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TMI Blog2010 (2) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... time for filing its returns and if the assessee had not thought it proper to raise the question of limitation before the very assessing autho- rity, it cannot be said that the assessee has got an opportunity to raise the question of limitation for the first time only before the Tribunal and that too only after the assessing authority passed the order. - assessee being quite aware of the fact that as on March 31, 1997, no block assessment order had been passed, and even as contended there was no possibility of passing a block assessment order, the contention that it was not within the knowledge of the assessee as to when the Assessing Officer would pass the block assessment order is not tenable - Decided against the assessee. Cross objection in second appeal - held that:- even if a cross-objection is possible or permitted and assuming on such premise also cross-objection is definitely not permissible under section 260A of the Act based only on the language of sub-section (7) of section 260A and in the absence on any express enabling provision creating a right of cross-objection. It is on an over all examination of all these aspects, we hold that a cross-objection is not permitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the residence/business premises No. 568, 10th Cross, Buddha Marga, Siddartha Layout, II Stage, Mysore, of the respondent in I. T. A. No. 257 of 2001 and the appellant in I. T. A. No. 277 of 2003. 2. Two of the appeals, I. T. A. Nos. 257 of 2001 and 258 of 2001 are by the Revenue and the respondents in these two appeals are couple. While in I.T. A. No. 257 of 2001 Purushothamlal is the respondent-assessee and the subject-matter relates to his undisclosed income assessed to tax by the Assessing Officer under the provisions of section 158BC of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), but on his demise being now represented by his legal heir-wife Smt. Jyothikumari, wife herself is the respondent-assessee in I. T. A. No. 258 of 2001 and the subject-matter of this appeal is the block assessment order passed in respect of this asses- see for the block period April 1, 1985, to March 18, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed-up by certain other developments and for the purpose of further discussion a few more dates that can be of some sig- nificance in this context are that while on the date of search the searching officer had while impounded as many as 68 documents in terms of the panchnama drawn on that date, which were all inventorised on the very date. A prohibitory order was also passed by the Income-tax Officer, Survey, Mysore-8 in respect of a copy of R. C. book of the motor vehicle bearing registration No. KA 09 M 7575. 8. It is the version of the Revenue that the search continued or did not end till May 16, 1996, when the prohibitory order in respect of a copy of the R.C. book was lifted and thereafter it was followed up by issue of a notice under section 158BC of the Act as on June 22, 1996. 9. It is also the version of the Revenue that further panchanama was drawn as on May 16, 1996. 10. The notice under section 158BC of the Act was followed-up by a further notice dated July 19, 1996, issued under section 142 of the Act apprising the assessee that the case is posted to July 30, 1996. 11. The further development thereafter as recorded in the order of the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return. However, the assessee's representative has filed a written submission requesting for time till November 25, 1996, to file the return. In view of the assessee's failure to adhere his own admission to file the return by November 24, 1996, yet another summons was issued under section 131 on January 26, 1996, posting the case to December 2, 1996, at 11 a. m. and the same was served on the assessee on November 26, 1996. At last, the assessee filed block returns in Form 2B admitting 'nil' income on December 6, 1996. A detailed questionnaire was issued on December 12, 1996, along with notice under section 143(2) and summons under section 131, seeking clarifications on various issues that emanated at the time of search, posting the case on December 31, 1996. In response to the above notices, the assessee filed a letter on December 26, 1996, requesting time till January 10, 1997. Again, the case was posted for hearing by issue summons under section 131 on December 30, 1996, posting the case to January 10, 1997. On January 10, 1997, the assessee's representatives, Shri Venkatesan and Shri Mallya, chartered accountants of S. Venkatesan and Co., were present and they wanted time till J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of this asses- see at No. 588, 10th Cross, Buddha Marga, Siddartha Layout, Mysore, and the unexplained part of expenditure incurred for constructing the property at No. 568, 10th Cross, Buddha Marga, Siddartha Layout, Mysore. "Income attributable to money lending activities" reads as under : 1. Advance money-lending 2. Invt. In Siddaratha Layout Property 3. Construction of house property 4. Unexplained part of investment made on the acquisition of elec- tronic and electric gadgets 5. Loan advance given to one N. Suresh Rs. 15,000 for the purchase of vehicle 6. The unexplained part of expenses on the foreign tour undertaken by the assessee 7. Certain advances to one Mr. Moh. Rebeck 8. Certain advance to Smt. Lakshmi W/o. Gururaj Acharya 9. Invest made on movables and immovables to the tune of Rs.3,81,284 10. Cash credits in the Bank accounts of the assessee during the relevant assessment years 1991-92 to 1996-97. 