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TMI Blog2010 (2) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of appeals under Section 260-A(1) and not in its entirety. Even the provisions of Rule 3 of Order 42 of CPC reading "Reference in sub-rule(4) of Rule 14 of Order XLI to the court of first instance shall in the case of an appeal from an appellate decree or order, be construed as a reference to the court to which the appeal was preferred from the decree or order" also cannot make any difference to understand that the provisions of Rule 22 of Order 41 of CPC are all automatically applicable even in respect of an appeal under section 100 CPC for the reasons as spelt out above, while discussing the different authorities on this aspect. If the cross-objection is not even tenable in a second appeal under Section 100 CPC, it is more so in an appeal under Section 260A of the Act. - the principles of natural justice even otherwise, would require that if a person who has obtained some benefit or relief is to be deprived of that benefit or relief he should have an opportunity to defend that possession. The minimum that is expected in law and procedure is that a person is given an opportunity before being deprived of any benefit or relief which a person had already obtained. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns filed prior to the search by the assessee, such income can be brought to tax only in the form of regular assessment or by reopening as permitted within the scope of section 147 of the Act and does not get into a block assessment order, but if an income had not been disclosed for earlier years, there is no way of the assessee filing a revised return for the earlier year, but it is only in the block period it has to be brought to tax and the only criteria for bringing to tax such undisclosed unassessed income of the assesses for the earlier period is only by the block assessment order and by no other method so long as the provisions of section 158BC of the Act are on the statute book. Mere fact that some of the bank statements did indicate the credits as reflected in the bank account of the assessee by itself does not constitute a disclosure of income by the assessee. Addition on account of peak cash credit - held that:- we cannot accept the argument that the method adopted by the assessing officer to aggregate the peak cash credit available in the two accounts for each of the year which again is arrived at after giving deduction, to the withdrawals and only the available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in ITA No. 258/2001 and the subject-matter of this appeal is the block assessment order passed in respect of this assessee for the block period 1.4.1985 to 18.3.1996 and in respect of her undisclosed income for this period, but the revenue passing an assessment order in the hands of this assessee more for the purpose of an alternative option as this assessee had claimed the income assessed to tax as her own income which had gone into contribution of acquiring an asset in respect of which contributions had been made by the couple, but the revenue having rejected this version of this assessee and having attributed the entire unexplained, undisclosed investment in the asset as the undisclosed income of the assessee's husband - Purushothamlal for the very block period. 3. The respondent - Smt. Jyothi Kumari in the other appeal viz . I.T.A.258/2001 is the wife of Sri. Purushothamlal. 4. The search and the follow-up action having lead to the passing of the assessment order dated 26.5.1997 under the provisions of Section 158 BC of the Act, resulting in considerable tax liability on Sri. Purushothamlal, the Principal assessee to an extent of Rs.32,51,142/- which is on the prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also the version ofthe Revenue that further panchanama was drawn as. on 16.5.1996. 10. The notice under Section 158BC of the Act was followed-up by a further notice dated 19.7.1996 issued under Section 142 of the Act apprising the assessee that the case is posted to 30.07.1996. 11. The further development thereafter as recorded in the order of the Assessing Officer is extracted as below:- "In response to this notice, the assessee's representative has stated that he has filed: Returns of income for the assessment year 1995-96 and 1996-97 in Form No. 2 in response to notice u/s 158BC . On receipt of this letter, another opportunity was given to the assessee to file the Return in form No.2 for the block period 01.04.1985 to 18.03.1996 by 30.7.1996 with copy to assessee's representative Shri U.V. Mallya, Chartered Accountant, Bangalore. In response to this notice, the assessee's representative sent a telegram seeking extension of time for filing the Return till 15.08.1996. The telegram was followed by a letter from the assessee's representative wherein he has confirmed the sending of the telegram and requesting for time till 15.08.1996 to file the Return of income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill 27.01.97 on which date the case was posted for hearing. On 27.01.97 the assessee filed detailed written submissions contesting the various issues raised at the time of hearing which are dealt with separately in this order. The case was again posted for hearing by issue of notice u/s 143(2) and summons u/s 131 on 11.02.97. The assessee along with his representative appeared on that date and a statement was recorded on that date from the assessee. While recording the statement, the assessee sought some more time to file further details that were required for finalisation of the assessment proceedings. The assessee stated that he will file the details called for by 17.02.97. In view of the assessee's failure to file the details called for, the case was again posted for hearing by issue of notice u/s 143(2) and summons u/s 131 on 27.03.97. There was no response from the assessee. The case was again posted on 25.04.97 by issue of summons on 10.04.97. There was no response from the assessee. Therefore, another letter was issued by this office on 05.05.97 requiring certain details to finalise the assessment proceedings by 12.05.97. The assessee appeared on that date and sought for adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thi Kumari though was a protective measure by the Revenue, on the premise of this assessee having undisclosed income attributable to the unexplained part of the investment on the property at No.568, 10th Cross, Buddha Marga, Siddartha Layout, II Stage, Mysore. It is the very property in respect of which, her husband had also claimed to have made investment and the claim of the couple being that they had invested jointly for the construction of the house on this site and from out of their respective earnings. The block assessment order under Section 158BC of the Act of this assessee also was for the block period 1.4.1985 to 18.3.1996 on the premise that the actual investments on the house property was not fully disclosed as also the actual income of the assessee from her own activities. The order in the hands of Smt. Jyothi Kumari was also appealed against and the Income Tax Appellate Tribunal acting as the First Appellate Authority has allowed the appeals in full, in terms of the common order dated 4.4.2001 passed in respect of both these appeals IT (SS) A.No. 118/B/97 and IT (SS) A.115/B/97. While agreeing with the claim of the assessees who had incidentally filed their returns in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to raise this ground and did look into its order for a possible correction on the premise of the mistake in passing the order, nevertheless on examining the question on its merits found there was no occasion to exclude the amount from the undisclosed income of the assessee as assessed by the Assessing Officer and accordingly disposed of the Miscellaneous Petition. 