CHAMPALAL S. SHAH, MUMBAI V. INCOME TAX OFFICER 16(2)(3), MUMBAI

MA 168/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5255 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: RUSHAB MEHTA
• Keywords: Unexplained cash credit; Unexplained expenditure; Gift; Depreciation; Search and seizure; Double taxation relief; Opportunity of being heard; Peak credit; Deemed to accrue or arise in india; Retrospective amendment; Question of law; Fair market value; Speculation loss; Tax effect
• Section: 69C; 260A; 131; 68; 69

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER MA NO. 168 - 169 /MUM/2018 ARISING OUT OF ITA NO. 2415 & 1295 /MUM/2014 ASSESSMENT YEAR 2006 - 07 SHRI CHAMPALAL S. SHAH B - 33, PANNALAL TERRACE 2 ND FLOOR, GRAND ROAD(EAST) MUMBAI - 400007 PAN: AAHPS4629Q V. INCOME TAX OFFICER WARD 16(2)(3) PRATYAKSHAKAR BHAVAN MATRU MANDIR MUMBAI - 400007 APPLICANT RESPONDENT ASSESSEE BY MS RUSHAB MEHTA REVENUE BY SHRI R AM TIWARI DATE OF HEARING : 27 - 07 - 2018 DATE OF PRONOUNCEMENT : 22 - 10 - 2018 ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER THESE TWO MISCELLANEOUS APPLICATION S ( HEREINAFTER CALLED THE MA) HAVE BEEN FILED BY ASSESSEE BEING MA NO. 168 - 169 /MUM/2018 ARISING OUT OF ITA NO. 2415 & 1295/MUM/2014 FOR ASSESSMENT YEAR ( AY ) 2006 - 0 7 AGAINST COMMON ORDER DATED 03.10.2017 PASSED BY INCOME - TAX APPELLATE TRIBUNAL ( HEREINAFTER CALLED THE TRIBUNAL) IN CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE . THESE TWO MA S FILED BY ASSESSEE IS SEEKING RECTIFICATION ON THE GROUNDS THAT THE ALLEGED MISTAKES CREPT IN THE COMMON ORDER PASSED BY THE INCOME - TAX APPELLATE TRIBUNAL( HEREINAFTER CALLED THE TRIBUNAL ) DATED 03.10. 2017 IN CROSS APPEALS IN ITA NO. 1295 & 2415/MUM/2014 WHICH IN THE OPINION OF THE ASSESSEE ARE APPARENT FROM RECORDS AND NEEDED TO BE RECTIFIED WITHIN THE LIMITED MANDATE OF SECTION 254(2) OF THE INCOME - TAX ACT,1961(HEREINAFTER CALLED THE ACT) OR IN THE ALTERNATIVE PRAYERS ARE MADE MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 2 TO SET ASIDE THE AFORES AID ORDER OF THE TRIBUNAL DATED 03.10.2017 IN CROSS APPEAL FILED BY THE ASSESSEE AND THE REVENUE . 2. 1 THE BACKGROUND OF THE CASE ARE THAT TRIBUNAL HAS PASSED AN DETAILED ORDER WITH RESPECT T O ITA NO. 2415 & 1295/MUM/2014 VIDE COMMON ORDERS DATED 03.10 .2017 WHEREIN AGAINST CROSS APPEALS FILED BY BOTH ASSESSEE AND REVENUE, THE ADDITIONS TO THE TUNE OF RS. 49,17,69,925/ - WERE CONFIRMED BY THE TRIBUNAL BY HOLDING AS UNDER: - 10. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE RECORDS PLACED O N FILE. WE HAVE OBSERVED THAT THE ASSESSEE IS AN INDIVIDUAL RUNNING A PROPRIETARY CONCERN UNDER THE NAME AND STYLE OF SHANKHESHWAR BULLION, STATED TO BE ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF GOLD BARS. THE ASSESSEE STARTED HIS PROPRIETARY CON CERN ONLY IN THE MONTH OF MARCH, 2005 WHEREIN REGISTRATION WAS OBTAINED VIDE TIN NO. 24071301929 W.E.F. 07 - 03 - 2005 WITH GUJARAT VAT AUTHORITIES IN THE STATE OF GUJARAT AT AHMEDABAD(GUJARAT) , ALTHOUGH THE ASSESSEE BELONGED TO MUMBAI (MAHARASHTRA) . THE R EASONS FOR SEEKING VAT REGISTRATION IN THE STATE OF GUJARAT IS STATED TO BE LEVYING OF VAT @0.25% AT FIRST POINT OF SALE OF GOLD BAR DURING RELEVANT PERIOD IN THE STATE OF GUJARAT, WHILE SAID EXEMPTION WAS STATED TO BE NOT AVAILABLE IN THE STATE OF MAHARA SHTRA WHICH AS CLAIMED BY THE ASSESSEE PROMPTED ASSESSEE TO OPEN PROPRIETARY CONCERN IN THE STATE OF GUJARAT KEEPING IN VIEW SAVINGS IN VAT WHICH COULD LOWER COSTS. THE SAID PROPRIETARY CONCERN UNDERTOOK LARGE MAGNITUDE OF TRANSACTIONS OF SALE AND PURCHAS E OF GOLD BARS IN THE MONTH OF MARCH/APRIL 2005 IMMEDIATELY AFTER IT WAS ESTABLISHED ON 07 - 03 - 2005 . THE MAJOR TRANSACTIONS OF CASH SALES OF GOLD BAR WERE TO THE TUNE OF RS. 6.85 CRORES IN THE MONTH OF MARCH 2005 ITSELF WHILE THE TRANSACTIONS OF CASH SALES OF GOLD BAR WERE TO THE TUNE OF RS. 48.99 CRORES IN THE MONTH OF APRIL, 2005. THEREAFTER , THERE WAS A SOLITARY TRANSACTIONS OF CASH SALE OF GOLD BAR OF APPROX. RS. 18.50 LACS IN THE MONTH OF JULY 2005 AND THEREAFTER SAID BUSINESS OF THE ASSESSEE CEASED TO OPERATE. THE PROPRIETARY CONCERN OF THE ASSESSEE NAMELY SHANKHESHWAR BULLION REGISTRATION WITH GUJARAT VAT WAS CANCELLED BY GUJARAT VAT AUTHORITIES W.E.F. 30 - 09 - 2005(PB/PAGE 261). THE PROPRIETARY CONCERN OF THE ASSESSEE NAMELY SHANKHESHWAR BULLION MADE PURCHASES OF GOLD BARS IN THE SUBJECT ASSESSMENT YEAR MAINLY FROM A PARTNERSHIP CONCERN NAMELY M/S PADMAVATI BULLION, AHMEDABAD OF HUGE MAGNITUDE TO THE TUNE OF AROUND 796 KG IN THE MONTH OF APRIL, 2005 ITSELF WHICH WAS SOLD BY IT TO UNDISCLOSED CUSTOMER S IN CASH WHOSE IDENTITIES HAVE BEEN WITHHELD BY THE ASSESSEE AND THE SAID CASH FROM UNDISCLOSED SOURCES HAVE BEEN DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE. SIMILARLY IT IS OBSERVED FROM MATERIAL ON RECORD THAT IN THE CASE OF PADMAVATI BULLION FROM W HOM THE ASSESSEE MADE PURCHASES ALSO STARTED ITS BUSINESS IN THE MONTH OF FEBRUARY, 2005 BY GETTING VAT REGISTRATION AT AHMEDABAD, GUJARAT AND WITHIN A SHORT SPAN OF TIME REGISTRATION OF THE SAID CONCERN ALSO STOOD CANCELLED BY VAT DEPARTMENT ON 30 - 03 - 2005 ITSELF (TIN NO. 24071301928 EFFECTIVE DATE OF TIN REGISTRATION IS 14.2.2005). DESPITE THE INSISTENCE OF THE AUTHORITIES BELOW REQUESTING THE ASSESSEE TO REVEAL THE IDENTITY OF BUYERS OF THE GOLD BARS FROM THE ASSESSEE SO THAT THE GENUINENESS OF THE TRANS ACTION OF CASH SALE OF GOLD BARS CAN BE VERIFIED, THE ASSESSEE DID NOT REVEAL THE IDENTITY OF ITS CUSTOMERS WHO BOUGHT GOLD IN CASH FROM HIM ON MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 3 THE PRETEXT THAT THERE IS NO REQUIREMENT UNDER LAW TO REVEAL THE IDENTITY OF THE BUYER. IT IS PERTINENT TO MENTI ON THAT EACH INVOICE OF CASH SALE OF GOLD BAR IN MAJORITY OF CASES ISSUED BY THE ASSESSEE IS ON AN AVERAGE EXCEEDING RS. 3,00,00,000/ - IN MAJORITY OF CASES. THE ASSESSEE NEVER REVEALED THE IDENTITY OF PERSON WHO BOUGHT GOLD BARS IN SUCH A HUGE QUANTITY BY PAYING CASH. THE ASSESSEE IS STATED TO HAVE PURCHASED GOLD BARS MAINLY FROM PADAMAVATI BULLIONS. THE PARTNER OF SAID FIRM PADMAVATI BULLION CONFIRMED THE SALE OF GOLD BARS TO THE ASSESSEE IN STATEMENT RECORDED U/S 131 BUT SUBSEQUENTLY THE SAID PARTNER NEV ER APPEARED BEFORE THE AUTHORITIES BELOW WHEN HE WAS CALLED BY THE AO AS REVENUE SOUGHT MORE INFORMATION FROM HIM.. THE SAID PADMAVATI BULLION PURCHASED THIS GOLD BARS/BULLION FROM ICICI BANK FOR WHICH NECESSARY DOCUMENTS SUCH AS PURCHASE INVOICES, PAYMENT S FOR PURCHASES BY CHEQUE THROUGH BANK, DELIVERY CHALLAN IN FAVOUR OF PADMAVATI BULLION ISSUED BY THE ICICI BANK ARE PART OF THE RECORDS WHICH ARE PLACED IN THE PAPER BOOK. HOWEVER, THERE IS NO MATERIAL ON RECORD AS TO THE DELIVERY OF GOLD BARS TO THE AS SESSEE AND ALSO THERE IS NO EVIDENCE OF MOVEMENT OF GOLD BARS STARTING FROM RECEIPT OF GOLD BARS BY THE ASSESSEE FROM PADMAVATI BULLIONS AT THE TIME OF STATED PURCHASES TILL THE SAID GOLD BARS ARE DELIVERED TO THE SO CALLED BUYERS OF THE ASSESSEE WHOSE I DENTITIES ARE NOT REVEALED THUS, THE ASSESSEE DID NOT BRING ON RECORD ANY PROOF OF DELIVERY OF MATERIAL RECEIVED BY HIM FROM PADMAVATI BULLION AND FURTHER NO PROOF OF DELIVERY OF GOLD BAR BY THE ASSESSEE TO THE BUYERS TO WHOM THE GOLD BAR IS STATED TO BE S OLD BY THE ASSESSEE IN CASH IS PLACED ON RECORD. THE ASSESSEE HAD STATED TO HAVE RECEIVED CASH FROM UN - KNOWN/UNDISCLOSED BUYERS WHICH IS DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE AND CHEQUES ARE ISSUED TO PADMAVATI BULLION TOWARDS PURCHASES OF GOLD B ULLION . THE ASSESSEE HAS CONTENDED THAT ONLY AFTER RECEIPT OF THE PAYMENTS FROM BUYERS WHICH IS DEPOSITED IN THE BANK, DELIVERY OF THE GOLD TO THE UNREVEALED/UNDISCLOSED BUYERS IS EFFECTED BUT THERE IS NO SUCH EVIDENCE ON RECORDS WHICH COULD SUBSTANTIATE THAT THE GOLD BARS HAVE BEEN DELIVERED TO THE UNDISCLOSED BUYERS ONLY AFTER THE RECEIPT OF CASH RATHER THE RECORDS REVEAL OPPOSITE WHEREIN CASH SALES OF GOLD BAR TO THE TUNE OF RS. 48.99 CRORES WAS SHOWN TO HAVE BEEN MADE BY THE ASSESSEE IN THE MONTH OF A PRIL, 2005 WHILE MOST OF THE CASH PROCEEDS AGAINST SAID STATED SALE OF GOLD BARS AMOUNTING TO RS. 27.54 CRORES WAS RECEIVED POST APRIL, 2005 AND WAS RECEIVED IN THE MONTH OF MAY, JUNE, JULY & AUGUST, 2005 WHICH WAS DEPOSITED IN BANK OF THE ASSESSEE. PERUS AL OF MATERIAL ON RECORD REVEALS THAT THE ASSESSEES CAPITAL INTRODUCTION IN THE FIRM IS A MEAGER SUM OF RS. 87,114/ - AND THE TOTAL CAPITAL OF THE ASSESSEE STOOD AT RS. 7,89,578/ - AND AGAINST THIS PALTRY CAPITAL OF THE ASSESSEE , THE ASSESSEE HAS STATED TO HAVE ENTERED INTO HUGE TRANSACTION IN GOLD BARS OF MORE THAN RS. 56 CRORES(APPROX.) IN THE MONTH OF MARCH/APRIL 2005 AND HAS EXTENDED CREDIT OF AROUND RS 27.55 CRORES TO ITS UNDISCLOSED BUYERS WHOSE IDENTITY WERE WITHHELD BY THE ASSESSEE WHO HAVE STATED T O HAVE PURCHASED GOLD BARS IN CASH FROM THE ASSESSEE AND THE WHOLE THEORY OF THE ASSESSEE DOES NOT INSPIRE CONFIDENCE. IT IS ALSO PERTINENT TO MENTION THAT THE ASSESSEE DOES NOT HAVE ANY PAST EXPERIENCE OF DEALING IN GOLD BARS NOR HAS MAINTAINED ANY INFRAS TRUCTURE TO HANDLE,SECURE AND STORE GOLD/CASH OF SUCH MAGNITUDE AS IS EMANATING FROM THE RECORDS. THERE IS NO EVIDENCE ON RECORD THAT SECURITY VAULTS OR SECURITY PERSONNELS WERE DEPLOYED BY THE ASSESSEE TO SECURE HIGHLY EXPENSIVE COMMODITY BEING GOLD BARS OR EVEN CASH DEALT/HANDLED BY THE ASSESSEE. THE FINANCIAL STATEMENT OF THE ASSESSEE AS AT 31 - 03 - 2005 REVEALS THAT 5KG OF STOCK OF GOLD TO THE TUNE OF RS. 30.95 LACS WAS HELD AS CLOSING STOCK BUT THERE IS NO EXPLANATION AS TO HOW THE SAID GOLD WAS STORED/S ECURED. SIMILARLY, THERE IS NO EXPLANATION BY THE ASSESSEE THAT HOW IT USED TO SECURE THE MOVEMENT OF GOLD BARS AFTER ITS RECEIPT FROM PADMAVATI MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 4 BULLIONS TILL IT IS DELIVERED TO THE BUYER. THERE IS ALSO NO MATERIAL ON RECORD TO SUGGEST THAT ANY SECURITY VA ULTS WERE HIRED OR CONSTRUCTED OR ANY SECURITY PERSONNEL WERE DEPLOYED BY THE ASSESSEE NOR THERE IS ANY INSURANCE POLICY BEING TAKEN BY THE ASSESSEE TO SECURE GOLD BARS OF HUGE VALUE. THE MATERIAL ON RECORD ALSO CLEARLY REVEAL THAT THE CAPITAL OF THE M/S P ADMAVATI BULLION FROM WHOM THE ASSESSEE MADE PURCHASES IS IN NEGATIVE AND IS MERELY ( - ) RS. 2.75 LACS AS COMPARED TO THE HUGE TRANSACTIONS IN SALE OF GOLD RUNNING INTO RS. 77.26 CRORES IN MARCH 2005 AND TURNOVER OF RS. 136.92 CRORES FROM APRIL 2005 TO 29 - 06 - 2005 , AGGREGATING TO APPROX. RS 215 CRORES WERE MADE BY SAID PADMAVATI BULLIONS TO ITS BUYERS .THE FINANCIAL DOCUMENTS OF PADMAVATI BULLIONS ARE PLACED IN PAPER BOOK PAGE 170 TO 199. GUJARAT VAT REGISTRATION OF PADMAVATI BULLIONS WAS ALSO CANCELLED BY GUJARAT VAT AUTHORITIES ON 30 - 03 - 2005 ITSELF AND IT CEASED TO UNDERTAKE OPERATION TOWARDS SALE / PURCHASE AFTER 29 - 06 - 2005. ON THE COMPLETE APPRECIATION OF THE FACTS AND ALSO TOUCHSTONE OF HUMAN PROBABILITIES, THE STORY OF SALE OF GOLD BARS APPEARS TO BE A SMOKE SCREEN WHILE REAL OBJECTIVE IS TO INTRODUCE UNDISCLOSED INCOME INTO BANKING SYSTEM BY WAY OF DEPOSIT OF CASH IN BANK ACCOUNTS. REFERENCE IS DRAWN TO DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V. CIT (1995) 214 ITR 801(SC). INDIA I S ONE OF THE MAJOR IMPORTER OF GOLD IN THE WORLD. THE SALE AND PURCHASE OF IMPORTED GOLD INCLUDING ITS END USE IS REGULATED, CONTROLLED AND MONITORED BY RESERVE BANK OF INDIA(RBI). M/S PADMAVATI BULION FROM WHOM THE ASSESSEE HAS STATED TO HAVE PURCHASED G OLD BARS HAS IN TURN PURCHASED THE SAID GOLD BARS FROM ICICI BANK AS IS EMANATING FROM THE RECORDS BEFORE US. THE GOLD BARS SOLD BY ICICI BANK TO PADMAVATI BULLION IS IMPORTED GOLD AS IS CLEARLY REFLECTED IN THE SALE INVOICES AND DELIVERY CHALLANS ISSUED B Y ICICI BANK IN FAVOUR OF PADMAVATI BULLION WHICH ARE PLACED IN PAPER BOOK PAGE 86 - 139. THE SAID DOCUMENTS BEING INVOICES/CHALLANS RAISED BY ICICI BANK IN FAVOUR OF PADMVATI BULLION SHOWS THE PRICES OF GOLD IN US$(UNITED STATES DOLLARS) AND THE SUPPLIERS F ROM WHOM ICICI BANK IMPORTED GOLD BAR/BULLION IS ALSO CLEARLY MENTIONED. THE ATTENTION IS DRAWN TO THE FOLLOWING FEW RBI CIRCULARS/ GUIDELINES/NOTIFICATION WHICH REGULATED GOLD IMPORTS AND ITS SALE IN INDIA AT RELEVANT TIME: - 1.RBI/2004 - 05/30 A.P.(DIR SER IES) CIRCULAR NO. 2 DATED 09 - 07 - 2004 2. RBI CIRCULAR A.D.