DCIt, Kannur V. M/s Manjoo & Co., Kannur

ITA 625/COCH/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0509 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-12-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 13-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANTHAM BOSE
• Assessee Lawyers: RAM KUMAR MENON
• Keywords: Business income; Revision of order; Depreciation; Opportunity of being heard; Period of limitation; Right to appeal; Tax effect; TDS; Set aside
• Section: 143(3); 115JB; 251; 207; 13; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M IT A NO. 625/ COCH/201 7 ASSESSMENT YEAR: 200 6 - 07 THE ASSISTANT COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 1, KOZHIKODE. VS. M/S. MANJOO & CO., C/O MURALEEDHARAN, MANJOO, NEAR POONKAVU TEMPLE, KADAMBUR, EDAKKAD P.O., KANNUR - 670 663. [[ P AN: AAEFM 7842G] (A SSESSEE - APPELLANT) (REVENUE - RESPONDENT) REVENUE BY SHRI SHANTHAM BOSE, CIT(DR) ASSESSEE BY SHRI R AM KUMAR MENON, CA D ATE OF HEARING 05/12/ 2019 DATE OF PRONOUNCEMENT 1 0 TH / 1 2 /201 9 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - III, KOCHI DATED 22/09/2017 AND PERTAINS TO THE ASSESSMENT YEAR 200 6 - 07. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.6,85,47,229/ - ON THE GROUND THAT THE AO WAS NOT AUTHORIZED TO DO ROVING ENQUIRY AND MAKE ADDITIONS. THE LEARNED C I T(A) HAS OVERLOOKED THE FACT THAT IN PARA 3 OF THE ORDER U/S 263, THE CIT HAS DIRECTED THE AO TO VERIFY THE DIFFERENCE OF RS. I.T.A. NO . 625/ COC H/ 2017 2 36,94,613 / - AND THAT THE ADDITION OF RS. 6,85,47,229/ - WAS A RESULT OF SUCH VERIFICATION. HENCE THE AO HAS NOT EXCEEDED HIS JURISDICTION, BUT HAS CARRIED OUT THE DIRECTIONS OF CIT GIVEN IN THE ORDER U/S 263. 2. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 6,70,59,121/ - ON THE GROUND THAT THE AO HAS EXCEEDED HIS JURISDICTION AND GONE BEYOND THE DIRECTIONS GIVEN IN THE ORDER U/S 263. THE LEA RNED CIT(A) HAS OVERLOOKED THE FACT THAT IN PARA 6 OF THE ORDER U/S 263, THE CIT HAS DIRECTED THE AO TO GIVE EFFECT TO THE ORDER OF THE HIGH COURT IN 1TA NOS. 1216 & 1410 OF 2009 DATED 08/09/2010. THE ASSESSING OFFICER, FOLLOWING THE DIRECTION HAS BROUGHT T O TAX THE SUM OF RS. 6,70,59,121/ - BEING WINNINGS FROM LOTTERIES CHARGEABLE TO TAX AS PER SPECIAL PROVISION UNDER SECTION 115BB. 3 . THE LEARNED C1T(A) HAS ERRED IN DELETING THE ADDITION OF RS. 55,88,795/ - ON THE GROUND THAT THE AO HAS EXCEEDED HIS JURISD ICTION AND GONE BEYOND THE DIRECTIONS GIVEN IN THE ORDER U/S 263. THE LEARNED CIT(A) HAS OVERLOOKED THE FACT THAT IN PARA 6 OF THE ORDER U/S 263, THE CIT HAS DIRECTED THE AO TO GIVE EFFECT TO THE ORDER OF THE HIGH COURT IN ITA NOS. I216 & 1410 OF 2009 DATE D 08/09/2010. THE ASSESSING OFFICER, FOLLOWING THE DIRECTION HAS BROUGHT TO TAX THE SUM OF RS. 55,8 8 ,795/ - BEING WINNINGS FROM LOTTERIES CHARGEABLE TO TAX AS PER SPECIAL PROVISION UNDER SECTION 115BB. 4. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.8,00,000/ - , BEING THE DIFFERENCE IN GROSS PROFIT, ON THE GROUND THAT THE AO EXCEEDED HIS JURISDICTION. THE LEARNED CIT(A) FAILED TO NOTE THAT AS PER PARA 6 OF THE ORDER U/S 263, THE ASSESSING OFFICER HAD BEEN DIRECTED TO REDO THE ASSESSMENT AND HENCE THE ISSUE WAS OPEN BEFORE THE ASSESSING OFFICER. 5. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIONS OF RS. 28,68,792/ - AND RS. 51,26,296/ - BEING DIFFERENCE IN CREDITORS BALANCES, ON THE GROUND THAT THE AO EXCEEDED HIS JURISDICTION. THE LEARNED CIT(A) FAILED TO NOTE THAT AS PER PARA 6 OF THE ORDER U/S 263, THE ASSESSING OFFICER HAD BEEN DIRECTED TO REDO THE ASSESSMENT AND HENCE THE ISSUE WAS OPEN BEFORE THE ASSESSING OFFICER. 6. THE LEARNED CIT(A) ERRED IN CLUBBING THE ISSUE OF ADDITION U/S 1 15BB WITH OTHER ISSUES AND DELETING ALL ADDITIONS ON THE GROUND THAT THE AO EXCEEDED HIS JURISDICTION. THE LEARNED CIT(A) FAILED TO DECIDE EACH ISSUE ON MERITS . 3 . THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.72,86,022/ - ON 31/03/2008 FOR AY 2006 - 07. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 29/12/2008 I.T.A. NO . 625/ COC H/ 2017 3 DETERMINING TOTAL INCOME OF RS.79,70,414/ - . ON REVIEW OF RECORDS, THE CIT NOTICE D FOLLOWING DISCREPANCIES: 1. AS A GAI NST THE AGENTS PRICE OF RS. 65,69, 820 / - RECE IVED, ONLY AN AMOUNT OF RS. 28,75, 207 HAS BEEN SHOWN IN THE P&L ACCOUNT. THE DIFFERENCE IS THEREFORE RS.30,94,637/ - . 