19. The Tribunal examined this petition under Section 254(2) and in terms of its order dated 25.1.2002 treated the petition as allowed for the limited purpose of re-examining the appeal of the assessee only in respect of ground No. 6 as urged in the memorandum of appeal and on such examination found that, there was no occasion to vary or modify the earlier order of the Tribunal touching on this aspect of the matter and there was no occasion to set aside or modify the order of the Assessing Officer on this aspect of the matter and accordingly opined that the original order dated 4.4.2001 did not call for any modification and the said order was sustained in its original form. 20. It is against this order dated 24.3.2003 passed by the Appellate Tribunal in Appeal No. 118/1997, the assessee has come up w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal was correct in holding that the assessee was entitled to claim Rs.15,000/- towards payment of loan on vehicle when there was absolutely no proof about such payment except estimation from auto consultancy? 6. Whether the Tribunal is correct in holding that a. sum of Rs. 1,00,000/- paid to Lakshmi and admitted by the Assessee in his statement cannot be added to the income of the assessee as the assessing officer has not stated whether the document of has been availed a pro-note, or an agreement which has been referred to as document No. 17 in the assessment order? 7. Whether the peak credits of Rs.14,55,550/- which was not explained by the assessee could be allowed by the tribunal that the bank accounts are figuring in the balance sheet including the cash credits when the income of the assessee was being shown on estimate basis and no final accounts were submitted along with the return ? ITA.NO.258/2001: 1. Whether the Tribunal is correct in holding, that the cost of construction should be assessed in the hand of the assessee's husband Sri. Purushothamlal even though the assessee herself had claimed that 50% of the cost had to be out of the investment made by her a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments sake not on merits but only on the ground of limitation in a sense that the block assessment order passed on 26.5.1997 was one barred by the period of limitation as indicated in Section 158BE of the Act, then the order of the Tribunal can be sustained on this premise alone notwithstanding the fact that the assessee has not either preferred an independent appeal on the aspect of the Tribunal not having agreed with the stand of the assessee that the assessment order was barred by the period of limitation and also notwithstanding the fact that the assessee had neither filed a cross appeal nor cross objection in the appeals filed by the Revenue but nevertheless for the purpose of sustaining the order of the Tribunal to the extent the assessee gets relief before the Tribunal that can be sustained even by supporting the order of the Tribunal and such findings and issues though would have gone against the assessee as per the answers given by the Tribunal and therefore, would vehemently urge that the appeals of the Revenue should necessarily be dismissed, if this Court agrees with the stand of the assessee that the block assessment order was barred by the period of limitation for pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Order 41 Rule 22 are attracted to an appeal under Section 260-A of the Act, is neither tenable nor stipulated in terms of the statutory provisions of Section 260-A of the Act, that it is not open to the assessee to contend that the order of the Tribunal can be supported even by pressing the arguments to contend that the assessment order was barred by limitation though the Tribunal neither examined this question nor has in any way indicated that it was a question that merits examination for an answer to set aside the block assessment order and would urge that the assessee having not preferred an appeal by itself in terms of Section 260 A of the Act raising the precise substantial questions of law on the question of limitation if it was so permissible and a shortcoming of this nature either not seeking to modify the order or not following a procedure that can fetch the assessee a relief for invalidating the order of the Tribunal not on merits but on the ground of limitation alone cannot be got over by a person who was only a respondent before the Income Tax Appellate Tribunal as well as this court and would therefore, urge that a question as raised by the assessee for ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l had been admitted but which arise in the opinion of the Court and can be examined at any point of time before the disposal of the appeal. 28. While this part of the argument is an argument based on the right given under Section 260A of the Act itself, the other part of the argument such as supporting the order of the Tribunal even in the appeals preferred by the Revenue and to the limited extent of calling in aid the question of limitation, Sri. Shankar, learned counsel for the assessee has urged that this course of defence is definitely available for the assessee in the two appeals of the Revenue on the proper understanding of the provisions of sub-Section (7) of Section 260 A of the Act which in turn has adopted the provisions of CPC as are applicable to the appeal before the High Court and so far as may be such provisions applied in the case of appeals under this Section i.e. Section 260-A of the Act and the submission here is that insofar as the procedure for examining the appeals before the High Court which in our understanding had not joined been issue by either counsel can be an appeal under Section 100 of CPC. The procedure is governed by the provisions of Order 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation before the Tribunal and which has not been expressly addressed to can also be raised and a correct answer can be sought for even when the assessees have not filed any appeals that so tar as the question of limitation is concerned to the extent of sustaining relief granted by the Tribunal in the assessees appeal before the Tribunal and though the Tribunal had not expressly opined on the question of limitation can nevertheless demonstrate before this Court that the assessing authority had no jurisdiction to pass an assessment order in terms of the provisions of Section 158BC of the Act for the reason that a period of one year had