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TMI Blog2021 (11) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, in his possession. The statutory obligations in case of enhancement are far wider. As alleged, the impugned enhancement has apparently been made without giving notice to the assessee and without confronting him with his process of reasoning for doing so. The impugned enhancement is thus wholly unsustainable in law. The direction for enhancement is thus quashed and set aside. - Decided in favour of assessee. Enhancement of income to the AO for the earlier assessment years which are not in appeal before him - HELD THAT:- Findings of the CIT(A) seeks to travel beyond the A.Y. 2012-13 in question and seeks to displace the completed assessment of the other years (some of which have already become time barred at the time of passing of original assessment order in appeal) by giving directions to the AO to take remedial actions towards service tax allowed in earlier assessment years. Such findings and directions are outside the scope of powers entrusted under S. 251 as well as S. 150(1) of the Act. To reiterate, Section 150(1) does not permit issue of such directions to the AO without showing as to how such findings/directions are necessary for the purposes of adjudicating the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of wages and 'transportation charges site expenses' - HELD THAT:- As the assessee could not seriously dispute the rationale for indulging in estimations of disallowance in the facts of the case. A part relief has been granted by the CIT(A) out of estimations under the head 'wages'. No relief has been granted on 'transportation charges and site expenses'. In the absence of any attendant circumstances on record, some estimations cannot be entirely condemned. However, having regard to nature of business and totality of circumstances, a further relief of Rs. One lakh each from two expense heads in question appears just and benign and would meet the ends of justice. - I.T.A. Nos. 140 & 141/RPR/2017 - - - Dated:- 26-10-2021 - Pradip Kumar Kedia, Member (A) And Pawan Singh, Member (J) For the Appellant : Richa Khatri, C.A. For the Respondents : Sanjay Kumar, DR ORDER Per Pradip Kumar Kedia, AM The captioned appeals have been filed at the instance of the assessee against the separate orders of the Commissioner of Income Tax (Appeals), Bilaspur ('CIT(A)' in short) for both assessment years as tabulated hereunder: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wable on actual payment basis as paid up to the filing of return of income under s. 139(1) of the Act. The AO, however, rejected the request of the assessee for entitlement of higher claim which was not routed through the return of income. According to the AO, the assessee could have claimed deduction by way of return filed under s. 139(1) or by filing revised return within the given time limit and since this was not done by the assessee, the claim of allowance of deduction of ₹ 2,87,01,852/- as against the existing claim of ₹ 2,04,88,913/- debited in the P L account was rejected. The AO also made certain disallowances under various heads expenses and assessed income at ₹ 1,62,16,864/-. 4. Aggrieved by the disallowances carried out by the AO and also for refusing to allow additional claim towards service tax expense, the assessee preferred appeal before the CIT(A). 5. The CIT(A), however, denied the relief towards enhanced quantification of service tax deduction remaining unclaimed in ROI. The CIT(A) also simultaneously raised doubt on the quantum of service tax deductions claimed year after year and made analysis of claim on service tax from A.Y. 2007-08 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1965) 56 ITR 234(SC). 8.2. On appraisal of the submissions made on behalf of the assessee and on perusal of the orders of the CIT(A), it appears self- evident that the enhancement for the assessment year in question was carried out by the CIT(A) without giving any formal intimation to the assessee in this regard and without communicating the basis for arriving at the said figure of enhancement to the assessee. Such approach of the CIT(A) is contrary to statutory protocol as well as law codified in S. 251(2) of the Act. It is trite that the enhancement in the assessed income, if any, can be considered and advanced only if an opportunity is given for that purpose as held in Gedore Tools (P.) Ltd. vs. CIT (1999) 238 ITR 268 (Del.). Pertinently, the power of enhancement conferred under s. 251(1) of the Act is restricted to the subject-matter of assessment or the source of income which have been considered expressly or by clear implication by the AO from the point of view of the taxability of the assessee. Besides, the enhancement proceedings are intrinsically a serious exercise undertaken independently by the CIT(A). Hence, for making any comments adverse to the assessee, it is bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther words, s. 150(1) enables the authorities to lift the embargo of period of limitation provided under s. 149 of the Act to reopen the assessment in appropriate situations. Section 150(2) of the Act, however, insulates the assessee from the operation of Section 150(1) of the Act in the circumstances specified therein. As per Section 150(2), only those assessments can be reopened which have not already attained finality due to bar of limitation under s. 149 at the time of passing assessment order which is subject matter of appeal. Hence, the CIT(A) cannot formulate a 'finding' or a 'directions' pertaining to assessment years which had already become time barred at the time of passing assessment order in question. 9.3. It may be significant to note here that the scope of expressions 'findings' and 'directions' contemplated in Section 150 of the Act and Section 153 of the Act is limited in its sweep. A 'direction' or a 'finding' as contemplated in Section 150/S. 153 of the Act must be a finding necessary for the disposal of a particular case, that is to say, in respect of the particular assessee and in reference to a particular asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax was also examined by the AO under s. 143(3) of the Act for AY 2010-11. The appeal on the point was filed before the CIT(A). The order of the AO thus stood merged with the first appellate order. Such assessment already merged in the order of the higher authority cannot be distributed by the authority of equal rank. Hence, action of the CIT(A) can not be upheld from this perspective as well. 9.7. As a sequel to such delineation, the directions to the AO to examine the service tax issue in relation to earlier assessment years require to be quashed and expunged. We do so accordingly. Ground No. 3 of the assessee's appeal is thus allowed. 10. Ground No. 4 concerns rejection of enhanced claim of service tax on actual payment basis before the due date of return. As stated, the claim was rejected on the ground that such claim for extra deduction does not arise from ROI. In the instant case, at the time of scrutiny proceedings, the assessee raised an additional claim for allowability of service tax at higher figure of ₹ 2,87,01,852/- in place of ₹ 2,04,88,913/- originally claimed in the return of income on the ground that deduction is allowed under S. 43B on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be countenanced. In our view, the assessee can not be prevented from raising such additional claim merely because the ROI could not be revised. The factual matrix towards actual payments however does not appear to have been verified by the AO. It would thus be in fitness of things to remit the issue back to the file of AO. The AO shall allow the higher claim of service tax in accordance with law on being satisfied with the actual payments. It shall be open to the assessee to adduce evidence and explanation as may be considered necessary in support of higher claim of deduction. The issue is accordingly set aside to the file of the AO for proper determination of entitlement of service tax claim in question. 11. Consequently, Ground no. 4 of the assessee is allowed for statistical purposes. 12. Ground Nos. 5 6 concern lump sum disallowances out of wages and 'transportation charges site expenses' sustained by the CIT(A) to the tune of ₹ 2,57,722/- ₹ 2 Lakhs; respectively. 12.1. At the time of hearing, the assessee could not seriously dispute the rationale for indulging in estimations of disallowance in the facts of the case. A part relief has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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