13. The undisclosed income attributable to all the above sources added up to a total of Rs. 54,18,571 in terms of the assessment order, was the subject matter of appeal by Sri Purushothamlal before the Tribunal under the pro- vis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2003 involves a few additional facts, viz., that the principal assessee. Sri Purushothamlal had filed a miscellaneous petition under section 254(2) of the Act before the Tribunal seeking for rectification of the order of the Tribunal dated April 4, 2001, on the premise that a sum of Rs. 3,10,000 attributable to the proceeds of the sale of car, which was being used by the assessee resulting in a surplus of a sum of Rs. 3,10,000 and sold for a price of Rs. 3,10,000 was available and explained the source for investments made in the construc- tion of the house property and the Tribunal should have taken note of this aspect of the matter for reducing the undisclosed income attributable to the unexplained investments made in respect of the house property made by the assessees. 17. Sub-sections (1) and (2) of section 254 of the Act reads as follows : "254.(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on all aspects of the matter including raising a preliminary objection for sustaining the order. 22. All the three appeals have been admitted by this court for examining and the substantial questions of law as indicated in the memorandum of respective appeals and such questions read as under : I. T. A. No. 257 of 2001 "1. Whether the Tribunal is correct in holding that it is the Assess- ing Officer who has to discharge the burden of demonstrating the claim of the assessee that he is an HUF even though the assessee does not produce any evidence or any material to substantiate his claim regarding his status ? 2. Whether the amount of Rs. 4,90,000 received by the assessee from 60 persons for organizing Singapore trips could be treated as an expenditure without the assessee establishing the identity of these 60 persons by producing their names, addresses and presence ? 3. Whether a sum of Rs. 1,77,730 paid towards purchase of site was correctly disallowed by the Assessing Officer as the sale deed does not disclose the name of the HUF or the assessee and the assessee had adopted the status of the HUF merely to account for unaccounted investments ? 4. Whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Chapter XIV-B of the Act ? 2. Whether, on the facts and in the circumstances of the case, was the Tribunal right in law in holding that a sum of Rs. 3,10,000 declared by the appellant in his return of income before the date of search constitute undisclosed income and liable for assessment under Chapter XIV-B of the Act ? 3. Whether, on the facts and in the circumstances of the case, was the Tribunal right in law in holding that the matters which are already a part of return of income, filed before the date of search, can be the subject-matter of block assessment under Chapter XIV-B of the Act ? 4. Whether, on the facts and in the circumstances of the case, the addition sustained by the Tribunal could be treated as undisclosed income under section 158B(b) of the Act and liable for assessment under Chapter XIV-B of the Act ? 23. Sri Seshachala, learned senior standing counsel for the appellant, has addressed arguments on behalf of the Revenue in the two appeals, viz., I.T. A. Nos. 257 of 2001 and 258 of 2001. Even at the threshold of his submissions a preliminary objection was raised by Sri Shankar, learned counsel for the assessee, contending that the preliminary ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said two questions are as under : "1. Whether the Tribunal was justified in law in not giving a find- ing in respect of the issue of limitation for passing the order of block assessment after having noticed the contentions in its order on the facts and circumstances of the case ? 2. Whether the Tribunal was justified in law in not holding that the assessment order dated May 26, 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 ?" 25. Sri Shankar, learned counsel for the assessee, being conscious of the fact that a ground of this nature had not been raised along with the memo- randum of appeal and also that the Tribunal though by implication should be understood to have answered this question against the assessee, would nevertheless make a fervent appeal for remanding the matter to the Tri- bunal for recording a specific finding on this question of law, if this court is not inclined to examine the question raised for recording the answer for the limited purpose of sustaining the order of the Tribunal though not on the merits but on the question of limitation. The preliminar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the block assessment order passed by the Assessing Officer is not tenable in law even on the ground of limitation, by calling in aid, by the assessee, for the purpose of sustaining the order passed by the Tribunal and at any rate in the appeal filed by the assessee, the subject- matter of which appeal is the order passed by the Tribunal. The order of the Tribunal showing recording a finding on limitation or for not having recorded a positive finding against the assessment order as having been barred by the period of limitation, the question can never be raised by the assessee and, therefore, would urge that when once the assessee can raise this ground even in its own appeal under section 260A of the Act, whether or not such ground can be urged to support the order of the Tribunal in the two appeals filed by the Revenue, i.e., in I. T. A. Nos. 257 and 258 of 2001 such arguments will definitely be available to the assessee in I. T. A. No. 277 of 2003 as it is not an appeal filed under the very provisions of section 260A of the Act and it is well settled that an additional ground involving the substantial question of law can be urged at any point of time and at any rate would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout pre- ferring an appeal but for the purpose of sustaining it and if so, even on such of those issues which should have been answered by the order under appeal and even by seeking reversal of the finding on such findings and it is such principle and on such premise Sri Shankar, learned counsel for the assessee, has urged that this court has to necessarily examine the question of limitation, i.e., the block assessment order being hit by bar of limitation and if such question is examined, it can be answered for such purpose and the assessee is definitely entitled to call in aid this benefit to the extent of sustaining the order of the Tribunal on the ground of limitation also, in addition to defending the order on its merits. 