already elapsed from the date of initial search and therefore in the wake of the provisions of Section 158BE of the Act, the Assessing Authority having been prohibited or not enabled to pass block assessment order after the expiry of this period could not have passed an assessment order which was sought in an appeal against the assessee before the Tribunal and when the assessee had expressly urged this before the Tribunal as to whether or not the Tribunal has opined on the question it is open to the assessee to urge before this Court even in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that nothing in this sub-section shall be deemed to take away or abridge the power of the court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit (6) The High Court may determine any issue which - ( a ) has not been determined by the Appellate Tribunal; or ( b ) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). (7) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall as far as may be, apply in the case of appeals under this Section. ORDER XLI RULE 22 APPEALS FROM ORIGINAL DECREES *** 22. Upon hearing, respondent may object to decree as if he had preferred separate appeal (1) Any respondent, though he may not have appealed from any part of the decree, may n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le (4) of rule 14 of Order XLI to the court of first instance shall in the case of an appeal from an appellate, decree or order, be construed as a reference to the court to which the appeal was preferred from the original decree or order. Section 100 CPC : (1) Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law. (2) An appeal may lie under this section from an appellate decree passed ex parte. (3) In an appeal under this section, the memorandum of appeal shall precisely state the substantial question of law involved in the appeal. (4) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (5) The appeal shall be heard on the question so formulated and the respondent shall at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en as the date of search, then the assessment order passed as on 26.5.1997 is definitely barred in terms of Section 158BE as the period contemplated in terms of Section 158BE ended on 31.3.1997 and therefore an order dated 16.5.1996 is definitely bad in law etc. It is this factual premise which is made use of for urging the legal submissions relating to the provisions of Order 41 Rule 22, Order 42 in turn r/w Section 260 A (7) of the Act. 36. Though on facts the question as to whether search ended on 18.3.1996 or it continued up to 16.5.1996 there is no clear recording of finding by the Tribunal and in the wake of the records of the assessing authority placed before us, it indicates that certain proceedings had taken place on 16.5.1996 and if we are to accept the search etc., recording certain developments such as lifting of prohibitory order as on that date should be accepted from the records and also to take it as part of the search proceedings, all these questions are definitely not arising for examination. 37. However, on a perusal of the record as we have to find some minor technical discrepancies such as the date of lifting of the prohibitory order in terms of a mahaz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. Explanation 1: In computing the period of limitation for the purposes of this section:- ( i ) the period during which the assessment proceeding is stayed by an order or injunction of any court; or ( ii ) the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section, or ( iii ) the time taken in reopening the whole or any part of the proceedings or giving an opportunity to the assessee to be re-heard under the proviso to section 129; or ( iv ) in a case where an application made before the Settlement Commission under section 245C is rejected by it or is not allowed to be proceeded with by it, the period commencing on the dole on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section, shall be excluded: Provided that where immediately af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.5.1997 and seeking for an adjournment till 16.5.1997 would virtually estop the assessee from contending that on the present facts in terms of Section 158BE of the Act, the Assessing Officer could not have passed the block assessment order for the said period. We also draw support from the first part of Clause 3 of Explanation (1) of Section 158BE of the Act which reads as under :- "Time taken in reopening the whole or any part of the proceedings or giving an opportunity to the assessee to be re-heard under the proviso to section 129; or" which would indicate that time consumed by the assessee at his request for postponing the proceedings and for passing an assessment order should be excluded in computing the period of one year from The date of search. 42. In this regard, we are unable to accept the submission of Sri. Shankar, learned counsel for the assessee that limitation is a pure question of law and it is incumbent upon the Assessing Officer to examine and at any rate he could not have passed an order and therefore, the entire order is bad in law, is not tenable. 43. On the other hand, submission made on behalf of the Revenue that limitation no doubt is a questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 96 of CPC is not the same as the second appeal in terms of Section 100 of CPC. 47. While the substantive provision for filing an appeal is the judgment and decree of the original Court, question is as to whether under Section 96 and the procedure governing the filing of such an appeal, is in terms of Order 41 of CPC. The substantive provision for filing a second appeal to the High Court can be compared to Section 260 A of the Act for the purpose of present examination. The procedure for disposal of the second appeal before the Court is provided for in Order 42 and sub-rule (1) of order 42 expressly says that the provisions of Order 41 of CPC shall be applicable insofar as may be, to appeals from appellate decrees. The Karnataka amendment to Order 42 of CPC has brought about the following changes in place of existing order that as in the Central Act page 373 of CPC. The words so far as may be the appeals from appellate decrees is of significance as the provision does not enable the applicability of Order 41 in its entirely to the procedure under Order 42 in respect of the second appeal. In fact the procedure in terms of Order 42 can also be linked to the substantive prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Venkata Rao case as accepted in Chandre Prabhuji case. 20. So far as the explanation was concerned, the Law Commission stated (p. 298) that it was necessary to "empower" the respondent to file cross-objection against the adverse finding. That would mean that a right to file cross-objections was given but it was not obligatory to file cross-objections. That was why the word "may" was used. That meant that the provision for filing cross-objections against a finding was only an enabling provision. 