Inspecting Assistant ... vs Avis International (P.) Ltd.
1990 Latest Caselaw 105 Del

ORDER

Per V. P. Elhence, Judicial Member - In this appeal, filed by the departmental against the order dated 13-11-1986 of the learned Commissioner of Income-tax (Appeals)-II, New Delhi for the assessment year 1981-82, an application dated 24-10-1989 was filed by the assessed respondent purporting to raise the following "additional ground of appeal :-

"That the assessed had shown receipts from cash assistance to the tune of Rs. 12,59,973 which has been taken as profit while computing the income of the appellant. The Hon'ble Full Bench in the case of Gedore Tools (India) (P.) Ltd. v. IAC [1988] 25 ITD 193 (Delhi) vide order dated 25-3-1988 have held by a majority view that cash compensatory support is not taxable."

2. The assesseds application raises an interesting point because neither the assessed has filed any cross appeal against the order of the Commissioner of Income-tax (Appeals) referred to above nor has it chosen to file by the departmental. At the time of the hearing, we persistently asked Shri O. P. Dua, the learned counsel for the assessed as to whether the assessed wanted to file any cross appeal or cross objection (which had by then become barred by limitation) after seeking condensation of delay but Shri Dua insisted that the assessed did not desire any such thing and that it was entitled to raise "an additional ground" even though neither any cross appeal nor any cross objection had been filed by it.

3. We have heard the learned representatives on both the sides on this application and have also duly considered a number of decisions to which reference was made by Shri Dua in support of his submissions. In our view the assesseds application is misconceived and has to he rejected. The aspect raised in the present application is in a way supplemental to the aspect which was considered by the Special Bench (to which one of us was a party) in Indo Java & Co. v. IAC [1989] 30 ITD 161 (Delhi). Section 254 provides that the Appellate Tribunal may, after giving both the parties to the appeal, an opportunity of being heard, pass such orders thereon as it things fit. In para 16 of the order of the Special Bench, it has been held that "thereon" means the subject matter of appeal. Since the appeal has been filed only by the departmental and not the assessed, the question of raising any additional ground could arise only at the instance of the department as an appellant, in terms of Rule 11 of Income-tax Appellate Tribunal Rules, 1963. So far as the non-appellant i. e. the respondent is concerned, the only provision which is relevant in the Rules is rule 27 which is in the following term :-

"The respondent, though he may not have appealed may support the order appealed against on any of the grounds decided against him."

This would also suggest that a respondent who not filed any appeal or cross objection himself can only support the order appealed against by the other side and cannot raise any fresh ground himself. This would also be easily understandable because a party who has filed an appeal cannot be placed in a worse position than what it would have been in, had it not filed the appeal. If the departmental had not filed any appeal against the order of the CIT (Appeals) the respondent i. e. the assessed could not have made any application and it had to file an appeal itself if it was seeking an independent remedy. It is needless to say that what cannot be done directly is also not permitted to be done indirectly. To permit the assessed to raise a ground (so called "additional ground") would be to deprive the department of the right which vested in it on account of the appeal and cross objection on the part of the assessed having become time barred. To permit the same would, therefore, be contrary to law. No assistance can be derived by the assessed from the observations made at pp. 163 & 187 of the Special Bench decision in the case of Indo Java & Co. (supra). The decision in the case of CIT v. S. Nelliappan [1967] 66 ITR 722 (SC) does not assist the assessed as it deals with an appellant. The same is the position of the following case :

(1) J. S. Parkar v. V. B. Palekar [1974] 94 ITR 616 (Bom.);

(2) Nathmal Bankatlal Parikh & Co. v. CIT [1980] 122 ITR 168 (AP) (FB);

(3) N. P. Saraswathi Ammal v. CIT [1982] 138 ITR 19 (Mad.);

(4) CIT v. Indian Express (Madurai) (P.) Ltd. [1983] 140 ITR 705 (Mad.);

(5) CED v. R. Brahadeeswaran [1987] 163 ITR 680 (Mad.); and

(6) Swadeshi Cotton Mills Co. Ltd. v. CIT [1989] 180 ITR 651/47 Taxman 215 (All.).

