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TMI Blog2005 (11) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT [ 1996 (12) TMI 7 - SUPREME COURT] in which it was noticed that the power to allow additional ground to be raised at the time of hearing vested in the Tribunal which has direct nexus with the object of the taxing powers. It was a case which arose in like circumstances as the present case. The assessee has sought to ascertain the conditions before the Tribunal by drawing its attention to its decision by claiming that the assessee is entitled to certain relief in respect of certain conditions made by the section officer which the Tribunal had earlier not found to (be) taxable. The Tribunal has declined to undertake the plea. The assessee was unsuccessful in his plea before the High Court, on a reference being made about the jurisdiction of Tribunal to allow raising of such grounds which were not urged before the appellate authority earlier. The Tribunal in refusing to entertain the plea raised by the assessee on the anvil of binding decisions in respect of chargeability of interest under ss. 234A and 234B has declined to exercise jurisdiction vested in it by law by ignoring the well settled principle, that it owes a duty to determine correct tax liability which in the context in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to bring on specific material on record to link such investment with the husband of Smt. Huma. No such material has been referred to or brought on record. In the present appeal automatic substantive assessment in the hands of assessee by clubbing the same with his income cannot be sustained on any ground. The reason adopted by the authority only permits it to be assessed as the income of the wife from explained source in her hands. Accordingly, the question No. 3 as reframed in the case of Zakir Hussain has to be decided in negative in favour of the assessee and against the Revenue relating to clubbing of income of Smt. Huma Hussain with the income of appellant Zakir Hussain and raising a demand on account of interest under ss. 234A and 234B without any specific order. Accordingly, the appeal is allowed and the order passed by the Tribunal as well as CIT(A) and the AO are set aside to the extent indicated above. - Rajesh Balia And R. P. Vyas, JJ. For the Petitioner : Arun Bhansali For the Respondent : K. K. Bissa JUDGMENT The IT Appeal No. 84 of 2002 filed by Zakir Hussain assessee, relates to asst. yr. 1993-94 and arises out of the common order passed by the Tribunal, Jodhpur B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er parents and relatives and interest received therefrom ? 3. The appeal No. 82 of 2002 filed by Zakir Hussain relates to asst. yr. 1995-96 against the common appellate order passed by the Tribunal in the appeals of Zakir Hussain'appellant as well as by his wife Smt. Huma Hussain. 4. For asst. yr. 1995-96 in the appeal No. 82 of 2002 following questions of law were framed at the time of admission of appeal : (i) Whether, in the facts and circumstances, Tribunal was justified in law in clubbing ₹ 77,502 in the hands of appellant on substantive basis by rejecting explanation furnished by Smt. Huma Hussain without holding any enquiry in the correctness of her statement mainly on the basis of conjectures and surmises ? (ii) In the facts and circumstances, even if the explanation of Smt. Huma was to be rejected, whether addition could be made on substantive basis in the petitioner's assessment ? (iii) Whether, in the facts and circumstances, the Tribunal was right in holding that permission to raise additional grounds in appeal can be granted only, if such additional grounds are also taken within the period of limitation for filing the appeal, particularly when the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of CIT ? (ii) If the permission sought is granted whether interest under ss. 234A and 234B could be levied in the present case ? 8. The other controversy which relates to the assessment of Zakir Hussain is that for the two assessment years, Smt. Huma wife of the assessee Zakir Hussain, had submitted her returns in response to the notices issued under s. 148 of the IT Act, 1961. Such notices have been issued as a consequence of search which was conducted on the residential premises of Shri Hafiz Mohd., who is father of Zakir Hussain, the present assessee-appellant, and father-in-law of Smt. Huma. 9. Smt. Huma, wife of the present assessee in her return for asst. yr. 1994-95 declared her income by way of interest from the amount advanced by her for two different periods, and has also claimed that she received certain amount of gifts from the parents and relatives at the time of marriage and from her parents thereafter. The AO rejected the explanation about the sources of investment disclosed by Smt. Huma but made a protective assessment in the hands of Smt. Huma. However, the income assessed in the hands of Smt. Huma by treating the receipts shown (by) her by way of gift also to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to conduct the matters before it. The ITAT Rules, 1963 lay down such rules. Rule 11 gives very wide power to the Tribunal to permit raising of any additional ground at any stage of proceedings in deciding the appeal without any string of limitation so much so not only it confers the powers on Tribunal to decide the appeal on the grounds set forth in memorandum of appeal or such grounds raised with the leave of the Tribunal, but it can travel beyond it at the time of hearing. The only constraint is that any party likely to be affected by considering such new and additional ground must be provided with sufficient opportunity of being heard in that regard. Rule 11 reads as under : 11. Grounds which may be taken in appeal.'The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule : Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R (SC) 249: (1998) 229 ITR 383(SC) in which it was noticed that the power to allow additional ground to be raised at the time of hearing vested in the Tribunal which has direct nexus with the object of the taxing powers. It was a case which arose in like circumstances as the present case. The assessee has sought to ascertain the conditions before the Tribunal by drawing its attention to its decision by claiming that the assessee is entitled to certain relief in respect of certain conditions made by the section officer which the Tribunal had earlier not found to (be) taxable. The Tribunal has declined to undertake the plea. The assessee was unsuccessful in his plea before the High Court, on a reference being made about the jurisdiction of Tribunal to allow raising of such grounds which were not urged before the appellate authority earlier. Allowing the appeal of the assessee, the Court said : Under s. 254 of the IT Act, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 234B has declined to exercise jurisdiction vested in it by law by ignoring the well settled principle, that it owes a duty to determine correct tax liability which in the context include liability arising on account of charging section, penalty or interest leviable under the Act and as per the binding precedent of Hon'ble Supreme Court. In this connection, it would be apposite to draw attention to two more decisions which had bearing on the very same controversy. 