(G.P. SERIES) CIRCULAR NO. 7 DATED 06 - 03 - 1998 3. GUIDELINES ON KNOW YOUR CUSTOMER NORMS AND CASH TRANSACTIONS DBOD AML.BC.18/14.01.001/2002 - 03 DATED 16 - 08 - 2002 4. CIRCULAR NO. AP(DIR SERIES)CIRCULAR NO. 25 DATED 01 - 10 - 2003 4.MASTER CIRCULAR NO RBI/2005 - 06/07 MASTER CIRCULAR NO. 7/2005 - 06 DATED 01 - 07 - 2005 THE MANDATE OF THESE CIRCULAR/ GUIDELINES/ NOTIFICATION ISSUED BY THE RBI FROM TIME TO TIME IS THAT THE IMPORT OF GOLD AND ITS END USE IN INDIA IS B EING REGULATED, CONTROLLED AND MONITORED BY RBI AND IMPORTS WERE ALLOWED TO BE DONE THROUGH THE GOVERNMENT NOMINATED AGENCIES INCLUDING APPROVED BANKS. THE RBI HAS DIRECTED THESE AGENCIES WHO ARE AUTHORIZED BY THE RBI TO DO DUE DILIGENCE/KYC AND OTHER CHE CKS AND VERIFICATION OF THE ULTIMATE BUYERS OF THE GOLD SO THAT THE END USE OF THE IMPORTED GOLD CAN BE TRACKED , CONTROLLED AND MONITORED AND GOLD IS HANDLED/ UTILIZED/ CONSUMED BY ONLY AUTHORIZED MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 5 CONCERNS FOR SPECIFIED APPROVED PURPOSES AND IN NO CASE IT WAS ALLOWED TO BE DIVERTED FOR UN - AUTHORIZED USE OR/AND TO UNAUTHORIZED PERSONS . THE MASTER CIRCULAR DATED 01 - 07 - 2005 ISSUED BY RBI MADE THESE REGULATORY AND CONTROLLED MONITORING MORE STRINGENT WHEREIN ONEROUS RESPONSIBILITIES WERE PLACED ON THE NOMINAT ED AGENCIES AND BANKS TO FURTHER TIGHTEN THEIR MONITORING BOTH ON SUPPLIERS AS WELL ON THE IMPORTING CONCERNS AND THE END USERS. THIS IS MAINLY DONE BY RBI TO TACKLE/CURB ABUSE AND MENACE OF MONEY LAUNDERING AND PROHIBIT CIRCULATION OF BLACK MONEY IN THE ECONOMY . IN ITS CIRCULAR NO. 25 DATED 01 - 10 - 2003 , RBI HAS EXPRESSED UNHAPPINESS ABOUT MISUSE OF IMPORT LCS BY UNAUTHORIZED AGENCIES FOR IMPORTING GOLD AND STRICT INSTRUCTIONS ARE ISSUED FOR COMPLYING WITH REGULATIONS/GUIDELINES. FURTHER STRINGNING OF RE GULATORY NORMS FOR IMPORT OF GOLD BY RBI VIDE MASTER CIRCULAR OF JULY 2005 ONEROUS RESPONSIBILITIES HAVE BEEN PLACED ON APPROVED BANKS AND NOMINATED AGENCIES TO DO DUE DILIGENCE/KYC/VERIFICATION OF SUPPLIERS, IMPORTERS AND USER OF THE GOLD ON A MORE TIGHTE NED BASIS. ON THE PERUSAL OF THE DOCUMENTS WHICH ARE ON RECORD IT IS CRYSTAL CLEAR THAT THE ASSESSEE WAS NOT HAVING ADEQUATE INFRASTRUCTURE TO HANDLE SUCH HUGE TRANSACTIONS IN GOLD BARS AND HAD NO EXPERIENCE TO HANDLE TURNOVER IN GOLD BARS OF SUCH A HUGE MAGNITUDE , RATHER IF THE THEORY OF ASSESSEE IS ACCEPTED AS TO THE SALE AND PURCHASE OF GOLD BARS , THEN BY NOT DISCLOSING THE NAMES OF ULTIMATE BUYERS OF GOLD WHO HAVE ALLEGEDLY BOUGHT GOLD THROUGH ASSESSEE, THE ASSESSEE HAS IN FACT FACILITATED INTRODU CTION OF THE UNDISCLOSED MONEY OF HIS BUYERS INTO THE BANK ACCOUNTS OF THE ASSESSEE AND ITS CONVERSION INTO GOLD BARS WITHOUT DISCLOSING THEIR IDENTITY WHICH ALSO PREVENTED END USE OF GOLD BARS TO BE MONITORED. REFERENCE IS DRAWN TO A RECENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF BINOY VISWAM V. UOI REPORTED IN (2017) 82 TAXMANN.COM 211(SC) , WHEREIN LORDSHIPS HAVE HELD IN NO UNCERTAIN TERMS THAT MENACE OF THE BLACK MONEY WHICH IS DEEP ROOTED IN THE ECONOMY NEED TO BE TACKLED BY TAKING MULTIPLE ACTIONS AT THE SAME TIME, BY HOLDING AS UNDER : 99. UNEARTHING BLACK MONEY OR CHECKING MONEY LAUNDERING IS TO BE ACHIEVED TO WHATEVER EXTENT POSSIBLE. VARIOUS MEASURES CAN BE TAKEN IN THIS BEHALF. IF ONE OF THE MEASURES IS INTRODUCTION OF AADHAAR INTO T HE TAX REGIME, IT CANNOT BE DENOUNCED ONLY BECAUSE OF THE REASON THAT THE PURPOSE WOULD NOT BE ACHIEVED FULLY. SUCH KIND OF MENACE, WHICH IS DEEP ROOTED, NEEDS TO BE TACKLED BY TAKING MULTIPLE ACTIONS AND THOSE ACTIONS MAY BE INITIATED AT THE SAME TIME. IT IS THE COMBINED EFFECT OF THESE ACTIONS WHICH MAY YIELD RESULTS AND EACH INDIVIDUAL ACTION CONSIDERED IN ISOLATION MAY NOT BE SUFFICIENT. THEREFORE, RATIONALITY OF A PARTICULAR MEASURE CANNOT BE CHALLENGED ON THE GROUND THAT IT HAS NO NEXUS WITH THE OBJEC TIVE TO BE ACHIEVED. OF COURSE, THERE IS A DEFINITE OBJECTIVE. FOR THIS PURPOSE ALONE, INDIVIDUAL MEASURE CANNOT BE RIDICULED. WE HAVE ALREADY TAKEN NOTE OF THE RECOMMENDATIONS OF SIT ON BLACK MONEY HEADED BY JUSTICE M.B. SHAH. WE HAVE ALSO REPRODUCED THE MEASURES SUGGESTED BY THE COMMITTEE HEADED BY CHAIRMAN, CBDT ON 'MEASURES TO TACKLE BLACK MONEY IN INDIA AND ABROAD'. THEY HAVE, IN NO UNCERTAIN TERMS, SUGGESTED THAT ONE SINGULAR PROOF OF IDENTITY OF A PERSON FOR ENTERING MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 6 INTO FINANCE/BUSINESS TRANSACTION S ETC MAY GO A LONG WAY IN CURBING THIS FOUL PRACTICE. REFERENCE IS ALSO DRAWN TO RECENT DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. D.K.GARG IN ITA NO 115 /2005 , WHEREIN LORDSHIPS HAVE HELD THAT AN ACCOMMODATION ENTRY PROVIDER WANTING TO AVAIL THE BENEFIT OF THE 'PEAK CREDIT' HAS TO MAKE A CLEAN BREAST OF ALL THE FACTS WITHIN HIS KNOWLEDGE CONCERNING THE CREDIT ENTRIES IN THE ACCOUNTS. THE TAX - PAYER HAS TO EXPLAIN WITH SUFFICIENT DETAIL THE SOURCE OF ALL THE DEPOSITS IN HIS ACCOUNTS AS WEL L AS THE CORRESPONDING DESTINATION OF ALL PAYMENTS FROM THE ACCOUNTS. THE TAX - PAYER SHOULD BE ABLE TO SHOW THAT MONEY HAS BEEN TRANSFERRED THROUGH BANKING CHANNELS FROM THE BANK ACCOUNT OF CREDITORS TO THE BANK ACCOUNT OF THE ASSESSEE, THE IDENTITY OF THE CREDITORS AND THAT THE MONEY PAID FROM THE ACCOUNTS OF THE TAX - PAYER HAS RETURNED TO THE BANK ACCOUNTS OF THE CREDITORS. THE TAX - PAYER HAS TO DISCHARGE THE PRIMARY ONUS OF DISCLOSURE IN THIS REGARD . THEIR LORDSHIPS HELD AS UNDER: 15. THE PRESENT CASE, HOWEVER, IS OF A DIFFERENT NATURE. HERE, WE ARE DEALING WITH AN ASSESSEE WHO DOES NOT DENY THAT HE IS AN ACCOMMODATION ENTRY PROVIDER. HE, IN FACT, MAKES NO BONES OF THE FACT THAT HE EITHER OWNED OR FLOATED 'PAPER COMPANIES' ONLY FOR THAT PURPOSE. HE ALSO DOES NOT DISPUTE THE FACT THAT HE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF ALL THE DEPOSITS IN HIS ACCOUNTS OR THE ULTIMATE DESTINATION OF ALL THE OUTGO FROM HIS ACCOUNTS. 16. THE ASSESSEE'S PLEA THAT HE SHOULD BE TAXED ONLY ON A COMPOSITE 'PEAK CREDIT' IS BASED ENTIRELY ON PRINCIPLES OF ACCOUNTANCY. HE QUESTIONS THE LOGIC BEHIND ALLOWING PEAK CREDITS FOR SOME OF THE CREDIT ENTRIES BY WAY OF CHEQUES AND DENYING IT FOR THE OTHER ENTRIES IN CASH. HE ALSO QUESTIONS THE PRACTICE OF WORKING OUT SEPARATE PEAK C REDITS FOR CHEQUE AND CASH TRANSACTIONS. 17. THE PREMISE UNDERLYING THE CONCEPT OF PEAK CREDIT IS THE SQUARING UP OF THE DEPOSITS IN THE ACCOUNT WITH THE CORRESPONDING PAYMENTS OUT OF THE ACCOUNT TO THE SAME PERSON. IN BHAIYALAL SHYAM BIHARI V. CIT ( SUPRA ), THE ALLAHABAD HIGH COURT EXPLAINED THAT BENEFIT OF PEAK CAN BE GIVEN ONLY WHEN THE ASSESSEE OWNS UP ALL THE CASH CREDITS IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER HELD: 'FOR ADJUDICATING UPON THE PLEA OF PEAK CREDIT THE FACTUAL FOUNDATION HAS TO BE LAID BY THE ASSESSEE. HE HAS TO OWN ALL CASH CREDIT ENTRIES IN THE BOOKS OF ACCOUNT AND ONLY THEREAFTER CAN THE QUESTION OF PEAK CREDIT BE RAISED.' 18. IN THAT CASE, IT WAS HELD THAT AS THE AMOUNT OF CASH CREDITS STOOD IN THE NAMES OF DIFFERENT PERSONS WHICH T HE ASSESSEE HAD ALL ALONG BEEN CLAIMING TO BE GENUINE DEPOSITS, WITHDRAWALS/PAYMENTS TO DIFFERENT PERSONS DURING THE PREVIOUS YEARS, THE ASSESSEE WAS, THEREFORE, NOT MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 7 ENTITLED TO CLAIM THE BENEFIT OF PEAK CREDIT. LATER IN CIT V. VIJAY AGRICULTURAL INDUSTRIE S ( SUPRA ), IT WAS REITERATED THAT: 'THE PRINCIPLE OF PEAK CREDIT IS NOT APPLICABLE IN CASE WHERE THE DEPOSITS REMAINED UNEXPLAINED UNDER SECTION 68 OF THE ACT. IT CANNOT APPLY IN A CASE OF DIFFERENT DEPOSITORS WHERE THERE HAS BEEN NO TRANSACTION OF DEPOSIT S AND REPAYMENT BETWEEN A PARTICULAR DEPOSITOR AND THE ASSESSEE.' ON THE FACTS OF THAT CASE IT WAS HELD THAT PEAK CREDIT COULD BE APPLIED ONLY IN THE CASE OF SQUARED UP ACCOUNTS. IN OTHER WORDS, WHERE AN ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCES OF DEPOSI TS AND THE CORRESPONDING PAYMENTS THEN HE WOULD NOT GET THE BENEFIT OF 'PEAK CREDIT'. 19. THE LEGAL POSITION IN RESPECT OF AN ACCOMMODATION ENTRY PROVIDER SEEKING THE BENEFIT OF 'PEAK CREDIT' APPEARS TO HAVE BEEN TOTALLY OVERLOOKED BY THE ITAT IN THE PRESE NT CASE. INDEED, IF THE ASSESSEE AS A SELF - CONFESSED ACCOMMODATION ENTRY PROVIDER WANTED TO AVAIL THE BENEFIT OF THE 'PEAK CREDIT', HE HAD TO MAKE A CLEAN BREAST OF ALL THE FACTS WITHIN HIS KNOWLEDGE CONCERNING THE CREDIT ENTRIES IN THE ACCOUNTS. HE HAS TO EXPLAIN WITH SUFFICIENT DETAIL THE SOURCE OF ALL THE DEPOSITS IN HIS ACCOUNTS AS WELL AS THE CORRESPONDING DESTINATION OF ALL PAYMENTS FROM THE ACCOUNTS. THE ASSESSEE SHOULD BE ABLE TO SHOW THAT MONEY HAS BEEN TRANSFERRED THROUGH BANKING CHANNELS FROM THE BANK ACCOUNT OF CREDITORS TO THE BANK ACCOUNT OF THE ASSESSEE, THE IDENTITY OF THE CREDITORS AND THAT THE MONEY PAID FROM THE ACCOUNTS OF THE ASSESSEE HAS RETURNED TO THE BANK ACCOUNTS OF THE CREDITORS. THE ASSESSEE HAS TO DISCHARGE THE PRIMARY ONUS OF DI SCLOSURE IN THIS REGARD. 20. WHILE THE AO IN THE PRESENT CASE DID NOT QUESTION THE WORKING OUT OF THE PEAK CREDIT BY THE ASSESSEE, HE, AT THE SAME TIME, INSISTED THAT THE ADDITIONS MADE BY HIM TO THE RETURNED INCOME OF THE ASSESSEE SHOULD BE SUSTAINED. TH E PEAK CREDIT WORKED OUT BY THE ASSESSEE WAS ON THE BASIS THAT THE PRINCIPLE OF PEAK CREDIT WOULD APPLY, NOTWITHSTANDING THE FAILURE OF THE ASSESSEE TO EXPLAIN EACH OF THE SOURCES OF THE DEPOSITS AND THE CORRESPONDING DESTINATION OF THE PAYMENT WITHOUT SQU ARING THEM OFF. THAT IS NOT PERMISSIBLE IN LAW AS EXPLAINED BY THE ALLAHABAD HIGH COURT IN THE AFOREMENTIONED DECISIONS WHICH, THIS COURT CONCURS WITH. CONCLUSION 21. AS ALREADY NOTED, THE ITAT WENT MERELY ON THE BASIS OF ACCOUNTANCY, OVERLOOKING THE SETT LED LEGAL POSITION THAT PEAK CREDIT IS NOT APPLICABLE WHERE DEPOSITS REMAIN UNEXPLAINED UNDER SECTION 68 OF THE ACT. THE QUESTION OF LAW FRAMED BY THIS COURT, IS ACCORDINGLY, ANSWERED IN THE NEGATIVE I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE IMPUGNED ORDER OF ITAT IS, ACCORDINGLY, SET ASIDE AND THE ORDER OF THE AO IS RESTORED TO FILE. MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 8 REFERENCE IS ALSO DRAWN TO THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF RAJMANDIR ESTATES PRIVATE LIMITED V PR. CIT (2016) 386 ITR 162(CAL. HC), WHEREIN LORDSHIPS HAS DISCUSSED THE CONCEPT OF LAUNDERING OF BLACK MONEY AS FOLLOWS: IN A COMMENTARY ON THE PREVENTION OF MONEY LAUNDERING ACT, 2002 BY DR. M. C. MEHANATHAN PUBLISHED BY LEXIS NEXIS, 2014, THE STEPS OF MONEY LAUNDERING ARE DESCRIBED AS FOLLOWS: 'STEPS OF MONEY - LAUNDERING ALTHOUGH MONEY - LAUNDERING OFTEN INVOLVES A COMPLEX SERIES OF TRANSACTIONS, IT GENERALLY INCLUDES THE FOLLOWING THREE BASIC STEPS: 1. PLACEMENT IT INVOLVES INTRODUCTION OF THE PROCEEDS OF CRIME INTO THE FINANCIAL SYS TEM. THIS IS ACCOMPLISHED BY BREAKING UP LARGE AMOUNTS OF CASH INTO SMALLER SUMS THAT ARE THEN DEPOSITED DIRECTLY INTO A BANK ACCOUNT, OR BY PURCHASING MONETARY INSTRUMENTS, TRANSFERRING THE CASH OVERSEAS FOR DEPOSIT IN BANKING/FINANCIAL INSTITUTIONS, USE FOR PURCHASE OF HIGH VALUE THINGS SUCH AS GOLD, PRECIOUS STONES, ART WORKS ETC. AND RESELLING THE SAME THROUGH CHEQUES OR BANK TRANSFERS ETC. 2. LAYERING THIS INVOLVES FORMATION OF COMPLEX LAYERS OF FINANCIAL TRANSACTIONS WHICH DISTANCE THE ILLICIT PROCEED S FROM THEIR SOURCE AND DISGUISE THE AUDIT TRAIL. IN THIS PROCESS A SERIES OF CONVERSIONS OR TRANSACTIONS ARE INVOLVED FOR MOVING THE FUNDS TO PLACES SUCH AS OFFSHORE FINANCIAL CENTRES OPERATING IN A LIBERAL REGULATORY REGIME. OFTEN 'FRONT' COMPANIES ARE F ORMED TO ACCOMPLISH THIS TASK. THESE COMPANIES OBSCURE THE REAL OWNERS OF THE MONEY THROUGH THE BANK SECRECY LAWS AND ATTORNEY - CLIENT PRIVILEGE. THE TECHNIQUES USED FOR THE PURPOSE ARE TO LEND THE PROCEEDS BACK TO THE OWNER AS LOANS, GIFTS AND ETC., UNDER INVOICING THE ITEMS EXPORTED TO THE REAL OWNER OR ETC. IN SOME CASES, THE TRANSFERS MAY BE DISGUISED AS PAYMENTS FOR GOODS OR SERVICES, THUS GIVING THEM A LEGITIMATE APPEARANCE. 3. INTEGRATION THIS INVOLVES INVESTMENT IN THE LEGITIMATE ECONOMY SO THAT THE MONEY GETS THE COLOUR OF LEGITIMACY. THIS IS ACHIEVED BY TECHNIQUES SUCH AS LENDING THE MONEY THROUGH 'FRONT' COMPANIES ETC. THE MONEY MAY BE INVESTED IN REAL ESTATES, BUSINESS AND ETC. THE STAGES AT WHICH MONEY - LAUNDERING COULD BE EASILY DETECTED ARE THOS E WHERE CASH ENTERS INTO THE DOMESTIC FINANCIAL SYSTEM, EITHER FORMALLY OR INFORMALLY, WHERE IT IS SENT ABROAD TO BE INTEGRATED INTO THE FINANCIAL SYSTEMS OF TAX HAVEN COUNTRIES AND WHERE IT IS REPATRIATED IN THE FORM OF TRANSFERS.' THE ROLE OF THE REVENUE AUTHORITIES IN TACKLING THE MENACE OF LAUNDERING BLACK MONEY WAS COMMENTED BY THE LEARNED AUTHOR AS FOLLOWS: MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 9 'IT HAS TO BE KEPT IN VIEW THAT INDIA HAS A PROBLEM OF BLACK ECONOMY, WHICH IS UNACOUNTED AND MANY A TIME THE HOLDERS OF BLACK MONEY ALSO LAUNDER THE BLACK MONEY IN ORDER TO ACQUIRE LEGITIMATE ASSETS. LEGAL OR ILLEGAL INCOME WHICH EVADES TAX AND ILLEGAL INCOME THAT COMES WITHIN THE EXEMPTED TAXATION SLAB CONSTITUTE THE UNREPORTED GROSS DOMESTIC PRODUCT OR BLACK ECONOMY. LAUNDERING THE BLACK MONEY A ND LAUNDERING PROCEEDS OF CRIME ARE TWO DIFFERENT ISSUES, ALTHOUGH THERE IS FREQUENT OVERLAP BETWEEN THE TWO. WHILE LAUNDERING BLACK MONEY IS TO BE HANDLED THROUGH TAXATION LAWS OR SIMILAR LAWS, THE LAUNDERING OF PROCEEDS OF CRIME IS TO BE HANDLED THROUGH SPECIAL ANTI - MONEY - LAUNDERING LAWS.' NOW COMING BACK TO THE CONTROVERSY IN HAND , WE HAVE OBSERVED THAT THE ASSESSEE HAS ALLEGEDLY MADE SALES OF GOLD BARS TO THE TUNE OF RS. 49,17,69,925/ - DURING THE IMPUGNED ASSESSMENT YEAR WHEREIN SALE PROCEEDS HAVE BEE N STATED TO HAVE BEEN RECEIVED IN CASH FROM UNDISCLOSED BUYERS WHICH HAS BEEN DEPOSITED BY THE ASSESSEE IN THE BANK ACCOUNT OF THE ASSESSEE AND HENCE SOURCES OF THESE CASH DEPOSIT COULD NOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE ALTHOUGH THE SAME IS STATED TO BE CASH RECEIVED ON ACCOUNT OF CASH SALES OF GOLD BARS TO UNDISCLOSED BUYERS. THUS, IF THE STORY OF THE ASSESSEE IS TO BE BELIEVED THEN HE HAD ACTED IN A MANNER TO FACILITATE CONVERSION OF UNDISCLOSED MONEY OF UNDISCLOSED PERSONS TO ENABLE THEM TO CONVERT THEIR UNDISCLOSED MONEY INTO SAFE HAVENS OF GOLD BAR AT HIS OWN PERILS WHICH GOT FURTHER AGGRAVATED BY A CONSISTENT ADAMANT AND UNACCEPTABLE STAND OF THE ASSESSEE IN NOT REVEALING THE NAMES OF BUYERS OF THE GOLD BARS BY STATING THAT THE DETAILS OF THESE BUYERS WHO HAVE PAID IN CASH FOR GOLD BAR ARE NOT KNOWN TO THE ASSESSEE WHICH STAND OF THE ASSESSEE ALSO PREVENTED AUTHORITIES BELOW TO MAKE ENQUIRY AGAINST THESE HOLDERS OF UNDISCLOSED MONEY LEADING TO ESCAPEMENT OF INCOME IN THE HANDS OF SUCH UNDISCLOSED BUYERS DUE TO THE ADAMANT STAND OF THE ASSESSEE IN NOT REVEALING THE IDENTITIES OF THE SAID UNDISCLOSED BUYERS , AND THE ASSESSEE IS ACTING IN A MANNER TO SHIELD THESE UN - IDENTIFIED PERSONS FOR WHICH THE ASSESSEE ITSELF IS TO BE BLAME FOR HIS OWN AGONIES. IT IS SETTLED PROPOSITION THAT THE COURT WILL ASSIST THOSE WHO COME TO COURT WITH CLEAN HANDS AND COURT WILL NOT HELP THOSE WHOSE OWN HANDS ARE DIRTY. AT THIS STAGE IT IS IMPORTANT TO REFER TO PROVISIONS OF SECTION 106 AND 114(G) OF THE INDIA N EVIDENCE ACT,1872. SECTION 106 OF THE 1872 ACT STIPULATES THAT BURDEN OF PROVING FACT WHICH IS ESPECIALLY WITHIN THE KNOWLEDGE OF ANY PERSON IS ON THAT PERSON. SIMILARLY SECTION 114(G) OF THE 1872 ACT STIPULATES THAT THE EVIDENCE WHICH COULD BE AND IS NO T PRODUCES WOULD , IF PRODUCED, BE UNFAVOURABLE TO THE PERSON WHO WITHHOLDS IT. THE ASSESSEE IN THE INSTANT APPEAL HAS WITHHELD THE DETAILS AND IDENTITIY OF THE BUYERS OF GOLD BARS FOR WHICH THE ASSESSEE IS TO BE BLAMED AND PRESUMPTION IS DRAWN AGAINST THE ASSESSEE AS IT CANNOT BE ACCEPTED THAT SUCH A HUGE SALES AVERAGING MORE THAN RS 3 CRORES EXECUTED PER ONE SALE INVOICE IN MAJORITY OF CASES BY THE ASSESSEE TO PERSONS WHOSE DETAILS ARE NOT KNOWN TO THE ASSESSEE RATHER THE ASSESSEE IS DELIBERATELY WITHHOLD ING SUCH DETAILS AT HIS OWN PERIL AND IS CLEARLY HIT BY SECTION 106 AND 114(G) OF THE 1872 ACT AND PRESUMPTION IS DRAWN AGAINST THE ASSESSEE THAT EITHER THE ASSESSEE HAS INTRODUCED HIS OWN UNDISCLOSED INCOME INTO THE BANK ACCOUNTS OF THE ASSESSEE OR IF THE STORY OF THE ASSESSEE IS BELIEVED HAS FACILITATED INTRODUCTION OF UNDISCLOSED MONEY OF THE UNDISCLOSED BUYERS OF GOLD AND ITS CONVERSION INTO GOLD WITHOUT REVEALING IDENTITY OF THE BUYERS . IT IS STATED BY THE ASSESSEE THAT THERE IS NO ONUS ON THE ASSESS EE UNDER ANY LAW TO REVEAL THE IDENTITY OF MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 10 BUYERS WHO ALLEGEDLY BOUGHT GOLD BARS FROM THE ASSESSEE, THIS ARGUMENT IS FALLACIOUS AS THE AMOUNT OF CASH ALLEGEDLY RECEIVED FROM UNKNOWN BUYERS OF GOLD BARS STOOD DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AN D ARE CASH CREDITS APPEARING IN BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE ASSESSEE HAS TO FULFILL THREE INGREDIENTS REQUIREMENTS AS ARE MANDATED U/S 68 BEFORE THE SAID CASH CREDITS CAN BE ACCEPTED VIZ. IDENTITY OF THE CREDITORS, CREDIT WORTHINESS OF THE CR EDITORS AND GENUINENESS OF THE CASH CREDITS . THUS, TO SAY THAT NO BURDEN LAY ON THE ASSESSEE TO FULFILL ALL THE THREE INGREDIENT REQUIREMENTS SATED ABOVE BEFORE ITS ACCEPTED WHEREIN ONE OF THE INGREDIENT REQUIREMENT IS TO ESTABLISH IDENTITY OF THE CREDIT OR. THUS, THESE SO CALLED PROCEEDS OF CASH SALES DEPOSITED IN BANK ACCOUNTS OF THE ASSESSEE ARE CASH CREDITS APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE SOURCES OF WHICH ARE NOT SATISFACTORILY EXPLAINED BY THE ASSESSEE KEEPING IN VIEW DETAILED FAC TUAL MATRIX OF THE CASE DISCUSSED BY US IN PRECEDING PARAS OF THIS ORDER AND MANDATE AND ONUS CAST UNDER SECTION 68 ON THE ASSESSEE IS NOT FULFILLED. THE GENUINENESS OF THESE CASH RECEIPTS COULD NOT BE SATISFACTORILY PROVED BY THE ASSESSEE AS THERE IS NO THIRD PARTY EVIDENCES TO SUBSTANTIATE THE AUTHENTICITY OF THESE CASH DEPOSITS AS NO DETAILS OF THE SAID PERSONS TO WHOM CASH SALES WERE ALLEGEDLY MADE BY THE ASSESSEE WAS REVEALED BY THE ASSESSEE. IT IS INCOMPREHENSIBLE AND UNACCEPTABLE THAT THE ASSESSEE H AVING ISSUED CASH SALES INVOICES OF AVERAGE VALUE OF AROUND RS. 3 CRORES PER SINGLE INVOICE IN MAJORITY OF CASE AND AT THE SAME TIME THE ASSESSEE IS CLAIMING THAT THE NAME OF THE SAID ALLEGED BUYERS OF GOLD BARS IS NOT KNOWN TO THE ASSESSEE RATHER IT IS TH E ASSESSEE WHO IS ACTIVELY CONCEALING THE IDENTITY OF THESE SO CALLED BUYERS OF GOLD BARS. IT IS INCOMPREHENSIBLE KEEPING IN VIEW FACTUAL MATRIX OF THE CASE THAT THE ASSESSEE HAVE EXTENDED CREDIT OF RS. 27.55 CRORES TO ITS SO CALLED BUYERS OF GOLD BARS OUT OF SALE OF GOLD BARS OF RS. 48.99 CRORES CONCLUDED IN APRIL 2005 AS THE SAID AMOUNT OF RS. 27.55 CRORES WAS REALIZED IN THE MONTHS OF MAY,JUNE,JULY AND AUGUST 2005 WHICH DOES NOT INSPIRE CONFIDENCE. THE GENUINENESS OF THE BUSINESS OF GOLD BARS CARRIED ON BY THE ASSESSEE OF SUCH HUGE MAGNITUDE KEEPING IN VIEW BACKGROUND OF THE ASSESSEE BASED ON MATERIAL ON RECORD AND INFRASTRUCTURE FACILITIES MAINTAINED BY THE ASSESSEE AS WELL NO EXPERIENCE IN THIS FIELD ITSELF CAST SERIOUS SHADOW OF DOUBT ON THE GENUINENE SS OF SAID BUSINESS CARRIED ON BY THE ASSESSEE. THE ONUS WAS ON THE ASSESSEE TO PROVE GENUINENESS OF THE BUSINESS OF GOLD BARS CONDUCTED BY THE ASSESSEE. REFERENCE IS DRAWN TO DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL(SUPRA). PROVISIONS OF SECTION 68 OF THE ACT IS A SPECIAL PROVISIONS AND IS A DEEMING PROVISION WHICH CAST OBLIGATION ON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE CASH CREDITS APPEARING IN BOOKS OF ACCOUNTS OF THE ASSESSEE BY REVEALING IDENTITY, CREDITWORTHINESS OF THE CRED ITOR AND GENUINENESS OF THE TRANSACTION WHICH HAS NOT BEEN FULFILLED BY THE ASSESSEE AND BURDEN CAST ON THE ASSESSEE IS NOT FULFILLED BY THE ASSESSEE IN THE INSTANT CASE AS DETAILED ABOVE. PROVISIONS OF SECTION 68 AS WERE APPLICABLE FOR RELEVANT ASSESSMEN T YEAR ARE REPRODUCED HEREUNDER: CASH CREDITS. 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 11 THE ASSESSEE FAILED TO SATISFACTORILY EXPLAIN THE SOURCES OF THESE CASH DEPOSITS IN BANK ACCOUNTS OF THE ASSESSEE WHICH ARE IN THE NATURE OF CASH CREDITS IN THE BOOKS OF ACCOUNTS /BANK ACCOUNTS OF THE ASSESSEE, WHICH IS STATED TO BE FROM CASH SALES OF GOLD BAR WHEREIN IDENTITY OF THE BUYERS IS NOT REVEALED BY THE ASSESSEE AND IS A DEVISE USED TO CONVERT UNDISCLOSED INCOME/MONEY INTO GOLD BAR S WITHOUT DISCLOSURE OF THE IDENTITY OF DEPOSITOR OF CASH IN BANK ACCOUNTS, AND THUS BURDEN CAST ON THE ASSESSEE U/S 68 DID NOT STOOD DISCHARGED AND THE SAID CASH CREDIT WILL BE DEEMED TO BE INCOME OF THE ASSESSEE FROM THE UNDISCLOSED INCOME CHARGEABLE TO TAX WITHIN DEEMING FICTION OF SECTION 68 OF THE 1961 ACT, WHICH IN THE INSTANT CASE WE HOLD THIS ISSUE AGAINST THE ASSESSEE AND IN FAVOUR OF REVENUE BASED ON FACTUAL MATRIX OF THE CASE DETAILED ABOVE. REFERENCE IS MADE TO THE DECISION OF HONBLE CALCUTTA H IGH COURT IN THE CASE OF CIT V. SANJAY JAIN (2015) 55 TAXMANN.COM 512(CALCUTTA), WHEREIN LORDSHIPS HELD AS UNDER: 5. THE JUDGEMENTS CITED BY MR. BAGARIA, ACCORDING TO US, HAVE NO APPLICATION TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOT IN DISPUT E THAT ALLEGED SALE OF SHARE BY THE ASSESSEE WAS THROUGH THE BROKER M/S. M.L. DHINGRA & ASOCIATES THAT IN FACT IS THE CASE OF THE ASSESSEE AS WOULD APPEAR FROM THE ORDER OF THE TRIBUNAL. THE NAME OF THE PERSON TO WHOM THE SHARES WERE, IN FACT, SOLD HAS NOT BEEN DISCLOSED. THE SALE PROCEEDS WERE ADMITTEDLY RECEIVED IN CASH. IN CASE OF SALE OF SHARES BY A BROKER A SOLD NOTE AND BOUGHT NOTE IS ISSUED IN THE USUAL COURSE OF BUSINESS. BUT, NO SUCH SOLD NOTE ISSUED BY THE BROKER WAS ISSUED BY THE ASSESSEE. BOTH T HE SALE OF SHARES AND RECOVERY OF THE ALLEGED EXISTING DUES ARE IN THE SPECIAL KNOWLEDGE OF THE ASSESSEE AND THE ALLEGED BUYER AND THE ALLEGED DEBTOR. DURING THE ASSESSMENT THE ASSESSEE WAS PRESENT. HE COULD HAVE ADDUCED EVIDENCE WHICH WAS IN HIS SPECIAL K NOWLEDGE WHICH IS ALSO THE REQUIREMENT OF LAW IN SECTION 106 OF THE EVIDENCE ACT. '106. BURDEN OF PROVING FACT ESPECIALLY WITHIN KNOWLEDGE. - WHEN ANY FACT IS ESPECIALLY WITHIN THE KNOWLEDGE OF ANY PERSON, THE BURDEN OF PROVING THAT FACT IS UPON HIM'. 6. IN A CATENA OF JUDGMENTS SUPREME COURT HELD THAT REQUIREMENT OF SECTION 106 IS THAT THE PERSON CONCERNED HAS TO ADDUCE SUCH EVIDENCE AS IS SUPPOSED IN THE ORDINARY COURSE OF BUSINESS TO BE WITHIN HIS POWER. IF THE SHARES WERE SOLD AND SALE PROCEEDS WERE RECEI VED IN CASH THE ASSESSEE COULD HAVE PRODUCED THE SOLD NOTE. THE ASSESSEE COULD HAVE ALSO APPLIED FOR ISSUANCE OF SUMMONS BOTH TO THE BROKER AND THE BUYER. HE COULD HAVE LED EVIDENCE THROUGH THEM PROVING THE TRANSACTION OF SHARE. SIMILARLY HE COULD HAVE APP LIED FOR ISSUANCE OF SUMMONS FOR EXAMINING THE DEBTOR WHO HAD ALLEGEDLY REPAID THE MONEY IN CASH AND IT COULD HAVE BEEN SAID THAT THE ASSESSEE DID WHATEVER WAS WITHIN HIS POWER, BUT THE ASSESSEE DID NOT DISCHARGE HIS BURDEN. LAW REQUIRES THE ASSESSEE TO SA TISFY THE ASSESSING OFFICER. SATISFACTION OF THE ASSESSING OFFICER CANNOT BE OF A HIGHER OR LOWER LEVEL THAN THE SATISFACTION OF ANY PERSON OF ORDINARY PRUDENCE. IF THE ASSESSEE HAS TAKEN STEPS TO SATISFY A PERSON OF ORDINARY PRUDENCE THEN HE CAN BE SAID T O HAVE DISCHARGED HIS BURDEN, BUT IF THE ASSESSEE CONSCIOUSLY CHOSE NOT TO DO WHAT WAS WITHIN HIS POWER THEN HE COULD BE SAID NOT TO HAVE DISCHARGED HIS BURDEN. THE JUDGEMENT IN THE CASE OF EXOIMP RESOURCES (INDIA) LTD . ( SUPRA ) IS DISTINGUISHABLE BECAUSE I N THAT CASE THE CASE OF THE ASSESSEE WAS THAT HE HAD MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 12 FURNISHED EVIDENCE WHICH WAS NOT CONSIDERED AND THEREFORE THE MATTER WAS REMANDED. THE JUDGEMENT IN THE CASE OF JAORA FLOUR AND FOODS (P.) LTD. ( SUPRA ) IS DISTINGUISHABLE BECAUSE IN A SEARCH AND SURVEY, A SUM OF RUPEES TEN LAKHS WERE FOUND WHICH THE REVENUE THOUGHT WAS UNACCOUNTED MONEY, BUT IT TRANSPIRED THAT IT HAD DULY BEEN REFLECTED IN THE BOOKS OF ACCOUNTS. DOUBLE TAXATION COULD NOT HAVE BEEN PERMITTED AND THAT WAS NOT ALSO A CASE OF SECTION68 . SECTI ON 68 IS SQUARELY APPLICABLE IN THIS CASE BECAUSE THE MONEY WAS FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE ASSESSEE WAS UNABLE TO SATISFY THE ASSESSING OFFICER BY ADDUCING PROPER EVIDENCE. WHICH EVIDENCE WAS NOT ADDUCED BY THE ASSESSEE WILL APPEAR FROM THE JUDGEMENT OF THE ASSESSING OFFICER WHICH READS AS FOLLOWS: 'IT IS FURTHER FOUND THAT ASSESSEE HAS SHOWN CASH RECEIPT FROM M.L. DHINGRA & ASSOCIATES FOR RS.10,61,834.44 AND FROM SALE OF SHARES AMOUNTING TO RS. 21,55950/ - . IN COURSE OF HEARING A/R OF THE ASSESSEE AS WELL AS THE ASSESSEE WAS REQUESTED TO PRODUCE THE DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM REGARDING RECEIPT OF ABOVE CASH BUT NO DOCUMENTARY EVIDENCE HAS BEEN FILED. NEITHER ANY ONE FROM M/S. M.L. DHINGRA & ASSOCIATES WA S PRODUCED NOR ANY CONFIRMATION FILED. NO REQUEST TO ISSUE SUMMON MADE.' 7. THE COMMISSIONER OF INCOME TAX REJECTED AN APPEAL PREFERRED BY THE ASSESSEE AGREEING WITH THE VIEWS OF THE ASSESSING OFFICER OPINED AS FOLLOWS: ' I HAVE PERUSED THE ASSESSMENT ORDE R AND CONSIDERED THE SUBMISSION OF THE APPELLANT. THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE APPELLANT COULD PRODUCE NO EVIDENCE IN SUPPORT OF HIS CONTENTIONS. THIS FACT HAS NOT BEEN DISPUTED BY THE APPELLANT. THERE IS NO MATERIAL ON RECORD TO S HOW THAT CASH OF RS. 21,55,950/ - WAS RECEIVED ON SALE OF SHARE. SIMILARLY, THERE IS NO EVIDENCE ON RECORD TO SHOW THAT CASH OF RS. 10,61,834/ - WAS RECEIVED FROM M/S. M L DHINGRA & ASSOCIATES. CONFIRMATION FROM THE SAID PARTY WAS NOT FILED BEFORE THE AO. EVE N DURING THE COURSE OF APPELLATE PROCEEDINGS , THE APPELLANT COULD BRING NO MATERIAL OR EVIDENCE ON RECORD IN SUPPORT OF HIS CONTENTIONS. I ALSO FIND NO SUBSTANCE IN THE ARGUMENT THAT, SINCE THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT, THE PROVISIONS OF SE CTION 68 HAVE NO APPLICATION. THERE IS NO REQUIREMENT IN LAW THAT BOOKS SHOULD BE REJECTED BEFORE INVOKING THE PROVISIONS OF SECTION 68 . IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT THE AO HAS RIGHTLY HELD THAT THE APPELLANT HAS FAILED TO EXPLAIN THE SOU RCE OF THE CASH DEPOSITS TOTALLING TO RS. 32,17,784/ - . THE ADDITION MADE BY THE AO IS CONFIRMED. THE GROUNDS RAISED BY THE APPELLANT ARE LIABLE TO BE DISMISSED.' 8. THE JUDGEMENT OF THE ASSESSING OFFICER AND THE CIT(A) DISCLOSE IN NO UNCERTAIN TERMS THAT THE EVIDENCE INCLUDING STEPS WHICH THE ASSESSEE COULD HAVE TAKEN WERE NOT RESORTED TO. THEREFORE, THE ASSESSING OFFICER WAS ENTITLED IN LAW TO DRAW AN ADVERSE INFERENCE WHICH IS AUTHORIZED BY SECTION 114(G) OF THE EVIDENCE ACT WHICH PERMITS A PRESUMPTION A S FOLLOWS: 'THAT EVIDENCE WHICH COULD BE AND IS NOT PRODUCED WOULD, IF PRODUCED, BE UNFAVOURABLE TO THE PERSON WHO WITHHOLDS IT;' 9. FOR THE REASONS AFORESAID, WE ARE OF THE OPINION THAT THE JUDGEMENT UNDER CHALLENGE CANNOT BE SUSTAINED AND, THEREFORE, JUD GEMENT OF THE TRIBUNAL IS SET ASIDE. THE JUDGEMENT OF THE CIT(A) IS RESTORED. MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 13 REFERENCE IS ALSO DRAWN TO THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF P M ABDULLA V. ITO ( 2015) 60 TAXMANN.COM 52(KAR.) , DECISION OF HONBLE PUNJAB AND HARYAN A HIGH COURT IN THE CASE OF SELF KNITTING WORKS V. CIT (2014) 27 TAXMAN 253(P&H HC) AND DECISION OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF SMT REKHA KRISHNARAJ V. ITO (2013) 215 TAXMAN 159(KAR) , WHEREIN SLP FILED AGAINST THE SAID CASE STOOD DISMIS SED BY HONBLE SUPREME COURT IN THE CASE OF REKHA KRISHNARAJ V. ITO (2017) 85 TAXMANN.COM 256(SC). THE WHOLE CONTROVERSY CAN ALSO BE SEEN FROM THE ANOTHER ANGLE , THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE SOURCES OF EXPENDITURE INCURRED BY THE AS SESSEE TOWARDS PURCHASES TO TUNE OF RS. 48.78 CRORES DURING THE SUBJECT ASSESSMENT YEAR AS THE PAYMENTS FOR THESE PURCHASES ARE STATED TO BE MADE OUT OF CASH DEPOSITED IN BANK ACCOUNTS OUT OF SO CALLED CASH SALES OF GOLD MADE BY THE ASSESSEE OF WHICH IDENT ITY OF THE BUYERS IS NOT REVEALED BY THE ASSESSEE. PROVISIONS OF SECTION 69C AS WERE APPLICABLE FOR IMPUGNED ASSESSMENT YEAR ARE REPRODUCED BELOW: - [ UNEXPLAINED EXPENDITURE, ETC. 69C. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE C ASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR :] [ PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHA LL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME.] THE ASSESSEE IN THE INSTANT CASE AS WE HAVE SEEN COULD NOT SATISFACTORILY EXPLAIN THE SOURCES OF CASH DEPOSIT OF HUGE MAGNITUDE OF MORE THAN RS. 49 CRORES IN HIS BANK ACCOUNT WHICH HE CLAIMED TO BE FROM CASH SALES FROM GOLD BARS TO THE PERSONS WHEREIN THE IDENTITY OF THE BUYERS ARE NOT REVEALED BY THE ASSESSEE. THUS, THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE SOURCES OF CASH DEPOSIT IN THE BANK ACCOUNT AND CONSEQUENTLY SOURCES OF INCURRING EXPENDITURE BY WAY OF PURCHASES CLAIMED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT OF RS.48.78 CRORES COULD NOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE AND ONUS CAST U/S 69C WAS NOT SATISFIED WHICH WILL MAKE AMOUNT COVERED BY SUCH EXPENDITURE REPR ESENTED BY PURCHASES OF GOLD BARS TO BE DEEMED INCOME OF THE ASSESSEE UNDER THE DEEMING FICTION OF SECTION 69C. THE SAID SECTION 69C IS FURTHER CONTROLLED BY PROVISO WHICH HAS AN OVERRIDING EFFECT AND PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THE 1961 ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME. THUS , SECTION 69C READ WITH PROVISO MAKES IT ABUNDANTLY CLEAR THAT THE AMOUNT REP RESENTED BY EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS PURCHASES OF GOLD BARS CONSTITUTE INCOME WITHIN DEEMING FICTION OF 69C OF THE 1961 ACT. THUS, WE SET ASIDE THE ORDER OF LEARNED CIT(A) AND CONFIRM THE ADDITION TO THE TUNE OF RS 49,17,69,925/ - (RS F ORTY NINE CRORES SEVENTEEN LACS SIXTY NINE THOUSAND NINE HUNDRED AND TWENTY FIVE ONLY ) FOR DETAILED REASONS AS CITED ABOVE. THUS, REVENUE SUCCEEDS ON THIS GROUND WHILE THE ASSESSEE FAILS ON THIS ISSUE IN THEIR RESPECTIVE APPEALS. WE ORDER ACCORDINGLY. MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 14 AS COULD BE SEEN FROM THE ABOVE THAT THE DETAILED ORDER WAS PASSED BY THE TRIBUNAL AGAINST CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE, VIDE ORDERS DATED 03.10.2017. THE TRIBUNAL DISBELIEVED THE ALLEGED BUSINESS OF GOLD BARS CONDUCTED BY THE ASSESSEE WHEREIN THE PROPERIETORY CONCERN WAS O PENED IN MONTH OF MARCH 2005 AND THE ALLEGED TRANSACTION FOR SALE AND PURCHASE OF GOLD BARS WERE CONDUCTED WITHIN TWO MONTHS I.E. MARCH 2005 FOR RS. 6.85 CRORES AND FOR APRIL 2005 FOR RS. 48.99 CRORES. THEREAFTER ONLY SOLITARY TRANSACTION WAS CONDUCTED IN THE MONTH OF JULY 2005 OF RS. 18.50 LACS AND THE CONCERN OF THE ASSESSEE STOOD CLOSED . THE ASSESSEE DID NOT HAD ANY INFRASTRUCTURE AND EXPERIENCE TO DEAL IN HUGE QUANTITIES OF GOLD BARS. THE VAT REGISTRATION ALSO STOOD CANCELLED BY GUJARAT VAT AUTHORITIES IN SHORT SPAN OF TIME. THE ASSESSEE ALSO COULD NOT EVIDENCE MOVEMENT OF GOLD BARS WITH RESPECT TO ITS ALLEGED BUSINESS. THE ALLEGED SALES OF MORE THAN RS.55 CRORES WERE MADE IN CASH TO UNDISCLOSED CUSTOMERS AND CASH GOT DEPOSITED IN ASSESSEES BANK ACCOUN T FROM UNDISCLOSED PERSONS . THE ALLEGED SALES PER INVOICE WERE FOR MORE THAN RS. 3.00 CRORES PER INVOICE WHICH WERE ALLEGEDLY CASH SALES TO UNDISCLOSED CUSTOMERS. THE ASSESSEE WAS NOT HAVING CAPACITY OF ITS OWN AS THE CONCERN WAS STARTED WITH A MEAGRE CAPI TAL OF LESS THAN RS. 1.0 LACS AND IT WAS ALSO FOUND TO BE EXTENDING CREDIT TO THE TUNE OF RS. 27.54 CRORES TO UNDISCLOSED PERSONS WHICH WAS ALSO DISBELIEVED BY THE TRIBUNAL AFTER CONSIDERING THE ENTIRE FACTUAL MATRIX OF THE CASE IN ITS TOTALITY. THE DETA ILED CONCLUSION OF THE TRIBUNAL WERE EXTRACTED ABOVE. THE TRIBUNAL WHILE COMING TO CONCLUSION THAT THE CONCERN WAS LAUNDERING UNDISCLOSED MONEY FOR WHICH ONUS WAS NOT DISCHARGED BY THE ASSESSEE, AND EVIDENCES WITHHELD RELIED UPON FOLLOWING CASE LAWS: A ) HON BLE SUPREME COURT DECISION IN THE CASE OF SUMATI DAYAL V. CIT (1995) 214 ITR 801(SC) B ) HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT V. D.K.GARG IN ITA NO. 115/2005. C ) HONBLE CALCUTTA HIGH COURT DECISION IN THE CASE OF RAJMANDIR ESTATES PRIVATE LIMIT ED V. PR. CIT (2016) 386 ITR 162(CAL. HC) MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 15 D ) HONBLE CALCUTTA HIGH COURT DECISION IN THE CASE OF CIT V. SANJAY JAIN (2015) 55 TAXMANN.COM 512(CAL. HC) E ) HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF P M ABDULLA V. ITO (2015) 60 TAXMANN.COM 52(KAR.) F ) HONB LE PUNJAB AND HARYANA HIGH COURT DECISION IN THE CASE OF SELF KNITTING WORKS V. CIT (2014) 27 TAXMANN 253(P & H HC) G ) HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF SMT REKHA KRISHANRAJ V. ITO (2013)215 TAXMAN 159(KAR.) , WHEREIN SLP FILED WAS ALSO DIS MISSED BY HONBLE SUPREME COURT IN THE CASE OF REKHA KRISHANRAJ V. ITO (2017) 85 TAXMANN.COM 256(SC) THE TRIBUNAL ALSO REFERRED TO STRINGENT RBI CIRCULARS ISSUED FROM TIME REGULATING IMPORT AND UTILISATION OF GOLD WHILE COMING TO AFORESAID CONCLUSIONS. THE TRIBUNAL ALSO REFERRED TO PROVISIONS OF SECTION 106 AND 114(G) OF INDIAN EVIDENCE ACT ,1872 TO COME TO CONCLUSION THAT THE ASSESSEE IS WITHHOLDING EVIDENCES AND PREVENTING ENQUIRY WHEREIN PRESUMPTION WILL BE DRAWN AGAINST THE ASSESSEE IN THESE CIRCUMSTANCES. AS WE WOULD SEE LATER IN THIS ORDER THAT T HE ASSESSEE HAS FILED THESE TWO MAS WHEREIN AN ATTEMP T IS MADE TO GET THE DECISION OF THE TRIBUNAL REVIEWED WITHIN THE LIMITED MANDATE OF SECTION 254(2) OF THE 1961 ACT WHICH IS NOT PERMISSIBLE. THE ASSESSEE HAS MADE FOLLOWING CONTENTIONS IN THE TWO MA S FILED WITH TRIBUNAL , WHICH ARE AS UNDER: A ) IT IS THE CONTENTION OF THE ASSESSEE IN THE MA AS TO NON CONSIDERATION OF REMAND REPORT OF THE AO DATED 28.03.2013 WITH RESPECT TO NO ABNORMAL VARIATION IN SALES PRICE. THE TRIBUNAL DID CONSIDER THE REMAND REPORT OF THE AO BUT THE TRIBUNAL DISBELIEVED THE WHOLE GAMU T OF ALLEGED BUSINESS OF GOLD BAR OPENED AND CLOSED WITHIN SHORT SPAN OF TIME BY THE ASSESSEE AND THE MANNER IN WHICH MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 16 CASH SALES WERE EFFECTED TO UNDISCLOSED BUYERS IN 16 TRANSACTIONS WHEREIN EACH INVOICE WAS OF THE VALUE OF MORE THAN RS. 3.00 CRORES AND T HE AGGREGATE SALES WERE MORE THAN RS. 55 CRORES IN TWO MONTHS OF MARCH AND APRIL 2005. THE TRIBUNAL DISBELIEVED THAT THE ASSESSEE COULD EXTEND CREDIT TO THE TUNE OF RS. 27 .54 CRORES TO UNDISCLOSED BUYERS . THE TRIBUNAL CAME TO CONCLUSION THAT THE CONCERN W AS A DEVICE TO LAUNDER UNDISCLOSED BLACK MONEY AND EVIDENCES WERE DELIBERATELY WITHHELD TO PREVENT ENQUIRY . THIS CONTENTION OF THE ASSESSEE OF NON CONSIDERATION OF REMAND REPORT IS AN DESPERATE ATTEMPT TO SOME HOW WRIGGLE OUT OF WELL REASONED ORDER PASSED BY TRIBUNAL AND THE SAID CONTENTION STOOD REJECTED . B ) IT IS THE CONTENTION OF THE ASSESSEE IN THIS MA THAT THERE WAS NO REQUIREMENT TO DISCLOSE THE NAMES OF CUSTOMERS TO WHOM INVOICES OF MORE THAN RS. 3 CRORE PER INVOICE WAS RAISED BY THE ASSESSEE AS IT IS CLAIMED THAT TCS PROVISIONS CAME MUCH LATER. THE TRIBUNAL HAS COME TO CONCLUSION THAT THIS WHOLE DEVICE OF OPENING AND CLOSING OF THE CONCERN WITHIN SHORT SPAN AND INDULGING IN TRANSACTION OF MORE THAN RS. 55 CRORES IN CASH SALES TO UNDISCLOSED PARTIES WI THIN TWO MONTHS IS AN DEVICE TO LAUNDER UNDISCLOSED MONEY WITH AN INTENT TO EVADE INCOME - TAX. THE ONUS WAS VERY HEAVY ON THE ASSESSEE TO PROVE THAT IT HAS CAPACITY AND CAPABILITY TO UNDERTAKE THE TRANSACTION OF THIS MAGNITUDE WITHIN SHORT SPAN OF TIME WHIC H THE ASSE SSEE MISERABLY FAILED TO DISCHARGE. THE ASSESSEE WAS HELD TO BE HOLDING EVIDENCES AND WAS HELD TO BE HIT BY PROVISIONS OF SECTION 106 AND 114(G) OF THE INDIAN EVIDENCE ACT,1872 . THE ASSESSEE WAS FOUND TO BE HAVING NO EXPERIENCE OF DEALING IN GOL D NOR IT COULD BE SHOWN THAT THE ASSESSEE HAD INFRASTRUCTURE TO HANDLE AND DEAL WITH GOLD OF SUCH A HUGE MAGNITUDE. THIS CONTENTION OF THE ASSSESSEE ALSO LACKS MERIT AS WITHIN THE LIMITED MANDATE OF SECTION 254(2), THE TRIBUNAL CANNOT REVIEW ITS OWN ORDER. THE ASSESSEE CAN ALWAYS AVAIL ALTERNATIVE MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 17 REMEDY PROVIDED UNDER THE 1961 ACT BY FILING AN APPEAL WITH HONBLE HIGH COURT U/S 260A OF THE 1961 ACT. C ) IT IS THE CONTENTION OF THE ASSESSEE IN THIS MA THAT THE AO ACCEPTED THE GP OF 4% TO 5% IN REMAND REPORT. THE TRIBUNAL CONSIDERED THE TOTALITY OF THE CIRCUMSTANCES AND THE CASE LAWS RELIED UPON BY TRIBUNAL ARE CITED IN THE ORDER. THE TRIBUNAL HAS COME TO C ONCLUSION THAT HUGE AMOUNT OF CASH WAS DEPOSITED IN THE ASSESSEES BANK ACCOUNTS FROM UNDISCLOSED SOURCES AND IT WAS INFACT LAUNDERING OF UNDISCLOSED MONEYS WHICH THE ASSESSEE IS NOT COMING FORWARD TO REVEAL THE TRUTH AND DELIBERATELY WITHHOLDING EVIDENCE TO SHIELD UNDERNEATH UNDISCLOSED INCOME. THE ONUS CAST ON THE ASSESSEE WAS NOT DISCHARGED AND THE TRIBUNAL CAME TO CONCLUSION THAT ADDITIONS TO THE TUNE OF RS. 49,17,69,925/ - KEEPING IN VIEW FACTUAL MATRIX OF THE CASE WERE JUSTIFIED . THE TRIBUNAL RELIED U PON FOLLOWING CASE LAWS AND ALSO ON RBI CIRCULARS WHICH WERE FLOUTED BY THE ASSESSEE, DETAILS OF WHICH ARE ELABORATELY DISCUSSED IN TRIBUNAL ORDER. THE CASE LAW RELIED BY TRIBUNAL TO COME TO CONCLUSION ARE AS UNDER: A . HONBLE SUPREME COURT DECISION IN THE CASE OF SUMATI DAYAL V. CIT (1995) 214 ITR 801(SC) B . HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT V. D.K.GARG IN ITA NO. 115/2005. C . HONBLE CALCUTTA HIGH COURT DECISION IN THE CASE OF RAJMANDIR ESTATES PRIVATE LIMITED V. PR. CIT (2016) 386 ITR 162(CA L. HC) D . HONBLE CALCUTTA HIGH COURT DECISION IN THE CASE OF CIT V. SANJAY JAIN (2015) 55 TAXMANN.COM 512(CAL. HC) E . HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF P M ABDULLA V. ITO (2015) 60 TAXMANN.COM 52(KAR.) MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 18 F . HONBLE PUNJAB AND HARYANA HIGH COURT DE CISION IN THE CASE OF SELF KNITTING WORKS V. CIT (2014) 27 TAXMANN 253(P & H HC) G . HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF SMT REKHA KRISHANRAJ V. ITO (2013)215 TAXMAN 159(KAR.) , WHEREIN SLP FILED WAS ALSO DISMISSED BY HONBLE SUPREME COURT IN THE CASE OF REKHA KRISHANRAJ V. ITO (2017) 85 TAXMANN.COM 256(SC) THE TRIBUNAL CANNOT WITHIN LIMITED MANDATE OF SECTION 254(2) REVIEW ITS OWN ORDER AND THIS CONTENTION IS ALSO REJECTED. D ) THE ASSESSEE HAS ALSO RAISED CONTENTION OF NON APPLICABILITY OF SEC TION 68 BY CONTENDING THAT IT IS NOT APPLICABLE TO CASH SALES DISREGARDING THAT THE TRIBUNAL IN ITS ORDER HAS DISBELIEVED THE ENTIRE SPECTRUM OF ACTIVITIES OF ALLEGED PURCHASE AND SALE OF GOLD BARS OF HUGE MAGNITUDE UNDERTAKEN BY THE ASSESSEE IN SHORT SPAN OF TIME OF TWO MONTHS BY CONSIDERING IT AS SMOKE SCREEN TO LAUNDER UNDISCLOSED MONEY . THE ALLEGED SALES WERE CASH SALES TO UNDISCLOSED PERSONS AND PER INVOICE RAISED BY THE ASSESSEE WAS MORE THAN RS. 3 CRORES IN SIXTEEN TRANSACTIONS IN SHORT SPAN OF TIME OF TWO MONTHS TO UNDISCLOSED PERSONS. THE ATTEMPT TO GET THE ORDER OF TRIBUNAL REVIEWED WITHIN LIMITED MANDATE OF SECTION 254(2) IS VISIBLE BUT WE ARE AFRAID THAT WE CANNOT ACCEDE TO THIS CONTENTION OF THE ASSESSEE, WHICH ALSO STOOD REJECTED . E ) DOUBLE TAXAT ION OF SALES. THE ASSESSEE HAS CONTENDED IN THIS MA THAT SALES ARE TAXED TWICE. WE FAILED TO UNDERSTAND THIS CONTENTION. THE TRIBUNAL HAS DISBELIEVED THE ENTIRE ACTIVITIES OF SALES AND PURCHASE UNDERTAKEN BY THE ASSESSEE. THE ASSESSEE HAS MADE CASH SALES O F MORE THAN RS. 55 CRORES OF GOLD BAR IN MARCH 2005 AND APRIL 2005. THE SAID SALES WERE MADE TO UNDISCLOSED PERSONS. THE CASH WAS DEPOSITED IN BANK OF THE ASSESSEE. THE ASSESSEE HAS ALSO EXTENDED CREDIT OF MORE THAN RS. 27 CRORES . THE CONCERN WAS MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 19 CLOSED WITHIN SHORT PERIOD OF TIME AS VAT NUMBER ALSO STOOD CANCELLED BY GUJARAT VAT AUTHORITIES. THE ASSESSEE WAS HELD TO BE WITHHOLDING EVIDENCES AND SHIELDING CERTAIN PERSONS AND PREVENTING ENQUIRY. THE ASSESSEE COULD NOT DISCHARGE ITS BURDEN U/S 68 OF THE 196 1 ACT AND HENCE ADDITIONS WERE CONFIRMED BY TRIBUNAL. IF THE ASSESSEE IS AGGRIEVED BY WELL REASONED ORDER OF THE TRIBUNAL, IT HAS ALTERNATIVE EFFACIOUS REMEDY PROVIDED UNDER THE 1961 ACT WHICH THE ASSESSEE CAN ALWAYS AVAIL BUT WE CANNOT REVIEW OUR OWN ORDE R WITHIN LIMITED MANDATE OF SECTION 254(2) OF THE 1961 ACT. THE TRIBUNAL IN ITS ORDER ALSO CONFIRMED THE ADDITIONS BY INVOKING PROVISIONS OF SECTION 69C AS AN ALTERNATIVE AS IN THE OPINION OF THE TRIBUNAL THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE SOURCE OF MAKING PAYMENTS FOR THE PURCHASES BECAUSE THE PAYMENTS WERE MADE FROM CASH DEPOSITED IN THE ASSESSEE FROM SO CALLED CASH SALES OF GOLD MADE BY THE ASSESSEE TO UNDISCLOSED BUYERS WHICH WAS DISBELIEVED BY THE TRIBUNAL . THE TRIBUNAL INVOKED DEEMING FICTION OF PROVISIONS OF SECTION 69C OF THE 1961 ACT READ W ITH PROVISO TO SECTION 69C. T HE ASSESSEE HAS SUBMITTED THAT TRIBUNAL COULD NOT INVOKE ITS POWERS AS ARE CONTAINED IN SECTION 254(1) OF THE ACT TO PASS SUCH ORDERS AS ARE CONSIDERED FIT. THE ASSESSE E RELIED UPON DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SMT SARITA JAIN V. CIT (2017 - TIOL - 1394 - HC - ALL - IT) TO CONTEND THAT THE TRIBUNAL OUGHT NOT TO HAVE INVOKED PROVISIONS OF SECTI ON 69C MORE SO PURCHASES WERE NEVER DOUBTED BY ANY OF THE AUTH ORITIES. THE ARGUMENTS ARE FALLACIOUS AS THE TRIBUNAL HAS DOUBTED SOURCES FOR MAKING PAYMENT FOR PURCHASES WHICH WERE STATED TO BE FROM CASH SALES TO UNDISCLOSED PERSONS AND THE SAID HUGE CASH OF MAGNITUDE OF MORE THAN RS. 55 CRORES WAS FOUND DEPOSITED IN ASSESSEES BANK ACCOUNT IN SHORT SPAN OF TIME. THE ASSESSEE IS WITHHOLDING IDENTITY OF ITS BUYER AND WAS FOUND TO BE HIT BY PROVISIONS OF SECTION 106 AND 114(G) OF THE 1872 ACT. THE TRIBUNAL HAS THUS DISBELIEVED THE ENTIRE SPECTRUM OF ACTIVITIES OF PURCHAS E AND SALE OF GOLD AS SMOKE SCREEN TO INTRODUCE MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 20 UNDISCLOSED INCOME IN