Dr.L.Saravanan, CHENNAI V. ITO Corporate Ward 1(1), CHENNAI

ITA 1620/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2665 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 14-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Salary income; Source of fund; Difference of opinion; Deemed dividend; Commercial expediency; Change of opinion
• Section: 40A(3); 143(3); 27; 148; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , . , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER I.T.A.NOS.1614 TO 1616/CHNY/2018 ASSESSMENT YEARS : 2010-11 TO 2012-13 DR.S.MAHALAKSHMI , NO.4,TEMPLE ROAD, 1 ST STREET, JAWAHAR NAGAR, CHENNAI 600 082. VS. THE INCOME TAX OFFICER, CORPORATE WARD-1(1), CHENNAI [PAN AISPM 7140 D ] ( / APPELLANT) ( /RESPONDENT) I.T.A.NOS.1617 TO 1622/CHNY/2018 ASSESSMENT YEARS : 2008-09 TO 2013-14 DR.L.SARAVANAN , NO.4,TEMPLE ROAD, 1 ST STREET, JAWAHAR NAGAR, CHENNAI 600 082. VS. THE INCOME TAX OFFICER, CORPORATE WARD-1(1), CHENNAI [PAN AUEPS 1508 D ] ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.S.SRIDHAR,ADVOCATE ! /RESPONDENT BY : MR.CLEMENT RAMESH KUMAR, ADDITIONAL CIT D.R ' # $% / DATE OF HEARING : 24 - 1 0 - 201 8 &' $% / DATE OF PRONOUNCEMENT : 29 - 1 0 - 201 8 / O R D E R ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 2 -: PER GEORGE MATHAN, JUDICIAL MEMBER ITA NOS.1614 TO 1616/CHNY/2018 ARE THE APPEALS FILED BY DR.S. MAHALAKSHMI AGAINST THE COMMON ORDER OF LD.CIT(A)-4,CHENNAI IN ITA NOS.381, 383, 385, 387 & 389/2016-17/A.YS.2008-09 TO 2012-13/CIT(A)-4 DATED 15.03.2018 FOR ASSESSMENT YEARS 2008-09 TO 2012-13 . ITA NOS.1617 TO 1622/CHNY/2018 ARE THE APPEALS FILED BY DR.L.SARAVANAN AGAINST THE COMMON ORDER OF LD.CIT(A )-I, 1,CHENNAI IN ITA NOS.146,148,150,152,225 & 154/CIT (A)- 1/2016-17 DATED 30.03.2018 FOR ASSESSMENT YEARS 2008 -09 TO 2013-14. 2. SINCE ALL THE APPEALS ARE OF THE HUSBAND AND WI FE AND THE ISSUES ARE INTERLINKED, ALL THE APPEALS ARE DISPOSE D OF BY THIS COMMON ORDER. 3. MR.S.SRIDHAR REPRESENTED ON BEHALF OF THE ASSESSEE AND MR.CLEMENT RAMESH KUMAR REPRESENTED ON BEHALF OF THE REVENUE. 4. IT WAS SUBMITTED BY LD.A.R THAT IN RESPECT OF G ROUNDS NOS.2 TO 5 IN ALL THE APPEALS WERE AGAINST THE ACTION OF THE LD.CIT(A) IN ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 3 -: CONFIRMING THE ADDITION MADE BY THE LD. ASSESSING O FFICER IN RESPECT OF DEEMED DIVIDEND BY INVOKING THE PROVISIONS OF THE S ECTION 2(22)(E) OF THE ACT. 4.1 IT WAS A SUBMISSION THAT GROUNDS NOS.6 TO 8 IN THE APPEALS IN ITA NOS.1614 TO 1616/CHNY/2018 ARE AGAINST THE A CTION OF THE LD.CIT(A) IN MAKING ENHANCEMENT ADDITION IN RESPECT OF CASH PAYMENTS MADE FOR PURCHASE OF MEDICINES FOR INVOKIN G THE PROVISIONS OF THE SECTION 40A(3) OF THE ACT. 4.2 IT WAS A SUBMISSION THAT GROUNDS NOS.6 TO 8 IN THE APPEALS IN ITA NOS.1617 TO 1622/CHNY/2018 ARE AGAINST THE A CTION OF THE LD.CIT(A) IN MAKING ENHANCEMENT RESULTING IN ADDITI ON IN RESPECT OF CASH DEPOSITS IN THE COMPANYS ACCOUNT, WHICH HAVE BEEN MADE IN THE NAME OF ASSESSEE BY NOT ACCEPTING THE SOURCE OF INC OME AS EXPLAINED BY THE ASSESSEE. 4.3 IT WAS FURTHER SUBMISSION THAT GROUND NO.7 IN ALL THE APPEALS ARE AGAINST THE ENHANCEMENT PER SE AS MADE BY LD.CIT(A). 5. IN RESPECT OF GROUNDS NOS.2 TO 5 IN ALL THESE A PPEALS, IT WAS SUBMITTED BY LD.A.R THAT IN THE COURSE OF ASSESSMEN T IT WAS NOTICED BY THE LD. ASSESSING OFFICER THAT THE ASSESSEE AND HIS WIFE HAD DRAWN ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 4 -: FUNDS FROM THE COMPANY AND HAD PURCHASED A LANDED P ROPERTY IN THEIR JOINT NAMES AND CONSTRUCTED A BUILDING AND HAD LEAS ED OUT THE SAID BUILDING TO THE COMPANY FOR THE PURPOSE OF RUNNING A HOSPITAL. LD.A.R DREW OUR ATTENTION TO PAGE NO.3 OF THE ASSESSMENT O RDER FOR ASSESSMENT YEAR 2008-09 WHEREIN THE DETAILS OF THE AMOUNTS DRAWN FROM THE COMPANY THROUGH THE CURRENT ACCOUNTS AND T HE ACCUMULATED PROFITS OF THE COMPANY, M/S.ABHIJAY HOSPITAL PVT. L TD., FOR THE FINANCIAL YEARS 2007-08 TO 2011-12 HAS BEEN EXTRACTED IN A CH ART FORM, WHICH IS AS FOLLOWS:- F.Y RESERVES & SURPLUS DR.L.SARAVANAN DR.S.MAHALAKSHMI DRAWAL DEPOSITS DRAWAL DEPOSITS 2007 - 08 18,56,453 17,37,957 22,22,377 14,48,893 18,75,312 2008 - 09 31,61,657 55,24,270 65,24,482 25,62,620 35,56,134 2009 - 10 60,26,670 4,57,89,271 4,08,21,080 1,35,37,844 1,15,33,972 2010 - 11 1,03,35,401 2,46,58,065 2,12,06,746 51,08,161 2011 - 12 1,10,57,253 3,20,62,648 1,88,16,862 1,45,40,542 35,99,514 IT WAS A SUBMISSION THAT LD. ASSESSING OFFICER HELD THAT THE ASSESSEE HAD DRAWN FUNDS FROM THE COMPANY, AND THEREFORE, HE LD THAT THERE WAS VIOLATION OF PROVISIONS OF THE SECTION 2(22)(E) OF THE ACT AND THE ASSESSING OFFICER BROUGHT TO TAX THE SUMS DRAWN AS DIVIDEND INCOME. ON APPEAL, LD.CIT(A) HAD WITHOUT CONSIDERING THE E XPLANATION OF THE ASSESSEE THAT THE DRAWINGS WAS IN THE CURRENT ACCOU NT AND THAT IT WAS A CURRENT ACCOUNT TRANSACTION, UPHELD THE ORDER OF ASSESSING OFFICER. ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 5 -: IT WAS A SUBMISSION THAT THE ISSUE WAS NOW SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF M/S.CAI INDUSTRIES P LTD., VS. THE DCIT IN ITA NO.3 56/MDS./2017 VIDE ORDER DATED 21.09.2017 WHEREIN IT HAS BEEN HELD AS FOLLOWS:- 5.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT BOTH THE ASSESSEE AND ITS SISTER COMPANY ARE DEALER S IN AUTOMOBILES OF DIFFERENT NATURE AND ENGAGED IN BUSINESS WITH CL OSE PROXIMITY. THE COMBINED ENDURANCE TO MARKET THE PRODUCTS IN THE SA ME VICINITY RESULTS IN CLOSE COMMERCIAL TIES BETWEEN THE ASSESS EE COMPANY AND ITS SISTER COMPANY. AS A RESULT BOTH THE COMPANIES WERE MAINTAINING CURRENT ACCOUNTS IN ORDER TO ACHIEVE THEIR RESPECTI VE BUSINESS TARGETS. THEREFORE IT CANNOT BE SAID THAT, THE INTE RDEPENDENCE FOR MEETING SEVERAL BUSINESS COMMITMENTS OF THE ASSESSE E AND ITS SISTER CONCERNS DOES NOT RESULT IN COMMERCIAL NEXUS BETWEE N THE ASSESSEE COMPANY AND ITS SISTER CONCERNS. AS POINTED OUT BY THE LD.AR SOME EXPENSES WERE MET BY BOTH THE COMPANIES WHICH WERE REIMBURSED BY EITHER COMPANY. THESE FACTS ARE NOT DISPUTED. MO REOVER AT THE CLOSE OF THE FINANCIAL YEAR THE CURRENT ACCOUNT MAI NTAINED BY THE ASSESSEE WITH ITS SISTER CONCERN SHOWED NIL BALANCE . IN THIS SITUATION, WE ARE OF THE VIEW THAT THE DECISION OF THE JURISDI CTIONAL HIGH COURT IN THE CASE CIT VS. C.SUBBA REDDY WOULD BE MOST APP ROPRIATE, WHEREIN IT WAS HELD THAT WHEN NO BENEFIT HAS ACCRU ED TO ASSESSEE AND CREDIT WAS A RESULT OF BUSINESS TRANSACTION AND WAS NEITHER IN NATURE OF LOAN OR DEPOSIT HENCE, PROVISIONS OF SECT IONS 2(22)(E) OF THE ACT DO NOT STAND ATTRACTED. FURTHER IN THE CAS E OF THE ASSESSEE THE CIRCULAR NO.19/2017 SUPRA IS ALSO VERY RELEVANT . CONSIDERING THESE ASPECTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT PROVISIONS OF SECTION 2(22)(E) OF THE ACT WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE. THEREFORE WE HEREBY DIRECT THE LD.AO TO D ELETE THE ADDITION MADE BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. LD.A.R ALSO PLACED RELIANCE IN THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. C.SUBBA REDDY, REPORTE D IN (2017) 77 TAXMANN.COM 320(MADRAS), WHICH HAS BEEN REFERRED TO IN THE DECISION ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 6 -: OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CAS E OF M/S.CAI INDUSTRIES P LTD., REFERRED TO SUPRA. 