SHERATON INTERNATIONAL INC. v. DEPUTY DIRECTOR OF INCOME TAX
[Citation -2006-LL-0721-10]

Citation 2006-LL-0721-10
Appellant Name SHERATON INTERNATIONAL INC.
Respondent Name DEPUTY DIRECTOR OF INCOME TAX
Court ITAT
Relevant Act Income-tax
Date of Order 21/07/2006
Assessment Year 1995-96 TO 2000-01
Judgment View Judgment
Keyword Tags admission of additional grounds of appeal • opportunity to cross-examine • permanent establishment • directions of tribunal • non-resident assessee • cross-examination
Bot Summary: The assessee has thereafter on 12th July, 2006 filed the following identical worded additional grounds of appeal in relation to each of these six appeals: 1(a) That the AO erred in not appreciating that under s. 1(2) of the IT Act, 1961, the jurisdiction of the Act extends only to India and not beyond that. During the course of hearing on 19th July, 2006 the learned special counsel for the Revenue argued that the assessee s application for additional grounds of appeal was not in accordance with r. 11 of the Tribunal Rules inasmuch as the assessee had not sought leave of the Tribunal to urge the aforesaid additional grounds of appeal. The learned counsel for the assessee argued that additional grounds of appeal filed by the assessee on 12th July, 2006 were in the nature of advance copy so that the respondent was apprised of the matter well in advance. On merits of the additional grounds sought to be raised the learned counsel for the assessee argued that the same related to the question as to whether under the provisions of IT Law the assessee being a question as to whether under the provisions of IT Law the assessee being a non-resident could be subjected to a direct assessment. The learned special counsel for the Revenue stated that the Revenue needed sufficient time to refer to the assessment records to oppose assessee s prayer for admission of additional grounds of appeal. We see considerable force in the contention of the learned special counsel for the Revenue that the application for additional grounds of appeal filed by the assessee on 12th July, 2006 is not in accordance with r. 11 of the Tribunal Rules, 1963. We are not inclined to reject the assessee s application for admission of additional grounds of appeal for that reason alone because it would be a disservice to substantial interests of justice to reject an application for admission of additional grounds of appeal for the reason only that it is not accompanied by a prayer seeking leave of the Tribunal to raise additional grounds of appeal.


By Bench: In this case assessee has filed six appeals on 6th January, 2006 against orders of learned CIT(A)-XXIX, New Delhi in case of assessee in relation to assessment orders under s. 143(3) r/w s. 254 for asst. yrs. 1997-98 and 1998-99 and assessment orders under s. 143(3) r/w s. 147 for asst. yrs. 1995-96, 1996-97, 1999-2000 and 2000-01. assessee has thereafter on 12th July, 2006 filed following identical worded additional grounds of appeal in relation to each of these six appeals: "1(a) That AO erred in not appreciating that under s. 1(2) of IT Act, 1961 ( Act ), jurisdiction of Act extends only to India and not beyond that. (b) That AO failed to appreciate that assessee being non-resident having no permanent establishment in India, its income could not be brought to tax in India by issuing notice directly on non-resident assessee. (c) That AO fell in error in not appreciating that income of non- resident assessee having no permanent establishment in India can only be brought to tax in India through its representative assessee in India under s. 160(1) r/w s. 163( 1) of Act. (d) That AO having failed to treat ITC Ltd. as agent of assessee in terms of s. 163(1) of Act, acted beyond jurisdiction in framing assessment directly in hands of non-resident assessee company." Thereupon learned special counsel for Revenue has filed on 18th J u l y , 2006 application for cross-examination of signatory to assessee s application for urging additional grounds. When these appeals came up for hearing before us on 19th July, 2006, learned counsel for assessee made oral request for admission of aforesaid additional grounds of appeal. On that day we have heard arguments of both learned counsels for assessee and learned counsel for Revenue on assessee s request for admission of additional grounds of appeal as well as Revenue s request for cross-examination of signatory to assessee s additional grounds of appeal. During course of hearing on 19th July, 2006 learned special counsel for Revenue argued that assessee s application for additional grounds of appeal was not in accordance with r. 11 of Tribunal Rules inasmuch as assessee had not sought leave of Tribunal to urge aforesaid additional grounds of appeal. He argued that additional grounds sought to be raised did not arise out of impugned orders of learned CIT(A) as well as assessment orders of learned AO and same were being agitated for first time before Tribunal and therefore, Revenue needed opportunity to cross-examine signatory of application. learned special counsel for Revenue also requested eight weeks time to file counter affidavit in opposition to assessee s application for urging additional grounds. He stated that under Tribunal Rules, no procedure had been laid down for seeking leave of Tribunal to urge additional grounds of appeal and for purposes of arguments of parties in relation to additional grounds of appeal. That being so, learned special counsel added, CPC should be followed. He pointed out that under Order 37, r. 3 of CPC leave for admission of additional grounds had to be obtained by assessee through affidavit and Revenue as respondent was required to file counter affidavit. learned counsel for assessee argued that additional grounds of appeal filed by assessee on 12th July, 2006 were in nature of advance copy so that respondent was apprised of matter well in advance. In hurry to do so additional grounds were inadvertently not accompanied by formal prayer for admission thereof. assessee had intended to make such formal request on immediately following date of hearing. He thereafter orally prayed that his additional grounds of appeal may be admitted in interest of substantial justice to assessee. He also opposed request of Revenue for time to file counter affidavit and cross-examination of signatory of applicant as totally uncalled for entirely out of sync