The decision in the case of Ellerman Lines Ltd. v. CIT [1971] 82 ITR 913 (SC) would not apply on the facts of the present case. In the case of CIT v. Gilbert & Barker Mfg. Co. [1978] 111 ITR 529 (Bom.) the point which really arose before the High Court was whether the Tribunal was justified in permitting the assessed to sustain the Appellate Asstt. Commissioners final order on a new point which it sought to urge before the Tribunal even though the assessed had not preferred an appeal. It is in this context alone that the observation made by the Bombay High Court was that the Tribunal had the discretion to allow any party to an appeal, may be the appellant or the respondent, to raise a new point or new contention. Therefore, no advantage can be taken by the assessed in quoting the observation of the Hon'ble High Court divorced from its context. The decision therefore, does not really support the assesseds case. No doubt in the case of CIT v. Edward Keventer (Successors) (P.) Ltd. [1980] 123 ITR 200, Delhi High Court held that in the assesseds appeal to the Tribunal challenging profit from transaction the contentions sought to be raised by the department was that if the transaction was held not to be genuine, consequential interest ought not to be allowed. The same principle has been enunciated by Andhra Pradesh High Court in the case of CED v. Estate of Late Smt. K. Narasamma [1980] 125 ITR 196 and ITAT v. B. Hill & Co. (P.) Ltd. [1983] 142 ITR 185 (All.). This was held to be resizable on the part of the department by quoting Rule 27 (supra) and O. XLI, r. 22 provides that any respondent though he may not have appealed from any part of the decree may not only support the decree but may also state that the finding against him in the Court below in respect of any issue ought to have been in his favor and may also take any cross-objection to the decree which he could have taken by way of appeal provided he has filed such objection in the Appellate Court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow. However, this provision does not confer on the respondent any right higher than what he would have had if he had preferred the appeal against the grounds decided against him by the Court below. A respondent cannot attack the decree in the appellants favor without filing cross objections under that Rule. As an ordinary rule, in the absence of a cross appeal or cross objection by a respondent, the Appellate Court has no power to disturb the decree of a lower Court so far as it is in favor of the appellant. In the absence of a cross appeal or a cross objection by a respondent, the Appellate Court cannot grant any relief to the respondent except insofar as such relief is incidental to the relief granted to the appellant. We may also in this connection refer to another provision namely, O. XLI, r. 33 of the Code of Civil Procedure which provides that the Appellate Court shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the Court notwithstanding that the appeal is as to part only of the decree and may be exercised in favor of all or any of the respondents or parties, although they may not have filed any appeal or objection. This provision has not been incorporated either in the Income-tax Appellate Tribunal Rules, 1963 or in the Income-tax Act, 1961. Moreover the object of the Rule is to enable the Appellate Court to do complete justice between the parties and to avoid contradictory and inconsistent decisions on the same question. But the ordinary rule remains namely that an Appellate Court would not revise or vary a decree in favor of a party who has not preferred any appeal or cross objection against it and this general rule holds good notwithstanding the enactment of Rule 33 (supra). The rules does not confer any right on the non-appealing party. Shri Dua had referred to the decision of the Gujarat High Court in the case of CIT v. Ahmedabad Keiser-E-Hind Mills Co. Ltd. [1981] 128 ITR 486 in which it has been noticed that the Circular dated 11-4-1955 issued by the Central Board of Revenue was that the Officers of the department must not take advantage of the ignorance of the assessed as to his rights. To the same effect is also the Commentary at page 856 of Chaturvedi & Pithisaria, Vol. I, third Edition. However this decision would not assist the assessed for the simple reason that we are not considering the merits of the plea yet and the assessed must be able to cross the threshold first i. e. get over the difficulty in the entertainment of the ground sought to be raised. The decision of the Supreme Court in the case of Mithilesh Kumari v. Prem Behari Khare [1989] 177 ITR 97 referred to on behalf of the assessed is not relevant on the point at issue before us. Having regard to the above, we are of the clear view that the instant application moved by the assessed is entirely misconceived and that it has to be rejected. However, before parting with the discussion, we would record the fact that valiant efforts were made by the learned counsel for the assessed Shri O. P. Dua to press his point.

4. The application filed by the assessed respondent is rejected. The appeal may now be posted in due course for hearing before any Bench.

Per Goradia - I fully agree with the order passed by my learned Brother. I add as follows : It is settled law that this tribunal has no power to enhance the tax liability of the appellant before it. If in an appeal filed by the assessed, the Revenue were to be allowed to raise similar additional ground on altogether different subject then if on merits such ground has to be decided in favor of revenue, then this might result in enhancement of assesseds liability, even where there is no cross-appeal/objection.