9911796707
TMI Blog1988 (6) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... e years the assessee raised a claim that taxation liability should be allowed. The W.T.O. mentioned that on 27-8-1970 there was a search and seizure u/s.132(1) of the Income-tax Act, 1961, in the business premises of the firm M/s. Barik Brothers and the residential houses of their partners etc. Certain documents were seized and possessed. More income-tax liabilities were raised. Among other things, the W.T.O noted that in the present statement of wealth the assessee had not disclosed fully or truly all assets found in course of search although books of account found were alleged to belong to the partner. The W.T.O. discussed with the assessee concerned and computed the liability on the basis as made out by him in the assessment order itself. He also noted that there were certain income-tax demands relating to the assessment year 1966-67 raised on 30-3-1971, for 1967-68 on 21-3-1972, and penalty for the assessment year 1967-68 u/s. 271(1)(c) on 28-3-1973. According to the W.T.O. the income-tax demands were neither quantified nor raised on the date of valuation relevant to the years under consideration, but later on he noted that the demands were consequent to the income-tax assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of CWT v. K.S. N. Bhatt [1984] 145 ITR 1 which was followed in other cases --- CWT v. Vadilal Lallubhai [1984] 145 ITR 7 (SC) and CWT v. Vimlaben Vadilal Mehta [1984] 145 ITR 11 (SC). The A.A.C., therefore, directed the W.T.O. to allow deduction in accordance with the principle set out in the decision. He also directed the W.T.O. to revise the assessments in accordance with the findings and directions given. Hence these appeals by the Revenue. 6. It is vehemently urged by the learned Departmental Representative that the A.A.C. went wrong in giving the above direction, notwithstanding the fact that as on the respective valuation dates there was no such liability as contended by the assessee either before the W.T.O. or before the A.A.C. It is strongly urged that only the debts which were in existence on those dates can be taken into account and that too subject to the limitation prescribed u/s. 2(m). It is submitted that at point of time of the valuation dates in the present cases, those tax liabilities were not at all present as, in fact, such assessments and demand were raised later on in the case of the firm etc. It is strongly urged by both the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court mentioned above. It is also submitted that the A.A.C. has given direction to the W.T.O. to allow deduction on account of such tax liabilities in accordance with the principles enunciated by the Hon'ble Supreme Court and there is no flaw of law in the orders of the A.A.C. 9. We have heard both the sides at length. The learned Departmental Representative submits that the Tribunal would have to consider the substance of the appeal and the subject matter and it was only a clerical error in mentioning the amounts in the respective grounds of appeal in the present cases. It is submitted that the Commissioner of Wealth-tax has given the direction for filing the appeals against the impugned orders of the A.A.C. with a direction that correct figures of the different years would have to be sorted out from the records for the purpose of filing appeals before the Tribunal. It is submitted that the mistake arose in taking out the figures from the orders of the W.T.O. instead of the orders of the A.A.C. It is urged that even in the circumstances of the case the appeals by the Revenue are in order and valid although those figures given in the grounds of appeal may require subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's learned counsel is that the Appellate Tribunal would not have jurisdiction if the point did not arise out of the order of the A.A.C. impugned. But this view cannot be supported after having regard to the various decisions of the Hon'ble Supreme Court and other High Courts. In the case of CIT v. Steel Cast Corporation [1977] 107 ITR 683 the Hon'ble Gujarat High Court has dealt with extensively the question involving jurisdiction of the Tribunal in allowing the parties before it to raise points which were not raised before the departmental authorities or which are alleged not to have been raised before them, which has to be considered ultimately in the light of the decision of the Hon'ble Supreme Court in the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 and in the case of CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710. Amongst other things, it was observed that it must be found out what is the subject matter of appeal which can be determined only by finding out what the A.A.C. expressly or impliedly decided or rejected. It was also observed that the subject matter of appeal before the Tribunal can only be the decision, expressed or implied, of the A.A.C. an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 254(1) empowers the Appellate Tribunal to pass such orders "thereon" but the Appellate Tribunal cannot travel outside the appeal or the point which did not form part of the subject matter of appeal. The Hon'ble High Court has also considered the decision in the case of Hukumchand Mills Ltd. 13. In a slightly similar situation as reported in 159 ITR 519 it is seen on the facts of the case that the question raised was whether the A.A.C. was justified in treating the deduction claimed as loss arising in course of carrying on of the business and as being incidental to the business. The Tribunal found that neither section 36 nor section 37 would apply to the case and went further to point out that the loss, if any, was in the business of banking and, therefore, the loss cannot be claimed as deduction in computing the profits of the kuries. The Hon'ble High Court found no error committed by the Tribunal as the Tribunal had only exhausted all the possible arguments which would have been put forward by the parties. 14. In another decision in CIT v. Edward Keventer (Successors) (P.) Ltd. [1980] 123 ITR 200 the Hon'ble Delhi High Court while dealing with the similar situation on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific formula is necessary for seeking relief at the hands of any court or Tribunal, if the necessary grounds are taken in the appeal or memo. This is view of the Hon'ble Supreme Court in the case of CIT v. Calcutta Discount Co. Ltd. [1973] 91 ITR 8. 16. From the brief narration of the background of the case of the present assessees before us it is seen that the substance of the appeal and the subject matter of appeal before us related to the direction of the A.A.C. given to the W.T.O. to allow those tax liabilities as deduction in computing the net wealth of the assessees. Since this is the subject matter of appeal before us, we are of the opinion that there is a jurisdiction of the Tribunal to deal with the contentions raised by the Revenue in the instant cases. Thus, the objections of the assessee's learned counsel in this score cannot be accepted. 17. On merits, we are to mention that from the facts available and the findings given by the authorities below it is seen that after the valuation dates there were additional demands or fresh demands of income-tax raised in the income-tax assessments of the firm in which the assessees were partners. According to the Revenue thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal was right in allowing income-tax and other tax liabilities as deduction in respect of the respective assessment years even though the assessment orders were finalised after the respective valuation dates. It is also seen that following the said decision the Hon'ble Supreme Court has allowed similar claims of the assessee in the cases of Vadilal Lallubhai and Vimlaben Vadilal Mehta. 18. It is a settled law that liabilities to tax does not depend on assessment, that ex-hypothesi has already been fixed. The assessment only particularizes the exact sum which a person was liable to pay. The liability to pay income-tax is embedded with the income earned. The process of assessment is a method to ascertain the tax after allowing deductions etc. reference is made to the decision in Kalwa Devadattam v. Union of India [1963] 49 ITR 165 (SC). 19. Thus, having regard to the entirety of the facts and circumstances of the case mentioned above, we are of the opinion that the A.A.C. was justified in giving the direction to the W.T.O., subject to our modification of the said direction, as mentioned somewhere in the preceding paragraphs. Thus, we find no justification to interfere with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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