1. By this application, the assessee requires us to recall Tribunal's order dated 17th August, 1999, in ITA No. 421/Bom/1992 for the asst.
yr. 1988-89 on the ground that there were some mistakes rectifiable under the provisions of s. 254(2) of the IT Act, 1961.
2.The assessee-firm purchased jewellery of the value of Rs. 1,53,02,266 weighing 54,803.250 gms. from the partners of the firm and their family members in the year of account relevant for the asst. yr. 1988-89. It was also claimed that the said partners and family members filed returns for the asst. yr. 1978-79 under the Amnesty Scheme, 1985 in March, 1987 and offered the value of certain jewelleries as their incomes and it is the same jewelleries which were declared by the partners in March, 1987, that were subsequently sold to the assessee-firm in the year of account relevant for the asst. yr.
1988-89. In the course of the assessment of the assessee-firm for the asst. yr. 1988-89, the AO sought to enquire into the genuineness of the said purchase of jewellery of the value of Rs. 1,53,02,266 from the said partners and their family members. The assessee-firm sought to stall the enquiries into the genuineness of the said purchases on the ground that as the vendors declared the jewellery in the returns filed under the Amnesty Scheme, 1985, the Department is legally debarred from going into the question of the genuineness of the said purchases aggregating to Rs. 1,53,02,266. The AO, however, rejected this contention and held that the amnesty granted to the declarants under the Amnesty Scheme, 1985, is restricted to the assessments of the declarants and does not extend to a third party which has any transactions with the declarants and for this proposition, he relied upon the decision of the apex Court in the case of Jamnaprasad Kanhaiyalal vs. CIT (1981) 130 ITR 244 (SC). He went into the question of the genuineness of the purchases and found that the version of the assessee-firm regarding the said purchases of jewellery from the partners and their family members was, for various reasons adduced by him, incredible and accordingly made the addition of Rs. 1,53,02,266 as the undisclosed income of the assessee-firm for the asst. yr. 1988-89.
The CIT(A), however, accepted the contention of the assessee-firm regarding the non-applicability of the decision of the apex Court in the case of Jamnaprasad Kanhaiyalal vs. CIT (supra) to the issue on hand. He was of the view that there is a distinction between the statutory scheme mentioned in s. 24 of the Finance (No. 2) Act, 1965 [58 ITR (St) 1], which was considered by the apex Court in the said decision of Jamnaprasad Kanhaiyalal vs. CIT and the provisions of the Amnesty Scheme, which is governed by administrative circulars and under which the partners and their family members declared their jewellery, and so the Department was debarred from going into the genuineness of the purchases made by the assessee-firm and accordingly he deleted the addition. The Department came in appeal before the Tribunal and took the following two grounds : "1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the Supreme Court decision in the case of Jamnadas Kanaiyalal vs. CIT (1981) 130 ITR 244 (SC) is not applicable to the cases of return filed under the Amnesty Scheme 1985.
2. Without prejudice to the above, the CIT(A) has failed to appreciate the fact that the declarants could not have held the jewellery alleged to have been sold to the firm during May, 1987 to June, 1987 when during the search action by the IT Department in September, 1982, the jewellery under reference was neither found at their premises, nor was it mentioned in their depositions. The CIT(A) has thus clearly erred in deleting the addition of Rs. 1,53,02,266 made on account of alleged purchase consideration credited to the accounts of the partners and their family members." 3. The Tribunal considered the orders of the AO and the CIT(A) and came to the conclusion that the ratio of the decision of the apex Court in the case of Jamnaprasad Kanhaiyalal vs. CIT (supra) is equally applicable to the declarants under the Amnesty Scheme, 1985, as it was held by the apex Court to be applicable to the declarants under the statutory scheme considered by their Lordships in the said decision. In an elaborate order, the Tribunal observed as follows : "7. Having anxiously considered the rival submissions we are of the view that the Department deserves to succeed. The AO has painstakingly enquired into the circumstances relating to the declarations under the Amnesty Scheme by the partners and their relatives and the version of subsequent purchase of the gold from them by the assessee-firm. The entire story suffers from strange coincidences. The entire gold was bought by the assessee-firm in the same year from all the 18 persons. Actually, what was bought by the assessee-firm were new ornaments, even though it is not in the normal course of the trade of the assessee-firm to buy such ornaments from outsiders. All the 18 declarants availed of the Amnesty Scheme and, surprisingly, all of them got their gold valued on the same day, i.e. 27th March, 1987, from the same valuer and that too, all of them declared the jewellery for the same assessment year, i.e., 1978-79. Further, all of them got the gold converted into new ornaments and the assessee-firm paid majoori charges to all the 18 parties from whom it purchased the gold. All of them, except one, i.e., Smt. Bindu S. Zaveri, mentioned that the gold was acquired out of their undisclosed incomes. Only Smt. Bindu Zaveri said that she received the gold by way of gifts. In other words, none of the other declarants had any source. Further, none of them could give the address or particulars of the jeweller from whom they purchased the gold or jewellery which they declared. In none of the premises of the partners, the gold was noticed in a search action that was conducted on the firm and its partners in September, 1982.
Further, shortly before selling the ornaments to the assessee-firm, all or them took their gold to the Karigars on the same day. Some of the declarants under the Amnesty Scheme are even minors, like Master Sammart N. Zaveri and Miss Priyanka N. Zaveri. It is surprising that all of them acquired the gold out of undisclosed sources in the year of account relevant for the same assessment year, i.e. 1978-79. It is equally surprising that all of them sold it after getting it covered into gold ornaments in the same year to the assessee-firm.
It is also surprising that not one of them was paid the purchase money in cash by the year end and all of them were only credited with the purchase consideration in the books of the assessee-firm.
All these common features cannot be simple coincidences. That the entire affair is a tax planning device is writ large on its face.
