Income Tax Appellate Tribunal - Jodhpur
R.K. Dave vs Income Tax Officer on 9 August, 2004
Equivalent citations: (2005)94TTJ(JODH)19
ORDER
Joginder Pall, A.M.
1. By this order, we shall dispose of this appeal of the assessee filed against the order of CIT(A), Jodhpur, for the asst. yr. 1991-92.
2 The first issue raised in this appeal relates to sustaining of an addition of Rs. 15,000 being unexplained investment in NSCs. The facts of the case are that the assessee invested a sum of Rs. 15,000 in NSCs on 8th Feb., 1991, and Rs. 5,000 in PPF. During the course of assessment proceedings, the assessee submitted that the source of investments was out of current year's income. The assessee had stated that amounts of Rs. 15,000 and Rs. 5,000 were deposited out of withdrawals of Rs. 45,000 made on 9th July, 1990 and 10th July, 1990, and investment in the NSCs was made on 8th Feb., 1991, i.e., after a gap of seven months. There was no evidence that the amount withdrawn on earlier dates was available with the assessee for making investment in NSCs. The same position was found with reference to investment in PPF. Thus, the AO made an addition of Rs. 20,000 while completing the assessment on 17th July, 1992. A copy of this order is paced on pp. 5 to 8 of the paper book.
3. Aggrieved, the assessee impugned the addition of Rs. 20,000 in appeal before the CIT(A). The CIT(A) set aside the assessment and restored the issue to the file of AO on the ground that all relevant aspects have not been properly dealt with by the AO. The relevant para 3 of the order of CIT(A) (A copy placed at pp. 9 and 10 of the paper book) is reproduced as under :
After careful consideration of the matter, I find that the issues have not been properly thrashed out at the original stage. Therefore, the assessment is set aside with a direction to be reframed afresh after allowing the appellant to place his cards. The AO will also please allow the appellant adequate opportunity of hearing before deciding the issues involved."
Accordingly, the AO took up the set aside assessment. The AO again observed that the assessee failed to prove the source with documentary evidence that the amount withdrawn on earlier date was available for making investment. He, therefore, made an addition of Rs. 15,000 as made in the original order. On appeal, the learned CIT(A) upheld the addition on the ground that there was a time gap between the withdrawals and for making investment in the NSCs which the assessee could not explain satisfactorily. The assessee is aggrieved by the order of CIT(A) and hence this appeal before us.
4. The learned counsel for the assessee reiterated the submissions which were made before the authorities below. He submitted that the assessee had explained the source of deposits with reference to withdrawals of Rs. 45,000 on 9th July, 1990 and 10th July, 1990. He submitted that the authorities below could not have rejected the assessee's explanation only for the reason that there was a time gap between the dates when the amounts were withdrawn and investment in the NSCs. Relying on the decision of Tribunal, Jaipur (SMC) Bench, in the case of Hemant Prabhakar v. Dy. CIT 31 Tax World 198 (Jp) (a copy placed at pp. 45 to 47 of the paper book) where the Tribunal has deleted the addition on the ground that the withdrawals shown in the cash flow statement were sufficient to cover the investment. He, therefore, submitted that the order of CIT(A) be set aside and the addition deleted.
5. The learned Departmental Representative, on the other hand, heavily relied on the orders of the authorities below.
6. We have heard both the parties and given our thoughtful consideration to the rival submissions with reference to facts, evidence and material on record. From the facts discussed above, it is obvious that the assessee had placed cash flow statement before the authorities below. A copy of the same is also placed at p. 33 of the paper book. It is also not in dispute that the assessee had withdrawn an amount of Rs. 45,000 on 9th July, 1990 and 10th July, 1990. It is not the case of the Revenue that the amounts so withdrawn were utilized elsewhere. Mere fact that the assessee could not explain the time gap between the amount withdrawn and the investment in NSCs or where the amount was kept would not itself justify the addition. The claim of the assessee could have been rejected only if the source of balance in the bank account was not established or it could have been demonstrated that the amount so withdrawn was utilized elsewhere. This is not the case here. Therefore, we do not find any justification for sustaining the impugned addition. Accordingly, the order of CIT(A) is set aside and the addition is deleted. This ground of appeal is allowed.
7. The next ground relates to enhancing the income of the assessee to Rs. 50,000 by way of issue of show-cause notice. The facts of the case are that during the course of appellate proceedings, the learned CIT(A) issued a notice for enhancement (a copy placed at pp. 19 and 20 of the paper book) proposing to enhance the income in respect of the following items :
(i) Rs. 15,000 in the name of Shri Gajraj Dave; and
(ii) Rs. 15,000 in the name of mother of the assessee.
In the show-cause notice the learned CIT(A) mentioned that from the confirmation filed before the AO, it was found that these confirmations did not contain any information about the source of such deposit --
(i) Rs. 15,000 on account of low withdrawals for household expenses; and
(ii) Rs. 5,000 being unexplained savings.
8. The assessee submitted the reply. However, the learned CIT(A) was not satisfied with the reply and made an addition of Rs. 30,000 being unexplained cash credits in the name of two persons. He also made an addition of Rs. 5,000 being unexplained savings and addition of Rs. 15,000 being inadequate withdrawals for household expenses. While doing so, the learned CIT(A) further observed that the assessee had constructed the house property in 1993. The construction went upto the asst. yr. 1994-95. He directed the AO to investigate the source of investment and take necessary follow up action. The AO shall also trace out the IT returns for the relevant assessment year and if this had not been filed notices under Section 142(1)/147 shall be issued without taking any approval of the administrative authority as his directions/permission was good enough for this purpose. The assessee is aggrieved by the order of CIT(A). Hence, this appeal before us.
9. The counsel for the assessee, Shri U.C. Jain, submitted that at the time of completing the original assessment the only issue related to addition of Rs. 20,000 made by the AO on account of unexplained investment in NSCs and Rs. 5,000 in PPF. He submitted that no other issue was raised in the appeal before the CIT(A). While deciding the appeal, the learned CIT(A) merely set aside the additions of Rs. 20,000 on account of unexplained investment in NSCs and PPF. Thus, all the remaining issues had become final as those were not the subject-matter of dispute before the CIT(A). He submitted that while completing the set aside assessment the AO is strictly bound by the direction of the appellate authority. He cannot travel beyond the same and rake up the issue which stood concluded at the time of completing the original assessment. He further submitted that the AO had no power to travel beyond the directions given by the appellate authority. Relying on the judgment of the Hon'ble Supreme Court in the case of CIT v. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC), the learned counsel for the assessee submitted that the first appellate authority has plenary powers in disposing of an appeal. The scope of his power is co-terminus with that of the ITO. He could do what the ITO can do and can also direct him to do what he has failed to do. He further relied on the judgment of the Hon'ble Supreme Court in the case of Jute Corporation of India Ltd. v. CIT (1991) 187 ITR 688 (SC) where the Hon'ble Supreme Court has again expressed the opinion that the appellate authority has all the powers which the AO may have, subject to the restriction or limitation. He also relied on the judgment of the Hon'ble Calcutta High Court in the case of CIT v. Ganga Jamuna (1986) 157 ITR 225 (Cal) where the Hon'ble High Court has held that the power of the AAC is co-terminus with that of the AO. He submitted that now moot question is whether the CIT(A) had the power to enhance the income in respect of issues which stood concluded and accepted at the time of completing the original assessment and setting aside the assessment. He submitted that since the AO could have not travelled beyond the directions given by the CIT(A), the learned CIT(A) could have also not travelled beyond the scope of directions given in the first order for setting aside the assessment on a limited issue relating to an addition of Rs. 20,000 which was the subject-matter of appeal. Thus, he submitted that the learned CIT(A) has travelled beyond the scope of his power while enhancing the income of Rs. 50,000. He further drew our attention to para 9 of the impugned order where the CIT(A) had directed the AO to make thorough investigation about the cost of construction for which there would be no need to take permission of the statutory authorities as his directions would be technical. He submitted that this only showed perverse and biased mind of the CIT(A). He, therefore, submitted that while disposing of this appeal suitable cost may be awarded to the assessee.
10. The learned Departmental Representative, on the other hand, heavily relied on the orders of the authorities below.
11. We have heard both the parties at some length and given our thoughtful consideration to the rival submissions with reference to facts, evidence and material on record. We have also carefully gone through the orders of the authorities below. From the facts discussed above, it is obvious that the only issue raised before the first appellate authority against the original assessment order related to addition of Rs. 20,000 being unexplained investment in NSCs and PPF. This issue was set aside and restored to the file of AO after allowing proper opportunity to the assessee. Thus, the scope of powers of the AO was limited to the issues restored to his file. He could have not travelled beyond the directions of the CIT(A) and raked up the issue which stood already concluded or any new issue. Such power is not vested with the AO at the time of completing the set aside assessment. Now, the question is if the AO could have not taken up this issue, whether the CIT(A) could take up this issue at the time of deciding the appeal on a limited issue of addition of Rs. 15,000. No doubt, the learned CIT(A) has wide power co-terminus with the AO. He could certainly do what the AO can do or also do what the AO has failed to do. But, the question is when the same CIT(A) had set aside the first assessment on a limited issue, whether he could travel beyond the scope of his original directions setting aside the assessment. After due consideration, we are of the view that such power is not vested with the CIT(A) to travel beyond the scope of original directions given in his first order and travel beyond the issues which stood already concluded or decided at the time of completing the first assessment and deciding the first appeal. Such power was vested with the CIT(A) at the time of deciding the first appeal, but not at the time when he decided the second appeal because such issues did not arise from the set aside assessment completed by the AO. Therefore, we are of the considered opinion that the learned CIT(A) travelled beyond his powers in raking up the already concluded issue and making enhancement of Rs. 50,000. We, therefore, quash the order of CIT(A) in enhancing the income of Rs. 50,000, as such enhancement made by the CIT(A) is without jurisdiction and bad in law. Consequently, the income enhanced by the CIT(A) is deleted. All the grounds of appeal of the assessee are allowed.
12. As regards the submissions of the learned counsel for awarding the cost by relying on the judgment of the Hon'ble Supreme Court reported in 65 ITR 443, we do not find any such judgment reported in this ITR at p. 443. However, considering the totality of facts and circumstances of the case, we do not consider it fit to award any cost to the assessee. We order accordingly.
13. In the result, the appeal of the assessee is allowed.