Itta/67/2000 Of S.a Raheem v. The Commissioner Income Tax Guntur

*THE HON’BLE MR JUSTICE B. PRAKASH RAOAND*THE HON’BLE MR JUSTICE R. KANTHA RAO +I.T.T.A.Nos. 67 of 2000, 2 of 2001, 5 of 2001 &84 of 2000 % Dated 27.08.2010#Between:ITTA No.67/2000S.A.Raheem …AppellantAndThe Commissioner of Income Tax,Guntur …RespondentITTA No.2/2001Smt.Aktharunnisa Begum …Appellant AndThe Commissioner of Income Tax,Guntur …RespondentITTA No.5/2001Sri Md.Quid Ali Qureshi …AppellantAndThe Commissioner of Income Tax,Guntur …RespondentITTA No.84/2000Sri S.Furkhan Ahmed …AppellantandThe Income Tax Officer,Ward 2,Nellore. …Respondent ! Counsel for the Appellants: Mr.K.K.Viswanatham ^ Counsel for the Respondents: Mr. J.V. Prasad <GIST: > HEAD NOTE: ? Cases referred [1] (1977) 107 ITR 702 (AP) 2 (2008) 307, ITR 289 (Guj) 3 (1993) 199 ITR 1 4 (1991) 187 ITR 688 THE HON’BLE MR JUSTICE B.PRAKASH RAOANDTHE HON’BLE MR JUSTICE R. KANTHA RAO I.T.T.A.Nos. 67 of 2000, 2 of 2001, 5 of 2001 &84 of 2000 Between:ITTA No.67/2000S.A.Raheem …AppellantAndThe Commissioner of Income Tax,Guntur …RespondentITTA No.2/2001Smt.Aktharunnisa Begum …Appellant AndThe Commissioner of Income Tax,Guntur …RespondentITTA No.5/2001Sri Md.Quid Ali Qureshi …AppellantAndThe Commissioner of Income Tax,Guntur …Respondent ITTA No.84/2000 Sri S.Furkhan Ahmed …Appellant and The Income Tax Officer,Ward 2, Nellore. …Respondent THE HON’BLE MR JUSTICE B.PRAKASH RAOANDTHE HON’BLE MR JUSTICE R. KANTHA RAO I.T.T.A.Nos. 67 of 2000, 2 of 2001, 5 of 2001 &84 of 2000 COMMON JUDGMENT: (Per RKR,J) These appeals are filed under Section 260-A of the IncomeTax Act, 1961. Since the challenge to the orders passed by theIncome Tax Appellate Tribunal, Hyderabad, ‘B’ Bench atHyderabad is on the same grounds and in view of the fact that thesubstantial questions of law for determination by this Court beingone and the same in all the appeals, they are being disposed of bythe following common judgment. We have heard the learned counsel appearing for theassessees and the department. For the sake of convenience, the appellants/assesses willbe referred to by their names. In all the cases, the assessment relates to the year 1985- 86. While making assessment under Section 143(3) r/w 250 ofIncome Tax Act, the Assessing Authority made addition of thefollowing amounts to the income of the assessees under Section69-A of the Income Tax Act. An amount of Rs.2,06,500/- was added in respect ofassessment relating to S.Furkhan Ahmed, an amount ofRs.1,22,500/- was added in respect of assessment ofSmt.Akhtharunnisa Begum, an amount of Rs.2,06,000/- wasadded in respect of assessment of Sri S.A.Raheem and anamount of Rs.1,54,000/- was added in respect ofassessment of Sri Quaid Ali Quereshi. The said amounts were claimed by the assessees as thesale proceeds of cattle, sheep and goats which they werepossessing. The assessees in their income tax returns hadshown the said amounts as the sale proceeds of the cattle, sheepand goats belonging to them and claimed exemption from incometax. At the instance of the assessees, re-assessment wasordered by the Commissioner, Income Tax (Appeals), Vijayawada.The Assessing Officer while making re-assessment examinedsome witnesses and after conducting the enquiry, the AssessingOfficer negatived the contention of the assessees on the groundthat they failed to prove the possession and sale of cattle, sheepand goats by adducing clinching evidence and consequentlytreated the aforesaid amounts as unexplained income underSection 69-A of the Act. The said amounts were claimed by the assessees as thesale proceeds of cattle, sheep and goats which they werepossessing. The assessees in their income tax returns hadshown the said amounts as the sale proceeds of the cattle, sheepand goats belonging to them and claimed exemption from incometax. At the instance of the assessees, re-assessment wasordered by the Commissioner, Income Tax (Appeals), Vijayawada.The Assessing Officer while making re-assessment examinedsome witnesses and after conducting the enquiry, the AssessingOfficer negatived the contention of the assessees on the groundthat they failed to prove the possession and sale of cattle, sheepand goats by adducing clinching evidence and consequentlytreated the aforesaid amounts as unexplained income underSection 69-A of the Act. Feeling aggrieved, the