Now the only question is whether the Department, while processing the return of the assessee-firm for the asst. yr. 1988-89, could go behind the returns filed by the declarants in question under the Amnesty Scheme, 1985, for the asst. yr. 1978-79. As already mentioned, the Department's stand is that it is so entitled in view of the decision of the apex Court in the case of Jamnaprasad Kanhaiyalal vs. CIT (supra). The CIT(A) negatived the contention on the ground that this decision of the apex Court does not apply to the returns filed under the Amnesty Scheme. We are not convinced about the reasoning of the CIT(A) in this regard. We do not see how the assessee-firm can get out of the ratio of this decision. There is nothing in the Amnesty Scheme, 1985, which conferred any explicit or implicit benefit on third parties. The benefits under the scheme are restricted only to the declarants. In this regard we do not see any difference between the Voluntary Disclosure Scheme, 1965, considered by the apex Court and the Amnesty Scheme, 1985. Simply because the Voluntary Disclosure Scheme is a statutory scheme and the Amnesty Scheme is a creature of Board's circulars, it does not follow that there is any material difference between the two in respect of the applicability of the said decision of the apex Court." 4. In the course of the hearing of the present application before us, the learned counsel for the assessee mentioned that the appeal filed by the Department was defective inasmuch as it did not conform to the requirements of Form No. 36 r/w r. 47 of the IT Rules, 1962, and r. 9 of the ITAT Rules, 1963, and other relevant rules of the said Tribunal Rules. It is claimed that under the said rules, the appeal has to be filed in the prescribed form and both Form No. 36 and r. 9 of the Appellate Tribunal Rules prescribe that the memorandum of appeal should be accompanied, inter alia, by two copies of the grounds of appeal before the first appellate authority and two copies of the statement of facts, if any, filed before the said appellate authority. It is pointed out that the Departmental appeal before the Tribunal in the present case was not accompanied by copies of the grounds of appeal taken by the assessee before the first appellate authority or by the statement of facts filed by the assessee before the said authority and so the appeal was defective. It is, therefore, submitted that the appeal should have been rejected under r. 12 of the Tribunal Rules and at the most an opportunity of amending the appeal could have been given to the Department under the same rule. It is explained that under r. 4A, the Registrar of the was supposed to scrutinise all appeals and applications received and to point out defects therein, and in the present case, the registry failed in its function of pointing out the defects in the appeal and consequently the order of the Tribunal which is based upon such a defective appeal is erroneous and deserves to be recalled under the provisions of s. 254(2) of the IT Act. In support of this contention, the assessee-firm relied upon the following decisions : 5. It is also claimed that in the present case, the statement of facts given by the assessee-firm was almost in the nature of written submissions and it is mandatory that the written submissions filed by the assessee-firm should be considered, and an order passed without meeting this requirement is erroneous and in this context, reliance is placed upon the decision of the apex Court in the case of ITAT vs. Dy.
CIT (1996) 218 ITR 275 (SC). It is also claimed that if the order is based upon erroneous assumptions and subsequently the error comes to the knowledge of the Tribunal, the Tribunal has the power to recall its order. It is explained that in the present case the order was based upon the erroneous assumption that the appeal was in proper order and form and as this assumption is now proved incorrect, the Tribunal has the power and the duty to recall its order, and in this context reliance is placed upon the decision of the Hon'ble Allahabad High Court in the case of CIT vs. U.P. Shoe Industries (1999) 235 ITR 663 (All). In support of the proposition that the Tribunal has the power to recall its order when there is a palpable mistake therein, reliance is placed upon the decision of the Hon'ble Punjab High Court in the case of Mangat Ram Kuthiala & Ors. vs. CIT (1960) 38 ITR 1 (Punj). It is also pointed out that the Tribunal cannot decide issues which were not decided by the CIT(A) and in the present case, the CIT(A) did not give any finding as to whether the ornaments/jewellery purchased by the assessee-firm were really owned by it or belonged to the partners and other family members concerned and as such the Tribunal was wrong in deciding the issue in its order, and for this proposition, reliance is placed upon the decision of the Tribunal in the case of ITO vs. Ambalal Sarabhai Trust (1983) 15 TTJ (Ahd) 31 : (1982) 2 ITD 158 (Ahd) (at para 21, p. 166). It is also pointed out that while the Tribunal, under the provisions of s. 254(1) has wide powers and can pass such orders as it thinks fit on the appeal, it should confine itself to the subject-matter of the appeal and in the present case, the Tribunal went beyond the subject-matter of appeal and so its order deserved to be recalled under the provisions of s. 254(2) of the IT Act.
6. The learned counsel for the assessee has also pointed out some other, what he described in the course of the hearing as, minor mistakes, in the order of the Tribunal. The relevant portion of the application which deals with these so-called minor mistakes reads as follows : "(i) The Hon'ble Tribunal came to the conclusion that the sale consideration was not paid to the declarants (i.e., sellers), (a) In fact, the original sale considerations were credited to the respective accounts and substantial amounts were withdrawn by the sellers before the end of the year. In other words, this is a clear cut case of payment. In several judgments, the Hon'ble Tribunal has taken the view that even if credit is given or a Hundi is executed for the amount due, the same would tantamount to payment or accrual of income. Moreover, capital gains tax could not have been charged by the same AO, if the sale had not taken place.
(ii) The Hon'ble Tribunal has ruled that there is no evidence to show that if the declarations were made by the firm, the tax liability of the firm would have been more or less the same.
(a) In fact, this aspect was discussed by the CIT(A) and in p. No. 16 he has given the figures to indicate that "by either route the tax would have been practically the same amount" and this fact was informed to the ITO when he was present before the CIT(A) in the case proceeding of the applicant.
(iii) The Hon'ble Tribunal has ruled that the sales in question were not genuine.
(a) In fact in the course of hearing of the Appeal it was clearly pointed out that after the very same officer having assessed the parties in question in regard to the said transactions to the capital gains arising on the sale of jewelleries, he had no basis now to prove that the sales in question were not genuine.
