JOINT COMMISSIONER OF INCOME TAX v. SAKURA BANK LTD
[Citation -2005-LL-1202-1]

Citation 2005-LL-1202-1
Appellant Name JOINT COMMISSIONER OF INCOME TAX
Respondent Name SAKURA BANK LTD.
Court ITAT
Relevant Act Income-tax
Date of Order 02/12/2005
Assessment Year 1992-93
Judgment View Judgment
Keyword Tags company in which public are substantially interested • agreement for avoidance of double taxation • opportunity of being heard • reassessment proceedings • reopening of assessment • retrospective amendment • subordinate authority • revenue authorities • additional ground • judicial decision • domestic company • foreign company • legal provision • indian company • charge of tax • foreign bank • rate of tax • tax treaty
Bot Summary: The Assessing Officer himself thus upheld the contention of the assessee and held that, in terms of non-discrimination clause enshrined in India- Japan DTAA, the assessee was required to be taxed at the same rate at which Indian companies are taxed in India. The answer would have posed no difficulty at all in case we were to adjudicate as to whether or not the assessee is entitled to the benefit of lower rate by the virtue of non-discrimination clause in the DTAA. That aspect has already been decided in favour of the assessee by the Assessing Officer; this round of litigation is on the question as to whether the assessee is liable to be taxed on the rate applicable to a company in which public are substantially interested or applicable to a company which is closely held company. The purpose of assessing authorities is to assess correctly the tax liability of an assessee in accordance with the law. Can an assessee be in a position worse off, as a result of the matter being carried in appeal before the Tribunal by the revenue, than the position the assessee was in after the assessment order To put it differently, can there be situations in which the assessee ends up paying more, as a result of the matter having been carried in appeal before the Tribunal, than what it would have paid if the Assessing Officer's order was simply accepted by the assessee 17. There have been situations, as we will see now, where as a result of the matter having been carried before the Tribunal, there has been an enhancement of tax liability of the assessee vis-a-vis the tax liability which would have arisen if the assessee had simply accepted the order passed by the Assessing Officer. There can be thus situations in which the assessee ends up paying more, as a result of the matter having been carried in appeal before the Tribunal, than what it would have paid if the Assessing Officer's order was simply accepted by the assessee. Ltd., the assessment proceedings were reopened under section 147 of the Act and, aggrieved by the assessment order so passed by the Assessing Officer in the reassessment proceedings, assessee carried the matter in appeal before the first appellate authority on the question of merits of the addition of Rs. 1,16,184 made by the Assessing Officer question of merits of the addition of Rs. 1,16,184 made by the Assessing Officer in the reassessment proceedings as cash credit.


This appeal is directed against Commissioner (Appeals) order dated 4-3- 1999 in matter of assessment under section 143(3), read with section 250 of Income-tax Act, 1961 (hereinafter referred to as 'the Act') for assessment year 1992-93: On facts and in circumstances of case and in law, learned CIT(A) has erred in directing Assessing Officer to tax bank at rate applicable to domestic companies @ 40 per cent and surcharge shall not be payable by it. CIT(A) ought to have held that tax rate payable to bank would be as per provisions of Finance Act for foreign companies. Vide letter dated 6-6-2005, present Assessing Officer, i.e., Joint Director of International Taxation, Range 5(1), Mumbai, has filed revised grounds of appeal which are as follows: 'On facts and in circumstances of case and in law, learned CIT(A) erred in directing Assessing Officer to tax foreign bank at rate applicable to domestic companies, i.e., 45 per cent, and surcharge shall not be payable by it, without appreciating fact that: (i) CIT(A) ought to have held that tax rate applicable to foreign bank would be as per provisions of Finance Act for foreign companies. (ii) Assessing Officer and CIT(A) erroneously interpreted provisions of law in respect of taxation of foreign companies, which has now been clarified by way of insertion of Explanation to section 90 of Income-tax Act, 2001, which is with retrospective effect from 1-4-1962. (iii) It is, therefore, prayed that Hon'ble ITAT decides issue in light of said Explanation to section 90 of Act.' 2. materials facts of case, so far as assessment year 1992-93 is concerned, are like this. original assessment order under section 143(3) w s framed on 25-1-1994 and, in said order, Assessing Officer had