Ita/425/2009 Of Commissioner Of Income Tax, Kottayam v. M/S. Jass Roller Flour Mills Pvt. Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 22ND SEPTEMBER 2010 / 31ST BHADRA 1932 ITA.No. 425 of 2009() --------------------- AGAINST THE ORDER DATED 12/12/2005 IN IT (S&S) A.NO.49(COCH)/2004 of INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH .................... APPELLANT/RESPONDENT: ---------------------------------------- THE COMMISSIONER OF INCOME TAX, KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, INCOME TAX RESPONDENT(S): APPELLANT: ------------------------------------------------- M/S.JASS ROLLER FLOUR MILLS PVT. LTD., ETTUMANOOR, KOTTAYAM. BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22/09/2010 ALONG WITH ITA NO. 412 OF 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. ------------------------------------------- I.T. Appeal Nos.425 of 2009 and412 of 2009 ------------------------------------------- Dated this the 22[nd] September, 2010 JUDGMENT Ramachandran Nair, J. The connected appeals are filed by the revenuechallenging the orders of the Tribunal, both issued in theblock assessment appeal and in the appeal filed againstpenalty levied under Section 158BFA(2) of the Income TaxAct. 2. We have heard the Senior Standing Counselappearing for the appellant and Sri.P.Balakrishnan,Advocate appearing for the respondent-assessee. 3.During the last hearing of the case, thedepartment’s main challenge against the order of theTribunal in the assessment appeal, that is against theTribunal exceeding it's jurisdiction, was considered. Thegrievance of the department was that without raising anydispute against the assessment pertaining to the estimationof income made for various years in the first appeal, the ITA 425/2009 & 412/2009 2 Tribunal considered the appeal before it on those matters asif it is the first appeal and decided the appeal. We,therefore, directed the department to produce the groundsof appeal raised by the assessee before the Commissioner ofIncome Tax (Appeals). After going through the grounds ofappeal filed by the assessee before the Commissioner ofIncome Tax (Appeals) and after considering the CIT(A)’sorder, we notice that the Tribunal has prima facie exceededits jurisdiction in considering and deciding the matters thatdo not arise from the orders of CIT(A). Both sides cited thedecisions reported inNational Thermal Power Co. Ltd. VCommissioner of Income Tax229 ITR 383 and anotherdecision reported inGoetze (India) Ltd. V Commissionerof Income Tax 284 ITR 323, wherein the Supreme Courthas held that the Tribunal is entitled to consider questionsof law to be raised for the first time before it and theTribunal can, based on the facts available on record, decidesuch questions of law raised for the first time before it.However, in this case what we find is that the matterswhich were never agitated in the first appeal were allowedto be raised before the Tribunal for the first time and theTribunal decided the appeals on several factual issues ITA 425/2009 & 412/2009 3 ITA 425/2009 & 412/2009 3 treating the same as first appeal before it. From the ordersof the CIT (Appeal) on the grounds raised before it, primafacie, we find that the assessee has contested the reliefsgranted under Section 80-IA for the assessment year 1994-1995 and for the assessment year 1998-1999. The CIT(Appeal) has considered in detail the claim for relief underSection 80-IA and it was in fact granted. So far as theestimation of income for several years in the assessmentmade is concerned, what the assessee contested before theCIT (Appeal) was only in respect of the mistakes in thecomputation for the block period ending in 1998-1999.Here again, the First Appellate Authority has granted relief.However, from the grounds of appeal filed before the CIT(Appeals) and the order of the CIT (Appeal), we find that theassessee has not contested the assessment on any othergrounds other than the issues considered and decided bythe CIT (Appeal). However, on going through the appellateorder of the Tribunal, we notice that the assessee has raisedabsolutely new grounds which were never raised orconsidered by the CIT (Appeal). We, prima facie feel thatthe Tribunal exceeded its jurisdiction under Section 253.The Tribunal has to decide the appeal as the Second ITA 425/2009 & 412/2009 4 Appellate Authority against the orders of the CIT (Appeal).We do not think the Tribunal can convert itself to the FirstAppellate Authority on questions of fact that too relating toestimation of income. If the assessee has a case that thegrounds raised before the CIT (Appeal) were not consideredand decided by it, then the assessee's remedy was to file arectification application and in the course of appeal, iffound the Tribunal finds that CIT (Appeal) has notconsidered and decided the grounds raised by the assessee,it was for the Tribunal to remand the case and direct theCIT (Appeal) to consider the appeal on those grounds.Therefore, prima facie, we feel the Tribunal exceeded it'sjurisdiction by deciding matters pertaining to estimation ofincome for various years in the block period, which werenot raised before the CIT (Appeals) and decided byhim. Therefore, we are of the view that matter requiresre-consideration by the Tribunal on this aspect, because thedepartment's objection about maintainability of appeal onfresh grounds raised is not considered and decided by theTribunal. We, therefore, allow IT Appeal No.412/2008 bysetting aside the orders of the Tribunal and by restoring theappeal back to the Tribunal for considering the ITA 425/2009 & 412/2009 5 maintainability of appeal on the new grounds raised and todecide the matter afresh on all grounds. 4. I.T.Appeal No.425/2005 is an appeal filed againstthe penalty. The first appeal was disposed of by the CIT(Appeal) on the assumption that the assessee has noobjection against the addition. However, the assesseecontested addition in the second appeal filed before theTribunal which is already set aside by us as indicated above.Since the Tribunal has decided penalty appeal also,following their order in assessment appeal which we haveset aside, we set aside this said order also directing theTribunal to re-consider the matter based on the decision inthe assessment appeal and after or along with the saidappeal. Both sides are free to raise all objections and theTribunal will decide both the appeals on all issues raised. C.N.RAMACHANDRAN NAIR JUDGE K.SURENDRA MOHAN JUDGE