(b) It was also pointed out that the said sales were also disclosed under the Gold Control Act, which were re-made by the said partners and their relatives before they were sold and accordingly the said transactions were entered in the Gold Control Register as required under the Gold Control Rules and, therefore, there was no question for doubting the genuineness of the sales." 7. Finally, it is mentioned that when a view is taken by a judicial authority on some facts which are true and on others which are false, the entire order becomes vitiated in the light of the decisions of the apex Court in the cases of Dhirajlal Girdharilal vs. CIT (1954) 26 ITR 736 (SC) and Lalchand Bhagat Ambica Ram vs. CIT (1960) 37 ITR 288 (SC) and consequently the order deserves to be recalled.
8. The learned Departmental Representative, on the other hand vehemently pleaded that the learned counsel for the assessee who incidentally was not the same as the one who argued the appeal, did not point out at all in the course of the hearing of the appeal that the appeal was defective. It is also argued that he did not raise any arguments on the question of genuineness of the purchase of the ornaments/jewellery by the assessee-firm from the partners and the family members in the course of the hearing of the appeal and at that stage, the only contention of the learned counsel for the assessee was that the Department was barred from enquiring into the genuineness of the said purchases by virtue of the decision of the apex Court in the case of Jamnaprasad Kanhaiyalal vs. CIT (supra) and it is only because the decision of the Tribunal went against the assessee that the assessee sought to circumvent the order of the Tribunal by raising these objections. It is also claimed that in Ground No. 2 taken before the Tribunal, the Department had clearly raised the issue of the genuineness of the purchase and the Tribunal would have failed in its duty if it had not given a finding on this issue. He has also argued that the scope of an application under s. 254(2) is very limited and no arguable issue can be raised in such an application.
9. The learned counsel for the assessee reiterated in his rejoinder that a subsequent event can always authorise the Tribunal to recall its order in view of the decision of the Hon'ble Allahabad High Court in the case of CIT vs. U.P. Shoe Industries (supra) and that the assessee-firm had come to know about the defective nature of the appeal only after it took inspection of the appeal papers with the Tribunal after the appellate order of the Tribunal was received. It is also mentioned that the decision of the jurisdictional High Court in the case of CIT vs. Ramesh Electric and Trading Co. (1993) 203 ITR 497 (Bom) has to be applied with caution and in this context, reliance is placed upon the following decisions : (1) Amrit Bottlers (P) Ltd. vs. ITO (1994) 48 TTJ (Cal) 680 (TM) : (1994) 49 ITD 1 (Cal) (TM); (2) M. Shankaraiah & Anr. vs. State of Karnataka & Ors. (1993) Supp (4) SCC; and (3) Modu Timblo vs. WTO (1995) 53 TTJ (Pune) 329 (TM) : (1995) 53 ITD 3 (Pune) (TM).
10. Having carefully considered the submissions of the learned counsel for the assessee and the contents of the application filed before us, we are of the view that the application has to be rejected. None of the cases cited by the learned counsel for the assessee fits the facts of the present case before us and they are all distinguishable. We may mention that the contention of the learned counsel for the assessee that the Department has not raised any issue in the appeal before the Tribunal regarding the genuineness of the purchases has to be rejected even at the outset. A bare look at Ground No. 2 taken before the Tribunal by the Department, which we have extracted hereinbefore, would belie this contention. It is clearly mentioned in the ground that the CIT(A) failed to appreciate the fact that the declarants could not have held the jewellery alleged to have been sold to the firm during May, 1987 to June, 1987 and so the CIT(A) clearly erred in deleting the addition of Rs. 1,53,02,266 made on account of the alleged purchase consideration credited to the accounts of the partners and their family members. The next question is whether the CIT(A) gave any finding on this issue. The CIT(A) held that the Department is debarred from entering into the area of enquiry on the genuineness of the said purchases in view of the decision of the apex Court in the case of Jamnaprasad Kanhaiyalal vs. CIT (supra). Having so held, he did not mention that he was reserving his judgment on the question of the genuineness of the purchases. The AO deliberately discussed the circumstances which, according to him, disproved the contention of the assessee-firm that the so-called partners and family members really owned/held the ornaments which were ostensibly declared by them in the returns filed under the Amnesty Scheme, 1985. The CIT(A) mentioned the circumstances that weighed with the AO for coming to the conclusion that the so-called purchase of the ornaments by the assessee-firm for a sum of Rs. 1,53,02,266 was only a made-up affair. He summarised the order of the AO as follows : "(a) He has noted that the ladies and minors had no independent source of income to enable them to acquire jewellery in the first instance.
(b) The men only had their share of profit from the firm, property income and interest income in all the past years. There was no other source to acquire jewellery.
(c) Priyanka who was less than 2 years old in the accounting period relevant to asst. yr. 1978-79 and Samarat who was 5 years old at that time have also claimed to have earned income from undisclosed sources so as to be able to invest that amount in the gold ornaments allegedly acquired by them in that year.
(d) All sellers have stereotyped answers to explain how they acquired gold ornaments in asst. yr. 1978-79. All of them have only pointed out to undisclosed sources without making any attempt to throw light upon the possible nature of such a source. Smt. Bindu is the only exception and has stated that she had received these ornaments as gifts.
(e) The name of the jeweller from whom the initial acquisition of gold ornament was made by the sellers could not be given by anyone of them.
(f) Though gold in such a large quantity was allegedly present in the hands of the family from asst. yr. 1978-79 it was not found by the Department in an action under s. 132 which had taken place in September, 1982.
(g) The appellant firm never purchases ready ornaments in any substantial quantity. This is the first instance where the appellant firm has purchased ready ornaments in such a large quantity.
(h) It has been stated that all sellers had converted their old ornaments into new ornaments a little before selling these new ornaments to the appellant firm. The sequence dates involved in the conversion creates doubt about this version.
