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TMI Blog2018 (9) TMI 1883X X X X Extracts X X X X X X X X Extracts X X X X ..... SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For the Revenue : Shri K. Srinivas Reddy For the Assessee : Shri K.A. Sai Prasad ORDER PER P. MADHAVI DEVI, J.M.: This is revenue s appeal for AY 2010-11 against the order of CIT(A) 5, Hyderabad dated 12/02/2015 deleting the penalty levied by the AO u/s 271(1)(c) of the Act. In this appeal, the revenue has raised the following grounds of appeal: 1. The order of the Ld. C!T(A) is bad and erroneous in law and on facts of the case. 2. The Ld. CIT(A) erred in deleting the penalty u/s. 271(1)(c) when the assessee did not discharge the onus of satisfactorily explaining the identity, creditworthiness and genuineness of transaction neither in assessment proceedings nor during the penalty proceedings. 3. The Ld. CIT(A) erred in deleting the penalty u/s. 271(1)(c) ignoring the fact that the AO had carried out in-depth verification and investigations, as a result of which the assessee did not challenge the addition in appeal and accepted the same. 4. The Ld. CIT(A) ought to have decided the appeal on merits of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that if the AO did not strike off the irrelevant portion in the notice issued u/s 271 read with section 274 of the Act, then, such notice is not valid. He relied on the decision of ITAT at Delhi in the case of Vijay Power Generators Ltd. Vs. ITO reported in 6 DTR (AT) 64 (ITAT-Delhi) in support of his contention that unless AO records satisfaction in the course of the assessment proceedings that assessee has concealed its income or furnished inaccurate particulars thereof, penalty proceedings are not valid. 5. Having regard to the rival contentions and material on record, we find that the respondent-assessee has not filed cross-objections or cross-appeal against the order CIT(A). Since CIT(A) has granted relief to the assessee by deleting penalty in toto, assessee could not have filed cross-objections or cross-appeal. It is only because revenue has filed the appeal against the order of CIT(A) deleting penalty, that assessee has raised this ground of appeal. The Hon ble Bombay High Court in the case of New India Life Assurance Pvt. Ltd. (supra) has held that the powers of the Tribunal are restricted to the grounds of appeal raised by the appellant and the respondent-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l ground in the memorandum of appeal, and there would have been no want of jurisdiction in the Tribunal to allow him to agitate the same. Since the decision of the Appellate Assistant Commissioner was wholly in his favour, the assessee could not appeal, and had no occasion also to file any cross-objections. If the view is taken that a respondent, who could not have appealed or filed cross-objections because that decree was wholly in his favour, cannot be permitted to raise a new ground available to him in support of the decree, although the same ground would have been available to him if he was in the position of an appellant, it would amount to putting him in a worse position as a respondent than as an appellant. In our opinion, therefore, the Tribunal had jurisdiction to allow the assessee-respondent to urge a fresh ground which it sought to raise in the present appeal before it. 7. The decisions to which Mr. Joshi has invited our attention do not, in our opinion, go contrary to the view which we are inclined to take. In Motor Union Insurance Co. Ltd. v. Commissioner of Income-taxit was held : The word 'thereon' used in section 33(4) of the Indian Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. If the assessee were to be confined only to such grounds as it had taken before the income-tax authorities, the tax could not have been avoided. It is only because of the new ground urged that the tax is being avoided and, therefore, the appellant is being affected adversely. In our opinion, the submission made by Mr. Joshi is not a correct one. The dispute before the Income-tax Officer was whether the amount of ₹ 90,000 was subject to tax. The Income-tax Officer had held that it was subject to tax and had added it to the income. The Appellate Assistant Commissioner had deleted it. The dispute before the Tribunal was whether it should be taxed or not and the respondent-assessee was supporting the decision of the Appellate Assistant Commissioner that it was not subject to tax. Whether the ground that it was urging in support of the decision of the Appellate Assistant Commissioner was the one on which the Appellate Assistant Commissioner had relied or some other ground did not make any difference. The appellant was not being affected adversely in the sense that the permitting of the ground to be raised by the respondent was to affect the decision of the lower authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent which relief was not given to him by the trial court and which relief he has not himself sought by either cross-appealing or cross-objecting. Now, these observations were made in the context of distinguishing the case which was cited before the court from the case with which the learned judges were dealing. In our opinion, from these observations, it could not be said that this court took the view that the respondent was not entitled to support the decree in his favour on a ground other than the one on which the lower court had decided in his favour. Another decision to which Mr. Joshi has invited our attention is Rajkumar Mills Ltd. v. Income-tax Appellate Tribunal. It was held in that case that that the jurisdiction of the Appellate Tribunal under section 33 in an appeal against an order of the Appellate Assistant Commissioner is limited to the grounds of appeal raised before it and the Tribunal is only entitled to determine the objections raised by the appellant, does not preclude the Tribunal from determining the matter on the basis of facts canvassed before the Income-tax Officer and the Appellate Assistant Commissioner, on which either the Income-tax Officer or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to urge for the first time before the Tribunal was entirely a new basis which had not been set up in the courts below, and the facts in respect of which had not been found until the stage the assessee filed an appeal to the Tribunal, and was sought to be based on an opinion expressed by the Appellate Assistant Commissioner in his remand report and which opinion was beyond the scope of the remand. It was in these circumstances that the observations, to which Mr. Joshi has drawn our attention, were made by this court. Now, the circumstances of the case before us are entirely different. On the facts as stated by the Tribunal, the contention raised in the present case was one purely, in law, on the facts as they existed all along before the Income-tax Officer as well as the Appellate Assistant Commissioner, though the legal argument available on those facts was not urged before either of the authorities. In our opinion, none of the decisions to which Mr. Joshi has invited our attention, goes contrary to the view which we are inclined to take in the matter. In our opinion, therefore, it was within the jurisdiction of the appellate powers of the Tribunal to permit the assessee-respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry on the Tribunal to give such a direction. If it was obligatory, and the Tribunal had refused to give a direction, the refusal would indeed have not been valid. But, if it was not obligatory to give a direction, we cannot see how we can say that the refusal is not valid. It seems to us that it cannot also be said, so far as the Tribunal is concerned, that it was not justified in refusing to give a direction. The decision of this court in Hiralal Amritlal Shah's case was binding on the Tribunal and, in view of that decision, it was indeed permissible for the Tribunal to take the view that no useful purpose will be served even if the Tribunal were to give a direction such as was required. In our opinion, therefore, the refusal by the Tribunal to give a direction under the provisions of section 34(3) of the Income-tax Act was a valid refusal and the second question, therefore, must be answered in the affirmative. We answer accordingly. The department will pay the costs of the assessee. 5.1 This view has been followed by the Hon ble Punjab Haryana High Court in the case of CIT Vs. Dehati Cooperative Marketing-cum-Processing Society (supra) wherein the Hon ble Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. Respectfully following the same, we hold that the notice issued u/s 271 r.w.s. 274 of the Act is not valid and consequential penalty proceedings are not sustainable. 7. Even on merits of the grounds raised by the revenue, we find that the CIT(A) has brought out the facts extensively to the effect that the assessee has furnished all the relevant material before the AO both during the assessment proceedings as well as during the penalty proceedings to prove the identity, creditworthiness and genuineness of the transaction of payment of share application money, but, the AO had failed to carry out proper investigation to verify the documents such as PAN, etc. Further, he also brought out that the AO has not recorded satisfaction about concealment of income or furnishing of inaccurate particulars of income by the assessee. Assessee has produced relevant material, but, since AO was not satisfied with the same, he made addition. Assessee, in order to avoid further litigation, has not appealed, but, that does not mean that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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