1. D.N. CHOWDHURY, J.--The reference under section 256(1) of the Income Tax Act, 1961, raised at the instance of the assessee revolves round the time limit for completion of assessment and reassessm ent as enjoined in section 153(1)(b) of the Income Tax Act, 1961, pertaining to the assessm ent year 1985-86 and the accounting year ending on March 31, 1985.
2. In the course of assessm ent, the Assessing Officer asked the assessee to explain certain bank deposits, bank accounts, fixed deposits and investments in respect of properties that stood in his name and in the name of his wife and children. He was also required to produce the names of the creditors from whom he had taken loans. Summons were issued to the creditors some of whom were interrogated/examined by the Assessing Officer on March 8, 1988. The Assessing Officer noticed that the assessee had various bank deposits in his name which were not explained. The Assessing Officer mentioned some of those transactions_ Under the normal course, the assessm ent was to be completed on or before March 31, 1988, in terms of section 153(1)(a)(iii) of the Act of 1961. The Assessing Officer, however, held the opinion that the assessee was at fault for the concealment of his income thereby making him liable under section 171(1)(c) of the Act of 1961.
3. The Assessing Officer completed the assessment on March 31, 1989, after making additions of various amounts under the head "Other sources". The assessment was assailed in appeal in the ground that the assessm ent was barred by limitation and that there was no material of whatsoever manner in the possession of the Assessing Officer to hold that the case fell within the rigour of section 271(1)(c) of the Act of 1961. The appellate authority accepted the contention of the assessee and held that the assessm ent was barred by limitation and that the provision of section 153(1)(b) of the Act of 1961, was not applicable. On appeal by the Revenue, the Appellate Tribunal held that the assessm ent was not barred by limitation and that provisions of section 153(1)(b) read with section 271(1)(c) of the Act of 1961, were applicable to the case. The Appellate Tribunal distinguished the judgment of the Allahabad High Court in CIT v. Surajpal Singh (1977) 108 ITR 746, which was relied upon by the Commissioner of Income-tax (Appeals), on the facts. The Tribunal held that till March 28, 1988, no proper explanation was given/filed by the assessee in respect of the deposits. The Tribunal, after evaluating the materials in record, found that since no materials were produced before the Assessing Officer explaining the amounts/accounts as indicated by the Assessing Officer, extension of limitation under section 153(1)(b) read with section 271(1)(c) of the Act of 1961, was permissible and accordingly, directed the Assessing Officer to pass a fresh order after giving an opportunity to the parties. The assessee not being satisfied with the order of the Appellate Tribunal, made the reference application under section 256(1) of the Act of 1961, to draw up a statement of the case and to refer the two questions indicated in the application to the High Court for its opinion. The Appellate Tribunal reframed the questions and accordingly made,the following reference: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the provisions of section 153 (1)(b) of the Income Tax Act, 1961, read with section 271(1)(c) were applicable and that the extended period of limitation of eight years was available to the Assessing Officer and in that vie in holding that the assessment made on March 31, 1989, was not barred by limitation under section 153(1)(a)(iii) of the Act?"
4. Mr. R. Gogoi, learned senior counsel appearing of behalf of the assessee, referred to the statutory provisions pertaining to assessm ent and submitted that the statute has provided procedure for assessm ent and also set out the time limit for completion of assessment and reassessment.
5. Assessm ents. Are to be made within the period delineated by the statute. Extension of the period is permissible only under the exceptions set out by the statute. Mr. Gogoi, learned senior counsel, referred to the provisions of . Subsection (1) of section 153 of the A& of 1961, and submitted that on the face of the admitted facts borne out by the records, the authority was duty bound to complete the assessm ent within the normal period. The Department did not have any. Material in its possession to extend the limitation in aid of clause (b) of subsection (1) of section 153 of the Act, 1961. Mr. Gogoi, learned senior counsel appearing on behalf of the appellant/applicant, in support of his contentions referred to the Bench decision of the Allahabad High Court in CIT v. Surajpal Singh (1977) 108 ITR 746. Learned senior counsel submitted that the Assessing Officer in the instant case deliberately allowed the four years period to elapse without any positive action and' thereafter in a most illegal, fashion, sought to avail of the exceptions contained in section. 153(1)(b)
(iii) of the Act of 1961. Referring to the materials relied upon by the Assessing Officer, Mr. Gogoi, learned senior counsel, submitted that those' materials were not sufficient to extend the period of limitation.