directed that 'charge income-tax @ 65 per cent, as rate applicable to foreign companies'. Aggrieved by stand so taken by Assessing Officer, assessee carried matter in appeal before CIT(A). CIT(A), vide appellate order dated 10-1-1995, remitted matter back to file of Assessing Officer with observations as follows: 'I have carefully considered arguments of learned counsel. issue was discussed with Assessing Officer also. Assessing Officer has not considered Double Taxation Avoidance Agreement between India and Japan while charging taxes applicable to foreign companies. No reasons have been given by him as to rate of tax chargeable from appellant bank. In view of provisions of Agreement for Avoidance of Double Taxation, it seems that Assessing Officer has not discussed issue with appellant or appellant's learned counsel. Therefore, this issue is remanded to file of Assessing Officer for fresh consideration. Assessing Officer is directed to give opportunity of hearing to appellant and consider provisions of agreement for Avoidance of Double Taxation between India and Japan. After considering appellant's arguments and provisions of agreement for Avoidance of Double Taxation, Assessing Officer should give reasons for charging Income-tax at particular rate on total income of appellant.' When matter was so restored to file of Assessing Officer, Assessing Officer upheld contention of assessee in principle and concluded as follows: 'The assessee's claim and contentions seem to be in accordance with provisions of Act, as well as provisions of India Japan DTAA. Section 90(2) of Act clearly stipulates that in such situation in relation to assessee to whom such agreement applies, provisions of Income-tax Act shall apply only to extent they are more beneficial to assessee. Articles 5(2) and 24(2) of India Japan DTAA also clearly stipulate that for taxation purposes, enterprise of contracting State shall not be subjected in other contracting State to any taxation or any requirement connected therewith to which nationals of that other contracting State, in same circumstances, may be subjected. over riding effect of India Japan DTAA over provisions of Income-tax Act is also clear from Board circular and case law relied upon by assessee as above. As such contention of assessee is acceptable. As such assessee company shall be taxed in India at same rate as applicable to domestic companies i.e., 50 per cent. assessed income will remain unchanged at Rs 8,98,91,268.' 3. Assessing Officer himself thus upheld contention of assessee and held that, in terms of non-discrimination clause enshrined in India- Japan DTAA, assessee was required to be taxed at same rate at which Indian companies are taxed in India. 4. assessee was still not satisfied. assessee's grievance this time, however, was slightly different. grievance was on question whether assessee was required to be taxed at same rate at which 'closely held domestic' company is required to be taxed or as 'company in which public is substantially interested'. This grievance was set out in following ground of appeal taken by assessee before Commissioner (Appeals): 'The Assessing Officer has erred in taxing appellant at rate applicable to closely held domestic companies. Appellant submits that considering facts and circumstances of its case, applicable Indo Japaneses Double Taxation Avoidance Agreement and law prevailing on subject, it ought to be taxed at rate applicable to companies in which public are substantially interested. Appellant submits that Assessing Officer be directed to apply rate of tax applicable to domestic companies in which public are substantially interested and recompute its tax liability accordingly.' 5. Learned Commissioner (Appeals), in his brief order and relying upon Assessing Officer's orders passed on same issue for assessment years 1994-95 and 1995-96, upheld this contention also. operative portion of Commissioner (Appeals)'s order is as follows: 'I have considered matter carefully. In view of facts narrated above, assessee bank shall be taxed in India at same rate as applicable to domestic companies i.e., 45 per cent and surcharged shall not be payable by it as it is non- resident bank, referred under section 6(3) of Income-tax Act.' 6. Revenue is aggrieved of order so passed by learned Commissioner (Appeals) and is in appeal before us. 7. We have heard rival contentions at considerable length, perused material on record and duly considered factual matrix of case as also applicable legal position. 8. It is important to bear in mind undisputed position that short issued decided by CIT(A) in impugned order is whether or not assessee, if it is to be taxed on same rate as Indian company, should have been taxed at rate applicable for 'closely held domestic company' or at rate applicable for 'company in which public are substantially interested'. Interestingly, however, no arguments have been advanced by learned Departmental Representatives on this aspect of matter. 