High Court Of Uttarakhand
Deep Kukreti vs. CIT
Section 48, 246A
K.M Joseph, C.J. And Sudhanshu Dhulia, JJ.
IT Appeal Nos. 40 & 41 Of 2014
August 19, 2014
JUDGMENT
K.M. Joseph, CJ. – Since common questions arise in these appeals, we deem it proper to dispose of the same by the following common judgment.
2. Appellants were co-owners of an ancestral property situated at Niranjanpur, Dehradun. The land was sold for a total consideration of Rs. 7,36,07,624/-. The cost of acquisition was taken at Rs. 2,70,000/- per bigha. The Assessing Officer found that the prescribed circle rate for agricultural land, as on 01.04.1981, in the area was ranging from Rs. 7,000/-to Rs. 8,000/- per bigha. The amount is taken as Rs. 2,70,000/- per bigha by the assessee as cost as on 01.01.1981. The Sub-Registrar, Dehradun, intimated in response to notice under Section 136 of the Income Tax Act that the cost was Rs. 7,000 to Rs. 8,000/- per bigha as on 01.01.1981. The assessees were asked to show-cause as to why the cost of land should not be taken at Rs. 8,000/- per bigha and capital gain be calculated on that basis. On the date fixed for hearing, appellants gave their acceptance for applying the rates for cost of acquisition of land at Rs. 8,000/- per bigha. On the said basis, the rate was applied; the cost was worked out; and there is resultant assessment on the capital gains.
3. There is no dispute that there was a communication in writing signifying the assent of the appellants for the cost being determined at Rs. 8,000/- per bigha in place of Rs. 2,70,000/- per bigha, as sought to be made out in the return of the appellants assessees. According to the appellants, this was agreed to on the condition that there would be no penalty proceedings and it was for buying peace that the said concession was made. However, proceedings were taken to impose penalty under Section 271(1)(c). Thereupon, appellants had preferred appeals before the Commissioner of Income Tax under Section 246A of the Income Tax Act. There was delay in filing the appeals. The Commissioner of Income Tax took the view that there was no explanation for the delay and the appellants are not aggrieved persons. Even though the matter was carried before the Tribunal, the Tribunal affirmed the order of the Commissioner of Income Tax. It is feeling aggrieved by the same that the appellants are before us.
4. We have heard the learned counsel for the appellants and the learned counsel for the revenue.
5. The following are the substantial questions of law, which are purported to be raised in the memorandums of appeals (extracted from Income Tax Appeal No. 40 of 2014):
“(i) Whether the Appellant having accepted the estimated fair market value as on 01.04.1981 @ Rs.8000 per bigha and consequential addition of Rs.10,59,890 in computation of taxable capital gains, subject to specific condition that no penalty u/s 271 (1)(c) would be imposed in relation to addition, on subsequent imposition of penalty, the ITAT was right in holding that the appeal against the quantum u/s 143(3) dated 26.08.2009 was not maintainable as the appellant was not really aggrieved against assessment?
(ii) Whether the Tribunal was right in upholding the findings of CIT (A) that the appeal filed by the assessee against the assessment order simultaneously with appeal against penalty order on 09.04.2010 was not in time and was barred by limitation, ignoring that cause of action (grievance) had arisen with the imposition of penalty u/s 271(1)(c) on 19.03.2010?
(iii) Whether the ITAT was right in not condoning the delay in preferring the appeal before CIT (A) against 143 (3) order ignoring the sufficient cause for not preferring the appeal within limitation?”
6. Mr. Suyash Agarwal, learned counsel for the appellants, would submit that, in the matter of appeal, which is a creature of statute, which in this case is Section 246A of the Income Tax Act; the Legislature has assured a right of appeal against an order passed as in this case and the said right of appeal cannot be whittled down or destroyed by the alleged concession, which was made by the assessees. In fact, he would submit that, before the Commissioner of Income Tax, the assessees supplied material to show that the value, as determined by the Assessing Officer, though based on the concession, was not correct. As far as the question of delay is concerned, he would submit that the delay was explained under the circumstances of the case. He would also point out that, contrary to what was agreed, penalty proceedings were commenced and, in fact, levied, which formed the basis for the appeals being lodged.
7. Per contra, Mr. H.M. Bhatia, learned counsel for the revenue, would submit that no ground is made out to interfere with the order impugned. He would also draw the attention of this Court to the unreported judgment of this Court in support of his contention.