21. These recommendations of the Law Commission are reflected in the Statement of Objections and Reasons for the amendment. They read as follows: "Rule 22 [i.e. as it stood before 1976] gives two distinct rights to the respondent in appeal. The first is the right of upholding the decree of the court of first instance on any of the grounds on which that court decided against him; and the second right is that of taking any cross-objection to the decree which the respondent might have taken by way of appeal. In the first case the respondent supports me decree and in the second case he attacks the decree. The language of the rule, however, requires some modification because a person ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amages in B and C Schedules was based) can be attacked by the respondents for the purpose of sustaining the decree of the High Court refusing to pass a decree for non-pecuniary damages as per A Schedule. The filing of cross-objections against the adverse finding was not obligatory. There is no res judicata . Point 1 is decided accordingly in favour of the respondent-defendants. 50. We find that the question as to whether a cross-objection is tenable in a second appeal to the High Court was not a question, which was examined in this judgment of the Supreme Court, but it is only explaining the scope of Rule 22 of Order 41 and as to the precise scope of first part of Rule 22 which enables a non-appealing respondent in an appeal against an appealable decree to defend that part of the decree even by urging such other grounds which would have gone against the non-appealing respondent and not followed to hold that a cross-objection is tenable in a second appeal under Section 100 CPC. 51. In fact reliance is placed by Sri. Shankar, learned counsel for the assessee on many other judgments of the Supreme Court as well as High Courts as under including Subba Reddy's case. All these a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgments and the provisions of Section 41 of the Act and Order 41 Rule 22 of the Code, in our view, the following principles emerge: (1) Appeal is a substantive right. It is a creation, of the statue. Right to appeal does not exist unless it is specifically conferred. (2) Cross-objection is like an appeal. It has all the trappings of an appeal. It is filed in the form of memorandum and the provisions of Rule 1 of Order 41 of the Code, so far as these relate to the form and contents of the memorandum of appeal apply to cross-objection as well. (3) Court fee is payable on cross-objection like that on the memorandum of appeal. Provisions relating to appeals by an indigent person also apply to cross-objection. (4) Even where the appeal is withdrawn or is dismissed for default, cross-objection may nevertheless be heard and determined. (5) The respondent even though he has not appealed may support the decree on any other ground but if he wants to modify it, he has to file cross-objection to the decree which objections he could have taken earlier by filing an appeal. Time for filing objecting which is in the nature of appeal is extended by one month after service of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal being filed, against any order passed under the Act but not covered by clauses (i) to (vi) abovesaid, by inserting the expression "and from no others" in the text of sub-section (1). Clause (a) of Section 41 extends applicability of all the provisions contained in the Code of Civil Procedure, 1908 to (i) all proceedings before the court under the Act, and (ii) to all the appeals, under the Act However, the applicability of such of the provisions of the Code of Civil Procedure shall be excluded as may be inconsistent with the provisions of the Act and/or of rules made thereunder. A bare reading of these provisions shows that in all the appeals filed under Section 39, the provisions of the Code of Civil Procedure, 1908 would be applicable. This would include the applicability of Order 41 including the right to take any cross-objection under Rule 22 thereof to appeals under Section 39 of the Act. " and therefore having regard to the language of Section 39 of the Arbitration Act, 1940 the Supreme Court ruled that Section 39 being in the nature of first appeal and with the provisions of Order 41 having been made applicable Rule 22 of Order 41 was also attracted and applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamined the merits of the submission that the assessment order was barred by the provisions of Section 158BE of the Act and Sri. Shankar, learned counsel for the assessee was permitted to make submission on that aspect of the matter on an examination of the factual position and the statutory provisions as pointed out m Section 158BE of the Act, particularly, prescribing the period of one year and indicating the situations wherein the period of one year is enlarged. We have examined and answered such submissions also in the wake of the view expressed in the earlier part of this order. We are of the clear opinion, that even on complying with the principles of natural justice and the prayer of the respondent-assessee to defend the order on the question of limitation also the submission of the respondent does not stand scrutiny in accepting the same as expressed earlier. 58. It is therefore, that the question of limitation cannot be pressed into service or it does not hold the defence set up on behalf of the assessee even to the limited extent of defending the order of the Tribunal to the extent, the relief was granted. 59. That inevitably takes us to the merits of the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im by both the assessees. 64. In this state of affairs, we notice that a finding recorded by the Tribunal assuming it to be on a fact by the Tribunal to the effect that there was an HUF and certain investments said to be explained by the assessee in whose returns it was found as unexplained to be the income of the HUF and in turn gift given to the assessee is nothing short of a perverse finding or inference not tenable in law nor stipulated on material available. The reasoning of the Tribunal towards the end of paragraph 17 reads as under :- "17. We have gone through the entire facts and thoroughly perused the assessment order. The assessee has given a clear account of transactions as to which amounts pertaining to money-lending business; punting business and double entries etc. When such facts and figures are furnished by the assessee it is the bounden duty of the Assessing Officer to counter such statement, if he wants to disbelieve the version of the assessee, in which he failed. The Assessing Officer further failed to discharge the burden cast on him to prove that there was no HUF. In this view of the matter, only the amount admitted by the assessee under the money-lendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally only on the question of difference of value and on the question of availability of a sum of Rs. 3.10,000/- being the sale proceeds of a car which the assessee pressed earlier and which proceeds count in the investment which had been invested in the construction of building and such other questions. Limitation was not a question but in the light of the enabling proviso to sub-section (4) r/w sub-section (6) of Section 260 A of the Act, Such additional ground/question should always be permitted to be raised and even the Courts can also admit such questions and answer the questions and if such is the statutory provision the assessee should be permitted to raise this question. It is therefore, such additional grounds sought to be urged in the assessee's appeal i.e., ITA. No. 277/2003, the question of limitation is sought to be agitated before this Court to contend that the assessment order is bad in law. 68. We have bestowed our attention to the prayer for raising additional grounds. While we are not inclined to accept the submission of Sri. Shankar, learned counsel for the assessee that the statutory provisions particularly, sub-section (4) r/w sub-section (6) of Section 260 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing authority could not have passed block assessment order in terms of Section 158BC in view of the limitation provided under Section 158BE of the Act. The objection to the question of limitation should be raised at the earliest, particularly when it is to be found, that on the peculiar facts and circumstances of the given case there cannot be a generalization of the question of limitation being applicable to all cases. It is no doubt true that the statute has prescribed the limitation in general but even here for the purposes of considering the supporting point of limitation it is inevitably linked to the date on which the cause of action arises which depends upon the facts and circumstances of each case and can be different in respect of each litigant in respect of income tax matters, which is the respect of each assessee. If so, the question of limitation being not a pure question of law and being a mixed question of law and facts and the assessee having got an opportunity to plead this before the original authority as the assessee was quite aware that no block assessment order had been passed even as on 31.3.1997 and on the other hand the assessee having actively partici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 22 after the amendment is explained to be of two implications. The first part is to enable a non-appealing respondent to defend the order in appeal even by supporting the order by contending that the issues decided against the respondent should have been decided in favour of the respondent by the order under appeal even without filing a positive appeal or a cross appeal The second part is to enable a non-appealing respondent who could have filed an appeal to the extent of Original Court not having granted the relief sought for by the non-appealing person through an independent appeal to maintain a cross-objection which can achieve the purpose of maintaining an independent appeal and though such a party might have missed the bus and had not filed the appeal which is io be filed or to maintain such an appeal through the cross-objection in the appeal filed by either contestant to the original proceedings. 76. While we find such is the scope of a cross objection filed under the provisions of Order 41 Rule 22 which is expressly applicable to first appeals or in the sense which is Rule in Order 41 which is a procedural guidelines in respect of appeals from original decrees. Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the procedure regulating the filing of a regular first appeal, it cannon be by implication extended under order 42, to attribute a right of filing a cross-objection in a section 100 appeal also. 80. A Single Beach decision of the Orissa High Court in the case of Shridhar Ghose v. Hari Mohan Sahu AIR 1964 ORISSA 141, while opines that a cross-objection in terms of Order 41 Rule 22 is not tenable in a second appeal. A contrary view appears to have been taken in a Single Bench Decision of the Kerala High Court in the case of Palasseri Velayudhan v. Palasseri Ithayi AIR 1994 Ker. 267, however, to the limited extent of the cross-objection also conforming to the requirements of a Section 100 appeal. 81. We have bestowed our attention to these two authorities of the Orissa High Court as well as Kerala High Court. On an independent analysis also we find that with a second appeal being not the same as. a first appeal and having regard to the provisions of Section 108 CPC, if we examine the scope of a cross-objection in an appeal against the original decree it is obvious that a provision of this nature was provided for to enable the defendant who might have suffered an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y enables the provisions of Code of Civil Procedure relating to the appeal to the High Court being made applicable only as far as may be and subject to the other provisions in this Section or in the Act also. Sub-section (7) of Section 260 A of the Act figuring towards the end of the Section "Expressly providing for the procedure to be followed, it should be understood to be only in respect of the procedural aspects of Order 42 that is made applicable and even there to the extent it may be made applicable. While even in Order 42 not all provisions of Order 41 are made applicable, the scope of the provisions of Order 42 are being made applicable to an appeal under Section 260 A of the Act should necessarily be read as a provision in providing for creating substantive rights. A right of appeal under Section 260A of the Act is governed by sub-sections (1) to (6). 85. The scope of an appeal is that the order appealed against should involve a substantial question of law and of course such question having been decided erroneously by the Tribunal should warrant interference by the High Court in the appeal:- 86. For the purpose of disposing of an appeal under Section 260 A of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that manner. Learned counsel, Mr. P.K. Ravindranatha Menon, appearing for the Revenue, submits that no separate appeal is filled by the assessee claiming this relief. The question of considering the present claim that it would be a revenue expenditure cannot be adjudicated. We are of the view that there is no prohibition in the statute preventing the examination of the said contention as to whether the present claim be treated as revenue expenditure. Sub-section (7) of section 260A reads as follows: "Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section." This means that all the provisions relating to an appeal under the Civil Procedure Code would apply when an appeal is preferred under section 260A. It is well known that a respondent in appeal can sustain the order which is being challenged in appeal relying on any ground that is decided against him. In this case the question as to whether the claim would amount to a revenue expenditure or not was not pressed in aid by him for the reason that the assessee had succee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of all other provisions of Income Tax Act. A sweeping generalization to the effect they being made the basis for acceptance, even the Court maintains a distinction between the first appeal and second appeal and all appeals are generalized under the code. Be that as it may, with great respect to Kerala High