M/s National Agricultural Co-Operative Marketing Federation of India Ltd., New Delhi V. JCIT, New Delhi

ITA 5949/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4234 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 21-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Opportunity of being heard; Question of law; Right to appeal; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI I.P.BANSAL AND SHRI K.G. BANSAL I.T.A. NO. 5949(DEL)/2010 ASSESSMENT YEAR: 2007-08 NATIONAL AGRICULTURAL COOPERATIVE JOINT COMMISSIONER OF MARKETING FEDERATION OF INDIA VS. INCOME-TAX, RANGE-32, LTD., NAFED HOUSE, RING ROAD, NEW DELHI. ASHRAM CHOWK, SIDHARTHA ENCLAVE, NEW DELHI. PAN: AAAAN4629F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HIREN MEHTA, C.A. RESPONDENT BY : SHRI A. K. MONGA, SR. DR ORDER PER K.G. BANSAL : AM THE ASSESSEE HAD TAKEN UP THREE GROUNDS AT TH E TIME OF FILING APPEAL ON 28.12.2010. THESE GROUNDS READ AS UND ER:- 1. THAT THE ORDER PASSED BY THE COMMISSIONER OF I NCOME- TAX (APPEALS)-XXVI, NEW DELHI (HEREINAFTER REFERR ED TO AS CIT(A)) IS BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT SURCHARGE IS LEVIABLE ON THE TAX DUE BY OBSERVING THAT T HE APPELLANT HAD NOT ASSESSED IN THE STATUS OF AN AOP (ASSOCIATIO N OF PERSONS) CONTRARY TO THE ASSESSMENT ORDER, WHERE THIS ISS UE HAS NOT BEEN DISCUSSED AT ALL. ITA NO. 5949(DEL)/2010 2 2.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS NOT JUSTIFIED IN HOLDING T HE LEVY OF 10% SURCHARGE ON TAX DUE AS THE SAME IS NOT AP PLICABLE IN THE CASE OF COOPERATIVES. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTE R, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL AT THE TIME O F HEARING OR EARLIER. 1.1 IN THE COURSE OF HEARING BEFORE US, THE ASSE SSEE TOOK UP AN ADDITIONAL GROUND ON 19.04.2011, WHICH READS A S UNDER:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. A.O. WAS NOT JUSTIFIED IN ASSESSING TH E APPELLANT IN THE STATUS OF ASSOCIATION OF PERSONS (AOP) INSTEAD OF ASSESSING IT AS A COOPERATIVE, WITHOUT DISCUSSING THE R EASONS FOR SUCH DEVIATION IN THE TEXT OF THE ASSESSMENT ORDE R. 2. THE FACTS ARE THAT THE ASSESSEE FILED ITS R ETURN ON 31.10.2007 DECLARING NIL INCOME. THE RETURN WAS FILED IN THE STATUS OF FIRM. ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 13.11.200 9 AT TOTAL INCOME OF RS. 41,41,25,120/- THIS ASSESSMENT WAS COMPLETED IN THE STATUS OF AOP. THE MATTER WAS AGITATED IN APPEAL AND ONE OF TH E GROUNDS TAKEN BEFORE THE LD. CIT(A) WAS TO THE EFFECT THAT THE AO ERRE D IN LEVYING SURCHARGE @ 10% ON THE TAX. THIS GROUND WAS DISMISSED BY MEN TIONING THAT THE ASSESSEE HAS BEEN ASSESSED IN THE STATUS OF AN AOP (ASSOCIATION OF ITA NO. 5949(DEL)/2010 3 PERSONS), ON WHICH SURCHARGE IS LEVIABLE. FOR T HE SAKE OF READY REFERENCE, PARAGRAPH 9 OF THE IMPUGNED ORDER IN THIS BEHALF I S REPRODUCED BELOW:- GROUND NO. 8 RELATES TO LEVY OF SURCHARGE @ 10% IN THE CASE OF THE ASSESSEE. IT HAS BEEN SUBMITTED BY THE L D. COUNSEL THAT THE ASSESSEE BEING A COOPERATIVE SOCIETY IS NOT LIABLE TO SURCHARGE @ 10% IN A.Y. 2007-08. HE HAS DRAWN A TTENTION TO THE FINANCE ACT, 2007 WHEREIN THE LIABILITY FO R LEVY OF SURCHARGE HAS NOT BEEN PROVIDED IN THE CASE OF COOPERATIVE SOCIETIES. IT WAS SUBMITTED THAT THE SURCHARGE LEVIED BY THE ASSESSING OFFICER IS, THEREFORE, CONTRARY TO THE LAW AND SHOULD BE DELETED. THE SUBMISSIONS OF THE LD. COUNSEL HAVE BEEN CONS IDERED. IT IS SEEN THAT THE ASSESSEE HAS BEEN ASSESSED IN THE STATUS OF AN AOP (ASSOCIATION OF PERSONS). AS PER FINANCE ACT , 2007, SURCHARGE IS LEVIABLE IN THE CASE OF AOP. THE AS SESSEE HAS NOT CHALLENGED ITS ASSESSMENT IN THE STATUS OF AOP. THUS, FOR A.Y. 2007-08, IN THE CASE OF THE ASSESSEE THE SURCHARGE HAS BEEN CORRECTLY LEVIED BY THE ASSESSING OFFICER. T HIS GROUND ACCORDINGLY FAILS. 3. THE GROUND TAKEN AT THE TIME OF FILING AP PEAL PRIMARILY DEALS WITH THE LEVY OF SURCHARGE. IT IS MENTIONED THAT THE STATUS OF THE ASSESSEE HAS NOT BEEN DISCUSSED AT ALL IN THE ASSESSMENT O RDER. THE PRIMARY CASE OF THE LD. COUNSEL BEFORE US IS THAT THE ASSESSE E IS A COOPERATIVE SOCIETY AND THE ADDITIONAL GROUND HAS BEEN TAKEN ONLY T O ARTICULATE THE EXISTING GROUND. SUCH A GROUND SHOULD BE ADMITTED IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NTPC VS. CIT, (1998) 229 ITR 383. ON THE OTHER HAND, THE SUBMISSION OF THE LD. DR IS THAT THE ASSESSEE ITA NO. 5949(DEL)/2010 4 HAS SHOWN THE STATUS OF FIRM, WHICH HAS BEEN ASSESSED IN THE STATUS OF AN AOP AND THE LD. CIT(APPEALS) HAS AFFIRMED THE ORDER OF THE AO IN THIS BEHALF AS NO EVIDENCE TO THE CONTRARY WAS PLACED BEFORE HIM. EVEN A FIRM IS LIABLE TO PAY SURCHARGE. THEREFORE, THE GROUND MAY NOT BE ADMITTED. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE OPERATIVE PORTION OF THE DECISION I N THE CASE OF NTPC IS AS UNDER:- UNDER SECTION 254 OF THE INCOME-TAX ACT, THE AP PELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO T HE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS T HEREON AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALIN G WITH APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS . THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXIN G AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A R ESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDI NG BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, WE DO NOT SEE ANY REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAI SING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF TH AT ITEM. WE DO NOT SEE ANY REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WH ICH ARISE FROM THE ORDER OF THE COMMISSIONER OF INCOME-TAX ( APPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT H AVE A RIGHT TO FILE AN APPEAL/CROSS OBJECTIONS BEFORE THE TRIBU NAL. WE FAIL TO SEE WHY THE TRIBUNAL SHOULD BE PREVENTED F ROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSM ENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. ITA NO. 5949(DEL)/2010 5 4.1 FURTHER, THE LD. COUNSEL RELIED ON THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CI T, (2006) 284 ITR 323. THE OPERATIVE PORTION OF THE ORDER READS AS UND ER:- THE DECISION IN QUESTION IS THAT THE POWER OF T HE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961, IS TO ENTERTAIN FOR THE FIRST TIME A POINT OF LAW PROVIDED TH E FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED BEFORE THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELAT E TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN. IN THE CIRCUMSTANCES OF THE CASE, WE DISMISS THE CIVIL APPEAL. HOWEVER, WE MAKE IT CLEAR THAT THE ISSUE IN THI S CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME-TAX APPELLATE T RIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961. T HERE SHALL BE NO ORDER AS TO COSTS. 4.2 THE LD. COUNSEL ALSO RELIED ON THE DECISION IN THE CASE OF CIT VS. JAI PARABOALIC SPRINGS LTD., (2008) 306 ITR 42 ( DEL). AFTER REFERRING TO VARIOUS DECISIONS INCLUDING THE DECISION IN THE CASE OF GOETZE (INDIA) LTD., IT HAS BEEN HELD THAT THERE IS NO PROHIBITI ON ON POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL GROUND, WHICH ACCORDING TO TRIBUNAL ARISES IN THE MATER AND FOR THE JUST DECISION OF THE CASE. 4.3 HAVING CONSIDERED THE FACTS OF THE CASE AN D THE DECISIONS CITED BEFORE US, THE POSITION WHICH EMERGES IS DISCUSSE D HERE. IN THE CASE OF ITA NO. 5949(DEL)/2010 6 NTPC (SUPRA), IT WAS INTER-ALIA HELD THAT THE PO WERS OF THE TRIBUNAL HAVE BEEN EXPRESSED IN THE WIDEST POSSIBLE TERM AND, THEREFORE, THERE IS NO REASON WHY THE TRIBUNAL SHOULD BE PREVENTED FROM C ONSIDERING THE QUESTIONS OF LAW IN ASSESSMENT PROCEEDINGS ALTH OUGH NOT RAISED EARLIER. IT IS FURTHER HELD THAT THE TRIBUNAL HAS DISCRET ION TO ALLOW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS, WE FAIL TO SEE WHY SU CH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY. FR OM THIS, IT IS CLEAR THAT A QUESTION OF LAW REGARDING WHICH FACTS ARE THER E ON RECORD, CAN BE RAISED AND ENTERTAINED BY THE TRIBUNAL FOR THE FIRST TI ME. HOWEVER, THE TRIBUNAL HAS NOT BEEN BARRED FROM ENTERTAINING A QUESTION WHICH MAY REQUIRE FINDING OF FACTS ALSO, ALTHOUGH IN THIS REGA RD THERE IS NO EXPRESS WORDS IN THE DECISION. IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA), THE DECISION IS ON THE LINES IN THE CASE OF NTPC THAT THE TR IBUNAL HAS POWER TO ENTERTAIN FOR THE FIRST TIME A POINT OF LAW PR OVIDED THE FACTS ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED, ARE TH ERE ON THE RECORD. THE DECISION IN THE CASE OF JAI PARABOLIC SPRINGS LT D. (SUPRA) IS THAT THERE IS NO PROHIBITION ON POWERS OF THE TRIBUNAL TO ENTERTAI N AN ADDITIONAL GROUND ITA NO. 5949(DEL)/2010 7 WHICH ARISES BEFORE IT AND WHICH IS NECESSARY TO DECIDE TO ARRIVE AT A JUST CONCLUSION. THIS DECISION CLOTHES THE T RIBUNAL WITH WIDEST POWERS ALTHOUGH IT IS NOT MENTIONED THAT WHERE FURTHER FACTS ARE REQUIRED TO BE ASCERTAINED, THE QUESTION OF LAW CAN BE ENTERTAI NED. THESE DECISIONS SEEM TO STATE THAT THE TRIBUNAL HAS WIDEST PO WER AND IT MAY ENTERTAIN QUESTION OF LAW REGARDING WHICH FACTS ARE ON R ECORD. HOWEVER, THE TRIBUNAL HAS ALSO POWER TO ENTERTAIN A QUESTI ON OF LAW WHICH MAY REQUIRE FURTHER ASCERTAINMENT OF FACTS. IT APP EARS TO US THAT POWER IN REGARD TO LATTER SITUATION SHOULD BE INVOKED WITH GREAT CAUTION AND CIRCUMSPECTION. THE POSITION IN THIS CASE IS T HAT THE ASSESSEE FILED THE RETURN IN THE STATUS OF FIRM AND IT IS STATED T HAT THIS WAS THROUGH OMISSION. THE STATUS WAS CHANGED IN ASSESSMENT TO AOP. THE LD. CIT(APPEALS) DISMISSED THE GROUND WITHOUT GOING INTO DETAI LS WHETHER THE CORRECT STATUS SHOULD HAVE BEEN FIRM, AOP OR COOPERATIV E SOCIETY. INHERENT IN THE GROUND REGARDING NON-LEVY OF SURCHARGE IS T HE QUESTION OF DETERMINATION OF THE STATUS, WHICH WAS GLOSSED OVE R BY THE LD. CIT(APPEALS) BY MENTIONING THAT IT HAS BEEN ASS ESSED IN THE STATUS OF AOP. WE CONSIDER THAT THIS IS AN EXCEPTIONAL S ITUATION WHERE THE ADDITIONAL GROUND SHOULD BE ADMITTED EVEN THOUGH IT MAY REQUIRE SOME FURTHER EXAMINATION OF FACTS REGARDING INSTRU MENT OF FORMATION AND ITA NO. 5949(DEL)/2010 8 REGISTRATION, IF ANY. THEREFORE, WE ADMIT THE GRO UND. SINCE IT IS NECESSARY TO ADJUDICATE UPON THIS GROUND FOR DECIDING THE APPEAL, AND THIS MATTER HAS NOT BEEN LOOKED INTO BY THE LOWER AUTHORITIE S, THE MATTER IS RESTORED TO THE FILE OF THE AO TO DECIDE THE ISSUE OF STATUS A ND CHARGEABILITY OF SURCHARGE. 5. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21.04.2011 SOON AFTER COMPLETION OF THE HEARING. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21ST APRIL, 2011. SP SATIA COPY OF THE ORDER FORWARDED TO: 1. NATIONAL AGRICULTURAL COOPERATIVE MARKETING FEDE RATION OF INDIA LTD., NEW DELHI. 2. JCIT, RANGE-32, NEW DELHI. 3. CIT(A) 4. CIT 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.