9. point canvassed before us by revenue is that CIT(A) ought t o have held that despite non-discrimination clause in India-Japanese Double Taxation Avoidance Agreement, rate at which assessee- company should have been rate prescribed in respective Finance Act for 'company other than domestic company'. In other words, according to revenue, CIT(A) ought to have reversed relief given by Assessing Officer himself. 10. reason for this unusual request from revenue is that relevant legal provision has since been amended with retrospective effect. scope of section 90 of Act, which is enabling provision under Act to give relief in cases where Central Government has entered into agreement with Government of any country outside India, has been curtailed by inserting Explanation, by Finance Act, 2001 but with retrospective effect from 1-4-1962, which provides as follows: 'Explanation - For removal of doubts, it is hereby declared that charge of tax in respect of foreign company at rate higher than rate at which domestic company is chargeable, shall not be regarded as less favourable charge or levy in respect of such foreign company.' net effect of insertion of this Explanation is that non- discrimination clauses in Double Taxation Avoidance Agreements (DTAAs, in short), so far as they relate to non-discrimination in tax rates between domestic companies vis-a-vis foreign companies in India, have been rendered ineffective. very section which enabled relief being given in respect of cases covered by DTAAs has been amended so as to disable relief being given on ground of such non-discrimination. enforceability of non-discrimination clauses, to that extent, is not supported by any enabling provisions. These provisions thus remain academic and unenforceable in law. 11. aforesaid Explanation was inserted by Finance Act, 2001 whereas impugned order was passed on 4-3-1999. CIT(A) obviously did not have benefit of having perused said Explanation to section 90. CIT(Appeals) therefore, by any stretch of logic, can be said to have erred in not applying said Explanation. 12. question then arises whether, in given situation, this Tribunal has powers to apply Explanation to section 90 and hold that assessee-company should be liable to be taxed at rate prescribed for 'company other than domestic company'. 13. answer would have posed no difficulty at all in case we were to adjudicate as to whether or not assessee is entitled to benefit of lower rate by virtue of non-discrimination clause in DTAA. That aspect has already been decided in favour of assessee by Assessing Officer; this round of litigation is on question as to whether assessee is liable to be taxed on rate applicable to company in which public are substantially interested or applicable to company which is closely held company. On face of it, therefore, question that is being raised by revenue now does not arise out of order of CIT(A) or even that of Assessing Officer. 14. question then arises whether powers of Tribunal are confined to issues arising out of order of Commissioner (Appeals) or, for that purpose, even order passed by Assessing Officer. 15. We find guidance from judgment of Hon'ble Supreme Court's judgment in case of National Thermal Power Corpn. Ltd. v. CIT [1998] 229 ITR 383. In this judgment, their Lordships have, inter alia, observed as follows: 'The view that that Tribunal is confined only to issues arising out of appeal before CIT(A) takes too narrow view of powers of Tribunal [vide e.g. CIT v. Anand Prakash [1981] 128 ITR 388 (Delhi), CIT v. Karamchand Premchand Private Ltd. [1969] 74 ITR 254 (Guj.) and CIT v. Cellulose Products of India Ltd.[1985] 151 ITR 499 (Guj.) (FB)]. Undoubtedly, Tribunal will have discretion to allow or not to allow such ground to be raised. But where Tribunal is only required to consider question of law arising from facts which are already on record, we fail to see why such question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess tax liability of assessee.' [Emphasis supplied] Explaining reasoning of coming to this conclusion, Their Lordships, earlier in same order, observed as follows: 'Under section 254 of Income-tax Act, Tribunal may, after giving both parties to appeal opportunity of being heard, pass such orders thereon as it thinks fit. power of Tribunal in dealing with appeals is thus expressed in widest possible terms. purpose of assessing authorities is to assess correctly tax liability of assessee in accordance with law. If, for example, as result of judicial decision given while appeal is pending before Tribunal, it is found that non-taxable item is taxed or permissible deduction declined, we do not see any reasons why assessee should be prevented from raising that question before Tribunal for first time, so long