Karnataka High Court
Commr Of Income Tax vs K S Dattatreya on 10 August, 2010
Bench: N.Kumar, H.S.Kempanna
IN THE HIGH COURT OF KARNATAKA AT
Dated this the 10991 day of 3
PRESENT:m I
THE HON'BLE 1\¢'1'I{.V%"".~',rI'%Js'ri'c:3¢:_
THE HON'BLE .. KEMPANNA
V 'K V:'gf:RC 'No§;vVL--'10:1_ ;§o 1393 of 1999
ITRC N6; 1 I9 of 1999,?'
BETWEEN?-«, A '
Covtrxinlissioner of"Incc).:11e Tax
' - (cerxtrair '_
T ' .E:{a1'nVa9ia}{a, Bangalore . . Applicant
'V A f Sri M V Seshachala, Advocate)
-- H K. 'S Dawftatreya
" 'inc_e.-'deceased by his L. Rs.,
, reference.
t) Sri K. Venkatesh Dutt
S / 0 K S Dattatreya
No.11, Brunton Cross Road
Bangalore
u] Suclarshanamma _
W/o K S Dattatreya
No.11, Brunton Cross Road
Bangalore
V} Shreelatha Prakash
D/0 K S Dattatreya
No.11, Bruntonvfhtoss Road '
Bangalore " d 'T _,..Responder1ts
[By Sr; N. p1A1;:x_n1'£iri1?,éjt;':;u}
s. I§:Iegd.e'& Rao;_j_Advoj-sates}
The~ «As;-3ista';<;t-- Registrar""'of"the Income Tax Appellate
Tribunal, Bar1g.alore.pB'enaCh_, has forwarded a reference under
Section. 256(2) ' *the=._ Income Tax Act. 1961 in RA
No.21O/Bang/1994;.A"aris.ing' out of ITA No.1055/Bang/90,
assessmer1t..yea.r 1986-8'7'..~for the opinion of the Hon'ble Judges
of this pH1'ghVC.ou'rt, on the question of law as stated in the
ITRC 19554.. L1o:~ 103 of 1999
'
Cominissioner of Income Tax
H [Central]
'- _:K:-lrriataka, Bangalore ...Applicant
k/,9
(By Sri M V Seshachala, Advocate)
AND:
K. S. Dattatreya ._
Since deceased by his L. Rs.,
(a) Sri K. Venkatesh Dutt ,
S/o K S Dattatreya ' _ '
No.1 1, Brunton Cross Road"»
Bangalore
(b} Sudarshanamma. _
W/o K S Dattatreya V ,
No.1 1, Brunton Cr~ossfRoad
Bangalo.re.,_ V v '
(C) Shregela }11~"ra._k.ash"--.._ " g_ "
D/o 1{..S'v»Da,ttatreyaA"v.' ~
No;"1 1, 'Lama-ma Cross Road'''
Bangalore ' ...Respondents
g [By"Sri'=K,"N. Phanindra, for
- M / s.'.Hegde 8: Rao, Advocates)
The Assistant'llllllegistrar of the Income Tax Appellate
»Trib_uI1al,*.B«an'galore Bench, has forwarded a reference under
...s'ect1'on;'25s{23a.or the Income Tax Act, 1951 in RA No.313, 314,
a,n"d--.,315' ,z'Ba1;1g/1994, arising out of ITA Nos. 496 to 498/
Bang/92,. 'assessment year 1986-87 for the opinion of the
Hon"'ole"--Judges of this High Court, on the question of law as
V ' stated" in the reference.
l.°:;'I'hese ITRCS coming on for hearing this day,
KUIIGLAR J delivered the following:
lu/
JUDGMENT
....._.........__.......__......_._................._..... This {ETRC No.119/99) reference is at the revenue, by the Tribunal.
2. The questions of 1aw_V_i*eferred' are.a_s' " 1. Whethe'r'*a_ .. and 'Vii': "the cir-fcurnstctrtcesh Vt of Tribunal was in 'ltitv hoisting the amount of 'a.--séessed in the ,.E3:,tt't,:ortin the hands of as§é3s~see.»or other person ?
ht the facts and in the au'ctr_:<iurn.é':tctr"tce's*"Vof the case, the ITAT was rtght"tn..,1c:_tw in holding tht the Commissioner ,Income--Tax [Appeorls) has no jurisdiction tv Vtéj-teonesider the genuineness of the cash he: P-tcrtiedit in the norne of Rqq' Naik ?
3. Whether on the faets 'a.._m9;t in the circumstances of the case,' ITAT__ was right in law in setting aside the enhancement made by the CIT (A) as illegal ?"
3. The assessee is an indiyiduai ~ag1.fii;:_u1'tura.1 operations and aiso a share .01", ir1c0'rn_e*--as paz*i,nAe'r "from"~,si'Xx different firms mostly engaged Vtéinhliquort' btitsinesse as excise' contractors. There was .__sei:z;.i.1re otpveirations in the residential premises the assessee on 07.06.1985 wliiiehgrtesiiitedi bank pass--b00k of the assessee 'Langford Town Branch, shoxmfig on three different dates in the rnunthé of ti 0':2..Q5.i9'9'5"" -- Rs.50,00,000--00 ..;..'%1.é;r.o5'.L.1995 -- Rs.50.00,000-00 Q11 i'e.65.1995 - Rs.35.00.000--00 Total Rs.1,35.00,000--00
5. The first appellate authority after carefui scrutiny of the statements of the assessee, P.J. Fernandez, Sri. Srikantadatta Narasimharaja Wodeyar and K._4vl/lenltatesh Dutt, came to the conclusion that the eXplanation"_l'in respect of these 1.35 crores found ascredit.s"in bank pass--books is unsatisfactory', Therefore;-. alth'o:t3lgh'eA:1it is d not clear as to whom these 1r.-'onies beiongsptofor A.as._Vwhe§reVt1iey» came from, in the absence of anjfcogent ex'/*id.ence for the same, the deeming provisions.._o'f _Se_ctit_3n. "-8_8~ ._a1:e_ applicable and the addition of: in the hands of the appellant is therefore by the said order, the assessee preferred anlappeavl before. the Tribunal. . 6. The Tribttnal, on consideration of the above n1ate1'ia:l»-.e_'c'aln1el_}.to the conclusion that the version of the asséessee. and his son that the entire money amounting to Rs.1.35V__A'3~crores belong to Venkatesh Dutt and represented _ unaccounted income of various businesses carried on by him it in film, financing loan as well as in the bill discounting line, is 9 a quite plausible one and seems also to be beiievah1e;«._yd_d'Qn the other hand, simply because of the fact ri.;.oriey ultimately got credited in the bankyaccoun_--t"oi"'th'_e,assesseie, 'for a temporary period, it cannot'-, be"'esaid'»._that flV'i't3.."ii,{On€y."". * represented the unaccounted the a;§s¢1§st¢V¢V especiaiiy when there are no i'ndicatiovns.d/.V:e'vet1. dd: speak of any evidence about such held that the same amount has already of Venkatesh Dutt. It who completed the assessmehtyyotdd pvfid hfenkatesh Dutt on the same day was assessed in the hand of K. \'A/enka.tesiii_.DAuttb a protective basis. The Assessing Ofiicerpp was aware of "the pros and cons relating to the yasesessdrnentyproceedings of both the assessee and his son and on the part of the Assessing Officer in choosing assess the amount of Rs.135 lakhs in the hands of Venkatesh Dutt in a substantive manner would certainly p_i*et;1ude him from assessing' the same amount once more in the hands of the assessee. The assessee can be considered to L"/, E0 have discharged even the stronger onus of proving the source of the money ciaimed to be from his son. Hence aithotigh the credits appeared in the bank account of view, the assessee cannot be held to be liabie.to--..be:.A_ass_essed_c respect of this amount by app1icatif_ono'f_y Section 68. Therefore, the order ofthe"a.uthorit.iesv"wf'as'reversed by directing deletion of additifonifof hands of the assessee. Agg"iW¢d Tribuflai.
the revenue is in appeah if V if it dd
7. T1'IE'.,_ié_.aI'nt?d (;3ounseI"*for.V revenue assailing the impugned_t1_2e Tribunal contended that the stateme'n_t"Assessing Officer of the aforesaid four 'persons aremtotafl-y inconsistent with each other. Everyone of have the money which is reflected in the fafsyveii as the books of accounts of the assessee. "Foe Tribunalfflappears to have been influenced by the fact that the same amount is assessed at the hands of the son of theiassessee and therefore it has proceeded to set aside the "orders of the authorities deleting the aforesaid addition of \'f_'§;~ ll income. As a matter of fact, the said amount is not 'ass.essed in the hands of the asse:-3see's son. In fact, in filed by the assessee's son, he did not inolulde:this'*amount"
all. He filed a revised return V'incl;ud.i_ngl insali'd:f».arr;1ount.T"
Thereafter, he wanted to Vsaiidlb' return. When it was not pern*1itted,_:vj'_l:he:_ preferredh appeal. The appellate authority and remanded the matter to the AssessinLg,¥w--{h5_fiicereej;;)e'r egnquiry. Against the said order,"i?.hel:.1rei(enue ipreferredllaln"appeal to the Tribunal. The assessee The revenue withdrew the " _0bjections were considered and it came t0.__ 5': the said order, the revenue preferred appeal before this Court. The appeal came to be . on the ground that the aforesaid A not_}~'oelong to the assessee's son, either it belongs to the asseslsjee herein or the partnership firm by name M/s elntercorlp Associates. The said amount cannot be assessed in 'thefhands of the assessee's son. Therefore it held that the it fassessee has the right to withdraw the revised return showing K'/, the aforesaid amount as h.is income. In these circtirnstances, the finding recorded by the Tribunal is requires to be set aside. l V V t it
8. Per contra, the learned contended that it is not per.-'nis.siblellfor' this the order passed by the Tribu_riial-x_iri--an preferred by the assessee's son or "Court against the said order. When once Veibgflanation to the effect that this arrangeld son, Section 68 is not attractedildl;"p._El'hle ' of assessing the said amoullt h.'1S_'HVlsovr1 should not prosecute the assessecgbyp "said amount in his hands. The Tribunal 'aside the order passed by the Assessing . yQ'1'ficei5"Aasl'l'well first appellate authority and the said I ordeal' ..do_pnot"ca1~l for interference. ifrom the aforesaid facts it is clear that the assessee is an agriculturist and partner in five firms which are _ carrying on the business in liquor. Assessee is also an excise contractor. The material on record discloses that he needed money for depositing one month's kist in excise ..aut.ct.i_onvAbids for the relevant excise year. Admittedly, Rs.1.35 crores was credited to _acco_--11nt"
13.05.1995 and 16.05.1995 in the Town Branch. In the return' the he did not disclose the said a search of the residential and __of the assessee on 7.6.1985. At that of the assessee in Longford was seized. The said pass bool; deposits. Thereafter, the asses1se§t§' He stated that the said 'means of demand drafts from one P.J.5Fernande;7,. 'l$3, .t'Br1'.§ade Road, Bangalore, the said loan ' was{.ar.ra.nged by histtson Sri Venkatesh Dutt. He remembered document. When contacted P.J.Fernandez o'ri_gtina13tytt_c:on.i'1rrned that he advanced amounts by borrowing moneyfrom one Sr)'. Srikanta Datta Wodeyar. Sri Wodeyar also .go_ntfirmed the same. However, on 5.7.1985 in the course of the statement recorded under Section 132(4) Sri P.J.Fernandez EA/.
categorically denied that he advanced a sum of to the assessee. He stated that he only ass.essee to help him. Sri Wodeyar also from his earlier statement. "
assessee's son on enquiry fatherlvionlyeltnelwlvaboiit the said loans. SubsequentlyDh.e' said money has come from M/ s __Later he changed the statement stating father about the source of context the affidavit filed by inrpolrtance. The assessee has sworn tofari declaring on oath that the aforesaid "shown as credits in his books of account. "..Tl'1'ey" have been shown as received from .&lFer1"1aI"'1des andmthe same is shown in his books. Further, it :ise.state'd._&btha'tthe said amounts represent the income earned by M./_s Interciorp Associates, one of the concerns of his son Venléatesh Dutt. Further, he has stated that all amounts were 'brought in as credits in the name of P.J.Fernandez in his books as there were legal complications with State Bank of India in l./ regard to deposits of intercorp Associates. Finally _h~e_jconfinned that Rs.1,35,00,000/- represents the Associates, Bangalore, a concern of"hi_s son'"Sr'i"D'utt"
and the said income has been offeredfby. ~thir'I2._for:ta;x':atieQni'in his "
accounts.
10. The Assessing fiommissioner of Appeals on careful .vAtlre'p*st'atements of all the four persons on different that their stand is explanation offered by the assessee iis therefore, it cannot be accepted; 68 of the Act, the said amount in the hands of the assessee. It is in this re'ga,rAd itis necessary to notice the law on the point.
. if ' 1V1; of the Act reads as under:--
A Credits. 68. Where any sum is found if the books of an assessee maintained for «previous year, and the assessee oflers no " efcplanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so 16 credited may be charged to ihcome-tax as the income of the assessee of that previous year. "
In order to attract Section 68 of the Act,_ have to be fulfilled. They are ~ (1) A sum is to be found 7i_n -ithfelolf. assessee maintained forbAl;1n$i.A.A_n'fevio'L1_s is f not offered to tax. if if l d if (2) When asked to explaiinlltlaee and source of the income, . _ if V [a] The assessee l offets llll Tl{h_e offefed is not satisfactory, in the l " l 0p_inilon.lofvtlrlelllkssessing Officer. Theiinlitiallb_ufden...l~*iies on the Department to prove that tY?:E'l'«:53ti,fl I'??Qeipt"'is.._in«vthe nature of income and it is within the ' Then the burden shifts on to the assessee to "show not taxable because it falls within the exception proVidl"ed under the Act. When a sum is found credited in the if xbfooaks of the assessee, which is not disputed, it is a prima facie Aiexbtidence against the assessee. If the assessee fails to rebut the We 17 said evidence, the same can be used against the _ass:ee_ssee by holding that it was a receipt of an income nat1:ire'4eiI'iCif5r:c«.:
to tax.
11.1 The Apex Court in the case vs~.._ COMMISSIONER ' or INCOME in 995,n2.'1f4" S011 interpreting Section 68 has undei-~.:_ 2 "It is no douijt ti"-tie ..in_dELcases in which a receipt is sought to 'the' tax_edA.';'as"_'_.incon'ze, the burden iiieiseon v'to;.p'rove that it is if a receipt is in the :V1.inatureVVVoj'. burden of proving that it is not it falls within exemption _ _ provided byf.t'h:et_Ac'ttVlies upon the assessee. Bu.t, in Zvieug of s';'68,____u:»here any sum is found credited in hooks of the assessee for any previous year the ' be charged to income-tax as the income qt assessee of that previous year if the H Vexphldhation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such a case there is, prima facie, evidence against the assessee, viz., the receipt of money, and if to rebut, the said evidence being unrebutted;.'.V'ca:rt be used against him by holding T' if receipt of an income natiire,--W"h--:'--l.e explanation of the assessee;ft.he cannot, however, act unreasonably."
11.2 Again the_zV:i"SAuipre;i:1e in the case of COMMISSIONER OF v1NeoMEV~.;r.2;X"'vs '7ti,1itoIL4NAKALA AND OTHERS [[2 l éisiinder: --
tttt ~»'?Ir.s £14":;«i§»../.:\that \."é:)'efi Clfter rejecting the the assessees if found unacceptable; AVA'tl1e""'.chicial aspect whether on the
5. 'circumstances of the case it should be inferred credited in the books of the constituted income of the previous year A V' receive the consideration of the authorities provided the assessees rebut the evidence and the ~ vinference drawn to reject the explanation offered as unsatisfactory. It needs be noticed that s. 68 itself"
provides, where any sum is found credited in the books of the assessees for any previous year the same may be charged to income-tax as the of the assessees of the previous yeajr""'iff explanation offered by the assessees "
nature and source of such sumsfouhd the books of the assessees his inftrhe of'lt'l2.e in A0 not satisfactory. 'Such opi_ruon constitutes a prima fa'£te'*t.evidei1ce'=.agailfi.svt""the assessees, vr'z., ,.the 'arid/iif the assessees fail to"««re'but'l._ttu3>'sldtdtebidence the same can be used agaihsvt holding that it was Zarejcetpt ah _:i.ri1corfte'__n_ature. I In the case in hand' o,ut'hortt*tes -.."ccincurtehtly found the the assessees
12. _ _ lt"ls_i'n this'*~'oackgr0und of the aforesaid statutory and llthe------in'terpretation placed on the same by the _l have to find out whether the Tribunal was ljusltilfied.lttititerfering with the order passed by the Appellate Au.tl1oti'ty as well as the Assessing Officer. \l./ 25 unable to explain the nature and source of the sai.dV_iarnount. Assessing Officer as well as the first Appellat.-§:l1Xutl'io:ri.t},f___on careful scrutiny of the statements of the afo1'e'sa«i.dr.fot1:r persons recorded at various stages incl:udin'ga«..;!the assessee came to the conclusionthatthe ofiferedl the assessee is unreasonable, tl1e'refo're. the sum so credited was "i.nco'me Though the Tribunal has the jurisidictioin the said finding of fact, its legal evidence. It seems to have made by the counsel for the _n.otmsupported by any material on recordtanédinterlered:_4i»tiitl*x "the finding of fact recorded by the Appellate Aauthority ysrhich was based on material on "record. Tribunal was not sure of its finding when it I itsylopinion by saying that from the facts and the st-aternentsrof various parties it appears to us that the Version AA of thevatssessee and his son that the entire money amounting to l'"Rs_';5l.35 lakhs belong to Sri Vekatesh Dutt and represented unaccounted income of Various businesses carried on by him 22 in the film financing line as well as in bill discountingl_:liine.,_ is a quite plausible one and seems also to be believable'; absolutely no material in supporthof _t_h6 »fa'i\\\ stated earlier it is based on the arg:§.ums-ents l' the Tribunal was not justified in__so laightlyy finding of fact recorded by xukuppellatellliuthority which was based on legal reason given by the Tribunal is thatthe assessed at the hands of is without any basis.
lnfact the tax by any one of them.
as all' of Qfiid amount. Therefore, the Tribunal interfering with the finding of fact and§'lii.oldinfg, V-fhatdthe eicplanation offered by the assessee is ., and accebtable.
'V satisfied from the material on record there is a concertedvdfifattempt by the father and the son to suppress by income and one is trying to put the blame on the other. In the Q' mprofcess both of them are not willing to offer the said income for Hétax under the Act. As the said amount was credited to the i/ 24 In the course of search in the case of assessee's son, Shri K.Venkatesh Dutt on 23.2.1988, an account 1p,Qgj'i:<'_jqr the assessee for the year ending 31.3.1986 was seized; 'l the alleged loan of Rs.1.35 erores from in 1985, certain other loans in the byi'-. the assessee. The loans stateduto havebeen of drafts were found retumedlvlvléonh the same:d'ay.Hletter was issued to the assessee:4_.askir.i§iorleyidlence invvrespect of these loans. A 1etterV'dated'VV_2'vI:7'.A'i3>VV. xerox copies of confinnationi"let:§;ers 'fr-orréh above were filed. As getting barred by limitation on 31.3.lA98.9dand were found to be stationed at dista1'1tt p1aeesV"l'ike'V' Bidar, Raiehur and Gulbarga, the was Hmeornpleted without enquiring into these I Vereditstj:'~i...v'1'h.ere.after, ACIT was directed to enquire into these ore_ditsv'an;d.~'report on the same. From the said enquiry report it AAappe.avrs:'that one of the credits on 17.6.1985 of Rs.4O Lakhs in 'thef?name of Rajan Patel appeared to be not genuine. The iassessee was called upon to explain the credit of Rs.4~O Lakhs. \t/ 25 Though the name of the party was shown as Raj an Pat-e__l, it was one B.Rajanna who was the creditor. Howeve_r}:.the'.,_'said Rajanna denied having lent a sum of Rs. itlie assessee. In fact he denied any as'se's_VseVe'.g. He was offered for cross--examinati"on.7'_HeV was it Nothing was elicited in theV»c_our_se of regard to lending of Rs. 40 Appellate Authority held that the satisfactorily able to prove the source or eyen" explanation as to the creditigf iinfhis books in the name of .p:'esumption of Section 68 was invoked was added to the income of the assessee andataxed. assessee challenged the said finding of Vf'theE"-first A~AppellvatefAuthority before the Tribunal contending by the assessee, the Appellate Authority had jur_i~sd_iction to enhance the tax by adding the aforesaid Apincomef The Tribunal held that the Commissioner of Appeals 'di_d:f.--'not have jurisdiction to make this enhancement as the iassessee did not show this amount in the return of income filed l/ 26 by him or in any of the accompanying statements. In the assessment order also, the Assessing Officer did any mention of or even reference to this credit itemgofloalghs standing in the name of Shri Rajan Patel_Q17'v'A4Shri:/'c113.l2ajla1f(1§i;t__ whatever may be his actual name. on Section 251 of the Act it held that the'Appellateauthority'has no jurisdiction to travel the matter of the assessment or beyond the recolrld; return of income and the assessment order andhislpowfer'ofaenhancement relates only to the been subjected to the process of assessme_nt._ to the judgment of the Madhya Pradesh High A' 'Court, "it was held, any matter arising .ou"tx. of proceedings in Explanation to Section 251(1) matters which were either specifically dis_clos.edb'ylthe assessee in the return of income filed by him or aiayt' accompanying statements or mentioned by the \v 27 Assessing Officer in the assessment order and, therefore, the Appellate Authority was in total error in the enhancement as it is without jurisdiction it . I5. Challenging the sa1d:;'AfinciittglV learned counsel for the revenue--~.Vcontended to the language of Section in an appeal against the L has the power to confirm, reduce,» enhaneeor 'lassessment order. Even the subject matter of reti_n'rlil_ the proceedings initiated by him, he hadislsLiedl.'rio'tie_e"'calling upon the assessee to explain these~receip.ts,.A 'As: the limitation to pass assessment order was it " .nearirig; Without going into the said question, assessment order lwhas is in this context the Appellate Authority gave a1i.4__opportti'i1ilty to the assessee to substantiate their claim and Athereafter it has passed the order enhancing the addition in 'respect of one item as the explanation offered was Hlunsatisfactory. Therefore, it is not a case of extraneous facts V 28 which are not part of the assessment proceedin_gsVV_l is made the basis for enhancement. It was the assessment proceedings which was tahen into' the Appellate Authority and enhancern'ent,._.:iN.as it 'I1'i.::z9.:_('lri°:v;.1V"':"i"'f1e'."-- approach of the Tribunal is erroneous' is settled legal principle.
16. Per,_contra.,..._le--ar11ed, counsel-for the assessee supported "
1'7. it of Tribunal is based on the judgment thel'li!tadhya"'P'radesh High Court in the case of '{"l27 ITR 491] where it was held that.
d the lidproceedingsllaefore the ITO are limited to the matters "orA~a.i;m.pliedly raised by the assessee and the ITO and the proceledirig done by him of these matters. The explanation does" not authorize consideration of any matter by the AAC. iwhlich was not raised or processed before the ITO. In fact, the 'aforesaid judgment is reversed by the Apex Court in the case of 'A/, 30 INDIA LIMITED vs CIT [(1990] 88 CTR 66] where th_e-.___law has been declared as under : -
Mrhe above observations A applicable in the interpretatiori of :25': the :3 it Act. The declaration ofglaw isdclear that.vt.hevlpower."' of the AAC is coterminousfiivith thatyttzel?' that is so, there appears..toh:A'be rzoyAreaso'n..asyAto why the appellate V il'¢annb: _ modify the assessment orderyyonyround even if not raised: before the'J::I,E7(j)v§"~:l.l\_'oyextscption could be taken view__ the Act not place any o}?§i exercise of appellate lpouver.' an appellate authority while llhieal'in'g:'the"".appeal against the order of a syubord§.naate'1 authority, has all the powers which the -o_.riginal""'authority may have in deciding the
-vquestio'n.__before it subject to the restrictions or V'iiniit_aiilo'n';' if any, prescribed by the statutory ipxovlistons. 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 appears to be no good reason and none was placed before us V.'/.31
to justij"y curtailment of the power of the entertaining an additional ground raisedeby.' , A' assessee in seeking modification of the*o__rdejrV..of = ' assessment passed by the A
17.2 In fact it is also 'iiseful to'-reVi'e1f the Bombay High Court which__1fié1-s:_been apptoxrcd by the Apex Court in the case of Nzmiiombas .li4AIir.oRpAss vs CIT [(1957) 31 ITR 909 mom);where-tirgagllaé§:_J"1~;ie1;:i':;$"under:--
" It has_.been constituted a Vrevt<;_i'n'gIauthjoriiyjlaaainstvtheldecision of the ITO; a .not_ in the narrow sense of revising .is"t;he..s.ubject~matter of the appeal, notxlinll theV'sen_sei«o'f revising those matters about it which Vthefi assessee makes a grievance, but a reiiising authority in the sense that once the appeal it l. he can revise not only the ultimate arrived at by the ITO but he can revise A process which led to the ultimate " computation or assessment. In other words, what he can revise is not merely the ultimate amount which is liable to tax, but he is entitled to revise the various decisions given by the ITO in the course of the assessment and also the various incomes "or deductions which came in for consideration .of..the*--_ ITO"
Therefore Section 251 of the Act hasv----be:e~n matter of interpretation by the Apex Courtin -s'eV:e1'al.decisiVons.T.__ In this background a closer look at 'lseéuau. words in the Section make the leg-isllativeirhintent,clear unambiguous.
Section 251 Of the as _ (1) In disposing of an t.hg;.._S:{Cno'ni_n_1issioner (Appeals]] shall have the follc"wing.'powe'r,s« " " '
(a) in "an'app~ea]. against__ an order of assessment, he may confirm, reduce,_ enhance or annul the assessment.