(i) While the sellers had allegedly paid Rs. 2 to 3 per gm to Karigars as making charges for converting old ornaments into new, the appellant firm had paid the sellers Rs. 25 to Rs. 30 per gm.
towards the making charges.
(j) The alleged price of the gold ornaments was not paid to the sellers in cash but was credited to their accounts maintained by the appellant firm.
(k) The jewellery allegedly purchased by the appellant firm in such a large quantity exactly fitted its requirement. This coincidence is strange." 11. Actually, Tribunal reproduced the above summary in pp. 13 and 14 of its order. When the above findings were given by the AO and the only objection raised by the CIT(A) against the conclusion of the AO that the so-called purchases of ornaments by the assessee-firm for a sum of Rs. 1,53,02,266 were not genuine was the legal bar which, according to him, was contained in the decision of the apex Court in the case of Jamnaprasad Kanhaiyalal vs. CIT (supra) and he did not mention that he was reserving his judgment on any other matter, the obvious inference is that he agreed with the findings of the AO and would have decided the issue in favour of the Department but for the fact that there was a bar against such a finding in the said decision of the apex Court. That is the inference drawn by the Tribunal and we do not find any error, much less an apparent or patent one, in that inference. The correctness of this inference has also to be seen in the light of, as argued by the learned Departmental Representative before us, the self-imposed restriction of the learned counsel who argued the appeal before us in respect of the merits of the case. The Tribunal specifically mentioned towards the end of para 11 and also elsewhere of its order that the learned counsel had not advanced any arguments in respect of the various factors enumerated by the AO to infer that the purchases of the gold in question from the said parties were bogus. The Tribunal could only decide the appeal in the light of the arguments before it and could not possibly have done anything more in the matter. It may also be mentioned that the learned counsel for the assessee did not, as contended by the learned Departmental Representative before us now, raise any contention about the failure of the Department to have filed the grounds of appeal taken by the assessee before the CIT(A) and the statement of facts filed by the assessee before the said authority.
Actually, there was no need or occasion to refer to this failure of the Department because there was no dispute on facts. The dispute was only with regard to the inference to be drawn from the facts. In other words, there is no dispute that the partners and the other family members disclosed the value of the jewellery/ornaments in the returns filed under the Amnesty Scheme, 1985, for the asst. yr. 1978-79. There is no dispute about the weight of the ornaments/jewellery either declared by them or alleged to have been sold to the assessee-firm subsequently. There is no dispute about the value of the gold ornaments declared or the purchase consideration received by them from the assessee-firm. There is no dispute that they have paid wealth-tax on the value of the gold declared. There is also no dispute that the AO levied capital gains tax on the alleged sales to the assessee-firm.
There is no dispute about even incidental matters like that they were got valued by registered valuer at the time of the filing of the amnesty returns or that they were converted into new ornaments as mentioned in the assessment order. In other words, there is no dispute on any material fact. At any rate, no such dispute was raised before the Tribunal. The only dispute is on the inference to be drawn from all these facts. The Tribunal, unfortunately for the assessee, came to the conclusion that the only inference that could be drawn was that in view of the concomitance of coincidences, the entire affair was incredible and it was only a tax-evading measure and accordingly was hit by the decision of the apex Court in the case of McDowell & Co. Ltd. vs. CTO (1985) 154 ITR 148 (SC) and also the decision of the apex Court in the case of Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC). This inference may be assailed, but it does not follow there is any rectifiable error in the order of the Tribunal. In the circumstances, it does not appear to us that there is any rectifiable error in the order of the Tribunal.
12. Normally, as per the Tribunal Rules, the appellant has to file before the Tribunal the grounds of appeal taken before the first appellant authority and also the statement of facts. However, if the registry has not pointed out the absence of these documents and if neither the appellant nor the respondent relied on them in the course of the hearing and when the respondent has not pointed out any factual discrepancy in the findings of the AO, we are of the view that the absence of such documents is a procedural irregularity and does not by itself constitute an apparent error which can be rectified under the provisions of s. 254. In this context, reference may usefully be made to the provisions of s. 99 of the CPC, which reads as follows : "No decree shall be reversed or substantially varied, nor shall any case be remanded, in appeal on account of any misjoinder of parties of causes of action or any error, defect or irregularity in any proceedings in the suit, not affecting the merits of the case or the jurisdiction of the Court." 13. In the commentary thereon, the learned author, Mulla, mentioned as follows : "The mere circumstances of there being an error, defect or irregularity in any proceeding in a suit is no ground for reversing or varying a decree in appeal. But if it appears that the error, defect or irregularity affected the merits of the case or the jurisdiction of the Court, it would be a ground for reversing or varying the decree. Where an irregularity is one which affects the merits of a case or the jurisdiction of a Court, it is said to be a material irregularity. Where it does not, it is usually spoken of as a mere irregularity. This section cures a mere irregularity, error or defect ......... In Kiran Singh vs. Chaman Paswan 1955 (1) SCR 117, 1954 SC 340, 1954 SCJ 514, 1954 SCA 725, the policy behind this section was thus stated by the Supreme Court : "When a case had been tried by a Court on the merits and judgment rendered, it should not be liable to be reversed purely on technical grounds, unless it had resulted in failure of justice." (Mulla, Code of Civil Procedure, Volume I, pp. 430 & 431) 14. In Muhammad Husain Khan vs. Kishva Nandan AIR 1937 All 655, the Privy Council observed, as per the relevant portion of the headnote, as follows : "The provisions contained in the CPC do not regulate the procedure of their Lordships in hearing appeals from India, but there can be no doubt that the rule embodied in s. 99 proceeds upon a sound principle, and is calculated to promote justice." 15. Even though the provisions of s. 99 of the CPC are in the context of an appeal, the principle laid down therein, to our mind, applies with equal if not greater force to miscellaneous application under s.
