In this appeal, the assessee has filed an application seeking directions of the Tribunal calling for documents and record as prayed in his application dated 28-6-2005.
This appeal is filed by the assessee which is directed against the order of the Commissioner (Appeals)-I, Trivandrum dated 6-12-2004 for the assessment year 2000-01. In the memorandum of appeal filed by the assessee, the assessee has urged six grounds. Subsequently, the assessee filed an application seeking the leave of the Tribunal to allow him to raise the additional grounds, and the said application in the form of affidavit dated 7-2-2005 was heard by this Tribunal. After hearing the learned Counsel for the assessee and the learned Departmental Representative, this Tribunal admitted two additional grounds as raised by the assessee on 1-5-2005. The additional grounds which are raised by the assessee and admitted by this Tribunal are as under : (i) That the initiation of proceedings in the instant case by the issue of a notice under section 148 of the Income Tax Act, 1961, for the assessment year 2000-01 is without jurisdiction and, therefore, bad in law.
(ii) That the assessment made on the basis of the notice under section 148 is, therefore, bad in law.
The brief facts pertaining to the case are that the assessee was the Managing Director of the company M/s. Peninsula Polymers Ltd., Trivandrum. It appears that the assessee had filed his return of income for assessment year 2000-01 on 31-8-2000. It further appears that his return was processed under section 143(1) on 28-3-2000 accepting the income returned. Subsequently, re-assessment proceedings were initiated against the assessee by issue of notice under section 148 to the assessee. The assessment of the assessee was completed under section 143(3) read with section 148 on 15-3-2004 determining the total income of the assessee at Rs. 4,09,69,360.
The assessee challenged the re-assessment proceedings by filing appeal to the Commissioner (Appeals). The Commissioner (Appeals) decided the appeal vide his order dated 6-12-2004. Being aggrieved by the order of the Commissioner (Appeals), the assessee has filed the present appeal before us.
Assessee's learned Advocate filed Miscellaneous Application in this appeal seeking directions of this Tribunal under section 255(6) of the Income Tax Act. The assessing officer has also filed his reply dated 1-7-2005 to the contentions and averments made by the assessee in his application dated 20-6-2005 strongly opposing the application.
We have heard the learned Advocate Shri V.U. Eradi for the assessee and the learned Sr. Departmental Representative, Shri V. Sreekumar.
The learned Advocate for the assessee submitted that the issue of jurisdiction of the assessing officer to initiate the proceedings on the facts and circumstances of the case was not before the Commissioner (Appeals). He further submitted that this Tribunal has already granted leave to the assessee and has already admitted two additional grounds on the issue of jurisdiction for initiation of re-assessment proceedings against him. He further submitted that as the issue of jurisdiction for initiation of the re-assessment proceedings is a very important issue which goes to the root of the case and for deciding the said issue, assessment record of the assessee in the custody of the assessing officer plays a vital role. The learned advocate has taken us through the copy of the reply sent by the CIT, Trivandrum, dated 6-5-2005 to him. He submitted that he helplessly tried to get inspection of the assessment record and certified copies thereof but the same was denied by the assessing officer as well as by the CIT, Trivandrum. The learned Advocate has taken us through the order of the Commissioner (Appeals) which is challenged by the assessee before us, more particularly para 9 which reads as under : "On going through the order sheet of the case, I find that the return was accepted under section 143(1)(a). After doing the calculation the refund due to the appellant, a note has been put up by the official checking the refund bringing to the notice of the assessing officer the anomaly of the appellant having remitted advance tax of Rs. 63,94,000 and self assessment tax of Rs. 5,00,000 in addition to the TDS amount of Rs. 17,95,580. The dealing official has also brought to the notice of the assessing officer the huge receipt of Rs. 3,90,00,000 by the appellant from M/s. Tarumo Corporation which was not offered to tax. In fact, the note put up by the dealing official in the order sheet has been the starting point for the good assessment in this case. On enquiry with the assessing officer, I find that the note has been put up by Shri G.R. Madhusoodanan Nair, Senior Tax Assistant. Kudos to the alacrity and work involvement exhibited by this official in this case." Then the learned Counsel laid emphasis on the observation of the CIT(A) that "the note put up by the dealing officer in the order sheet has been the starting point for the good assessment in this case. On enquiry with the assessing officer, I find that the note has been put up by Shri G.R. Madhusoodanan Nair, Senior Tax Assistant". The learned Advocate submitted that assumption of jurisdiction under section 147 is a very crucial issue involved in this appeal. It appears from the observation of the Commissioner (Appeals) that one Shri G.R.Madhusoodanan Nair, Senior Tax Assistant had put up some note and on the basis of the said note, the re-assessment proceedings against the assessee were initiated. The learned Advocate further submitted that the contents of the said note which was put up by Shri Madhusoodanan to the assessing officer are very much relevant to examine whether the mandatory conditions for initiation of the re-assessment proceedings have properly been complied with or not. He further submitted that though the assessing officer has communicated the reasons for initiating the re-assessment proceedings in the assessee's case, but at the same time, the assessee was refused permission to take inspection of the said note which was put up by Shri Madhusoodanan to the assessing officer.
