of the Bengal Raw Jute Taxation Act, 1941, as it entertained a belief that it was not liable to pay purchase tax under that Act. Subsequently, the appellant was assessed to purchase tax and the order of assessment was received by it on 23rd November, 1973. The appellant challenged the same and obtained a stay order. The appellant also filed an appeal from the assessment order under the Income Tax Act. It was only during the hearing of the appeal that the assessee claimed an additional deduction in respect of its liability to purchase tax. The Appellate Assistant Commissioner (AAC) permitted it to raise the claim and allowed the deduction. The Tribunal held that the AAC had no jurisdiction to entertain the additional ground or to grant relief on a ground which had not been raised before the Income Tax Officer. The Tribunal also refused the appellant's application for making a reference to the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in seeking modification of the order of assessment passed by the Income Tax Officer. [emphasis supplied] (B) It is clear, therefore, that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. 12. At page 694, after referring to certain observations of the Supreme Court in Additional Commissioner of Income-tax v. Gurjargravures P. Ltd., (1978) 111 ITR 1, the Supreme Court observed at Page 694 as under :- The above observations do not rule out a case for raising an additional ground before the Appellate Assistant Commissioner if the ground so raised could not have been raised at that particular stage when the return was filed or when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second category viz. where the ground became available on account of change of circumstances or law. 14. The facts in Jute Corporation of India Ltd., various judgments referred to therein as well as in subsequent cases, which we will refer to, establishes this beyond doubt. In many of the cases, the grounds were, in fact, available when the return was filed and/or the assessment order was made. In Jute Corporation of India Ltd., the ground was available when the return was filed. The assessee did not claim any deduction of its liability to pay purchase tax as it entertained a belief that it was not liable to pay purchase tax under the Bengal Raw Jute Taxation Act, 1941 . Thus, the ground existed when the return was filed. The assessment order was even made and received by the assessee. It is only after the appeal was filed that the assessee claimed a deduction in respect of the amount paid towards the purchase tax under the said Act. It is also significant to note that the assessee's entitlement to claim deduction had been held to be valid in view of an earlier judgment of the Supreme Court in Kedarnath Jute Manufacturing Company Limited v. Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced the papers before the Hon'ble Chief Justice for constituting a larger bench to resolve the controversy. The Full Bench answered the reference in the affirmative and in favour of the assessee. The Full Bench held : Thus, the Appellate Assistant Commissioner has very wide powers while considering an appeal which may be filed by the assessee. He may confirm, reduce, enhance or annul the assessment or remand the case to the Assessing Officer. This is because, unlike an ordinary appeal, the basic purpose of a tax appeal is to ascertain the correct tax liability of an assessee in accordance with law. Hence an Appellate Assistant Commissioner also has the power to enhance the tax liability of the assessee although the Department does not have a right of appeal before the Appellate Assistant Commissioner. The Explanation to sub-section (2), however, makes it clear that for the purpose of enhancement, the Appellate Assistant Commissioner cannot travel beyond the proceedings which were originally before the Income-tax Officer or refer to new sources of income which were not before the Income-tax Officer at all. For this purpose, there are other separate remedies provided unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed in their duty in adjudicating the matter correctly and by mechanically including the amount in the total income. It is pertinent to note that the assessee contended that it was entitled to the deduction in view of two orders of the Special Benches of the Tribunal and the assessee further stated that it had raised these additional grounds on learning about the legal position subsequently. The Tribunal declined to entertain these additional grounds. The Supreme Court did not answer the question on merits, but framed the following question and held as under :- 4. The Tribunal has framed as many as five questions while making a reference to us. Since the Tribunal has not examined the additional grounds raised by the assessee on merit, we do not propose to answer the questions relating to the merit of those contentions. We reframe the question which arises for our consideration in order to bring out the point which requires determination more clearly. It is as follows: Where on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee, whether the Tribunal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Officer. He can do all that Income Tax Officer can do and also direct him to do