2017 (7) TMI 870 - HC - Income Tax

Addition of gift as assessee s income - addition under Section 69-A or under Section 68 - ibunal ITAT adding a sum received as gift u/s 69-A after deleting the said addition under Section 68 - Held that - The use of the word thereon is important and it reflects that the Tribunal has to confined itself to the questions, which are arising or are subject matter in the appeal and it cannot be travelled beyond the same. The power to pass such orders as the 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 issue, which is not in dispute and which is not the subject matter of the dispute in appeal. Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It may be worth noting that the Tribunal has recorded a categorical finding that it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant-assessee under Section 68 of the Act. When the said income cannot be added under Section 68 and the Tribunal was not competent to make the said addition under Section 69-A of the Act, the entire order of the Tribunal stand vitiated in law. - Decided in favour of assessee and hold that the Tribunal was not competent to make any addition under Section 69-A of the Act and as the same was subject matter of the appeal before it.

Summary

Issues:
1. Addition of alleged gift amount as income under Section 69-A of the Income Tax Act.
2. Jurisdiction of the Tribunal to make additions beyond the scope of appeal.

Analysis:
1. The appellant challenged the addition of ?12,20,000 as income under Section 69-A of the Act. The appellant, a partner in a firm, received the amount as a gift and provided documentation and statements to prove its authenticity. The Assessing Officer and CIT (Appeals) initially deemed the gifts as not genuine, adding the amount to the appellant's income under Section 68. However, the Tribunal reversed this decision, adding the amount under Section 69-A. The appellant contended that the dispute was solely about the addition under Section 68, not Section 69-A. The Court held that the Tribunal exceeded its jurisdiction by adding the amount under Section 69-A when the dispute was limited to Section 68. Consequently, the Tribunal's order was set aside, and the matter was remanded for a fresh decision.

2. The Court emphasized that the Tribunal's power to pass orders is limited to the subject matter of the appeal. The Tribunal must confine itself to the questions in dispute and cannot adjudicate on issues beyond the appeal's scope. In this case, the dispute revolved around the addition under Section 68, not Section 69-A. By adding the amount under Section 69-A, the Tribunal overstepped its authority. The Court concluded that since the income couldn't be added under Section 68 and the Tribunal lacked the competence to add it under Section 69-A, the entire Tribunal order was invalidated. Consequently, the Court ruled in favor of the appellant, setting aside the Tribunal's order and remanding the matter for a fresh decision in line with the law.