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TMI Blog2018 (10) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 254(2) of the Income-tax Act,1961(hereinafter called " the Act") or in the alternative prayers are made to set aside the aforesaid order of the tribunal dated 03.10.2017 in cross appeal filed by the assessee and the revenue. 2.1 The Background of the case are that tribunal has passed an detailed order with respect to ITA no. 2415 & 1295/Mum/2014 vide common orders dated 03.10.2017 wherein against cross appeals filed by both assessee and revenue, the additions to the tune of Rs. 49,17,69,925/-were confirmed by the tribunal by holding as under:- "10. We have considered rival contentions and carefully gone through the records placed on file. We have observed that the assessee is an individual running a proprietary concern under the name and style of „Shankheshwar Bullion', stated to be engaged in the business of purchase and sale of gold bars. The assessee started his proprietary concern only in the month of March, 2005 wherein registration was obtained vide TIN No. 24071301929 w.e.f. 07-03-2005 with Gujarat VAT authorities in the state of Gujarat at Ahmedabad(Gujarat), although the assessee belonged to Mumbai (Maharashtra). The reasons for seeking VAT registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m on the pretext that there is no requirement under law to reveal the identity of the buyer. It is pertinent to mention that each invoice of cash sale of gold bar in majority of cases issued by the assessee is on an average exceeding Rs. 3,00,00,000/- in majority of cases. The assessee never revealed the identity of person who bought gold bars in such a huge quantity by paying cash. The assessee is stated to have purchased gold bars mainly from Padamavati Bullions. The partner of said firm Padmavati Bullion confirmed the sale of gold bars to the assessee in statement recorded u/s 131 but subsequently the said partner never appeared before the authorities below when he was called by the AO as Revenue sought more information from him.. The said Padmavati Bullion purchased this gold bars/bullion from ICICI bank for which necessary documents such as purchase invoices, payments for purchases by cheque through bank, delivery challan in favour of Padmavati Bullion issued by the ICICI bank are part of the records which are placed in the paper book. However, there is no material on record as to the delivery of gold bars to the assessee and also there is no evidence of movement of gold bars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsonnel's were deployed by the assessee to secure highly expensive commodity being gold bars or even cash dealt/handled by the assessee. The financial statement of the assessee as at 31-03-2005 reveals that 5kg of stock of gold to the tune of Rs. 30.95 lacs was held as closing stock but there is no explanation as to how the said gold was stored/secured. Similarly, there is no explanation by the assessee that how it used to secure the movement of gold bars after its receipt from Padmavati Bullions till it is delivered to the buyer. There is also no material on record to suggest that any security vaults were hired or constructed or any security personnel were deployed by the assessee nor there is any insurance policy being taken by the assessee to secure gold bars of huge value. The material on record also clearly reveal that the capital of the M/s Padmavati Bullion from whom the assessee made purchases is in negative and is merely (-) Rs. 2.75 lacs as compared to the huge transactions in sale of gold running into Rs. 77.26 crores in March 2005 and turnover of Rs. 136.92 crores from April 2005 to 29-06-2005, aggregating to approx. Rs. 215 crores were made by said Padmavati Bullions t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted these agencies who are authorized by the RBI to do due diligence/KYC and other checks and verification of the ultimate buyers of the gold so that the end use of the imported gold can be tracked, controlled and monitored and gold is handled/ utilized/ consumed by only authorized concerns for specified approved purposes and in no case it was allowed to be diverted for un-authorized use or/and to unauthorized persons. The master circular dated 01-07-2005 issued by RBI made these regulatory and controlled monitoring more stringent wherein onerous responsibilities were placed on the nominated agencies and banks to further tighten their monitoring both on suppliers as well on the importing concerns and the end users. This is mainly done by RBI to tackle/curb abuse and menace of money laundering and prohibit circulation of black money in the economy. In its circular no. 25 dated 01-10-2003, RBI has expressed unhappiness about misuse of import LC's by unauthorized agencies for importing gold and strict instructions are issued for complying with regulations/guidelines. Further stringning of regulatory norms for import of gold by RBI vide master circular of July 2005 