what he has failed to do. If the Income Tax Officer has the option to assess one or other of the entities in the alternative, the Appellate Assistant Commissioner can direct him to do what he should have done in the circumstances. The Apex Court observed that the Appellate Commissioner in disposing of such an Appeal could confirm, reduce, enhance or annul the assessment and he may also set aside the assessment and direct the Income Tax Officer to make a fresh assessment. Paragraph 7 of the said decision is relevant and is quoted as under :- 7. The next question is whether the said option is given only to the Income Tax Officer and is denied to the Appellate Assistant Commissioner and the Appellate Tribunal. Under the Act the Income Tax Officer, after following the procedure prescribed, makes the assessment under Section 23 of the Act. Doubtless in making the assessment at the first instance he has to exercise the option whether he should assess the association of persons or the members thereof individually. It is not because that any section of the Act confers an exclusive power on hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; under clause (b) thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment. 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. If the Income Tax Officer has the option to assess one or other of the entities in the alternative, the Appellate Assistant Commissioner can direct him to do what he should have done in the circumstances of a case. Under Section 33 (1), an assessee objecting to an order passed by an Appellate Assistant Commissioner under Section 28 or Section 31 may appeal to the Appellate Tribunal within 60 days of the date on which such order is communicated to him. Under Section 33(4), The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner. Under Section 33(5), Where as the result of an appeal any change is made in the assessment of a firm or associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment, and also to pass any other order which the Appellate Authority may think fit. These are the powers which are of widest amplitude, are expressly conferred both on the Appellate Authority and the Appellate Tribunal. Paragraphs 4, 19 and 20 of the said decision are apt in the context and are quoted as under :- 4. We accept the contention of the learned Government Pleader that the assessing authority, as the prescribed authority, has the power to allow further time to file C forms under the proviso to section 8(4) of the Central Sales Tax Act. Likewise, we accept the position that under the proviso to rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957, the first assessing authority is invested with the power to allow further time for filing C forms. We do not, however, accept the implication in the Government Pleader's further contention that an appellate authority cannot be brought within the meaning of the expression assessing authority . In one sense, an appeal may be different from an assessment. But the difference lies only in the particular stage of the proceeding and in the particular authority having jurisdiction in the two stages. Basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessing authority must also be possessed of like powers as those of the assessing authority. It is implicit in the very nature of the appellate jurisdiction, as well as the purposes for which that jurisdiction is created by the statute, that the appellate authority will have to function, in the very image of the assessing authority. Appellate proceedings are often truly described as an extension of the assessment proceedings, or as a continuation of the assessment proceedings. In this context, therefore, it does not matter that a power is conferred, by any provision in the taxing statute or in the statutory rules, eo nomine on the assessing authority, and is silent about the appellate authority or any other authority under the Act. Since the enabling section, or the rule, as the case may be, expressly refers to the assessing authority, as the repository of the power, it is elementary construction to hold that such power can be, and is intended to be, exercised by the assessing authority named in the particular provision concerned. But, it does not mean that the appellate authority and any other fiscal authority who are in seisin of the assessment, either in appeal, or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand. The Tribunal may, if satisfied, about the sufficient cause set aside even the assessment order, and direct the assessing authority to re-do the assessment, in which event there would be no occasion for the assessing authority to go into any question of delay in filing the C forms, for with the setting aside of the assessment the whole thing is once again at large. It is needless to add that whatever has been stated by us as respects the Tribunal's power and the modes of its exercise apply, mutatis mutandis, to the Appellate Assistant Commissioner in like situations occurring in the appeals before him. 15. When the law, as can be seen from the above discussion, with respect to the scope of powers of the Appellate Authorities, being so well settled, it would be a superfluous to restate the same. The Appellate Authority as well as the