as relevant facts are on record in respect of that item. We do not see any reasons to restrict powers of Tribunal under section 254 only to decide those grounds which arise from order of CIT(A). Both assessee, as well as Department, have right to file appeal/cross objection before Tribunal. We fail to see why Tribunal should be prevented from considering questions of law arising in assessment proceedings though not raised earlier. In case of Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 (SC), this Court, while dealing with powers of AAC, observed that appellate authority has all powers which original authority may have in deciding question before it subject to restrictions or limitations, if any. prescribed by statutory provisions. In absence of any statutory provision, appellate authority is vested with all plenary powers which subordinate authority may have in matter. There is no good reason to justify curtailment of power of AAC in entertaining additional ground raised by assessee in seeking modification of order of assessment passed by ITO. This Court further observed that there may be several factors justifying raising of new plea in appeal and each case is to be considered on its own facts. AAC must be satisfied that ground raised was bona fide and same could not have been raised earlier for good reasons. AAC should exercise discretion in permitting or not permitting assessee to raise additional ground in accordance with law and reason. same observations would apply to appeals before Tribunal also.' [Emphasis supplied] Clearly, therefore, powers of Tribunal are not confined to deal with issues arising out of orders of authorities below. As long issue has relevance to correct determination of taxes in respect of year, and particularly when relevant facts can be found from material already on record, it is open to appellant and cross objector, whether assessee or revenue, to raise that issue, provided issue so raised is bona fide and same could not have been raised earlier for good reasons. There is no difference between assessee and revenue on this issue as both of these parties are equal parties before us and their rights are same. 16. There is one more aspect to matter. Can assessee be in position worse off, as result of matter being carried in appeal before Tribunal by revenue, than position assessee was in after assessment order? To put it differently, can there be situations in which assessee ends up paying more, as result of matter having been carried in appeal before Tribunal, than what it would have paid if Assessing Officer's order was simply accepted by assessee? 17. Undoubtedly, normal principle is that Tribunal does not have any powers of enhancement, but this principle is not without any exceptions. There have been situations, as we will see now, where as result of matter having been carried before Tribunal, there has been enhancement of tax liability of assessee vis-a-vis tax liability which would have arisen if assessee had simply accepted order passed by Assessing Officer. It is also to be noted that in present case there is no enhancement of income but there is enhancement in tax liability wholly because of retrospective insertion of Explanation in section 90 of Act, with retrospective effect from 1-4-1961, which restricts application of non-discrimination clauses in tax treaties. This situation is materially different from cases in which enhancement is in respect of assessed income and in which there are no retrospective amendments in legislation. law laid down by Hon'ble Courts in those cases will not have any application in present case which is on these peculiar facts, including fact about retrospective amendment in relevant statutory provisions. It is also important to appreciate that, even according to learned counsel, there is no blanket restriction on powers of Tribunal which can pass such orders 'as it may think fit' but restriction on enhancement is in light of Judge made law, or, to put it differently, in light of ratio decidendi of binding judicial precedents. In none of cases, there was retrospective amendment in law because of which enhancement was to be made. In this light of fact, and in light of Hon'ble Supreme Court's observation in case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297 that 'the judgment must be read as whole and observations from judgment should be considered in light of questions before Court', it is plain on principle that those decisions will not have any application in present context. In Pathikonda Balasubba Shetty v. CIT [1967] 65 ITR 252, Hon'ble Mysore High Court did hold that Tribunal did not have powers to make order resulting in enhancing tax liability beyond liability fixed by Assessing Officer but then Their Lordships were not dealing with this issue in backdrop of amendment in relevant legal provision itself in between point