6. Mr. U. Bhuyan, the learned standing counsel appearing on behalf of the Revenue, strenuously opposed the plea of the assessee and submitted that there was no illegality or impropriety on the part of the Assessing Officer in taking aid of clause (b) to subsection (1) of section 153 of the Act of 1961. Learned counsel for the Revenue, referred to the order, dated March 28, 1988, passed by the Assessing Officer and submitted that in the absence of any explanation of whatsoever manner, the Assessing Officer has had no alternative but to extend the period of limitation for assessment in aid of clause (b) of subsection (1) of section 153 of the Act of 1961. On the facts, the decision referred to in Surajpal Singh's case (1977) 108 ITR 746 (All), is not applicable to the case in hand, contended Mr. U. Bhuyan, learned standing counsel for the Revenue.
7. Parliament showed its concern for expeditious disposal of the assessment proceedings and for that purpose of time limit for completion of assessment and reassessment has been set out in section 153 of the Act of 1961. In order to expedite the disposal of the assessment proceedings during the relevant time, amendment was made by the Finance Act of 1968; effecting a phased reduction in the time limit from four years to two years as indicated in sub-clauses (i), (ii) and (iii) of clause (a) to subsection (1) of section 153 of the Act of 1961. However, in those cases wherein the assessee has made concealment of particulars of his income or furnished inaccurate particulars of such income, as mentioned in section 271(1)(c) of the Act of 1961, a longer time period is prescribed in view of the fact that such enquiry at the assessment stage would be likely to consume more time and accordingly, a longer time limit for completion of such assessment is prescribed. In aid of the aforesaid or provisions, the Assessing Officer is armed with the jurisdiction to prolong the assessm ent on fulfilment of the conditions set out in clause (b) to subsection (1) of section 153 of the Act of 1961. The power is not arbitrary. The Assessing Officer can stretch the period of limitation on being satisfied, on the materials on record, about the necessity of invoking section 271(1)(c) of the Act of 1961. It is no doubt true that the power conferred on the Assessing Officer is not arbitrary power. It has to be exercised only when condition (s) set out in clause (b) of subsection (1) of section 153 of the 1961, is/are satisfied. But no such issue arises in the present matter.
8. In the case in hand, the Assessing Officer provided opportunity to the assessee to give explanations for the various amounts of deposits and for the withdrawals in the names of the assessee, his wife and children (sons). In those circumstances, the assessing Officer noted in his order, dated March 28, 1988, about his satisfaction for extending the period of limitation. The Tribunal accepted the finding of the Assessing Officer. In these circumstances, it cannot be said that the Assessing Officer acted illegally in extending the period of limitation for assessment. The assessm ent was made on March 31, 1989, i.e., within the period of eight years and in the circumstances the assessm ent made on March 31, 1989, could not be said to be barred by limitation. The decision in Surajpal Singh's case (1977) 108 ITR 746 (All.), has no application in the case.
9. In the aforesaid case Surajpal Singh (1977) 108 ITR 746 (All), the assessee did offer an explanation.
10. That apart, the material particulars required for exercise of the power under section 153(1)(b) were non-existent. The decision of this Court in Smt. Savitri Rani Malik v. CIT (1990) 186 ITR 701, also does not come to the aid of the assessee. In the aforesaid case of Smt. Savitri Rani Malik (1990) 186 ITR 701 (Gauhati), the assessee was not made aware of the move of the Revenue authority to take the case out of the normal period of limitation in the absence of any notice within the period of limitation. Confronted with this situation Mr. R. Gogoj, learned senior counsel for the applicant/appellant (assessee), submitted that it was incumbent on the part of the authority to inform the assessee about the discovery of concealment of income within the normal period of limitation and the said fact being evident from the record, it is a fit case in which this Court should call for a supplementary statement of the case Learned senior counsel appearing on behalf of the assessee submitted that in order to answer the questions referred to it satisfactorily, it is necessary to have additional materials included in the statement of the case and, accordingly, this Court should issue appropriate direction in that behalf to submit a supplementary statement of the case.
11. In support of his contention, Mr. Gogoi referred to two decisions of the Supreme Coda in New Jehangir Vakil Mills Ltd. v. CIT (1959) 57 ITR 11, and in CIT v. Scindia Steam Navigation Co. Ltd. (1961)
12. 43 ITR 589. In our view, the aforesaid decisions need not detain us since the question now sought to be raised on the issue of notice, was neither raised before the Appellate Tribunal nor was the same considered by it.
13. In New Jahangir Vakil Mills Ltd.'s case (1959) 37 ITR 11, the Supreme Court held that the scope of a reference under section 66(2) of the Indian Income-tax Act, 1922, was co-extensive with that of the one under section 66(1) of the Act, 1922, and, therefore, the Court (High Court) had no power or jurisdiction under section 66(2) to travel beyond the ambit of section 66(1). Under both these provisions, it is only a question of law arising out of the order of the Tribunal that could be referred; that the object of section 66(4) of the Act of 1922, was to enable the Court to obtain an additional statement of the case only for the purpose of deciding questions referred under sections 66(1) and 66(2) and no investigation could be ordered in respect of new questions which were not and could not be the subject-matter of reference under sections 66(1) and 66(2) of the Act of 1922.
14. The Supreme Court in CIT v. Scindia Steam Navigation Co. Ltd. (1961) 42 ITR 589, summed up its discussion on the issue in the following manner (page 611): "(1) When a question is raised before the Tribunal and is dealt with by it, is clearly one arising out of its order.
(2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order.
(3) When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order.
(4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be question- arising out of its order notwithstanding that it may arise on the findings given by it.
15. Stating the position compendiously, it is only a question that has been raised before or decided by the Tribunal that could be held to arise out of its order."
16. Section 66 of the Indian Income-tax Act, 1922, is projected in section 256 of the Income Tax Act, 1961.
17. Section 66(4) of the Act of 1922, is found in section 258 of the Act of 1961. The power under section 258 of the Act of 1961, though wide in nature, there are inherent limitations also. The High Court in exercise of its advisory powers is not to send back a case to the Tribunal to ascertain fresh facts and to embark upon a fresh line of enquiry. The High Court's power under section 258 of the Act of 1961, is not to be exercised for providing more chance to the party(ies) to establish its case by a fresh and divergent evidence with a different colour. The question that was canvassed in this proceeding was neither raised before the Tribunal, nor the Tribunal considered the same.
18. For the reasons stated above, we answer the reference in the affirmative and in favour of the Revenue and against the assessee.
19. In the circumstances of the case, there shall, however, be no order as to costs.
20. Reference answered.
21. 2001 1 T D 2788 [240 I T R 169] [Madras High Court (India)] Before K.A. Thanikkachalam and K. Gnanaprakasam, JJ COMMISSIONER OF INCOME-TAX versus HARIDAS BHAGATH & CO. (P.) LTD.
22. Tax Cases Nos.315 and 316 of 1986 (References Nos.193 and 194 of 1986), decided on 5th August, 1997.
(a) Income-tax--- ----Capital or revenue expenditure---Expenditure incurred in providing extra amenities in leasehold premises---No capital asset of enduring nature brought into existence---Revenue expenditure---Indian Income Tax Act, 1961, S.37.
23. The assessee, a company which carried on business in building materials, was allotted on lease hold some bays in Nehru Stadium Shopping Complex. Some construction work, providing minimum facilities like walls, racks, minimum electrical fittings and the like had to be done to make the property suitable for business purposes. The Stadium Committee permitted the allottees to do such construction work.
24. The Committee undertook to bear the expenditure up to Rs.64,000. If additional facilities were required, the same had to be provided by the assessee itself at its cost. The total cost of construction worked out to Rs.97,880. So, the assessee claimed the balance amount of Rs.33,800 revenue expenditure. The Income-tax Officer disallowed the claim. The Tribunal allowed.The claim as revenue expenditure inasmuch as no capital asset of enduring nature was brought into existence. On a reference: Held, affirming the Tribunal's order, that the expenditure incurred on the building taken on lease was revenue in nature.
25. CIT v. Andavar Calendering Mills (1994) 210 ITR 815 (Mad.) and CIT v. Kisenchand Chellaram (India)
26. (P.) Ltd. (1981) 130 ITR 385 (Mad.) fol.
(b) Income-tax--- ----Reference---Depreciation---Expenditure declared to be revenue expenditure---Tribunal justified in holding that question of depreciation does not arise---Indian Income Tax Act, 1961, Ss.32(1A) & 256.
27. Inasmuch as the expenditure incurred by the assessee was held to be revenue expenditure, the question of allowing depreciation would not arise.
28. C.V. Rajan for the Commissioner.
29. P.P.S. Janarthana Raja for the Assessee.
30. K.A. THANIKKACHALAM, J.--At the instance of the Department, the Tribunal referred the following two questions for the opinion of this Court under section 256(2) of the Income Tax Act, 1961: "(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has rightly held that the expenditure of Rs.33,800 incurred by the assessee-company in providing extra amenities in the lease-hold premises is allowable as revenue expenditure?
(ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that in view of the finding of the Tribunal in its order, dated June 27, 1983, the question of application of section 32(1A) did not arise, and accordingly, in rejecting the miscellaneous petition filed by the Department?"
31. The assessee is a company which carries on business in building materials and was allotted on lease-hold some bays in Nehru Stadium Shopping Complex. Some construction work, providing minimum facilities like walls, racks, minimum electrical fittings and the like, had to be done to make the property suitable for business purposes. The Stadium Committee permitted the allottees to do such construction work. The Committee undertook to bear the expenditure up to Rs.64,000. If additional facilities were required, the same would have to be provided by the assessee itself at its cost. The total cost of construction worked out to Rs.97,880. So., the assessee claimed the balance amount of Rs.33,800 as revenue expenditure. The Income-tax Officer considering the same as capital in nature, disallowed the claim. On appeal, the Commissioner of Inconie-tax (Appeals) considering the expenditure as revenue in nature allowed the same. On further appeal, the Tribunal affirmed the decision of the Commissioner of Income-tax (Appeals). Inasmuch as no capital asset was brought into existence, which is of enduring nature by incurring an expenditure of Rs.33,800, the Tribunal held that expenditure of Rs.33,800 is allowed as revenue expenditure. A similar view was taken in CIT v. Andavar Calendering Mills (1994) 210 ITR g15 (Mad.). In CIT v. Kisenchand Chellaram (India) (P.) Ltd. (1981) 130 [TR 385 .(Mad.), it was held that on the building taken on lease, expenditure incurred for partition wall panelling construction, etc., would be of revenue nature. In view of the foregoing decisions, we answer the first question referred to us in the affirmative and against the Department.
32. In so far as Question No.2, is concerned, the assessee claimed depreciation under section 32(1A) of the Income Tax Act, 1961. Inasmuch as the expenditure incurred by the assessee was held to be revenue expenditure, the question of allowing depreciation would not arise. Therefore, Question No.2 does not arise out of the order of the Tribunal. There will no order as to costs. .