The learned Advocate further submitted that though it is categorically stated by the assessing officer in his order that the return filed by the assessee was processed under section 143(1), till today the assessee has not received any intimation from the assessing officer. He further submitted that in fact the assessing officer has initiated proceedings under section 143(2). He has also taken us through page 32 of the paper book where the copy of the letter sent by the assessing officer to the assessce is placed. The learned Advocate further submitted that as per the provisions of section 255(6) of Income Tax Act, 1961, this Tribunal has plenary powers, as the assessee has been denied the opportunity to take inspection of the assessment record, to issue directions to the assessing officer to allow the assessee inspection of the entire record of the re-assessment proceedings and to provide him certified copies of (1) note put up by Shri G.R.Madhusoodanan Nair, Senior Tax Assistant to the assessing officer, (2) order-sheet of the assessment proceedings, and (3) copy of the intimation which is alleged to be sent to the assessee in respect of his return processed under section 143(1). The learned Advocate also relied on the following decisions in support of his contentions :Food Corpn. of India v. Provident Fund Commissioner The learned Departmental Representative, on the other hand, vehemently opposed the application filed by the assessee seeking direction of the Tribunal for allowing the assessee to take inspection of the assessment record and to obtain copies of the documents as prayed by the assessee in his application dated 28-6-2005. He submitted that the assessee is in the second appeal and the Tribunal is acting in the appellate jurisdiction and the authority to be exercised is, therefore, that of the civil court under the appellate Jurisdiction and not as the civil court in the original jurisdiction. He further submitted that the assessing officer has no right for seeking the direction of this Tribunal as the reasons for the re-opening of his case were communicated to him. The Departmental Representative further submitted that the assessing officer has no objection for producing the documents required by the assessee before the Tribunal and no privilege is also claimed but he has got objection to inspection of the record and documents by the assessee or by his Advocated which have not been used as evidence in the order under appeal. He also submitted that the assessee has a right to contend that the reasons for forming the belief that income escaped assessment were not based on adequate materials on record before the assessing officer at the relevant time and in such a situation, the assessee may have the right under section 255(6) of the Income Tax Act to invoke the jurisdiction of the Tribunal as civil court to ask the respondent to place before the Tribunal the materials on which the assessing officer formed the belief that income had escaped assessment and also that the assessee can be allowed an opportunity to examine the same documents. He has also taken us through paras 8 and 9 of the order of the Commissioner (Appeals) where the Commissioner (Appeals) has made a good remark in favour of the assessing officer. The learned Departmental Representative further submitted that it is a well-settled proposition of law that assessing officer can gather information from anybody and even in the case of Indian & Eastern Newspaper Society v. CIT (1979) 119 ITR 996 the Hon'ble Supreme Court has held that a fact relevant can be pointed out by the Audit Party and this can be the starting point of action under section 147. He further submitted that with equal force that the order sheet which is used to make a brief record of the proceedings of the case is bound to contain several entries which are not relevant to take a decision on this issue and which are used for internal purposes by the officials of the department and that the assessee does not have the right to access or inspection of the same. He has also submitted that the assessee has already received the intimation under section 143(1).
The learned Departmental Representative reiterated his argument which is nothing but contentions and averments in the reply filed by the assessing officer opposing the application of the assessee.
It is not disputed in this case that the re-assessment of the assessee was completed by initiating action under section 147. We find some substance in the argument of the learned Advocate for the assessee that for initiating the re-assessment proceedings certainly some mandatory legal requirements are to be satisfied. As per the observations made by the Commissioner (Appeals) in para 9 of his order, it is clear that the note put up by the dealing official namely, Shri G.R. Madhusoodanan Nair, Senior Tax Assistant is relevant to decide whether the assessing officer has rightly initiated re-assessment proceedings against the assessee or not and whether for initiation of reassessment proceedings, the assessing officer has applied his mind or not. Secondly though it is submitted by the learned Departmental Representative that intimation in respect of the assessee's return processed under section 143(1) was sent to the assessee but nothing is produced by him before us to show that the copy of intimation was served on the assessee. In fact, the assessee has filed an affidavit stating that he has not received any intimation in respect of his return processed under section 143(1).
There is no substance in the argument of the learned Departmental Representative that the assessee is in the second appeal and hence this Tribunal has no power to give any directions to the assessing officer for producing the relevant record if this Tribunal desires the same for disposing of the appeal. We would like to reproduce here section 255(5) and (6) which are as under : (5) Subject to the provisions of this Act, the Appellate Tribunal shall have powers to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.
(6) The Appellate Tribunal shall, for the purpose of discharging its functions, have all the powers which are vested in the income-tax authorities referred to in section 131, and any proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purposes of section 196 of the Indian Penal Code (45 of 1860), and the Appellate Tribunal shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898 (5 of 1898)." Though the Tribunal is not tax authority but for discharging its functions the Tribunal has been vested with all the powers, which are vested in the income-tax authorities. Moreover rule 29 of the ITAT Rules, 1963 is also very much relevant which is as under: "Rule 29 : The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced." It is very clear from rule 29 that the Tribunal can, if required, direct any party to produce any document or any witness to be examined or to file affidavit, even in the nature of additional evidence, for deciding the appeal. It is well-settled proposition of law that the powers of the Tribunal in dealing with the appeal are expressed by the statute in widest possible terms. Merely because the proceedings before the Tribunal are appellate proceedings, it does not put any restriction on the Tribunal in giving direction for production of documents and for calling information from the parties. In our considered opinion, the following records and documents are relevant for deciding the issue regarding validity of re-assessment proceedings initiated against the assessee: (i) Intimation on the record of the assessing officer in respect of the assessee's return of assessment year -2000-01 processed tinder section 143(1) of the Income Tax Act.
(ii) Original note put up by Shri G.R. Madhusoodanan Nair, Senior Tax Assistant to the assessing officer, which is the starting point for initiation of the re-assessment proceedings challenged by the assessee in this appeal.
The assessing officer is directed to produce on the next date of hearing the record and documents mentioned in para 13 above before us.
The assessing officer is further directed to allow the assessee or his advocate to take inspection of the documents and record mentioned in para 13 above in his office during any of the working days before the next date of hearing. The registry is directed to post this appeal on 18-8-2005. The parties have to take notice of the next date of hearing of this appeal as mentioned in this order. Order accordingly.