Appellate Tribunal have powers of widest amplitude. The power of an Appellate Authority in relation to an Assessment Order has got to be exercised in the same manner, which the Assessing Authority can exercise. Whatever discretion is conferred on the Assessing Authority for the purposes of assessment must be regarded to have been conferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2) of section 85 passed under this Act or rules or notifications, shall lie if, the order is made, - (a) by a Sales Tax Officer or an Assistant Commissioner, or any other officer sub-ordinate thereto, to the Deputy Commissioner; (b) by a Deputy Commissioner or Senior Deputy Commissioner, to the Joint Commissioner; (c) by a Joint Commissioner, Additional Commissioner, Advance Ruling Authority or the Commissioner to the Tribunal. (2) In the case of an order passed in appeal by a Deputy Commissioner or a Joint Commissioner, a second appeal shall lie to the Tribunal. (3) Every order passed in appeal by the Tribunal under this section shall, subject to the provisions of sections 24 and 27, be final and every order passed in appeal by any other appellate authority, shall, subject to the provisions of sections 24, 25 and 27 be final. (4) Subject to the provisions of sections 80 and 81, no appeal including a second appeal shall be entertained unless it is filed within sixty days from the date of the communication of the order appealed against. (5) Subject to such rules of procedure as may be prescribed, every appellate authority (both in the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id proceedings regarding such matter. (6) .. (6A) .. (6B) .. (6C) .. (7) .. 18. Sub-Section (5)(a) of Section 26 quoted above specifically empowers every appellate authority under the MVAT Act, 2002 in an appeal against the order of assessment to confirm, reduce, enhance or annul the assessment. It has been provided that the appellate authority can also set aside an assessment order passed ex-parte and refer the case back to the assessing authority for making fresh assessment. Also in any appeal before the Tribunal, the Tribunal may set aside the assessment and refer the case back to the assessing authority for making a fresh assessment. 19. A plain reading of the Explanation to Sub-section 5 of Section 26 of the MVAT Act, 2002 quoted above clearly empowers an appellate authority to consider and decide any matter arising out of the proceedings in which the order appealed against was passed even though such matter was not raised before it by an assessee or even if no order was made in the said proceedings. In nuce, an appellate authority has been invested with wide powers to consider a claim arising i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Company, various documents were brought to the notice of the Tribunal such as invoices, audit report, Form-704 etc. stated to be annexed to the appeal wherein the invoices issued by M/s Varsha Controls Gear containing numbers, dates, amounts, nature of forms etc. indicating that those relate to the transactions made and challans issued during the period from 6th August, 2005 to 30th October, 2005 i.e. relating to the assessment year 2005-2006 in question. These factual findings are neither disputed nor controverted by the Appellants. 23. As seen from the above discussion, the Appellate Authority has very wide powers and can exercise its discretion to consider a claim or a ground not considered by the assessing authority for a sufficient cause. The Tribunal has accepted and considered the C forms of M/s Varsha Controls Gear which could not have been furnished before the assessing authority, though the same undisputedly, pertain to the assessment year 2005-2006. There was sufficient cause to consider the C forms by M/s Varsha Controls Gear as the same pertained to the transactions in relation to the business of the Respondent for the assessment period in question. It cannot t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vaded, as provided under clause (a) by any dealer or person, the said authority may, after issuing a notice in the prescribed form and after giving a reasonable opportunity of being heard to such dealer or person, proceed to assess such dealer or person as provided in clause (a) in respect of any such transaction or claim relating to any period or periods and such authority shall, notwithstanding anything contained in section 59, be deemed to have the requisite jurisdiction and power to assess such dealer or person in respect of such transaction of sale or purchase or claim, covered by clause (a) and such assessment proceedings shall, for all purposes of this Act, be deemed to have been transferred to such authority. (c) The assessment proceedings under this sub-section shall be without prejudice to the assessment proceedings in respect of the said period or periods under any other provisions of this Act by any authority who otherwise has the jurisdiction to assess such dealer or person in respect of other transactions of sale or purchase or any other claim which are not covered by clause (a) and clause (b). (d) The assessment under this sub-section shall be made separat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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