6. IN REPLY, LD.D.R SUBMITTED THAT THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.P.K .ABUBACKER REPORTED IN [2003] 259 ITR 507(MADRAS) WOULD APPLY AS ADVANC ES HAD BEEN TAKEN BY THE SHAREHOLDER FOR THE CONSTRUCTION OF TH E BUILDING, WHICH WAS LATER TAKEN ON LEASE BY THE COMPANY AND SUCH AD VANCE WAS SET OFF AGAINST THE FUTURE RENT. LD.D.R ALSO PLACING RELIAN CE IN THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F SUNIL KAPOOR VS. CIT REPORTED IN [2015] 235 TAXMAN 279 (MADRAS) SUBM ITTED THAT WHEN THE COMPANY POSSESSED ACCUMULATED PROFITS IN EXCESS OF AMOUNT THAT WAS PAID TO ASSESSEE, THEN THE SAME WAS LIABLE TO B E TREATED AS DEEMED DIVIDEND. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AT THE OUTSET, PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE LD. ASSESSING OFFICER HAS CA TEGORICALLY RECOGNIZED THE AMOUNT HAS BEEN DRAWN THROUGH THEIR CURRENT ACCOUNT. THE PURPOSE OF TAKING OF THE MONEY WAS ALSO FOR THE PURPOSE OF BUSINESS OF THE COMPANY, WHICH IS ALSO NOT DISPUTED . A PERUSAL OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS.C.SUBBA REDDY REFERRED TO SUPRA WHICH IS IN THE YEAR 2017 C LEARLY SHOWS THAT ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 7 -: WHERE THE AMOUNT HAS BEEN GIVEN BY THE COMPANY AS P ART OF THE CONTRACTUAL OBLIGATION, NO DEEMED DIVIDED CAN BE AS SESSED. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M /S.CAI INDUSTRIES P LTD REFERRED TO SUPRA FOLLOWED DECISION OF HAS THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. C.SUBBA REDDY (SUPRA), AS ALSO CBDT CIRCULAR NO.19/2017 HELD THAT ON ACCOUNT OF COMMERC IAL EXPEDIENCY TRANSACTIONS IN THE CURRENT ACCOUNT SHOULD NOT BE T REATED AS GIVING RISE TO DEEMED DIVIDEND. IN THE CIRCUMSTANCES, RESPECTFU LLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS. C.SUBBA REDDY REFERRED TO SUPRA, AS ALSO THE PRINCIPLE LAID DOWN BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. CAI INDUSTRIES P LTD REFERRED TO SUPRA, WE ARE OF THE VIEW THAT THE ADDI TION AS MADE BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD.CIT(A ) IS UNSUSTAINABLE AND THEREFORE, STANDS DELETED. 8. IN RESPECT OF THE APPEALS OF DR.L.SARAVANAN IN ITA NOS.1617/2018 TO 1622/2018 IN RESPECT OF GROUNDS NO S.6 & 8 REPRESENTING THE CASH DEPOSITS IN THE COMPANYS AC COUNT, THE SOURCE FOR WHICH HAS BEEN TREATED AS UNEXPLAINED BY THE LD .CIT(A) IN THE ENHANCEMENT PROCEEDINGS, IT WAS SUBMITTED BY THE LD .A.R THAT AT THE OUTSET THE ENHANCEMENT AS DONE BY THE LD.CIT(A) WAS ERRONEOUS. ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 8 -: 9. IT WAS A SUBMISSION THAT GROUND NO.7 IN ALL THE APPEALS RELATE TO THE ISSUE OF ENHANCEMENT, WHICH WOULD BE ARGUED SEPARATELY. 9.1 IT WAS A SUBMISSION THAT IN RESPECT OF MERITS, THE LD.A.R HAD NO OBJECTION, IF THE ISSUES OF THE SOURCES FOR THE CASH DEPOSITS WAS RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION. 9.2 IN RESPECT OF THE APPEALS OF DR.S.MAHALAKSHMI IN ITA NOS.1614 TO 1616/2018 IN RESPECT OF GROUND NOS. 6 & 8, IT WAS A SUBMISSION THAT THE ISSUE WAS IN RESPECT OF CASH PA YMENTS IN EXCESS OF ` 20,000/- FOR PURCHASE OF MEDICINE BY INVOKING THE P ROVISIONS OF THE SECTION 40A(3) OF THE ACT. IT WAS A SUBMISSION THA T OUT OF FIVE TRANSACTIONS, ONE TRANSACTION WAS BY CASH. IT WAS A SUBMISSION THAT IT WAS NOT, AS IF ALL THE PURCHASES HAS BEEN ONLY AS C ASH TRANSACTIONS. IT WAS ONLY ON COMMERCIAL EXPEDIENCY, THE ASSESSEE HAD PAID THE CASH FOR THE PURCHASE OF MEDICINES FOR THE HOSPITAL. IT WAS A SUBMISSION THAT THE PROVISO AFTER SECTION 40A(3A), WHICH ALSO APPLI ED TO SEC.40A(3) PROVIDED FOR NO DISALLOWANCE TO BE MADE IF THE PAYM ENT WAS MADE FOR CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELE VANT FACTORS. IT WAS A SUBMISSION THAT THE FACT THAT THE CASH PAYMEN TS HAD TO BE MADE IS AN UNDISPUTED FACT AND THAT THE PAYMENT WAS MADE FOR THE PURCHASE OF MEDICINE WAS ALSO UNDISPUTED FACT AND THIS WAS A LSO SHOWN AND PROVED BEFORE THE LD.CIT(A) AS IT IS EVIDENT FROM T HE PAGE 21 OF THE ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 9 -: ORDER OF THE CIT(APPEALS). THE PAYMENTS HAD BEEN MA DE TO M/S.ABHIJAY HOSPITAL PVT. LTD., WHICH WAS A PARTNER SHIP FIRM BETWEEN ASSESSEE AND HER SPOUSE. THE SAID FIRM WAS INCURRIN G LOSSES AND SUBSEQUENTLY HAD ALSO CLOSED DOWN. IT WAS A SUBMISS ION THAT AS THE SAID FIRM WAS INCURRING LOSSES SO AS TO AVOID ANY L OCKED DOWN OF THE ASSESSEES FUNDS BY THE BANKS OF THE PARTNERSHIP FI RM, THE PAYMENTS HAD BEEN MADE BY CASH FOR THE PURCHASE OF THE MEDIC INES AND THE GENUINENESS OF THE TRANSACTION WAS NEVER DISPUTED. IT WAS A SUBMISSION THAT IN THE CIRCUMSTANCES, THE ENHANCEME NT MADE BY THE LD.CIT(A) BY INVOKING THE PROVISIONS OF THE SECTIO N 40A(3) OF THE ACT IN RESPECT OF CASH PAYMENTS MADE TO M/S.ABHIJAY HOS PITAL PVT. LTD., ON ACCOUNT OF COMMERCIAL EXPEDIENCY FOR PURCHASING THE MEDICINES WAS LIABLE TO BE DELETED. 10. IN REPLY, LD.D.R SUBMITTED THAT IN RESPECT OF T HE ISSUE OF THE SOURCE FOR THE CASH PAYMENTS TO THE COMPANY BY DR.L .SARAVANAN MAY BE RESTORED TO THE FILE OF LD. ASSESSING OFFICER FO R VERIFICATION AND RE- ADJUDICATION. 10.1 IN RESPECT OF ISSUE OF THE ADDITION REPRESENTI NG ENHANCEMENT IN THE CASE OF DR.L.SARVANAN BY INVOKING THE PROVIS IONS OF THE SECTION 40A(3) OF THE ACT, THE SAME WAS LIABLE TO BE UPHELD . ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 10 - : 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. CONS IDERING THE PRAYER OF THE LD.A.R AND THE LD.D.R, THE ISSUE REPR ESENTING THE SOURCE FOR THE CASH PAYMENTS WHICH IS THE SUBJECT MATTER O F ENHANCEMENT AS DONE BY THE LD.CIT(A) IN THE CASE OF THE ASSESSEE, DR.L.SARAVANAN IS RESTORED TO THE FILE OF THE LD. ASSESSING OFFICER F OR VERIFICATION AND RE- ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE O PPORTUNITY OF BEING HEARD. 11.1 IN REGARD TO THE ENHANCEMENT DONE BY THE LD.C IT(A) IN THE CASE OF DR.S.MAHALAKSHMI BY INV0KING THE PROVISIONS OF THE SECTION 40A(3) IN RESPECT OF THE CASH PAYMENTS TO THE PARTN ERSHIP FIRM, M/S.ABHIJAY PHARMA MEDICAL TECHNOLOGIES, WHEREIN TH E ASSESSEE IS ALSO A PARTNER, AS IT IS NOTED THAT THE CASH PAYMEN TS HAVE BEEN MADE ON ACCOUNT OF COMMERCIAL EXPEDIENCY, IN VIEW OF THE PROVISO AFTER SEC.40A(3A) WHICH IS ALSO APPLICABLE TO SEC.40A(3), THE DISALLOWANCE AS MADE BY THE LD.CIT(A) IS DELETED. 