Court we are unable to subscribe to the view taken in this judgment and on the other hand we indicate our views, on this aspect as above. Reliance placed by Sri. Shankar, learned counsel for the assessee, on the decision of Calcutta High Court Income Tax 124 438 cannot also advance the submissions made on behalf of the assessee to contend that a cross-objection in terms of Order 41 Rule 22 is enabled either in a Section 100 appeal or in an appeal under Section 280 A of the Act for the reason that the judgment is an authority only insofar it relates to the applicability of the provisions of Rule 5 of Order 41 and that cannot be made applicable or extended to understand the scope of Rule 22 Order 41 of CPC. However, Sri. Shankar, learned counsel for the assessee has placed strong reliance on a Full Bench Decision of our High Court in Chandrashekar v. Narayan . On a perusal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is only to give a second round of opportunity to a non-appealing party, who is content with limited success or failure but is dragged before the appellate court, gets a fresh opportunity to shrug off even the adverse part of the trial court even such a party had himself not filed an appeal, the enabling provisions of Rule 22 of Order 41 are put on the statute, but such an enabling provision to file a cross-objection in a second, appeal under section 100 CPC is neither the possibility nor the intention of legislature in Rule 1 of Order 42 of CPC. Even the provisions of Rule 3 of Order 42 of CPC reading "Reference in sub-rule(4) of Rule 14 of Order XLI to the court of first instance shall in the case of an appeal from an appellate decree or order, be construed as a reference to the court to which the appeal was preferred from the decree or order" also cannot make any difference to understand that the provisions of Rule 22 of Order 41 of CPC are all automatically applicable even in respect of an appeal under section 100 CPC for the reasons as spelt out above, while discussing the different authorities on this aspect. 93. In the light of the discussion made above though Sri. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pearing for the revenue is that the valuation by the department was based on sound principles and the deletions by the tribunal are not justified in law; that the Tribunal has committed an error in not only allowing a deduction of 15% purporting to be due to the differences in legal valuation method and CPW valuation method which the Tribunal presumes to have been adopted by the Departmental Valuation Officer and further deduction of 10% towards supervisory charges by the assessee himself was also not warranted when the situation did not warrant a reduction of this nature and in fact the claim of self supervision was clearly proved to be imaginary claim on the assessee's own revelations. 96. On this aspect, submission of Sri Shankar, learned counsel for the assessee is that if the revenue was not inclined to accept the valuation which according to the revenue was unearthed from the information furnished by the assessee himself and on his own valuation at Rs. 15,01,000/-, then if the revenue has to go by its own method of valuation as per the value arrived at by the Departmental Valuation Officer, the deductions towards differences in OPW rate and local rates and also towards se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardly around Rs.30,000/- and in such state of affairs, if the assessee's claim towards self supervision is found not tenable, we do not find the matter warranted such detail examination by the Tribunal and that too by giving various reasons. 101. With regard to the submission of Sri Shankar, learned counsel for the assessee that difference in valuation cannot be subject matter for block assessment on the premise that it is some undisclosed income and with respect to this view taken by the learned Judges of Bombay High Court in the decision stated [ supra ], we are of the view that the concept of block assessment is only one that enables revenue to bring to tax some undisclosed income for the block period and it is not so important as to the manner in which it is found that certain income had not been disclosed whether it is attributable to some differences in valuation or on any other reason, so long as it has a link to the search which results in passing of a block assessment order and so long as there is some unexplained investments or expenditure or an asset found in the hands of the assessee which is a general inference in law and particularly as enabled under the deeming p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uraj and that had been recycled etc., and therefore balance amount if at all could have been locked into was not acceptable as the claim was not supported by any receipt etc., owing from Gururaj - husband of Lakshmi. 107. The Tribunal on this issue has reversed the finding with a rather perverted reasoning to hold that there is no concrete evidence to support the view taken by the assessing officer. 108. It is not for the assessing officer to produce some negative evidence, but for the assessee who puts forth a claim, to make good the claim by producing evidence. If the assessee had claimed some amount had come back to him and that formed a reinvestment etc., that stand should have been made good by the assessee and not disproved by the assessing officer. In our considered opinion, the reasoning is most illogical, bordering on perversity. We set aside the finding of the Tribunal on this aspect and answer the question in favour of the revenue and against the assessee. 109. With regard to me question occurring at paragraph-21 on the aspect of the revenue taking the peak cash credit at Rs. 14,55,550/- and as an amount found in the bank statement of the account of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the income of the Hindu Undivided Family, some income earned by the assessee from Singapore trip collections and amount drawn by the assessee from the chit group and also as part of home loan from Canara Bank and cash gifts received from the relatives, we find that the assessee had net put forth such claims before the assessing authority but was rest content in claiming that the method of arriving at the peak cash credit was not tenable; that it worked for each year and this claim projected for the entire number of years in the block period etc. 113. We find that the Tribunal has gone over board in finding ways and means of funding the bank deposits in favour of the assessee by attributing that to a variety of activities on the part of the assessee capable of generating income available for investments in a bank by way of deposits. 