SHREE SHANKAR PLASTIC LTD,MUMBAI vs. ITO 8(3)(1), MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य लेखा सद�य राजे�� राजे�� केकेकेके अनुसार अनुसार PER RAJENDRA, AM- लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order,dtd.20.03.2014of CIT(A)-18,Mumbai,the assessee has filed the present appeal.Asseess-company,engaged in business of supplying plastic raw material,filed its return of income at Rs. NIL.The Assessing Officer (AO) completed the assessment u/s.143(3),on 30/12/2011,determining its income at Rs. 18.42 lakhs. 2.The assessee has raised three grounds of appeal. Ground number 2 deals with merits of the case,whereas in remaining two grounds jurisdictional issue has been raised. During the assessment proceedings the AO observed that the assessee had received commission of Rs. 25.35 lakhs and interest of Rs. 3.81 lakhs from BASF Styrenics Private Ltd.(BASF),that it had not offered both the items in its return of income. He directed the assessee to file an explanation in that regard and he also issued notice u/s. 133 (6) to BASF. After considering the available material and the reply BASF,AO made an addition of Rs. 26.16 lakhs(Rs.25,35,189/-)under the head commission income and (Rs.3,81,559/-)under the head unexplained income to the income of the assessee. 3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA) and made detailed submissions arguing that it had not received the 3252/M/14(09-10) Shree Shankar Plastics commission from BASF. He called for a remand report from the AO. A copy of the report was supplied to the assessee and comments were called for about the report. After considering the available material,the FAA held that interest in commission payment made to the assessee by BASF related to period October, 2007 to March, 2008 i.e. relevant for the AY.2008-09, that from the letter sent by BASF to the AO it was clear that commission income was to be assessed in the AY.2008-09 and not in the year under appeal, that BASF had made adjustment of interest in commission amount in the month of July/August, 2008, that it pertain to the period October,2007-March,2008, that the assessee was following Mercantile system of accounting, that the amount should be assessed in its sent for the AY. 2008-09.Accordingly,he deleted the additions made by the AO and directed him to assess the income in the AY.2008-09 by taking appropriate action u/s.147/148 of the Act.

4.We have heard the rival submissions and perused the material before us. We are of the opinion that before deciding the issue on merits jurisdictional issue has to be decided. We find that while deciding the appeal,the F AA has directed the AO to take action u/s. 147/148 of the Act and to assess the income of the assessee for the AY. 2008-09 and not for the year under consideration.Thus, he has given a direction for an AY.for which no appeal was pending before him.We find that similar issue was dealt by the Tribunal in the case of Lilasons Industries Ltd.(supra).After narrating the facts of the case the Tribunal observed as under: 9. Against this order of the ld. CIT(A), the Department is not in appeal. The assessee is challenging the direction of the ld CIT(A) “to take remedial action as per law for the relevant A.Y. 2009-10 and A.Y. 2010-11 in the case of appellant company” in both the cases.

XXXXX 20. We have heard the rival contentions of both the parties. We have also gone through the case laws relied upon by the ld. Authorized Representative for the assessee. 21 We find that the gist of the plethora of judgments quoted above is that where any AY. was not before the ld. CIT(A), no findings can be given in respect of such cases. We find that in the case of Pt. Hazari Lal, 39 ITR 265 (All.), it was made clear that the AAC was only competent to record the finding that the sum, which was in question in the appeal before him, was not income relevant to the AY. 1947-48, which was in appeal in that case. The question whether this income accrued or was earned in the previous year relevant to the AY. 1946-47 (i.e. the year not in appeal), was not before him for decision, nor was it a point on which it was essential for him to record a finding before appropriately deciding appeal before him. We also observe in the case of Mathuradas B. Mohta, 56 ITR 269 (Bom.), relying on Supreme Court in ITO vs. Murlidhar Bhagwan Das 52 ITR 335, wherein it was held that the jurisdiction of the AAC u/s. 31 of the 1922 Act was strictly confined to the assessment order of that particular year under appeal. The AAC no doubt was competent to hold whether a particular item or a particular amount was income of that AY., but he had no jurisdiction further to decide in that appeal the appropriate year in which the said income would fall. We also observe that in the case of Nathalal Dhanjibhai 59 ITR 615 (Guj), wherein it was held that a finding, therefore, could only be that which was necessary for the disposal of an appeal in respect of the assessment of a particular year. Hon'ble Supreme Court observed that the AAC might hold on the evidence that the income shown by the assessee was not the income of the relevant year and thereby exclude that income from the assessment of the year under appeal. We find that in the case of Dave (Mrs. RH) 140 ITR 1035 (Cal), where assessee’s land was acquired by Government in May 1961 but compensation was received and assessed in AY. 1971-72 as income from other sources. Ld. CIT(A) while deleting the impugned addition on the ground, inter-alia, held that relevant capital gains had already been taxed in AY. 1962-63 when land was acquired, directed ITO to bring it to tax in current AY.. Such directions of the ld. CIT(A) were held to be unsustainable. We find that in Onkar Nath, 64 ITR 347(All.),Hon'ble Allahabad High Court held that the law gives the AAC the power to give direction that a certain sum which was deleted from the assessment of the firm should be 3