onerous responsibili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identity of a person for entering into finance/business transactions etc may go a long way in curbing this foul practice." Reference is also drawn to recent decision of Hon'ble Delhi High Court in the case of CIT v. D.K.Garg in ITA no 115 /2005, wherein Lordships have held that an accommodation entry provider wanting to avail the benefit of the 'peak credit' has to make a clean breast of all the facts within his knowledge concerning the credit entries in the accounts. The tax-payer has to explain with sufficient detail the source of all the deposits in his accounts as well as the corresponding destination of all payments from the accounts. The tax-payer should be able to show that money has been transferred through banking channels from the bank account of creditors to the bank account of the assessee, the identity of the creditors and that the money paid from the accounts of the tax-payer has returned to the bank accounts of the creditors. The tax-payer has to discharge the primary onus of disclosure in this regard. Their Lordships held as under: "15. The present case, however, is of a different nature. Here, we are dealing with an Assessee who does not deny that he i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeking the benefit of 'peak credit' appears to have been totally overlooked by the ITAT in the present case. Indeed, if the Assessee as a self-confessed accommodation entry provider wanted to avail the benefit of the 'peak credit', he had to make a clean breast of all the facts within his knowledge concerning the credit entries in the accounts. He has to explain with sufficient detail the source of all the deposits in his accounts as well as the corresponding destination of all payments from the accounts. The Assessee should be able to show that money has been transferred through banking channels from the bank account of creditors to the bank account of the Assessee, the identity of the creditors and that the money paid from the accounts of the Assessee has returned to the bank accounts of the creditors. The Assessee has to discharge the primary onus of disclosure in this regard. 20. While the AO in the present case did not question the working out of the peak credit by the Assessee, he, at the same time, insisted that the additions made by him to the returned income of the Assessee should be sustained. The peak credit worked out by the Assessee was on the basis t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilege. The techniques used for the purpose are to lend the proceeds back to the owner as loans, gifts and etc., under invoicing the items exported to the real owner or etc. In some cases, the transfers may be disguised as payments for goods or services, thus giving them a legitimate appearance. 3. Integration This involves investment in the legitimate economy so that the money gets the colour of legitimacy. This is achieved by techniques such as lending the money through "front" companies etc. The money may be invested in real estates, business and etc. The stages at which money-laundering could be easily detected are those where cash enters into the domestic financial system, either formally or informally, where it is sent abroad to be integrated into the financial systems of tax haven countries and where it is repatriated in the form of transfers." The role of the revenue authorities in tackling the menace of laundering black money was commented by the learned author as follows:- "It has to be kept in view that India has a problem of black economy, which is unacounted and many a time the holders of black money also launder the black money in order to acquire legitimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at person. Similarly Section 114(g) of the 1872 Act stipulates that the evidence which could be and is not produces would, if produced, be unfavourable to the person who withholds it. The assessee in the instant appeal has withheld the details and identitiy of the buyers of gold bars for which the assessee is to be blamed and presumption is drawn against the assessee as it cannot be accepted that such a huge sales averaging more than Rs. 3 crores executed per one sale invoice in majority of cases by the assessee to persons whose details are not known to the assessee rather the assessee is deliberately withholding such details at his own peril and is clearly hit by Section 106 and 114(g) of the 1872 Act and presumption is drawn against the assessee that either the assessee has introduced his own undisclosed income into the bank accounts of the assessee or if the story of the assessee is believed has facilitated introduction of undisclosed money of the undisclosed buyers of gold and its conversion into gold without revealing identity of the buyers. It is stated by the assessee that there is no onus on the assessee under any law to reveal the identity of buyers who allegedly bought go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell no experience in this field itself cast serious shadow of doubt on the genuineness of said business carried on by the assessee. The onus was on the assessee to prove genuineness of the business of gold bars conducted by the assessee. Reference is drawn to decision of Hon'ble Supreme Court in the case of Sumati Dayal(Supra). Provisions of Section 68 of the Act is a special provisions and is a deeming provision which cast obligation on the assessee to satisfactorily explain the cash credits appearing in books of accounts of the assessee by revealing identity, creditworthiness of the creditor and genuineness of the transaction which has not been fulfilled by the assessee and burden cast on the assessee is not fulfilled by the assessee in the instant case as detailed above. Provisions of Section 68 as were applicable for relevant assessment year are reproduced hereunder: "Cash credits. 68. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as is supposed in the ordinary course of business to be within his power. If the shares were sold and sale proceeds were received in cash the assessee could have produced the sold note. The assessee could have also applied for issuance of summons both to the broker and the buyer. He could have led evidence through them proving the transaction of share. Similarly he could have applied for issuance of summons for examining the debtor who had allegedly repaid the money in cash and it could have been said that the assessee did whatever was within his power, but the assessee did not discharge his burden. Law requires the assessee to satisfy the Assessing Officer. Satisfaction of the Assessing Officer cannot be of a higher or lower level than the satisfaction of any person of ordinary prudence. If the assessee has taken steps to satisfy a person of ordinary prudence then he can be said to have discharged his burden, but if the assessee consciously chose not to do what was within his power then he could be said not to have discharged his burden. The judgement in the case of Exoimp Resources (India) Ltd. (supra) is distinguishable because in that case the case of the assessee was that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the above, I am of the opinion that the AO has rightly held that the appellant has failed to explain the source of the cash deposits totalling to Rs. 32,17,784/-. The addition made by the AO is confirmed. The grounds raised by the appellant are liable to be dismissed." 8. The judgement of the Assessing Officer and the CIT(A) disclose in no uncertain terms that the evidence including steps which the assessee could have taken were not resorted to. Therefore, the Assessing Officer was entitled in law to draw an adverse inference which is authorized by Section 114(g) of the Evidence Act which permits a presumption as follows: "That evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;" 9. For the reasons aforesaid, we are of the opinion that the judgement under challenge cannot be sustained and, therefore, judgement of the Tribunal is set aside. The judgement of the CIT(A) is restored." Reference is also drawn to the decision of Hon'ble Karnataka High Court in the case of P M Abdulla v. ITO ( 2015) 60 taxmann.com 52(Kar.), decision of Hon'ble Punjab and Haryana High Court in the case of Self Knitting Works v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrolled by proviso which has an overriding effect and provides that notwithstanding anything contained in any other provision of the 1961 Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. Thus, Section 69C read with proviso makes it abundantly clear that the amount represented by expenditure incurred by the assessee towards purchases of gold bars constitute income within deeming fiction of 69C of the 1961 Act. Thus, we set aside the order of learned CIT(A) and confirm the addition to the tune of Rs. 49,17,69,925/- (Rs Forty nine crores seventeen lacs sixty nine thousand nine hundred and twenty five only ) for detailed reasons as cited above. Thus, Revenue succeeds on this ground while the assessee fails on this issue in their respective appeals. We order accordingly." As could be seen from the above that the detailed order was passed by the tribunal against cross appeals filed by the Assessee and the Revenue, vide orders dated 03.10.2017. The tribunal disbelieved the alleged business of gold bars conducted by the assessee wherein the properietory concern was opened in Month of March 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 256(SC) The tribunal also referred to stringent RBI circulars issued from time regulating import and utilisation of gold while coming to aforesaid conclusions. The tribunal also referred to provisions of Section 106 and 114(g) of Indian Evidence Act,1872 to come to conclusion that the assessee is withholding evidences and preventing enquiry wherein presumption will be drawn against the assessee in these circumstances. As we would see later in this order that the assessee has filed