114. If the version of the assessee that he was carrying on business by borrowing money is to be pleaded, the assessee would not have been keeping the fund parked in a bank by way of deposits. We find that the actual figures as reflected in the bank statements are not in dispute and if the sum total is a possible amount which was not proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143 section 144 and section 145 shall, so for as may be, apply; ( c ) the Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment; ( d ) the assets seized under section 132 or requisitioned under section 132A shall be dealt with in accordance with the provisions of section 132B." 117. On a reading of the provisions of section 158BC of the Act, it becomes clear that the existence of some undisclosed income, and deduction of the same which are attributable to a search, in the sense, that it is as a sequel to the search in terms of section 132 of the Act, then in respect of such undisclosed income or as income which had not been subjected to tax, the assessing officer is bound to pass a block assessment order. 118. Here, we are of the clear view that the criteria is as to whether the assessee had earlier disclosed as part of its income or not. A disclosure of the existence of an asset is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not assessed to tax unless there is information and cannot be by looking into the very information or return filed by the assessee, such a limitation we are afraid cannot and should not be read into for the assessment in the block period in terms of section 1 58BC of the Act. 120. Submission of Sri Shankar, learned counsel for the assessee proceeds on the premise that it is analogous to the applicability of the provisions of section 147 of the Act for reassessment. 121. We are also aware that if an income had already been disclosed in the returns filed prior to the search by the assessee, such income can be brought to tax only in the form of regular assessment or by reopening as permitted within the scope of section 147 of the Act and does not get into a block assessment order, but if an income had not been disclosed for earlier years, there is no way of the assessee filing a revised return for the earlier year, but it is only in the block period it has to be brought to tax and the only criteria for bringing to tax such undisclosed unassessed income of the assesses for the earlier period is only by the block assessment order and by no other method so long as the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed the income part which had gone into such investments and with the assessing officer having arrived at by a method of peak cash credit to be at Rs. 14 lakhs etc., from out of those deposits there was no way that the tribunal could have reversed that finding of the assessing authority. 125. Sri Shankar, learned counsel for the assessee very vehemently contended that not only the assessment of income on peak cash credit basis is very erroneous, but even while computing the income for the block period, the method of the assessing officer, taking into account the peak cash credit for each of the years in the block period is also not tenable as that militates against the scheme of the block period for treating the entire block period as one assessment period and it is for this reason has submitted that the aggregation of the peak cash credits in the two accounts, namely, current account and savings bank account maintained by the assessee with Canara Bank from the years 1991-92 to 18.3.1996 reads as under: Asst. Year SB A/c No. 18461 CA A/c No. 480 Total 1991-92 160,200 - 160,200 1992-93 116,800 362 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year in question, could have demonstrated that some part of it has been recycled for the deposits made during the subsequent years within block period, quite naturally that amount could have gone into the purpose of computing the peak cash credits for the subsequent years, the actual recording on this aspect by the assessing officer that the assessee did not come forward with any evidence worthwhile to accept this claim and the Tribunal instead of addressing this aspect has given some other reasoning to reverse the finding of the assessing authority. 128. If the Tribunal should have found as a matter of fact and as is now sought to be contended by Sri Shankar, learned counsel for the assessee before us that the peak cash credit which constitute income for the years were available for redeposit on being withdrawn and if it should have been made good perhaps that could have merited acceptance and could have been a good ground for either setting aside the assessment order determining the income as assessed by the assessing officer or to the extent it is permitted to reduce the same. But, such is not the course of action resorted to by the Tribunal nor demonstrated by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good before the assessing authority, there is no way of the Tribunal attributing such sources of income to the assessee for the purpose of concluding that the assessee had cash of Rs. 27,15,600/- which even on a very liberal view appears to be rather ambitious for the assessee and rather impertinent on the part of the Tribunal to record such a finding. Attributing availability of an amount of Rs. 27,15,600/- in the hands of the assessee which had never been accounted for and even when the assessee had been borrowing from the banks for the purpose of investment for the construction of house etc., does not appeal to us either on logic or on reasoning and to accept that the assessee even while was retaining such amount of cash in his hand, was borrowing funds otherwise also and such cash was the amount which is available for such deposits etc. 133. The reasoning given by the tribunal does not appeal to us in the least and while we frown on this finding, other argument of Sri Sbankar, learned counsel for the assessee that the method of taking the peak cash credit for each of the year and aggregating that is also not tenable is an argument which we cannot accept for the simple reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity to demonstrate that this very income had been recycled for further credits made in the bank accounts had failed to do that, it was not for the tribunal to invent possibilities not demonstrated before it to hold that there was no undisclosed income or to opine in any other manner and even if the assessee to contended, as is now submitted by Sri Shankar, learned counsel for the assessee that it could have been only the peak which is the one peak for the entire block period. 136. There can be only one peak and not several peaks, but in the very scheme of the Income Tax assessments and the manner of computing undisclosed income, that too by the present method of the unexplained credits in the bank account, we do not find the method adopted by the assessing officer to be obnoxious enough to warrant interference by the Tribunal or to upset the same by us on the basis of arguments addressed by Sri Shankar, learned counsel for the assessee. It is for this reason we inevitably answer this question in favour of the revenue and against the assessee and by setting aside this finding of the Tribunal and sustaining the finding of the assessing officer. 137. Therefore, the substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1993-94 2,88,700 1994-95 1,02,700 1995-96 3,23,000 1996-97 1,02,150 resulting in a tax liability of Rs. 5,80,254/- on the assessee. 