TMI Blog2003 (2) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... e outset Mr. Amitabh Kumar submitted that the CO may not be entertained for the reason that (i) There is no appeal pending and hence there cannot be a CO. (ii) The CO is belated and not filed within the statutory time-limit and hence cannot be entertained. 3.2. To this Mr. Pradeep submitted that the COs are as good as the appeals and hence can be pressed into service even in the absence of the appeal before the Tribunal. For this purpose he submitted that provisions of s. 253(4) are clear. He also relied upon the decision of Tribunal, Pune in Asstt. CIT vs. Kripa Chemicals (P) Ltd. (2002) 76 TTJ (Pune) 889 : (2002) 82 ITD 449 (Pune). As regards the delay, it was submitted that there is no delay in filing the appeal since the copy of appeal memo along with grounds of appeal was received by the assessee only on 22nd May, 2002 and the COs have been filed on 24th May, 2002. Though originally the Form No. 36 was received on 28th Nov., 2000, the same was defective as per the notice of defect issued by the Asst. Registrar of the Tribunal and the said defect was rectified only on or after 14th Dec., 2000. Appeal memo duly rectified has not been sent to assessee after 14th Dec., 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of r. 1 of O. 41 of the Code, so far as these relate to the form and contents of the memorandum of appeal apply to cross-objection as well. Court fee is payable on cross-objection like that on the memorandum of appeal. Provisions relating to appeals by indigent person also apply to cross-objection. Even where the appeal is withdrawn or is dismissed for default, cross-objection may nevertheless be heard and determined. Respondent even though he has not appealed may support the decree on any other ground but if wants to modify it, he has to file cross-objection to the decree which objections he could have taken earlier by filing an appeal. Tune for filing objection which is in the nature of appeal is extended by one month after service of notice on him of the day fixed for hearing the appeal. This time could also be extended by the Court like in appeal. Cross-objection is nothing but an appeal, a cross-appeal at that. It may be that the respondent wanted to give quietus to whole litigation by his accepting the judgment and decree or order even if it was partly against his interest. When, however, the other party challenged the same by filing an appeal statute gave the respondent a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subserves the ends of justice—that being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that: (a) Ordinarily, a litigant does not stand to benefit by lodging an appellate. (b) Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits alter hearing the parties." In view of the affidavit filed by the assessee and the decision of Hon'ble Supreme Court, we condone the delay in filing the CO after the expiry of the relevant period as we are satisfied that there is a sufficient cause for not presenting the same within the time-limit. 4. Before we lake up the grounds raised in the cross-objection, certain vital facts as narrated by the assessee and which are not in dispute are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irms and other activities for the period June, 1984 to Dec., 1984. In Feb., 1985 there were several implications in connection with the bill discounting facility availed by the firm ICA and as such in order to clear the bill discounting facility with the Canara Bank, Colaba, Bombay, cheques to the extent of Rs. 3,50,00,000 was drawn by Sri K.V.D. on Oriental Bank of Commerce, New Delhi and the same were discounted with State Bank of India. Shivajinagar, Bangalore. The amount drawn from State Bank of India, Shivajinagar, Bangalore were utilised to clear the liabilities with Canara Bank, Colaba, Bombay. These cheques which were discounted with the State Bank of India were not realized as sufficient funds were not available in the Oriental Bank of Commerce in Feb., 1985. Immediately thereafter the State Bank of India entered into, an agreement with Sri KVD and others for the purpose of the repayment of this amount. Having disregard to the agreement entered into, the State Bank of India filed Police Complaint and gave paper publicity in the second week of Feb., 1985 stating that Sri KVD and others had cheated the Bank to the extent of Rs. 3.5 crores. Utilising the cheque discounting fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerns have been taken on the basis of the books of accounts available with Mr. KVD. On the basis of the said statements the income earned by the firm ICA and Mr. KVD is approximately Rs. 92,00,000 in the period June, 1984 to June. 1987. This income was offered for taxation for the asst. yrs. 1986-87 to 1988-89. The assessee submits that he offered the income for taxation with a view to buy peace, with the Department and to avoid litigation and, he is coming forward voluntarily for settling all his cases and that of his father and mother Sri K.S. Dattatreya and Smt. K. Sudarshanamma by offering a sum of Rs. 92,00,000 for the asst. yrs. 1986-87 to 1987-88. 4.3 It was submitted that his affairs are in a turmoil due to the fact that the State Bank of India, Shivajinagar, Bangalore with whom the cheques were discounted even though entered into an agreement for the purposes of clearing the loan created complications by filing a criminal complaint and informing the matter to CBI authorities. Further wide paper publicity was given stating that there has been a case of cheating by Mr. KVD and that he cheated the State Bank of India to the extent of Rs. 3.50 crores. In view of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sha Art Films 12,60,359 Total Loss 78,56,422 55,99,338 63,81,081 Income 1 Credits Offered 1,35,00.000 83,80,000 2 Shortage of Cash 5,00,000 66,00,000 Total income 1,40,00,000 83,80,000 66,00,000 Net Income 61,43,578 27,80,662 2,18,919 The AO passed original orders taking the income offered on agreed basis in respect of ICA but disallowed various losses, disregarding the petition. Appeal before CIT(A) was dismissed since the taxes due under s. 140A as per return of income were not paid. In further appeal, Hon'ble Tribunal vide its orders dt. 18th Dec., 1995, restored the appeals to CIT(A) holding that s. 249(4) was