8. Section 246A of the Income Tax Act, undoubtedly, provides for a right to appeal against an order of the nature, which we are dealing with. But, Section 246A provides a right of appeal only to a person, who is aggrieved. We may also advert to Section 96 of the Code of Civil Procedure. In Section 96 of the Code of Civil Procedure, appeal is provided against the decrees as provided therein. Section 96 also provides, however, that no appeal will lie against a consent decree. But, it is well settled that, under Section 96, an appeal can be maintained by any aggrieved party with the leave of the court. In Section 246A, right of appeal is carved out only in favour of a person, who is aggrieved. We are of the view that these words are placed in the Section with a definite purpose to rule out appeals in cases, where the parties are really not aggrieved.
9. This question has come up before various courts. In the case of Sterling Machine Tools v. CIT [1980] 123 ITR 181 a Division Bench of the Allahabad High Court considered the question, whether an appeal lies in a situation, where a partner of an assessee firm agreed to the cost of the machine being worked out on the basis of the experts’ report and the appeal could be maintained by the firm against an order of the Income Tax Officer in working out the profit on the sale of those machines by deducting the cost price, as is worked out by the experts, from the sale price. Noticing that the partner had agreed to the cost price being worked out as worked out by the experts, the court took the view that the Tribunal was right in holding that no appeal lay to the Commissioner under Section 246(c) of the Income Tax Act.
10. Again, in the case of Rameshchandra & Co. v. CIT [1987] 168 ITR 375/35 Taxman 153 a Division Bench of the Bombay High Court was dealing with a case of an assessment on the basis of admission by the assessee. The court, in fact, took the view that, where an assessee has made a statement of facts, he can have no grievance if the taxing authority taxes him in accordance with that statement and, if he can have no grievance, he can file no appeal. Interestingly, it is further held as follows:
“Therefore, it is imperative, if the assessee’s case is that his statement has been wrongly recorded or that he made it under a mistaken belief of fact or law, that he should make an application for rectification to the authority which passed the order based upon that statement. Until rectification is made, an appeal is not competent.”
11. No doubt, in the case of Gauri Sahai Ghisa Ram v. CIT [1979] 120 ITR 338/2 Taxman 245 a Division Bench of the Allahabad High Court took the view that an appeal could be maintained despite a concession made by the assessee. It is interesting to notice the facts of the said case. There, the firm was filing its return on the basis of the accounting year being Dussehra to Dussehra. A partner died. The succeeding firm adopted the financial year as the accounting year. The assessment was made on the basis of the assessee’s concession. The court took the view that separate assessments should have been made on the old firm up to the previous year and for the period prior to the death of the partner and the single assessment for the entire period could not be made. It is, in the said context, that the court took the view that the contention of the revenue that no appeal lies against the assessment order because it is based on concession could not be accepted. In fact, it is noticed that no such objection was raised before the appellate Commissioner or the Tribunal. We find that, more importantly, the court noted that the assessee was an aggrieved person because the assessment was framed by the Income Tax Officer on a concession wrongly made on question of law. We find that the said judgment is clearly distinguishable.
12. We notice further that in the case of Chhat Mull Aggarwal v. CIT [1979] 116 ITR 694 a Division Bench of the Punjab & Haryana High Court had an occasion to consider the question as to whether an appeal will lie in the following circumstances:
“During the previous year relevant to the assessment year 1970-71, the assessee had invested a sum of Rs. 83,042 in the construction of a house. The S.D.O., P.W.D., estimated the cost of construction as Rs. 87, 668 and the Income-tax Inspector gave the cost of construction as Rs. 1,06,846. The I.T.O. made an addition of Rs. 15,000 as being the assessee’s unexplained investment in house property, after noting that the assessee had agreed to the addition. On appeal to the AAC, the assessee contended that the construction of the house was completed only during the year ending March 31, 1971, that the total cost of construction was Rs. 98,152, that since he had actually spent Rs. 15,000 over and above Rs. 83,000, he agreed to the addition of Rs. 15,000 but did not understand that as a consequence of this agreement the amount would be added to his income for the assessment year 1970-71. The AAC allowed the appeal of the assessee and deleted the addition of Rs. 15,000. On further appeal, the Tribunal reversed the order of the AAC on the ground that the cost of construction of the house was irrelevant to the issue before the AAC and that, in the absence of a rectification application or an affidavit explaining the circumstances which misled the assessee to give his consent to the addition, the very appeal before the AAC was incompetent.”
