Andhra Pradesh H.C : ITAT can examine the correctness of the finding of the CIT( appeal) but cannot travel beyond the said question.

High Court Of Andhra Pradesh

S.A. Rahim Vs. CIT

Assessment Year : 1985-86

Section : 69A

B. Prakash Rao And R. Kantha Rao, JJ.

I.T.T.A. Nos. 67 & 84 Of 2000 And 2 & 5 Of 2001

August 27, 2010

JUDGMENT

R. Kantha Rao, J. – These appeals are filed under section 260A of the Income-tax Act, 1961. Since the challenge to the orders passed by the Income-tax Appellate Tribunal, Hyderabad, “B” Bench at Hyderabad is on the same grounds and in view of the fact that the substantial questions of law for determination by this court being one and the same in all the appeals, they are being disposed of by the following common judgment.

2. We have heard the learned counsel appearing for the assessees and the Department.

3. For the sake of convenience, the appellants/assessees will be referred to by their names.

4. In all the cases, the assessment relates to the year 1985-86. While making assessment under section 143(3) read with section 250 of the Income-tax Act, the assessing authority made addition of the following amounts to the income of the assessees under section 69A of the Income-tax Act.

An amount of Rs. 2,06,500 was added in respect of assessment relating to S. Furkhan Ahmed, an amount of Rs. 1,22,500 was added in respect of assessment of Smt. Akhtharunnisa Begum, an amount of Rs. 2,06,000 was added in respect of assessment of Sri S. A. Raheem and an amount of Rs. 1,54,000 was added in respect of assessment of Sri Quaid Ali Quereshi.

5. The said amounts were claimed by the assessees as the sale proceeds of cattle, sheep and goats which they were possessing. The assessees in their income-tax returns had shown the said amounts as the sale proceeds of the cattle, sheep and goats belonging to them and claimed exemption from income-tax. At the instance of the assessees, reassessment was ordered by the Commissioner of Income-tax (Appeals), Vijayawada. The Assessing Officer while making reassessment examined some witnesses and after conducting the enquiry, the Assessing Officer negatived the contention of the assessees on the ground that they failed to prove the possession and sale of cattle, sheep and goats by adducing clinching evidence and consequently treated the aforesaid amounts as unexplained income under section 69A of the Act.

6. Feeling aggrieved, the assessees filed appeals before the Commissioner of Income-tax (Appeals), Vijayawada. The appellate authority accepted the contention of the assessees on a consideration of the depositions and the affidavits of the witnesses and arrived at the conclusion that the amount derived from sale of cattle, sheep and goats had been proved by the assessees and accordingly passed the order deleting the addition of the abovementioned amounts made by the Assessing Officer. Thereafter, the Department filed appeals before the Income-tax Appellate Tribunal, Hyderabad “B” Bench, Hyderabad. The orders of the said Tribunal are impugned in the present appeals.

7. The Income-tax Appellate Tribunal upheld the finding recorded by the Commissioner of Income-tax (Appeals) as regards the factum of possession of cattle, sheep and goats and the sale by the assessees. However, the learned Tribunal held as follows :

“But what is lacking in this case is the real sale price of the cattle sold and the assessees have not placed any documentary evidence to show that the cattle was in fact sold for the amounts claimed by them, except oral assertions by the witnesses and the assessees, there is no material available on record to prove the sale price.”

8. On the said analogy, the learned Tribunal declined to accept the sale price stated by the assessees and the witnesses but having accepted the possession and sale of the cattle, sheep and goats, reduced the sale price to half of the amount claimed by the assessees. The said order is the subject-matter of the challenge in the present appeals.

9. The appeals are admitted basing on the following substantial questions of law raised by the appellants :

1. Whether in the facts and the circumstances of the case, the Tribunal is correct in law in adjudicating upon an issue which was not the subject-matter before the lower authorities and thus going beyond its jurisdiction?

2. Whether in the facts and the circumstances of the case, the Tribunal is correct in law in giving a decision suo motu on an issue which was not agitated by the Department in the grounds of appeal raised and making out a new case for the Department ?

3. Whether in the facts and the circumstances of the case, the Tribunal is correct in law in upholding part of the addition without any basis, ignoring the material evidence available on record ?

10. It has been contended by the learned counsel appearing for the assessees/appellants that the Assessing Officer accepted the similar evidence adduced by one Ghouse Mohiuddin with regard to rearing of the animals and sale thereof and exempted the sale proceeds. But in the case of the present assessees, the Assessing Officer rejected the same kind of evidence. It has been further contended that the Income-tax Appellate Tribunal having accepted the finding recorded by the Commissioner (Appeals) that the possession of cattle, sheep and goats and the sale by the assessees is genuine, erroneously reduced the value of the sale proceeds claimed by the assessees. According to the learned counsel the issue before the Income-tax Appellate Tribunal was only whether the possession of cattle, sheep and goats and their sale by the assessees was proved or not, but not the actual sale price and therefore, the learned counsel would submit that the decision rendered by the Income-tax Appellate Tribunal is outside the scope of its jurisdiction and the same is liable to be set aside in these appeals. In support of his contention, the learned counsel relied upon the following decisions :

(1) CIT v. Krishna Mining Co. [1977] 107 ITR 702 (AP) (Appex) wherein the Division Bench of this court held as follows (page 708) :

The grant of any such relief cannot be justified on the ground that section 33(4) of the Act enables the Tribunal to make any order that it thinks fit. We are not inclined to take any such view of that sub-section. Plainly, some limit, apart from the limit which the word ‘thereon’ puts upon it, must be placed upon the generality of the words used. No one can suppose that the Legislature intended to create a dictatorship in the Tribunal, if and whenever an appeal happened to be brought before it under this section. It is equally incredible that the sub-section should have been intended to give the Tribunal power to make any order it thinks fit relating to the assessment or transactions concerning it in general, or even in a case brought before it in particular, without any regard to the subject-matter of the appeal. The sub-section, after all, is not dealing with the powers of the Appellate Tribunal as such. It is dealing with its powers as an Appellate Tribunal exercising quasi-judicial functions and the order which the Tribunal may make as such. Hence, the Tribunal’s decisions must be confined, as in the case of other judicial or quasi-judicial Tribunals, to the questions brought before it on the appeal, and it must not travel outside it.”

