ALLAHABAD HIGH COURT

INCOME TAX APPEAL No. - 209 of 2015 
Appellant :- M/S Yog Builders Kanpur 
Respondent :- The Commissioner Of Income Tax 

Hon'ble Tarun Agarwala,J. 
Hon'ble Vinod Kumar Misra,J. 

We have heard learned counsel Sri Shakeel Ahmad on behalf of the appellant and Sri Manu Ghildiyal on behalf of the Income Tax Department. 

A search and seizure operation was carried out under Section 132 of the Income Tax Act at the premises of the appellant on 1.12.2004, based on which an Assessment Order for the Assessment Year 2002-2003 was made in which certain additions under Section 68 was made. The appellant being aggrieved filed an appeal which was partly allowed but an addition of Rs 10 lacs was affirmed. Before the First Appellate Authority, the appellant raised a ground with regard to the validity of the notice issued under Section 153C. The Appellate Authority while allowing the appeal by its order dated 16th February 2010 did not give any finding on the issue of the validity of the notice under Section 153C. The appellant did not prefer any second appeal and was satisfied with the order of the First Appellate Authority. The department however filed an appeal which was allowed and the matter was remitted to the Assessing Officer for a limited purpose namely to judge the creditworthiness and genuineness of the transactions made under Section 68 and, on this issue, the matter was remitted to the file of the Assessing Officer with a direction to decide this issue afresh after examining the creditors.

Based on the order of the Tribunal dated 6th January 2011, the Assessing Officer made a fresh assessment on this issue against which the appellant filed an appeal which was dismissed and thereafter filed a second appeal before the Tribunal. Before the Tribunal, the appellant took an additional ground with regard to the validity of the notice issued under Section 153C. The appeal was dismissed by the Tribunal on the holding that the petitioner is not entitled to raise the additional ground. The appellant being aggrieved has filed the present appeal contending that a substantial question of law arises for consideration and that the issue with regard to the validity of the notice under Section 153C could be raised at any stage. 

Having heard learned counsel for the appellant we find that the appellant had raised this issue before the First Appellate Authority in the first round of litigation in which no finding was given but the appeal was partly allowed to some extent. The appellant at this stage should have preferred a second appeal questioning the notice under Section 153C. Since the appellant did not challenge the order of the CIT appeals before the Second Appellate Authority, he could not raise the same issue in the second round of litigation. The appellant is stopped from raising such issue which had reached at finality in the first round of litigation.

The Tribunal had remitted the matter to the Assessing Authority to find out the genuineness and creditworthiness of the creditor while considering the matter under Section 68 and only to that extent the matter was remitted to the Assessing Officer to decide the said question. In remand proceedings only the issue relating to section 68 could be considered and not with regard to the validity and legality of the notice issued under Section 153C.

In the light of the aforesaid, we do not find any error in the order of the Tribunal. 

The appeal fails and is dismissed. 

Order Date :- 8.12.2015 

(Vinod Kumar Misra, J.)    (Tarun Agarwala, J.)