these two MA's wherein an attempt is made to get the decision of the tribunal reviewed within the limited mandate of Section 254(2) of the 1961 Act which is not permissible. The assessee has made following contentions in the two MA's filed with tribunal, which are as under: a) It is the contention of the assessee in the MA as to non consideration of Remand Report of the AO dated 28.03.2013 with respect to no abnormal variation in sales price. The tribunal did consider the remand report of the AO but the tribunal disbelieved the whole gamut of alleged business of gold bar opened and closed within short span of time by the assessee and the manner in which cash sales were effected to undisclosed buyers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it was infact laundering of undisclosed moneys which the assessee is not coming forward to reveal the truth and deliberately withholding evidence to shield underneath undisclosed income. The onus cast on the assessee was not discharged and the tribunal came to conclusion that additions to the tune of Rs. 49,17,69,925/- keeping in view factual matrix of the case were justified. The tribunal relied upon following case laws and also on RBI circulars which were flouted by the assessee, details of which are elaborately discussed in tribunal order. The case law relied by tribunal to come to conclusion are as under: a. Hon'ble Supreme Court decision in the case of Sumati Dayal v. CIT (1995) 214 ITR 801(SC) b. Hon'ble Delhi High Court decision in the case of CIT v. D.K.Garg in ITA no. 115/2005. c. Hon'ble Calcutta High Court decision in the case of Rajmandir Estates Private Limited v. Pr. CIT (2016) 386 ITR 162(Cal. HC) d. Hon'ble Calcutta High Court decision in the case of CIT v. Sanjay Jain (2015) 55 taxmann.com 512(Cal. HC) e. Hon'ble Karnataka High Court decision in the case of P M Abdulla v. ITO (2015) 60 taxmann.com 52(Kar.) f. Hon'ble Punjab and Haryana High Court dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso confirmed the additions by invoking provisions of Section 69C as an alternative as in the opinion of the tribunal the assessee could not satisfactorily explain the source of making payments for the purchases because the payments were made from cash deposited in the assessee from so called cash sales of gold made by the assessee to undisclosed buyers which was disbelieved by the tribunal. The tribunal invoked deeming fiction of provisions of Section 69C of the 1961 Act read with proviso to Section 69C. The assessee has submitted that tribunal could not invoke its powers as are contained in Section 254(1) of the Act to pass such orders as are considered fit. The assessee relied upon decision of Hon'ble Allahabad High Court in the case of Smt Sarita Jain v. CIT (2017-TIOL-1394-HC-All-IT) to contend that the tribunal ought not to have invoked provisions of Section 69C more so purchases were never doubted by any of the authorities. The arguments are fallacious as the tribunal has doubted sources for making payment for purchases which were stated to be from cash sales to undisclosed persons and the said huge cash of magnitude of more than Rs. 55 crores was found deposited in assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d answer as below. 22. Section 254 of the Act which delineates the powers of the Tribunal is quoted below to the relevant extent for ready reference:- "Orders of Appellate Tribunal 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. (1A)** ** ** (2) The Appellate Tribunal may at anytime within [six months from the end of the month in which the order was passed], with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing] Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub section unless the Appellate Tribunal has given notice to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thinks fit' can be exercised only in relation to the matter that arises in the appeal and it is not open to the Tribunal to adjudicate any other question or an issue which is not in dispute and which is not the subject matter of the dispute in appeal. The appeal of the Assessee was thus allowed and the additions made under Section 69-A of the Act by the Tribunal were set aside. 26. In the said judgment of the Allahabad High Court, it is true that the Tribunal cannot travel beyond the subject matter of the Appeal, but the additions under Section 69A, a different provision while deleting the additions under Section 68 of the Act appears to have been done without affording a specific opportunity of hearing to the assessee and that appears to be the reason for setting aside of that Order of the Tribunal by the High Court. 