2006-VIL-468-MP-DT

Equivalent Citation: [2008] 298 ITR 22

MADHYA PRADESH HIGH COURT

Date: 10.03.2006

COMMISSIONER OF INCOME-TAX.

Vs

TOLLARAM HASSOMAL.

BENCH

Judge(s)  : A. M. SAPRE., ASHOK KUMAR TIWARI.

JUDGMENT

The judgment of the court was delivered by

A.M. SAPRE J.- The decision rendered in this appeal shall also govern the disposal of the other connected appeals being I.T.A. Nos. 13, 14 of 2000, 15 and 16 of 2001, as all these appeals involve identical points and, secondly, it is in relation to one assessee except the difference being that they arise out of different assessment years.

This is an appeal filed by the Revenue (Commissioner of Income-tax) under section 260A of the Income-tax Act, 1961, against an order dated February 29,2000, passed by the Income-tax Appellate Tribunal in I.T.A. Nos. 440/Ind./94, 855/Ind./96, 856/Ind./96 and 1107/Ind./96. This appeal as also other four appeals were admitted for final hearing on the following substantial questions of law:

"1. Whether the Income-tax Appellate Tribunal was justified in recording a finding that the assessment in question which were essentially based upon the revised return filed by the assessee are void ab initio and, therefore, annulled?

2. Whether the finding recorded by the Income-tax Appellate Tribunal annulling the assessment made by the Assessing Officer for the assessment year in question is legally sustainable and can be said to be in conformity with the requirement of the Income-tax Act?"

Heard Shri R.L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the appellant, and Shri H. Joshi, learned counsel for the respondent.

Having heard learned counsel for the appellant and having perused the record of the case, we are of the view that these appeals also involve one more substantial question of law. Indeed in order to do complete justice between the parties and with a view to decide the issues arising out of the case in its correct and proper perspective, the additional substantial question of law which in our humble view does arise out of the impugned order need to be framed in these appeals. This court has ample power by virtue of section 260A(4) proviso, ibid to frame any additional substantial question of law during pendency of appeal or at the time of final hearing of appeal. As a matter of fact this court is also empowered to decide the point not decided by the Tribunal. We, therefore in order to make our order in accordance with the provisions of section 260A ibid read with the proviso to sub-section (4) ibid, frame the following additional substantial question of law:

"Having allowed the assessee to raise four additional grounds in appeal before the Tribunal for the first time, which were admittedly not raised by the assessee in appeal before the Commissioner of Income-tax (Appeals) could the Tribunal proceed to decide for the first time in appeal or it should have remanded the case to the Commissioner of Income-tax (Appeals) for deciding those four grounds in accordance with law?"

We wish to take up the additional substantial question of law first. This is how the Tribunal dealt with this issue in their order:

"I.T.A. No. 440/Ind./94- This is an appeal of the assessee in which the order of the Commissioner of Income-tax (Appeals) has been assailed on various grounds. During the course of hearing the assessee has filed the following additional grounds of appeal with the request to admit the same:-

'For that the order so passed is without jurisdiction and barred by limitation.

For that the proceedings so initiated under section 142(2A) of the Income-tax Act is illegal, arbitrary and without jurisdiction.

For that in the circumstances of the case there is no justification for initiating the proceedings under section 142(2A).

For that in the circumstances of the case the order so passed framing the assessment needs to be annulled and cancelled.'

3. We have heard the rival submissions of the parties on the point of admission of the aforesaid additional grounds. Since the additional grounds are legal in nature, we admit the same. Through these additional grounds the assessee has challenged the legality of the assessment order. We, therefore, prefer to adjudicate the aforesaid additional grounds first."

A mere perusal of the aforequoted paragraph from the impugned order would indicate that none of the four grounds had been raised by the assessee before the Commissioner of Income-tax (Appeals) when they filed appeal before the Commissioner of Income-tax (Appeals) against the assessment order passed by the Assessing Officer. In these circumstances, there was no occasion for the Commissioner of Income-tax (Appeals) to examine the case in the light of those four grounds nor the Commissioner of Income-tax (Appeals) could record and in fact recorded any finding on any of those four grounds while deciding the appeal filed by the assessee. Section 250(4) and (5) read with section 251 of the Act deals with the powers of the Commissioner of Income-tax (Appeals) while deciding any appeal filed by the assessee. By virtue of these powers, the Commissioner of Income-tax (Appeals) has wide discretion as also jurisdiction to deal with the issue and pass appropriate orders raised before him by the assessee.