12. IN RESPECT OF COMMON ISSUE BEING GROUND NO.7 I N ALL THE APPEALS AGAINST THE ACTION OF ENHANCEMENT DONE BY THE LD.CI T(A), IT WAS SUBMITTED BY LD.A.R THAT THE LD.CIT(A) HAS TAKEN R ECOURSE TO ENHANCEMENT BY TAKING UP A NEW SOURCE WHICH WAS NOT PERMISSIBLE. LD.A.R PLACED RELIANCE ON THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE CIT VS. SHAPOORJI PALLONJI MISTRY REPOR TED IN 44 ITR 891(SC) WHEREIN IT HAS BEEN HELD THAT IT WOULD NOT BE OPEN TO THE AAC TO ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 11 - : INTRODUCE INTO ASSESSMENT NEW SOURCES AS HIS POWER OF ENHANCEMENT IS RESTRICTED ONLY TO INCOMES WHICH WERE SUBJECT MA TTER OF CONSIDERATION FOR THE PURPOSE OF ASSESSMENT BY THE INCOME TAX OFFICER . 12. IN REPLY, THE LD.D.R SUBMITTED THAT THE ISSUE WAS SQUARELY COVERED BYTHE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. NIRBHERAM DELURAM REPORTED IN [1997] 224 ITR 61 0 (SC) WHEREIN IT HAS BEEN HELD THAT THE APPELLATE POWER CONFERRED O N AAC IS NOT CONFINED TO MATTER WHICH HAD BEEN CONSIDERED BY THE INCOME TAX OFFICER. IT WAS A SUBMISSION THAT THE SAID VIEW HA S ALREADY BEEN UPHELD BY THE HONBLE APEX COURT IN THE CASE OF JUT E CORPORATION OF INDIA LTD VS. CIT REPORTED IN [1991] 187 ITR 688 (S C). THE LD.D.R ALSO PLACED BEFORE US THE WRITTEN SUBMISSIONS ON TH E ISSUE OF THE POWER OF LD.CIT(A) TO ENHANCE THE ASSESSMENT WHICH IS EXTRACTED HEREIN BELOW:- 1. IT IS HEREBY SUBMITTED THAT, IN THE FACTUAL MATR IX OF THIS CASE THE CIT(A) HAS POWERS TO ENHANCE THE ASSESSMENT, BASED ON THE FOLLOWING DECISIONS: 2. RELIANCE IS PLACED ON THE DECISION RENDERED IN T HE CASE OF ANSADLDO_ENEGERGIA SPA V. ADIT (INTERNATIONAL; TAXA TION), (115 TTJ 942 DATED DATED MAY 11, 2007), BY THE HONBLE ITAT CHEN NAI, WHEREIN IT WAS HELD AS FOLLOWS: ... THE POWERS OF THE CIT A) ARE CO-TERMINOUS WITH THOSE OF THE AO. HE HAS PLENARY POWERS IN DISPOSING OF AN APPEAL . HE CAN DO WHAT THE AO COULD DO AND CAN ALSO DIRECT THE LATTER TO DO WHAT THE LATTER FAILED TO DO... THE RELEVANT EXTRACT OF THIS ORDER IS REPRODUCED AS BELOW: ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 12 - : ... 7.. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE POWERS OF CIT(A) ARE CO-TERMINOUS WITH THAT OF AO. AS SUCH HE CAN EXERCISE ALL THE POWERS OF AO. REFERENCE WAS MADE T O VARIOUS PRECEDENTS. IN THE CASE OF CIT V. KANPUR COAL SYNDI CATE [1964] 53 ITR 225 (SC) IT WAS HELD THAT CIT(A) CAN DO WHAT TH E ITO CAN DO. HE CAN ALSO DIRECT HIM TO DO WHAT HE FAILED TO DO. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ON THIS FACTUAL BACKDROP THE DECISIONS RENDERED IN THE CASES OF CIT V. SHAPOORJI PALLONJI MISTIY (SUPRA), CIT V. RAI BAHADUR HARD UT ROY MOTILAL CHAMARIA (SUPRA) AND CIT V. NIRBHERAM DALURAM (SUPR A) ARE TO BE CONSIDERED. THE FIRST TWO DECISIONS WERE RENDERED U NDER THE 1922 ACT WHEREAS THE CASE OF NIRBHERAM DALURAM (SUPRA) W AS RENDERED UNDER THE 1961 ACT IN WHICH AN EXPLANATION WAS APPE NDED TO S. 251. AS PER THIS EXPLANATION, CIT(A) MAY CONSIDER A ND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED. IN VIEW OF THIS AND CONSIDERING THE RATIO LAID DOWN IN THE CASES OF CIT V. KANPUR COAL SYNDICATE ( SUPRA) AND JUTE CORPORATION OF INDIA LTD. V. CIT [1990] 88 CTR (SC) 66 [1991] 187 ITR 688 (SC) SUPREME COURT IN NIRBHERAM DALURAMS C ASE (SUPRA) DECIDED THE ISSUE IN FAVOUR OF THE REVENUE. 8. IT WAS FURTHER SUBMITTED THAT CIT(A) DID NOT ADD ANY INCOME FROM TOTALLY NEW SOURCE. THE DICTIONARY MEANING OF THE T ERM SOURCE IS PLACE OF ORIGIN OR PLACE OF ISSUE. IN THIS CASE T HE SOURCE OF INCOME WAS CONTRACT WITH NEYVELI LIGNITE CORPORATION (IN S HORT NLC9. ASSESSEE DID OFFER INCOME FROM CONTRACT II AND PART OF CONTRACT I. DETAILS REGARDING CONTRACT III AND CONTRACT IV WERE ALSO AVAILABLE BEFORE THE AO. CIT(A) HAS ONLY ADDED INCOME FROM CO NTRACT III AND CONTRACT IV AS WELL AS PART OF INCOME FROM CONTRACT I. 9. AFTER CONSIDERING THE VARIOUS DETAILS AND SUBMIS SIONS WE FIND THAT CONTRACTS I, II, ILL AND IV WERE TREATED AS PART OF A SINGLE COMPOSITE CONTRACT, THERE WAS NO NEW SOURCE OF INCOME WHICH W AS CONSIDERED BY THE CIT(A). HONBLE SUPREME COURT IN THE CASE OF CIT V. SUN ENGINEERING WORKS (P) LTD. [1992] 107 CTR (SC) 209 [1992] 198 ITR 297 (SC) HAS HELD THAT ONCE AN ASSESSMENT IS RE OPENED, THE ENTIRE PROCEEDINGS ARE OPEN BEFORE THE AO AND HE CA N BRING TO TAX ANY INCOME WHICH ESCAPED ASSESSMENT. THEREFORE AO A S WELL AS CIT(A) NEED NOT RESTRICT THEMSELVES TO THE ISSUE ON WHICH THE ASSESSMENT WAS REOPENED. 10. THE POWERS OF THE CIT(A) ARE CO-TERMINOUS WITH THOSE OF THE AO. HE HAS PLENARY POWERS IN DISPOSING OF AN APPEAL . HE CAN DO WHAT THE AO COULD DO AND CAN ALSO DIRECT THE LATTER TO DO WHAT THE LATTER FAILED TO DO. APPEAL IS MERELY THE CONTI NUATION OF THE ORIGINAL PROCEEDINGS AND UNLESS SOME FETTERS ARE PL ACED UPON THE POWERS OF THE CIT(A), HE CAN EXERCISE THE SAME POWE RS AS THAT OF AO. THERE APPEARS TO BE NO REASON AS TO WHY CIT(A) CANNOT MODIFY THE ASSESSMENT ORDER WHEN SUCH POWERS ARE EX PRESSLY PROVIDED TO HIM BY THE STATUTE. ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 13 - : 11. IT IS THE DUTY OF THE CIT(A) TO CONSIDER A MATT ER PLACED BEFORE HIM IN ALL ITS ASPECTS. THIS IS ALL THE MORE SO WHE N THE AC HAD FAILED TO CONSIDER THE MATTER IN DETAIL OR IN A PROPER MAN NER. IN THE PRESENT CASE THE ISSUE WAS WITH REGARD TO THE TAXAB ILITY OF INCOME ARISING OUT OF THE CONTRACT WITH NLC. ASSESSEE DID OFFER INCOME FROM CONTRACT II AND PART OF CONTRACT I. DETAILS IN REGA RD TO CONTRACTS III AND IV WERE ALSO AVAILABLE BEFORE THE AC. CIT(A) HA S ONLY ADDED THE INCOME FROM CONTRACT III AND CONTRACT IV AND PART O F INCOME FROM CONTRACT I. 12. HONBLE APEX COURT IN THE CASE OF CIT V. NIRBHE RAM DALURAM (SUPRA) MADE IT CLEAR THAT THE POWERS OF FIRST APPE LLATE AUTHORITY UNDER S. 251 OF THE ACT CANNOT BE CONSTRUED TO BE C ONFINED TO THE MATTERS CONSIDERED BY THE AO ONLY. FIRST APPELLATE AUTHORITY IS ENTITLED TO DIRECT ADDITIONS IN RESPECT OF ITEMS OF INCOME NOT CONSIDERED BY THE AC. IN THE CASES OF RAI BAHADUR H ARDUTROY MOTILAL CHAMARIA (SUPRA) AND SHAPOORJI PALLONJI (SUPRA), DE CISIONS WERE RENDERED UNDER THE 1922 ACT. IN THE CASE OF KANPUR COAL SYNDICATE (SUPRA), APEX COURT MADE IT VERY CLEAR THAT CIT(A) CAN DO WHAT THE ITO CAN DO. WE THEREFORE RESPECTFULLY FOLLOWING THE DECISIONS OF THE HONBLE SUPREME COURT IN NIRBHERAM DALURAM (SUPRA) AND KANPUR COAL SYNDICATE (SUPRA), DECIDE THIS ISSUE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 3. THIS DECISION OF THE HONBLE ITAT CHENNAI WAS NO T CONTESTED BY THE ASSESSEE BEFORE THE HONBLE MADRAS HIGH. THIS CAN B E SEEN FROM THE RELEVANT DECISION OF THE HONBLE MADRAS HIGH COURT IN THE SAME CASE, REPORTED IN 178 TRNZJ2OO9) . THUS IT IS SUBMITTED T HAT, THIS ION OF THE HONBLE CHENNAL ITAT, REGARDING THE POWERS OF THE C IT(A), U/S 251 HAS BECOME FINAL, AND THEREFORE THE SAME MAY BE FOLLOWE D IN THIS PRESENT APPEAL ALSO. 4. FURTHER RELIANCE IS PLACED ON THE DECISION RENDE RED IN THE CASE OF MEGATRENDS INC V. CIT, CHENNAI, (74 TAXMANN 197, DA TED AUGUST 22, 2016), BY THE HONBLE MADRAS HIGH COURT, WHERE IT WAS HELD AS FOLLOWS: ... COURTS HAVE CONSISTENTLY HELD THAT THE POWER O F THE FIRST APPELLATE AUTHORITY ARE COTERMINOUS WITH THAT OF TH E ASSESSING OFFICER AND THAT THE APPELLATE AUTHORITY CAN DO WHA T THE ASSESSING OFFICER OUGHT TO HAVE DONE AND ALSO DIRECT THE LATT ER TO DO WHAT HE HAS FAILED... THE RELEVANT EXTRACT OF THIS ORDER IS REPRODUCED AS BELOW: 37. THE QUESTION NOW TO BE DECIDED BY US, IS WHETHE R THE IMPUGNED SHOW CAUSE NOTICE DATED 6.11.2015, HAS TO BE SET ASIDE, ON THE GROUNDS OF JURISDICTION, OR TO ALLOW THE COMMISSIONER OF INCOM E TAX, APPEALS TO DECIDE THE STATUS OF THE ASSESSEE. THE AUTHORITY, IN HIS A FFIDAVIT ON OATH HAS STATED THAT, THE ISSUE IS YET TO BE DECIDED. TRUE THAT IN THE EARLIER YEARS, THE ISSUE WAS NOT RAISED. MERELY BECAUSE, IT WAS NOT RAISED, IT CANNOT BE SAID THAT THE ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 14 - : COMMISSIONER, HAS NO POWERS TO DECIDE, IF THE ASSES SING OFFICER, HAS FAILED TO ADVERT TO THE SAID ASPECT. ON THIS ASPECT, WE AR E OF THE CONSIDERED VIEW, THAT IT IS ONLY A SHOW CAUSE NOTICE AND IT IS ALWAY S OPEN TO THE APPELLANT TO RESPOND. 