27. The learned counsel for the Assessee Company also relied upon the decision of the Division Bench of the Calcutta High Court in the case of ITO v. R.L. Rajghoria [1979] 119 ITR 872. The Division Bench of the Calcutta High Court upholding the Order of the learned Single Judge in a Writ Petition in R.L. Rajghoria v. ITO [1977] 107 ITR 347 (Cal.) held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the Assessee, Mr. Pardiwala submits that the Division Bench of the Karnataka High Court itself in the case of Karnataka State Forest Industries Corn. Ltd. v. CIT [1993] 201 ITR 674/[1994] 72 Taxman 19 had held that the power of the Tribunal under Section 254 of the Act can be exercised only in relation to the grounds raised in the appeal and the Tribunal cannot go beyond the scope of the appeal and decide the question which does not form the subject matter of the appeal. In that case, the Assessee - a Government Undertaking was engaged in the business of Development and Manufacture of forest products for sale. It directed the method of Accounting in relation to the valuation of the Closing Stock under a bona fide reason and claimed that the Closing Stock figures should be the one as determined by it for the purpose of income tax assessment. The ITO rejected the claim on the ground that the statutory Auditors of the Assessee had not agreed to the change in the method of Accounting. On second appeal, the Tribunal took a different stand and leaving out the aforesaid findings, upheld the additions on the ground that because of the change in the method of Accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of quantification of such loss to the Assessing Officer for fresh adjudication, it was held that when the Assessing Officer and Commissioner of Income Tax (Appeals) had not undertaken the issue of quantification of loss on sale of investments and there was no such ground raised by the Revenue in the appeal filed by it before the Tribunal, the Tribunal on its own could not have undertaken the said exercise. 34. For the aforesaid reasons given by us on the decision of the Calcutta High Court in the case of R.L. Rajghoria's case (supra), we are not inclined to follow the said view of the Gujarat High Court. 35-41**** 42. Mr. Aravind stoutly submitted that the powers of the learned Tribunal are not circumscribed by any limitation and the words "as it thinks fit" are wide enough to confer powers upon the Tribunal to make such directions of the nature as is made by it in para 7 of its Order quoted above. 43. He submitted that the word "thereon" does not de-limit or restrict the powers of the Tribunal to pass such Orders "as it thinks fit" and it also cannot be said that the directions in para 7 of the Order are beyond the subject matter of the appeal filed by the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef is not restricted to the plea raised by him. 48. In the case before the Hon'be Apex Court, the Assessee spent Rs. 93,215/- for introduction of "Casablanca conversion system" in its Spinning Plant for manufacture and sale of cotton yarn. Substantially, this involved replacement of certain roller stands and fluted rollers fitted with rubber aprons to the spinning machinery, removal of right-frames from certain existing parts, introduction, inter alia, of ball-bearing jockey-pulleys for converting the original band-drivers to tape-drivers and other additions and alterations in the drafting mechanism. The ITO disallowed the said claim of Rs. 93,215/- because it was not admissible as 'development rebate' as in the opinion of the ITO, it did not involve installation of new machinery. The first Appellate Authority affirmed the order of the ITO, but the Tribunal itself inspected the Spinning Factory of the Assessee and studied the working of the machinery with 'Casablanca conversion system' in the process of spinning yarn and came to the conclusion that though such expenditure cannot be admissible as Development Rebate, but the same was admissible as an allowance u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e function of the Appellate Authority is same and co-extensive with that of the Assessing Authority and the Appellate proceedings are continuation of the Assessment proceedings, therefore, the Appellate Authority can itself enter the arena of assessment, either by pursuing further investigation or causing further investigation to be done. It can do so on its own initiative, without being prodded by any of the parties. It can enhance the assessment, taking advantage of the opportunity afforded by the tax payer's appeal, even though the appeal itself has been mooted only with a view to a reduction in the assessment. It is considered apt to quote below the paragraphs 22 to 25 from the said judgment of Madras High Court, albeit they are little lengthy but are found to be containing good reasonings therein. "22. Quite apart from precedents, it seems to us quite in the fitness of things to invest the Tribunal with the plenary jurisdiction in matters of assessment. As we earlier observed, the Tribunal was created in 1941 as an independent, non-departmental body, in whose hand the Legislature intended to entrust the task of reviewing assessments made under the Act. Under the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke. The insistence on one party to appeal being entitled to the fruits