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TMI Blog2013 (10) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... d., J.B. Nagar, Andhery (E). According to Smt. Kalpana a sum of Rs. 8,25,000/- was paid to Shri Nandkishore Babulal, the landlord of the building for transferring the flat in her name. 3. It may be noticed that in the same building several other persons got the flats transferred in their names wherein they have paid some amount to the person who is holding tenancy rights apart from paying a stipulated sum to the landlord. Based on a Tax Evasion Petition the AO observed that a sum of Rs. 16,51,000/- must have been paid to the legal heirs of late Shri Jeevandas Bhaiya for surrendering of tenancy rights and for handing over the possession of the flat apart from payment of Rs. 8,25,000/- to Shri Nandkishore Babulal, the landlord of the buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier years. Under these circumstances the learned CIT(A) observed, in para 3.2 of his order, that the relevant addition, if at all required, should have been made in the hands of Smt. Kalpana Vijay Sarda and not in the hands of the assessee. In other words, the addition made in the hands of the assessee was deleted on the ground that neither the said flat was acquired or purchased by the assessee nor was there any evidence to prove that the payment made to the outgoing tenant was sourced out of the unaccounted income of the assessee. 5. Though he set aside the issue, which was in dispute before him, the learned CIT(A) has gone a step further to observe that there is sufficient corroborative circumstantial evidence to prove the Smt. Kalpana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenancy rights and having accepted in principle that premium was paid, based on sufficient corroborative circumstantial evidence, the CIT(A) was justified in directing the AO to consider the issue in the hands of the party who was the legal owner of the property. He thus justified the action of the learned CIT(A). 8. We have carefully considered the rival submissions and perused the record. Under section 251 of the Income Tax Act the first Appellate Authority has the powers to confirm, reduce, enhance or annual the assessment. He can also initiate penalty proceedings and in any other case he may pass such orders in the appeal as he thinks fit. The expression 'may pass such orders in the appeal' was subject matter of consideration by vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Authority cannot be subject matter of consideration while disposing of an appeal, in exercise of the powers vested in the first Appellate Authority under section 251 of the Income Tax Act. In the case of A.B. Parikh vs. Income Tax Officer 203 ITR 186 the Hon'ble Gujarat High Court had considered identical issue with regard to extension of time limit by virtue of provisions of section 150(1) of the Income Tax Act and in that regard the Court observed that in order to issue such directions, which would amount to enhancing the assessment of a third party, such person must have been put on notice, as otherwise, it is not permissible to give such direction. The first ingredient is that there must be a finding that the income excluded fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of law under which the CIT(A), while deciding an appeal preferred by the assessee, can pass orders with regard to assessments made by the AO in the case of a third party. 11. In the case of Peico Electronics and Electricals Ltd. 210 ITR 991 the Hon'ble Calcutta High Court observed that though the powers of the first Appellate Authority are co-terminus with that of the AO and has powers to enhance the assessment but that is confined to the assessee and a finding or direction, while disposing of the appeal, must be a finding necessary for giving relief in respect of the assessment year in question. In other words, the conclusion reached by the AO in the case of a third party should not be disturbed without giving such assessee an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me limit under section 148 of the Act, by taking aid of section 150 or 153 of the Act, the first Appellate Authority has to take into consideration the fact that the finding or direction should be relevant for the subject matter of dispute and, when it affects a third party, principles of natural justice demands that such third party should have been given an opportunity as otherwise such direction deserves to be set aside as invalid. 13. Similar view was taken by the ITAT Hyderabad Bench in the case of Pennar Electronics P. Ltd. 308 ITR (AT) 192. At page 203 the ITAT Hyderabad Benches had taken support of the view taken by the Hon'ble Patna High Court in the case of Gauri Shankar Choudhary 234 ITR 865 to observe that resort to sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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