of time when issue was decided by Assessing Officer and point of time when matter came up before Tribunal which has happened in present case. In any event, even as result of correct rate of tax being applied in case we are to uphold contention of revenue, assessee's tax liability will not be beyond tax liability determined by Assessing Officer in assessment order under section 143(3) of Act as framed by him originally. In case of State of Kerala v. Vijaya Stores [1979] 116 ITR 15, Hon'ble Supreme Court has laid down that in case of assessee's appeal, and in absence of cross objection or cross appeal, assessee cannot be worse off as result of his having carried matter in appeal before Tribunal. It was materially same issue before Hon'ble Allahabad High Court in case of Pahulal Ved Prakash v. CIT [1990] 186 ITR 589 and Their Lordships came to conclusion that 'it is settled that Tribunal, while dealing with appeal, in absence of any cross appeal or cross objection, cannot give finding adverse to appellant which would make his position worse than it was under orders appealed against'. That is not even situation before us. Revenue is in appeal and real issue is whether as result of revenue's appeal being allowed, assessee can be worse off vis-a-vis position that he would have been in, in event of his not challenging assessment order in appeal at all - irrespective of whether or not relevant legal provision has been subjected to retrospective amendment. 18. In case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232, Hon'ble Supreme Court did observe that 'the words 'pass such orders as Tribunal thinks fit' include all powers (except possibly powers of enhancement) which are conferred upon AAC by section 31 of Act'. This issue came up before Hon'ble Supreme Court in case of CIT v. Assam Travels Shipping Service [1993] 199 ITR 1 and Their Lordships having taken note of Hukumchand Mills Ltd.'s case (supra), observed, that 'The expression 'as it thinks fit' is wide enough to include powers of remand to authority competent to make requisite order in accordance with law in such case, even though Tribunal itself could not have made order enhancing penalty'. This is also thus clear that Tribunal does not have powers of enhancement, even though, in fit cases, it can remit matter to file of CIT(A) or Assessing Officer for deciding matter in accordance with law irrespective of whether or not order so being passed in accordance with law may result in enhancement. There can be thus situations in which assessee ends up paying more, as result of matter having been carried in appeal before Tribunal, than what it would have paid if Assessing Officer's order was simply accepted by assessee. One such example is situation that Hon'ble Supreme Court was in seisin of in case of Assam Travels Shipping Service (supra). In that case, assessee was imposed penalty of Rs. 6,944 under section 271(1)(a) which was less than minimum penalty of Rs. 65,700 which could have been imposed on facts of that case. first appellate authority cancelled penalty order on ground that penalty imposed is not in accordance with law. When matter travelled in appeal before Tribunal, view was taken that penalty imposed by Assessing Officer 'was not in accordance with law and since Tribunal had no rights to enhance penalty, there was no alternative but to set aside order of penalty imposed by ITO and, in that view, Tribunal upheld order of AAC (i.e., first appellate authority)'. While Hon'ble Gauhati High Court upheld this stand of Tribunal, Hon'ble Supreme Court did not do so. Their Lordships, on facts of this case, observed that 'The expression 'as it thinks fit' is wide enough to include powers of remand to authority competent to make requisite order in accordance with law in such case, even though Tribunal itself could not have, made order enhancing penalty'. In light of these discussions, we are of considered opinion that Tribunal is not always prevented from passing orders which may result in enhancement of assessee's tax liability beyond tax liability determined by Assessing Officer. In other words, it is not always necessary that as result of proceeding following assessee having been carried in appeal, assessee cannot be worse off vis-a-vis position in event of his having simply accepted order which is so carried in appeal. rule preventing enhancement of assessee's tax liability, beyond liability fixed by Assessing Officer, is not universal and without exceptions to said rule. 19. reason for revenue not taking up this plea earlier is retrospective amendment in law. There can be any lack of bona fides in this reason; nobody can be expected to have clairvoyance of knowing as to what amendments in statute will be in future. When law so permitted, Assessing Officer happily gave relief prayed for. legal position has changed now. appellate proceedings are still