Income Tax Appellate Tribunal - Mumbai
Joint Commissioner Of Income Tax vs Sakura Bank Ltd. on 2 December, 2005
Equivalent citations: [2006]100ITD215(MUM), (2006)99TTJ(MUM)689
ORDER
Pramod Kumar, A.M.
1. This appeal is directed against CIT(A)'s order dt. 4th March, 1999, in the matter of assessment under Section 143(3) r/w Section 250 of the IT Act, 1961 (hereinafter referred to as 'the Act'), for the asst. yr. 1992-93 :
On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in directing the AO to tax the bank at the rate applicable to domestic companies @ 40 per cent and surcharge shall not be payable by it. The CIT(A) ought to have held that tax rate payable (applicable) to bank would be as per provisions of the Finance Act for foreign companies. Vide letter dt. 6th June, 2005, the present AO, i.e., Jt. Director of International Taxation, Range-B(1), Mumbai, has filed the revised grounds of appeal which are as follows :
On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the AO to tax the foreign bank at a rate applicable to domestic companies, i.e., 45 per cent, and surcharge shall not be payable by it, without appreciating the fact that:
(i) The CIT(A) ought to have held that the tax rate applicable to foreign bank would be as per the provisions of the Finance Act for the foreign companies.
(ii) The AO and the CIT(A) erroneously interpreted the provisions of law in respect of taxation of foreign companies, which has now been clarified by way of insertion of Explanation to Section 90 of IT Act, 1961, which is with retrospective effect from 1st April, 1962.
(iii) It is, therefore, prayed that the Hon'ble Tribunal decides the issue in the light of the said Explanation to Section 90 of the Act.
2. The material facts of the case, so far as the asst. yr. 1992-93 is concerned, are like this. The original assessment order under Section 143(3) was framed on 25th Jan., 1994 and, in the said order, the AO had directed that "charge income-tax @ 65 per cent, as rate applicable to foreign companies". Aggrieved by the stand so taken by the AO, assessee carried the matter in appeal before the CIT(A). The CIT(A), vide appellate order dt. 10th Jan., 1995, remitted the matter back to the file of the AO with observations as follows :
I have carefully considered the arguments of the learned counsel. The issue was discussed with the AO also. The AO has not considered the DTAA between India and Japan while charging taxes applicable to foreign companies. No reasons have been given by him as to the rate of tax chargeable from the appellant bank. In view of the provisions of the DTAA, it seems that the AO has not discussed the issue with the appellant or the appellant's learned counsel. Therefore, this issue is remanded to file of the AO for fresh consideration. The AO is directed to give opportunity of hearing to the appellant and consider the provisions of DTAA between India and Japan. After considering the appellant's arguments and the provisions of the DTAA, the AO should give reasons for charging income-tax at a particular rate on the total income of the appellant.
When the matter was so restored to the file of the AO, the AO upheld the contention of the assessee in principle and concluded as follows :
The assessee's claim and contentions seem to be in accordance with the provisions of the Act, as well as the provisions of the India Japan DTAA. Section 90(2) of the Act clearly stipulates that in such situation in relation to the assessee to whom such agreement applies, the provisions of the IT Act shall apply only to the extent they are more beneficial to the assessee. Articles 5(2) and 24(2) of the India Japan DTAA also clearly stipulate that for the taxation purposes, the enterprise of the Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith to which nationals of that other Contracting State, in the same circumstances, may be subjected. The overriding effect of the India Japan DTAA over the provisions of the IT Act is also clear from the Board circular and the case law relied upon by the assessee as above.
As such the contention of the assessee is acceptable. As such the assessee-company shall be taxed in India at the same rate as applicable to the domestic companies, i.e., 50 per cent. The assessed income will remain unchanged at Rs. 8,98,91,268.
3. The AO himself thus upheld the contention of the assessee and held that, in terms of non-discrimination clause enshrined in India Japan DTAA, the assessee was required to be taxed at the same rate at which Indian companies are taxed in India.
4. The assessee was still not satisfied. The assessee's grievance this time, however, was slightly different. The grievance was on the question whether the assessee was required to be taxed at the same rate at which a closely-held domestic' company is required to be taxed or as a 'company in which public are substantially interested'. This grievance was set out in the following grounds of appeal taken by the assessee before the CIT(A) :
The AO has erred in taxing the appellant at the rate applicable to closely-held domestic companies.
The appellant submits that considering the facts and circumstances of its case, the applicable Indo-Japanese DTAA and the law prevailing on the subject, it . ought to be taxed at the rate applicable to companies in which the public are substantially interested.
The appellant submits that the AO be directed to apply the rate of tax applicable to domestic companies in which public are substantially interested and recompute its tax liability accordingly.
5. Learned CIT(A), in his brief order and relying upon AO's orders passed on the same issue for the asst. yrs. 1994-95 and 1995-96, upheld this contention also. The operative portion of the CIT(A)'s order is as follows :
I have considered the matter carefully. In view of the facts narrated above, the assessee-bank shall be taxed in India at the same rate as applicable to domestic companies, i.e., 45 per cent and surcharge shall not be payable by it as it is a non-resident bank, referred under Section 6(3) of the IT Act.
6. Revenue is aggrieved of the order so passed by the learned CIT(A) and is in appeal before us.
7. We have heard the rival contentions at considerable length, perused the material on record and duly considered factual matrix of the case as also the applicable legal position.
8. It is important to bear in mind the undisputed position that the short issue decided by the CIT(A) in the impugned order is whether or not the assessee, if it is to be taxed on the same rate as an Indian company, should have been taxed at the rate applicable for a 'closely-held domestic company' or at a rate applicable for a 'company in which public are substantially interested'. Interestingly, however, no arguments have been advanced by the learned Departmental Representatives on this aspect of the matter.
9. The point canvassed before us by the Revenue is that the CIT(A) ought to have held that despite the non-discrimination clause in the India Japanese DTAA, the rate at which the assessee-company should have been (taxed is) the rate prescribed in the respective Finance Act for a 'company other than the domestic company'. In other words, according to the Revenue, the CIT(A) ought to have reversed the relief given by the AO himself.
10. The reason for this unusual request from the Revenue is that the relevant legal provision has since been amended with retrospective effect. The scope of Section 90 of the Act, which is the enabling provision under the Act to give relief in the cases where the Central Government has entered into an agreement with Government of any country outside India, has been curtailed by inserting an Explanation, by the Finance Act, 2001, but with retrospective effect from 1st April, 1962, which provides as follows :
Explanation-For the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy in respect of such foreign company.
The net effect of insertion of this Explanation is that the non-discrimination clauses in the Double Taxation Avoidance Agreements (DTAAs, in short) so far as they relate to non-discrimination in tax rates between domestic companies vis-a-vis foreign companies in India, have been rendered ineffective. The very section which enabled the relief being given in respect of the cases covered by the DTAAs has been amended so as to disable the relief being given on the ground of such non-discrimination. The enforceability of the non-discrimination clauses, to that extent, is not supported by any enabling provisions. These provisions thus remain academic and unenforceable in law.
11. The aforesaid Explanation was inserted by the Finance Act, 2001, whereas the impugned order was passed on 4th March, 1999. The CIT(A) obviously did not have benefit of having perused the said Explanation to Section 90. The CIT(A) therefore, by any stretch of logic, can (not) be said to have erred in not applying the said Explanation.
12. The question then arises whether, in the given situation, this Tribunal has the powers to apply the Explanation to Section 90 and hold that the assessee-company should be liable to be taxed at the rate prescribed for the 'company other than a domestic company'.
13. The answer would have posed no difficulty at all in case we were to adjudicate as to whether or not the assessee is entitled to the benefit of lower rate by the virtue of non-discrimination clause in the DTAA. That aspect has already been decided in favour of the assessee by the AO; this round of litigation is on the question as to whether the assessee is liable to be taxed on the rate applicable to a company in which public are substantially interested or applicable to a company which is closely-held company. On the face of it, therefore, the question that is being raised by the Revenue now does not arise out of the order of the CIT(A) or even that of the AO.
14. The question then arises whether the powers of the Tribunal are confined to the issues arising out of the order of the CIT(A) or, for that purpose, even the order passed by the AO.
15. We find guidance from the judgment of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 1TR 383 (SC). In this judgment, their Lordships have, inter alia, observed as follows :
The view that the Tribunal is confined only to the issues arising out of the appeal before the CIT(A) takes too narrow a view of the powers of the Tribunal [vide, e.g., CIT v. Anand Prasad and Ors. (1981) 128 1TR 388 (Del), CIT v. Karamchand Premchand (P) Ltd. (1969) 74 ITR 254 (Guj)and CIT v. Cellulose Products of India Ltd. (1985) 151 ITR 499 (Guj)(FB). Undoubtedly, the Tribunal will have the discretion to allow or not to allow such ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are already on record, we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess tax liability of the assesses.
(emphasis, italicised in print, supplied by us) Explaining the reasoning of coming to this conclusion, Their Lordships, earlier in the same order, observed as follows :
Under Section 254 of the IT Act, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with the appeals is thus expressed in widest possible terms. The purpose of assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with the law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction declined, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the CIT(A). Both the assessee, as well as the Department, have a right to file an appeal/cross-objection before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings though not raised earlier.
In the case of Jute Corporation of India Ltd. v. CIT (1991) 187 ITR 688 (SC), this Court, while dealing with the powers of the AAC, observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. 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 is no good reason to justify curtailment of power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the ITO. This Court further observed that there may be several factors justifying the raising of new plea in an appeal and each case has to be considered on its own facts. The AAC must be satisfied that the ground raised was bona fide and the same could not have been raised earlier for good reasons. The AAC should exercise discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also.
(emphasis, italicised in print, supplied by us) Clearly, therefore, the powers of the Tribunal are not confined to deal with the issues arising out of the orders of the authorities below. As long as an issue has relevance to the correct determination of taxes in respect of the year, and particularly when relevant facts can be found from the material already on record, it is open to the appellant and the cross-objector, whether assessee or Revenue, to raise that issue, provided the issue so raised is bona fide and the same could not have been raised earlier for good reasons. There is no difference between the assessee and the Revenue on this issue as both of these parties are equal parties before us and their rights are the same.
16. There is one more aspect to the matter. Can an assessee be in a position worse off, as a result of the matter being carried in appeal before the Tribunal by the Revenue, than the position the assessee was in after the assessment order ? To put it differently, can there be situations in which the assessee ends up paying more, as a result of the matter having been carried in appeal before the Tribunal, than what it would have paid if the AO's order was simply accepted by the assessee ?
17. Undoubtedly, the normal principle is that the Tribunal does not have any powers of enhancement, but this principle is not without any exceptions. There have been situations, as we will see now, where as a result of the matter having been carried before the Tribunal, there has been an enhancement of tax liability of the assessee vis-a-vis the tax liability which would have arisen if the assessee had simply accepted the order passed by the AO. It is also to be noted that in the present case there is no enhancement of income but there is an enhancement in tax liability wholly because of retrospective insertion of Explanation in Section 90 of the Act, with retrospective effect from 1st April, 1962, which restricts the application of non-discrimination clauses in the tax treaties. This situation is materially different from the cases in which the enhancement is in respect of assessed income and in which there are no retrospective amendments in legislation. The law laid down by the Hon'ble Courts in those cases will not have any application in the present case which is on these peculiar facts, including the fact about retrospective amendment in the relevant statutory provisions. It is also important to appreciate that, even according to the learned counsel, there is no blanket restriction on the powers of the Tribunal which can pass such orders "as it may think fit" but the restriction on enhancement is in the light of Judge-made law, or, to put it differently, in the light of ratio decidendi of the binding judicial precedents. In none of the cases, there was a retrospective amendment in law because of which the enhancement was to be made. In this light of the fact, and in the light of Hon'ble Supreme Court's observation in the case of GIT v. Sun Engineering Works (P) Ltd. (1992) 198 ITR 297 (SC) that "the judgment must be read as a whole and the observations from the judgment should be considered in the