of finality, as it is called, and the appellate authority being con-find (sic! confined) to the subject matter of the appeal, are all ideas which might have relevance if the discussion centres in purely civil litigation and such like adversary proceedings as in an industrial dispute. But in a case where the revenue is all the while a party, in a manner of speaking and is also at the same time, an authority vested with the responsibilities of drawing up the assessment and laying down the correct liability, it would not be in accord with the scheme of the Act to impose restrictions on the ambit and the power of the Tribunal by such like notions as finality, subject matter of the appeal and the like. The statutory provision in Section 33(4) of the 1922 Act and Section 254 of the 1961 Act which confers appellate jurisdiction on the Tribunal clearly lays down that the Tribunal, in disposing of an appeal may pass such orders thereon as it thinks fit. Excepting that the expression 'subject-matter' has taken the fancy of many learned and eminent judges, that is an expression which is not employed by the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Court of Appeal and there Lord Wright MR reiterated the position in the following passage in his judgment: "I may note here at once that in making the assessment and in dealing with the appeals, the Commissioners are exercising their statutory authority and their statutory duty which they are bound to carry out, not as judges deciding an issue between two particular parties; their obligation is wider than that. It is to exercise their judgment on such material as comes before them, and, as we shall see later, to obtain any material which they think it is necessary and which they think they ought to have, and on that to make the assessment or the estimate which the law requires them to make. They are not deciding the case inter partes ; they are assessing or estimating the amount which in the interests of the country at large the taxpayer ought to have to deal with as the basis on which he is to be "taxed."(p.387) 24. In a recent Full Bench decision of this Court in State of Tamil Nadu v. Arulmurugan & Co. [1982] 51 STC 381 (Mad.), it was held that the appellate authorities perform precisely the same functions as the assessing authority. The Full Bench expressed the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns the assessee's assessment merely because nobody else had handled it before it has not occurred either to the assessee or to the department to raise and urge that point at earlier stages of the proceedings." We respectfully agree with the aforesaid view of the Madras High Court. 52. The Rajasthan High Court in the case of CITv. Pratapsingh [1987] 164 ITR 431 also dealt with the power of the Income Tax Appellate Tribunal (ITAT) to permit a new ground to be raised before it and the power under Section 254 to enhance the assessment and answer the said question on the basis of leading judgment in the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC) in the following manner:- 'The question before us is limited to the power or the jurisdiction of the Tribunal to go into the point of contention which has not been raised earlier by the Department. The observations made in Hukumchand's case [1967] 63 ITR 232 (SC) have been pressed into service by the Tribunal for coming to the conclusion that it cannot consider and examine the point not raised by the Department as it may involve enhancement of tax liability. It may be stated that their Lordships of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal (vide, e.g., CIT v. Anand Prasad [1981] 128 ITR 388 (Delhi), CIT v. karmachand Premchand P. Ltd. [1969] 74 ITR 254 (Guj) and CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499 (Guj) [FB]). Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal. They are merely procedural in character and do not, in any way, circumscribe or control the power of the Tribunal under section 33(4)." 56. The Full Bench of Gujarat High Court in the case of CITv. Cellulose Products of India Ltd. [1985] 151 ITR 499 (Guj) (FB) held that the scope of appeal before the Tribunal extends to the subject matter of the appeal before the Appellate Assistant Commissioner (AAC), the first Appellate Authority and merely because a ground has not been raised, though it could be raised in support of the relief sought in the appeal, it cannot be said that a ground could not be raised before the Tribunal. The relevant portion from the Head Note of the said judgment is quoted below:- "The scope of an appeal before the Appellate Tribunal extends to the subject matter of the appeal before the AAC and if the question sought to be raised for the first time before the Tribunal is a question which concerns the subject-matter of the appeal which was before the AAC, then such question would be permissible. What the subject-matter of the appeal is, has, therefore, to be decided first. It may be that the same claim or relief is sought to be sustained on a differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdiction given by section 254 of the Income-tax Act, the Income-tax Appellate Tribunal has power to restore and rehear an appeal disposed of an the merits in the absence of any hearing." 