254(2) of the IT Act. The principle applies not only to the proceedings in civil Courts but also to proceedings in a quasi-judicial forum like the Tribunal. Reference may also be made to s. 11 of the CPC which deals with the doctrine of res judicata. Explns. IV and V to this section read as follows : "Explanation IV. - Any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.
Explanation V. - Any relief claimed in the plaint, which is not expressly granted by the decree, shall, for the purposes of this section, be deemed to have been refused." 16. The principle of res judicata is of general application and applies even to quasi-judicial proceedings like those in the Tribunal.
17. The learned counsel for the assessee had the opportunity of advancing arguments on merits in support of the purchases made by the assessee-firm from its partners and their family members but he did not do so. Having chosen not to agitate that issue in the course of the hearing, it is too late in the day for the learned counsel for the assessee now to mention that the statement of facts and the grounds of appeal before the first appellate authority were not filed by the Department with their appeal memo before the Tribunal. We see no reason for not extending the salutory principle enunciated in Expln. IV of s.
11 of the CPC to the proceedings under s. 254(2) of the IT Act.
Similarly, Expln. V to s. 11 of the CPC negates the contention of the learned counsel for the assessee that the CIT(A) had not dealt with the question of the purchases in question effected by the assessee-firm. He did not specify that he was not going into that aspect of that matter.
He did not mention that he was reserving his judgment on that aspect of the matter. In the circumstances, it has to be presumed that he agreed with the findings of the AO that the purchases were not genuine. The only reason why he decided the issue in favour of the Department was because of, as already mentioned, the decision of the Hon'ble Supreme Court in the case of Jamnaprasad Kanhaiyalal vs. CIT (supra) and that inference was made by the Tribunal in its order. An inference may be assailed, which is altogether a different matter. That does not, to our mind, given rise to a rectifiable error under s. 254(2) of the IT Act.
18. In the case of New India Construction Co. vs. CIT (supra), relied on by the learned counsel for the assessee, the Hon'ble Calcutta High Court observed that the provision that the memorandum of appeal should be accompanied by a certified copy of the order appealed against is mandatory. If there is a delay in the filing of the certified copy of the order appealed against, there should be a separate application for condonation of the delay, because the appeal can be regarded as having been validly filing only on the date on which the certified copy had been filed. But the Hon'ble Calcutta High Court came to this conclusion because of the provisions of s. 268 of the IT Act, which provides for exclusion of time for obtaining the certified copy of the order for the purpose of counting the period of limitation. There is no such section in the IT Act which makes a similar stipulation about the written statement and the grounds of appeal before the appellate authority which are referred along with the certified copy in r. 9 of the Appellate Tribunal Rules. The observations of the Hon'ble Calcutta High Court in this context are as follows : "As stated hereinbefore it was mainly contended by the assessee's counsel on r. 9(2) of the IT (Appellate Tribunal) Rules (hereinafter referred to as "Appellate Tribunal Rules") that as the Tribunal has discretion to accept a memorandum of appeal which is not accompanied by all or any of the documents referred in r. 9(1), non-filing of a certified copy of the order appealed from along with the memorandum of appeal is a mere irregularity and the requirement of sub-r. (1) is not mandatory. We are, however, unable to accept this contention.
From the relevant sections and the rules referred to above it appears that filing of the certified copy of the order appealed against is linked up with the period of limitation prescribed for the filing of the appeal. If a certified copy of the order appealed against can be filed at any time before the hearing of the appeal and the appeal is competent where the memorandum of appeal is unaccompanied by the certified copy of the order appealed from and the defect is merely an irregularity then s. 268 of the Act providing for exclusion of the time requisite for obtaining a certified copy of the order for the purpose of computation of the period of limitation for filing of the appeal becomes meaningless.
The provision in the Act allowing exemption of time for taking a certified copy of the order appealed against in computing the period of limitation shows that the requirement, viz., the memorandum of appeal should be accompanied by a certified copy of the order appealed against, is mandatory. Rule 9(1) of the Appellate Tribunal Rules should not be construed with reference to sub-r. (2) only but also with reference to or in the context of the other relevant provisions of the Act. Prescribed forms issued by the Board are also binding. As stated earlier on the similar language used in O. 41, r.
1 of the CPC, the Supreme Court held that the requirement that the decree should be filed with the memorandum of appeal is mandatory.
Therefore, the requirement of r. 9(1) of the Appellate Tribunal Rules that the memorandum of the appeal shall be accompanied by a certified copy of the order appealed against appears to us to be mandatory." 19. Rule 9 of the Appellate Tribunal Rules has undergone some changes and the relevant portion of the rule as it is applicable for the present application reads as follows : "9. (1) Every memorandum of appeal shall be in triplicate and shall be accompanied by two copies (at least one of which shall be a certified copy) of the order appealed against, two copies of the order of the ITO, two copies of the grounds of appeal before the first appellate authority and two copies of the statement of facts, if any, filed before the said appellate authority.
(3) The Tribunal may in its discretion accept a memorandum of appeal which is not accompanied by all or any of the documents referred to in sub-r. (1)." 20. Rules 9(3) reproduced above stood as r. 9(2) at the point of time the Hon'ble Calcutta High Court had considered the issue in the abovementioned judgment. It may be observed that the Hon'ble Calcutta High Court has clearly mentioned that r. 9(1) of the Appellate Tribunal Rules should not be construed with reference only to the provisions of r. 9(2) as they stood at the relevant time or the provisions of r. 9(3) as it is renumbered as on today, but with reference to the other relevant provisions of the IT Act. As s. 268 of the IT Act deals only with the certified copy of the order appealed against and there is no similar provision which deals with the written statement and the grounds of appeal before the first appellate authority, though they are mentioned in the same breath along with the order appealed against in r. 9(1) of the Appellate Tribunal Rules, it has to be construed that the ratio of the decision of the Hon'ble Calcutta High Court is restricted only to what it deals with, i.e., the certified copy of the order appealed against, and does not extend to other documents referred to in r. 9(1) of the Appellate Tribunal Rules. This, to our mind, stands to reason. The most important document in an appeal is the order appealed against and the grounds of appeal taken before the forum considering the appeal, i.e., in the present case, the Tribunal. The statement of facts and the grounds taken before the first appellate authority stand merged in the order of the first appellate authority unless there is any dispute raised that the order of the first appellate authority misrepresents the facts given in the statement of facts. As already mentioned, there is no such dispute raised before us during the course of hearing of the appeal that the factual findings of the AO or the first appellate authority are at variance with those given in the statement of facts. In the circumstances, we fail to see how the ratio of the decision of the Hon'ble Calcutta High Court supports the case of the assessee-firm in the present proceedings.
