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TMI Blog2008 (5) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... s raised in this regard in written arguments in three letters. It is, therefore, prayed that the direction shown on page 2 of the impugned order be deleted from order dated 23-3-2006. 2. The assessment was framed by the Assessing Officer vide order under section 143(1) on 9-2-2005 in respect of nil income shown by the assessee after claiming set-off of brought forward losses from earlier year for a sum of Rs. 11,45,844 against the net profit shown in the Profit Loss Account of a sum of Rs. 11,45,844. After framing assessment under section 143(1), the Assessing Officer issued notice under section 154 observing therein that the assessee had received rental income of Rs. 10,80,000 during the year under consideration which was to be assessed under the head "Income from house property." In reply, vide letter dated 5-12-2005, it was submitted by the assessee that the said receipt of Rs. 10,80,000 is not rent, but it is commission called as hire charges on account of collection with golden dragon for running restaurant under which the assessee was to provide building, furniture and all paraphernalia, kitchenware, etc., and also to supervise the working of the restaurant. The receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was correct in stating that this was not a fit case under section 154. Hence, the order under section 154 stands cancelled. The Assessing Officer is directed to take issue notice under section 147 or under section 143(3)." 3. The assessee did not challenge the above-mentioned order of CIT(A) in appeal before ITAT. Instead of filing any appeal before ITAT, the assessee preferred to file Writ Petition against the above-mentioned directions of CIT(A). Simultaneously, the assessee has also filed a rectification application before the CIT(A). The Writ Petition of the assessee was decided by their Lordships of Delhi High Court vide their order dated 4-9-2006 and the Writ Petition was disposed of by their Lordships with the directions to CIT(A) to decide the rectification application of the assessee within four weeks from the date of order. In pursuance of the said order of the Hon'ble Delhi High Court, the CIT(A) has decided the rectification application of the assessee by impugned order. Vide impugned order, the CIT(A) has held that there is no mistake in the earlier order of the CIT(A) and, therefore, the same cannot be rectified under the provisions of section 154 as the scope of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, the Tribunal was justified in rectifying the order so as to bring it in conformity with the Supreme Court decision. Thus, it was pleaded by the ld. AR that the CIT(A) was wrong in holding that no mistake had crept in his order while giving such directions which are contrary to the aforementioned two decisions of Hon'ble Supreme Court and the said directions of the CIT(A) should be deleted. 6. On the other hand, the ld. DR argued that as assessee has not challenged the original order of ld. CIT(A) before the Tribunal, therefore, the said order of the CIT(A) has attained finality and, thus, the assessee has no right to challenge the impugned order of the CIT(A). Without prejudice, the ld. DR contended that it will be incorrect to accept the contention of ld. AR that the powers of CIT(A) are limited to issue raised by the assessee in its appeal and, therefore, the direction/finding given by him is outside the powers of CIT(A). He contended that the scope of powers of CIT(A) are wide enough to cover all the issues related to the assessment of the assessee irrespective of the fact that whether or not the said issue was raised either by the assessee or by the Assessing Officer. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave carefully considered the rival submissions in the light of the material placed before us. The directions which have been given by the CIT(A) in his original order have been reproduced in the above part of this order. Ld. CIT(A) has held that the addition made by the Assessing Officer vide order passed under section 154 were beyond the power of Assessing Officer exercised under section 154. At the same time, the CIT(A) has observed that if the income of assessee had escaped assessment, then the Assessing Officer should have taken recourse to the provisions of section 147 of the Act. Ld. CIT(A) observed that since there is an escapement of income, it is directed to the Assessing Officer to either reopen the case under section 147 or issue notice under section 143(3) if limitation permitted to do so. After doing so, the Assessing Officer will re-examine the whole issue. The case of the assessee is that the directions which were not subject-matter of appeal could not be given by ld. CIT(A) and such directions are contrary to the decisions of Hon'ble Supreme Court in the cases of Murlidhar Bhagwan Das and Rajinder Nath. We have carefully gone through these two decisions of Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sweep any finding given by the appropriate authority necessary for the disposal of appeal or the revision, as the case may be, and to any direction given by the said authority to effectuate its findings and the said finding or direction may be in respect of any year or any person and the language used in the proviso was clear and unambiguous. Therefore, it was the case of the revenue that the directions given by the AAC in the appeal for a particular assessment year which affect the other assessment year also could be given by the AAC as the same falls within his powers as prescribed in section 31 of the Income-tax Act, 1922. Thus, it is clear from the decision in the case of Murlidhar Bhagwan Das that the question before their Lordships was whether the directions given by AAC in a particular assessment year which was affecting another assessment year could be considered valid and on the basis of those directions whether the limitation period to assess or reassess the assessee could be extended. In the case of Rajinder Nath, similar findings were given based on the earlier decision of Hon'ble Supreme Court in the case of Murlidhar Bhagwan Das. Therefore, it is clear from those deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f several persons combined together for the purpose of purchasing coal in order to supply the same to the customers for domestic purposes and other small scale industries. For assessment year 1948-49, the Assessing Officer levied tax upon the total income in the hands of the said AOP. The assessee claimed that in the circumstances of the case, it should not be assessed to tax as an AOP, but the proportion of income in the hand of each of the members of association might be assessed to tax instead. As the ITO did not comply with this request, the assessee preferred an appeal to the AAC, but it was dismissed. On further appeal to the Tribunal, the Tribunal held that though the ITO had the power to assess the income of the AOP as such or in the alternative on the individual members thereof in respect of their proportionate share in the income, it (the Tribunal) had no power under the Act to direct the ITO to exercise his power in one way or the other and the following question was referred to the Allahabad High Court:- "If in pursuance of section 3 of the Indian Income-tax Act the ITO levies the income-tax in respect of the total income of the previous year of an AOP upon the said A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment already made on the members. The comprehensive phraseology used both in section 31 and section 33 of the Act does not countenance the attempt of the revenue to restrict the powers of the AAC or of the Appellate Tribunal: both of them have power to direct the appropriate authority to assess the members individually instead of the AOP as a unit. 8. We, therefore, hold, agreeing with the High Court that the Appellate Tribunal has jurisdiction to give directions to the appropriate authority to cancel the assessment made on the AOP and to give appropriate directions to the authority concerned to make a fresh assessment on the members of that association individually. The answer given by the High Court to the question propounded is correct." 14. It can be seen from the above observations of their Lordships that power of CIT(A) are not restricted and the CIT(A) has plenary powers to dispose of an appeal. The scope of his power is coterminous with that of the Assessing Officer and he is empowered to do what the Assessing Officer could do and he has also power to direct the Assessing Officer to do what the Assessing Officer had failed to do. Thus, it will be within the po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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