58. In the case of MCORP Global P.Ltd. v. CIT [2009] 309 ITR 434/178 Taxman 347 (SC), the Hon'ble Supreme Court held in the context of findings given by the learned Assessing Authority, the Tribunal could not take back the benefit conferred by the Assessing Authority without any controverting material. The Court observed:- "When the matter came before the Appellate Tribunal, the Tribunal held that since the lease was not renewed and the bottles were not returned on expiry, the transaction in question was only a financial arrangement and not a lease and disallowed the depreciation and the High Court affirmed the decision of the Tribunal. On appeal to the Supreme Court: Held, that under Section 254 (1) of the Income-tax Act, 1961, the Appellate Tribunal had no power to take back the benefit conferred by the assessing Officer or enhance the assessment. Since the Assessing Officer had granted depreciation in respect of 42,000 bottles that benefit could not be withdrawn." 59. Thus on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter' of the appeal in first part of the Sub-section (1) and therefore while the Tribunal is dealing with the subject matter of the appeal, it can pass any such relevant Order as it thinks fit, which would be rational, germane, reasonable, appropriate, necessary and expedient in the opinion of the learned Tribunal subject to the requirement that it gives an opportunity of hearing to both the parties to the appeal, viz., the Assessee and the Revenue. Neither the powers are restricted nor the power to allow the fresh and new ground to be raised before it is restricted nor the powers to enhance an assessment or tax liability or reduce the tax especially enumerated in the Proviso to Sub-section(2) of Section 254 of the Act also is restricted. 62. The powers under Section 254 of the Act with the Tribunal to pass such Orders 'as it thinks fit' cannot be lesser than the powers conferred upon the lower and first Appellate Authority, viz., the Commissioner of Income Tax(Appeals) who under Section 251(1)(a) of the Act has power to dispose of an appeal against the Order of assessment and he may confirm or reduce or enhance or annul the assessment. The higher and final Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become the limited concern of the Courts or Tribunals and adjudicating Authorities but should percolate down in other Executive wings of the State as well. 66. 'Truth' has a strange but a firm character of finding its way and coming out and revealing itself even though embedded at the bottoms of time periods and piles of papers bound through the chain of litigation in the Courts of law but the quest for truth should not get bogged-down merely because a long period has lapsed. 67. The ultimate object of providing the multiple Tiers of appellate forums and mechanism in the Income Tax law and then further providing for remedies by way of Appeals before the Constitutional Courts on the substantial questions of law is nothing but to allow the quest for Truth to be taken to its logical end. 68. Reverting to the facts of the present case, what the learned Tribunal has done is merely to ask the Assessing Authority to hold an enquiry as to whether the abnormally high price paid for buy-back of shares from almost a single shareholder only, viz., the Mauritius Company, a Holding Company which held 99.99% of the share holding of the Assessee Indian Company so as to ascertain the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the taxability aspect of the matter and we have restricted ourselves to the substantial question No.1 as re-formulated by us only regarding the powers of the Tribunal under Section 254 (1) of the Act. 72. Accordingly on the basis of the aforesaid discussion, we are of the opinion that the present appeal filed by the Assessee deserves to be dismissed and the substantial question of law framed by us in para 5 in the present appeal is answered in favour of the Revenue and against the Assessee and it is held that the Income Tax Appellate Tribunal (ITAT) has the power to give directions for fresh enquiry into the aspects of the subject matter of appeal filed before it either suomotu or on any grounds raised by either party to the appeal which have not been investigated or enquired into by the lower Authorities earlier and which may result in enhancement of tax liability of the assessee and in the present case, the Appellate Tribunal was right and within its jurisdiction in directing the examination of the fair market value of the shares bought back by it during the previous year relevant for the AY 2011-12 in question. 73. Accordingly, the Appeal of the Appellant -Assessee Company ..... 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