Actually, to our mind, it goes against the assessee in the sense that the Hon'ble Calcutta High Court has clearly held that r. 9(1) cannot be read in isolation and shorn off all its context.
21. As regards the contention of the learned counsel for the assessee that the written submissions have to be looked into by the Tribunal in the light of the decision of the apex Court in the case of ITAT vs. Dy.
CIT (supra), we can only say that the statement of facts given before the first appellate authority, however lengthy they are, cannot be equated to written submissions. So there is no failure on the part of the Tribunal to have looked into the written submissions in this case.
It is not the case of the assessee that it had filed any written submissions apart from the statement of facts given by it before the first appellate authority. We may also mention that the apex Court in the case of ITAT vs. Dy. CIT (supra) was dealing with a case where the Tribunal refused to admit written submissions and there is no such refusal on our part. Actually, there is not even a request for filing written submissions at any stage. If the assessee-firm had requested to file a copy of the written submissions/statement and grounds of appeal taken by it before the first appellate authority and we had refused to accede to such a request, the said decision of the apex Court would have been applicable. That is not the case at all. The assessee-firm, at no stage of the hearing before us, desired to file a copy of the written submissions/statement and grounds of appeal filed before the first appellate authority as a defence and the learned counsel for the assessee did not even refer to them or to any facts contained therein.
In the circumstances, we do not see the relevance of the judgment of the apex Court in the above case for judging the issue before us.
22. The decision of the apex Court in the case of CIT vs. Filmistan Ltd. (supra) laid down that an appeal is not to be held to be properly filed until the tax has been paid and this decision was given in the context of s. 30 and provisos (1) and (2) thereto of the old Act. It was given in a different context and in the context of a different statutory provision and we do not see its applicability to the issue before us.
23. The same is the position with reference to the other decisions relied on by the learned counsel before us. The learned counsel for the assessee relied on certain other decisions, which we have cited hereinabove, for the proposition that in case there is a palpable mistake, the Tribunal has the power to recall its order, but those decisions come into play only when there is a palpable or patent mistake, and as we have tried to indicate hereinabove, that is not the position in the present case.
24. Regarding the contention of the learned counsel for the assessee that the Tribunal should restrict itself to the subject-matter of the appeal and that it cannot decide issues which were not decided by the CIT(A), we have no quarrel with this proposition. However, we do not see how the Tribunal has traversed beyond the subject-matter of the appeal in the present order. As we have already mentioned, ground No. 2 taken by the Department clearly raises the issue about the genuineness of the purchases of the order of Rs. 1,53,02,266 alleged to have been effected by the assessee-firm from its partners and family members. The CIT(A), as we have tried to indicate hereinabove, implicitly accepted the findings of the AO, though for a different reason mentioned hereinabove he decided the issue in favour of the assessee-firm. In the circumstances, in the context of the grounds taken by the Department before the Tribunal, the Tribunal would have failed in its duty to dispose of the appeal if it had not dealt with this issue. In this context, reference may be made to the Commentary on Income-tax Law by Chaturvedi & Pithisaria at pp. 5330 and 5331, Volume 5, Fourth Edition, and the relevant portion reads as follows : "Tribunal's duty to decide all the issues - being the final fact-finding authority, the Tribunal has to consider and decide all the issues that are brought before it. It cannot decide only one issue arising out of many issues and decline to go into the other issues raised before it on the ground that the further issues will not arise in view of the finding on the issue decided by it. If the Tribunal declines to consider and decide the other issues it will only protract and delay the proceedings, for the assessee has to get the decision of the Tribunal on the initial point set aside by approaching the High Court and, thereafter again go before the Tribunal for a decision on the other issues left undecided by it earlier. This will amount to multiplication of the proceedings under the Act. It is desirable that the Tribunal should avoid disposing of the matters on preliminary issues alone, without deciding all the issues raised before it so that the higher Courts will have the benefit of its decision on other points also if the necessity arises - CIT vs. Ramdas Pharmacy (1970) 77 ITR 276 (Mad).
The need on the part of the appellate authorities to deal with all the contentions urged at the time of disposal of an appeal cannot be over-emphasised. The practice of taking up one amongst several contentions and allowing the appeal on that ground would result in piecemeal disposal of the appeal causing considerable time-lag and consequent hardship on account of the superior appellate authorities taking contrary views in the matter. In the interests of all concerned, appellate authorities like the Dy. CIT(A), CIT(A) and the Tribunal, should address themselves to all the contentions raised before them and dispose of them so that there is a decision on all the points urged. When the matter is processed, no further time will be lost by the necessity to remand the matter on matters not considered [Srinivasa Pitti & Sons vs. CIT (1988) 173 ITR 306 (AP)].
Thus, the Tribunal is under an obligation to consider all the pleas raised in the appeal [CIT vs. Hyderabad Secunderabad Foodgrains Association Ltd. (1989) 175 ITR 574, (AP)]. In other words, the Tribunal has to consider every fact for and against the assessee and has to give findings on all the objections raised before it [Naran Dass Raja Ram & Co. vs. Punjab State (1985) 58 STC 313, (Punj)].