(2) Deepak Nitrite Ltd. v. CIT [2008] 307 ITR 289 / 175 Taxman 230 (Guj.) wherein the Division Bench of the Gujarat High Court held as follows (page 296) :

The Tribunal failed to appreciate that at no stage was the issue of quantification ever in dispute between the parties. The Assessing Officer had categorically recorded that for the reasons stated in his order the claim of loss ‘is not acceptable and the same is ignored in the computation of income.’ If the Assessing Officer had not undertaken quantification of the loss, the Commissioner (Appeals) had not undertaken such an exercise as there was no ground raised by the Revenue before the Tribunal in the appeal, the Tribunal on its own could not have undertaken the said exercise without first deciding the controversy brought before it by the parties, more particularly, the appellant. Merely because during the course of argument some contentions were raised as to whether detachable warrants had any cost or not was not sufficient for the Tribunal to embark upon such an exercise in the absence of any controversy between the parties. The Tribunal failed to appreciate that in the absence of any exercise of quantification by the Assessing Officer there was no occasion for the assessee to carry the matter any further and therefore the said issue could not arise out of the order of the Commissioner (Appeals). Once that was the position the Tribunal could not have taken it upon itself to raise the issue and decide the same which did not properly arise out of the order of the Commissioner (Appeals) as no ground could be taken by either side in the absence of any findings by the Commissioner (Appeals).”

11. In the instant cases also from the inception the issue was only whether the assessees possess any cattle, sheep and goats and they sold them out. The sale price of the cattle, sheep and goats was not disputed at any point of time. The findings recorded by the authorities below reflected only as to the genuineness or otherwise of possessing of cattle, sheep and goats and their sale by the assessees. The Commissioner of Income-tax (Appeals) believed the evidence adduced by the assessees and held that the transactions of sale of cattle, sheep and goats claimed by them is genuine. The Income-tax Appellate Tribunal is only supposed to examine the correctness of the said finding in the appeal but it cannot travel beyond the said question.

12. However, the learned counsel appearing for the Department in support of his contention that the Income-tax Appellate Tribunal is empowered to pass any order while disposing of the appeal, relied upon the following decisions :

(1) CIT v. Assam Travels Shipping Service [1993] 199 ITR 1/ 67 Taxman 269 (SC) wherein the Apex Court held that (headnote) :

“the power of the Appellate Assistant Commissioner under section 251(1)(b) included the power even to enhance the penalty subject to the requirement of sub-section (2) of section 251 after giving a reasonable opportunity to show cause against the enhancement; and the Appellate Assistant Commissioner was wrong in taking the view that he had no power to enhance the penalty in accordance with law;

(ii) That the expression ‘such orders thereon as it thinks fit’ under section 254(1) was wide enough to include the power of remand to the authority competent to make the requisite order in accordance with law even though the Tribunal could not have made an order enhancing the penalty;

(iii) That, therefore the Tribunal was not justified in holding that it had no alternative except to affirm the order of the Appellate Assistant Commissioner cancelling even the lesser penalty imposed by the Income-tax Officer.”

(2) Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688 /[1990] 53 Taxman 85 (SC) wherein the Apex Court held that (headnote) :

“. . . since the tax liability was admitted, the Income-tax Officer was afforded an opportunity of being heard and the appellant’s claim was based on the settled view of the law, the Appellate Assistant Commissioner had jurisdiction to permit the appellant to raise the additional ground.

Since the ordinary procedure for calling for a statement of the case and thereupon decide the matter afresh would be time consuming, the Supreme Court granted special leave against the order of the Tribunal, set aside the order and remitted the matter to the Tribunal to consider the merits of the deduction claimed.”

13. The above two judgments rendered by the Apex Court are in a different context than that of the situation in the present appeals. In the present appeals as already pointed out, there was absolutely no basis for the Income-tax Appellate Tribunal to reduce the sale price to half of the amount claimed by the assessees. The Commissioner of Income-tax (Appeals) accepted the entire transactions as genuine and therefore, the question which the Income-tax Appellate Tribunal could go into was only whether the sale transactions were genuine or not, but not as to the sale price. These matters relate to the assessment year of 1985-86. At this length of time, if the matters are remitted to the assessing authority for making fresh assessment, it causes undue hardship and lot of inconvenience to the assessees. Further no documentary evidence could be produced in respect of sale of cattle, sheep and goats. The version of the assessees and their witnesses was believed by the Commissioner of Income-tax (Appeals) and a finding was rendered on the said issue. If there is no basis for such finding, the learned Income-tax Appellate Tribunal can set aside the same, but it is not supposed to make out a third case and arbitrarily reduce the sale price claimed by the assessees. In the absence of any criteria to reduce the sale price to half of the amount claimed by the assessees, we have to necessarily hold that such an exercise by the Income-tax Appellate Tribunal is unwarranted and without jurisdiction.

14. On the aforesaid analysis and reasoning, the orders passed by the Income-tax Appellate Tribunal impugned in these appeals are set aside and the appeals are allowed. There shall be no order as to costs.

[Citation : 333 ITR 379]

Leave a Reply

Your email address will not be published. Required fields are marked *