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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Smt. P. Madhavi Devi & Shri A. Mohan Alankamony
This is Revenue’s appeal for the A.Y 2007-08 against the order of the CIT (A)-Kurnool, dated 6.9.2018.
Brief facts of the case are that the assessee company which is into manufacture and trading of cement, filed its return of income through ‘e-filing’ for the A.Y 2007-08 on 31.10.2007 declaring total income at Rs.’Nil’ after setting off of brought forward business losses and unabsorbed depreciation to the extent of Rs.226,10,69,195/-. However, the assessee has paid Minimum Alternate Tax (MAT) of Rs.17,08,71,924/-.
During the assessment proceedings u/s 143(3) of the Act, the Assessing Officer required the assessee to prove the genuineness of the expenditure claim to the extent of Rs.3,78,84,583/-. Since the assessee could not substantiate the said expenses with evidence, the Assessing Officer made the addition of Rs.3,78,84,583/-. Similarly, he also made an addition of Rs.2,85,57,298/- being the expenditure under the head “consumption of stores and space”. The Assessing Officer made similar other additions, the total of which came to Rs.17,07,94,505/-.
4. Aggrieved, the assessee preferred an appeal before the CIT (A) who granted partial relief against which both the parties filed appeals before the ITAT. The Revenue had filed appeal in while the assessee filed cross objection No.120/Hyd/2012 and vide orders dated 31.10.2012, ITAT set aside the issue to the file of the CIT (A) for re-examination of the issue afresh after calling for a remand report from the Assessing Officer for verification of the details filed by the assessee in respect of the expenses claimed.
5. Accordingly, the matter was taken up by the CIT (A), before whom, the assessee filed an application for admission of additional evidence. The CIT (A) called for Assessing Officer’s comments on this petition and the Assessing Officer objected to the admission of the additional evidence. The assessee had also filed the additional evidence before the CIT (A), but no remand report was called for from the Assessing Officer on such addition and by observing that the Assessing Officer has not commented adversely against the additional evidence, the CIT (A) granted partial relief and the Revenue is in appeal before the Tribunal by raising the following grounds of appeal:
“1. The order of the learned CIT (A) is erroneous both on facts and in law.
2. The learned CIT (A) erred in not following the directions of the Hon'ble ITAT, Hyderabad given in its order in dated 31.10.2012 in the assessee’s case for the above year in granting relief of Rs.17.07 crores. The Hon'ble ITAT in the above referred order specifically stated that “the CIT (A) grossly erred in not calling for remand report from the Assessing Officer as the assessee had produce details of expenses and also evidences like bills, vouchers etc., before the CIT (A) and the CIT (A) ought to have remanded them to the Assessing Officer for his opinion under Rule 46A of the Act. In these circumstances, we remit the matter to the file of the CIT (A) with a direction to call for the remand report from the Assessing Officer and decide the issue after examining the remand report of the Assessing Officer and in accordance with the law after providing reasonable opportunity of hearing to the assessee”. The assessee hasn’t produced any bills or vouchers before the Assessing Officer for verification which were produced before the CIT (A). The CIT (A) once again given the relief without any remand report from the Assessing Officer on this issue, which is contrary to the specific directions of the Hon'ble ITAT.
3. The learned CIT (A) erred in directing the Assessing Officer to allow depreciation on Goodwill values at Rs.179Crs which wasn’t subject matter of appeal remitted back by the Hon'ble ITAT to the CIT (A). The powers of the CIT (A) are limited only to the issues remitted back by the ITAT and the CIT (A) cannot enhance the scope of appeal & admit the new relief which is not subject matter of appeal before the ITAT. Reliance is placed on the jurisdictional Hon'ble A.P High Court in the case of Pulipathi Subbarao & Co. vs. AAC 35 ITR 673 and the Hon'ble M.P High Court decision in the case of CIT vs. Hope Textiles Ltd (1997) 225 ITR 993.
The CIT (A) failed to appreciate the Hon'ble Supreme Court decision in the case of Hukumchand Mills Ltd vs. CIT 63 ITR 232 that power of Tribunal is restricted to the subject matter of appeal alone – the words “thereon” restricts the jurisdiction. Hence, when ITAT remits an issue to the CIT (A), he will have same powers or restrictions as the ITAT and his powers are restricted to subject matter of appeal remitted back by the ITAT and he cannot have more powers than ITAT.
The CIT (A) failed to appreciate the Hon'ble Supreme Court decision in the case of Addl.CIT vs. Gurjagravures Pvt Ltd 111 ITR 1 that when a claim of exemption not made before ITO no material on record supporting such claim – AAC cannot entertain such claim in appeal proceedings.
The learned CIT (A) erred in not following the binding decision of the Supreme Court that assessee was not entitled to claim exemption which was not made in the return as held in the case of CIT vs. Goetze India Ltd by directing the Assessing Officer to allow depreciation on Goodwill. In this case the assessee not claimed any depreciation on Goodwill in the Return of Income filed.
7. Whether CIT(A) is right in directing the Assessing Officer to allow the depreciation on the Goodwill, under the facts and circumstances of the case.
Whether the CIT (A) is right in not considering the Assessing Officer’s request vide letter dated 19.11.2015 and CIT (A)’s letter dated 25.01.2016 issued to the assessee for rectification of apparent mistakes in computation of income/other issues which are arising out of original assessment proceedings on the ground that he did not intend to travel beyond the matters arising out of assessment proceedings and at the same time admitting the assessee’s new ground of relief viz., allowing of depreciation of Goodwill which is also not arising out of original assessment proceedings.
9. Any other additional ground that may be urged at the time of appeal hearing”.
6. The learned DR submitted that in respect of the evidence filed by the assessee in support of the expenditure which have been disallowed by the Assessing Officer, no verification has been done by the Assessing Officer. Therefore, the CIT (A) has not followed the directions of the ITAT and hence the relief granted by the CIT (A) cannot be sustained.
The learned Counsel for the assessee supported the orders of the CIT (A).
8. Having regard to the rival contentions and the material on record, we find that in the appeal proceedings before the ITAT, the ITAT had taken note of the evidence filed by the assessee and also that the Assessing Officer has not verified such evidence. Therefore, ITAT thought it fit and proper to remand the issue to the file of the CIT (A) and directed him to call for a remand report from the Assessing Officer on the evidence filed by the assessee. We find that in the remand proceedings before the CIT (A) , the assessee had filed an application for admission of additional evidence and also the additional evidence. However, the CIT (A) had called for the comments of the Assessing Officer only on the petition for admission for additional evidence and did not forward the additional evidence to the Assessing Officer and therefore, the Assessing Officer has submitted his remand report only on the petition for admission of the additional evidence. Thus, it is clear that the additional evidence has not been verified either by the Assessing Officer or the CIT (A) and hence the directions of the ITAT have not been followed in its letter and spirit. Therefore, we deem it fit and proper to remand the issue to the file of the Assessing Officer for verification and denovo consideration of the issue in accordance with law. All the contentions of the assessee which are raised before the Tribunal are left open and the assessee is at liberty to make such claims before the Assessing Officer, who shall decide the same in accordance with law.
In the result, Revenue’s appeal is treated as allowed for statistical purposes. Order pronounced in the Open Court on 23rd June, 2021.