THE BANKING SYSTEM. THE POWERS OF THE TRIBUNAL ARE VERY WIDE AND IT CAN PASS SUCH ORDERS AS IT DEEM FIT UNDER THE CIRCUMSTANCES WITHIN MANDATE OF SECTION 254(1). THE TRIBUNAL EXERCISED I TS POWERS U/S 254(1) WHILE INVOKING PROVISIONS OF SECTION 254(1) TO CONFIRM ADDITIONS U/S 69C READ WITH PROVISO TO SECTION 69C AS THE CIRCU M STANCES EXISTED WHICH CALLED FOR TRIBUNAL TO INVOKE POWERS U/S 254(1) AS THE ASSESSEE WAS FOUND INDULGING IN MONEY L AUNDERING . REFERENCE IS DRAWN TO DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF FIDELITY BUSINESS SERVICES INDIA PRIVATE LIMITED V. ACIT REPORTED IN (2018) 95 TAXMANN.COM (KAR. HC) WHICH HAS DULY CONSIDERED THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF MRS SARIKA JAIN(SUPRA), WHEREIN THE HONBLE KARNATAKA HIGH COURT HELD AS UNDER: - 19. WE HAVE HEARD THE LEARNED COUNSELS AT LENGTH AND GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL CONTENTIONS AND THE CASE LAWS CITED AT THE BAR. 20 . WE ARE ESSENTIALLY CALLED UPON TO DECIDE THE AMBIT, SCOPE AND PARAMETERS OF THE POWERS OF THE INCOME TAX APPELLATE TRIBUNAL (ITAT) WHILE DEALING WITH THE APPEALS FILED BEFORE IT UNDER SECTION 253 OF THE ACT. 21. SECTION 254 OF THE ACT DELINEATES THE POWE RS OF THE TRIBUNAL. WE ARE NOT PRESENTLY DECIDING THE TAXABILITY PART OF SUCH BUY - BACK OF THE SHARES BY THE COMPANY BECAUSE THAT WOULD ESSENTIALLY DEPEND UPON THE FRESH INQUIRY OR INVESTIGATION UPON REMAND BY THE LEARNED TRIBUNAL VIDE IMPUGNED ORDER DATED 22/02/2017 IN TERMS OF IMPUGNED PARA 7 OF THE SAID ORDER QUOTED ABOVE. THEREFORE, THE AFORESAID PROPOSED SUBSTANTIAL QUESTION OF LAW NO.2 NEED NOT BE ANSWERED AT THIS STAGE AS THE QUESTION OF ACTUAL TAXABILITY OF THE SAID ALLEGED EXCESS FAIR MARKET VALUE O F THE SHARES BUY - BACK UNDER SECTION 2(22)(E) OF THE ACT WOULD DEPEND UPON SUCH INQUIRY WHICH IS YET TO BE UNDERTAKEN AND COMPLETED. THEREFORE THE AFORESAID SUBSTANTIAL QUESTION OF LAW NO.1 ONLY AS REFORMULATED BY US, AS TO WHETHER THE TRIBUNAL WAS JUSTIFIE D IN MAKING SUCH DIRECTIONS VIDE PARA 7 OF THE ORDER OR NOT, IS THE QUESTION WHICH WE WILL DISCUSS AND ANSWER AS BELOW. 22. SECTION 254 OF THE ACT WHICH DELINEATES THE POWERS OF THE TRIBUNAL IS QUOTED BELOW TO THE RELEVANT EXTENT FOR READY REFERENCE: 'ORD ERS OF APPELLATE TRIBUNAL 254. (1) THE APPELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 21 (1A)** ** ** (2) THE APPELLATE TRIBUNAL MAY AT ANYTIME WITHIN [SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER WAS PASSED], WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD, AMEND ANY ORDER PASSED BY IT UNDER SUB - SECTION (1), AND SHALL MAKE SUCH AMENDMENT IF THE MISTAKE IS BROUGHT TO ITS NOTICE BY TH E ASSESSEE OR THE [ASSESSING] OFFICER: PROVIDED THAT AN AMENDMENT WHICH HAS THE EFFECT OF ENHANCING AN ASSESSMENT OR REDUCING A REFUND OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE, SHALL NOT BE MADE UNDER THIS SUB SECTION UNLESS THE APPELLATE TRI BUNAL HAS GIVEN NOTICE TO THE ASSESSEE OF ITS INTENTION TO DO SO AND HAS ALLOWED THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD: PROVIDED FURTHER THAT ANY APPLICATION FILED BY THE ASSESSEE IN THIS SUB - SECTION ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 SHALL BE ACCOMPANIED BY A FEE OF FIFTY RUPEES.' 23. THE BURDEN OF THE ARGUMENT OF THE LEARNED SENIOR COUNSEL FOR THE APPELLANT - ASSESSEE, MR. PERCY PARDIWALA WAS THAT THE POWERS OF THE LEARNED TRIBUNAL ARE CIRCUMSCRIBED AND RESTRICTED BY THE WORDS ' THEREON ', USED IN JUXTAPOSITION WITH THE WORDS ' AS IT THINKS FIT '. 24. HE SUBMITTED THAT THE TRIBUNAL CANNOT EXCEED THE PARAMETERS OR THE GROUNDS OF THE APPEAL RAISED BY THE AGGRIEVED APPELLANT ASSESSEE COMPANY AND WHAT ISSUE HAS NEITHER BEEN RAISED BY THE ASSESSEE COMPANY NOR BY THE REVENUE, CANNOT BE DEALT WITH OR SUO MOTU TAKEN UP BY THE LEARNED TRIBUNAL AND SUCH AN EXERCISE IN EXCESS OF ITS JURISDICTION AS HAS BEEN DONE IN PARA 7 OF THE IMPUGNED ORDER QUOTED ABOVE, DESERVES TO BE QUASHED AND SET ASIDE B Y THIS COURT . 25. HE RELIED UPON THE DECISION OF THE DIVISION BENCH OF THE ALLAHABAD HIGH COURT IN THE CASE OF SMT. SARIKA JAIN V . CIT [2017] 84 TAXMANN.COM 64/249 TAXMAN 625 (ALL) WHEREIN DEALING WITH THE CASE OF A PARTNER WHO INTRODUCED A CAPITAL OF RS. 12,20,000/ - IN THE PARTNERSHIP FIRM AND EXPLAINED THAT CAPITAL CONTRIBUTION TO HAVE BEEN RECEIVED BY HER AS 'GIFTS' AND THE DONORS OF SUCH 'GIFTS' WERE ALSO PRODUCED BEFORE THE ASSESSING AUTHORITY AND EVEN THOUGH THE ASSESSING OFFICER HELD THAT THE 'GI FTS' WERE NOT GENUINE AND THEREFORE ADDED BACK THE SAME AS UNEXPLAINED CASH CREDITS AS THE UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE UNDER SECTION 68 OF THE ACT AND THE LEARNED TRIBUNAL ON AN APPEAL THOUGH HELD THAT THE ADDITIONS IN THE HANDS OF THE ASSESSEE UNDER SECTION 68 OF THE ACT COULD NOT BE SUSTAINED BUT, THE TRIBUNAL PROCEEDED TO ADD THE AFORESAID AMOUNTS AS UNEXPLAINED INCOME OF THE ASSESSEE UNDER SECTION 69 - A OF THE ACT , A DIFFERENT PROVISION. IN THE APPEAL FILED BEFORE THE HIGH COURT, THE DIVISION BENCH OF THE ALLAHABAD HIGH COURT HELD IN PARA - 15 THAT THE USE OF WORD ' THEREON' (UNDER SECTION 254 OF THE ACT) IS IMPORTANT AND IT REFLECTS THAT THE TRIBUNAL HAS TO CONFINE ITSELF TO THE QUESTIONS WHICH ARE ARISING OR ARE THE SUBJECT MATTER IN TH E MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 22 APPEAL AND IT CANNOT TRAVEL BEYOND THE SAME. THE POWER TO PASS SUCH ORDERS 'ASTHE TRIBUNAL THINKS FIT' CAN BE EXERCISED ONLY IN RELATION TO THE MATTER THAT ARISES IN THE APPEAL AND IT IS NOT OPEN TO THE TRIBUNAL TO ADJUDICATE ANY OTHER QUESTION OR AN ISS UE WHICH IS NOT IN DISPUTE AND WHICH IS NOT THE SUBJECT MATTER OF THE DISPUTE IN APPEAL. THE APPEAL OF THE ASSESSEE WAS THUS ALLOWED AND THE ADDITIONS MADE UNDER SECTION 69 - A OF THE ACT BY THE TRIBUNAL WERE SET ASIDE. 26. IN THE SAID JUDGMENT OF THE ALLAHA BAD HIGH COURT, IT IS TRUE THAT THE TRIBUNAL CANNOT TRAVEL BEYOND THE SUBJECT MATTER OF THE APPEAL, BUT THE ADDITIONS UNDER SECTION 69A, A DIFFERENT PROVISION WHILE DELETING THE ADDITIONS UNDER SECTION 68 OF THE ACT APPEARS TO HAVE BEEN DONE WITHOUT AFFORD ING A SPECIFIC OPPORTUNITY OF HEARING TO THE ASSESSEE AND THAT APPEARS TO BE THE REASON FOR SETTING ASIDE OF THAT ORDER OF THE TRIBUNAL BY THE HIGH COURT. 27. THE LEARNED COUNSEL FOR THE ASSESSEE COMPANY ALSO RELIED UPON THE DECISION OF THE DIVISION BENCH OF THE CALCUTTA HIGH COURT IN THE CASE OF ITO V. R.L. RAJGHORIA [1979] 119 ITR 872 . THE DIVISION BENCH OF THE CALCUTTA HIGH COURT UPHOLDING THE ORDER OF THE LEARNED SINGL E JUDGE IN A WRIT PETITION IN R.L. RAJGHORIA V . ITO [1977] 107 ITR 347 (CAL.) HELD THAT THE WORD ' THEREON ' APPEARING IN SECTION 33(4) OF THE INCOME TAX ACT, 1922 AKIN TO SECTION 254 (1) OF THE INCOMETAX, 1961 RESTRICTS THE JURISDICTION OF THE TRIBUNAL TO THE SUBJECT MATTER OF THE APPEAL AND THERE IS NO DOUBT THAT THE TRIBUNAL HAS POWERS OF REMANDING A CASE TO THE LOWER APPELLATE AUTHORITY OR THE ASSESSING AUTHORITY AS THE CASE MAY BE, REQUIRING HIM TO HOLD FURTHER INQUIRY AND TO DISPOSE OF THE CASE ON THE BASIS OF SUCH INQUIRY, BUT THE JURISDICTION OF THE TRIBUNAL IS CONFINED ONLY TO THE SUBJECT MATTER OF THE APPEAL. 28. THE TRIBUNAL BY THE IMPUGNED ORDER BEFORE THE CALCUTT A HIGH COURT HAD HELD THAT FOR AY 1962 - 63 , THE LOSS OF RS. 23,100/ - IN SHARES TRANSACTIONS ON THE GROUND THAT THE ASSESSEE PURCHASED THROUGH A SHARE BROKER 15 ORDINARY SHARES OF M/S. HINDUSTAN MOTORSLIMITED ON 05/03/1962 FOR RS. 3,17,400/ - AND THE SAID SHA RES WERE SOLD THROUGH ANOTHER BROKER FOR RS. 2,94,300/ - ON 29/03/1962 AND THUS THE ASSESSEE INCURRED A LOSS OF RS. 23,100/ - FOR THE SAID YEAR, THE LEARNED TRIBUNAL HELD THAT THOUGH THE SAID LOSS IN SALE AND PURCHASE OF THE SHARES COULD NOT BE TERMED AS ' SP ECULATIVE TRANSACTIONS' AND THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN TREATING THE SAID LOSS AS ' SPECULATIVE LOSS ' BUT HOWEVER, THE TRIBUNAL REMANDED THE CASE BACK TO THE FIRST APPELLATE AUTHORITY, APPELLATEASSISTANT COMMISSIONER (AAC) REQUIRING HIM TO D ECIDE WHETHER THE LOSS IN QUESTION WAS A 'CAPITAL LOSS' OR A ' TRADE LOSS ' IN THE HANDS OF THE ASSESSEE. THE SAID DIRECTION OF THE LEARNED TRIBUNAL WAS QUASHED BY THE LEARNED SINGLE JUDGE OF THE CALCUTTA HIGH COURT IN A WRIT PETITION FILED BY THE ASSESSEE, WHICH ORDER OF THE LEARNED SINGLE JUDGE CAME TO BE UPHELD BY THE DIVISION BENCH. 29. WE BEG TO DIFFER, WITH GREAT RESPECTS, FOR TWO REASONS. FIRSTLY, THE SAID JUDGMENT DOES NOT DEAL WITH THE APPELLATE POWERS OF THE TRIBUNAL AND WRIT JURISDICTION WAS EXERCI SED TO QUASH THE ORDER OF THE TRIBUNAL AND SECONDLY, WE FEEL, THE DIRECTIONS GIVEN BY THE TRIBUNAL TO EXAMINE THE ASPECT WHETHER LOSS ON ACCOUNT OF SHARES WAS IN THE NATURE OF 'CAPITAL LOSS' (IF SHARES WERE HELD OVER A PARTICULAR PERIOD) OR A 'TRADE LOSS' (IF THE ASSESSEE WAS ENGAGED IN THE REGULAR ACTIVITY OF PURCHASE AND SALE OF SHARES) WAS PERFECTLY WITHIN ITS MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 23 POWERS UNDER SECTION 254(1) OF THE 1961 ACT OR SECTION 33(4) OF THE OLD 1922 ACT . 30. SIMILARLY, THE LEARNED COUNSEL FOR THE ASSESSEE, MR. PARDIWA LA SUBMITS THAT THE DIVISION BENCH OF THE KARNATAKA HIGH COURT ITSELF IN THE CASE OF KARNATAKA STATE FOREST INDUSTRIES CORN. LTD. V . CIT [1993] 201 ITR 674/[1994] 72 TAXM AN 19 HAD HELD THAT THE POWER OF THE TRIBUNAL UNDER SECTION 254 OF THE ACT CAN BE EXERCISED ONLY IN RELATION TO THE GROUNDS RAISED IN THE APPEAL AND THE TRIBUNAL CANNOT GO BEYOND THE SCOPE OF THE APPEAL AND DECIDE THE QUESTION WHICH DOES NOT FORM THE SUBJE CT MATTER OF THE APPEAL. IN THAT CASE, THE ASSESSEE - A GOVERNMENT UNDERTAKING WAS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND MANUFACTURE OF FOREST PRODUCTS FOR SALE. IT DIRECTED THE METHOD OF ACCOUNTING IN RELATION TO THE VALUATION OF THE CLOSING STOCK UN DER A BONA FIDE REASON AND CLAIMED THAT THE CLOSING STOCK FIGURES SHOULD BE THE ONE AS DETERMINED BY IT FOR THE PURPOSE OF INCOME TAX ASSESSMENT. THE ITO REJECTED THE CLAIM ON THE GROUND THAT THE STATUTORY AUDITORS OF THE ASSESSEE HAD NOT AGREED TO THE CHA NGE IN THE METHOD OF ACCOUNTING. ON SECOND APPEAL, THE TRIBUNAL TOOK A DIFFERENT STAND AND LEAVING OUT THE AFORESAID FINDINGS, UPHELD THE ADDITIONS ON THE GROUND THAT BECAUSE OF THE CHANGE IN THE METHOD OF ACCOUNTING OF THE VALUATION OF CLOSING STOCK IN A PARTICULAR YEAR, DIFFERENT VALUATION WOULD BE SHOWN FOR THE SAME STOCK WHICH WAS HELD AS THE OPENING STOCK AND REMAINED AS THE CLOSING STOCK AND THUS A SUM EQUAL TO THAT DIFFERENCE WOULD EITHER BE TAXED TWICE OR WOULD ESCAPE TAXATION ALTOGETHER AND SINCE T HE TRIBUNAL THUS PROCEEDED ON A NEW GROUND NOT TAKEN BY THE LOWER AUTHORITIES OR URGED BY THE DEPARTMENT BEFORE THE TRIBUNAL, SUCH A DIRECTION COULD NOT HAVE BEEN GIVEN BY THE LEARNED TRIBUNAL. 31. THIS JUDGMENT OF CO - ORDINATE BENCH OF THE KARNATAKA HIGH C OURT TO THE EXTENT OF THE TRIBUNAL BEING BOUND TO DECIDE THE ISSUES WITHIN THE SUBJECT MATTER OF THE APPEAL APPLIES TO THE CASE BEFORE US ON ALL FOURS. ON MERITS OF THE CASE ALSO, THE VIEW OF THE TRIBUNAL ABOUT ADDITIONS MADE ON ACCOUNT OF CHANGE OF METHOD FOR VALUATION OF CLOSING STOCK, HAVING NEUTRAL TAX EFFECT WAS REQUIRED TO BE INTERFERED WITH. THEREFORE, THIS JUDGMENT DOES NOT SUPPORT THE CONTENTION OF THE ASSESSEE BEFORE US IN ANY MANNER. 32. THE LEARNED COUNSEL FOR THE ASSESSEE COMPANY, MR. PARDIWALA ALSO RELIED UPON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF POKHRAJ HIRACHAND V . CIT [1963] 49 ITR 293 . THE DIVISION BENCH OF BOMBAY HIGH COURT HELD THAT THE EXPRESSION ' THEREON ' OCCURRING IN SECTION33(4) OF THE 1922 ACT MEANS 'ON THE SUBJECT MATTER OF APPEAL' BEFORE THE TRIBUNAL AND READING THE RELEVANT RULES 22 AND 27 OF THE INCOME TAX RULES GOVERNING THE PROCEDURE BEFORE THE TRIBUNAL, THE SUBJECT MATTER OF A PPEAL BEFORE THE TRIBUNAL, THE GROUNDS OF APPEAL RAISED BY THE APPELLANT IN HIS MEMORANDUM OF APPEAL AND THE GROUNDS WHICH THE TRIBUNAL ALLOWS HIM TO RAISE UNDER RULE 12 AND THE CONTENTIONS RAISED BY THE RESPONDENT BEFORE THE TRIBUNAL IN SUPPORT OF THE ORD ER MADE BY THE APPELLATE ASSISTANT COMMISSIONER(AAC) . 33. SIMILARLY THE DIVISION BENCH OF THE GUJARAT HIGH COURT IN THE CASE OF DEEPAK NITRITE LTD. V. CIT [2008] 175 TAXMAN 230/175 TAXMAN 230 HELD THAT THE TRIBUNAL ON ITS OWN COULD NOT HAVE UNDERTAKEN THE E XERCISE WITHOUT FIRST DECIDING THE CONTROVERSY BROUGHT BEFORE IT BY THE PARTIES, WHERE THE ASSESSING OFFICER DISALLOWED THE LOSS ON SALE OF INVESTMENTS HOLDING THAT THE TRANSACTION MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 24 WAS A COLOURABLE DEVICE TO REDUCE THE TAXABLE INCOME BUT, THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE ASSESSEE'S CLAIM AND ON THE APPEAL FILED BY THE REVENUE, THE TRIBUNAL RESTORED THE ISSUE OF QUANTIFICATION OF SUCH LOSS TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION, IT WAS HELD THAT WHEN THE ASSESSING OFFICER AND COM MISSIONER OF INCOME TAX (APPEALS) HAD NOT UNDERTAKEN THE ISSUE OF QUANTIFICATION OF LOSS ON SALE OF INVESTMENTS AND THERE WAS NO SUCH GROUND RAISED BY THE REVENUE IN THE APPEAL FILED BY IT BEFORE THE TRIBUNAL, THE TRIBUNAL ON ITS OWN COULD NOT HAVE UNDERTA KEN THE SAID EXERCISE. 34. FOR THE AFORESAID REASONS GIVEN BY US ON THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF R.L. RAJGHORIA'S CASE ( SUPRA ), WE ARE NOT INCLINED TO FOLLOW THE SAID VIEW OF THE GUJARAT HIGH COURT. 35 - 41**** 42. MR. ARAVIND ST OUTLY SUBMITTED THAT THE POWERS OF THE LEARNED TRIBUNAL ARE NOT CIRCUMSCRIBED BY ANY LIMITATION AND THE WORDS ' AS IT THINKS FIT ' ARE WIDE ENOUGH TO CONFER POWERS UPON THE TRIBUNAL TO MAKE SUCH DIRECTIONS OF THE NATURE AS IS MADE BY IT IN PARA 7 OF ITS ORDE R QUOTED ABOVE. 