29. It is such submissions which are urged for the purpose of inviting us to examine the validity of the block assessment order on the point of limitation, though the Tribunal has not expressly opined on this question against the assessee or the Tribunal has positively recorded a finding one way or the other. 30. In so far as the question of limitation is concerned, the submission of Sri Shankar, learned counsel for the assessee, is two fold. 31. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (7) of section 260A of the Act to sub- mit that the procedure as contemplated in the Code of Civil Procedure, particularly the provisions of Order 42 to a second appeal and in turn that being linked to the provisions of Order 41 relating to first appeal are all attracted in view of sub-section (7) of section 260A of the Act and, there- fore, would urge that cross-objection is enabled and tenable in view of sub- section (7) of section 260A of the Act even in an appeal under section 260A of the Act. 33. We can usefully extract section 260A of the Income-tax Act, the provi- sions of Order 42, Order 41, rule 22 as also section 100 of the Code of Civil Procedure as under for easy reference : "260A. Appeal to High Court.-(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation.-A respondent aggrieved by a finding of the court in the judgment on which the decree appealed against is based may, under this rule, file cross-objection in respect of the decree in so far as it is based, on that finding, notwithstanding that by reason of the decision of the court on any other finding which is sufficient for the decision of the suit the decree, is, wholly or in part, in favour of that respondent. (2) Form of objection and provisions applicable thereto.-Such cross-objection shall be in the form of a memorandum, and the pro- visions of rule 1, so far as they relate to the form and contents of the memorandum of appeal, shall apply thereto . . . (4) Where, in any case in which any respondent has under this rule filed a memorandum of objection, the original appeal is with- drawn or is dismissed for default, the objection so filed may never- theless be heard and determined after such notice to the other parties as the court thinks fit. (5) The provisions relating to pauper appeals by indigent persons shall, so far as they can be made applicable, apply to an objection under this rule. Order XLII Appeals from appellate decrees 1. Procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defend the order appealed against as though an appeal is filed and, secondly, if the nonappealing respondent is desirous of getting a relief other than what had been obtained before the court of the first instance, then even when such respondent had not filed an independent appeal by himself/herself, can nevertheless take advantage of the appeal preferred by the other side and even figuring as the respondent in the appeal of the other side can file a cross-objection which when admitted would acquire the status of an inde- pendent appeal and could possibly get such relief to such a cross- objector if entitled to, on the merits than what was given before the court of first instance. 35. It is the first part of these two benefits which Sri Shankar, learned counsel for the assessee, would press for the exercise by the respondent- assessee and would, therefore, submit that if it is to be accepted that the assessment order was one without jurisdiction for the reason that the Assessing Officer passed the order beyond the period contemplated under the provisions of section 158BE of the Act that arguments can be pressed into service before this court also, but only to the extent of susta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongly that the search was conducted on May 16, 1996, at 3 p.m. whereas the search was actually conducted on March 18, 1996, and even at the left hand bottom of the panchnama where the signature of panchas date is required to be affixed, one Mr. P. Nagaraj has affixed his signature and it is only on right hand part of the very column another signature of the asses- see is obtained and the date mentioned is May 16, 1996. In this state of affairs, we examine the legal issues ignoring the two panchnama relied upon by the Revenue. 38. The provisions of section 158BE of the Act reads as under : "158BE. Time limit for completion of block assessment.-(1) The order under section 158BC shall be passed,- (a) within one year from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997 ; (b) within two years from the end of the month in which the last of the authorisations for search under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stipulation of limitation is not an absolute stipulation for the period of one year from the date of the initial search, but as indicated in Expla- nation 1 to section 158BE there are certain exceptions and the period of one year is enlarged in the circumstances mentioned in clauses (i), (ii), (iii) and (iv). 