Where on alternative arguments on the facts of a particular case varying findings can be given, it is desirable that the Tribunal should give all findings of fact and not dispose of the matter merely on a point of law [See CIT vs. Ganesh Builders (1979) 116 ITR 911 (Bom)].
When in a particular case two questions arise before the Tribunal to be considered by it and one of which is interlinked with another, it would always be desirable for the Tribunal to consider and answer both the questions. It is not proper for the Tribunal to consider and answer only one question and leaving the other to be considered or answered only when the decision of the Tribunal on the question was found to be erroneous by the Court [see CIT vs. Kartikey V. Sarabhai (1981) 131 ITR 42 (Guj), on appeal (1985) 156 ITR 509 (SC)].
The Tribunal is not absolved of its duty to decide a vital question (e.g., whether the initiation of reassessment proceedings was vaildly done) by a bald statement in the statement of the case (though there was no statement to that effect in the appellate order) to suggest that such question was not argued by the counsel [P. K. Divekar vs. CIT (1985) 151 ITR 11 (Bom)]." 25. The provisions of s. 254(1) are widely worded and they give discretion to the Tribunal to pass such orders on the order appealed against as it deems fit. In the present case, the Tribunal did not go beyond its jurisdiction in deciding the issue of the genuineness of the purchases made by the assessee-firm.
26. It is mentioned in the present application that the finding of the Tribunal that the sale consideration was not paid to the declarants is erroneous. There seems to be some confusion on this issue, as is evident from the relevant portion of the application, which we have extracted hereinabove. The relevant portion of the order of the Tribunal on this issue reads as follows : "12. We have to consider one more aspect of the matter. Catching a clue from a query addressed by the Bench to the learned Departmental Representative, the learned counsel for the assessee-firm has also mentioned that as the gold bought from the partners and their relatives are reflected in its sales or closing stock, the purchases in question cannot be doubted. In other words, the plea is that if the purchases in question are held to be bogus, corresponding debit for purchases from other parties should be allowed, because the assessee-firm could not have sold without purchasing the gold in question and as it is not the case of the Department that there is no quantitative tally. This argument is plausible but we are of the view that it cannot detract from the validity of the addition made by the AO. 13. It has to be stressed that in the present case, the purchases of gold of Rs. 1,53,02,266 represents only credit purchases and not cash purchases. As already mentioned, the accounts of the partners and their relatives from whom the gold in question has been bought have only been credited in the books of the assessee-firm. In other words, no money had flown out of the books by the end of the accounting year towards the purchases. If it had been a case of cash purchases, the argument of the learned counsel for the assessee-firm that in case the purchases from the specified parties are doubted, as an alternative measure, deduction for purchases from third parties for the same extent should be given would have deserved some consideration, but, in the present case, where the purchases are merely on credit basis, no money had flown out of the books and so it was not available for making purchases from third parties. As the gold had admittedly come into the books by way of purchases and no money had flown out of the books towards the purchases in question recorded in the books, it has to be inferred that as the recorded purchases are bogus, the gold has been acquired from the undisclosed income of the assessee-firm held outside the books. As the gold acquired out of the undisclosed income has surfaced in the year of account relevant for the asst. yr. 1988-89, we are of the view that the Department is justified in bringing the value of such gold acquired outside the books to tax in the present assessment year under the provisions of s. 69/69A of the IT Act. Even if the assessee had acquired the gold in one of the earlier years, as it was not disclosed in that year and as it surfaced in the year of account relevant for the present assessment year, we are of the view that the amount has to be taxed in this year." 27. It may be observed that the Tribunal has only mentioned that the purchase considerations were only credited and it did not consider the further issue as to whether such credits would tantamount to payments or not. That seems to be the issue raised in the present application.
28. There is also an observation in the present application that substantial amounts were withdrawn by the sellers before the end of the accounting year, but this finding does not find a place either in the assessment order or in the order of the CIT(A), nor was it mentioned in the course of the hearing. We have already quoted hereinabove the summary of the findings of the AO as given by the CIT(A). The finding at (j) of the said summary is to the effect that the alleged price of the gold ornaments was not paid to the sellers in cash but was credited to their accounts maintained by the assessee-firm. The Tribunal went by this finding and, as already mentioned, this finding was not contradicted during the hearing before us. It is a fresh allegation made in the present application that a portion of the sale price had been withdrawn during the year of account. If fresh facts are advanced in the course of miscellaneous applications, there is no end to litigation. So we reject the application on this issue, as there is no mistake in the original order.
29. Regarding the issue raised in the application that the Tribunal had ruled that there is no evidence to show that if the declarations were made by the assessee-firm, the tax liability of the firm would have been more or less the same, we may reproduce the relevant portion of the Tribunal's order : "11. It is claimed that the tax effect would have been of the same order. The CIT(A) also mentioned this point and we have already reproduced his comments wherein he referred to the calculation given by the counsel for the assessee-firm who appeared before him, according to which the tax effect would have been of the order of Rs. 60 lakhs, which is more or less the same figure as in the case of the partners and their relatives who had actually declared.
Neither the CIT(A) nor the counsel before us has given any basis for working out the tax effect under the alternative arrangement at Rs. 60 lakhs. Assuming that the figure is correct, we find that this is not a strong enough argument in favour of the assessee-firm. The CIT(A) approvingly referred to the plea of the counsel for the assessee before him that the assessee could have declared the same gold in its hands and then withdrew it in favour of the partners by debiting their capital accounts. By this method, at the most, the assessee-firm would have created separate files only in the case of the partners. The partners of the assessee-firm were only five, whereas the declarants, being the partners and their relatives, are of the order of 18. By the method adopted by the assessee-firm, i.e., by declaring the gold in the hands of the partners and their relatives, the assessee-firm had created separate files with separate build-up of capital in their hands and the consequential benefit of claiming separate exemption limit in the years to come.
At the least, the assessee might have desired in 1987 not to do anything which could cause any suspicion regarding its activities.