operative subsequent to filing of return and hence he should have heard the appeal on merits. CIT(A) thereafter passed the order restoring the matter to AO for passing fresh order considering the seized material. A ground by way of additional ground was raised to annul the assessment or to exclude the income/loss of ICA from computation. The same was neither d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of Income of ICA, the concession is against provision of law. Correct income is to be taxed in correct person's hands only and anything contrary to same is not binding. Reliance was placed on decisions of: (i) Asit Kumar Ghosh vs. CIT (1953) 24 ITR 576 (Cal) (ii) Pullangode Rubber Produce Co. Ltd. vs. State of Kerala Anr. (1973) 91 ITR 18 (SC) (iii) CIT vs. MRP Firm, Muar (1965) 56 ITR 67 (SC) (iv) CIT vs. Ajax Products Ltd. (1965) 55 ITR 741 (SC) (v) CIT vs. Bharat General Reinsurance Co. Ltd. (1971) 81 ITR 303 (Del). (f) Amount of bank deposit of Rs. 135 lacs in asst. yr. 1986-87 in the name of KSD has flown from loans from SBI by way of bill discounting only. The amount is therefore not connected to assessee in either way. Similarly all credits are in books of ICA are only from bank accounts. Thus neither s. 68 nor s. 69 is applicable. (g) Firm ICA is a valid partnership firm in the eye of law and not a sham entity or benami concern of assessee. There is valid partnership deed dt. 15th June, 1984, (paper book pp. 44 to 48). Settlement petition was from assessee as well as ICA. Civil and criminal cases have been filed against firm. Settlement commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believable." Thus admission made at not only one place but several places is binding on assessee. Assessee cannot be allowed to retract thereafter. Reliance was placed on decision in 1. Durga Timber Works vs. CIT (1971) 79 ITR 63 (Del) 2. CIT vs. Durga Prasad More 1973 CTR (SC) 500 : (1971) 82 ITR 540 (SC) 3. Addl. CIT vs. Bhartiya Bhandar (1979) 13 CTR (MP) 159 : (1980) 122 ITR 622 (MP) and 4. Mahesh B. Shah vs. Asstt. CIT Anr. (1999) 154 CTR (Ker) 391 : (1999) 238 ITR 130 (Ker). Even admission before other authorities will bind assessee in income-tax proceedings as held in Addl. CIT vs. Chikkaveerayya Lingaiah (1986) 51 CTR (Kar) 95 : (1987) 164 ITR 41 (Kar). (c) The agreement dt. 9th Feb., 1986, between assessee and IG is to relieve Mr. IG from business of ICA and to the effect that they will not continue the business together. ICA is just a smoke screen and if looked beyond the same, it is a non-existing entity. Even as per s. 6 of Partnership Act, 1932 existence of firm is to be viewed from all angles, i.e., profit/loss is to be shared by all. The said agreement goes against the existence of valid partnership firm. Thus for all practical purposes, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of the firm ICA. The funds borrowed from bank found place in the books of the firm ICA. From the said firm the amount is withdrawn and is reappearing in the form of deposit in bank in the name of K.S.D. The assessee is facing Court cases and is being investigated by CBI. During the course of search under s. 132, the assessee failed to offer any explanation for the deposit in the name of his father. He therefore chooses to surrender by way of settlement owning up the income of firm ICA as well as KSD and IG in his name. However, the fact remains that the root of income lies in the firm's hands only. The assessee cannot for various reasons like criminal/civil cases, admit that deposit is out of amount borrowed from banks, yet the fact remain that an assessee who is indebted to banks for such huge sum will never out of his own fund make deposit with banks. The fact of borrowal and Court cases against the assessee is an established fact beyond any doubt. Assessee is not found owner of sums larger than that borrowed from banks. Just to avoid any further litigation, the assessee filed settlement application before CIT and filed return conforming to such application. Still in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "It is no doubt true that entries in the account books of the assessee amount to an admission that the amount in question was laid out or expended for the cultivation, upkeep or maintenance of immature plants from which no agricultural income was derived during the previous year. An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect." To the same effect is the observation of Hon'ble Supreme Court in CIT vs. VMRP Firm, Muar wherein on page No. 74, it was held as under: "The doctrine of "approbate and reprobate" is only a species of estoppel; it applies only to the conduct of parties. As in the case of estoppel, it cannot operate against the provisions of a statute. If a particular income is not taxable under the IT Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either eligible to tax under the taxing statute or it is not. If it is not, the ITO has no power to impose tax on the said income." The decisions relied upon by learned Departmental Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individually or for that matter to tax the firm or its partners individually. If it is the income of the AOP in law, the AOP alone has to be taxed; the members of the AOP cannot be taxed individually in respect of the income of the AOP. Consideration of the interests of the Revenue has no place in this scheme." Since in the present case sufficient material is available which suggest that a valid partnership firm in name of ICA was in existence and is not found to be a sham entity or benamidar of assessee, the income of firm ICA cannot be taxed in the hands of assessee before us. This material is found by way of valid partnership deed, business being carried on by him, books of accounts, bank accounts, assessment and reassessment of firm under IT Act. Civil/Criminal cases against it etc. All these suggest the firm ICA is a separate taxable entity. 12. Learned Departmental Representative strongly submitted that since the assessment is only remanded back, no grievance is caused to assessee. We do not subscribe to such a view, CIT(A) has directed to reframe the assessment considering seized material. However, CIT(A) has not directed to exclude the income of the firm ICA even tho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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