38. WHILE CONSIDERING THE SCOPE AND POWERS OF THE A PPELLATE AUTHORITY, UNDER THE INCOME TAX ACT, 1961, COURTS HAVE CONSISTENTLY HELD THAT THE POWER OF THE FIRST APPELLATE AUTHORITY ARE COTERMINOUS WITH THAT OF THE ASSESSING OFFICER AND THAT THE APPELLATE AUTHORITY CAN DO WHA T THE ASSESSING OFFICER OUGHT TO HAVE DONE AND ALSO DIRECT THE LATTER TO DO WHAT HE HAS FAILED. APPEAL IS ALSO CONTINUATION OF ORIGINAL PROCEEDINGS AND UNLESS SOME FETTERS ARE PLACED UPON THE POWERS OF THE APPELLATE AUTHORI TY BY EXPRESS WORDS, THE APPELLATE AUTHORITY CAN EXERCISE ALL THE POWERS AS THAT OF THE ORIGINAL AUTHORITY. IF THE ASSESSING OFFICER, HAS ERRED IN C ONCLUDING THE STATUS OF THE ASSESSEE AS A FIRM, IT CANNOT BE SAID THE COMMISSIO NER OF APPEALS, HAS NO JURISDICTION TO GO INTO THE ISSUE..... 4.1. THUS IT IS SUBMITTED THAT, THIS LATEST DECISIO N OF THE JURISDICTIONAL MADRAS HIGH COURT , UPHOLDING THE POWERS OF THE CIT(A), U/ S 251 TO ENHANCE THE ASSESSMENT , MAY BE FOLLOWED IN THIS PRESENT APPEAL ALSO. 5. IN THE AFORESAID DECISION THE HONBLE MADRAS HIGH COURT IN TURN HAS RELIED ON THE FULL BENCH DECISION OF THE HONBLE MADRAS HI GH RENDERED IN THE CASE OF SATE OF TAMILNADU V. ARULMURUGAN & CO {(1982) 51 STC 381}. 5.1. IN THIS DECISION BASED ON PAN MATERIA PROVISIO N IN THE TMAILNADU GENERAL SALES TAX ACT 1959 DEALING WITH THE POWERS OF THE APPELLATE AUTHORITY TO ISSUE NOTICE FOR ENHANCEMENT, THE HON BLE FULL BENCH OF THE MADRAS HIGH COURT HAS HELD THAT .. THE POWER OF THE APPELLATE AUTHORITY CONCERNING AN ASSESSMENT UNDER APPEAL IS NO DIFFERENT, AND NOT LE SS WIDE, THAN THE POWER OF THE ASSESSING AUTHORITY TO MAKE T HE ASSESSMENT IN THE FIRST INSTANCE. IT FOLLOWS, THERE FORE, THAT WHATEVER DISCRETION IS CONFERRED ON THE ASSESSING A UTHORITY FOR PURPOSES OF ASSESSMENT MUST SO BE REGARDED, AS A MATTER OF STATUTORY CONSTRUCTION, TO HAVE BEEN CONFERRED O N THE APPELLATE AUTHORITY EVEN WITHOUT THE CONCERNED STAT UTORY PROVISION EXPRESSLY NAMING THE APPELLATE AUTHORITY IN THAT BEHALF. THE RELEVANT EXTRACT OF THIS ORDER IS REPRODUCED AS BELOW: ... 5. WE ACCEPT THE CONTENTION OF THE LEARNED GO VERNMENT PLEADER THAT THE ASSESSING AUTHORITY, AS THE PRESCRIBED AUTHORITY, H AS THE POWER TO ALLOW FURTHER TIME TO FILE C FORMS UNDER THE PROVISO TO S ECTION 8(4) OF THE CENTRAL SALES TAX ACT. LIKEWISE, WE ACCEPT THE POSITION THA T UNDER THE PROVISO TO RULE 12(7) OF THE CENTRAL SALES TAX (REGISTRATION AND TU RNOVER) RULES, 1957, THE FIRST ASSESSING AUTHORITY IS INVESTED WITH THE POWE R TO ALLOW FURTHER TIME FOR FILING C FORMS. WE DO NOT, HOWEVER, ACCEPT THE IMPL ICATION IN THE GOVERNMENT PLEADERS FURTHER CONTENTION THAT AN APP ELLATE AUTHORITY CANNOT ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 15 - : BE BROUGHT WITHIN THE MEANING OF THE EXPRESSION ASS ESSING AUTHORITY. IN ONE SENSE, AN APPEAL MAY BE DIFFERENT FROM AN ASSES SMENT. BUT THE DIFFERENCE LIES ONLY IN THE PARTICULAR STAGE OF THE PROCEEDING AND IN THE PARTICULAR AUTHORITY HAVING JURISDICTION IN THE TWO STAGES. BASICALLY, AN APPEAL DOES NOT DIFFER FROM AN ASSESSMENT. JUST AS IS THE CASE WITH ANY OTHER APPEAL UNDER OUR LEGAL SYSTEM, AN APPEAL FROM A SAL ES TAX ASSESSMENT IS ONLY A REHEARING OR A RETRIAL. IN THE ABSENCE OF AN Y ST AT UTOIY INHIBITIONS OR RESTRICTIONS, AN APPELLATE AUTHORITY HAS PRECISELY THE SAME POWERS, EXERCISABLE OR IN THE SAME MANNER AND TO THE SAME E XTENT, AS THE ASSESSING AUTHORITY HAS, IN THE FIRST INSTANCE. IF THIS WERE NOT THE POSITION, NO APPELLATE AUTHORITY CAN EFFECTIVELY FUNCTION WHILE HEARING AN D DETERMINING AN APPEAL FROM AN ASSESSMENT. UNDER THE SCHEME OF SECTION 9 O F THE CENTRAL SALES TAX ACT, APPEALS FROM CENTRAL SALES TAX ASSESSMENTS WIL L HAVE TO BE DEALT WITH IN THE SAME MANNER AND UNDER THE SAME PROCEDURE AS PRO VIDED FOR UNDER THE GENERAL SALES TAX LAW OF THE CONCERNED STATE. THE J URISDICTION OF AN APPELLATE AUTHORITY UNDER THE TAMIL NADU GENERAL SALES TAX AC T, 1959, INCLUDES THE POWER TO CONFIRM, REDUCE, ENHANCE, OR ANNUAL, THE A SSESSMENT. IT ALSO INCLUDES THE POWER TO SET ASIDE THE ASSESSMENT WITH A DIRECTION TO THE ASSESSING AUTHORITY TO MAKE A FRESH ASSESSMENT, AND ALSO TO PASS ANY OTHER ORDER WHICH THE APPELLATE AUTHORITY MAY THINK FIT. THESE POWERS, WHICH ARE OF THE WIDEST AMPLITUDE, ARE EXPRESSLY CONFERRED BO TH ON THE APPELLATE ASSISTANT COMMISSIONER AND ON THE APPELLATE TRIBUNA L, VIDE SECTIONS 31 AND 36 OF THE TAMIL NADU GENERAL SALES TAX ACT, 1959. T HE PROVISIONS SHOW CLEARLY THAT THE POWER OF THE APPELLATE AUTHORITY C ONCERNING AN ASSESSMENT UNDER APPEAL IS NO DIFFERENT, AND NOT LESS WIDE, TH AN THE POWER OF THE ASSESSING AUTHORITY TO MAKE THE ASSESSMENT IN THE F IRST INSTANCE. BESIDES, SUCH POWER AS THE APPELLATE AUTHORITY IS EMPOWERED TO EXERCISE IN RELATION TO AN ASSESSMENT UNDER APPEAL, HAS GOT TO BE EXERCISED ONLY IN THE SAME MANNER AND SUBJECT TO THE SAME CONDITIONS, IF ANY, WHICH GOVERN THE EXERCISE OF THE POWER OF ASSESSMENT BY THE ASSESSIN G AUTHORITY IN THE FIRST INSTANCE. IT FOLLOWS, THEREFORE, THAT WHATEVER DISC RETION IS CONFERRED ON THE ASSESSING AUTHORITY FOR PURPOSES OF ASSESSMENT MUST SO BE REGARDED, AS A MATTER OF STATUTORY CONSTRUCTION, TO HAVE BEEN CONF ERRED ON THE APPELLATE AUTHORITY EVEN WITHOUT THE CONCERNED STATUTORY PROV ISION EXPRESSLY NAMING THE APPELLATE AUTHORITY IN THAT BEHALF IT GOES WITH OUT SAYING THAT AN APPELLATE AUTHORITY, ENGAGED AS IT IS IN PRECISELY THE SAME T ASK UNDER THE FISCAL STATUTE AS THAT OF THE ASSESSING AUTHORITY MUST ALSO BE POS SESSED TO LIKE POWERS AS THOSE OF THE ASSESSING AUTHORITY. IT IS IMPLICIT IN THE VERY NATURE OF THE APPELLATE JURISDICTION, AS WELL AS THE PURPOSES FOR WHICH THAT JURISDICTION IS CREATED BY THE STATUTE, THAT THE APPELLATE AUTHORIT Y WILL HAVE TO FUNCTION, IN THE VERY IMAGE OF THE ASSESSING AUTHORITY. APPELLAT E PROCEEDINGS ARE OFTEN TRULY DESCRIBED AS AN EXTENSION OF THE ASSESSMENT P ROCEEDINGS, OR AS A CONTINUATION OF THE ASSESSMENT PROCEEDINGS. IN THIS CONTEXT, THEREFORE, IT DOES NOT MATTER THAT A POWER IS CONFERRED, BY ANY P ROVISION IN THE TAXING STATUTE OR IN THE STATUTORY RULES, EO NOMINE ON THE ASSESSING AUTHORITY, AND IS SILENT ABOUT THE APPELLATE AUTHORITY OR ANY OTHE R AUTHORITY UNDER THE ACT. SINCE THE ENABLING SECTION, OR THE RULE, AS THE CAS E MAY BE, EXPRESSLY REFERS ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 16 - : TO THE ASSESSING AUTHORITY, AS THE REPOSITORY OF TH E POWER, IT IS ELEMENTARY CONSTRUCTION TO HOLD THAT SUCH POWER CAN BE, AND IS INTENDED TO BE, EXERCISED BY THE ASSESSING AUTHORITY NAMED IN THE P ARTICULAR PROVISION CONCERNED. BUT, IT DOES NOT MEAN THAT THE APPELLATE AUTHORITY AND ANY OTHER FISCAL AUTHORITY WHO ARE IN SEISIN OF THE ASSESSMEN T, EITHER IN APPEAL, OR IN REVISION OR IN ANY OTHER PROCEEDING, CANNOT EXERCIS E A LIKE POWER. THE FACT THAT THE APPELLATE AUTHORITY IS NOT EXPRESSLY MENTI ONED IN THE PROVISION CONFERRING THE ENABLING POWER, DOES NOT MEAN THAT T HE LEGISLATURE INTENDED TO EXCLUDE THAT AUTHORITY FROM THE PURVIEW OF THE P ROVISION... 21. HAVING REGARD TO THE CONSIDERATIONS WHICH WE HA VE SET OUT IN THE FOREGOING PARAGRAPHS, WE MUST UPHOLD THE DECISION O F THE TRIBUNAL IN BOTH THE CASES. WE HOLD THAT THE TRIBUNAL HAS THE POWER TO RECEIVE C FORMS AT THE TIME OF THE APPEAL, FOR SUFFICIENT CAUSE. THE TRIBU NAL CAN THEN PROCEED TO THE NEXT STEP OF APPLYING THE CONCESSIONAL RATE OF TAX TO THE TURNOVER COVERED BY THE C FORMS. OR, THE TRIBUNAL MAY REMAND THE CASE T O THE APPELLATE ASSISTANT COMMISSIONER. THE REMAND MAY BE FOR THE S PECIFIC PURPOSE OF GOING INTO THE QUESTION OF SUFFICIENT CAUSE. THE RE MAND MAY ALSO BE LOADED WITH A FINDING BY THE TRIBUNAL THAT THERE HAS BEEN SUFFICIENT CAUSE, LEAVING THE SCRUTINY OF THE C FORMS ALONE TO BE UNDERTAKEN ON REMAND. THE TRIBUNAL MAY, IF SATISFIED ABOUT THE SUFFICIENT CAUSE SET AS IDE EVEN THE ASSESSMENT ORDER, AND DIRECT THE ASSESSING AUTHORITY TO RE-DO THE ASSESSMENT, IN WHICH EVENT THERE WOULD BE NO OCCASION FOR THE ASSESSING AUTHORITY TO GO INTO ANY QUESTION OF DELAY IN FILING THE C FORMS, FOR WITH THE SETTING ASIDE OF THE ASSESSMENT THE WHOLE THING IS ONCE AGAIN AT LARGE. IT IS NEEDLESS TO ADD THAT WHATEVER HAS BEEN STATED BY US AS RESPECTS THE TRIB UNALS POWER AND THE MODES OF ITS EXERCISE APPLY, MUTATIS MUTANDIS, TO T HE APPELLATE ASSISTANT COMMISSIONER IN LIKE SITUATIONS OCCURRING IN THE AP PEALS BEFORE HIM... -----AN APPEAL IS A CONTINUATION OF THE PROCESS OF ASSESSMENT, AND AN ASSESSMENT IS BUT ANOTHER NAME FOR ADJUSTMENT OF THE TAX LIABILITY TO ACCORD WITH THE TAXABLE EVENT IN THE P ARTICULAR TAX- PAYERS CASE. THERE CAN BE NO ANALOGY OR PARALLEL BETWEEN A TAX APPEAL AND AN APPEAL, SAY, IN CIVIL CASES. A CIVIL APPEAL, LIKE A LAW SUIT IN THE COURT OF FIRST INSTANCE OUT OF WHICH IT ARISES, IS REALLY AN D TRULY AN ADVERSARY PROCEEDING, THAT IS TO SAY, A CONTROVERSY OR TUSSLE OVER MUTUAL RIGHTS AND OBLIGATIONS BETWEEN CONTESTING LITIGANTS RANGED AGA INST EACH OTHER AS OPPONENTS. A TAX APPEAL IS QUITE DIFFERENT. EVEN AS THE ASSESSING AUTHORITY IS NOT THE TAX-PAYERS OPPONENT, IN THE STRICTLY PRO CEDURAL SENSE OF THE TERM, SO TOO THE APPELLATE AUTHORITY SITTING IN APPEAL OV ER THE ASSESSING AUTHORITYS ORDER OF ASSESSMENT IS NOT STRICTLY AN ARBITRAL TRI BUNAL DECIDING A CONTESTED ISSUE BETWEEN TWO LITIGANTS RANGED ON OPPOSITE SIDE S. IN A TAX APPEAL, THE APPELLATE AUTHORITY IS VERY MUCH COMMITTED TO THE A SSESSMENT PROCESS. THE APPELLATE AUTHORITY CAN ITSELF ENTER THE ARENA OF A SSESSMENT, EITHER BY PURSUING FURTHER INVESTIGATION, OR CAUSING FURTHER INVESTIGATION TO BE DONE. IT CAN DO SO ON ITS OWN INITIATIVE, WITHOUT BEING PROD DED BY ANY OF THE PARTIES. IT CAN ENHANCE THE ASSESSMENT, TAKING ADVANTAGE OF THE OPPORTUNITY AFFORDED BY THE TAX-PAYERS APPEAL, EVEN THOUGH THE APPEAL ITSELF HAS BEEN MOOTED ONLY WITH A VIEW TO A REDUCTION IN THE ASSES SMENT. THESE ARE SPECIAL ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 17 - : AND EXCEPTIONAL ATTRIBUTES OF THE JURISDICTION OF A TAX APPELLATE AUTHORITY IS NO DIFFERENT, FUNCTIONALLY AND SUBSTANTIALLY, FROM THE ASSESSING AUTHORITY ITSELF. THIS POSITION HAS BEEN WELL BROUGHT OUT IN MORE THA N ONE DECISION OF THE SUPREME COURT (PARA 15)... 5.2. FROM THE ABOVE , IT IS HERE BY SUBMITTED THAT THESE REASONING LAID DOWN BY THE FULL BENCH DECISIONS OF THE JURISDICTIO NAL MADRAS HIGH COURT , (AS RELIED IN THE INCOME TAX DECISION BY THE JURISD ICTIONAL MADRAS HIGH COURT IN THE CASE OF MEGA TRENDS INC (SUPRA)), MAY BE FOL LOWED IN THE THE HONBLE CHENNAL ITAT. 6. IT IS FURTHER SUBMITTED THAT THE ABOVE REASONING RENDERED BY THE FULL BENCH OF THE MADRAS HIGH COURT HAS BEEN UPHELD IN B Y THE HONBLE SUPRERE COURT IN THE CASE STATE OF ANDHRA PRADESH V. HYDERA BAD ASBESTOS CEMENT PRODUCTION LTD, DATED APRIL 28, 1994, {(1994) 1994 TAXMANN.COM 361 (SC) (PARA 16)}. 7. IT IS HEREBY SUBMITTED THAT, SIMILAR VIEW HAS BE EN HELD BY THE THREE-JUDGE BENCH OF THE HONBLE SUPREME COURT IN THE CASE OF C IT V. KANPUR COAL SYNDICATE [1964] 53 ITR 225. IN THIS CASE THE SCOPE OF SECTION 31(3)(A) OF THE INDIAN INCOME-TAX ACT, 1922 [WHICH WAS ALMOST I DENTICAL TO SECTION 251(1)(A) OF THE 1961 ACT] WAS CONSIDERED AND IT WA S HELD THAT POWERS OF THE CIT (A) IS COTERMINOUS WITH THAT OF THE AO. 7.1. THE RELEVANT EXTRACT OF THIS DECISION IS REPRO DUCED AS BELOW: ... IF AN APPEAL LIES, SECTION 31 OF THE ACT DESCR IBES THE POWERS OF THE APPELLATE ASSISTANT COMMISSIONER IN SUCH AN APP EAL. UNDER SECTION 31(3)(A), IN DISPOSING OF SUCH AN APPEAL, T HE APPELLATE ASSISTANT COMMISSIONER MAY, IN THE CASE OF AN ORDER OF ASSESSMENT, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; U NDER CLAUSE (B) THEREOF HE MAY SET ASIDE THE ASSESSMENT AND DIRECT THE INCOME-TAX OFFICER TO MAKE A FRESH ASSESSMENT. THE APPELLATE A SSISTANT COMMISSIONER HAS, THEREFORE, PLENARY POWERS IN DISP OSING OF AN APPEAL. THE SCOPE OF HIS POWER IS COTERMINOUS WITH THAT OF THE INCOME- TAX OFFICER. HE CAN DO WHAT THE INCOME-TAX OFFICER CAN DO AND ALSO DIRECT HIM TO DO WHAT HE HAS FAILED TO DO . 8. THE ABOVE OBSERVATIONS (OF LARGER BENCH DECISION OF THE SUPREME COURT), HAD BEEN HELD AS APPLICABLE IN THE INTERPRETATION O F SECTION 251 (1) (A) OF INCOME TAX ACT 1961, BY AN ANOTHER LARGER BENCH OF THE SUPREME COURT, IN THE CASE OF JUTE CORPORATION OF INDIA. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS BELOW: .THE ABOVE OBSERVATIONS ARE SQUARELY APPLICABLE I N THE INTERPRETATION OF SECTION 251(1)(A)OF THE ACT. THE DECLARATION OF LAW IS CLEAR THAT THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IS CO-TERMINOUS WITH THAT OF THE INCOME-TAX OFFICER, A ND IF THAT IS SO, ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 18 - : THERE APPEARS TO BE NO REASON AS TO WHY THE APPELLA TE AUTHORITY CANNOT MODIFY THE ASSESSMENT ORDER ON AN ADDITIONAL GROUND EVEN IF NOT RAISED BEFORE THE INCOME-TAX OFFICER. NO EXC EPTION COULD BE TAKEN TO THIS VIEW AS THE ACT DOES NOT PLACE ANY RE STRICTION OR LIMITATION ON THE EXERCISE OF APPELLATE POWER. EVEN OTHERWISE, AN APPELLATE AUTHORITY WHILE HEARING THE APPEAL AGAINS T THE ORDER OF A SUBORDINATE AUTHORITY, HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATION, IF ANY, PRESCRIBED BY T HE STATUTORY PROVISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISI ON, THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHI CH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE APPEARS TO BE NO GOOD REASON AND NONE WAS PLACED BEFORE US TO JUS TIFY CURTAILMENT OF THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASS ESSEE IN SEEKING MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY T HE INCOME-TAX OFFICER. . . 8.1. THUS SUBMITTED THAT , TWO LARGER BENCH OF THE SUPREME COURT HAS HELD THAT THE POWERS OF CIT(A) IS COTERMINOUS WITH THAT OF THE AO. 9. THESE DECISION RENDERED BY THE SUPREME COURT HAS BEEN CONSIDERED AGAIN BY THE SUPREME COURT IN THE CASE OF CIT V. NIRBHERA M DELURAM [(1991) 224 ITR 610 (SC)], AND THE APEX COURT HAS HELD AGAIN TH AT , CIT(A) HAS POWERS TO DECIDE AND ENHANCE ON THE MATTERS, WHICH HAS NOT BEEN CONSIDERED BY THE ITO. THE RELEVANT EXTRACT OF THIS ORDER IS REPRODUCED AS BELOW: AT THE INSTANCE OF THE REVENUE, THE TRIBUNAL WAS DI RECTED BY THE MADHYA PRADESH HIGH COURT TO REFER THE FOLLOWING QUESTIONS OF LAW FOR OPINION: 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DELETING A SUM OF RS.2,30 ,000 FRESHLY ADDED BY THE APPELLATE ASSISTANT COMMISSIONER? 2. WHETHER THE SUM OF RS.2,30,000 WAS ADDED BY THE APPELLATE ASSISTANT COMMISSIONER ON NEW SOURCES OF INCOME OF ITEMS NOT CONSIDERED BY THE INCOME-TAX OFFICER FROM THE POINT OF VIEW OF ASSESSABILITY? 3. WHETHER THE APPELLATE ASSISTANT COMMISSIONER HAD NO JURISDICTION OR POWER TO ADD THE SUM OF RS. 2,30,00 0 IN THE FACTS AND CIRCUMSTANCES IN WHICH HE HAS ADDED THE SAME ? (PARA) 4. HAVING REGARD TO THE DECISION IN JUTE COR PN. OF INDIA LTD. S CASE (SUPRA),IT MUST BE HELD THAT THE HIGH COURT WAS IN ERROR IN HOLDING THAT THE APPELLATE POWER CONFERRED ON THE A AC UNDER SECTION 251 WAS CONFINED TO THE MATTER WHICH HAD BE EN CONSIDERED BY THE ITO AND THE AAC EXCEEDED HIS JURISDICTION IN MAKING AN ADDITION OF RS. 2,30,000 ON THE BASIS OF THE OTHER 10 ITEMS OF ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 19 - : HUNDIS WHICH HAD NOT BEEN EXPLAINED BY THE ASSESSEE . THIS MEANS THAT EVEN IF QUESTION NO. 2 IS ANSWERED IN THE AFFI RMATIVE, QUESTION NOS. I AND 3 MUST BE ANSWERED IN THE NEGATIVE. THE APPEAL IS, THEREFORE, ALLOWED, THE IMPUGNED JUDGMENT OF THE HI GH COURT INSOFAR AS IT RELATES TO QUESTION NOS. 1 AND 3, IS SET ASIDE AND THE SAID QUESTIONS ARE ANSWERED IN THE NEGATIVE, I.E., IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. NO ORDER AS TO CO STS. 9.1. THUS IT IS SUBMITTED THAT THIS LATEST DECISION OF THE SUPREME COURT , WHICH HAS HELD THAT THE POWERS OF THE CIT (A) IS CO -TERMINOUS WITH THAT OF THE AC, MAY BE FOLLOWED IN THE PRESENT APPEAL BEFOR E THE HONBLE ITAT, CHENNAI. 10. THE HONBLE ITAT, HYDERABAD IN ITS VERY RECENT ORDER IN THE CASE OF FINCITY INVESTMENTS (P.) LTD. V. ACIT, HYDE, [2018] 96 TAXMANN. CORN 616, FOLLOWED THESE AFORE REFERRED SUPREME COURT DECISIO NS, AND HAS HELD THAT CIT(A) HAS POWERS TO ENHANCE ON ISSUES NOT CONSIDER ED BY THE AO. THE RELEVANT EXTRACT OF THIS ORDER IS REPRODUCED AS BELOW: ... (PARA) 11.1 RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE OPINION THAT LD. CIT(A) HAS JURISDICTION TO CONSIDER THE LOSS CLAIME D OF THE ASSESSEE, WHICH AC HAS NOT EXAMINED, AS HE HAS POWERS TO ENHA NCE ALSO GIVEN TO HIM U/S. 251. THE PROVISIONS OF SECTION 251(1)(A ) EMPOWERS THE CIT IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. THUS, SINCE THE CI T(A) HAS NOT UN- EARTHED A NEW SOURCE OF INCOME, BUT ONLY HAS GONE B Y THE ANNUAL REPORT! STATEMENTS ENCLOSED TO THE RETURN IN WHICH ASSESSEE HAS CLAIMED TRADING LOSS TO SET-OFF TO OTHER INCOMES, W E ARE OF THE OPINION THAT CIT(A) HAS POWER TO ENHANCE AND ACCORD INGLY THE CONTENTIONS OF ASSESSEE ON THIS ISSUE ARE REJECTED. .. 11. SUBMISSION REGARDING THE ASSESSEE RELIANCE ON T HE ASSESSEE, RENDERED BY THE HONBLE KERAL HIGH COURT: 11.1. IN THIS CASE UNDER APPEAL, THE AC HAD ASSESSE D THE DEEMED DIVIDEND U/S 2 (22) (E). THE APPEALLENT ASSESEE HAS PRODUCED THE RELEVENT ACCOUNT REFLECTING THE FINACIAL TRANSACTION BETWEEN HIM AND THE COMPANY, BEFORE THE CIT(A) AND SOUGHT THAT IF AT ALL THE DEEMED DIVIDEN T TO ASSESSED, IT SHOULD BE ON THE NET BALANCE OUTSTANDING AS ON THE END OF THE YEAR, AS THE ASSESSEE HAD REPAID TO LOAN TAKEN, BACK TO THE COMP ANY. 11.2. IN THIS REGARD THE CIT(A) HAD SOUGHT TO VERIF Y THE CORRECTNESS OF THIS SUBMISSION OF THE ASSESSEE, THE CIT(A) HAD SOUGHT T HE DETAILS OF THE SOURCE FOR THE SAID REPAYMENTS. THE ASSESSEE COULD NOT PRO DUCE THE SAME , HENCE IT LEAD TO THE SAID ENHANCEMENT THUS IT IS FOUND THAT THE ENHANCEMNET HAS BEEN MADE, BASED ON THE SAME DETAILS FILED BY THE A SSESSEE, AND NOT FORM OUTSIDE HIS RETURN OF INCOME. 11.3. ON THE OTHER HAND IN THE CASE LAW RELIED BY T HE ASSESSEE, RENDERED BY THE HONBLE KERAL HIGH COURT IN THE CASE OF CIT V. B. P. SHERAFUDIN [(2017) ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 20 - : ((87 TAXMANN.COM 330)], THE ENHANCEMENT HAD BEEN MA DE BY THE CIT(A), BY ASSESSING THE SALARY INCOME OF THE ASSESSEE, EAR NED BY HIM FROM ABROAD SOURCES, WHICH WAS NOT ORIGINALLY OFFERED TO TAX , IN HIS RETURN ORGINALLY FILED, AND BASED ON WHICH THE APPEAL PROCEDINGS HAVE ORIGI NATED. 11.4. IN THIS CASE THE ASSESSEE IS NOT FOUND TO HAV E GOT AN ANOTHER SALARY INCOME FROM AN ANOTHER HOPITAL OR BUSINESS IN COME FROM RUNNING MEDICAL INSTITUTE OR PROFESSIONAL INCOME FROM AN ANOTHER CL INIC , WHICH WERE HITHERTO NOT OFFERED TO TAX. HAD SUCH INCOME WAS BROUGHT TO TAX , BY THE CIT(A) , THEN IT CAN BE SAID THAT INCOME AN ANOTHER NEW SOUR CE , HAS BEEN ENHANCED BY THE CIT(A). BUT AS SUBMITTED EARLIER THAT IS NOT THE CASE, IN THIS ENHANCEMENT MADE BY THE CIT(A). 11.5. THUS IT IS SUBMITTED THAT THE DECISIONS RELIE D BY THE ASSESSEE ARE NOT APPLICABLE TO THIS CASE UNDER APPEAL. 12. BASED ON THESE SUBMISSIONS, THE HONBLE ITAT, M AY KINDLY CONSIDER TO HOLD THAT THE CIT(A) HAS THE POWERS TO ENHANCE THE ASSESSMENT IN THIS CASE. 13. IN REPLY, LD.A.R SUBMITTED THAT THE DECISION O F HONOURABLE SUPREME COURT IN THE CASE OF CIT VS.SHAPPORI PALLON JI MISTRY REFERRED TO SUPRA WAS A THREE-JUDGE DECISIONS. IT WAS A FURT HER SUBMISSION THAT THE DECISION IN THE CASE OF CIT VS.NIRBHERAM DALURA M REFERRED TO SUPRA WAS A TWO-JUDGE DECISION AND HAD NO APPLICABILITY I N SO FAR AS THAT WAS A CASE WHERE THE ASSESSING AUTHORITY HAD DISALLOWED VARIOUS HUNDIS LOANS, THE AAC HAD TAKEN NOTE OF OTHER ITEMS OF HUN DIS LOANS AND HAD ENHANCED THE ASSESSMENT IN RESPECT OF THOSE OTHER O STENSIBLE HUNDIS LOANS. IT WAS A SUBMISSION THAT IN THE PRESENT APPE ALS, THE LD. ASSESSING OFFICER HAD CONSIDERED THE ISSUE OF DEEME D DIVIDEND IN THE COURSE OF ASSESSMENT, THE LD. ASSESSING OFFICER HAD NOT TOUCHED UPON THE SOURCE OF THE DEPOSITS OF CASH IN THE ACCOUNTS OF THE COMPANY BY THE ASSESSEE DR.L.SARAVANAN NOR HAD THE LD. ASSESSI NG OFFICER TOUCHED ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 21 - : UPON THE ISSUE OF CASH PAYMENTS BY THE ASSESSEE, DR .S.MAHALAKSHMI FOR PURCHASE OF MEDICINE FROM THE PARTNERSHIP FIRM. IT WAS A SUBMISSION THAT, CONSEQUENTLY, THESE ISSUES WERE FR ESH SOURCE OF INCOME WHICH HAD BEEN TOUCHED BY THE LD.CIT(A) FOR THE PURPOSE ENHANCEMENT. IT WAS A SUBMISSION THAT THE HONBLE S UPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. VS. CIT REPORTED IN [1990] 53 TAXMAN 85(SC) WAS ON THE ISSUE TO DECIDE THAT TH E APPELLATE AUTHORITY WHILE HEARING APPEAL AGAINST THE ORDER OF SUBORDINATE AUTHORITY HAS ALL THE POWERS WHICH THE ORIGINAL AUT HORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE REST RICTIONS OR LIMITATIONS, IF ANY, PRESCRIBED BY THE STATUTORY PROVISIONS. IT WAS A SUBMISSION THAT IN FACT THE EXPLANATION TO SECTION 251 LAID RESTRIC TIONS TO THE POWERS OF THE LD.CIT(A) IN RESPECT OF ENHANCEMENTS IN SO FAR AS HE MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED. IT W AS A SUBMISSION THAT UNLESS THE ISSUE HAD BEEN TAKEN UP FOR CONSIDE RATION OR DECISION IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE FRESH ISSUE WHICH HAS NOT BEEN CONSIDERED OR DECIDED, IN THE COURSE OF ASSESS MENT PROCEEDINGS WAS OUT OF THE PURVIEW OF ENHANCEMENT OR CONSIDERAT ION BY THE LD.CIT(A). IT WAS A SUBMISSION THAT THE HONBLE SU PREME COURT IN THE CASE OF CIT VS. KANPUR COAL SYNDICATE REPORTED IN [ 1964] 53 ITR 225(SC) IS ALSO THE DECISION OF THREE-JUDGE BENCH, WHICH WAS AGAIN ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 22 - : CONSIDERING THE INDIAN INCOME-TAX ACT, 1922, HAD H ELD THAT THE SCOPE OF HIS POWER IS CO-TERMINOUS WITH THAT OF THE INCOM E TAX OFFICER. HE CAN DO WHAT THE INCOME TAX OFFICER CAN DO AND ALSO DIRECT HIM TO DO WHAT HE HAS FAILED TO DO. IT WAS A SUBMISSION THA T IN FACT, THE EXPLANATION TO SECTION 251, WHICH WAS NOT IN SECTIO N 31(3)(A) OF INDIAN INCOME-TAX ACT, 1922, CLEARLY RESTRICTED THE SECOND PORTION TO SAY THAT THE APPELLATE AUTHORITY CAN DO ONLY AN EXTENSION OF WHAT THE INCOME TAX OFFICER HAS DONE AND HE CANNOT OPEN UP FRESH AR EAS OF ASSESSMENT. IT WAS A SUBMISSION THAT THE ENHANCEME NT AS DONE BY THE LD.CIT(A) WAS LIABLE TO ANNULLED. 14. IN REPLY, THE LDR SUBMITTED THAT THIS ISSUE OF ENHANCEMENTS MUST BE DECIDED IN FAVOUR OF THE REVENUE IN SO FAR AS THERE IS A DIRECTION FROM THE BOARD THAT THE LD.CIT(A) ARE EXP ECTED TO ENHANCE THE ASSESSMENT WHERE THEY FIND THAT THE ASSESSMENT HAS NOT BEEN DONE PROPERLY BY THE LD. ASSESSING OFFICER. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. AT THE OUTSET, THE ARGUMENT OF THE LD.D.R THAT THE ISSUE OF ENHANCEMENT MUST BE UPHELD IN SO FAR AS TH E BOARD HAS DIRECTED THE LD.CIT(A) TO ENHANCE THE ASSESSMENT W HERE THEY FIND THAT THE LD. ASSESSING OFFICER HAS NOT DONE THE ASS ESSMENT PROPERLY, ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 23 - : WOULD NOT HOLD ANY WATER IN SO FAR AS THE TRIBUNAL IS AN APPELLATE AUTHROITY AND AS FAR AS THE TRIBUNAL IS CONCERNED, BOTH THE REVENUE AND THE ASSESSEE ARE LITIGANTS BEFORE IT. 16. COMING TO THE ISSUE OF THE ENHANCEMENT, IT WOU LD BE WORTHWHILE TO EXTRACT THE PROVISIONS OF THE SECTION 251 OF THE ACT IN ITS ENTIRETY. POWERS OF THE COMMISSIONER (APPEALS) 3 251. (1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (A PPEALS) SHALL HAVE THE FOLLOWING POWERS (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, H E MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; (AA) IN AN APPEAL AGAINST THE ORDER OF ASSESSMENT I N RESPECT OF WHICH THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION ABA TES UNDER SECTION 245HA , HE MAY, AFTER TAKING INTO CONSIDERATION ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE ASSE SSEE BEFORE, OR THE RESULTS OF THE INQUIRY HELD OR EVIDENCE RECORDE D BY, THE SETTLEMENT COMMISSION, IN THE COURSE OF THE PROCEED ING BEFORE IT AND SUCH OTHER MATERIAL AS MAY BE BROUGHT ON HIS RE CORD, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; (B) IN AN APPEAL AGAINST AN ORDER IMPOSING A PENAL TY, HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO AS EITHE R TO ENHANCE OR TO REDUCE THE PENALTY; (C) IN ANY OTHER CASE, HE MAY PASS SUCH ORDERS IN THE APPEAL AS HE THINKS FIT. (2) THE COMMISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAIN ST SUCH ENHANCEMENT OR REDUCTION. EXPLANATION.IN DISPOSING OF AN APPEAL, THE COMMISS IONER (APPEALS) MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF T HE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED, NOTWIT HSTANDING THAT SUCH MATTER WAS NOT RAISED BEFORE THE COMMISSIONER (APPEALS) BY THE APPELLANT. SECTION 251(1)(A) IS A PROVISION FOR ENHANCEMENT. S ECTION 251(2) IS A PROVISION UNDER WHICH IT IS MADE COMPULSORY FOR LD. CIT(A) TO PROVIDE ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 24 - : REASONABLE OPPORTUNITY OF SHOWING CAUSE IN RESPECT OF ENHANCEMENT OR REDUCTION OF REFUNDS. THE EXPLANATION TO SEC.251 IS THE PROCEDURE LAID DOWN FOR ADJUDICATING THE ISSUES BY THE LD.CIT(A) W HEN SUCH ISSUES HAVE NOT BEEN RAISED BEFORE THE LD.CIT(A) BY THE AS SESSEE. THUS, THE EXPLANATION ALSO ACTS AS A CURTAILMENT ON THE ISSUE S WHICH COULD BE GONE INTO BY THE LD.CIT(A). 17. THERE ARE PROVISIONS IN THE ACT FOR ENHANCING AN ASSESSMENT. THE METHODS BEING, RE-OPENING U/S.148 OF THE ACT, S UCH POWERS BEING AVAILABLE TO THE LD. ASSESSING OFFICER; THE PROVISI ONS OF THE SECTION 263 PROVIDING FOR REVISION OF AN ORDER, WHICH IS ERRONE OUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THIS POWER BEING WITH THE COMMISSIONER OF INCOME TAX. HERE, WHAT NEEDS TO BE CLEARLY KEPT IN MIND IS THAT THE PROVISIONS OF THE SECTION 148 OF THE ACT IS CONTROL LED BY A PARTICULAR LIMITATIONS PROVIDED U/S.153 OF THE ACT, THE LIMITA TIONS U/S.263 OF THE ACT IS PROVIDED IN THE PROVISIONS OF THE SECTION 26 3 ITSELF. 18. THUS TAKING AN EXAMPLE FOR FINANCIAL YEAR ENDI NG 31.03.2009 RELEVANT TO ASSESSMENT YEAR 2009-10, THE RETURN OF INCOME IN THE CASE OF AN INDIVIDUAL UNDER THE NORMAL CIRCUMSTANCES OUG HT TO BE FILED ON OR BEFORE 31 ST JULY, 2010. IN SUCH A SITUATION, THE ASSESSMENT I S COMPLETED U/S.143(3) OF THE ACT AS PER THE PROVISIO NS OF THE SECTION 153 ON OR BEFORE 30 TH APRIL, 2012. IN THE EVENT OF ANY ESCAPEMENT OF ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 25 - : INCOME, THE RE-OPENING GETS PERMISSIBLE DEPENDING U PON THE QUANTUM OF THE ESCAPEMENT OF INCOME BY FOUR YEARS OR SIX YE ARS, OR IN SOME CASES 16 YEARS FROM THE END OF THE RELEVANT ASSESSM ENT YEAR. IF THERE IS AN ESCAPEMENT OF INCOME OR IT IS FOUND THAT ASSE SSMENT ORDER OR RE- ASSESSMENT ORDER HAS BEEN PASSED ERRONEOUSLY AND HA S CAUSED PREJUDICIAL TO THE INTERESTS OF THE REVENUE THEN TH E COMMISSIONER OF INCOME TAX UNDER THE POWERS OF SEC.263 OF THE ACT G ETS ADDITIONAL TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH THE ORDER SOUGHT TO BE REVISED WAS PASSED. THUS, IN THE CASE OF ESC APEMENT OF INCOME FROM THE ASSESSMENT, THE REVENUE HAS MULTIPLE OPTIO NS DEPENDING UPON THE SITUATIONS AND THE VARYING TIME LIMITS FOR THE PURPOSE OF SUBJECTING SUCH INCOME, WHICH WAS ESCAPED ASSESSMEN T TO TAX. IN FACT, THE EXPLANATION-2 TO SEC.147 ALSO WIDENS THE SCOPE OF THE TERM INCOME CHARGEABLE TO TAX HAS ESCAPE ASSESSMENT . WHEN SUCH PLENARY AND SPECIFIC POWERS ARE AVAILABLE TO THE LD . ASSESSING OFFICER AND THE CIT TO READ IN SUCH SPECIFIC POWER INTO THE EXPLANATION TO SECTION 251 WOULD BE IN EFFECT TO MAKE THE PROVISIO NS OF THE SECTION 148 & 263 OTIOSE. IF THE EXPLANATION TO SEC.251 IS INTERPRETED TO INCLUDE THE BLANKET POWER OF ENHANCEMENT ON ANY ISS UE, WHETHER IT IS PART OF THE RETURN OF THE ASSESSEE OR THE ACTIONS O F THE ASSESSEE OR CONNECTED ACTIONS OR ACTIONS CONNECTED TO THE ASSES SEE, THEN THE OPPORTUNITY OF RE-OPENING BY THE LD. ASSESSING OFFI CER WOULD GET ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 26 - : COMPLETELY HAMPERED IN SO FAR AS IT WOULD BE A CLE AR CHANGE OF OPINION ON THE PART OF THE LD. ASSESSING OFFICER AS AGAINST THAT OF THE LD.CIT(A). THE POWERS OF LD.CIT U/S.263 WOULD ALSO GET HAMPERED IN SO FAR AS ONCE THE ISSUE HAS BEEN LOOKED INTO OR AD JUDICATED BY THE LD.CIT(A), THEN IN VIEW OF THE EXPLANTION-1(C) TO S EC.263(1) WOULD PRECLUDE THE OPERATIONS OF SEC.263 OF THE ACT. NOT ONLY THAT THE OPERATIONS OF PROVISIONS OF THE SECTION 263(1) ITSE LF COULD GET PRECLUDED IN SO FAR AS IT WOULD VERY MUCH BE VALID ARGUMENT T O SAY THAT THE ORDER OF THE LD. ASSESSING OFFICER HAS MERGED WITH THE OR DER OF LD.CIT(A) AND THEREFORE, THE ORDER OF LD. ASSESSING OFFICER NO MO RE SURVIVES AND THE REVISION BEING ATTEMPTED WOULD BE OF THE ORDER OF T HE LD.CIT(A), WHICH IS NOT PERMISSIBLE. A PERUSAL OF THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS.SHAPPORI PALLONJI MISTR Y REFERRED TO SUPRA ADMITTEDLY SPECIFIES THAT IT WOULD NOT BE OPEN TO T HE AAC TO INTRODUCE IN ASSESSMENT A NEW SORUCE AS HIS POWER OF ENHANC EMENT IS RESTRICTED ONLY TO INCOME WHICH WAS A SUBJECT MATTE R OF COMPUTATION FOR THE PURPOSE OF ASSESSMENT BY THE INCOME TAX OF FICER. ADMITTEDLY, THIS IS A DECISION OF HONBLE APEX COURT BY THREE-J UDGE BENCH. THIS DECISION EXPLAINS PROVISIONS OF THE SECTION 31 IN T HE INDIAN INCOME-TAX ACT, 1922.THE DECISION RELIED UPON BY THE REVENUE I N THE CASE OF CIT VS.NIRBHERAM DALURAM REFERRED TO SUPRA, ADMITTEDLY IS RELEVANT TO ASSESSMENT YEAR 1956-57, BUT THE APPLICABILITY OF T HE PROVISIONS OF THE ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 27 - : SECTION 251 OF THE INCOME TAX ACT, 1961. THE SAID DECISION IS BY TWO- JUDGE BENCH OF THE HONBLE SUPREME COURT, AND ANSWE RED THE QUESTION AS TO WHETHER THE APPELLATE POWER CONFERRE D ON THE AAC IS CONFINED TO MATTERS WHICH HAD BEEN CONSIDERED BY TH E INCOME TAX OFFICER, HAS BEEN ANSWERED IN THE NEGATIVE. HERE WHAT IS PECULIAR IS THAT NEITHER OF THE DECISIONS HAS CONSIDERED THE EX PLANATION TO SEC.251 AND ITS EFFECT THEREON. 19. A PERUSAL OF THE DECISION OF THE HONBLE SUPRE ME COURT IN THE CASE OF KANPUR COAL SYNDICATE REFERRED TO SUPRA, TH OUGH DEALING WITH THE PROVISIONS OF ENHANCEMENT UNDER THE INDIAN INCO ME-TAX ACT, 1922 HAS EXPLAINED THAT THE POWERS OF THE APPELLATE AUTH ORITY IS COTERMINOUS WITH THAT OF THE ASSESSING AUTHORITY. T HIS MEANS THAT THEY HAVE THE SAME BOUNDARIES OR EXTENT IN SPACE, TIME OR MEANING. THE HONBLE SUPREME COURT WENT FURTHER TO SAY HE C AN DO WHAT THE INCOME TAX OFFICER CAN DO AND ALSO DIRECT HIM TO DO WHAT HE HAS NOT DONE. THIS SHOWS THAT THE APPELLATE AUTHORITY CAN LOOK INTO ONLY SUCH THINGS THAT THE ASSESSING AUTHORITY HAS OPENED. IT MUST BE APPRECIATED THAT FOR THE PURPOSE OF MAKING AN INQUIRY BEFORE AS SESSMENT, THE NOTICE U/S.142(1) IS TO BE ISSUED ONLY BY THE ASS ESSING OFFICER AND NONE ELSE. SIMILARLY, SECTION 143(3) IS VERY SPECI FIC TO SAY AFTER HEARING SUCH EVIDENCES AS THE ASSESSEE MAY PRODUCE AND SUCH OTHER EVIDENCES AS THE ASSESSING AUTHORITY MAY REQUIRE ON SPECIFIED POINTS ,. ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 28 - : THESE POWERS THAT ARE SPECIFIC TO THE ASSESSING AUT HORITY CANNOT BE USURPED BY ANY AUTHORITY UNLESS THEY TAKE ON THEMSE LVES THE STATUS OF THE ASSESSING AUTHORITY, IN WHICH CASE, THE LIMITAT ION PROVIDED IN SECTION 153 WOULD ALSO BECOME OPERATIONAL. THIS HOW EVER, DOES NOT MEAN THAT THE LD.CIT(A) IS PRECLUDED FROM DIRECTING THE ASSESSING AUTHORITY TO VERIFY OR LOOK INTO SPECIFIC ISSUES, S UBJECT TO THE LIMITATIONS AND PERMISSIBILITY UNDER LAW. THE HONBLE DELHI HI GH COURT IN FULL BENCH IN THE CASE OF CIT VS.SARDARI LAL & CO., REPO RTED IN [2001] 251 ITR 864(DELHI), AFTER CONSIDERING THE IMPLICATION OF BOTH DECISIONS OF THE HONBLE SUPREME COURT IN THE CASES OF SHAPPORI PALLONJI MISTRY(SUPRA) AND NIRBHERAM DALURAM(SUPRA) HAD HELD AS UNDER:- 8. ----------, THE INEVITABLE CONCLUSION IS THAT WHEN EVER THE QUESTION OF TAXABILITY OF INCOME FROM A NEW SOURCE OF INCOME IS CONCERNED, WHICH HAD NOT BEEN CONSIDERED BY THE AO, THE JURISD ICTION TO DEAL WITH THE SAME IN APPROPRIATE CASES MAY BE DEALT WIT H UNDER S. 147/148 OF THE ACT AND S. 263 OF THE ACT, IF REQUIS ITE CONDITIONS ARE FULFILLED. IT IS INCONCEIVABLE THAT IN THE PRESENCE OF SUCH SPECIFIC PROVISIONS, A SIMILAR POWER IS AVAILABLE TO THE FIR ST APPELLATE AUTHORITY.- ------ IN THE ABOVE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HONBLE BULL BENCH OF DELHI HIGH COURT, IT IS HELD THAT THE ENHANCEMENT AS HAS BEEN DONE BY THE LD.CIT(A) IN TH E CASE OF THE APPEALS HEREIN BEING IN RESPECT OF NEW SOURCE OF IN COME, WHICH HAS NOT BEEN CONSIDERED BY THE LD. ASSESSING OFFICER IN COURSE OF ITS NOS.1614 TO 1622/CHNY/2018 DR.S.MAHALAKSHMI &DR.L.SARAVANAN :- 29 - : ASSESSMENT PROCEEDINGS, BEING THE PROCEEDINGS IN WH ICH THE ORDER APPEALED AGAINST BEFORE THE LD.CIT(A) WAS PASSED, THE ENHANCEMENT AS DONE BY THE LD.CIT(A) STANDS QUASHED. 20. IN THE CASE OF ASSESSEE, DR.S.MAHALAKSHMI IN R ESPECT OF GROUNDS NOS.6 & 8, IT HAD BEEN SUBMITTED BY LD.A.R AND THE LD.D.R THAT THE ISSUE MAY BE RESTORED TO THE FILE OF LD. A SSESSING OFFICER FOR RE-ADJUDICATION AND THE SAME HAD ALREADY BEEN SO DI RECTED IN THE EARLIER PORTION OF THIS ORDER. THIS DIRECTION OF SE T-ASIDE WOULD BECOME OTIOSE IN VIEW OF OUR FINDING IN RESPECT OF THE ISS UE OF ENAHANCEMENT. 21. IN THE RESULT, ALL THE APPEALS FILED BY DR.S.MAHALAKSHMI FOR ASSESSMENT YEARS 2010-11 TO 2012-13 AND ALL THE APPEALS FILED BY DR.L.SARAVANAN FOR ASSESSMENT YEARS 2008-09 TO 2013 -14 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER, 2018, AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) ! ' / ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) # ' / JUDICIAL MEMBER * # / CHENNAI + / DATED: 29 TH OCTOBER , 2018. K S SUNDARAM , - $./ 0 /'$ / COPY TO: 1 . / APPELLANT 3. , , ' 1$ () / CIT(A) 5. /23 $45 / DR 2. ! / RESPONDENT 4. , , ' 1$ / CIT 6. 367 8# / GF