2. INTEREST INCOME AS PER T DS CERTIF ICATES IS RS, 1,19, 480 / - WHEREAS INTE REST INCOME RETURNE D IS RS. 46, 560 / - . THE DIFFER ENCE IN THIS RESPECT IS RS. 72, 920 / - 3. LOSS CLAIMED ON ACCOUNT OF TAMPERED PRIZE WINNING TICKETS OF RS. 2,38, 270/ - WHICH HAS BEEN ALLOWED WITHOUT ANY CONCRETE EVIDENCE. 4. LOSS CLAIMED DUE TO RIOT IS RS.1 87 , 693 / - WITHOUT AN Y SUBSTANTIAL EVIDENCE . NOTICE U / S . 263(1) WAS ISSUED TO THE ASSESSEE ON 7 - 12 - 2010 POINTING OUT THE MISTAKES,IN THE A SSESSMENT ORDER. THE ASSESSEE SUBMITTED EXPLAN ATION DATED 13 - 12 - 2010. IN RESPECT OF POINT NO. 1, THE ASSESSEE SUBMIT TED THAT THE DIFFER ENCE HA D BEEN EXPLAINED IN THE NOTES (POINT NO. 6) ON ACCOUNTS ATTACHED TO THE STATEMENTS OT ACCOUNTS, FILED ALONG WITH THE RETURN OF INCOME. IT WAS FOUND THAT THE ORIGINAL FIGURES IN THE SOLD NOTES HAVE BEEN REPLACED, WITH HANDWRITTEN FIGURES REPRESENTING ALLEGEDLY A DIFFERENT GROSS AND NET AMOUNTS. THUS , THE TOTAL CREDITS AS PER NOTES TO ACCOUNTS WAS RS.4,77,79, 294 . 00 WHEREAS AS PER HANDWRITTEN NOTES IT WAS RS.15, 18,22, 861/ - . AGAIN THE TOTAL DEBITS UNDER THIS ACCOUNT AS PER NOTES WAS RS.4,50, 78, 726 . 65 WHEREAS IT WAS SHOWN IN THE HANDWRITTEN NOTES FILED WITH THE RETURN OF INCOME AT RS.14,89,47, 653 . 65. APPARENTLY , THE RECEIPTS WERE MUCH MORE THAN THOSE SHOWN AS PER ACCOUNTS AND THE PAYMENTS SHOWN ALSO ARE MUCH MORE WHICH NEEDED TO BE VERIFIED. REGARDING EXPLANATION TO POINT NO.2 , IT WAS STATED THAT THE FIGURES RELATING TO INTEREST ON INCOME TAX REFUND' AND 'INTEREST RECEIVED' HA D BEEN ERRONEOUSLY INTERCHANGED IN THE STATEMENTS OF ACCOUNTS FILED WHICH S EEMS TO BE I.T.A. NO . 625/ COC H/ 2017 4 CORRECT BUT NEED ED TO BE VERIFIED. IN RE SPECT OF EXPLANATIONS TO POINTS NO 3 AND 4 THE EXPLANATIONS OF THE ASSESSEE WAS ACCEPT ED. THE ASSESSEE HA D IN THE RETURN OF INCOME FILED, TREATED THE WINNINGS FROM UNSOLD TICKETS AS INCOME FROM BUSINESS WHICH WAS ACCEPTED B Y THE ASSESSING OFFICER . THE TRIB UNAL HA D DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AND ALSO AS THE TAX EFFECT WAS THE SAME. THE HIGH COURT IN I TA NOS. 1216 & 1410 OF 2009 D A TED 0 8 /09/ 2010 HA D HELD THAT THE RATE PRESCRIBED UNDER SEC. 115BB WAS APPLICABLE FOR THE WINNINGS FROM LOTTERY RECEIVED BY THE ASSESSEE IRRESPECTIVE OF WHETHER IT WAS AN INCOME INCIDENTAL TO BUSINESS OR N OT. T HE CIT HELD THAT THE O RDER OF THE HIGH COURT HAS TO BE GIVEN EFFECT TO ON THESE LINES. 3.1 IN VIEW OF THE ABOVE, THE CIT CONSIDERED THE ORDER PASSED UNDER SECTIO N 143(3) DATED 29 - 12 - 2008 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE SAME HA D BEEN PASSED WITHOUT MAKING PROPER VERIFICATION WITH REGARD TO THE ABOVE ISSUE S. THE CIT PLACED RELIANCE ON THE JUDGMENT OF THE CALCUTTA HIGH COURT IN THE CA SE OF . RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF THE K ARNATAKA HIGH COURT IN THE CASE OF THALIBAI S JAIN [(1975) 101 ITR 1 (KAR)] WHEREIN IT WAS HELD THAT THE COMMISSIONER WAS RIGHT IN REVISING THE ASSESSMENT UNDER SECTION 263 OF THE ACT. IN THAT CASE , THE COURT OBSERVED THAT SINCE NO SUCH ENQUIRY WAS MADE BY THE I TO ............. THE ASSESSMENT MUST BE HELD TO BE PREJUDICIAL TO THE INTERESTS OF REVENUE AND WHAT IS PREJUDICIAL TO THE INTERESTS OF REVENUE MUST BE HELD TO BE ERRONEOUS THOUGH THE CONVE RSE MAY NOT ALWAYS BE TRUE . 3.2 ACCORDING TO THE CIT, T HE ABOVE MISTAKES MA D E THE ASSESSMENT ORDER ERR ONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE, IN THAT THE ASSESSING OFFICER I.T.A. NO . 625/ COC H/ 2017 5 HA D NOT LOOKED INTO THESE MATTERS AT ALL. THUS, THE CIT SET ASIDE T H E ISSUES TO THE FILE OF THE ASSESSING OFFICER TO REDO THE ASSESSMENT. THE CIT, THEREFORE , REMI T T ED THE ISSUES BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO REDO THE ASSESSMENT AFRESH IN THE LIGHT OF THE A BOVE OBSERVATIONS AND AFTER GIVING THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD. 4. WHILE PASSING THE CONSEQUENTIAL ORDER PASSED U/S. 143(3) OF THE ACT, THE A SSESSING OFFICER COMPLETED THE ASSESSMENT AS FOLLOWS: WINNINGS FROM LOTTERIES ( NON TAXABLE - BELOW RS.5000/ - ) DURING THE YEAR TH E ASSESSEE RECEIVED THE FOLLOWING PRIZE AMOUNTS IN RESPECT OF KERALA LOTTERIES AS PER THE DETAILS RECEIVED FROM DIST. LOTTERY OFFICE , KANNUR. DETAILS OF DISTRIBUTION OF MINOR PRIZES (2005 - 06) (NON TAXABLE - BELOW RS.5000/ - ). S L .NO . NAME OF T HE AGENT PRIZE AMOUNT 1. M/S. MANJOO' & CO.