on and there cannot be any excuse for any appellate authority to decide issue in any manner except in accordance with law as is in existence at point of time, for relevant assessment year, when appeal is being heard. appeal before us, even in original grounds of appeal, seeks us to decide what is correct rate of tax chargeable on income of appellant. If correct rate of tax is rate which neither Assessing Officer nor CIT(A) has applied, we have no option except to remit matter to file of Assessing Officer to decide in accordance with law. 20. We are aware that on 10-1-1995, CIT(A) sent matter back to Assessing Officer for deciding matter de novo in light of applicable tax treaty provisions and observed that Assessing Officer is 'directed to give opportunity of hearing to appellant and consider provisions of agreement for Avoidance of Double Taxation between India and Japan', and revenue preferred not to file appeal against matter being so set aside to file of Assessing Officer. Today, decade later, and enlightened by retrospective amendments in law, revenue seeks to do what it missed out at that point of time. One of learned counsel's contention before us is that in case revenue is allowed to de facto challenge that order of CIT(A) in this round of proceedings, time limits set out in Act for filing of appeals will become redundant. 21. We do not think this contention is tenable in law either, particularly in light of judgment of Hon'ble Bombay High Court in case of Inventors Industrial Corpn. Ltd. v. CIT [1992] 194 ITR 548 and of Hon'ble Calcutta High Court in case of CIT v. Shree Ganesh Jute Mills Ltd. [1977] 109 ITR 562. In case of Inventors Industrial Corpn. Ltd. (supra), assessment proceedings were reopened under section 147 of Act and, aggrieved by assessment order so passed by Assessing Officer in reassessment proceedings, assessee carried matter in appeal before first appellate authority on question of merits of addition of Rs. 1,16,184 made by Assessing Officer question of merits of addition of Rs. 1,16,184 made by Assessing Officer in reassessment proceedings as cash credit. validity of reassessment proceedings was not called into question. In this round of appellate proceedings, assessment was set aside to file of Assessing Officer for examination de novo after giving yet another opportunity of hearing to assessee to present its case. However, when addition was, even after giving yet another opportunity of hearing to assessee, reiterated by Assessing Officer, assessee was again in appeal before AAC. addition was challenged on merits and additional ground was taken on issue of reopening of assessment under section 147 of Act. AAC admitted and allowed this additional ground and assessment was thus cancelled. Tribunal, however, reversed this action of AAC by holding that in second round of proceedings, it was not open to AAC to consider question of validity of reassessment proceedings when assessee failed to question same at time of filing appeal against original reassessment order. When assessee's grievance against Tribunal's order, so reversing relief given by AAC, came up before Hon'ble Bombay High Court, Their Lordships upheld action of AAC and reversed order of Tribunal. Their Lordships also took note of judgment of Hon'ble Calcutta High Court in case of CIT v. Shree Ganesh Jute Mills Ltd. [1977] 109 ITR 562 which lays down that any ground, not necessarily ground pertaining to jurisdictional aspect, could be taken up for first time before AAC in second round of proceedings. In case of Shree Ganesh Jute Mills Ltd. (supra), Hon'ble Calcutta High Court has held that 'the tax has to be assessed in, accordance with provisions of Act' and 'it is duty of revenue authorities to comply with provisions of Act'. It was for this reason that Their Lordships of Hon'ble Calcutta High Court were of considered view that 'the appellate authorities were justified in allowing assessee to take said new plea'. In case we are to adopt hyper technical approach and we decline to go into question as to whether tax rate applicable on foreign companies could at all b e different from rate prescribed under respective Finance Act, it will result in situation that rate at which assessee-company will be levied tax, in terms of this order, will be rate not in accordance with provisions of Act. In light of judicial precedents discussed above, it is not open to allow that absurd situation to arise, nor can we adjudicate on questions which are absolutely academic in view of clear legal position as it is at present. We have to decide matter in accordance with law as it exists at point of time when we are deciding matter. Revenue is not precluded from raising legal objection in this round of proceeding because it did not do so in first round of proceedings. 