At any rate, it is not for us to speculate as to the reasons that prompted the assessee-firm to declare the gold of 54.803 Kgs. in the hands of the partners and their relatives and not in its own hands.
The question before us is whether the assessee-firm did purchase the gold of Rs. 1,53,02,266 debited in its books. We are of the view that the assessee-firm could not prove the purchases in view of the factors enumerated by the AO. We have already mentioned that the learned counsel for the assessee-firm has not advanced any arguments in respect of the various factors enumerated by the AO to infer that the purchases of the gold in question from the said parties were bogus." 30. It may be observed that the Tribunal referred to the remark of the CIT(A) that there is no revenue effect one way or the other but only mentioned that there is no basis for this finding of the CIT(A) and proceeded further on the assumption that the remark of the CIT(A) was correct and rejected the claim of the assessee on the ground that the entire manipulation resulted at least in capital building up in the hands of ladies and minors. Even on such an assumption, it found no merit in the case of the assessee-firm for the reasons mentioned in the order. We do not see how this gives rise to a rectifiable error in the order.
31. Regarding the other point made out in the application that the AO had assessed the parties in question with regard to the said transactions to capital gains and so he had no basis to prove that the sales in question were not genuine, the Tribunal did refer to this contention raised by the learned counsel for the assessee in the following terms : "The CIT(A) has also summarised the various taxes paid by the declarants under the Amnesty Scheme and mentioned that the declarants have paid income-tax for the asst. yr. 1978-79, wealth-tax for the asst. yrs. 1978-79 to 1987-88 and capital gains tax on the sale of the jewellery to the assessee-firm in the year of the account relevant for the asst. yr. 1988-89 and also purchase tax under the Bombay Sales-tax Act, 1959, aggregating to Rs. 57,64,659.
He also mentioned that the assessee-firm paid purchase tax at 1 per cent under the BST Act, 1959, on the purchases in question of Rs. 1,53,02,266, of Rs. 1,71,386 and thus the aggregate taxes paid by the declarants under the amnesty scheme and the assessee-firm aggregated to a substantial figure of Rs. 59,36,045. As already mentioned, he agreed with the contention of the assessee that even if the amnesty was availed of in the hands of the assessee-firm for the jewellery in question, it would have resulted only in an approximate tax effect of Rs. 60 lakhs ......." 32. It, however, decided the issue in favour of the Department radically discounting the weightage of the above factors, inter alia, for the reasons recorded by it towards the close of the order and the relevant portion reads as follows : "14. There is an attempt of capital build-up in the hands of ladies, minors and other relatives of the partners of the assessee-firm. The attempt could have been made by the partners of the assessee-firm in their individual capacity or it could have been done by the assessee-firm. Considering the number of coincidences involved in the scheme, we are of the view that the entire scheme has been planned and coordinated by the assessee-firm. In the case of Homi Jehangir Gheesta vs. CIT (1961) 41 ITR 135 (SC), the apex Court held that while deciding an issue, the Tribunal can consider probabilities properly arising from the facts alleged or proved and by doing so the Tribunal does not indulge in conjectures, surmises or suspicions. The apex Court expressed a similar view in the case of Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC) and held that the decision of an adjudicating body based on surrounding circumstances and human probabilities is not bad in law and deserves to be upheld. In the case of McDowell & Co. Ltd. vs. CTO (1988) 154 ITR 148 (SC), the apex Court held that colourable devices are not part of legitimate tax planning. Going by the ratio of these decisions, we are of the view that the assessee-firm cannot be dissociated from the scheme of declaration of gold under the Amnesty Scheme in the names of the family members of the partners of the assessee-firm, as different individuals could not have hit upon the same idea of acquiring gold in the year of account relevant for the asst. yr.
1978-79 and declaring such gold under the Amnesty Scheme and getting the gold valued by the same valuer on the same day and filing their returns under the amnesty scheme on the same day, i.e., 30th March, 1987, and subsequently getting the gold converted into ornaments through Karigars on more or less the same day and subsequently selling the ornaments to the assessee-firm in the same year of account without the planning, controlling and coordination of a central agency and that agency in the surrounding circumstances appears to be only the assessee-firm. The apex Court has held in the case of Jamnaprasad Kanhaiyalal vs. CIT (supra) that there is no double taxation in taxing the person to whom the income actually belonged with the persons who falsely declared it in their returns filed under the Voluntary Disclosure Scheme. That is a risk which an assessee resorting to unfair tax saving devices has necessarily to run and an assessee who has resorted to such devices has to thank himself for it." 33. In the light of the above, we find that the Tribunal did consider all aspects of the matter, inclusive of the payment of capital gains tax, and if it took the view in favour of the Department that does not mean that there is any rectifiable error in the order of the Tribunal.
We find that the issues raised in the present application are covered squarely against the assessee by the decision of the apex Court in the case of CIT vs. Calcutta Discount Co. Ltd. (1973) 91 ITR 8 (SC) wherein the apex Court deprecated the attitude of the Tribunal for having been unduly influenced by procedural technicalities. The relevant remarks of their Lordships in this context appear at p. 11 of the Report and are as follows : "The procedure adopted by the Tribunal appears to us to be somewhat strange. The Tribunal, instead of dealing with the substance of the matter, appears to have been unduly influenced by procedural technicalities. We are also not impressed with the conclusion of the Tribunal that these appeal memo, was not in accordance with law. No specific formula is necessary for seeking relief at the hands of any Court or Tribunal if the necessary grounds are taken in the appeal memo." 34. It is exactly the procedural technicalities that are being agitated in the present application. We see no reason to recall the Tribunal's order on such technical grounds which do not throw up any apparent error which can be rectified under the provisions of s. 254(2) of the IT Act. The provisions of s. 254(2) are analogous to those of s. 154 and while considering the scope of the latter section, the apex Court held in the case of T. S. Balaram, ITO vs. Volkart Bros. (1971) 82 ITR 50 (SC) that no debatable issue can be rectified under the said section.