In our considered view, therefore, the Tribunal having permitted the assessee to raise four additional grounds treating them to be legal grounds in appeal for the first time, should have set aside the order of the Commissioner of Income-tax (Appeals) and remanded the case to the Commissioner of Income-tax (Appeals) for deciding the appeal by the Commissioner; of Income-tax (Appeals) afresh on all the issues including on those four grounds raised by the assessee in the appeal before the Tribunal rather than to decide the same on the merits for the first time by themselves and set aside the order of the Commissioner of Income-tax (Appeals) as also the assessment order. Had the case been remanded by the Tribunal, the Commissioner of Income-tax (Appeals) would have been in a position to examine the issue for the first time in relation to those four grounds which he did not decide for want of any attack on those grounds initially in the first round. It cannot be disputed that the Commissioner of Income-tax (Appeals) had jurisdiction to examine those four grounds had it been raised before him in appeal even in the first round. We thus cannot subscribe to the approach and the manner in which the Tribunal allowed the assessee to raise additional grounds in appeal for the first time and then deciding the appeal on those grounds by not only setting aside of the order of the Commissioner of Income-tax (Appeals) but even proceeding to annul the order of the Assessing Officer also. Such approach is neither legal, nor proper. It only exhibits the anxiety of the Tribunal to decide the appeal on the merits even on those points which did not arise for decision out of the order of the Commissioner of Income-tax (Appeals). In other words, instead of concentrating on the issues already decided by the Commissioner of Income-tax (Appeals), the Tribunal only concentrated on those grounds which had not been taken before the Commissioner of Income-tax (Appeals) and then answered them in favour of the assessee by completely annulling the whole assessment. There would have been no prejudice caused to either party if the case had been remanded to the Commissioner of Income-tax (Appeals) once the prayer to raise additional grounds was allowed by the Tribunal in favour of the assessee. When a litigant has a right to seek adjudication on a particular point from one more authority (as in this case Commissioner of Income-tax (Appeals)) and again acquire a right to reiterate the challenge before the higher appellate authority (such as Tribunal) in case if the challenge is decided against by the first appellate authority, then in such event, there is no justifiable reason as to why a litigant is deprived of such an opportunity. We, therefore, do not agree to such approach resorted to by the Tribunal and hence, we set aside the impugned order.

In view of the foregoing discussion, we do not consider it necessary to examine any other issues, i.e., the questions already framed and decided by the Tribunal though urged by learned counsel for the Revenue on various legal grounds with reference to decided cases of the Supreme Court and the High Courts by contending that none of them are legally sustainable and hence, we answer only additional question of law framed in favour of the Revenue and against the assessee (respondent). As a result, the appeal succeeds and is hereby allowed. The impugned orders of the Tribunal is set aside, so also that of the Commissioner of Income-tax (Appeals) which was the subject-matter of appeal before the Tribunal in an appeal filed by the assessee. Indeed, this being a consequence of the indulgence granted by the Tribunal to the assessee in permitting them to raise four additional grounds to urge the same has to be given effect to. As a consequence, the Commissioner of Income-tax (Appeals) is now directed to decide the appeal filed by the respondent (assessee) afresh on the merits including on the four additional grounds raised by the assessee. We, however, make it very clear that the Commissioner of Income-tax (Appeals) would not take into consideration any of the findings and the observations made by the Tribunal on any of the issues raised by the assessee, nor the Commissioner of Income-tax (Appeals) will be influenced by any of them. In other words, the Commissioner of Income-tax (Appeals) will decide the appeal strictly in accordance with law on the merits as if there is no finding on any of the issues ever recorded by the Tribunal because once we set aside the order of the Tribunal, then such order is regarded as being not in existence and cannot be looked into for any purpose, nor can be relied on or referred to by any authority much less an authority subordinate to the Tribunal. Needless to observe, the four additional issues urged by the assessee will have to be decided by the Commissioner of Income-tax (Appeals) keeping in view the law laid down by the Supreme Court and the High Courts in several cases holding the field in their right perspective. Let this be done within six months by the Commissioner of Income-tax (Appeals) from the date of appearance. Parties to appear before the Commissioner of Income-tax (Appeals) on April 3, 2006.

No costs.

 

 

 

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