43. HE SUBMITTED THAT THE WORD ' THEREON' DOES NOT DE - LIMIT OR RESTRICT THE POWERS OF THE TRIBUNAL TO PASS SUCH ORDERS ' AS IT THINKS FIT ' AND IT ALSO CANNOT BE SAID THAT THE DIRECTIONS IN PARA 7 OF THE ORDER ARE BEYOND THE SUBJECT MATTER OF THE APPEAL FILED BY THE ASSESSEE BEFORE THE TRIBUNAL. 44. HE SUBMITTED THAT THE POWER TO REMAND A CASE BY THE TRIBUNAL IS ADMITTEDLY VESTED IN IT AND THIS IS NOTHING BUT A REMAND FOR INQUIRY INTO AN ASPECT OF THE SUBJECT MATTER WHICH WAS NOT ADMITTEDLY DIS CUSSED OR INQUIRED INTO BY THE ASSESSING AUTHORITIES OR DISPUTE RESOLUTION PANEL (DRP) IN THE FIRST INSTANCE AND THEREFORE, THE TRIBUNAL BEING THE FINAL APPELLATE BODY UNDER THE ACT, HAS NOT ONLY THE POWER BUT A DUTY TO SEE THAT ALL RELATED ASPECTS OF THE SUBJECT MATTER ARE PROPERLY INQUIRED INTO BY THE ASSESSING AUTHORITY, TO MEET THE ENDS OF JUSTICE AND INTEREST OF THE REVENUE. THE TRIBUNAL HAS MADE THE REMAND OF THE CASE TO THE ASSESSING AUTHORITY WITH CERTAIN DIRECTIONS TO INQUIRE INTO THE FAIR MARKET V ALUE OF THE SHARES BOUGHT BACK BY THE ASSESSEE COMPANY AND NO VALID EXCEPTION CAN BE TAKEN TO THE SAME BY THE ASSESSEE. 45. HE FURTHER SUBMITTED THAT THE ASSESSEE COMPANY SHOULD HAVE NOTHING TO FEAR OR HIDE, IF THE SHARES HAVE BEEN BOUGHT BACK FROM ITS HOL DING COMPANY AT A FAIR MARKET VALUE AND IF SUCH A BUY - BACK HAS BEEN UNDERTAKEN BY THE ASSESSEE COMPANY IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT AND ALSO THE PROVISIONS OF THE INCOME TAX ACT AND ON THE CONCLUSION OF THE FRESH INQUIRY NOW TO BE UNDERTAKEN IN PURSUANCE OF PARA 7 OF THE ORDER OF THE TRIBUNAL ALSO, THE ASSESSEE COMPANY MAY NOT BE ULTIMATELY HELD LIABLE TO TAX UNDER THE ACT AND THEREFORE, IT WOULD BE PREMATURE TO CURTAIL OR SHOOT DOWN SUCH AN INQUIRY IN THE MATTER UNDER THE REMAND D IRECTIONS OF THE LEARNED TRIBUNAL. 46. MR. ARAVIND RELIED UPON CERTAIN JUDGMENTS ALSO IN SUPPORT OF HIS SUBMISSIONS WHICH ARE ALSO BRIEFLY DISCUSSED BELOW. 47. IN CIT V . MAHALAKSHMI TEXTILE MILLS LTD. [1967] 66 ITR 710 (SC) , THE HON'BLE SUPREME COURT HELD THAT THERE IS NOTHING IN THE INCOME TAX ACT WHICH MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 25 RESTRICTS THE TRIBUNAL TO THE DETERMINATION OF THE QUESTIONS RAISED BEFORE THE DEPARTMENTAL AUTHORITIES. ALL QUESTIONS W HETHER OF LAW OR OF FACT, WHICH RELATE TO THE ASSESSMENTS OF THE ASSESSEE MAY BE RAISED BEFORE THE TRIBUNAL. IF ANY REASONS RECORDED BY THE DEPARTMENTAL AUTHORITIES IN REJECTING THE CONTENTIONS RAISED BY THE ASSESSEE BUT THE GRANT OF RELIEF TO THE ASSESSEE ON ANOTHER GROUND IS JUSTIFIED, IT WOULD BE OPEN TO THE DEPARTMENTAL AUTHORITIES AND THE TRIBUNAL AND INDEED THEY WOULD BE UNDER A DUTY TO GRANT THAT RELIEF. THE RIGHT OF THE ASSESSEE TO SUCH A RELIEF IS NOT RESTRICTED TO THE PLEA RAISED BY HIM. 48. IN TH E CASE BEFORE THE HON'BE APEX COURT, THE ASSESSEE SPENT RS. 93,215/ - FOR INTRODUCTION OF 'CASABLANCA CONVERSION SYSTEM' IN ITS SPINNING PLANT FOR MANUFACTURE AND SALE OF COTTON YARN. SUBSTANTIALLY, THIS INVOLVED REPLACEMENT OF CERTAIN ROLLER STANDS AND FLU TED ROLLERS FITTED WITH RUBBER APRONS TO THE SPINNING MACHINERY, REMOVAL OF RIGHT - FRAMES FROM CERTAIN EXISTING PARTS, INTRODUCTION, INTER ALIA, OF BALL - BEARING JOCKEY - PULLEYS FOR CONVERTING THE ORIGINAL BAND - DRIVERS TO TAPE - DRIVERS AND OTHER ADDITIONS AND ALTERATIONS IN THE DRAFTING MECHANISM. THE ITO DISALLOWED THE SAID CLAIM OF RS. 93,215/ - BECAUSE IT WAS NOT ADMISSIBLE AS 'DEVELOPMENT REBATE' AS IN THE OPINION OF THE ITO, IT DID NOT INVOLVE INSTALLATION OF NEW MACHINERY. THE FIRST APPELLATE AUTHORITY AFF IRMED THE ORDER OF THE ITO, BUT THE TRIBUNAL ITSELF INSPECTED THE SPINNING FACTORY OF THE ASSESSEE AND STUDIED THE WORKING OF THE MACHINERY WITH 'CASABLANCA CONVERSION SYSTEM' IN THE PROCESS OF SPINNING YARN AND CAME TO THE CONCLUSION THAT THOUGH SUCH EXPE NDITURE CANNOT BE ADMISSIBLE AS DEVELOPMENT REBATE, BUT THE SAME WAS ADMISSIBLE AS AN ALLOWANCE UNDER SECTION 10(2)(V) OF THE INCOME TAX ACT AND IT ALLOWED THE EXPENDITURE AS 'CURRENT REPAIRS TO THE EXISTING MACHINERY'. THE APEX COURT UPHOLDING THE SAID OR DER OF THE LEARNED TRIBUNAL HELD THAT SUCH ORDER COULD BE PASSED WITHIN ITS POWERS UNDER SECTION 33(4) OF THE ACT TO PASS SUCH ORDERS ' AS IT THINKS FIT' . 49. SIMILARLY IN THE CASE OF KAPURCHAND SHRIMAL V . COMMISSIONER OF INCOME TAX [1981] 131 ITR 451/7 TAXMANN 6 (SC) , THE HON'BLE SUPREME COURT HELD THAT THE APPELLATE AUTHORITY HAS THE JURISDICTION AS WELL AS DUTY TO CORRECT ALL ERRORS IN THE PROCEEDINGS UNDER APPEALS AND T O ISSUE, IF NECESSARY, APPROPRIATE DIRECTIONS TO THE AUTHORITIES AGAINST WHOSE DECISIONS THE APPEAL IS PREFERRED, TO DISPOSE OF THE APPEAL OR ANY PART OF THE MATTER AFRESH UNLESS FORBIDDEN FROM DOING SO BY THE STATUTE. WHILE REJECTING THE APPEAL OF THE ASS ESSEE, THE HON'BLE SUPREME COURT DIRECTED THE TRIBUNAL TO FURTHER DIRECT THE INCOME TAX OFFICER (ITO) TO MAKE FRESH ASSESSMENTS AFTER HOLDING AN ENQUIRY UNDER SECTION 25 - A(1) OF THE ACT REGARDING THE PARTITION OF HINDU UNDIVIDED FAMILY (HUF) CORRESPONDING TO SECTION 171 OF THE INCOME TAX ACT, 1961. 50. MR. ARAVIND ALSO RELIED UPON THE DIVISION BENCH DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT V . INDIAN EXPRESS (MADURAI) (P.) LTD., [1983] 140 ITR 705/13 TAXMAN 441 (MAD.) WHICH INTER ALIA, ALSO RELIED UPON THE DECISION OF THE APEX COURT IN THE CASE OF MAHALAKSHMI TEXTILE MILLS LTD. ( SUPRA ). THE DIVISION BENCH OF THE MADRAS HIGH COURT HELD THAT THE TRIBUNAL IS CONSTITUTED AS THE FINAL AUTHORITY ON FACTS AND THE PENULTIMATE AUTHORITY ON LAW TOUCHING THE ASSESSMENT AND OTHER PROCEEDINGS UNDER THE ACT AND HAS THE PLENARY JURISDICTION IN THE MA TTERS OF ASSESSMENT. IT HELD THAT THE TASK OF AN MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 26 APPELLATE AUTHORITY UNDER THE TAXING STATUTE, ESPECIALLY A NON - DEPARTMENTAL AUTHORITY LIKE THE TRIBUNAL, IS TO ADDRESS ITS MIND TO THE FACTUAL AND LEGAL BASIS OF AN ASSESSMENT FOR THE PURPOSE OF PROPERLY ADJ USTING THE TAX PAYER'S LIABILITY TO MAKE IT ACCORD WITH THE LEGAL PROVISIONS GOVERNING HIS ASSESSMENT AND TO ASCERTAIN THE TAX PAYER'S LIABILITY CORRECTLY TO THE LAST PIE, IF IT WERE POSSIBLE. 51. THE DIVISION BENCH OF THE MADRAS HIGH COURT ALSO RELIED UPO N THE EARLIER FULL BENCH DECISION OF THE MADRAS HIGH COURT ITSELF IN THE CASE OF STATE OF TAMIL NADU V . ARULMURUGAN & CO. [1982] 51 STC 381 (FB) TO HOLD THAT THE FUNCTION OF THE APPELLATE AUTHORITY IS SAME AND CO - EXTENSIVE WITH THAT OF THE ASSESSING AUTHOR ITY AND THE APPELLATE PROCEEDINGS ARE CONTINUATION OF THE ASSESSMENT PROCEEDINGS, THEREFORE, THE APPELLATE AUTHORITY CAN ITSELF ENTER THE ARENA OF ASSESSMENT, EITHER BY PURSUING FURTHER INVESTIGATION OR CAUSING FURTHER INVESTIGATION TO BE DONE. IT CAN DO S O ON ITS OWN INITIATIVE, WITHOUT BEING PRODDED BY ANY OF THE PARTIES. IT CAN ENHANCE THE ASSESSMENT, TAKING ADVANTAGE OF THE OPPORTUNITY AFFORDED BY THE TAX PAYER'S APPEAL, EVEN THOUGH THE APPEAL ITSELF HAS BEEN MOOTED ONLY WITH A VIEW TO A REDUCTION IN TH E ASSESSMENT. IT IS CONSIDERED APT TO QUOTE BELOW THE PARAGRAPHS 22 TO 25 FROM THE SAID JUDGMENT OF MADRAS HIGH COURT, ALBEIT THEY ARE LITTLE LENGTHY BUT ARE FOUND TO BE CONTAINING GOOD REASONINGS THEREIN. '22. QUITE APART FROM PRECEDENTS, IT SEEMS TO US QUITE IN THE FITNESS OF THINGS TO INVEST THE TRIBUNAL WITH THE PLENARY JURISDICTION IN MATTERS OF ASSESSMENT. AS WE EARLIER OBSERVED, THE TRIBUNAL WAS CREATED IN 1941 AS AN INDEPENDENT, NON - DEPARTMENTAL BODY , IN WHOSE HAND THE LEGISLATURE INTENDED TO ENTRUST THE TASK OF REVIEWING ASSESSMENTS MADE UNDER THE ACT. UNDER THE SCHEME OF THE ACT, WHICH GIVES ONLY THE HIGH COURTS AND THE SUPREME COURTS THE POWER OF INTERFERENCE ON QUESTIONS OF LAW, THE TRIBUNAL IS CO NSTITUTED THE FINAL AUTHORITY ON FACTS AND THE PENULTIMATE AUTHORITY ON LAW TOUCHING THE ASSESSMENT AND OTHER PROCEEDINGS UNDER THE ACT. THE PRIMARY PURPOSE OF THE STATUE IS TO LEVY AND COLLECT THE INCOME - TAX. THIS IS BASED ON THE CARDINAL PRINCIPLE, WHICH HAS BEEN INCORPORATED AS A VERITABLE CONSTITUTIONAL PROVISION, THAT NO TAX CAN BE LEVIED OR COLLECTED SAVE UNDER AUTHORITY OF LAW. THE TASK OF AN APPELLATE AUTHORITY UNDER THE TAXING STATUTE, ESPECIALLY A NON - DEPARTMENTAL AUTHORITY LIKE THE TRIBUNAL, IS T O ADDRESS ITS MIND TO THE FACTUAL AND LEGAL BASIS OF AN ASSESSMENT FOR THE PURPOSE OF PROPERLY ADJUSTING THE TAXPAYER'S LIABILITY TO MAKE IT ACCORD WITH THE LEGAL PROVISIONS GOVERNING HIS ASSESSMENT. SINCE THE BE - ALL AND END - ALL OF THE STATUTORY PROVISIONS , ESPECIALLY THOSE RELATING TO THE ADMINISTRATION AND MANAGEMENT OF INCOME - TAX, IS TO ASCERTAIN THE TAXPAYER'S LIABILITY CORRECTLY, TO THE LAST PIE, IF IT WERE POSSIBLE, THE VARIOUS PROVISIONS RELATING TO APPEAL, SECOND APPEAL, REFERENCE AND THE LIKE CAN H ARDLY BE EQUATED TO A LIS OR DISPUTE AS ARISES BETWEEN THE TWO PARTIES IN A CIVIL LITIGATION. ALTHOUGH THE INCOME - TAX STATUTE MAKES THE DEPARTMENT OR ITS OFFICER'S FIGURE AS PARTIES IN APPEAL PROCEEDINGS, THEY ARE NOT IN THE STRICT SENSE WHAT ARE CALLED BY AMERICAN WRITERS AS PARTIES TO ADVERSARY PROCEEDINGS . THIS IS SO, BECAUSE THE VERY OBJECT OF THE APPEAL IS NOT TO DECIDE A POINT RAISED AS A DISPUTE, BUT ANY POINT WHICH GOES INTO THE ADJUSTMENT OF THE TAXPAYER'S LIABILITY. IN THAT SENSE, A VIEW PREVAILS, EVEN IN ENGLAND THAT THE AUTHORITIES SITTING IN APPEAL IN A TAX CASE CANNOT BE REGARDED AS DECIDING A LIS, MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 27 BUT THEY ARE ONLY ENGAGED IN AN ADMINISTRATIVE ACT OF ADJUSTING THE TAXPAYER'S LIABILITY. UNDER OUR FISCAL JURISPRUDENCE, WE MAY REGARD THE APPELLAT E AUTHORITIES AS EXERCISING QUASI - JUDICIAL FUNCTIONS IN THE SAME SENSE AS A TAXING OFFICER DOES. BUT, EVEN SO, THE PROCEEDINGS BEFORE THEM LACK THE BASIC ELEMENTS OF ADVERSARY PROCEEDINGS. IT, THEREFORE, FOLLOWS THAT THE DISCUSSION AND THE SCOPE OF THE APP ELLATE JURISDICTION OF THE TRIBUNAL AND OTHER AUTHORITIES UNDER THE TAX CODE CANNOT BE PURSUED BY DRAWING A PARALLEL TO CIVIL LITIGATION WITH PARTICULAR REFERENCE TO APPEALS FROM DECREES, AND THE LIKE. THE INSISTENCE ON ONE PARTY TO APPEAL BEING ENTITLED T O THE FRUITS OF FINALITY, AS IT IS CALLED, AND THE APPELLATE AUTHORITY BEING CON - FIND (SIC! CONFINED) TO THE SUBJECT MATTER OF THE APPEAL, ARE ALL IDEAS WHICH MIGHT HAVE RELEVANCE IF THE DISCUSSION CENTRES IN PURELY CIVIL LITIGATION AND SUCH LIKE ADVERSARY PROCEEDINGS AS IN AN INDUSTRIAL DISPUTE. BUT IN A CASE WHERE THE REVENUE IS ALL THE WHILE A PARTY, IN A MANNER OF SPEAKING AND IS ALSO AT THE SAME TIME, AN AUTHORITY VESTED WITH THE RESPONSIBILITIES OF DRAWING UP THE ASSESSMENT AND LAYING DOWN THE CORRECT LIABILITY, IT WOULD NOT BE IN ACCORD WITH THE SCHEME OF THE ACT TO IMPOSE RESTRICTIONS ON THE AMBIT AND THE POWER OF THE TRIBUNAL BY SUCH LIKE NOTIONS AS FINALITY, SUBJECT MATTER OF THE APPEAL AND THE LIKE. THE STATUTORY PROVISION IN SECTION 33(4) OF THE 1922 ACT AND SECTION 254 OF THE 1961 ACT WHICH CONFERS APPELLATE JURISDICTION ON THE TRIBUNAL CLEARLY LAYS DOWN THAT THE TRIBUNAL, IN DISPOSING OF AN APPEAL MAY PASS SUCH ORDERS THEREON AS IT THINKS FIT. EXCEPTING THAT THE EXPRESSION 'SUBJECT - MATTER' HAS T AKEN THE FANCY OF MANY LEARNED AND EMINENT JUDGES, THAT IS AN EXPRESSION WHICH IS NOT EMPLOYED BY THE PROVISION CONFERRING THE JURISDICTION IN THE TRIBUNAL. INDEED, IN MAHALAKSHMI TEXTILE MILLS' CASE (SUPRA) IN ONE OF THE PASSAGES TO WHICH WE HAVE MADE REF ERENCE, THE SUPREME COURT HAS UNDERSTOOD THE TRIBUNAL'S APPELLATE JURISDICTION AS JURISDICTION TO PASS 'SUCH ORDERS ON THE APPEAL AS IT THINKS FIT', WITHOUT ADDING ANY GLOSS OF THEIR OWN TO THE EXPRESSION. IN NELLIAPPAN'S CASE (SUPRA), AS WELL AS MAHALAKSH MI TEXTILE MILLS' CASE (SUPRA), THE SUPREME COURT HAD EVEN USED PHRASES WHICH ARE REMINISCENT OF THE LANGUAGE WHICH ENGLISH JUDGES HAVE USED WHILE DESCRIBING A TAX APPEAL. THE SUPREME COURT OBSERVED THAT THE TRIBUNAL IS NOT PRECLUDED FROM 'ADJUSTING' THE T AX LIABILITIES OF THE ASSESSEE IN THE LIGHT OF ITS FINDINGS MERELY BECAUSE THE FINDINGS ARE INCONSISTENT WITH THE CASE PLEADED BY THE ASSESSEE. ENGLISH JUDGES HAVE REGARDED A TAX APPEAL, NOT AS A LIS, BUT AS A PROCESS OF FURTHER ADJUSTMENT OF TAXPAYER LIAB ILITY VIDE LORD HEWART IN REX V. SPECIAL CIT [1935]20 TC 381 (CA); GREER L.J. IN IRC V. SNEATH [1932] 17 TC 149 (CA) ; ROMER L.J. IN THE SAME CASE, SNEATH (SUPRA) AND LORD WRIGHT M.R. IN REX'S CASE (SUPRA). 