with commonly followed practice in Tribunal in regard to hearing of admission of additional grounds of appeal. On merits of additional grounds sought to be raised learned counsel for assessee argued that same related to question as to whether under provisions of IT Law assessee being question as to whether under provisions of IT Law assessee being non-resident could be subjected to direct assessment. issue raised in additional grounds of appeal were jurisdictional issues that went to root of matter and such issues could be raised for first time before Tribunal. learned special counsel for Revenue stated that Revenue needed sufficient time to refer to assessment records to oppose assessee s prayer for admission of additional grounds of appeal. He however, stated that there was no force in additional grounds of appeal being sought to be urged by assessee because provisions of s. 166 of Act were quite clear that provisions relating to representative-assessees could not prevent direct assessment of person on whose behalf representative assessee could be subject to assessment proceedings. We have carefully considered rival submissions. From provisions of s . 131 of Act it is clear that proceedings under IT Act, 1961 before IT authority are deemed to be before court under CPC, 1908 only for specific purposes mentioned in s. 131(1). Similarly provisions of s. 136 provide that any proceeding before IT authority shall be deemed to be judicial proceeding within meaning of ss. 193 and 228 and for purposes of s. 196 of Indian Penal Code, every IT authority shall be deemed to be Civil Court for purposes of s. 195, but not for purposes of Chapter XXVI of CrPC, 1973. As to Tribunal provisions of s. 255(5) of Act laid down that Tribunal shall have power to regulate its own procedure and procedure of Benches thereof. It therefore, follows that provisions of CPC as such do not apply on any proceedings before Tribunal. In case of Dr. Baliram Waman Hiray vs. Justice B. Lentin (1989) 176 ITR 1 (SC) Hon ble Supreme Court have observed as under: "In Virendar Kumar Satyawadi vs. State of Punjab (1955) 2 SCR 1013, three Judge Bench, speaking through Venkatarama Ayyar, J., relying upon celebrated decision of Judicial Committee of Privy Council in Shell Co. of Australiav. Federal Commr. of Taxation (1931) AC 275, explained legal connotation of term Court in these words (at p. 157 of AIR 1956 SC): What distinguishes Court from quasi-judicial Tribunal is that it is charged with duty to decide disputes in judicial manner and declare rights of parties in definitive judgment. To decide in judicial manner involves that parties are entitled as matter of right to be heard in support of their claim and to adduce evidence in proof of it. And it also imports obligation on part of authority to decide matter on consideration of evidence adduced and in accordance with law. When question, therefore, arises as to whether authority created by Act is Court as distinguished from quasi-judicial Tribunal, what has to be decided is whether, having regard to provisions of Act, it possesses all attributes of Court. It is familiar feature of modern legislation to set up bodies and Tribunals, and entrust them with work of judicial, quasi-judicial or administrative character, but they are not Courts in accepted sense of that term, though they may possess, as observed by Lord Sankey L.C. in Shell Co. of Australia s case (1931) AC 275, some of trappings of Court. Venkatarama Ayyar, J., in Virindar Kumar Satyawadi (1955) 2 SCR 1013, has referred to several decisions of Courts in England and Australia as to what are essential characteristics of Court as distinguished from Tribunals exercising quasi-judicial functions." Having regard to this aspect we find scant merit in Revenue s application for cross-examination of applicant and hereby reject same. We see considerable force in contention of learned special counsel for Revenue that application for additional grounds of appeal filed by assessee on 12th July, 2006 is not in accordance with r. 11 of Tribunal Rules, 1963. We are not inclined to reject assessee s application for admission of additional grounds of appeal for that reason alone because it would be disservice to substantial interests of justice to reject application for admission of additional grounds of appeal for reason only that it is not accompanied by prayer seeking leave of Tribunal to raise additional grounds of appeal. Such procedural infirmities are ordinarily curable by subsequent conduct of applicant. However, we find that there are more substantial reasons to reject assessee s application for admission of additional grounds that we set fourth hereinafter. In instant case AO made original assessment orders for asst. yrs. 1997-98 and 1998-99 on 31st March, 2000 and 23rd March, 2001 respectively. matter travelled up to Tribunal and Tribunal, Delhi Bench D New Delhi by its order dt. 23rd October, 2002 in ITA Nos. 2216/Del/2001 and 253/Del/2002 made order restoring matter to AO for orders afresh in accordance with directions of Tribunal. assessee s appeals in ITA Nos. 52 & 53/Del/2006 relate to assessment orders made by AO for second time on 28th Nov., 2003 in accordance with directions of Tribunal (supra). At n o point of time in original round of proceedings assessee raised any objection to notices issued by AO and submitted himself to jurisdiction of AO without demur. Similarly during course of proceedings under s. 143(3) r/w s. 147 for asst. yrs. 1995-96,1996-97,1999-2000 and 2000- 0 1 no objections to this regard were raised by assessee before AO as well as before learned CIT(A). assessee s objection as made out in additional grounds of appeal at this belated stage, if admitted, would cause grave prejudice to Revenue. Moreover, we do not see any prima facie case for admission of these additional grounds of appeal. learned special counsel for Revenue has rightly pointed out that plain language of provisions of s. 167 is quite clear that provisions of Act relating to representative assessees do not bar direct assessment or recovery on person on/from whose behalf assessment or recovery may be made on/from representative. In result, assessee s request for admission of additional grounds of appeal as aforesaid fails and is accordingly rejected. *** SHERATON INTERNATIONAL INC. v. DEPUTY DIRECTOR OF INCOME TAX
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