assessees filed appeals before theCommissioner, Income Tax (Appeals), Vijayawada. The Appellate Authority accepted the contention of the assessees on aconsideration of the depositions and the affidavits of the witnessesand arrived at the conclusion that the amount derived from sale ofcattle, sheep and goats had been proved by the assessees andaccordingly passed the order deleting the addition of the abovementioned amounts made by the Assessing Officer. Thereafter,the department filed appeals before the Income Tax AppellateTribunal, Hyderabad Bench ‘B’, Hyderabad. The orders of the saidTribunal are impugned in the present appeals. The Income Tax Appellate Tribunal upheld the findingrecorded by the Commissioner of Income Tax (Appeals) asregards the factum of possession of cattle, sheep and goats andthe sale by the assessees. However, the learned Tribunal held asfollows: “But what is lacking in this case is the real sale price of thecattle sold and the assessees have not placed anydocumentary evidence to show that the cattle was in fact soldfor the amounts claimed by them, except oral assertions by thewitnesses and the assesses, there is no material available onrecord to prove the sale price.” On the said analogy, the learned Tribunal declined to acceptthe sale price stated by the assessees and the witnesses buthaving accepted the possession and sale of the cattle, sheep andgoats, reduced the sale price to half of the amount claimed by theassessees. The said order is the subject matter of the challengein the present appeals. 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, theTribunal is correct in law in adjudicating upon an issuewhich was not the subject matter before the lowerauthorities and thus going beyond its jurisdiction?Tribunal is correct in law in adjudicating upon an issuewhich was not the subject matter before the lowerauthorities and thus going beyond its jurisdiction? 2.Whether in the facts and the circumstances of the case, theTribunal is correct in law in giving a decision suo motu onan issue which was not agitated by the department in thegrounds of appeal raised and making out a new case for thedepartment?Tribunal is correct in law in giving a decision suo motu onan issue which was not agitated by the department in thegrounds of appeal raised and making out a new case for thedepartment? 3.Whether in the facts and the circumstances of the case, theTribunal is correct in law in upholding part of the additionwithout any basis, ignoring the material evidence availableon record.Tribunal is correct in law in upholding part of the additionwithout any basis, ignoring the material evidence availableon record. 2.Whether in the facts and the circumstances of the case, theTribunal is correct in law in giving a decision suo motu onan issue which was not agitated by the department in thegrounds of appeal raised and making out a new case for thedepartment?Tribunal is correct in law in giving a decision suo motu onan issue which was not agitated by the department in thegrounds of appeal raised and making out a new case for thedepartment? 3.Whether in the facts and the circumstances of the case, theTribunal is correct in law in upholding part of the additionwithout any basis, ignoring the material evidence availableon record.Tribunal is correct in law in upholding part of the additionwithout any basis, ignoring the material evidence availableon record. It has been contended by the learned counsel appearing forthe assessees/appellants that the Assessing Officer accepted thesimilar evidence adduced by one Ghouse Mohiuddin with regard torearing of the animals and sale thereof and exempted the saleproceeds. But in the case of the present assessees, theAssessing Officer rejected the same kind of evidence. It has beenfurther contended that the Income Tax Appellate Tribunal havingaccepted the finding recorded by the Commissioner (Appeals) thatthe possession of cattle sheep and goats and the sale by theassessees is genuine, erroneously reduced the value of the saleproceeds claimed by the assessees. According to the learnedcounsel the issue before the Income Tax Appellate Tribunal wasonly whether the possession of cattle, sheep and goats and theirsale by the assessees was proved or not, but not the actual sale price and therefore, the learned counsel would submit that