(C.3087) RS.4 , 69 , 75 , 593 2. SHRI. P MURALEEDHARAN(C.1362) RS.2 , 09 , 14 , 743 3. SHRI P MAJUSH(C.2622) NIL TOTAL RS.6 , 78 , 90 , 336 4.1 W HEN ASKED ABOUT THE DETAILS OF MINOR PRIZES ON WHICH TDS HA D NOT BEEN MADE, THE ASSESSEE STATED AS FOLLOWS: I.T.A. NO . 625/ COC H/ 2017 6 AS REGARDS YOUR QUERY AS TO WHAT IS A MAJOR PRIZE AND WHAT IS A MINOR PRIZE, WE SUBMIT THAT WE DO NOT UNDERSTAND THE TERMS. THESE TERMINOLOGY HAS NOT BEEN NOTIFIED IN THE LOTTERY SCHEMES OF THE LOTTERIES OF KERALA STATE LOTTERIES NOR ARE THEY PRINTED BEHIND THE TICKETS. WE SUGGEST THAT YOU MAY CONTACT THE DE PARTMENT OF KERALA STATE LOTTERIES. WE ANNEX HEREWITH PROCEEDINGS OF THE VARIOUS OFFICERS OF THE DEPARTMENT OF KERALA S T ATE LOTTERIES IN SUPPORT OF THE FACT THAT WE HAVE WON PRIZES. THESE PROCEEDINGS WILL GIVE YOU ALL DETAILS OF THE WINNINGS. ALL THESE WINNINGS HBAVE BEEN ACCOUNTED FOR BY IN THE OUR WINNINGS FORM UNSOLD LOTTERY TICKETS. 4.2 THUS , ACCORDING TO THE ASSESSEE THE DETAILS SHOULD BE COLLECTED FROM LOTTERY OFFICE. THE INFORMATION OBTAINED FROM DISTRICT LOTTERY OFFICE, KANNUR SHOW ED THAT FROM THAT OFFICE ALONE PRIZE WINNING FOR RS.5000/ - AND BELOW PAID TO THE ASSESSEE WAS RS.6,78,90,336/ - . IN THE P&L ACCOUNT, THE ASSESSEE HA D CREDITED AN AMOUNT OF RS.8,31,215/ - AS 'UNSOLD WINNING WITHOUT TDS'. THEREFORE , THE DIFFERENCE CAME TO RS.6,70,59,121/ - ( RS. 6,78,90,336/ - - RS. 8,31,215/ - ). THE ASSESSEE HA D NOT FURNISHED ANY DETAILED CLARIFICATION ON PRIZES WON ON SMALL PRIZES. THE ASSESSEE HAD ALSO NOT PRODUCED ANY DOCUMENTARY EVIDENCES THAT THE SMALL PRIZES ARE COLLECTED ON BEHALF OF SOLD OUT TICKETS SU RRENDERED BY OTHERS. CONSIDERING ALL THESE AND CONSIDERING THE FACT THAT ASSESSEE HA D OWN SALES, THE RECEIPTS WERE CONSIDERED AS WINNINGS FROM LOTTERIES AND ASSESSED ACCORDINGLY. IN ASSESSEE'S OWN CASE , THE HIGH COURT OF KERALA WHILE CONSIDERING THE APPEAL S FOR THE A.Y.2000 - 01 AND 2001 - 02 OBSERVED AS FOLLOWS. 'IN OUR VIEW WINNINGS FROM LOTTERIES IS ASSESSABLE UNDER THIS SPECIAL PROVISION IRRESPECTIVE AS TO UNDER WHAT HEAD WINNINGS FROM LOTTERY FALLS. THEREFORE, ASSUMING FOR ARGUMENT SAKE THE CONTENTION OF T HE RESPONDENT THAT WINNINGS FROM LOTTERIES IS RECEIVED BY HIM IN THE COURSE OF HIS BUSINESS AND IS INCIDENTAL TO BUSINESS AND SO MUCH SO IT IS HIS BUSINESS INCOME IS RIGHT, STILL, WE FEEL IN VIEW OF THE SPECIFIC PROVISION CONTAINED IN SECTION 115BB, THE SP ECIAL RATE OF TAX IS APPLICABLE FOR ALL WINNINGS FROM LOTTERY. WHAT IS PROVIDED IN THE SAID SECTION IS THAT WHERE THE TOTAL INCOME INCLUDES ANY INCOME BY WAY OF WINNINGS FROM I.T.A. NO . 625/ COC H/ 2017 7 LOTTERY OR CROSSWORD PUZZLE ETC, THE INCOME TAX PAYABLE SHALL BE CALCULATED AT TH E RATE OF 30%. TOTAL INCOME UNDER SECTION 2(45) READ WITH SECTION 5 OF THE ACT INCLUDES INCOME FROM ALL SOURCES AND NECESSARILY ALL SUCH INCOME ARE COMPUTED UNDER FIVE HEADS REFERRED TO IN A TO F OF SECTION 14 OF THE ACT . IN OTHER WORDS , EVEN AFTER COMPUTA TION OF INCOME UNDER VARIOUS HEADS OF INCOME REFERRED TO IN SECTION 14 IN TERMS OF SPECIFIC PROVISIONS OF THE ACT PROVIDING FOR COMPUTATION OF INCOME UNDER EACH HEAD. SUCH OF THE INCOMES SPECIFICALLY COVERED BY CHAPTER XII SHALL BE IDENTIFIED, SEPARATED AN D SHOULD B E SUBJECT TO TAX AT THE SPECIAL RATE PROVIDED THERE. SO MUCH SO IN OUR VIEW THE SPECIAL RATE OF TAX I.E. 4.2 THE ASSESSMENT IS COMPLETED AS UNDER: - I INCOME FROM BUSINESS TOTAJ, INCOME AS PER ORDER U/5.143(3) DT. 05 . 06.2009 RS.7,97,70,414 LESS: WINNING FROM LOTTERIES INCLUDED IN THE ABOVE INCOME CONSIDERED SEPARATELY (I) PRIZE WINNING FOR UNSOLD TICKETS WITH T DS RS. 38 , 98 , 310 (II) PRIZE WINNING FOR UNSOLD TIC KETS WITHOUT TDS RS. 8,31,215 RS. 47,29,525 LESS: INTEREST INCOME CONSIDERED SEPARATELY RS. 2,09,77 8 RS.49,39,313 RS.30,31,101 ADD I) DIFFERENCE IN CREDITORS ACCOUNT AS DISCUSSED IN PARA 5 [2898692+5126296) RS. 79,95,088 II) GROSS PROFIT IN RETAIL BUSINESS DISCUSSED IN PARA 4 RS. 8,00,000 III) AGENT'S PRIZE ON TICKETS ELABORATELY DISCUSSED IN PARA 6 RS.6,85,47,229 IV) DIFFERENCE IN DEPRECIATION DISCUSSED IN PARA 13 RS.31,347 RS.7,73,73,664 RS.8,04,04,765 I.T.A. NO . 625/ COC H/ 2017 8 IN COME FROM OTHER SOURCES (I) INTEREST ON FD RS.1,63,228 RS.2,09,788 (II) INTEREST ON INCOME RS. 46,560 TAX REFUND III WINNINGS FROM LOTTERIES AS PER PROFIT AND LOSS ACCOUNT RS. 47, 29,525 ADD: (I) DIFFERENCE AS DISCUSSED IN PARA 11 RS.6 ,7 0 , 5 9,121 (II) DIFFERENCE AS RS. 55,88,795 DISCUSSED IN PARA 12 GROSS TOTAL INCOME RS. 7,7 3,77,441 ROUNDED TO RS.15,79,91,994 5. AGAINST THIS, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFIC ER. THE ASSESSING OFFICER SUBMITTED THE REMAND REPORT VIDE HIS LETTER DATED 08/04/2013 WHICH READS AS FOLLOWS: KINDLY REFER TO THE ABOVE. THE REMAND REPORT CALLED FOR IN THE CA S E OF THE ABOVE ASSESSEE IS SUBMITTED HEREWITH. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF SALE OF LOTTERY TICKETS. THE ASSESSMENT ORIGINALLY COMPLETED U/S. 143(3) DATED 29/12/2008 WAS REVISED U/S. 263 OF THE I.T. ACT BY THE ORDER OF THE CIT DATED 9 - 03 - 2011. THE REVISED ASSESSMENT WAS COMPLETED ON 11 - 11 - 2011 AGAI NST WHICH THE INSTANT APPEAL HAS BEEN FILED. PARA WISE REMARKS ON THE ARGUMENT NOTES FILED BY THE ASSESSEE ARE SUBMITTED BELOW: PARA I & II. THE ASSESSEE CHALLENGES THE ORDER OF THE ASSESSING OFFICER DATED 11 - 11 - 2011 STATING THAT HE HAD OVER STEPPED HIS BRIEF BESTOWED ON HIM BY THE ORDER OF THE CIT U/S. 263 OF THE ACT. ACCORDING TO THE ASSESSEE THE ASSESSING OFFICER HAD BEEN DIRECTED TO VERIFY ONLY THE FOLLOWING TWO POINTS. A. TO VERIFY THE RECEIPTS AND PAYMENTS OF AGENTS PRIZE. B. TO TAX THE INCOME FROM WINNINGS FROM UNSOLD LOTTERY TICKETS RETU R NED BY THE ASSESSEE UNDER BUSINESS INCOME U/S. 115JB IN ACCORDANCE WITH THE ORDER OF THE HIGH COURT OF KERALA. I.T.A. NO . 625/ COC H/ 2017 9 BUT, ACCORDING TO THE ASSESSEE, THE ASSESSING OFFICER HAD MADE A FULL SCALE RE - ASSESSMENT MAKING HUGE ADDITIONS ON SEVERAL POINTS NOT TOUCHED UPON IN THE ORDER OF THE CIT U/S. 263. A PERUSAL OF THE ORDER OF THE CIT U/S. 263 SHOWS THAT THOUGH THE DIRECTION WAS TO REDO THE ASSESSMENT, IN THE CONCLUDING PART THE CIT OBSERVES AS UNDER: I, THEREFORE, R EMIT THE CASE BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO REDO THE ASSESSMENT CONSIDERING THE ABOVE OBSERVATIONS AND AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF THE BEING HEARD IT IS THUS SEEN THAT THE DIRECTION TO THE ASSESSING OFFICER WAS TO CONSIDER THE TWO POINTS MENTIONED ABOVE. IT WOULD THEREFORE, APPEAR THAT THE ASSESSEES EXPLANATION IS CORRECT. HOWEVER, THE CIT(A) MAY KINDLY CONSIDER THE ISSUE ON MERITS. 6. T HE LD. AR FURTHER SUBMITTED ITS ARGUMENTS ON THE VARIOUS ADDITIONS MA DE BY THE ASSESSING OFFICER IN T HE REVISED ASSESSMENT ORDER AS FOLLOWS: PARA IV. A. PARA 4 OF THE ASSESSME N T ORDER ACCORDING TO THE ASSESSEE THE RETAILS SALES PER DAY @ RS. 8,000/ - ESTIMATED BY THE ASSESSING OFFICER WAS WITHOUT ANY BASIS. FURTHER, THERE WA S NO NECESSITY OF ESTIMATING THE GROSS PROFIT WHEN THE ACTUAL BOOKS OF ACCOUNTS SUPPORTED BY RELEVANT DOCUMENTS WERE PRODUCED BEFORE HIM. FROM THE ASSESSMENT ORDER IT IS NOTICED THAT THE SAID DAILY SALES OF RS. 8 ,000/ - WAS ESTIMATED WITHOUT MENTIONING ANY PARTICULAR METHOD. THE WORKING OF THE GROSS PROFIT ALSO APPEAR ED TO BE ON AN ESTIMATE BASIS. THOUGH IT WAS STATED THAT ON COMPARISON WITH SIMILAR CASES GROSS PROFIT DECLARED BY THE ASSESSES WA S LOW, THERE WAS NO MENTION OF THE NAMES OF CASES COMPARED WITH. IN THE CIRCUMSTANCES, THE ASSESSEE'S CONTENTION APPEARS TO BE CORRECT. B. DIFFERENCE IN CREDITORS BALANCE IN THE ASSESSMENT ORDER THE AO HAD MADE AN ADDITION OF RS. 28,68,792 / - BEING T HE DIFFERENCE IN THE CREDITORS' BALANCE IN THE CASE OF SREE BALAJI AG ENCIES AND RS . 5 1, 26,296/ - IN THE CASE OF M/S. S.G. DISTRIBUTORS. ACCORDING TO THE ASSESSES THE AMOUNT PAYABLE TO THE CREDITOR AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS LESS THAN T HE AMOUNT SHOWN IN THE CREDITORS' BOOKS OF ACCOUNTS. AS SUCH THERE WAS ABSOLUTELY NO CASE FOR MAKING AN ADDITION. I.T.A. NO . 625/ COC H/ 2017 10 SIMILARLY, IN THE CASE OF M/S. S.G. DISTRIBUTORS, THE ASSESSES CLAIMS THAT THE BOOKS OF ACCOUNTS AND DOCUMENTS RUNNING INTO SEVERAL THOUSAND PAGES WERE PRODUCED BEFORE THE AO WHO DID NOT CONSIDER THESE MATERIALS AND PASSED THE ASSESSMENT ORDER HOLDING THAT THERE WA S NO OUTSTANDING LIABILITY TOWARDS THIS CREDITOR AND ADDED THE ENTIRE BALANCE OF RS 5 1 ,26,296/ - TREATING IT AS THE ASSESSEE'S OWN INCOME. WHILE T HE ADDITION OF RS. 25,65 , 792 / - APPEARS TO BE INCORRECT THE ASSESSEE'S CHARGE THAT THE DETAILS FURNISHED WERE NOT CONSIDERED BY THE AO WHO HAD MADE THE ADDITION OF RS. 5 1 ,26,296/ - CANNOT BE ACCEPTED IN THE ABSENCE OF EVIDENCE. C. PARA 10 & 11 OF THE ASSESSMENT ORDER THESE PARAS DEALS WITH WINNINGS FROM LOTTERIES OF PRIZES OF LESS THAN RS. 5 ,000/ - WHERE TAX NEED NOT B E DEDUCTED AT SOURCE. THE AO HAD MADE AN ADDITION OF RS. 6, 70,59, 121 / - RE PRESENT ING PRIZES WON WHERE T AX NEED NOT BE DEDUCTED AT SOURCE. THE MAIN GROUSE OF THE ASSESSES WAS THAT THE INFORMATION GATHER ED BY THE AO WAS NOT PUT TO THE ASSESSEE FOR CLARIFICATION A N D THE AO HAD MADE A ONE SIDED ADDITION. THE ASSESS E E HA S GIVEN A COMPREHENSIVE EXPLANATION AS TO THE NATURE OF SUCH PRIZES . THE ASSESSEE'S EXPLA NATION APPEARS TO BE ACCEPTABLE. D. IN THE P & L ACCOUNT THE ASSESSEE HAS SHOWN PRIZE WINNINGS IN UNSOLD TICKETS WITH TDS OF RS.38,98,310/ - . ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAS NOT GIVEN THE DETAILS OF PRIZE WINNING TICKETS AND ALSO NO CLARIFICATION AS TO WHETHER PRIZE WINNING AMOUNT RELATES TO KERALA STATE LOTTERIES. ON THE BASIS OF THE DETAILS GATHERED FROM LOTTERY DEPARTMENT THE ASSESSING OFFICER MADE AN ADDITION OF RS.55,88,795/ - U/S. 115BB OF THE ACT. HERE ALSO THE ASSESSEE COMPLAINS THAT THE INFORMATION GATHERED BY THE ASSESSING OFFICER WAS NOT DISCLOSED TO THE ASSESSEE NOR WAS ANY CLARIFICATION SOUGHT. THE ASSESSEE ALSO STATES THAT THE IDENTITY OF THE OFFICIALS GIVING THE INFORMATION WAS NOT REVEALED TO THE ASSESSEE NOR WAS AN OPPORTUNITY GIVEN FOR CROSS EXAMINATION. THE ASSESS EES CLAIM APPEARS TO BE CORRECT. E. DEPRECIATION ON UPS THE DEPRECIATION CLAIMED BY THE ASSESSEE @ 80% WAS RESTRICTED TO 10% BY THE AO. THE EXPLANATION GIVEN BY THE ASSESSEE DOES NOT SEEM ACCEPTABLE. F. AGENTS PRIZE ON TICKETS I.T.A. NO . 625/ COC H/ 2017 11 IN T HE P & L ACCOUNT T HE ASSESSEE HA D CREDITED AGENTS PRIZE ON S UPER AND SPECIAL TICKETS AT RS. 28,75 , 287/ - IN RESPECT OF SALE OF TICKETS OTHER THAN KERALA LOTTERIES WHICH ACCORDING TO THE A SSESSEE WAS THE ONLY POINT THE AO WAS AUTHORIZED TO REVIEW. THE ASSESSEE SUBMITTED THAT T HE AO HAD RECEIVED INFORMATION FROM BEHIND THE BACK OF THE ASSESSEE WHICH WAS NOT PUT BEFORE THE ASSESSEE. ACCORDING TO THE LD. AR, THE SUM OF RS. 28,7 5,207/ - WAS THE NET DIFFERENCE B E TWE EN TOTAL CREDITS AND TOTAL DEBITS IN THE 'AGENCY PRIZE, SUPER AND SPE CIAL TICKET ACCOUNT' WHICH WAS TRANSFERRED TO THE P & L ACCOUNT. THE AO HOWEVER, DID NOT ACCEPT THE ASSESSEE'S EXPLANATION. INSTEAD VERIFICATION WAS MADE WITH LOTTERY DEPARTMENT WHICH SHOWED THAT THE ASSESSEE HAD RECEIVED RS. 6 , 85,47 , 229 / - AS AGENTS PRIZE, COMMISSION DISCOUNT, SELLER'S BONUS ETC. THE ASSESSED HA D OPPOSED THE FINDINGS OF THE AO AGAIN SUBMITTING THAT NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE BEFORE MAKING THE ADDITION. THE MAIN GRIEVANCE OF THE ASSESSEE W AS THAT NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE ON SEVERAL ADDITIONS MADE BY SHE AO IN THE ASSESSMENT ORDER. BESIDES, AS MENTIONED IN PARA 1, THE AO WAS ONLY AUTHORIZED TO LOOK INTO TWO POINTS MENTIONED IN THE ORDER U/S 263 OF THE ACT. IT WAS ALSO SUBMITTED THAT MANY ISSUES RAISED BY IHE ASSE SSEE COULD HAVE BEEN ONLY LOOKED INTO AT TIME OF ASSESSMENT PROCEEDINGS. IT IS FURTHER SUBMITTED THAT THIS REMAND REPORT HAS BEEN PREPARED AFTER DISCUSSIONS WITH THE ASSESSEE'S REPRESENTATIVE. 7. THE CIT(A) OBSERVED THAT IN THE REMAND REPORT, THE AS SESSING OFFICER HAD ACCEPTED THAT THE ASSESSING OFFICER PASSING THE ORDER U/S. 143(3) R.W.S. 263, EXCEEDED HIS JURISDICTION AND ON MERIT ALSO, THE ASSESSING OFFICER HAD ACCEPTED AFTER VERIFICATION, THAT VARIOUS ADDITIONS MADE BY THE THEN ASSESSING OFFICER WERE NOT WARRANTED. THUS , HE DELETED ALL THE ADDITIONS MADE IN THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT. 8. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON TH IS ISSUE, THE CIT(A) SOLELY GAVE HIS CONCLUSIONS ON THE BASIS OF THE REMAN D REPORT I.T.A. NO . 625/ COC H/ 2017 12 OF THE ASSESSING OFFICER. THE REMAND REPORT OF THE ASSESSING OFFICER IS NOT THE BASIS FOR HOLDING THAT THE ADDITION CANNOT BE SUSTAINED. THE CIT(A) OUGHT TO HAVE DECIDED T HE ISSUE ON MERITS INSTEAD OF SOLELY PLACING RELIANCE ON THE REMAND REPORT OF THE ASSESSING OFFICER. SECTION 251 DEALS WI TH THE POWERS OF THE COMMISSIONER OF APPEALS WHICH READS AS FOLLOWS: ' 251. POWERS OF THE APPELLATE ASSISTANT COMMISSIONER OR, AS THE CASE MAY BE, THE DEPUTY COMMISSIONER (APPEALS). -- (1) IN DISPOSING OF AN APPEAL, THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS -- (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; OR HE MAY SET ASIDE THE ASSESSMENT AND REFER THE CASE BACK TO THE ASSESSING OFFICER FOR MAKING A FRESH ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CAS E MAY BE, THE COMMISSIONER (APPEALS) AND AFTER MAKING SUCH FURTHER INQUIRY AS MAY BE NECESSARY, AND THE ASSESSING OFFICER SHALL THEREUPON PROCEED TO MAKE SUCH FRESH ASSESSMENT AND DETERMINE, WHERE NECESSARY, THE AMOUNT OF TAX PAYABLE ON THE BASIS OF SUCH F RESH ASSESSMENT; (B) IN AN APPEAL AGAINST AN ORDER IMPOSING A PENALTY, HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO AS EITHER 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) TH E DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, 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 AGAINST SUCH ENHANCEMENT O R REDUCTION. EXPLANATION. -- IN DISPOSING OF AN APPEAL, THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED, NO TWITHSTANDING THAT SUCH MATTER WAS NOT RAISED BEFORE THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) BY THE APPELLANT. ' I.T.A. NO . 625/ COC H/ 2017 13 9.1 A READING OF THE ABOVE PROVISION SHOWS THAT THE POWERS OF THE COMMISSIONER EXTEND NOT ONLY TO THE SUBJECT MATTER OF THE APPEAL AGAINST THE ASSESSMENT, THAT IN A GIVEN CASE, IT IS OPEN TO THE APPELLATE AUTHORITY TO EVEN ENHANCE THE ASSESSMENT. THUS, APART FROM CONFIRMING AN ASSESSMENT OR GRANTING RELIEF TO THE ASSESSEE OR CANCELLING THE ASSESSME NT, THE FIRST APPELLATE AUTHORITY HAS THE POWER OF AN ASSESSING OFFICER TO ENHANCE THE ASSESSMENT WHICH IS UNDER APPEAL BEFORE HIM. THE COMMISSIONER HAS THE JURISDICTION TO EXAMINE ALL MATTERS COVERED BY THE ASSESSMENT ORDER AND CORRECT THE ASSESSMENT IN R ESPECT OF ALL SUCH MATTERS EVEN TO THE PREJUDICE OF THE ASSESSEE AND REMAND THE CASE TO THE ASSESSING OFFICER TO INQUIRE INTO MATTERS WHICH WERE NOT THE SUBJECT MATTER OF APPEAL - VIDE [1958] 33 ITR 182 ( COMMISSIONER OF INCOME - TAX V. MCMILLAN AND CO . ). THE ONLY RESTRICTION ON THE POWER WHILE ENHANCEMENT IS THAT, THE ASSESSEE MUST BE GIVEN A REASONABLE OPPORTUNITY OF SHOWING CAUSE AS AGAINST SUCH ASSESSMENT OR REDUCING THE AMOUNT OF REFUND. EXPLANATION APP ENDED TO SECTION 251 IS A FURTHER ADDITION TO THE POWER GIVEN TO THE COMMISSIONER AS SPECIFIED UNDER SUB SECTION (1). A READING OF THE ABOVE - SAID EXPLANATION SHOWS THAT THE AUTHORITY OF THE COMMISSIONER OF INCOME TAX (APPEALS) TRAVELS TO ANY MATTER WHICH MAY ARISE OUT OF THE PROCEEDINGS, WHICH IS APPEALED AGAINST, NOTWITHSTANDING THE FACT THAT SUCH MATTER WAS NOT RAISED BY AN ASSESSEE BEFORE THE COMMISSIONER. THE SUM AND SUBSTANCE IS THAT WHEN THE ENTIRE ASSESSMENT IS BEFORE THE COMMISSIONER, THE JURISDICTION OF THE COMMISSIONER IS NOT RESTRICTED EITHER BY THE GROUNDS RAISED OR LIMITED BY THE ASSESSMENT MADE AND THE AUTHORITY OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CO - TERMINUS WITH THAT OF I.T.A. NO . 625/ COC H/ 2017 14 THE ASSES SING OFFICER TO ENHANCE THE ASSESSMENT TOO. BARRING THIS, THE ACT DOES NOT CONTEMPLATE A WITHDRAWAL OF THE APPEAL FILED BY AN ASSESSEE. 9.2 IN THE DECISION REPORTED IN [1967] 66 ITR 443 ( COMMISSIONER O F INCOME - TAX V. RAI BAHADUR HARDUTROY MOTILAL CHAMARIA ), THE APEX COURT POINTED OUT THAT THE RIGHT OF APPEAL UNDER SECTION 31 UNDER THE 1922 ACT, TO WHICH SECTION 25 OF THE 1961 ACT IS IN PARI MATERIA, IS GIVEN TO THE ASSESSEE ALONE AS AGAINST AN ORDER OF ASSESSMENT. WHEN THE ASSESSEE DOES NOT CHOOSE TO FILE AN APPEAL, AS FAR AS THE ASSESSEE IS CONCERNED, THE ORDER BECOMES FINAL AND THE REVENUE HAS TH E POWER OF REVISIONAL ASSESSMENT UNDER SECTION 263 OR 147, AS THE CASE MAY BE. THE APEX COURT OBSERVED THAT THE APPELLATE ASSISTANT COMMISSIONER IS NOT AN ORDINARY COURT OF APPEAL. 'IT IS IMPOSSIBLE TO TALK OF A COURT OF APPEAL WHEN ONLY ONE PARTY TO THE ORIGINAL DECISION IS ENTITLED TO APPEAL AND NOT THE OTHER PARTY...' IN VIEW OF THIS PECULIAR SITUATION, ON THE WIDTH OF POWER OF THE APPELLATE COMMISSIONER, THE APEX COURT POINTED OUT: ' IT IS ALSO WELL - ESTABLISHED THAT AN ASSESSEE HAVING ONCE FILED AN APPEAL CANNOT WITHDRAW IT. IN OTHER WORDS, THE ASSESSEE HAVING FILED AN APPEAL AND BROUGHT THE MACHINERY OF THE ACT INTO WORKING, CANNOT PREVENT THE APPELLATE ASSISTANT COMMISSIONER FROM ASCERTAINING AND S ETTLING THE REAL SUM TO BE ASSESSED, BY INTIMATION OF HIS WITHDRAWAL OF THE APPEAL. EVEN IF THE ASSESSEE REFUSES TO APPEAL AT THE HEARING, THE APPELLATE ASSISTANT COMMISSIONER CAN PROCEED WITH THE ENQUIRY AND IF HE FINDS THAT THERE HAS BEEN AN UNDER - ASSESS MENT, HE CAN ENHANCE THE ASSESSMENT (SEE COMMISSIONER OF INCOME - TAX, PUNJAB V. NAWAB SHAH NAWAZ KHAN ([1938] 6 ITR 370). ' IN THE CONTEXT OF THE ABOVE - SAID DECISION OF THE APEX COURT, THE DECISION REPOR TED IN [1963] 50 ITR 578 ( JAGMOHANDAS GOKALDAS V. COMMISSIONER OF WEALTH - TAX ) NEEDS TO BE SEEN. I.T.A. NO . 625/ COC H/ 2017 15 9.3 . AGGRIEVED ON THE VALUATION OF THE NET WEALTH, THE ASSESSEE IN THE SAID DECISION FILED APPEALS BEFORE THE APPELLATE ASSISTANT COMMISSIONER OF WEALTH TAX, WHO REJECTED THE APPEALS. AGAINST THIS, THE ASSESSEE WENT ON APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. THE TRIBUNAL POINTED OUT THAT UNDER SECTION 24 SUB SECTION (6) OF THE WEALTH TAX ACT , THE ASSESSEE CAN REQUIRE THE TRIBUNAL TO REFER THE QUESTION OF THE DISPUTED VALUE TO THE ARBITRATION OF TWO VALUERS. THE ASSESSEE WAS CALLED UPON TO INDICATE ITS INTENTION TO AVAIL OF THIS BENEFIT. THE ASSESSEE WROTE A LETTER SEEKING PERMISSION OF THE TRIBUNAL TO WITHDRAW THE APPEAL. THE TRIBUNAL PASSED AN ORDER GRANTING PERMISSION TO WITHDRAW THE APPEAL. THEREAFTERWARDS, THE ASSESSEE PREFERRED TWO REVISION PETITIONS BEFORE THE COMMISSIONER OF WEALTH TAX UNDER SECTION 25(1) OF THE WEALTH TAX ACT, SEEKING REVISION OF THE ORDER PASSED BY THE APPELLATE ASSISTANT COMMISSIONER AND CONTENDED THAT THE VALUATION OF THE SHARES ADOPTED BY THE WEALTH TAX OFFICER WAS ON A W RONG BASIS. 9. 4 THE COMMISSIONER OF WEALTH TAX (REVISION), HOWEVER, REJECTED THE PETITION SUMMARILY ON THE GROUND THAT THE ORDER SOUGHT FOR REVISION WAS A SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL; HENCE, HE HAD NO JURISDICTION TO DEAL WITH THE SAME. ON THE REVISION BY THE ASSESSEE, THE BOMBAY HIGH COURT HELD THAT THE COMMISSIONER WAS NOT JUSTIFIED IN DISMISSING THE REVISION APPLICATION FILED ON THE GROUND THAT THE ORDERS OF THE WEALTH TAX OFFICER AND THE APPELLATE AUTHORITY WERE A SUBJECT MATTER OF AP PEAL BEFORE THE TRIBUNAL. IN CONSIDERING THE WITHDRAWAL OF THE APPEAL BEFORE THE TRIBUNAL, THE BOMBAY HIGH COURT HELD THAT IN A TAX APPEAL, THE ASSESSEE COULD NOT, AS A MATTER OF RIGHT, WITHDRAW THE APPEAL; HOWEVER THERE WAS NOTHING ILLEGAL IN I.T.A. NO . 625/ COC H/ 2017 16 SO DOING WIT H THE PERMISSION OF THE APPELLATE COURT. THE BOMBAY HIGH COURT POINTED OUT THAT AS AGAINST AN ORDER OF ASSESSMENT, AN ASSESSEE COULD FILE AN APPEAL BEFORE THE APPELLATE ASSISTANT COMMISSIONER AND AN ASSESSEE COULD TEST THE VALIDITY OF THE ASSISTANT APPELLA TE COMMISSIONER'S ORDER AT THE HANDS OF THE APPELLATE AUTHORITY, NAMELY, THE TRIBUNAL, OR GIVE THE VALIDITY OF THE ORDER OF ASSESSMENT OR THAT OF THE APPELLATE ASSISTANT COMMISSIONER DECIDED AT THE HANDS OF THE COMMISSIONER. IN THE BACKGROUND OF THE PROVIS ION, IT HELD THAT IT IS DIFFICULT TO SAY THAT MERE FILING OF A COMPETENT APPEAL WITHOUT CARRYING THE MATTER TO A FINAL DECISION WOULD AMOUNT TO A FULL EXERCISE OF THAT RIGHT. HOWEVER, IT IS OPEN TO THE ASSESSEE TO WAIVE THE RIGHT OF APPEAL BEFORE THE EXPIR Y OF THE PERIOD OF LIMITATION AND SEEK A REVISIONAL REMEDY. THE BOMBAY HIGH COURT HELD THAT WHEN THE LEGISLATURE PERMITS THE RIGHT OF AN ASSESSEE TO WAIVE A RIGHT OF APPEAL PRIOR TO THE PERIOD OF LIMITATION, IT CAN REASONABLY BE ASSUMED THAT THE LEGISLATUR E DID NOT INTEND TO PROHIBIT THE ASSESSEE FROM WAIVING HIS RIGHT OF APPEAL WHEN AN APPEAL HAD BEEN FILED BY THE ASSESSEE, UNLESS IT CAN GENUINELY BE SAID THAT IN NO CASE, IF THE APPEAL HAD BEEN FILED, THE ASSESSEE COULD WITHDRAW AN APPEAL. THE BOMBAY HIGH COURT HELD THAT IF THAT BE THE TRUE LEGAL POSITION, IT WOULD NECESSARILY FOLLOW THAT ONCE A COMPETENT APPEAL HAD BEEN FILED, IT IS NOT OPEN TO AN ASSESSEE TO WAIVE A RIGHT OF APPEAL. 9.5 IN CONSIDERING THIS ISSUE, THE BOMBAY HIGH COURT CONSIDERED THE DEC ISION REPORTED IN [1938] 6 ITR 370 ( COMMISSIONER OF INCOME - TAX V. NAWAB SHAH NAWAZ KHAN ), A DECISION CONSIDERED BY THE APEX COURT IN THE DECISION REPORTED IN [1967] I.T.A. NO . 625/ COC H/ 2017 17 66 ITR 443 ( COMMISSIONER OF INCOME - TAX V. RAI BAHADUR HARDUTROY MOTILAL CHAMARIA ) AND POINTED OUT THAT IN THE DECISION REPORTED IN [1938] 6 ITR 370 ( COMMISSIONER OF INCOME - TAX V. NAWAB SHAH NAWAZ KHAN ) THE ASSESSEE SOUGHT TO WITHDRAW THE APPEAL AFTER THE APPELLATE AUTHORITY ISSUED A NOTICE OF ENHANCEMENT OF ASSESSMENT. ON A CONSIDERATION OF THE DECISION REPORTED IN [1938] 6 ITR 370 ( COMMIS SIONER OF INCOME - TAX V. NAWAB SHAH NAWAZ KHAN ), THE BOMBAY HIGH COURT VIEWED THAT THE RATIO DEDUCTABLE FROM THE DECISION IS THAT, AFTER THE FILING OF AN APPEAL, THE TAX PAYER CANNOT, AT HIS OPTION OR AT HIS DISCRETION, WITHDRAW THE APPEAL TO THE PREJUDICE OF THE REVENUE. 9.6 ON THE FACTS OF THE CASE, THE HIGH COURT HELD THAT THE CHARTERED ACCOUNTANT WROTE A LETTER TO THE REGISTRAR OF THE TRIBUNAL, REQUESTING HIM TO OBTAIN PERMISSION FROM THE TRIBUNAL TO WITHDRAW THE APPEAL AND ON CONSIDERATION OF THE AP PLICATION, THE TRIBUNAL GRANTED THE ASSESSEE THE PERMISSION TO WITHDRAW THE APPEAL. IN THE LIGHT OF THE ABOVE - SAID FACTS, THE HIGH COURT HELD THAT THE COMMISSIONER OF WEALTH TAX WAS NOT JUSTIFIED IN DISMISSING THE REVISION APPLICATION IN LIMINE. 9.7 AS FAR AS THE PRESENT CASE IS CONCERNED, THE ASSESSEE HAS CHALLENGED THE MERIT OF THE ADDITION MADE BY THE ASSESSING OFFICER . TO ADJUDICATE THIS ISSUE, THE CIT(A) HAS TO GO INTO THE MERIT OF EACH ADDITION MADE BY THE ASSESSING OFFICER, AS ALL THE P OWERS ENUM ERATED U/S. 251 IS AVAILABLE TO THE APPELLATE AUTHORITY TO DECIDE THE ISSUE BEFORE HIM. THE CIT(A) HAS ALSO THE POWER TO ENHANCE THE ASSESSMENT WHICH WAS NOT SPECIFICALLY CONSIDERED BY THE ASSESSING OFFICER. IT IS A WELL SETTLED PRINCIPLE OF LAW THAT TA X APPEAL BEFORE THE CIT(A) IS ONLY A CONTINUATION OF ASSESSMENT I.T.A. NO . 625/ COC H/ 2017 18 PROCEEDINGS TO ARRIVE AT THE RIGHT INCOME FOR DETERMINING THE CORRECT DEMAND TO BE MADE IN ACCORDANCE WITH LAW. ONCE THE MACHINERY OF TAX APPEAL IS SET IN MOTION, THERE IS NO STOPPING OF SUCH MACHINERY ON ANY ACCOUNT FOR THE REASON THAT ONCE THE APPELLATE AUTHORITY ASSUMES JURISDICTION , NO OTHER AUTHORITY INCLUDING THE REVISIONAL AUTHORITY COULD TOUCH THE ASSESSMENT. . IN THE PRESENT CASE, THE CIT(A) SOLELY RELIED ON THE REMAND REPORT SUBMITT ED BY THE ASSESSING OFFICER IN A CRYPTIC MANNER WITHOUT DECIDING EACH GROUND RAISED BY THE ASSESSEE INDEPENDENTLY BEFORE DELETING THE ADDITION WHICH IS INAPPROPRIATE. ACCORDINGLY, WE REMIT THE ENTIRE ISSUE IN DISPUTE TO THE FILE OF THE CIT(A) TO DECIDE T HE ISSUE AFRESH. HE MAY CALL FOR THE REMAND REPORT ONCE AGAIN FROM THE ASSESSING OFFICER. IN OTHER WORDS, IF THE ASSESSEE FILES ANY FURTHER EVIDENCE, THE SAME SHALL BE CONFRONTED TO THE ASSESSING OFFICER BEFORE TAKING FINAL DECISION BY THE CIT(A). THIS GROUND OF APPEAL OF THE REVENUE IS PARTLY ALLOWED OR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH DECEMBER , 2019. SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 10 TH DECEMBER , 2019 GJ COPY TO: 1 . M/S. MANJOO & CO., C/O MURALEEDHARAN, MANJOO, NEAR POONKAVU TEMPLE, KADAMBUR, EDAKKAD P.O., KANNUR - 670 663. I.T.A. NO . 625/ COC H/ 2017 19 2. THE ASSISTANT COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 1, KOZHIKODE. 3 . THE COMMISSIONER OF INCOME - TAX(APPEALS) - III, KOCHI. 4. THE CO MMISSIONER OF INCOME - TAX, CENTRAL, KO CHI. 5 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 6 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN