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TMI Blog2012 (6) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is an individual having agricultural operations and also a share of income as partner from six different firms mostly engaged in liquor business as excise contractors. There was a search and seizure operations in the residential premises and business premises of the assessee on June 7, 1985, which resulted in discovery of a bank pass-book of the assessee with Canara Bank, Langford Town Branch, showing, inter alia, the following credits on three different dates in the month of May, 1985 : Rs. on 2-5-1985 50,00,000 on 13-5-1985 50,00,000 on 16-5-1985 35,00,000 Total 1,35,00,000 4. In the statement recorded during the course of the search, the assessee stated that he was not aware of the sources of the money but that his son, K. Venkatesh Dutt, had arranged the fund and knew everything about it. The credit entries were found to be realisation of demand draft in favour of the assessee purchased by one P. J. Fernandez, 133, Brigade Road, Ban- galore. The assessee even went on to say that his son, K. Venkatesh Dutt, arranged and that he remembered to have signed a document. When con- tacted, P. J. Fernandez, originally confirmed that he advanced the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal before the Tribunal. 6. The Tribunal, on consideration of the above material came to the con- clusion that the version of the assessee and his son that the entire money amounting to Rs. 1.35 crores belong to Venkatesh Dutt and represented unaccounted income of various businesses carried on by him in film, financing loan as well as in the bill discounting line, is a quite plausible one and seems also to be believable. On the other hand, simply because of the fact that the money ultimately got credited in the bank account of the assessee, for a temporary period, it cannot be said that the money repre- sented the unaccounted income of the assessee especially when there are no indications even, not to speak of any evidence about such a stand. Further, it held that the same amount has already been taxed in the hands of Venkatesh Dutt. It is the same Assessing Officer who completed the assessment of the assessee and Venkatesh Dutt on the same day and the amount of Rs. 1.35 crores was assessed in the hands of K. Venkatesh Dutt not on a protective basis. The Assessing Officer was aware of the pros and cons relating to the assessment proceedings of both the assessee and his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name M/s. Intercorp Associates. The said amount can- not be assessed in the hands of the assessee's son. Therefore, it held that the assessee has the right to withdraw the revised return showing the aforesaid amount as his income. In these circumstances, the finding recorded by the Tribunal is patently erroneous and requires to be set aside. 8. Per contra, the learned counsel for the assessee contended that it is not permissible for this court to look into the order passed by the Tribunal in an appeal preferred by the assessee's son or order passed by this court against the said order. When once the assessee offered explanation to the effect that this amount is arranged as loan by his son, section 68 is not attracted. The Revenue instead of assessing the said amount in the hands of his son should not prosecute the assessee by assessing the said amount in his hands. The Tribunal rightly set aside the order passed by the Assess- ing Officer as well as the first appellate authority and the said order do not call for interference. 9. From the aforesaid facts it is clear that the assessee is an agriculturist and partner in five firms which are carrying on the business i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of India in regard to deposits of Intercorp Associates. Finally, he confirmed that Rs.1,35,00,000 represents the income of Intercorp Associates, Bangalore, a concern of his son, Sri Venkatesh Dutt, and the said income has been offered by him for taxation in his accounts. 10. The Assessing Officer as well as the Commissioner of Income-tax (Appeals) on careful scrutiny of the statements of all the four persons on different dates came to the conclusion that their stand is totally inconsis- tent and the explanation offered by the assessee is unsatisfactory and, therefore, it cannot be accepted. Therefore, invoking section 68 of the Act, the said amount was held to be taxable in the hands of the assessee. It is in this regard it is necessary to notice the law on the point. 11. Section 68 of the Act reads as under : "68. Cash credits.-Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income- tax as the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejecting the explanation given by the assessees if found unacceptable, the crucial aspect whether on the facts and circumstances of the case it should be inferred the sums credited in the books of the assessees constituted income of the pre- vious year must receive the consideration of the authorities provided the assessees rebut the evidence and the inference drawn to reject the explanation offered as unsatisfactory. It needs be noticed that section 68 itself provides, where any sum is found credited in the books of the assessees for any previous year the same may be charged to income- tax as the income of the assessees of the previous year if the explanation offered by the assessees about the nature and source of such sums found credited in the books of the assessees is in the opinion of the Assessing Officer not satisfactory. Such opinion formed itself constitutes a prima facie evidence against the assessees, viz., the receipt of money, and if the assessees fail to rebut the said evidence the same can be used against the assessees by holding that it was a receipt of an income nature. In the case in hand, the authorities concurrently found the explanation offered by the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the facts and the statements of various parties it appears to us that the version of the assessee and his son that the entire money amount- ing to Rs. 1.35 crores belong to Sri Venkatesh Dutt and represented unaccounted income of various businesses carried on by him in the film financing line as well as in bill discounting line, is a quite plausible one and seems also to be believable. There is absolutely no material in support of the said reasoning. As stated earlier it is based on the arguments only and, therefore, the Tribunal was not justified in so lightly interfering with the finding of fact recorded by the first appellate authority which was based on legal evidence. Yet another reason given by the Tribunal is that the said amount is already assessed at the hands of the assessee's son which again is without any basis. In fact the said amount is not offered to tax by any one of them, as all of them disowned the said amount. Therefore, the Tribunal was in total error in interfering with the finding of fact and holding that the explanation offered by the assessee is reasonable and acceptable. 16. We are satisfied from the material on record there is a concerted attemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs. Though the name of the party was shown as Rajan Patel, it was one B. Rajanna who was the creditor. However, the said Rajanna denied having lent a sum of Rs. 40 lakhs to the assessee. In fact he denied any relationship with the assessee. He was offered for cross- examination. He was cross-examined. Nothing was elicited in the course of cross-examination with regard to lending of Rs. 40 lakhs. Therefore, the appellate authority held that the assessee has not satisfactorily able to prove the source or even give a satisfactory explanation as to the credit of Rs. 40 lakhs appearing in his books in the name of Shri Rajan Patel. The presumption of section 68 was invoked and the said amount was added to the income of the assessee and taxed. The assessee challenged the said finding of the first appellate authority before the Tribunal contending in the appeal filed by the assessee, the appellate authority had no jurisdiction to enhance the tax by adding the aforesaid income. The Tribunal held that the Commissioner of Income-tax (Appeals) did not have jurisdiction to make this enhancement as the assessee did not show this amount in the return of income filed by him or in any of the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order. 20. The judgment of the Tribunal is based on the judgment of the Madhya Pradesh High Court in the case of Nirbheram Daluram [1981] 127 ITR 491 (MP) where it was held that, the proceedings before the Income-tax Officer are limited to the matters expressly or impliedly raised by the assessee and the Income-tax Officer and the proceeding done by him of these matters. The explanation does not authorize consideration of any matter by the Appellate Assistant Commissioner, which was not raised or processed before the Income-tax Officer. In fact, the aforesaid judgment is reversed by the apex court in the case of CIT v. Nirbheram Daluram [1997] 224 ITR 610 (SC) where it was held as under (page 614) : "Having regard to the decision in Jute Corporation of India Ltd. [1991] 187 ITR 688 (SC), it must be held that the High Court was in error in holding that the appellate power conferred on the Appellate Assistant Commissioner under section 251 was confined to the matter which had been considered by the Income-tax Officer and the Appel- late Assistant Commissioner exceeded his jurisdiction in making an addition of Rs. 2,30,000 on the basis of the other 10 items o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng what is the subject-matter of the appeal, not in the sense of revising those matters about which the assessee makes a grievance, but a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the Income-tax Officer but he can revise every process which led to the ultimate com- putation or assessment. In other words, what he can revise is not merely the ultimate amount which is liable to tax, but he is entitled to revise the various decisions given by the Income-tax Officer in the course of the assessment and also the various incomes or deductions which came in for consideration of the Income-tax Officer." 23. Therefore, section 251 of the Act has been the subject-matter of interpre- tation by the apex court in several decisions. In this background a closer look at section 251 and the words in the section make the legislative intent clear and unambiguous. 24. Section 251 of the Act reads as under : (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s about which the assessee makes a grievance, but a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the Income-tax Officer but he can revise every process which led to the ultimate computation or assessment. He is enti- tled to revise the various decisions given by the Income-tax Officer in the course of assessment and also the various incomes or deductions which came in for consideration of the Income-tax Officer. The Commissioner (Appeals) can modify the assessment order on an additional ground even if not raised before the Income-tax Officer. The Act does not place any restriction or limitation on the exercise of appellate power. It has all the powers of the original authority may have in deciding the question before it subject to the restrictions or limitation, if any prescribed by the statutory provisions. In the absence of any statutory provision, the appellate autho- rity is vested with all the plenary powers which the subordinate authority may have in the matter. 26. In the instant case, it is not in dispute that the Assessing Officer issued a notice to the assessee calling upon him to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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