40. However, as Sri Shankar, learned counsel for the assessee has urged before us that the fact situation pointed out in the present case does not come under any one of the four clauses enumerated above. We have examined the fact situation also on this aspect of the matter. We find that the assessee while had not taken the stand that the assessment was barred for mulcting the assessee with any liability in terms of a block assessment order for the period as 1995-96 to 1996-97 as the period of one year had elapsed from the date of initial search, i.e., from March 18, 1996, was not expressly urged or taken before the Assessing Officer even though the assessee had himself participated or appeared before the Assessing Officer and had been seeking for extending the time for filing of a return of the income for the block period and particularly in the background of the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction as is sought to be con- tended by Sri Shankar, learned counsel for the assessee. 44. Jurisdiction is not an aspect necessarily dependent on the question of limitation as if one would agree it lacks jurisdiction, nothing else follows. But the law of limitation operates even when the court has jurisdiction to the extent that the particular court grants relief to which a person is enti- tled to in law, if the person seeking relief before the court approach the court within the stipulated period of limitation as prescribed under the statutory provision. In view of this legal position and in the wake of the enabling provisions for extending the enlarged period of limitation of one year and particularly, when the period of enlargement being not either pre- cise or definite but depending upon the facts and circumstances of each case. We are of the clear opinion that having regard to the facts, it cannot be definitely answered that the assessment order dated May 26, 1997, is one barred by the period of limitation, but nevertheless the learned counsel for the assessee having raised certain legal question of considerable impor- tance, we proceed to examine this legal question on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of this Part relating to appeals from original decrees shall, so far as may be, apply to appeals- (a) from appellate decrees, and (b) from orders made under this Code or under any special or local law in which a difference procedure is not provided." 48. It is under this provision, the enabling provisions of Order 42 in turn Order 41 to the extent they may be applicable are all invoked. It is by now well settled that an appeal is a creature of statute and is not either a vested right or a natural right nor can it be a right by implication. 49. Though Sri Shankar, learned counsel for the assessee, has placed reli- ance on the following decisions of the Supreme Court as also other High Courts to support the submission with regard to the maintainability of a cross-objection, even in a second appeal or in an appeal of the nature of section 260A of the Act, viz., Ravinder Kumar Sharma v. State of Assam reported in [1999] 7 SCC 435 relying particularly on paras. 19 to 24 : "19. In connection with Order 41 rule 22 CPC after the 1976 amendment, we may first refer to the judgment of the Calcutta High Court in Nishambhu Jana v. Sova Guha [1984-85] 86 CWN 685. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a ground decided against him. What is meant is that he may support the decree by asserting that the matters decided against him should have been decided in his favour. The rule is being amended to make it clear. An Explanation is also being added to rule 22 empowering the respondent to file cross-objection in respect to a finding adverse to him notwithstanding that the ultimate decision is wholly or partly in his favour.' Mookerjee J. observed in Nishambhu Jana case (see p. 689) that the amended rule 22 of Order 41 of the Code has not brought any substantial change in the settled principles of law' (i.e. as accepted in Venkata Rao case) and clarified (page 691) that 'it would be incorrect to hold that the Explanation now inserted by Act 104 of 1976 has made it obligatory to file cross-objections even when the respondent supports the decree by stating that the findings against him in the court below in respect of any issue ought to have been in his favour'. 22. A similar view was expressed by U. N. Bachawat J. in Tej Kumar Jain v. Purshottam, AIR 1981 MP 55 that after the 1976 amendment, it was not obligatory to file cross-objection against an adverse finding. The Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding Subba Reddy's case. All these authorities do not advance the submission to hold that a cross-objection is tenable in a second appeal such as an appeal under section 100 of the Code of Civil Procedure. The other authorities relied upon by Sri Shankar, learned counsel for the assessee, for this proposition are as follows : (1) Superintending Engineer v. B. Subba Reddy reported in [1999] 4 SCC 423 ; (2) American Pipe Company v. State of U. P. reported in [1983] AIR 1983 Cal 186 ; (3) Gaddem Chinna Venkata Rao v. Koralla Satyanarayanamurthy reported in [1943] AIR 1943 Mad 698 [FB] ; (4) CIT v. Deepak Aggarwal reported in [2009] 308 ITR 116 (Delhi) ; and (5) Municipal Corporation of Delhi v. International Security and Intelligence Agency Ltd. reported in [2004] 3 SCC 250. 52. We find none of these judgments/authorities have examined the question of tenability of cross-objection in an appeal under section 100 of the Code of Civil Procedure or in a like provision, but are all questions examined in the context of the scope of cross-objection under Order 41, rule 22 in an appeal against an original decree or a like situation. 