IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 22ND SEPTEMBER 2010 / 31ST BHADRA 1932 ITA.No. 425 of 2009() --------------------- AGAINST THE ORDER DATED 12/12/2005 IN IT (S&S) A.NO.49(COCH)/2004 of INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH .................... APPELLANT/RESPONDENT: ---------------------------------------- THE COMMISSIONER OF INCOME TAX, KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, INCOME TAX RESPONDENT(S): APPELLANT: ------------------------------------------------- M/S.JASS ROLLER FLOUR MILLS PVT. LTD., ETTUMANOOR, KOTTAYAM. BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22/09/2010 ALONG WITH ITA NO. 412 OF 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. ------------------------------------------- I.T. Appeal Nos.425 of 2009 and 412 of 2009 ------------------------------------------- Dated this the 22nd September, 2010 JUDGMENT Ramachandran Nair, J. The connected appeals are filed by the revenue challenging the orders of the Tribunal, both issued in the block assessment appeal and in the appeal filed against penalty levied under Section 158BFA(2) of the Income Tax Act. 2. We have heard the Senior Standing Counsel appearing for the appellant and Sri.P.Balakrishnan, Advocate appearing for the respondent-assessee. 3. During the last hearing of the case, the department’s main challenge against the order of the Tribunal in the assessment appeal, that is against the Tribunal exceeding it's jurisdiction, was considered. The grievance of the department was that without raising any dispute against the assessment pertaining to the estimation of income made for various years in the first appeal, the ITA 425/2009 & 412/2009 2 Tribunal considered the appeal before it on those matters as if it is the first appeal and decided the appeal. We, therefore, directed the department to produce the grounds of appeal raised by the assessee before the Commissioner of Income Tax (Appeals). After going through the grounds of appeal filed by the assessee before the Commissioner of Income Tax (Appeals) and after considering the CIT(A)’s order, we notice that the Tribunal has prima facie exceeded its jurisdiction in considering and deciding the matters that do not arise from the orders of CIT(A). Both sides cited the decisions reported in National Thermal Power Co. Ltd. V Commissioner of Income Tax 229 ITR 383 and another decision reported in Goetze (India) Ltd. V Commissioner of Income Tax 284 ITR 323, wherein the Supreme Court has held that the Tribunal is entitled to consider questions of law to be raised for the first time before it and the Tribunal can, based on the facts available on record, decide such questions of law raised for the first time before it. However, in this case what we find is that the matters which were never agitated in the first appeal were allowed to be raised before the Tribunal for the first time and the Tribunal decided the appeals on several factual issues ITA 425/2009 & 412/2009 3 treating the same as first appeal before it. From the orders of the CIT (Appeal) on the grounds raised before it, prima facie, we find that the assessee has contested the reliefs granted under Section 80-IA for the assessment year 1994- 1995 and for the assessment year 1998-1999. The CIT (Appeal) has considered in detail the claim for relief under Section 80-IA and it was in fact granted. So far as the estimation of income for several years in the assessment made is concerned, what the assessee contested before the CIT (Appeal) was only in respect of the mistakes in the computation for the block period ending in 1998-1999. Here again, the First Appellate Authority has granted relief. However, from the grounds of appeal filed before the CIT (Appeals) and the order of the CIT (Appeal), we find that the assessee has not contested the assessment on any other grounds other than the issues considered and decided by the CIT (Appeal). However, on going through the appellate order of the Tribunal, we notice that the assessee has raised absolutely new grounds which were never raised or considered by the CIT (Appeal). We, prima facie feel that the Tribunal exceeded its jurisdiction under Section 253. The Tribunal has to decide the appeal as the Second ITA 425/2009 & 412/2009 4 Appellate Authority against the orders of the CIT (Appeal). We do not think the Tribunal can convert itself to the First Appellate Authority on questions of fact that too relating to estimation of income. If the assessee has a case that the grounds raised before the CIT (Appeal) were not considered and decided by it, then the assessee's remedy was to file a rectification application and in the course of appeal, if found the Tribunal finds that CIT (Appeal) has not considered and decided the grounds raised by the assessee, it was for the Tribunal to remand the case and direct the CIT (Appeal) to consider the appeal on those grounds. Therefore, prima facie, we feel the Tribunal exceeded it's jurisdiction by deciding matters pertaining to estimation of income for various years in the block period, which were not raised before the CIT (Appeals) and decided by him. Therefore, we are of the view that matter requires re-consideration by the Tribunal on this aspect, because the department's objection about maintainability of appeal on fresh grounds raised is not considered and decided by the Tribunal. We, therefore, allow IT Appeal No.412/2008 by setting aside the orders of the Tribunal and by restoring the appeal back to the Tribunal for considering the ITA 425/2009 & 412/2009 5 maintainability of appeal on the new grounds raised and to decide the matter afresh on all grounds. 4. I.T.Appeal No.425/2005 is an appeal filed against the penalty. The first appeal was disposed of by the CIT (Appeal) on the assumption that the assessee has no objection against the addition. However, the assessee contested addition in the second appeal filed before the Tribunal which is already set aside by us as indicated above. Since the Tribunal has decided penalty appeal also, following their order in assessment appeal which we have set aside, we set aside this said order also directing the Tribunal to re-consider the matter based on the decision in the assessment appeal and after or along with the said appeal. Both sides are free to raise all objections and the Tribunal will decide both the appeals on all issues raised. C.N.RAMACHANDRAN NAIR JUDGE K.SURENDRA MOHAN JUDGE css/