thedecision rendered by Income Tax Appellate Tribunal is outside thescope of it’s jurisdiction and the same is liable to be set aside inthese appeals. In support of his contention, the learned counselrelied upon the following decisions: 1)COMMISSIONER OF INCOME TAX v. KRISHNAMINING COMPANY[[1]]wherein the Division Bench ofthis Court held as follows: “The grant of any such relief cannot be justified on theground that section 33(4) of the Act enables the Tribunal tomake any order that it thinks fit. We are not inclined to takeany such view of that sub-section. Plainly, some limit, apartfrom the limit which the word “thereon” puts upon it, must beplaced upon the generality of the words used. No one cansuppose that the legislature intended to create a dictatorshipin the Tribunal, if and whenever an appeal happened to bebrought before it under this section. It is equally incrediblethat the sub-section should have been intended to give theTribunal power to make any order it thinks fit relating to theassessment or transactions concerning it in general, or evenin a case brought before it in particular, without any regard tothe subject-matter of the appeal. The sub-section, after all, isnot dealing with the power of the Appellate Tribunal assuch. It is dealing with its powers as an Appellate Tribunalexercising quasi-judicial functions and the order which theTribunal may make as such. Hence, the Tribunal’sdecisions must be confined, as in the case of other judicialor quasi-judicial tribunals, to the questions brought before iton the appeal, and it must not travel outside it.” 2)DEEPAK NITRITE LTD. v. COMMISSIONER OFINCOME-TAX[[2]]wherein the Division Bench of GujarathHigh Court held as follows: 2)DEEPAK NITRITE LTD. v. COMMISSIONER OFINCOME-TAX[[2]]wherein the Division Bench of GujarathHigh Court held as follows: “The Tribunal failed to appreciate that at no stage was theissue of quantification ever in dispute between the parties. The Assessing Officer had categorically recorded that for thereasons stated in his order the claim of loss “is notacceptable and the same is ignored in the computation ofincome.” If the Assessing Officer had not undertakenquantification of the loss, the Commissioner (Appeals) hadnot undertaken such an exercise as there was no groundraised by the Revenue before the Tribunal in the appeal, theTribunal on its own could not have undertaken the saidexercise without first deciding the controversy broughtbefore it by the parties, more particularly, the appellant.Merely because during the course of argument somecontentions were raised as to whether detachable warrantshad any cost or nor was not sufficient for the Tribunal toembark upon such an exercise in the absence of anycontroversy between the parties. The Tribunal failed toappreciate that in the absence of any exercise ofquantification by the Assessing Officer there was nooccasion for the assessee to carry the matter any further andtherefore the said issue could not arise out of the order of theCommissioner (Appeals). Once that was the position theTribunal could not have taken it upon itself to raise the issueand decide the same which did not properly arise out of theorder of the Commissioner (Appeals) as no ground could betaken by either side in the absence of any findings by theCommissioner (Appeals).” In the instant cases also from the inception the issue was only whether the assessees possess any cattle, sheep and goatsand they sold them out. The sale price of the cattle, sheep andgoats was not disputed at any point of time. The findings recordedby the authorities below reflected only as to the genuineness orotherwise of possessing of cattle, sheep and goats and their saleby the assessees. The Commissioner of Income Tax (Appeals)believed the evidence adduced by the assessees and held that thetransactions of sale of cattle, sheep and goats claimed by them isgenuine. The Income Tax Appellate Tribunal is only supposed toexamine the correctness of the said finding in the appeal but itcannot travel beyond the said question. However, the learned counsel appearing for the departmentin support of his contention that the Income Tax Appellate Tribunalis empowered to pass any order while disposing of the appeal,relied upon the following decisions: 1)COMMISSIONER OF INCOMETAX v. ASSAMTRAVELS SHIPPING