141. The assessees stand was that she, as wife of Purushothamlal, had separate and independent income prior to the date of search of the premises of Purushothamlal; that she had filed return of income for the year 1995-96 in the normal course, towards the difference in the cost of construction of the house property jointly with her husband and other amount, was in a sum of Rs. 3,81,284/-, as unexplained investment made by the assessee for the four assessment years in question in purchasing an immovable property by the assessee. 142. The assessee had appealed to the tribunal, contending inter alia, that the search was not in accordance with law; that the assessment was not within the permitted time under Section 158BE of the Act; that the income sought to be included in the hands of the husband of the assessee cannot be again assessed in the hands of the present assessee also. With regard to the investment of Rs. 3,81,284/- as unexplained investment, it was the version of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to pay any further burden of tax as her undisclosed income. 148. However, in so far as the amount of Rs. 3,81,284/- is concerned, submission is that the tribunal taking the view that the amount cannot be treated as an undisclosed income of her husband Purushothamlal, particularly in the wake of the present assessee having filed her return of income for the earlier years prior to the date of search and having earned some income and offered it to tax and that income being sufficient to sustain assessee's explanation on this aspect, the finding based on the premise that the assessee had an independent source of income and from out of that income she had made investment, which theory has not been accepted by the revenue and therefore, the revenue is in appeal to this extent. 149. It is also submitted that the addition of Rs. 3,81,284/- an amount which the assessing authority had found over and above what had been accepted in terms of the returns filed by the assessee in the earlier years and this amount having not been properly explained in any manner other than the amount already indicated in the returns filed by the assessee, deletion by the tribunal is not justified and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned, it has to be necessarily answered in the affirmative and in favour of the assessee and against the revenue. 154. Accordingly ITA No 258 of 2001 is dismissed. BE: ITA No 277 OF 2003: 155. This appeal by the assessee directed against the order passed by the tribunal in two appeals that had been preferred by the assessee and his spuse Ms Jyothi Kumari, is against that part of the order of the tribunal, wherein the assessee was denied relief to the extent of confirmation of addition of Rs 3.10 lakh, an amount which the assessee claimed as income generated from the sale of a car, which was not accepted by the revenue and instead treated it as undisclosed income of the assessee for the block period, and also on the aspect of the difference in the value of a building constructed by the assessee during the block period being taken as undisclosed income of the assessee, assessable to tax in terms of Chapter XIVB of the Act and on the premise that the tribunal had taken the view that the assessing authority was entitled to bring to tax as undisclosed income the block period even if the particulars relating to the generation of income had already been disclosed in the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing the order of Block Assessment after having noticed the contentions in its order on the facts and circumstances of the case? 2. Whether was the Tribunal justified in law in not holding that the assessment order dated 26.05.1997 is barred by limitation in accordance with the provisions of section 158BE of the Income Tax Act on the facts and circumstances of the case. 159. The arguments substantially overlapped one another and all questions, except the question relating to acceptability of the source of investment of Rs 3.10 lakh as one attributable to sale of a motor car owned by the assessee, have virtually being answered above while answering the questions arising in the two appeals of the revenue. 160. For the sake of record, we have further examined the question relating to limitation, particularly as Sri Shankar, learned counsel for the assessee, has submitted that if the question of limitation is to be answered in favour of the assessee if reliance placed on behalf of the assessees in the decided cases of other high courts as also a Division Bench of this court, as referred to by us while dealing ITA No 257 of 2001, are to be looked into. 161. Sri M V Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n so far as the question of limitation is concerned, it was not a pure question of law but a mixed question fact and law, in the present situation and particularly having regard to the language of Section 158BE of the Act and the indication provided therein to compute the period of limitation, in an elastic manner and not in a rigid manner of a watertight compartment and having found that in the facts and circumstance of the assesses's case and particularly having regard to the conduct of the assessee in seeking for further time, even to file a return of income in respect of the undisclosed income for the block period after the expiry of the date up to which alone, the assessee contends, the assessing officer has been enabled to pass an assessment order and beyond that day, he has no jurisdiction and if the assessee had, by his own conduct, sought to take the assessment order beyond that date, that too for enabling him to furnish details in respect of the return, in the sense, that the assessee wanted further opportunity before passing the assessment order and it had been acceded to by the assessing officer, we are of the view that the situation cannot be taken to be as one disenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding counsel for the revenue, the amount cannot constitute an undisclosed source of investment to treat it as an income on the premise of unexplained source for further investment. Therefore, we have to necessarily answer this question in favour of the appellant-assessee and against the revenue. To this extent, we set aside the findings of the tribunal as well as that of the assessing authority, and hold that the addition of a sum of Rs 3.10 lakh to the undisclosed income of the assessee is not justified and the assessment order warrants correction to this extent. The assessing authority to effect the correction and to implement and given effect to this finding by passing necessary order in this regard. 168. Questions raised at paras-22 and 23 of the memorandum of appeal do not really warrant separate answers, in the light of the answers we have already indicated to the earlier substantial questions, which virtually cover these two questions also and therefore we ignore these two questions holding that they do not warrant separate answers on the facts and circumstances of this case. 169. In the result, this appeal is allowed in part to the extent indicated above. 170. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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