Income Tax Appellate Tribunal - Delhi
Smt. Rupa Rani vs Dcit, Spl. Range 29 on 27 September, 2002
ORDER
T.N. Chopra, Accountant Member
1. This order is being passed for disposing of the petition of the assessee dated 30.5.2002 seeking permission to raise the following additional ground of appeal in ITA No. 5211/Del/96:-
"On the facts and in the circumstances of the case and in law the authorities below erred in treating a sum of Rs. 1, 48, 471/- as falling under the purview of section 158-BC(c) of the Income Tax act. 1961 read with clause (c) of subsection (1) of section 158-BB ibid. 11 is prayed that the said sum cannot be called undisclosed or such which has not been disclosed or would not have been disclosed and was, therefore, no includable as part of the undisclosed income for the block period. It is prayed that the same may kindly be vacated."
2. The said appeal has been earlier filed by the assessee on 24.9.96 against order of block assessment dated 29.8.96 passed by the assessing officer. Referring to the decision of the Hon'ble High Court in the case of Maruti Udyog Limited Vs. ITAT 244 ITR 303. Id. counsel pleaded that a reasoned order be passed regarding admission of the additional ground raised as above. We have accordingly heard Id. representatives on both sides on the question of admission of additional ground under Rule it of ITAT Rules, 1963.
3. The additional ground sought to be raised by the assessee relates to the undisclosed income of Rs. 1, 48, 471/- for asstt. year 1994-95 falling in the block period which was disclosed by the assessee in the return filed u/s 158BC. Search operations were conducted by the Income-tax authorities at the residential premises of the assessee on 9.8.95 u/s 132 of the Income-tax Act. The locker of the assessee with Indian Overseas Bank. Model Town, was also searched on 11.10.95. Subsequently the AO issued notice u/s 158BBC to the assessee on 19.4.96 and the assessee filed a return for the block period on 7.8.96 indicating undisclosed income of the block period at Rs. 1, 48, 471/-. This undisclosed income, as stated hereinbefore, represented the Income of the assessee for asstt. year 1994-95 for which no return of income had been filed by the assessee. The AO proceeded to make the block assessment. By making a further addition of Rs 75, 000/- on account of undisclosed income in respect of unexplained cash credits and thus, computed the total undisclosed income of the block period at. Rs. 2,23,471/- vide order dated 29.8.96. Aggrieved, the assessee filed the appeal on 24.9.96 assailing the addition of Rs 75, 000/- on account of unexplained cash credits. In respect of the undisclosed income of Rs 1, 48, 471/- related to asstt. year 1994-95, which was included by the assessee herself in the block return no ground has been raised in the memo of appeal. It was only on 13.5.2002 that the assessee made an application seeking permission for raising additional ground of appeal against the addition of Rs. 1, 48, 471/- as undisclosed income. In the application, the assessee submitted that additional ground is a legal ground and the occasion to raise it has now arisen because of the exposition of law by the Tribunal and other authorities.
4. Shri Assem Chawla, Id. counsel for the assessee, pleading for the admission of the additional ground, argued that the income of the assessee for asstt. Year 1994-95 includes, inter alia, rental income from which TDS (Tax Deducted at source) had been deducted. Other sources of income are business income as well as interest income and the total income aggregate to Rs. 1,48,471/-. According to the Id. Counsel, even though no return has been filed by the assessee for asstt. Year 1994-95. Yet the income cannot be treated as undisclosed income as per the definition of "undisclosed income" contained u/s 158H(b). According to the Id. Counsel, looking at the nature of the income, it cannot be said that the assessee would not have disclosed the same for the purposes of the Income-tax Act. Ld. Counsel placed reliance on the two decisions of the Tribunal in Smt. Sitadevi Daga Vs. ACIT 67 ITD 151 (Indore) and SOU. Vidya Madanlal Malani vs. ACIT 74 ITD 341 (Pune), Ld. counsel heavily relied upon the Full Bench decision of Andhra Pradesh High Court in the case of CIT Vs. late Begum Noor Bano 204 TR 166 in support of his contention that a fresh claim not raised before the Income-tax authorities can be raised at the appeallate stage before the Tribunal. Will regard to the reasons for not including the ground in the memo of appeal, Id. Counsel argued that since chapter XIV-B laying down special procedure for assessement of search cases was inserted for the first time by the Finance Act, 1995 w.e.f. 1.7.1995, there was lack of clarity in the mind of the assessee as well as her counsel about the correct, interpretation of the provisions. He pleaded that the additional ground may be admitted under Rule 11 of the ITAT Rules, 1963.
5. Shri Sanjay Jain, Id. DR, on the other hand, put up a stout opposition against, the admission of the additional ground and argued that once the assessee had herself admitted the income of Rs. 1,48,471/- as undisclosed income relating to asstt. years 1994-95 falling in the block period and included the same in the block return, no grievance can be raised by the assessee at this belated stage challenging the inclusion of the amount in the block assessement made by the AO. Id. DR, submitted that after filling the block return including the amount of Rs. 1,48,471/- as undisclosed income, the assessee did not, raise any such plea during the course of assessment proceedings. No such ground has been included in the memo of appeal filed by the assessee and, therefore, the additional ground now raised should not be admitted. Ld. DR argued that the ground raised by the assessee cannot be treated as a legal ground and adjudication of any such claim would necessarily involve embarking upon investigation of fresh facts which would be contrary to law. In support of his contentions, Id. Dr placed reliance on the two decisions of the Hon'ble Supreme Court, namely, National Thermal Power company Limited 229 ITR 383 and Jute Corporation of India Limited vs. CIT 187 ITR 688. Id. DR argued that firstly, the ground sought to be raised by the assessee does not arise from the subject matter of the appeal inasmuch as the amount of undisclosed income has been declared by the assessee herself in the return and the same has been accepted by the assessing officer while making the block assessment. According to the Id. DR no grievance can possibly be raised by the assessee at this belated stage since the amount had been admitted by the assessee as undisclosed income before the assessing officer and had also been included in the block return. Id. DR further argued that the additional ground, in any case, would require fresh investigation into facts and, therefore, such a ground cannot be permitted to be raised as additional ground before the Tribunal.
6. We have carefully considered the rival submissions and gone through the string of judicial authorities cited before us. Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963 prescribes that the appellant shall not, except by leave of the Tribunal, urge, or be heard, in support of any ground not set forth in the memo of appeal. However, the rule would have, to be read in conjunction with section 254(1) which restricts the jurisdiction of the Tribunal to the subject matter of the appeal. The word "Thereon" used in Section 254(I) clearly points to the conclusion that the powers of the Appellate Tribunal are limited to the subject matter of the appeal. Therefore, if an item of income had been included in the return by the assessee herself and, at no stage, no contrary stand had been taken before the assessing officer, such an item of income could not normally be the subject matter of the appeal unless of course the issue involved is purely legal, in the Full Bench decision in late Begum Noor Bano case (supra), relied upon by the Id. Counsel, the Hon'ble High Court, after the detailed and exhaustive review of judicial authorities, held at page 203 of the report, "The above discussion would lead us to the conclusion that the jurisdiction of the Tribunal is necessarily restricted to the subject-matter of the dispute before the First appellate authority and the Tribunal cannot allow the assessee or the Department to dispute new items or entertain new claims for deduction for the first time." The Court observed that the nature of the appeal and the proceedings before the Tribunal are akin to those in a Civil Appeal, Under these circumstances, it is difficult to say that there are no adversial proceedings before the Tribunal and the Tribunal can, therefore, upon an enquiry into the correctness of the assessment as a whole and recomputed the tax de novo just as the assessing officer could have done.
7. At page 201 of the report, Their Lordships referred to the salutary principle underlying a taxing statute that. there should be finality to the proceeding so that an element of certainty ushered in as early as possible in the interests of both sides. Their Lordships further observed that the assessments need not be thrown to contest through out the singe of appeal. Revision and reference. There is a fallacy in thinking that, in reality, there is no his between the parties between the parties and that the Tribunal should set upon itself the task of recomputing the tax liability irrespective of whether the ground was raised before the Income-tax authorities or not. The propositions enonciated by the Andhra Pradesh High Court. in Late Begum Noor Banu's case cited by the Id. counsel are thus directly contrary to the contentions raged by the Id. counsel before us.
8. In our considered opinion, the additional ground of appeal sought to be raised by the assessee is well outside the ambit of subject matter of appeal and cannot, therefore, the admitted.
9. The additional ground sought, to be raised by the assessee seeks bring in and entirely new item which had nothing to do with the ground raised in the original memo of appeal. South a new ground entirely enconmended with the original memo of appeal, will be as if the appeal in this regard has been filed belatedly and the assessee is, therefore, liable to explain the reasons for the delay. In the instant case, the appeal has been filed on 24.9.96 whereas application for filling additional ground has been made by the assessee on 30.5.2002. i.e., after a lapse of nearly six years. The assessee has failed to submit cogent explanation for the inordinate delay in raising the additional ground. It has been held by the Delhi High Court in CIT vs. Edward Keventer (Successors) (P) Ltd. 123 ITR 200 that the assessee has to explain the inordinate delay in filing the application for additional ground. The high Court, has referred to the decision of Madras high Court, in Panchura Estate Ltd. vs. Govt. of Madras 87 ITR 698 in support of this view. The baid explanation furnished by the assessee/appellant in the petition based on lack of clarity of the statutory provision does not explain the inordinate delay of about six years for raising the additional ground after filling the appeal against the asstt. order. On this ground also, the application of the assessee is liable to be dismissed.
10. Apart from the aforesaid reasons. we find that, the additional ground moved by the assessee involve investigation into fresh facts and such an additional ground, therefore, cannot be admitted in view of the decision of the Supreme Court in National Thermal Power Company Limited 229 ITR 383 rendered by Three Judge Bench. In this decision, it has been held that new claims involving question of law arising from facts on record can be raised before the Tribunal. In the instant case, the assessee had herself treated the income of Rs. 1,48,471/- as undisclosed income and included the same in the block return. Id. counsel fairly state that return of income for asstt. year 1994-95 has not been filed by the assessee till this date. The assessee has included the aforesaid income in the block return obviously on the ground that the income is covered by the definition of "undisclosed income" as contained u/s 158B(b) inasmuch as "income has not been or would not have been disclosed for the purposes of this Act." This issue sought to be raised by way of additional ground by the assessee does not, in our opinion, involves a purely legal issue. With a view to determine the question whether the assessee would have disclosed the income for asstt. year 1994-95 for the purposes of Income-tax Act, it would, in any case, require investigation into fresh facts regarding the nature of the income, mode and manner of records kept in respect thereof and facts connected therewith. It is in the backdrop of these facts, respectfully following the decision of the Hon'ble Supreme court in National Thermal Power Limited, we are inclined to reject the application of the assessee seeking permission to raise additional ground.
11. We may now deal with the contention of the Id. counsel that income for asstt. year 1994-95 includes rental income and other income on which TDS has already been deducted and therefore, on grounds of equity and justice such income should not be treated as and undisclosed income. Al page 6 of the paper book filed by the learned counsel, details of income for asstt. year 1994-95, have been indicated which include business income, interest income as well as rental income. Rental income of Rs. 14,707/- has not been subject to any tax deduction at source. According to the working given by the Id. counsel, tax on the income fro the asstt. year 1994-95 under the regular taxation procedure works out to Rs. 89,082/- and tax in the taxtant of Rs. 76,826/- still remains outstanding, Id. counsel fairly conceded that no return of income for asstt. year 1994-95 has so far been filed by the assessee and the payment of outstanding tax has not been made. We feel that justice and equity do not lie on the side of the assessee. Admittedly, the assessee has not filed the return for asstt. year 1994-95 and has not paid the tax on the said income. The income in question has, therefore, rightly been included in the block return as undisclosed income by the assessee. If the objection as to the inclusion of the income in question as undisclosed income is raised for the first time on ground of justice and equity, it is quite likely that the Department will be handicapped from exercising the power of the assessing the income in a regular assessment procedure o account of lapse of limitation, pendency of appeal or otherwise. We are, therefore, not persuaded to accept the contention of the Id. counsel based on the plea of injustice and equity.
12. Regarding the two decisions of the Tribunal. namely, Smt. Sitadevi Daga (Indore Bench) and Sou. Vidya Madanlal Malani (Pune Bench) cited by the Id. counsel, these decisions are rendered on the facts of the said cases and are clearly distinguishable. No assistance, therefore, can be derived by the assessee from these decisions.
13. For the aforesaid reasons, we hold that the application for admission of additional ground moved by the assessee is liable to be dismissed. We accordingly dismiss the application.