23. IN REX'S CASE (SUPRA), LORD HEWART, CJ. LAI D DOWN THE NATURE OF AN APPEAL IN TAX MATTERS AS UNDER: 'IN MY OPINION, THE ARGUMENT OF THE LEARNED ATTORNEY - GENERAL IS ABSOLUTELY CORRECT, AND THE ARGUMENT UPON THE OTHER SIDE IS MANIFESTLY BASED, AS HE SAID, UPON A MISAPPREHENSION THAT AN APPEAL UNDER T HE INCOME - TAX ACT, 1918, IS THE SAME IN SUBSTANCE AS AN APPEAL WHERE TWO PRIVATE PERSONS ARE ENGAGED IN LITIGATION. IT IS OF COURSE, TOTALLY DIFFERENT.' (P. 382) IN SNEATH'S CASE (SUPRA), GREER, L.J. GAVE A SIMILAR DESCRIPTION OF THE TRUE POSITION OF A TA X APPEAL IN THE FOLLOWING WORDS: MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 28 'I THINK, THE ESTIMATING AUTHORITIES, EVEN WHEN AN APPEAL IS MADE TO THEM, ARE NOT ACTING AS JUDGES DECIDING THE LITIGATION BETWEEN THE SUBJECT AND THE CROWN. THEY ARE MERELY IN THE POSITION OF VALUERS WHOSE PROCEEDINGS AR E REGULATED BY STATUTE TO ENABLE THEM TO MAKE AN ESTIMATE OF THE INCOME OF THE TAXPAYER FOR THE PARTICULAR YEAR IN QUESTION.' (P.164) ROMER, L.J. IN THE SAME CASE, HELD AS UNDER: 'THE APPEAL IS MERELY ANOTHER STEP TAKEN BY THE COMMISSIONERS, AT THE INSTA NCE OF THE TAXPAYER, IN THE COURSE OF THE DISCHARGE BY THEM OF THEIR ADMINISTRATIVE DUTY OF COLLECTING THE SURTAX.' (P.168) REX'S CASE (SUPRA), WENT TO THE COURT OF APPEAL AND THERE LORD WRIGHT MR REITERATED THE POSITION IN THE FOLLOWING PASSAGE IN HIS JU DGMENT: 'I MAY NOTE HERE AT ONCE THAT IN MAKING THE ASSESSMENT AND IN DEALING WITH THE APPEALS, THE COMMISSIONERS ARE EXERCISING THEIR STATUTORY AUTHORITY AND THEIR STATUTORY DUTY WHICH THEY ARE BOUND TO CARRY OUT, NOT AS JUDGES DECIDING AN ISSUE BETWEEN TWO PARTICULAR PARTIES; THEIR OBLIGATION IS WIDER THAN THAT. IT IS TO EXERCISE THEIR JUDGMENT ON SUCH MATERIAL AS COMES BEFORE THEM, AND, AS WE SHALL SEE LATER, TO OBTAIN ANY MATERIAL WHICH THEY THINK IT IS NECESSARY AND WHICH THEY THINK THEY OUGHT TO HAVE , AND ON THAT TO MAKE THE ASSESSMENT OR THE ESTIMATE WHICH THE LAW REQUIRES THEM TO MAKE. THEY ARE NOT DECIDING THE CASE INTER PARTES ; THEY ARE ASSESSING OR ESTIMATING THE AMOUNT WHICH IN THE INTERESTS OF THE COUNTRY AT LARGE THE TAXPAYER OUGHT TO HAVE TO DEAL WITH AS THE BASIS ON WHICH HE IS TO BE 'TAXED.'(P.387) 24. IN A RECENT FULL BENCH DECISION OF THIS COURT IN STATE OF TAMIL NADU V. ARULMURUGAN & CO. [1982] 51 STC 381 (MAD.), IT WAS HELD THAT THE APPELLATE AUTHORITIES PERFORM PRECISELY THE SAME FUNC TIONS AS THE ASSESSING AUTHORITY. THE FULL BENCH EXPRESSED THE VIEW THAT A TAX APPEAL IS A REHEARING OF THE ENTIRE ASSESSMENT AND IT CANNOT BE EQUATED TO ADVERSARY PROCEEDINGS IN APPEAL IN CIVIL CASES. THE FOLLOWING PASSAGE FROM THE JUDGMENT OF THE FULL BE NCH WOULD BE RELEVANT TO THE DISCUSSION IN THE PRESENT CASE: 'AN APPELLATE AUTHORITY UNDER THE TAXING ENACTMENTS SITS IN APPEAL, ONLY IN A MANNER OF SPEAKING. WHAT IT DOES FUNCTIONALLY, IS ONLY TO ADJUST THE ASSESSMENT OF THE APPELLANT IN ACCORDANCE WITH THE FACTS ON THE RECORD AND IN ACCORDANCE WITH THE LAW LAID DOWN BY THE LEGISLATURE. 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 PARTICULAR TAXPAYER'S 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 AND TRULY AN ADVERSARY PROCEEDING, TH AT IS TO SAY, A CONTROVERSY OR TUSSLE OVER MUTUAL RIGHTS AND OBLIGATIONS BETWEEN CONTESTING LITIGANTS RANGED AGAINST EACH OTHER AS OPPONENTS. A TAX APPEAL IS QUITE DIFFERENT. EVEN AS THE ASSESSING AUTHORITY IS NOT THE TAX PAYERS OPPONENT, IN THE STRICTLY P ROCEDURAL SENSE OF THE TERM, SO TOO THE APPELLATE AUTHORITY SITTING IN APPEAL OVER THE ASSESSING AUTHORITY'S ORDER OF ASSESSMENT IS NOT STRICTLY AN ARBITRAL TRIBUNAL DECIDING A CONTESTED ISSUE BETWEEN TWO LITIGANTS RANGED ON MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 29 APPOSITE SIDES. IN A TAX APPEAL , THE APPELLATE AUTHORITY IS VERY MUCH COMMITTED TO THE ASSESSMENT PROCESS. THE APPELLATE AUTHORITY CAN ITSELF ENTER THE ARENA OF ASSESSMENT, EITHER BY PURSUING FURTHER INVESTIGATION OR CAUSING FURTHER INVESTIGATION TO BE DONE. IT CAN DO SO ON ITS OWN INIT IATIVE, WITHOUT BEING PRODDED BY ANY OF THE PARTIES. IT CAN ENHANCE THE ASSESSMENT, TAKING ADVANTAGE OF THE OPPORTUNITY AFFORDED BY THE TAXPAYER'S APPEAL, EVEN THOUGH THE APPEAL ITSELF HAS BEEN MOOTED ONLY WITH A VIEW TO A REDUCTION IN THE ASSESSMENT. THESE ARE SPECIAL AND EXCEPTIONAL ATTRIBUTES OF THE JURISDICTION OF A TAX APPELLATE AUTHORITY. THESE ATTRIBUTES UNDERLINE THE TRUTH THAT THE APPELLATE AUTHORITY IS NO DIFFERENT, FUNCTIONALLY AND SUBSTANTIALLY, FROM THE ASSESSING AUTHORITY ITSELF.' 25. IT SEEMS TO US, THEREFORE, THAT BOTH ON PRINCIPLE AND ON PRECEDENT, THERE IS NO REASON WHY THE TRIBUNAL MUST BE PRECLUDED FROM HANDLING A POINT WHICH APPERTAINS THE ASSESSEE'S ASSESSMENT MERELY BECAUSE NOBODY ELSE HAD HANDLED IT BEFORE IT HAS NOT OCCURRED EIT HER TO THE ASSESSEE OR TO THE DEPARTMENT TO RAISE AND URGE THAT POINT AT EARLIER STAGES OF THE PROCEEDINGS .' WE RESPECTFULLY AGREE WITH THE AFORESAID VIEW OF THE MADRAS HIGH COURT. 52. THE RAJASTHAN HIGH COURT IN THE CASE OF CIT V . PRATAPSINGH [1987] 164 ITR 431 ALSO DEALT WITH THE POWER OF THE INCOME TAX APPELLATE TRIBUNAL (ITAT) TO PERMIT A NEW GROUND TO BE RAISED BEFORE IT AND THE POWER UNDER SECTION 254 TO ENHANCE THE ASSESSMENT AND ANSWER THE SAID QUESTION ON THE BASIS OF LEADING JUDGMENT IN THE CASE OF HUKUMCHAND MILLS LTD. V . CIT [1967] 63 ITR 232 (SC) IN THE FOLLOWING MANNER: 'THE QUESTION BEFORE US IS LIMITED TO THE POWER OR THE JURISDICTION OF THE TRIBUNAL TO GO INTO THE POINT OF CONTENTION WHICH HAS NOT BEEN RAISED EARLIER BY THE DEPARTMENT. THE OBSERVATIONS MADE IN HUKUMCHAND'S CASE [1967] 63 ITR 232 (SC) HAVE BEEN PRESSED INTO SERVICE BY THE TRIBUNAL FOR COMING TO THE CONCLUSION THAT IT CANNOT CONSIDER AND EXAMINE THE POINT NOT RAISED BY THE DEPARTMENT AS IT MAY INVOLVE ENHANCEMENT OF TAX LIAB ILITY. IT MAY BE STATED THAT THEIR LORDSHIPS OF THE SUPREME COURT HAVE NOT LAID DOWN THAT THE TRIBUNAL CANNOT EXERCISE THE POWER OF ENHANCEMENT UNDER ITS APPELLATE JURISDICTION. THE WORDS 'EXCEPT POSSIBLY THE POWER OF ENHANCEMENT' HAVE BEEN PUT BY THEIR LO RDSHIPS IN BRACKETS. THE USE OF THE WORD 'POSSIBLY' AND PUTTING THESE WORDS IN BRACKETS SHOWS THAT ONLY AN OBSERVATION HAS BEEN MADE AND THE EFFECT OF IT CANNOT BE TAKEN THAT ANY LAW HAS BEEN LAID DOWN. THE WORD 'POSSIBLY' IS CLEARLY INDICATIVE OF IT. ** ** ** IN THE LIGHT OF THE ABOVE DISCUSSION, OUR ANSWER TO THE QUESTION IS THAT THE TRIBUNAL WAS NOT JUSTIFIED IN REFUSING TO ENTERTAIN THE PLEA OF THE DEPARTMENT THAT THE INCOME FROM THE LEASE RENT OF THE CINEMA BUILDING WAS ASSESSABLE UNDER THE HEAD ' INCOME FROM OTHER SOURCES' INSTEAD OF UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' ON THE GROUNDS MENTIONED IN THE QUESTION REFERRED TO US. OUR ANSWER TO THE QUESTION IS, THEREFORE, IN THE NEGATIVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 30 THE PA RTIES ARE LEFT TO BEAR THEIR OWN COSTS OF THE REFERENCE' OTHER RELEVANT CASE LAWS: 53. IN THE CASE OF NATIONAL THERMAL POWER CO.LTD. V . CIT [1998] 229 ITR 383 (SC) , THE HON'BLE SUPREME COURT FOLLOWING ITS EARLIER VIEW IN JUTE CORPN. OF INDIA LTD. V . CIT [1991] 187 ITR 688/[1990] 53 TAXMAN 85 (SC) , HELD AS UNDER: ' IN THE CASE OF JUTE CORPORATION OF INDIA LTD. V. CIT [1991] 187 ITR 688 , THIS COURT, WHILE DEALING WITH THE POWERS OF THE APPELLATE ASSISTANT COMMISSIONER OBSERVED THAT AN APPELLATE AUTHORI TY HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATIONS, IF ANY PRESCRIBED BY THE STATUTORY PROVISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISION, THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE IS NO GOOD REASON TO JUSTIFY CURTAILMENT OF THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SE EKING MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY THE INCOME - TAX OFFICER. THIS COURT FURTHER OBSERVED THAT THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A NEW PLEA IN AN APPEAL AND EACH CASE HAS TO BE CONSIDERED ON ITS OWN FACTS. THE APPELLA TE ASSISTANT COMMISSIONER MUST BE SATISFIED THAT THE GROUND RAISED WAS BONA FIDE AND THAT THE SAME COULD NOT HAVE BEEN RAISED EARLIER FOR GOOD REASONS. THE APPELLATE ASSISTANT COMMISSIONER SHOULD EXERCISE HIS DISCRETION IN PERMITTING OR NOT PERMITTING THE ASSESSEE TO RAISE AN ADDITIONAL GROUND IN ACCORDANCE WITH LAW AND REASON. THE SAME OBSERVATIONS WOULD APPLY TO APPEALS BEFORE THE TRIBUNAL ALSO. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO ISSUES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER OF INCO ME - TAX (APPEALS) TAKES TOO NARROW A VIEW OF THE POWERS OF THE APPELLATE TRIBUNAL (VIDE, E.G., CIT V. ANAND PRASAD [1981] 128 ITR 388 (DELHI) , CIT V. KARMACHAND PREMCHAND P. LTD. [1969] 74 ITR 254 (GUJ) AND CIT V. CELLULOSE PRODUCTS OF INDIA LTD. [1985] 1 51 ITR 499 (GUJ) [FB] ). UNDOUBTEDLY, THE TRIBUNAL WILL HAVE THE DISCRETION TO ALLOW OR NOT ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTION OF LAW ARISING FROM THE FACTS WHICH ARE ON RECORD IN THE ASSESSMENT P ROCEEDINGS WE FAIL TO SEE WHY SUCH 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 OF AN ASSESSEE.' 54. IN JUTE CORPN. OF INDIA LTD., ( SUPRA ) THE HON'BLE SUPREME C OURT HELD THAT THE APPELLATE AUTHORITY HAS ALL THE PLENARY POWERS WHICH A SUB ORDINATE AUTHORITY MAY HAVE IN THE MATTER. THE RELEVANT EXTRACT FROM HEAD NOTE IS QUOTED BELOW: 'AN APPELLATE AUTHORITY HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATIONS, IF ANY, PRESCRIBED BY THE STATUTORY PROVISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISION, THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AU THORITY MAY HAVE IN THE MATTER. THERE IS NO GOOD REASON TO JUSTIFY CURTAILMENT OF THE MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 31 POWER OF THE APPELLATE ASSISTANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SEEKING MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY THE INCOME - TAX OFFICER.' 55. IN THE CASE OF HUKUMCHAND MILLS LTD. V . CIT [1967] 63 ITR 232 , THE HON'BLE SUPREME COURT HELD THAT RULES 12 AND 27 OF THE APPELLATE TRIBUNAL RULES, 1946 ARE NOT EXHAUSTIVE OF THE POWERS OF THE TRIBUNAL AND WORDS 'PASS SUCH ORDERS AS THE TRIBUNAL THINKS FIT' INCLUDING ALL THE POWERS (EXCEPT POSSIBLY ! THE POWER OF ENHA NCEMENT). THE COURT ITSELF EXPRESSED ITS DOUBT OVER THE POWER OF ENHANCEMENT OF THE ASSESSMENT OR TAX LIABILITY OF THE ASSESSEE IN THE SAID JUDGMENT WHICH WAS LATER ON EXPLAINED BY THE RAJASTHAN HIGH COURT IN THE CASE OF ( SUPRA ). THE RELEVANT EXTRACT FROM THE SAID JUDGMENT IN HUKUMCHAND MILLS LTD. CASE (SUPRA) IS QUOTED BELOW FOR READY REFERENCE: 'THE POWERS OF THE APPELLATE TRIBUNAL IN DEALING WITH APPEALS ARE EXPRESSED IN SECTION 33(4) OF THE INCOME - TAX ACT IN THE WIDEST POSSIBLE TERMS. THE WORD 'THEREON ' IN SECTION 33(4) RESTRICTS THE JURISDICTION OF THE TRIBUNAL TO THE SUBJECT MATTER OF THE APPEAL. THE WORDS 'PASS SUCH ORDER AS THE TRIBUNAL THINKS FIT' INCLUDE ALL THE POWERS (EXCEPT POSSIBLY THE POWER OF ENHANCEMENT) WHICH ARE CONFERRED ON THE APPELLATE ASSISTANT COMMISSIONER BY SECTION 31. CONSEQUENTLY, THE TRIBUNAL HAS AUTHORITY UNDER SECTION 33 TO DIRECT THE APPELLATE ASSISTANT COMMISSIONER OF THE INCOME - TAX OFFICER TO HOLD A FURTHER ENQUIRY AND DISPOSE OF THE CASE ON THE BASIS OF SUCH ENQUIRY. RULES 12 AND 27 OF THE APPELLATE TRIBUNAL RULES, 1946, ARE NOT EXHAUSTIVE OF THE POWERS OF THE TRIBUNAL. THEY ARE MERELY PROCEDURAL IN CHARACTER AND DO NOT, IN ANY WAY, CIRCUMSCRIBE OR CONTROL THE POWER OF THE TRIBUNAL UNDER SECTION 33(4).' 56. THE FULL BENCH OF GUJARAT HIGH COURT IN THE CASE OF CIT V . CELLULOSE PRODUCTS OF INDIA LTD. [1985] 151 ITR 499 (GUJ) (FB) HELD THAT THE SCOPE OF APPEAL BEFORE THE TRIBUNAL EXTENDS TO THE SUBJECT MATTER OF THE APPEAL BEFORE THE APPELLATE ASSISTANT COMMISSIONER (AAC), THE FIRST APPELLATE AUTHORITY AND MERELY BECAUSE A GROUND HAS NOT BEEN RAISED, THOUGH IT COULD BE RAISED IN SUPPORT OF THE RELIEF SOUGHT IN THE APPEAL, IT CANNOT BE SAID THAT A GROUND COULD NOT BE RAISED BEFORE THE TRIBUNAL. THE RELEVANT PORTION FROM THE HEAD NOTE OF THE SAID JUDGMENT IS QUOTED BELOW: 'THE SCOPE OF AN APPEAL BEFORE THE APPELLATE TRIBUNAL EXTENDS TO THE SUBJECT MATTER OF THE APPEAL BEFORE THE AAC AND IF THE QUE STION SOUGHT TO BE RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL IS A QUESTION WHICH CONCERNS THE SUBJECT - MATTER OF THE APPEAL WHICH WAS BEFORE THE AAC, THEN SUCH QUESTION WOULD BE PERMISSIBLE. WHAT THE SUBJECT - MATTER OF THE APPEAL IS, HAS, THEREFORE, TO B E DECIDED FIRST. IT MAY BE THAT THE SAME CLAIM OR RELIEF IS SOUGHT TO BE SUSTAINED ON A DIFFERENT APPROACH OR BY PRESENTING A DIFFERENT ASPECT. SO FAR AS THE ASSESSEE IS CONCERNED, IT IS THE RELIEF THAT HE SEEKS TO OBTAIN THAT IS MATERIAL TO HIM. IT IS NOT NECESSARY THAT THE QUESTION SHOULD BE SPECIFICALLY RAISED BEFORE THE AAC AS A GROUND, BUT IT HAS NOT BEEN DEALT WITH, IN ORDER TO IMPLY A DECISION ON THAT POINT. THE DECISION OF THE AAC IS ON THE SUBJECT - MATTER OF THE APPEAL. THE SUBJECT - MATTER O F THE APPEAL MAY BE CAPABLE OF CHALLENGE ON VARIOUS GROUNDS. SOME OF WHICH MIGHT HAVE BEEN RAISED AND SOME NOT. THOSE RAISED MIGHT HAVE BEEN DEALT WITH, OR SOME OF THEM MIGHT NOT HAVE BEEN DEALT WITH, BUT A DECISION ON THE SUBJECT - MATTER IS AN IMPLIED MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 32 DECI SION ON ALL MATTERS WHICH ARE RAISED AND WHICH COULD HAVE BEEN RAISED, WHETHER DEALT WITH OR NOT. MERELY BECAUSE A GROUND HAS NOT BEEN RAISED, THOUGH IT COULD BE RAISED IN SUPPORT OF THE RELIED SOUGHT IN THE APPEAL, IT CANNOT BE SAID THAT IT CANNOT BE RAIS ED BEFORE THE TRIBUNAL. SUCH A GROUND CAN BE RAISED PROVIDED IT FALLS WITHIN THE CONTOURS OF THE SUBJECT - MATTER OF THE APPEAL BEFORE THE AAC.' 57. THE CALCUTTA HIGH COURT IN THE CASE OF KHAITAN PAPER AND INDUSTRIES LTD. V . CIT [2005] 273 ITR 234/148 TAXMAN 326 HELD THAT SECTION 254(1) OF THE ACT EMPOWERS THE TRIBUNAL TO RECALL ITS PREVIOUS ORDER WHERE THE ASSESSEE COULD NOT BE PRESENT AT THE TIME OF HEARING AND HEAR THE A PPEAL AGAIN ON MERITS EVEN THOUGH THERE IS NO EXPRESS PROVISION IN THIS REGARD YET AS AN ANCILLARY JURISDICTION UNDER SECTION 254 OF THE ACT, THE TRIBUNAL IS EMPOWERED TO DO SO. THE RELEVANT EXTRACT FROM THE HEAD NOTE OF THE SAID JUDGMENT IS QUOTED BELOW F OR READY REFERENCE: 'THE TRIBUNAL HAS THE POWER TO RECALL ITS PREVIOUS ORDER WHERE THE PETITIONER HAS MADE OUT A CASE THAT HE WAS PREVENTED FROM BEING PRESENT AT THE HEARING OF THE APPEAL. THE POWER OF SETTING ASIDE AN EX PARTE ORDER AND THEREBY AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE AGGRIEVED PARTY IS NOT THE SAME AS THE POWER OF REVIEW. WHEN ADEQUATE AND REASONABLE GROUNDS FOR OMISSION TO APPEAR AT THE HEARING ARE MADE OUT TO THE SATISFACTION OF THE TRIBUNAL, IT IS ONLY A QUESTION BEFORE THE TRIB UNAL AS TO THE ADEQUACY OF THAT OPPORTUNITY OF BEING HEARD WHICH SUB SECTION (1) OF SECTION 254 OF THE INCOME - TAX ACT, 1961, ENJOINS TO BE GIVEN BEFORE THE TRIBUNAL TO ENABLE IT TO PASS ORDERS IN THE APPEAL. IN OTHER WORDS, THOUGH NOT BY ANY EXPRESS PROVIS ION, YET ANCILLARY TO THE JURISDICTION GIVEN BY SECTION 254 OF THE INCOME - TAX ACT, THE INCOME - TAX APPELLATE TRIBUNAL HAS POWER TO RESTORE AND REHEAR AN APPEAL DISPOSED OF AN THE MERITS IN THE ABSENCE OF ANY HEARING.' 