18. In JDB Srinivasan vs. Secretary of the Govt. of Tamil Nadu Ors. (1994) 92 STC 631(Mad), the Madras High Court held that since the raising of additional grounds was a part of the continuous process of filing the appeal and the appeal having been filed in time, the additional grounds which could not be put forth before the lower authority or along with the appeal, could be raised subsequent to the filing of the appeal. The Court further observed that there was no time-limit for raising additional grounds nor was there a rigid rule in that regard. 19. The matter also received the attention of this Court in Shilpa Associates vs. ITO (2003) 181 CTR (Raj) 92. It was a case in which the Tribunal has rejected the applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be issued unless there is a specific order to that effect in the assessment order, the matter appears to be concluded by the reasoning given in decision of the Patna High Court in Uday Mistanna Bhandar Complex vs. CIT Ors. (1997) 137 CTR (Pat) 376: (1996) 222 ITR 44(Pat) and which decision of Patna High Court has been merged in the decision of the Hon'ble Supreme Court, on appeal, when it was dismissed. 23. The question, which had been adverted to by the Patna High Court was whether a notice of demand under s. 156 of the IT Act, 1961, could be issued when there was no specific order levying interest in assessment order, and secondly whether insertion of the words charge interest, if any or charge interest as per rules through the notice of demand makes any difference. The demand notices which were in consideration before the Patna High Court related to interest charged under ss. 234A and 234B. The Court noticed the provision of s. 156 which inter alia ordains that when any tax, interest, penalty or fine or any other sum is payable in consequence of any order passed under this Act, the AO served upon the assessee a notice of demand in the prescribed form specifying the sum so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ITR 414(Gau). 24. While answering these questions, the other question that came up for consideration was whether interest is liable to be charged on the returned income was held to be referred to a larger Bench. 25. Be that as it may, the judgment of the Patna High Court was challenged before the Hon'ble Supreme Court. The SLP was granted and appeals were admitted. Ultimately, appeals were dismissed by the Hon'ble apex Court recording a finding that there is no merit in the appeals. Thus, the reasoning of the Patna High Court about the requisite to be fulfilled before valid demand notice is that it could be founded only if specific order for charging interest under particular provision was approved. The Patna High Court in the case of Tej Kumari Devi [reported as Tej Kumari Ors. vs. CIT (2000) 164 CTR (Pat)(FB) 201'Ed.] held that there was no specific order of charging interest under ss. 234A and 234B and set aside the demand notices as having been issued without any order for charging the interest payable under ss. 234A and 234B. 26. The present case is no different. The assessment order in the present case only speaks about charge of interest as per rules as was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentary evidence to the satisfaction of the AO, the entire amount of opening capital, interest income shown and gifts received are being treated as the income of the assessee for the year on the protective basis. But as the assessee was not having any source of income as admitted in her statement under s. 132(4) recorded on 28th Sept., 1994 during the course of search on the residence of her father-in-law, Shri Hafiz Mohd. this capital formation will be considered as income of the husband of the assessee Shri Zakir Hussain in his case on substantive basis as representing his undisclosed sources of income. 28. Similarly, for asst. yr. 1995-96, the only ground for which the assessment on substantive basis in the hands of Shri Zakir Hussain was made can be stated as under : As in her statement recorded under s. 132(4) on 28th Sept., 1994, she had not admitted any source of income or somebody else's money lying with her or her money lying with anybody else, the income shown in the return of income is not being considered as her income but as the assessee has filed a return of income the assessment is being framed in her case on protective basis and the same shall be considered on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o assume such investment to be from undisclosed income of assessee's spouse. No such presumption is permissible in law, nor it arose from fact. If the AO wanted the investment disclosed by wife to be clubbed in the hands of her husband, on finding that explanation about sources of such investment submitted by her was not satisfactory, it was for the Revenue to bring on specific material on record to link such investment with the husband of Smt. Huma. No such material has been referred to or brought on record. In the present appeal automatic substantive assessment in the hands of assessee by clubbing the same with his income cannot be sustained on any ground. The reason adopted by the authority only permits it to be assessed as the income of the wife from explained source in her hands. 30. Accordingly, the question No. 3 as reframed in the case of Zakir Hussain has to be decided in negative in favour of the assessee and against the Revenue relating to clubbing of income of Smt. Huma Hussain with the income of appellant Zakir Hussain and raising a demand on account of interest under ss. 234A and 234B without any specific order. 31. Accordingly, the appeal No. 84 of 2002 is allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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