[aa] V ~~ xxx »!C0lTi'l'DiSSiOn€f (Appea1s)] shall not enhance an ' _ 's-sessment era penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against. such enhancement. or reduction. Explana;tion.- In disposing of an appeal, the {Commissioner i.lAppeals)I may consider and decide any matter arising out of _the"~_. proceedings in which the order appealed against was 'passed, notwithstanding that such matter was not raised before the {Commissioner (Appeals]] by the appellant. K/a 33 Therefore, the scope of the power of the Corr;:rni»ssioner [Appeals] is too \m'de. The appellate powers in disposing of an appeal. An app€_3.1.._i$:
of the process of assessment and name for adjustment of the, to.,l.a.coord taxable event in the particular taX:;>.t1Yer'.s The Commissioner (Appeals)..g_und'e'r"'th:¢§4p lenvactrnent sits in appeal, only in a manner' What it does.
functionally, of the appellant in record andnflin accordance
with the law legislature. In a tax appeal, the appellate ..at1thority committed to the assessment proc_e'ss.,A Corrimissiloner (Appeals) can itself enter the lhareria assessment, either by pursuing further investigation or._caus.i:'ng fujrthier investigation to be done. It can do so on its 0wn__linit.iative,lwithout being prodded by any of the parties. It can enhance the assessment, taking advantage of the l."l'.Aop.pofItunity afforded by the tax--payer's appeal, even though the appeal itself has been mooted only with a View to a reduction in 'V 34 the assessment. The scope of his powers is conterrniiious with that of the Income Tax Officer. He can do whatthe' Tax Officer can do and can also direct him to h'e.:h.as ffailedxfl to do. These are special and e2;cept'1onal:_attribut'eswofolithe; jurisdiction of a tax appellate authority. atgtribujtes underline the truth that the different. functionally and assessing authority itself. The Cornniissioner constituted as a revising autki'o'I€tv-' the ITO, a revising authority inotflinlhvthe. of revising what is the subject--Inatter:o.f_the not in the sense of revising those matters about whichg_tl1e"'assessee makes a grievance, but a revising authority': in 'the sense that once the appeal is before .hir'n 'can~.revise only the ultimate computation arrived at he can revise every process which led to the ultimate computation or assessment. He is entitled to revise the various decisions given by the ITO in the course of f' 'assessment and also the various incomes or deductions which "came in for consideration of the ITO. The Commissioner u/.
35 (Appeals) can modify the assessment order on arifadditional ground even if not raised before the ITO. "riot place any restriction or limitation on the e:{erci'se appeliateV«_ power. It has all the powers of the vv;1A"1vaf};:hfave'~., in deciding the question befo're_it subjfect to for limitation, if any prescribed In the absence of any statutorgi. authority is vested with all the the subordinate authority may in :the:: 2 V
18. is not in dispute that the Assessing notice to the assessee calling upon him to fexplainf which he had received by way of drafts. _ V-.eirpl'anatiown was offered giving the names of person's°from_ whom the said amounts were received. However, allofthem"were?residing at different places in the country. The ass.essmer_1t}' officer could not enquire into the same, as the period -prescribed for completing the assessment was Coming to " an end. Therefore, he proceeded to pass an assessment order H without expressing his opinion on the aforesaid loans. it is in 'L/.
36
this context, the said loans were the subject rria'tt"er_.'o.f the proceedings before the assessment officer. He.--Ad:id -any order. In those circumstances, the..first."ApperlIatélAVlth°I;ity gave an opportunity to the assessee explain' it called upon the Assessing'llQ'fficerato and submit a report. In the rep0rt_.»'4'2l:ti:Al2finit_ted evident that except the aforesaid in respect of all other payments.,nthe creditors "said payment. Only in respect of first place there is a difference péerson was identified he gave a payment, denied knowing the assessee all. given an opportunity to cross- examine the s-aAid"R'ajanna who was extensively cross--examined. ~ ., :t'i'sVeftét~a1i.ti1is egrlilelrcise, the Appellate Authority held that the explaiiationpffered by the assessee is not satisfactory and, th'erefo_.re*, nheflhas failed to disclose the nature and source of incomeeand, Section 68 is attracted. Therefore. it cannot be saifiithat the Appellate Authority had no jurisdiction to go into the said matter. add the said income and enhance the tax. The 38 Therefore, all the three appeals are allowed and the question of penalty is remanded to the Tribunal for fresh oVon~slde_ration in the light of the judgment rendered in the No costs.
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