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TMI Blog2003 (2) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... ion raised by the assessee. 3.1. At the outset Mr. Amitabh Kumar submitted that the CO may not be entertained for the reason that (i) There is no appeal pending and hence there cannot be a CO. (ii) The CO is belated and not filed within the statutory time-limit and hence cannot be entertained. 3.2. To this Mr. Pradeep submitted that the COs are as good as the appeals and hence can be pressed into service even in the absence of the appeal before the Tribunal. For this purpose he submitted that provisions of s. 253(4) are clear. He also relied upon the decision of Tribunal, Pune in Asstt. CIT vs. Kripa Chemicals (P) Ltd. (2002) 76 TTJ (Pune) 889 : (2002) 82 ITD 449 (Pune). As regards the delay, it was submitted that there is no delay in filing the appeal since the copy of appeal memo along with grounds of appeal was received by the assessee only on 22nd May, 2002 and the COs have been filed on 24th May, 2002. Though originally the Form No. 36 was received on 28th Nov., 2000, the same was defective as per the notice of defect issued by the Asst. Registrar of the Tribunal and the said defect was rectified only on or after 14th Dec., 2000. Appeal memo duly rectified has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm of memorandum and the provisions of r. 1 of O. 41 of the Code, so far as these relate to the form and contents of the memorandum of appeal apply to cross-objection as well. Court fee is payable on cross-objection like that on the memorandum of appeal. Provisions relating to appeals by indigent person also apply to cross-objection. Even where the appeal is withdrawn or is dismissed for default, cross-objection may nevertheless be heard and determined. Respondent even though he has not appealed may support the decree on any other ground but if wants to modify it, he has to file cross-objection to the decree which objections he could have taken earlier by filing an appeal. Tune for filing objection which is in the nature of appeal is extended by one month after service of notice on him of the day fixed for hearing the appeal. This time could also be extended by the Court like in appeal. Cross-objection is nothing but an appeal, a cross-appeal at that. It may be that the respondent wanted to give quietus to whole litigation by his accepting the judgment and decree or order even if it was partly against his interest. When, however, the other party challenged the same by filing an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law in a meaningful manner which subserves the ends of justice—that being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that: (a) Ordinarily, a litigant does not stand to benefit by lodging an appellate. (b) Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits alter hearing the parties." In view of the affidavit filed by the assessee and the decision of Hon'ble Supreme Court, we condone the delay in filing the CO after the expiry of the relevant period as we are satisfied that there is a sufficient cause for not presenting the same within the time-limit. 4. Before we lake up the grounds raised in the cross-objection, certain vital facts as narrated by the assessee and which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vanced for production of firms and other activities for the period June, 1984 to Dec., 1984. In Feb., 1985 there were several implications in connection with the bill discounting facility availed by the firm ICA and as such in order to clear the bill discounting facility with the Canara Bank, Colaba, Bombay, cheques to the extent of Rs. 3,50,00,000 was drawn by Sri K.V.D. on Oriental Bank of Commerce, New Delhi and the same were discounted with State Bank of India. Shivajinagar, Bangalore. The amount drawn from State Bank of India, Shivajinagar, Bangalore were utilised to clear the liabilities with Canara Bank, Colaba, Bombay. These cheques which were discounted with the State Bank of India were not realized as sufficient funds were not available in the Oriental Bank of Commerce in Feb., 1985. Immediately thereafter the State Bank of India entered into, an agreement with Sri KVD and others for the purpose of the repayment of this amount. Having disregard to the agreement entered into, the State Bank of India filed Police Complaint and gave paper publicity in the second week of Feb., 1985 stating that Sri KVD and others had cheated the Bank to the extent of Rs. 3.5 crores. Utilising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred in various other concerns have been taken on the basis of the books of accounts available with Mr. KVD. On the basis of the said statements the income earned by the firm ICA and Mr. KVD is approximately Rs. 92,00,000 in the period June, 1984 to June. 1987. This income was offered for taxation for the asst. yrs. 1986-87 to 1988-89. The assessee submits that he offered the income for taxation with a view to buy peace, with the Department and to avoid litigation and, he is coming forward voluntarily for settling all his cases and that of his father and mother Sri K.S. Dattatreya and Smt. K. Sudarshanamma by offering a sum of Rs. 92,00,000 for the asst. yrs. 1986-87 to 1987-88. 4.3 It was submitted that his affairs are in a turmoil due to the fact that the State Bank of India, Shivajinagar, Bangalore with whom the cheques were discounted even though entered into an agreement for the purposes of clearing the loan created complications by filing a criminal complaint and informing the matter to CBI authorities. Further wide paper publicity was given stating that there has been a case of cheating by Mr. KVD and that he cheated the State Bank of India to the extent of Rs. 3.50 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore CIT(A) was dismissed since the taxes due under s. 140A as per return of income were not paid. In further appeal, Hon'ble Tribunal vide its orders dt. 18th Dec., 1995, restored the appeals to CIT(A) holding that s. 249(4) was operative subsequent to filing of return and hence he should have heard the appeal on merits. CIT(A) thereafter passed the order restoring the matter to AO for passing fresh order considering the seized material. A ground by way of additional ground was raised to annul the assessment or to exclude the income/loss of ICA from computation. The same was neither disused nor disposed off. This in other words means dismissal of the said ground. Now Revenue is in appeal before us whereas assessee has filed cross-objection. 