22. Learned counsel's defence was three fold - first, that it is not open to revenue to appeal against assessment order passed by Assessing Officer but then if we adjudicate on revenue's contention that rate of tax applicable for foreign companies has to be as per Finance Act, revenue will end up challenging, in appeal, order passed by Assessing Officer; second, jurisdiction of Tribunal is confined to subject- matter of appeal which can be determined by finding out what CIT(A) has expressly or impliedly decided; and third, that Tribunal has no powers of enhancement. 23. We have dealt with all these issues earlier in this order. We may now deal with remaining contentions on these issues. lot of emphasis is also laid on judgment on Hon'ble Allahabad High Court in case of G.D. Steels & Gases (P.) Ltd. v. Commissioner of Trade Tax [1999] 115 STC 491 wherein Hon'ble High Court has held that 'it is unimaginable that though law does not allow Commissioner to challenge assessment order in first appeal, he can do so by preferring second appeal before Tribunal' and that 'right of appellant is restricted to challenge order. . . and not to revert back to assessment order that were not subject-matter of appeal...'. Learned counsel has also invited our attention to paragraph 4.19 at page 89 of Report of Direct Taxes Administration Enquiry Committee, 1958-59. This highlights fact that Tribunal does not have powers of enhancement of assessment. In our considered view, these contentions are also devoid of legally sustainable merits. As for learned counsel's reliance on G.D. Steels & Gases (P.) Ltd.'s case (supra), this case deals with revenue's challenge to assessment order on factual aspect regarding concealed turnover which was accepted by Assessing Officer at assessment stage but questioned again by Assessing Officer at time of second appeal to Tribunal. Hon'ble Allahabad High Court held that 'the Commissioner's appeal to extent of challenging turnover as determined by Assessing Officer was not maintainable in law and Tribunal had no jurisdiction to entertain such ground. . .'. This was factual aspect of matter. issue before us is legal issue on undisputed facts of case and Hon'ble Allahabad High Court has, in very same judgment and referring to Hon'ble Supreme Court's judgment in case of National Thermal Power Corpn. Ltd. (supra), observed that 'this authority. . .deals with question of power of Tribunal to entertain new question of law arising from facts found by income-tax authorities and having bearing on tax liability of assessee' and that 'it was held that Tribunal had power to allow such ground to be raised'. Unlike issue before Hon'ble Allahabad High Court, case before us is also purely legal issue arising, out of facts found by tax authorities and having bearing on tax liability of assessee. material facts thus not being in pari materia, observations made by Hon'ble Allahabad High Court are not relevant in present context. To quote from Hon'ble Supreme Court's of quoted landmark judgment in case of Sun Engg. Works (P.) Ltd. (supra), 'it is neither desirable nor permissible to pick up word or sentence from judgment of this court, divorced from context of question under consideration and treat it to be complete law declared by this court' and 'the judgment must be read as whole and observations from judgment should be considered in light of questions before Court'. Viewed in this perspective, assessee does not get any assistance from Hon'ble Allahabad High Court's aforesaid judgment. Learned counsel's reliance on report of Direct Taxes Administration Enquiry Committee is also of no assistance to his case because it only deals with enhancement of assessment and not enhancement of tax liability and also because reason given in this report is that 'the appellate Tribunal is final fact finding authority and no remedy is provided to assessee for going in appeal on question of fact arising out of its decisions'. That is not case here. We are dealing with purely legal question which, on being decided in accordance with law, could result in enhancement of tax liability vis-a-vis tax liability as result of appeal effect order but neither there is enhancement of income, nor there is enhancement in tax liability vis-a-vis tax liability determined by Assessing Officer in assessment order under section 143(3) of Act as framed by him originally. 24. For reasons set out above, we deem it fit and proper to vacate order of CIT(A) which is not in accordance with correct legal position now in force. matter shall now be sent back to Assessing Officer for fresh adjudication in accordance with law. While doing so, he will give due and fair opportunity of hearing to assessee and decide matter by way of speaking order. 25. appeal filed by revenue is allowed for statistical purposes in terms indicated above. *** JOINT COMMISSIONER OF INCOME TAX v. SAKURA BANK LTD.
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