53. However, the submission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fling objecting which is in the nature of appeal is extended by one month after service of notice on him of the day fixed for hearing the appeal. This time could also be extended by the court like in appeal. (6) Cross-objection is nothing but an appeal, a cross-appeal at that. It may be that the respondent wanted to give a quietus to the whole litigation by his accepting the judgment and decree or order even if it was partly against his interest. When, however, the other party challenged the same by filing an appeal the statute gave the respondent a second chance to file an appeal by way of cross-objec- tion if he still felt aggrieved by the judgment and decree or order. (24) In the present case, as noted above, the respondent did not file any appeal under section 39 of the Act in the High Court which right he admittedly had when the award of interest at 18 per cent. per annum was reduced to 12 per cent. per annum by the trial court. Sec- tion 41 of the Act is merely procedural in nature. If there is no rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Arbi- tration 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 an appeal under section 39 of the Act. However, in the present situation, we find such is not the case in so far as sub-section (7) of section 260A of the Act is concerned for the reason that the provisions of section 260A of the Act are more comparable to an appeal under section 100 of the Code of Civil Procedure rather an appeal under section 96 and even hearing in so far as the second appeal is concerned not all provisions of Order 41 are made automatically applicable to an appeal under section 100 both in terms of Order 42 read with section 108 of the Code of Civil Procedure and as the appeal being a creature of a statute, a cross-objection in terms of rule 22 being barred with an appeal until and unless there is express provision on settling the legal provisions one cannot hold that the implication or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contentions urged on behalf of the Revenue attacking the order of the Tribunal on the questions for- mulated in the memorandum of appeal for examination of which questions these appeals of the Revenue have been admitted. 60. We shall take up the questions in seriatim and examine the submissions made on these questions also. 61. As discussed earlier the questions though are several in number they are essentially revolving around three issues. The first issue posed for examination is on the aspect of the assessee having taken the defence of existence of the Hindu undivided family and attributing the sources for investment in several assets owned by the assessee to be from the funds of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 widen 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 Hindu undivided family. In this view of the matter, only the amount admitted by the assessee under the money-lending business alone has to be assessed, but not the other amounts." 65. On the other hand, the Assessing Officer failed to prove that there was no HUF which is in fact to call upon the assessing authority to place negative evidence and the inference drawn against all settled legal principles and even the statutory provisions of the Evidence Act, for the purposes of the income-tax the burden of proving the exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the enabling proviso to sub-section (4) read with sub-section (6) of section 260A of the Act, Such additional ground/question should always be per- mitted 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., I. T. A. No. 277 of 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 SriShankar, learned counsel for the assessee, that the statutory provisions particularly, subA-section (4) read with sub-section (6) of section 260A of the Act does enable this court to not only frame additional questions for examination, if such questions actually arise out the order of the Tribunal and if it is found that the Tribunal is again wrong in answering such questions and if the Tribunal has not expressly addressed any issues, it could be examined by this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in 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 March 31, 1997, and on the other hand the assessee having actively participated in the proceedings, if not for joining issue at least for seeking further time for filing its returns and if the assessee had not thought it proper to raise the question of limitation before the very assessing autho- rity, it cannot be said that the assessee has got an opportunity to raise the question of lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to 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 pro- visions of Order 41, rule 22 which is expressly applicable to first appeals or in the sense which is a rule in Order 41 which is a procedural guidelines in respect of appeals from original decrees. In so far as the provisions of Order 42 is concerned it is one relating to the procedure in appeals from the appellate decrees. 77. The distinction between Order 41 and Order 42 is that while Order 41 regulates the procedure in appeals from origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection in a section 100 appeal also. 80. A Single Bench decision of the Orissa High Court in the case of Sridhar Ghose v. Harimohan Sahu reported in [1964] 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 Vela- yudhan v. Palasseri Ithayi reported in [1994] AIR 1994 Ker 267, however, to the limited extent of the cross-objection also conforming to the require- ments of a section 100 appeal. 81. We have bestowed our attention to these two authorities of the Orissa High Court as well as the 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 of the Code of Civil Pro- cedure, 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 adverse finding on any of the issues framed in the suit, but nevertheless the suit having been dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also only 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 260A of the Act figuring towards the end of the section "Expressly providing for the pro- cedure 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 pro- visions of Order 41 are made applicable, the scope of the provisions of Order 42 are being made applicable to an appeal under section 260A of the Act should necessarily be read as a provision in providing for creating sub- stantive 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 260A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated in that manner. Learned counsel, Mr. P. K. Ravindranatha Menon, appearing for the Revenue, submits that no separate appeal is filed by the asses- see 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 pre- venting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition that it is so safe for application on a reading of all other provisions of the 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 the 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 the Calcutta High Court in 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 260A of the Act for the reason that the judgment is an authority only in so far 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 the Code of Civil Procedure. However, Sri Shankar, learned counsel for the assessee has placed strong relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove his prospects or to deprive the contestant even from the limited relief that the other party would have obtained before the trial court and 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 of the Code of Civil Procedure is neither the possibility nor the intention of the Legislature in rule 1 of Order 42 of the Code of Civil Procedure. Even the provisions of rule 3 of Order 42 of the Code of Civil Procedure 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 the Code of Civil Procedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or our answer in paragraph 18 of the memorandum of appeal, i.e., relating to valuation of the property and sub- mission in this regard by Sri Seshachala, learned senior standing counsel appearing for the Revenue is that the valuation by the Department was based on sound principles and the deletions by the Tribunal are not jus- tified in law ; that the Tribunal has committed an error in not only allowing a deduction of 15 per cent. purporting to be due to the differences in legal valuation method and CPW valuation method which the Tribunal pre- sumes to have been adopted by the Departmental Valuation Officer and further deduction of 10 per cent. towards supervisory charges by the asses- see 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, the 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 fur- nished by the assessee himself and on his own valuation at Rs. 15, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e value of Rs. 17,16,000 to Rs.12,44,100 is totally not warranted in law and, therefore, all questions could be answered in favour of the Revenue and against the assessee. 100. We notice that the difference between the two valuations is hardly 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 the 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 the Bombay High Court in the decision stated [supra], we are of the view that the concept of block assessment is only one that enables the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and amount advanced to one Smt. Lakshmi Gururaj Acharya, while the asses- see also did not dispute the transaction, the explanation which had not even found merit with the Assessing Officer was that a sum of Rs. 50,000 had been repaid by Sri Gururaj and that had been recycled, etc., and, therefore, the balance amount if at all could have been looked 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 per- verted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee per se merits acceptance on legal principles, the question is as to whether the Assessing Officer had committed an error warranting interference by the Tribunal to conclude that on the premise that the cash credits could be explained from the source of the income of the Hindu undivided family, some income earned by the assessee from Singapore trip collections and the 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 not 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 busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of proceeding under this Chapter : Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return ; (b) the Assessing Officer shall proceed to determine the undis- closed income of the block period 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 far 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 undis- closed income or as income which had not been su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment after an earlier assessment was over or for the first time also, but within the time stipulations as indicated in section 149 of the Act and if it is for a shorter period and only on fresh information and it presupposes information lead- ing to the possible income after it was 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 158BC of the Act. 120. The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the assessee is required to explain the income part of it and that having not been done, mere availability in itself is not the criteria but what part of the available amount had been indicated to be from out of the disclosed income is the criteria and the assessee having not disclosed 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 con- tended 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 sub- mitted that the aggregation of the peak cash credits in the two accounts, namely, current account an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al had no reason to reverse the well recorded finding of the Assessing Officer on this aspect of the matter. 127. We have bestowed our attention to the rival arguments on this aspect. While it is true that the assessee it is attributed to have some income and which is taken as the peak cash credit and treated as undisclosed income of the year in question, could have demonstrated that some part of it has been recycled for the deposits made during the subsequent years within the block period, quite naturally that amount could have gone into the pur- pose 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 hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailability of cash of Rs. 27,15,600 with the asses- see" which is based on the premise that the assessee had generated this kind of income from a variety of his activities, such as Singapore trips, amounts received from Vishandas being the karta of the Hindu undivided family and the amounts drawn from the chit transaction. When none of them had been made 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 deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of the Tribunal disturbing the undisclosed income arrived at by the Assessing Officer and irrespective of what the Tribunal has done, the arguments addressed by SriShankar, learned counsel for the assessee, to accept only the peak cash credit for each year separately does not appeal to us for acceptance. 135. If the assessee who had the opportunity 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated May 26, 1997 (annexure- B). The salient feature of this block assessment order is that the assessee had been assessed to undisclosed income of Rs 9,67,090 as undisclosed income referable to the period 1991-92 to 1996-97. The additions made for the different years are as under : Year Amount in rupees 1991-92 1,60,200 1992-93 4,78,800 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 the 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, int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search. 147. Sri M. V. Sheshachala, learned standing counsel for the appellant- Revenue, has contended that while the investment made in the construc- tion of house property in respect of which the assessee had claimed 50 per cent. contribution, the assessee's claim had been rejected and it has been brought to tax in the hands of her husband, Purushothamlal, and to this extent, there is no question of the assessee being asked 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, submis- sion 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 the asses- see'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 Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy been accounted properly and in this view of the matter of the two questions raised in this appeal by the Revenue, while the first question has become academic, as the Revenue itself has accepted that the entire income assessed in the hands of Purushothamlal, husband of the present assessee, and, therefore, there is no question of bringing that income to tax again in the hands of the present assessee, in so far as the second question is concerned, it has to be necessarily answered in the affirmative and in favour of the assessee and against the Revenue. 154. Accordingly I. T. A. No. 258 of 2001 is dismissed. Re : I. T. A. 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 spouse, 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 the addition of Rs. 3.10 lakhs, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -assessee, who figure as respondent in the two appeals filed by the Revenue and disposed of as above, i.e., I. T. A. Nos. 257 and 258 of 2001, we have examined the questions independently therein. For the sake of record, we have formally allowed the prayer of the appellant-assessee, made in this appeal through a memo dated January 21, 2010, for raising the following additional substantial questions of law : "1. Whether the Tribunal was justified in law in not giving a find- ing in respect of the issue of limitation for 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 May 26, 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 lakhs as one attributable to sale of a motor car owned by the asses- see, have virtually being answered above while answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation would have totally come in the way of the assessing authority passing block assessment order and if there was absolutely a bar in law against passing assessment order on a period of limitation, which is not made dependent on any other aspect, but only on the ascertainment of definite dates and being capable of only one possibility, such questions cannot be examined, nevertheless, we permit to raise such question in this appeal and examine the appeal on the basis of such question also. 163. We have already indicated that in 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 circum- stance of the assessee'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 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.10 lakhs as an amount not properly explained by the assessee, notwithstanding the amount being claimed as proceeds attribut- able to sale of a car owned by the assessee, we find that the assessing authority as well as the Tribunal have gone wrong on this aspect, parti- cularly as it is contended by Sri A, Shankar, learned counsel for the asses- see that this amount had figured in the returns filed by the assessee for the earlier years and had been accepted by the Revenue, as attributable to the sale of a car. 167. With this position being not disputed by Sri Sheshachala, learned stand- ing 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 lakhs to the undisclosed income of the assessee is not justified and the assessment order warrants correction to this extent. The assessing authority to ef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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