5. As discussed earlier, learned Departmental Representative sought permission to withdraw the appeals, to which authorised representative has no objection for the same. We therefore dismiss the appeals of Revenue as withdrawn. We now take up the cross-objections. 5.1. Mr. Pradeep, learned CA counsil for assessee, took us through the paper book filed containing 380 pages. The arguments were advanced on the sole ground that income of firm ICA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of KSD has flown from loans from SBI by way of bill discounting only. The amount is therefore not connected to assessee in either way. Similarly all credits are in books of ICA are only from bank accounts. Thus neither s. 68 nor s. 69 is applicable. (g) Firm ICA is a valid partnership firm in the eye of law and not a sham entity or benami concern of assessee. There is valid partnership deed dt. 15th June, 1984, (paper book pp. 44 to 48). Settlement petition was from assessee as well as ICA. Civil and criminal cases have been filed against firm. Settlement commission has passed order under s. 245D(1) dt. 22nd Jan., 1997, against ICA. Notices under s. 148 has been issued to the firm ICA, returns have been filed by it and even assessment order are passed thereafter. All these documents prove genuiness of firm ICA. (h) CIT(A) is not correct in remanding the matter back with direction to redo assessment after considering seized material. The same is not proper as no seized material pertain to assessee but ICA only. Presumption in respect of seized materials is that contents are true which indicates the same towards ICA and not assessee. Hence a second innings is not allowable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ah (1986) 51 CTR (Kar) 95 : (1987) 164 ITR 41 (Kar). (c) The agreement dt. 9th Feb., 1986, between assessee and IG is to relieve Mr. IG from business of ICA and to the effect that they will not continue the business together. ICA is just a smoke screen and if looked beyond the same, it is a non-existing entity. Even as per s. 6 of Partnership Act, 1932 existence of firm is to be viewed from all angles, i.e., profit/loss is to be shared by all. The said agreement goes against the existence of valid partnership firm. Thus for all practical purposes, the so-called firm ICA is proprietorship concern of assessee only and hence all its income is includible in assessee's hands only. Reliance was placed on decision of CIT vs. L.N. Dalmia (1994) 207 ITR 89 (Cal). (d) Assessee cannot make conditional disclosure. If conditions for waiver are not fulfilled, assessee cannot be given the benefit. Similarly if income of firm is to be computed, it can not be restricted to the amount offered. If losses are claimed, same has to be proved. Hence, the AO was justified in computing correct income as per law and also in denying the benefit. For this purpose, reliance was placed on the decision of Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons like criminal/civil cases, admit that deposit is out of amount borrowed from banks, yet the fact remain that an assessee who is indebted to banks for such huge sum will never out of his own fund make deposit with banks. The fact of borrowal and Court cases against the assessee is an established fact beyond any doubt. Assessee is not found owner of sums larger than that borrowed from banks. Just to avoid any further litigation, the assessee filed settlement application before CIT and filed return conforming to such application. Still in such Settlement Petition or Affidavit, everywhere assessee has shown the firm ICA only as correct entity liable to tax. Though the assessee is willing to settle the dispute by offering the income of firm ICA and KSD in his hands, it seems, the Revenue is not interested in same. Revenue has chosen to tax the firm ICA also which is evident from assessment orders passed by reopening the assessment. Revenue authorities may argue that the income of ICA assessed in hands of assessee is not taxed in the said firm, in our opinion quantum of income is not material in present discussion. What is to be seen is that the firm is taxed subsequent to filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly a species of estoppel; it applies only to the conduct of parties. As in the case of estoppel, it cannot operate against the provisions of a statute. If a particular income is not taxable under the IT Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either eligible to tax under the taxing statute or it is not. If it is not, the ITO has no power to impose tax on the said income." The decisions relied upon by learned Departmental Representative are not applicable to facts as the issue invoked therein was in respect of admission of certain facts and the admission was not against the statutory provision, or that admission was not proved wrong by the person admitting the same. He therefore do not propose to deal with them in detail. 10. Jurisdiction to tax certain amount is not by contract but only because of express provision contained in the Act. Concession against a statute is not binding. There cannot be a waiver on an illegality. Hon'ble Gujarat High Court in the case of P.V. Doshi vs. CIT (1978) 113 ITR 22 (Guj) held as under: "There could never be a waiver of a mandatory provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried on by him, books of accounts, bank accounts, assessment and reassessment of firm under IT Act. Civil/Criminal cases against it etc. All these suggest the firm ICA is a separate taxable entity. 12. Learned Departmental Representative strongly submitted that since the assessment is only remanded back, no grievance is caused to assessee. We do not subscribe to such a view, CIT(A) has directed to reframe the assessment considering seized material. However, CIT(A) has not directed to exclude the income of the firm ICA even though specific ground was raised before him. On a specific query from bench as to what is seized material in respect of assessee which is required to be considered, same remained unanswered. The original assessment order is based on settlement petition only. In the circumstances, we have all the reason to believe that seized materials do not pertain to assessee but firm ICA only. In such a situation, we do not think that the setting aside of assessment with direction to reframe the same was correct on facts of the case. We therefore expunge the said direction contained in the said order of CIT(A). 13. In view of our above finding and various decisions cite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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