13. It is, in the said facts, that the court took the view that it cannot be held as a matter of law that the remedy of appeal cannot be availed of by the assessee without having filed a rectification application before the Income Tax Officer. It is, further, held that the assessee was able to convince the Commissioner that the admission made by him was not binding on him and was made under a misapprehension that the amount of Rs. 15,000/- was being added for the subsequent assessment year and the Commissioner was right in reversing the order of the Income Tax Officer. It is further more important to notice the following discussion:
“There is no provision in the I.T. Act whereby the remedy of appeal against the order of the ITO or against the order of the AAC is barred if the impugned orders mention that they had been passed on the admission of the assessee. The provisions of s. 246(1)(c) of the I.T. Act, 1961, entitle an assessee to file an appeal against the order of the ITO before the AAC where the assessee denied his liability to be assessed under the Act. It would be a different matter if the AAC comes to the conclusion that the order was passed on the admission of the assessee and the assessee is unable to explain that the admission was wrongly recorded under some mistaken belief of fact and law. In that case, the AAC may dismiss the appeal on merits. In a case where the admission of the assessee has been wrongly recorded in the assessment order, it is open to the assessee to file a petition for rectification, but, where the said order is appealable, it is equally open to the assessee to avail of the remedy of appeal and the appellate authority will have to decide the appeal on merits. Nor is it necessary for the assessee to file an affidavit in support of his submissions in all cases. The assessee may choose to file an affidavit in support of his submissions and if he chooses not to file any such affidavit, the circumstances, appearing on the file have to be judged in the light of the material available and if there are sufficient circumstances on the file to come to the conclusion that the admission made by the assessee was not binding on him, in that case he will be entitled to the relief in appeal.”
14. We need not venture forth to pronounce on the issue on which there appears to be conflict of opinion between Bombay High Court and the Allahabad High Court, as to the need for filing of the rectification application to maintain an appeal in a case, where the party’s concession was not correctly recorded or there was a misapprehension in this regard.
15. As far as the facts of this case are concerned, it is important to notice that the appellants were represented by a counsel. The figure obtained from the registering authority was communicated. Thereafter, the assessee has given, in writing, his consent to the cost of the land being Rs. 8,000/- per bigha, as on the relevant date, for the purpose of calculation of capital gains. This is not a case, which involved concession of law. It is a case, where pure question of fact as to what is the value of the land was involved. It is also relevant to notice that the appellants did not choose to make available any evidence in support of their contentions, which they seem to do now. It is also important to notice that there is no dispute that, though penalty proceedings were taken, they have all ended in penalty being cancelled.
16. We are of the view, therefore, that, generally, when an assessment is made on the basis of the consent of the parties, in view of the provision creating the right of appeal, namely, Section 246A in this case, unless there is any grievance for the party as such that the concession was wrongly recorded or that he was coerced into making such concession, which case also the appellants do not have in these cases; the order of the appellate authority, as affirmed by the Tribunal, that the appellants cannot be treated as aggrieved persons is not liable to be interfered with. In such circumstances, we are of the view that the appellants have not made out a case for interference with the order of the Commissioner of Income Tax, as affirmed by the Tribunal.
17. The learned counsel for the appellants drew our attention to the judgment of the Apex Court in the case of Bhau Ram v. Baij Nath Singh AIR 1961 SC 1327. That was a case, where the court took the view that a vendee, who had filed an appeal by special leave to the Supreme Court against a pre-emption decree passed against him, is not precluded from proceeding with the appeal merely because he had withdrawn the pre-emption price deposited by the pre-emptor in the court below after the grant of special leave to appeal. The court, inter alia, took the view that, in the absence of some statutory provision or of a well recognized principle of equity, no one can be deprived of his legal rights, including a statutory right of appeal. We may observe that, in this case, what is involved is whether the right of appeal was available having regard to the fact that the provision creating the right of appeal allows an appeal only in favour of an aggrieved person and, in the context of the present case, we take the view that the appellants cannot be treated as aggrieved persons and, therefore, the reliance placed on the said judgment of the Apex Court does not appear to us to be of any avail.
18. At the time when the appeals were lodged, it may be true that penalty was levied in breach of the understanding between the parties and we may have taken a different view if it was a case, where the appellants were in the danger of being jeopardized with the concession, which is with the condition being violated. But, we cannot overlook the subsequent development in the form of the penalty proceedings being cancelled. Therefore, as things stand, appellants seek to maintain an appeal against an assessment order, which was based on a concession relating to the fact as to the value of the property and, though with the condition that there would be no penalty proceedings, having regard to the penalty proceedings being cancelled, there is no ground for the appellants to maintain these appeals.
19. Accordingly, the appeals are found to be merit-less and the questions of law are answered against the appellants. The appeals will stand dismissed. No order as to costs.
[Citation : 371 ITR 257]
