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2016 (6) TMI 1193 - AT - Income TaxCapital gain - income relevant to the assessment year - Held that - We find that in Onkar Nath (1966 (10) TMI 157 - Allahabad high court) held that the law gives the AAC the power to give direction that a certain sum which was deleted from the assessment of the firm should be assessed in the hands of a partner as his individual income. For the assessment year 1957-58 the ITO made an addition which included certain sum introduced in the head office cash book in November 1955. On appeal the AAC deleted the addition of said sum on the ground that the said sum was outside the financial year 1956-57 relevant to the assessment year in question. The Court further observed that in the instant case the AAC was dealing with the propriety of the assessment for assessment year 1957-58. He found that the said sum did not relate to that year. That finding was sufficient to dispose of the item. He would not record a definite finding that this very item represented income of the assessee from an undisclosed source for assessment year 1956-57. We find that in the instant case the assessment year involved before the ld. CIT(A) was A.Y. 2011-12. The observations made for assessment years 2010-11 and 2009-10 would be out of the jurisdiction of the ld. CIT(A) as before him no such assessment year was pending. Thus we hold that the directions of the ld. CIT(A) to take remedial action in the A.Y. 2010-11 and 2009-10 is uncalled for and liable to be expunged. We direct accordingly.
Issues Involved:
1. Legality of the directions given by the CIT(A) for assessment years not under appeal. 2. Justification and correctness of the additions made by the AO based on seized documents. 3. Jurisdiction of the CIT(A) in giving directions for years not in appeal. 4. Validity of the findings regarding the period to which the seized documents pertain. Detailed Analysis: Issue 1: Legality of the Directions Given by the CIT(A) for Assessment Years Not Under Appeal The assessee challenged the directions of the CIT(A) directing the AO to take remedial action for A.Y. 2009-10 and A.Y. 2010-11. The main contention was that the CIT(A) exceeded his jurisdiction by giving directions for years not under appeal. The Tribunal noted that the CIT(A) has co-terminus powers with the AO, but these powers are confined to the assessment year under appeal. The Tribunal cited several judgments, including CIT vs Kanpur Coal Syndicate and ITO vs Murlidhar Bhagwan Das, to support the principle that the CIT(A) cannot give directions for assessment years not before him. Consequently, the Tribunal held that the CIT(A)'s directions for A.Y. 2009-10 and A.Y. 2010-11 were beyond his jurisdiction and thus, uncalled for and liable to be expunged. Issue 2: Justification and Correctness of the Additions Made by the AO Based on Seized Documents The AO made additions based on loose papers found in a bank locker, which allegedly showed cash payments made by the appellant companies to the Lila family. For LIL, the AO added ?17,77,64,300/- and for LBL, ?6,93,84,000/-, based on extrapolation from the seized documents. The CIT(A) deleted these additions, holding that the documents did not pertain to A.Y. 2011-12. The Tribunal agreed with the CIT(A) that the documents did not relate to A.Y. 2011-12 but noted that the AO's findings were based on presumptions and not concrete evidence. The Tribunal emphasized that the AO should have provided more substantial evidence to justify the additions. Issue 3: Jurisdiction of the CIT(A) in Giving Directions for Years Not in Appeal The Tribunal reiterated that the CIT(A)'s jurisdiction is limited to the assessment year under appeal. The CIT(A) can only make findings relevant to the year in question and cannot extend his directions to other years. This principle was supported by various judgments, including Pt. Hazari Lal and Mathuradas B. Mohta. The Tribunal concluded that the CIT(A)'s directions for A.Y. 2009-10 and A.Y. 2010-11 were outside his jurisdiction and thus, should be expunged. Issue 4: Validity of the Findings Regarding the Period to Which the Seized Documents Pertain The AO and CIT(A) had differing views on the period to which the seized documents pertained. The AO argued that the documents related to F.Y. 2008-09 and 2009-10, while the CIT(A) concluded they pertained to A.Y. 2009-10 and 2010-11. The Tribunal noted that the documents did not have specific dates and the AO's attempt to correlate the entries with specific financial years was speculative. The Tribunal found that the CIT(A)'s conclusion was based on the remand report and lacked concrete evidence. Thus, the Tribunal held that the findings regarding the period of the documents were not substantiated and should be quashed. Conclusion: The Tribunal allowed the appeals, holding that the CIT(A) exceeded his jurisdiction by giving directions for assessment years not under appeal and that the findings regarding the period of the seized documents were not substantiated. The directions given by the CIT(A) for A.Y. 2009-10 and A.Y. 2010-11 were expunged, and the appeals were allowed.
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