58. IN THE CASE OF MCORP GLOBAL P.LTD. V . CIT [2009] 309 ITR 434/178 TAXMAN 347 (SC) , THE HON'BLE SUPREME COURT HELD IN THE CONTEXT OF FINDINGS GIVEN BY THE LEARNED ASSESSING AUTHORITY, THE TRIBUNAL COULD NOT TAKE BACK THE BENEFIT CONFERRED BY THE ASSESSING AUTHORITY WITHOUT ANY CONTROVERTING MATERIAL. THE COURT OBSERVED: ' WHEN THE MATTER CAME BEFORE THE APPELLATE TRIBUNAL, THE TRIBUNAL HELD THAT SINCE THE LEASE WAS NOT RENEWED AND THE BOTT LES WERE NOT RETURNED ON EXPIRY, THE TRANSACTION IN QUESTION WAS ONLY A FINANCIAL ARRANGEMENT AND NOT A LEASE AND DISALLOWED THE DEPRECIATION AND THE HIGH COURT AFFIRMED THE DECISION OF THE TRIBUNAL. ON APPEAL TO THE SUPREME COURT: HELD, THAT UNDER SECTION 254 (1) OF THE INCOME - TAX ACT, 1961, THE APPELLATE TRIBUNAL HAD NO POWER TO TAKE BACK THE BENEFIT CONFERRED BY THE ASSESSING OFFICER OR ENHANCE THE ASSESSMENT. SINCE THE ASSESSING OFFICER HAD GRANTED DEPRECIATION IN RESPECT OF 42,000 BOTTLES THAT BENEFIT COULD NOT BE WITHDRAWN .' 59. THUS ON THE ANALYSIS OF THE PROVISIONS OF THE ACT AND THE CASE LAWS DISCUSSED ABOVE, WE ARE OF THE CLEAR AND CONSIDERED OPINION THAT THE DIRECTIONS OF THE LEARNED TRIBUNAL IN PARA 7 FOR HOLDING AN INQUIRY INTO THE MATTER BY THE ASSESSING AUTHORITY INTO THE ASPECT OF FAIR MARKET PRICE OF THE SHARES BOUGHT BACK BY THE ASSESSEE FROM ITS MAJOR SHARE HOLDING MAURITIUS HOLDING COMPANY IS NOT BEYOND THE JURISDICTION OF THE LEARNED TRIBUNAL AND THE SAID REMAND DIRECTION OF THE TRIBUNAL TO HOLD SUCH AN ENQUIRY NOT ONLY FALLS WITHIN THE AMBIT AND SCOPE OF THE 'SUBJECT MATTER' OF THE APPEAL FILED BY THE ASSESSEE BY WHICH HE CLAIMED THAT THE REMITTANCE BY THE ASSESSEE MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 33 COMPANY TO ITS MAURITIUS HOLDING COMPANY COULD NOT BE TAXED AS DIVIDEND, F ORGETTING THE ASPECTS RELATING TO CLAUSE (E) OF SECTION 2(22) OF THE ACT AND THEREFORE THE SAID DIRECTIONS WERE WITHIN THE SUBJECT MATTER OR THE ISSUES RAISED BY THE ASSESSEE AND MAKING A DIRECTION TO HOLD AN ENQUIRY INTO THE ASPECT OF FAIR MARKET VALUE OF SHARES CANNOT BE SAID TO BE BEYOND THE SUBJECT MATTER OF THE APPEAL. THE SAID DIRECTIONS CANNOT BE SAID TO BE PER SE AMOUNTING TO TAXABILITY OF THE SAID PAY - OUT BY THE APPELLANT ASSESSEE AS 'DIVIDEND' BUT THE SAME WOULD DEPEND UPON THE NATURE OF ENQUIRY T O BE CONDUCTED BY THE ASSESSING AUTHORITY AND FINDINGS ARRIVED AT IN PURSUANCE OF THE SAID DIRECTION. THE POWER TO REMAND INCLUDING FOR CONDUCTING AN ENQUIRY IN THE ASPECT OF THE MATTER WHICH WAS NOT EARLIER ADJUDICATED UPON BY THE LOWER AUTHORITIES, CANNO T, IN OUR CONSIDERED OPINION, BE QUESTIONED BY THE ASSESSEE OR THE REVENUE. 60. THE WORDS 'AS IT THINKS FIT' EMPLOYED IN SECTION 254 OF THE ACT IS ONLY BOUND BY THE REQUIREMENT OF GIVING AN OPPORTUNITY OF BEING HEARD TO THE PARTIES TO THE APPEAL. 61. SECTI ON 254(1) OF THE ACT CLEARLY STIPULATES THAT THE APPELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. THE EMPHASIS ON THE WORD ' THEREON' SOUGHT TO BE PLACED BY THE LEA RNED COUNSEL FOR THE ASSESSEE, MR. PARDIWALA ON THE BASIS OF CASE LAWS RELIED UPON BY HIM AS AGAINST THE WORDS ' AS IT THINKS FIT ' IS SLIGHTLY MISPLACED. THE EMPHASIS WHILE ANALYZING THE POWERS OF THE TRIBUNAL SHOULD BE ON THE WORDS ' AS IT THINKS FIT' RATHE R THAN ON THE WORD ' THEREON '. THE WORD ' THEREON' ONLY RELATES TO THE 'SUBJECT MATTER' OF THE APPEAL IN FIRST PART OF THE SUB - SECTION (1) AND THEREFORE WHILE THE TRIBUNAL IS DEALING WITH THE SUBJECT MATTER OF THE APPEAL, IT CAN PASS ANY SUCH RELEVANT ORDER AS IT THINKS FIT, WHICH WOULD BE RATIONAL, GERMANE, REASONABLE, APPROPRIATE, NECESSARY AND EXPEDIENT IN THE OPINION OF THE LEARNED TRIBUNAL SUBJECT TO THE REQUIREMENT THAT IT GIVES AN OPPORTUNITY OF HEARING TO BOTH THE PARTIES TO THE APPEAL, VIZ., THE ASSE SSEE AND THE REVENUE. NEITHER THE POWERS ARE RESTRICTED NOR THE POWER TO ALLOW THE FRESH AND NEW GROUND TO BE RAISED BEFORE IT IS RESTRICTED NOR THE POWERS TO ENHANCE AN ASSESSMENT OR TAX LIABILITY OR REDUCE THE TAX ESPECIALLY ENUMERATED IN THE PROVISO TO SUB - SECTION(2) OF SECTION 254 OF THE ACT ALSO IS RESTRICTED. 62. THE POWERS UNDER SECTION 254 OF THE ACT WITH THE TRIBUNAL TO PASS SUCH ORDERS ' AS IT THINKS FIT' CANNOT BE LESSER THAN THE POWERS CONFERRED UPON THE LOWER AND FIRST APPELLATE AUTHORITY, VIZ., THE COMMISSIONER OF INCOME TAX(APPEALS) WHO UNDER SECTION 251(1)(A) OF THE ACT HAS POWER TO DISPOSE OF AN APPEAL AGAINST THE ORDER OF ASSESSMENT AND HE MAY CONFIRM OR REDUCE OR ENHANCE OR ANNUL THE ASSESSMENT. THE HIGHER AND FINAL APPELLATE AUTHORITY UNDE R THE ACT CANNOT BE INTENDED BY THE PARLIAMENT TO HAVE LESSER POWER THAN THE FIRST APPELLATE AUTHORITY AS IS WELL SETTLED THAT THE POWERS OF THE APPELLATE AUTHORITIES ARE ALWAYS CO - EXTENSIVE WITH THAT OF THE ASSESSING AUTHORITY AND THEREFORE WHAT THE ASSES SING AUTHORITY OR THE FIRST APPELLATE AUTHORITY COULD DO IN THE MATTER OF ASSESSMENT, THE TRIBUNAL CANNOT BE SAID TO HAVE ANY LESSER POWER TO DO SO. 63. SECTION 254 OF THE ACT, IN OUR OPINION, DOES NOT HAVE ANY NARROWER SCOPE TO PUT FETTERS ON THE POWERS O F THE TRIBUNAL AS IS SOUGHT TO BE CANVASSED BEFORE US THAT THE TRIBUNAL COULD NOT HAVE EXCEEDED THE GROUNDS RAISED BEFORE IT BY THE APPELLANT ASSESSEE. THE APPELLANT MAY BE EITHER ASSESSEE OR REVENUE BEFORE THE TRIBUNAL AND THE TRIBUNAL HAS ALSO POWERS TO ALLOW FRESH GROUND OF APPEAL OR ALLOW THE OTHER PARTY TO THE APPEAL TO FILE ITS CROSS OBJECTIONS AND EVEN SUO MOTU DATE OF JUDGMENT :23 - 07 - 2018 I.T.A.NO.512/2017 M/S. FIDELITY BUSINESS SERVICES INDIA PVT. LTD., VS. ASSISTANT MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 34 COMMISSIONER OF INCOME - TAX, & A NR. PASS APPROPRIATE ORDERS ' THEREON' AND THEREFORE THE WORDS ' AS IT THINKS FIT ' IN OUR OPINION, CONFER WIDE POWERS UPON THE INCOME TAX APPELLATE TRIBUNAL TO PASS SUCH ORDERS ON THE SUBJECT MATTER OF APPEAL ' AS ITTHINKS FIT ' WHETHER THE ISSUE IS RAISED BY EITHER PARTY TO THE APPEAL OR NOT. THE TRIBUNAL IS NOT BOUND TO DECIDE THE APPEAL IN A PARTICULAR OR NARROWER MANNER OR LIMITED TO THE GROUNDS RAISED IN THE APPEAL BEFORE IT. THE CONFINES OR BOUNDARY LIMIT IS ONLY 'SUBJECT MATTER' OF THE APPEAL. 64. THE PO WERS OF THE TRIBUNAL ARE NOT LIMITED OR CIRCUMSCRIBED BY THE GROUNDS RAISED BEFORE IT AND ANY ORDER ON THE SUBJECT MATTER OF APPEAL CAN BE PASSED IF IT IS FOUND TO BE NECESSARY, EXPEDIENT AND RELEVANT BY THE LEARNED TRIBUNAL. 65. TRUTH BEING THE CHERISHED IDEAL AND ETHOS OF INDIA, PURSUIT OF TRUTH SHOULD BE THE GUIDING STAR OF THE ENTIRE JUSTICE SYSTEM. FOR JUSTICE TO BE DONE, TRUTH MUST PREVAIL. IT IS TRUTH THAT MUST PROTECT THE INNOCENT AND IT IS TRUTH THAT MUST BE THE BASIS TO PUNISH THE GUILTY. TRUTH IS THE VERY SOUL OF JUSTICE. THEREFORE TRUTH SHOULD BECOME THE IDEAL TO INSPIRE THE COURTS TO PURSUE. THIS CAN BE ACHIEVED BY STATUTORILY MANDATING THE COURTS TO BECOME ACTIVE SEEKERS OF TRUTH. IT IS OF SEMINAL IMPORTANCE TO INJECT VITALITY INTO OUR SYSTEM. CONCERN FOR AND DUTY TO SEEK THE TRUTH SHOULD NOT BECOME THE LIMITED CONCERN OF THE COURTS OR TRIBUNALS AND ADJUDICATING AUTHORITIES BUT SHOULD PERCOLATE DOWN IN OTHER EXECUTIVE WINGS OF THE STA TE AS WELL. 66. 'TRUTH' HAS A STRANGE BUT A FIRM CHARACTER OF FINDING ITS WAY AND COMING OUT AND REVEALING ITSELF EVEN THOUGH EMBEDDED AT THE BOTTOMS OF TIME PERIODS AND PILES OF PAPERS BOUND THROUGH THE CHAIN OF LITIGATION IN THE COURTS OF LAW BUT THE QUEST FOR TRUTH SHOULD NOT GET BOGGED - DOWN MERELY BECAUSE A LONG PERIOD HAS LAPSED. 67. THE ULTIMATE OBJECT OF PROVIDING THE MULTIPLE TIERS OF APPELLATE FORUMS AND MECHANISM IN THE INCOME TAX LAW AND THEN FURTHER PROVIDING FOR REMEDIES BY WAY OF APPEALS BEFORE THE CONSTITUTIONAL COURTS ON THE SUBSTANTIAL QUESTIONS OF LA W IS NOTHING BUT TO ALLOW THE QUEST FOR TRUTH TO BE TAKEN TO ITS LOGICAL END. 68. REVERTING TO THE FACTS OF THE PRESENT CASE, WHAT THE LEARNED TRIBUNAL HAS DONE IS MERELY TO ASK THE ASSESSING AUTHORITY TO HOLD AN ENQUIRY AS TO WHETHER THE ABNORMALLY HIGH PRICE PAID FOR BUY - BACK OF SHARES FROM ALMOST A SINGLE SHAREHOLDER ONLY, VIZ., THE MAURITIUS COMPANY, A HOLDING COMPANY WHICH HELD 99.99% OF THE SHARE HOLDING OF THE ASSESSEE INDIAN COMPANY SO AS TO ASCERTAIN THE FAIR MARKET VALUE OF THE SHARES WHICH CAN C ERTAINLY BE DETERMINED WITH THE RELEVANT DATA AND EVIDENCE AVAILABLE WITH THE RESPONDENT ASSESSING AUTHORITY. SINCE THE SHARES ARE NOT LISTED ON THE STOCK EXCHANGE, THEREFORE, FAIR MARKET VALUE OF THE SHARES ON A PARTICULAR DATE OF TRANSACTION WAS NOT ASCE RTAINABLE OTHERWISE READILY AND THE SAID ASPECT OF THE MATTER WAS NOT ADMITTEDLY LOOKED INTO BY THE AUTHORITIES BELOW BEFORE THE APPEAL WAS DECIDED BY THE LEARNED TRIBUNAL. THEREFORE, EVEN THOUGH THE SOME FINDINGS WERE GIVEN BY THE TRIBUNAL IN FAVOUR OF TH E ASSESSEE THAT THE SAID PAY - OUT FOR BUY - BACK OF THE SHARES AT AN ABNORMALLY HIGH PRICE WAS NOT TAXABLE UNDER SECTION 115 - O OR SECTION 115 - QA READ WITH ITS EXPLANATION AND SECTION 2(22)(D) OF THE ACT AS PER THE CONTENTION RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL, THE TRIBUNAL WAS PERFECTLY JUSTIFIED IN DIRECTING AN ENQUIRY INTO THE FAIR MARKET PRICE OF THE SHARE OF THE ASSESSEE COMPANY WHICH COULD HAVE AN IMPLICATION OF TAXABILITY UNDER SECTION 2(22)(E) OF THE ACT OR OTHERWISE. 69. HOWEVER, SINCE WE ARE N OT DECIDING THE QUESTION OF TAXABILITY HERE, AS THE FACTUAL FOUNDATION FOR THE SAME IS NOT THERE AND WE ARE NOT EXPRESSING ANY OPINION ON THE MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 35 TAXABILITY ON SUCH FINDINGS UPON AN ENQUIRY WHICH MAY NOW BE HELD BY THE ASSESSING AUTHORITY IN PURSUANCE OF THE D IRECTIONS OF THE LEARNED TRIBUNAL. THEREFORE THAT QUESTION IS LEFT OPEN. 70. THE MAURITIUS ROUTE OF TAX AVOIDANCE AND EVASION IS A HUGELY SUFFERED PHENOMENON IN OUR COUNTRY. IT ALSO RESULTED IN A HUGE TAX CONTROVERSY IN THE CASE OF VODAFONE IN WHICH EVEN A FTER THE DECISION OF THE HON'BLE APEX COURT IN FAVOUR OF THE ASSESSEE IN 2012, THERE WAS A RETROSPECTIVE AMENDMENT OF LAW AND THE SAID MATTER IS STILL BEING DEBATED IN THE INTERNATIONAL ARBITRATION BETWEEN INDIA AND THE VODAFONE AND EVEN THE INDO MAURITIUS DTAA HAS NOW BEEN AMENDED RECENTLY BY ADDING CERTAIN PROTOCOLS IN THE SAID DTAA WITH EFFECT FROM 01/04/2017 SEEKING TO PLUG THE LOOPHOLES FOR THE TAX EVASION THROUGH MISUSE OF THE ERSTWHILE DTAA OF 1983 BETWEEN INDIA AND MAURITIUS, BUT IT HAS BEEN A ROUTE OF TAX EVASION AND MONEY LAUNDERING IN THE PAST. 71. HOWEVER, AS WE ARE NOT REQUIRED TO GO INTO TAXABILITY ASPECTS OF THE MATTER AT THIS STAGE, AS INDICATED ABOVE AND WE ARE NOT PROPOSING TO ANSWER THE SUBSTANTIAL QUESTION OF LAW NO.2 RAISED BY THE APPELL ANT ASSESSEE IN THE PRESENT APPEAL REGARDING THE TAXABILITY ASPECT OF THE MATTER AND WE HAVE RESTRICTED OURSELVES TO THE SUBSTANTIAL QUESTION NO.1 AS RE - FORMULATED BY US ONLY REGARDING THE POWERS OF THE TRIBUNAL UNDER SECTION 254 (1) OF THE ACT. 72. ACCORD INGLY ON THE BASIS OF THE AFORESAID DISCUSSION, WE ARE OF THE OPINION THAT THE PRESENT APPEAL FILED BY THE ASSESSEE DESERVES TO BE DISMISSED AND THE SUBSTANTIAL QUESTION OF LAW FRAMED BY US IN PARA 5 IN THE PRESENT APPEAL IS ANSWERED IN FAVOUR OF THE REVEN UE AND AGAINST THE ASSESSEE AND IT IS HELD THAT THE INCOME TAX APPELLATE TRIBUNAL (ITAT) HAS THE POWER TO GIVE DIRECTIONS FOR FRESH ENQUIRY INTO THE ASPECTS OF THE SUBJECT MATTER OF APPEAL FILED BEFORE IT EITHER SUOMOTU OR ON ANY GROUNDS RAISED BY EITHER P ARTY TO THE APPEAL WHICH HAVE NOT BEEN INVESTIGATED OR ENQUIRED INTO BY THE LOWER AUTHORITIES EARLIER AND WHICH MAY RESULT IN ENHANCEMENT OF TAX LIABILITY OF THE ASSESSEE AND IN THE PRESENT CASE, THE APPELLATE TRIBUNAL WAS RIGHT AND WITHIN ITS JURISDICTION IN DIRECTING THE EXAMINATION OF THE FAIR MARKET VALUE OF THE SHARES BOUGHT BACK BY IT DURING THE PREVIOUS YEAR RELEVANT FOR THE AY 2011 - 12 IN QUESTION. 73. ACCORDINGLY, THE APPEAL OF THE APPELLANT - ASSESSEE COMPANY IS DISMISSED. NO COSTS. THUS, THE TRIBUNAL HAS INHERENT POWERS TO PASS SUCH ORDERS AS IT DEEMED FIT WITHIN MANDATE OF SECTION 254(1) OF THE 1961 ACT AND CONFIRMATION OF ADDITIONS U/S 69C READ WITH ITS PROVISO WAS JUSTIFIED AND WAS WITHIN POWERS OF THE TRIBUNAL KEEPING IN VIEW ENT IRE FACTUAL MATRIX OF THE CASE BEFORE IT. THE POWERS OF THE TRIBUNAL U/S 254(2) IS LIMITED AND IS RESTRICTED TO CORRECTING MISTAKES APPARENT FROM RECORDS AND THIS POWERS DO NOT EXTEND TO REVIEWING ITS OWN ORDER. THUS, THIS CONTENTION OF THE ASSESSEE WITH R ESPECT TO INVOCATION OF PROVISIONS OF SECTION 69C BY TRIBUNAL IN THIS MA ALSO STOOD MA NO. 168 & 169/MUM/2018 ARISING OUT OF ITA NO. 1295 & 2415/MUM/2014 36 REJECTED.BOTH THE MAS FILED BY THE ASSESSEE STOOD DISMISSED. WE ORDER ACCORDINGLY. 3 . THUS, BOTH THESE M.A. S NO. 168 & 169 /MUM/2018 ARISI NG OUT OF APPEAL S IN ITA NO. 2415 & 1295 /MUM/20 1 4 FOR AY 2006 - 07 ARE DISMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 .10.2018 2 2 .10.2018 S D / - S D / - ( SAKTIJIT DEY ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 2 2 .10.2018 COPY TO NISHANT VERMA SR. PRIVATE SECRETARY 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI