High Court Of Gujarat
CIT vs. P.B. Corporation
Section 254(1), CPC Order 41, R. 33,
Asst. Year 1979-80, 1980-81, 1981-82, 1982-83, 1983-84
M.S. Shah & A.M. Kapadia, JJ.
IT Ref. No. 88 of 1992
15th January, 2004
Counsel Appeared :
Manish R. Bhatt, for the Petitioner : None, for the Respondent
JUDGMENT
M.S. Shah, J. :
In this reference at the instance of the Revenue, the following question is referred for our opinion in respect of asst. yrs. 1979-80 to 1983-84 :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in restoring the matter to the AAC for fresh decision of the appeals when the assessee had not filed any appeal against the additions which have been sustained by the AAC?”
We have heard Mr. M.R. Bhatt, learned standing counsel for the Revenue. Though served, none appears for the respondent-assessee. During survey operations under s. 133A of the IT Act, 1961, the ITO came to know that the assessee carried on business in medicines on wholesale basis and that the assessee also maintained books of accounts but they were not produced before the Inspector during survey. Information was also received that the assessee-firm consisted of four partners carrying on business of manufacture and sale of plot and that the yarn was also purchased. Notices under s. 148 were issued to the assessee to file returns. The assessee filed returns declaring income of Rs. 12,800, Rs. 15,870, Rs. 16,473, Rs. 12,770 and Rs. 15,225 for asst. yrs. 1979-80 to 1983-84, respectively. Notices under ss. 142(1) and 143(2) were not complied with and as such the AO estimated the total income at Rs. 65,000, Rs. 75,000, Rs. 80,000, Rs. 65,000 and Rs. 75,000, respectively. The assessee filed appeals before the AAC. The assessee did not appear and as such the appeals were heard ex parte by the AAC.
The AAC reduced Rs. 20,000 from the amount assessed by the ITO for each year and directed the ITO to assess the income at Rs. 45,000, Rs. 55,000, Rs. 50,000, Rs. 43,000 and Rs. 55,000, respectively.
Aggrieved by the above orders, the Revenue went in appeal before the Tribunal. The assessee did not appear and the Tribunal heard and decided the appeals after taking notice of the fact pointed out by the Departmental Representative that in the case of sister concern IBP Corporation, on identical facts, similar assessments were made, the AAC passed similar orders and the Tribunal in the Departmental appeals restored the matter to the ITO with a direction to obtain on record some concrete material for estimating the income and then make assessments.
In view of the above, when the Tribunal found that the facts were identical, the Tribunal set aside the orders of the AAC. However, instead of restoring the matter to the AO, the Tribunal thought it fit to restore the matter to the AAC so that the litigation is shortened. The Tribunal accordingly disposed of the appeals after restoring the matters to the AAC with a direction that the AAC would obtain some material on record which would form basis for estimating the income and then decide the appeals finally, of course, after giving reasonable opportunity of being heard to both the assessee as well as to the ITO and also after giving them opportunity to bring relevant material on record.
Mr. M.R. Bhatt learned counsel for the Revenue has submitted that it was the Revenue which was aggrieved by the orders of the AAC. The assessee had not filed any appeal against the orders of the AAC and, therefore, the Tribunal ought to have proceeded on the footing that the assessee was not aggrieved by the order of the AAC assessing the income at Rs. 45,000, Rs. 55,000, Rs. 50,000, Rs. 43,000 and Rs. 55,000 respectively for the five assessment years in question and, therefore, the Tribunal ought to have considered the controversy only in respect of the difference between the assessments made by the ITO and the assessments made by the AAC. Mr. Bhatt submitted that by setting aside the entire order of the AAC, the Tribunal has given a fresh innings to the assessee although he had not filed any appeal against the orders of the AAC. Sec. 254(1) of the IT Act, 1961, confers the following appellate powers on the Tribunal: “The Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.”
At this stage, we may also note the provisions of Order 41, r. 33, CPC which read as under: “33. Power of Court of Appeal—The Appellate Court shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the Court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have filed any appeal or objection and may, where there have been decrees in cross-suits or where two or more decrees are passed in one suit, be exercised in respect of all or any of the decrees, although an appeal may not have been filed against such decrees: Provided that the Appellate Court shall not make any order under s. 35A, in pursuance of any objection on which the Court from whose decree the appeal is preferred has omitted or refused to make such order.”
It is clear that the Appellate Court can pass appropriate orders and the appellate powers may be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have filed any appeal or objection against the order giving rise to the appeal. Apart from the fact that the provisions of s. 254(1) confer very wide powers on the appellate Tribunal, there is nothing in the provisions of the IT Act, which would have the effect of nullifying the provisions of Order 41, r. 33, CPC, or the principle underlying the said provision that the appellate Court may pass such order or decree as the case may require and this would also include passing orders in favour of any of the respondents although such a respondent may not have filed any appeal or objection.
In the facts of the instant case, the AO exercised powers under the provisions of s. 144 because the notices under ss. 142(1) and 142(2) of the IT Act were not complied with by the assessee and the ITO substantially enhanced the assessment for the concerned five years. Once the Tribunal found that there was no warrant for assessing the income at the particular amounts mentioned hereinabove, it was but natural that the entire matter was required to be kept at large and to permit the parties to lead evidence. In this set of circumstances, the assessee could not have been tied down to the amounts assessed by the AAC and the Tribunal, therefore, rightly set aside the assessment orders passed by the AAC as well.
The question whether the matters should have been remanded to the AAC or to the ITO, need not detain us because in the first place the assessee is not aggrieved by the orders of the Tribunal and has not sought any reference and secondly the Tribunal directed the AAC to permit both the parties to bring relevant material on record and to give them an opportunity of hearing and thereafter to decide the appeals. Hence, for all practical purposes, there would be no material difference, whether the matter is remanded to the ITO or to the AAC.
10. In view of the above discussion, we answer the question in the affirmative i.e., in favour of the assessee and against the Revenue.
The reference accordingly stands disposed of.
[Citation : 266 ITR 548]