SERVICE[[3]]Commissioner of Income Tax Vs. Assam Shipping Travel Serviceswherein the Apex Court held that “the power of theappellate Assistant Commissioner under Section 251(1)(b) includes the power even to enhance the penaltysubject to the requirement of sub-section (2) of section251 after giving a reasonable opportunity to show causeand the appellate Assistant Commissioner was wrong intaking the view that he had no power to enhance thepenalty in accordance with law. That the expression such orders thereon as it thinks fit under Section 254(1) was wide enough toinclude the power of remand to the authoritycompetent to make the requisite order in accordancewith law even though the Tribunal could not havemade an order enhancing the penalty. That, therefore the Tribunal was not justified in takingthe view that it had no other alternative except toaffirm the order of the Appellate AssistantCommissioner canceling even the lesser penaltyimposed by the Income Tax Officer.” 2)JUTE CORPORATION OF INDIA LTD. v.COMMISSIONER OF INCOME TAX AND ANOTHER[[4]] wherein the Apex Court held that “since the tax liabilitywas admitted, the Income Tax Officer was afforded anopportunity of being heard and the appellant’s claim wasbased on the settled view of the law, the AppellateAssistant Commissioner had jurisdiction to permit theappellant to raise the additional ground. That, therefore the Tribunal was not justified in takingthe view that it had no other alternative except toaffirm the order of the Appellate AssistantCommissioner canceling even the lesser penaltyimposed by the Income Tax Officer.” 2)JUTE CORPORATION OF INDIA LTD. v.COMMISSIONER OF INCOME TAX AND ANOTHER[[4]] wherein the Apex Court held that “since the tax liabilitywas admitted, the Income Tax Officer was afforded anopportunity of being heard and the appellant’s claim wasbased on the settled view of the law, the AppellateAssistant Commissioner had jurisdiction to permit theappellant to raise the additional ground. Since the ordinary procedure for calling for astatement of the case and thereupon decide thematter afresh would be time consuming, the SupremeCourt granted special leave against the order of theTribunal, set aside the order and remitted the matterto the Tribunal to consider the merits of the deductionclaimed.” The above two judgments rendered by the Apex Court are ina different context than that of the situation in the presentappeals. In the present appeals as already pointed out, absolutely there was no basis for the Income Tax Appellate Tribunal toreduce the sale price to half of the amount claimed by theassessees. The Commissioner of Income Tax (Appeals) acceptedthe entire transactions as genuine and therefore, the questionwhich the Income Tax Appellate Tribunal could go into was onlywhether the sale transactions were genuine or not, but not as tothe sale price. These matters relate to the assessment year of1985-86. At this length of time, if the matters are remitted to theAssessing Authority for making fresh assessment, it causesundue hardship and lot of inconvenience to the assessees. Furtherno documentary evidence could be produced in respect of sale ofcattle, sheep and goats. The version of the assessees and theirwitnesses was believed by the Commissioner of Income Tax(Appeals) and a finding was rendered on the said issue. If there isno basis for such finding, the learned Income Tax AppellateTribunal can set aside the same, but it is not supposed to makeout a third case and arbitrarily reduce the sale price claimed bythe assessees. In the absence of any criteria to reduce the saleprice to half of the amount claimed by the assessees, we have tonecessarily hold that such an exercise by the Income TaxAppellate Tribunal is unwarranted and without jurisdiction. On the aforesaid analysis and reasoning, the orders passedby the Income Tax Appellate Tribunal impugned in these appealsare set aside and the appeals are allowed. There shall be no orderas to costs. _______________ B. PRAKASH RAO,J _______________ R. KANTHA RAO, J Date: 27.08.2010. Note: L.R. copy to be marked. b/o ccm THE HON’BLE MR JUSTICE B.PRAKASH RAOAND THE HON’BLE MR JUSTICE R. KANTHA RAO I.T.T.A.Nos. 67 of 2000, 2 of 2001, 5 of 2001 AND84 of 2000 -- Date: 27082010 [1](1977) 107 ITR 702 (AP)[2](2008) 307, ITR 289 (Guj)[3](1993) 199 ITR 1 [4](1991) 187 ITR 688