light of questions before the Court", it is plain on principle that those decisions will not have any application in the present context. In Pathikonda Balasubba Setty (Decd.) v. CIT (1967) 65 ITR 252 (Mys), Hon'ble Mysore High Court did hold that the Tribunal did not have powers to make an order resulting in enhancing the tax liability beyond the liability fixed by the AO but then their Lordships were not dealing with this issue in the backdrop of the amendment in the relevant legal provision itself in between the point of time when the issue was decided by the AO and the point of time when the matter came up before the Tribune which has happened in the present case. In any event, even as a result of the correct rate of tax being applied in case we are to uphold the contention of the Revenue, the assessee's tax liability will not be beyond- the tax liability determined by the AO in the assessment order under Section 143(3) of the Act as framed by him originally. In the case of State of Kerala v. Vijay Stores (1979) 116 ITR 15 (SC), Hon'ble Supreme Court has laid down that in the case of assessee's appeal, and in the absence of cross-objection or cross-appeal, an assessee cannot be worse off as a result of his having carried the matter in appeal before the Tribunal. It was materially the same issue before the Hon'ble Allahabad High Court in the case of Pahulal Ved Prakash v. CIT (1990) 186 ITR 589 (All) and their Lordships came to the conclusion that "it is settled that the Tribunal, while dealing with an appeal, in the absence of any cross-appeal or cross-objection, cannot give a finding adverse to the appellant which would make his position worse than it was under the orders appealed against". That is not even the situation before us. Revenue is in appeal and the real issue is whether as a result of Revenue's appeal being allowed, assessee can be worse off vis-a-vis the position that he would have been in, in the event of his not challenging the assessment order in appeal at all-irrespective of whether or not the relevant legal provision has been subjected to the retrospective amendment.
18. In the case of Hukumchand Mills Ltd. v. CIT (1967) 63 ITR 232 (SC). Hon'ble Supreme Court did observe that "the words 'pass such orders as the Tribunal thinks fit' include all the powers (except possibly the powers of enhancement) which are conferred upon the AAC by Section 31 of the Act". This issue came up before the Hon'ble Supreme Court in the case of CIT v. Assam Travel Shipping Service (1993) 199 ITR 1 (SC) and Their Lordships having taken note of Hukumchand Mills' case (supra), observed that "The expression 'as it thinks fit' is wide enough to include the powers of remand to the authority competent to make the requisite order in accordance with the law in such a case, even though the Tribunal itself could not have made the order enhancing the penalty". This is also thus clear that the Tribunal does not have powers of enhancement, even though, in fit cases, it can remit the matter to the file of the CIT(A) or the AO for deciding the matter in accordance with the law irrespective of whether or not the order so being passed in accordance with the law may result in enhancement. There can be thus situations in which the assessee ends up paying more, as a result of the matter having been carried in appeal before the Tribunal, than what it would have paid if the AO's order was simply accepted by the assessee. One such example is the situation that the Hon'ble Supreme Court was in seisin of in the case of Assam Travel Shipping Service (supra). In that case, the assessee was imposed penalty of Rs. 6,944 under Section 271(l)(a) which was less than the minimum penalty of Rs. 65,700 which could have been imposed on the facts of that case. The first appellate authority cancelled the penalty order on the ground that the penalty imposed is not in accordance with the law. When the matter travelled in appeal before the Tribunal, a view was taken that the penalty imposed by the AO "was not in accordance with the law and since the Tribunal had no rights to enhance the penalty, there was no alternative but to set aside the order of penalty imposed by the ITO and, in that view, the Tribunal upheld the order of the AAC (i.e., the first appellate authority)". While Hon'ble Gauhati High Court upheld this stand of the Tribunal, Hon'ble Supreme Court did not do so. Their Lordships, on the facts of this case, observed that "The expression 'as it thinks fit' is wide enough to include the powers of remand to the authority competent to make the requisite order in accordance with the law in such a case, even though the Tribunal itself could not have made the order enhancing the penalty". In the light of these discussions, we are of the considered opinion that the Tribunal is not always prevented from passing orders which may result in enhancement of the assessee's tax liability beyond the tax liability determined by the AO. In other words, it is not always necessary that as a result of the proceeding following assessee having been carried in appeal, the assessee cannot be worse off vis-a-vis the position in the event of his having simply accepted the order which is so carried in appeal. The rule preventing enhancement of assessee's tax liability, beyond the liability fixed by the AO, is not universal and without exceptions to the said rule.
19. The reason for Revenue not taking up this plea earlier is the retrospective amendment in law. There can (sic-not) be any lack of bona fides in this reason; nobody can be expected to have the clairvoyance of knowing as to what the amendments in the statute will be in future. When the law so permitted, the AO happily gave the relief prayed for. The legal position has changed now. The appellate proceedings are still on and there cannot be any excuse for any appellate authority to decide the issue in any manner except in accordance with the law as is in existence at the point of time, for the relevant assessment year, when the appeal is being heard. The appeal before us, even in original grounds of appeal, seeks us to decide what is correct rate of tax chargeable on the income of the appellant. If the correct rate of tax is the rate which neither the AO nor the CIT(A) has applied, we have no option except to remit the matter to the file of the AO to decide in accordance with the law.
20. We are aware that on 10th Jan., 1995, the CIT(A) sent the matter back to AO for deciding the matter de novo in the light of the applicable tax treaty provisions and observed that the AO is "directed to give opportunity of hearing to the appellant and consider the provisions of DTAA between India and Japan", and the Revenue preferred not to file an appeal against the matter being so set aside to the file of the AO. Today, a decade later, and enlightened by the retrospective amendments in law, the Revenue seeks to do what it missed out at that point of time. One of the learned counsel's contention before us is that in case Revenue is allowed to de facto challenge that order of the CIT(A) in this round of proceedings, the time-limits set out in the Act for filing of appeals will become redundant.
21. We do not think this contention is tenable in law either, particularly in the light of judgment of Hon'ble Bombay High Court in the case of Inventors Industrial Corporation Ltd. v. CIT (1992) 194 ITR 548 (Bom) and of Hon'ble Calcutta High Court in the case of CIT v. Shree Ganesh Jute Mills Ltd. (1977) 109 ITR 562 (Cal). In the case of Inventors Industrial Corporation Ltd. (supra), the assessment proceedings were reopened under Section 147 of the Act and, aggrieved by the assessment order so passed by the AO in the reassessment proceedings, assessee carried the matter in appeal before the first appellate authority on the question of merits of the addition of Rs. 1,16,184 made by the AO in the reassessment proceedings as cash credit. The validity of reassessment proceedings was not called into question. In this round of appellate proceedings, the assessment was set aside to the file of the AO for examination de novo after giving yet another opportunity of hearing to the assessee to present its case. However, when the addition was, even after giving yet another opportunity of hearing to the assessee, reiterated by the AO, the assessee was again in appeal before the AAC. The addition was challenged on merits and an additional ground was taken on the issue of reopening of assessment under Section 147 of the Act. The AAC admitted and allowed this additional ground and the assessment was thus cancelled. The Tribunal, however, reversed this action of the AAC by holding that in the second round of proceedings, it was not open to the AAC to consider the question of validity of reassessment proceedings when the assessee failed to question the same at the time of filing appeal against the original reassessment order. When the assessee's grievance against Tribunal's order so reversing the relief given by the AAC, came up before the Hon'ble Bombay High Court, their Lordships upheld the action of the AAC and reversed the order of the Tribunal. Their Lordships also took note of the judgment of Hon'ble Calcutta High Court in the case of CIT v. Shree Ganesh Jute Mills Ltd. (supra) which lays down that any ground, not necessarily a ground pertaining to jurisdictional aspect, could be taken up for the first time before the AAC in the second round of proceedings. In the case of Shree Ganesh Jute Mills Ltd. (supra), Hon'ble Calcutta High Court has held that "the tax has to be assessed in accordance with the provisions of the Act" and "it is duty of the Revenue authorities to comply with the provisions of the Act". It was for this reason that their Lordships of Hon'ble Calcutta High Court were of the considered view that "the appellate authorities were justified in allowing the assessee to take the said new plea". In case we are to adopt a hyper-technical approach and we decline to go into the question as to whether the tax rate applicable on foreign companies could at all be different from the rate prescribed under the respective Finance Act, it will result in a situation that the rate at which the assessee-company will be levied tax, in terms of this order, will be a rate not in accordance with the provisions of the Act. In the light of the judicial precedents discussed above, it is not open to allow that absurd situation to arise, nor can we adjudicate on the questions which are absolutely academic in view of the clear legal position as it is at present. We have to decide the matter in accordance with the law as it exists at the point of time when we are deciding the matter. Revenue is not precluded from raising the legal objection in this round of proceedings because it did not do so in the first round of proceedings.
22. Learned counsel's defence was three-fold-first, that it is not open to Revenue to appeal against the assessment order passed by the AO but then if we adjudicate on the Revenue's contention that the rate of tax applicable for the foreign companies has to be as per the Finance Act, Revenue will end up challenging, in appeal, the order passed by the AO; second, the jurisdiction of the Tribunal is confined to the subject-matter of appeal which can be determined by finding out what the CIT(A) has expressly or impliedly decided; and third, that Tribunal has no powers of enhancement.
23. We have dealt with all these issues earlier in this order. We may now deal with the remaining, contentions on these issues. A lot of emphasis is also laid on the judgment of Hon'ble Allahabad High Court in the case of G.D. Rathi Steels & Gases (P) Ltd. v. Commr. of Trade Tax 115 STC 491 (All) wherein Hon'ble High Court has held that "it is unimaginable that though the law does not allow the CIT to challenge the assessment order in first appeal, he can do so by preferring a second appeal before the Tribunal" and that "right of an appellant is restricted to challenge the order... and not to revert back to the assessment order that were not subject-matter of appeal...". Learned counsel has also invited our attention to para 4.19 at p. 89 of the Report of Direct Taxes Administration Enquiry Committee, 1958-59. This highlights the fact that the Tribunal does not have powers of enhancement of assessment. In our considered view, these contentions are also devoid of legally sustainable merits. As for learned counsel's reliance on G.D. Rathi Steels & Gases (P) Ltd.'s case (supra), this case deals with Revenue's challenge to the assessment order on a factual aspect regarding concealed turnover which was accepted by the AO at the assessment stage but questioned again by the AO at the time of second appeal to the Tribunal. Hdn'ble Allahabad High Court held that "the CIT's appeal to the extent of challenging the turnover as determined by the AO was not maintainable in law and the Tribunal had no jurisdiction to entertain such ground...". This was a factual aspect of the matter. The issue before us is a legal issue on the undisputed facts of the case and Hon'ble Allahabad High Court has, in the very same judgment and referring to the Hon'ble Supreme Court's judgment in the case of National Thermal Power Co. Ltd.'s case (supra), observed that "this authority...deals with the question of the power of the Tribunal to entertain a new question of law arising from the facts found by the IT authorities and having a bearing on the tax liability of the assessee" and that "it was held that the Tribunal had power to allow such ground to be raised". Unlike the issue before Hon'ble Allahabad High Court, the case before us is also a purely legal issue arising out of the facts found by the tax authorities and having bearing on the tax liability of the assessee. The material facts thus not being in pan materia, the observations made by the Hon'ble Allahabad High Court are not relevant in the present context. To quote from the Hon'ble Supreme Court's oft quoted landmark judgment in the case of CIT v. Sun Engineering Works (P) Ltd. (supra), "it is neither desirable nor permissible to pick up a word or a sentence from the judgment of this Court, divorced from the context of question under consideration and treat it to be complete law declared by this Court" and "the judgment must be read as a whole and the observations from the judgment should be considered in the light of questions before the Court". Viewed in this perspective, the assessee does not get any assistance from Hon'ble Allahabad High Court's aforesaid judgment. Learned counsel's reliance on the Report of Direct Taxes Administration Enquiry Committee is also of no assistance to his case because it only deals with enhancement of assessment and not enhancement of tax liability and also because the reason given in this report is that "the Tribunal is the final fact-finding authority and no remedy is provided to the assessee for going in appeal on question of fact arising out of its decisions". That is not the case here. We are dealing with a purely legal question which, on being decided in accordance with the law, could result in enhancement of tax liability vis-a-vis the tax liability as a result of appeal effect order but neither there is an enhancement of income, nor there is an enhancement in the tax liability vis-a-vis the tax liability determined by the AO in the assessment order under Section 143(3) of the Act as framed by him originally.
24. For the reasons set out above, we deem it fit and proper to vacate the order of the CIT(A) which is not in accordance with the correct legal position now in force. The matter shall now be sent back to the AO for fresh adjudication in accordance with the law. While doing so, he will give due and fair opportunity of hearing to the assessee and decide the matter by way of a speaking order.
25. The appeal filed by the Revenue is allowed for statistical purposes in the terms indicated above.