AZHIMALA BEACH RESORTS PVT.LTD., TVM V. THE COMMISSIONER OF INCOME TAX, TVM

ITA/95/2009

AI Insights

The case involves Azhimala Beach Resorts Pvt. Ltd., the appellant, contesting an order from the Income Tax Appellate Tribunal, which had reversed a favorable decision from the CIT(A). The dispute originated from a revised assessment order under Section 263 of the Income Tax Act, 1961, issued by the Commissioner of Income Tax, which was challenged by the assessee. The CIT(A) had allowed the assessee's appeal, which was subsequently contested by the Department. The Tribunal, referencing a Madhya Pradesh High Court judgment, set aside the CIT(A)'s order, deeming it without jurisdiction. The High Court of Kerala found this approach incorrect, emphasizing that an open remand allows for a detailed re-examination by the assessing officer, and an appeal against the revised assessment order is maintainable.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 768350 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 03-11-2009
• Assessment Year: misc
• Other Referred Cases: CIT v. D and H Secheron Electrodes Ltd. (301 ITR 20)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: S RAJ; P DANIEL
• Keywords: Ex-parte; Income tax appeal; Jurisdiction; Revision of Assessment; Open Remand
• Section: 263

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN TUESDAY, THE 3RD NOVEMBER, 2009 / 12TH KARTHIKA ,1931 ITA.No. 95 of 2009 (ITA.766/COCH/2007 of I.T.A.TRIBUNAL,COCHIN BENCH) .................... APPELLANT/RESPONDENT/ASSESSEE: ------------------------------------------------------- AZHIMALA BEACH RESORTS PVT. LTD., CHOWARA.P.O., TRIVANDRUM-695581 REP. BY ITS MANAGING DIRECTOR MR.NORBERT LAWRENCE. BY ADV. SRI.S.ARUN RAJ SRI.P.DANIEL RESPONDENT/ APPELLANT/REVENUE: ------------------------------------------------------ THE COMMISSIONER OF INCOME TAX, TRIVANDRUM. BY ADV. SRI.JOSE JOSEPH, SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 03/11/2009, THE COURT ON 03/11/2009 DELIVERED THE FOLLOWING: 'C.R' C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. --------------------------------------------- I.T.A.No. 95 of 2009 --------------------------------------------- Dated this the 3rd day of November, 2009 J U D G M E N T Ramachandran Nair,J: This appeal is filed by the assessee against the order of the Tribunal allowing the Department's appeal ex parte by reversing the order of the CIT(A), which was decided substantially in favour of the assessee for the assessment year 2004-05. 2. We have heard the counsel appearing for the appellant and the Senior Counsel appearing for the respondent. 3. The original assessment completed was directed to be revised by the Commissioner through orders issued under Section 263 of the Income Tax Act, 1961 (for short 'the I.T.Act') vide Annexure-B order of the Commissioner of Income Tax. When the revised order I.T.A. NO.95 of 2009 :-2-: was issued by the assessing officer pursuant to the above order of the CIT, the assessee challenged the same before the First Appellate Authority who allowed the appeal substantially against which the Department filed appeal. It is seen from the copy of the Department's appeal produced as Annexure-F, that the Department has not questioned the jurisdiction of the First Appellate Authority in considering the assessment on merit. However, the Tribunal volunteered to consider the maintainability of the appeal before the First Appellate Authority and following the judgment of the Madhya Pradesh High Court in CIT v. D and H Secheron Electrodes Ltd. (301 ITR 20), set aside the order of the CIT (A) as one issued without jurisdiction. The finding of the Tribunal is that when assessment is revised in terms of the order issued under Section 263 of the Act, appeal before the First Appellate I.T.A. NO.95 of 2009 :-3-: Authority is not maintainable. 4. Counsel for the appellant/assessee pointed out that the order issued by the Commissioner of Income Tax under Section 263 is an open remand and he has made certain observations and doubted the correctness of the finding made by the assessing authority. After making certain observations about the finding of the assessing officer in the original assessment, he remanded the case for assessment to the assessing officer for deciding the matter afresh after reconsidering the issues with reference to the observations made by the Commissioner and after giving an opportunity to the assessee. An appeal will not lie against the revised assessment under Section 263 only in respect of so much of the additions made in the assessment based on the findings of the Commissioner in the order issued under Section 263. In this case, it is seen that the I.T.A. NO.95 of 2009 :-4-: Commissioner has not independently decided on any addition or disallowance. On the other hand, he expressed doubt about the correctness of the findings in the original assessment and ordered detailed re-examination of the issues. When an open remand is made by the Commissioner under Section 263, it is for the assessing officer to conduct a detailed enquiry after giving an opportunity to the assessee and he is free to restore the original assessment partly or in full even after the order issued under Section 263. Such an order issued by the assessing officer after a remand order issued under Section 263 is again liable to be revised under Section 263, if the revised order is again prejudicial to the revenue. If assessee has any grievance, it is open to the assessee to maintain an appeal against revised assessment order before the First Appellate Authority. Since we find from the I.T.A. NO.95 of 2009 :-5-: order of the Commissioner of Income Tax issued under Section 263 that it is an open remand order, the Tribunal went wrong in holding that the appeal before the First Appellate Authority was not maintainable. In fact, since the Department has contested the finding of the Appellate Authority on merit, it was the duty of the Tribunal to consider the order of the C.I.T(A) on merit and decide the appeal on every ground raised. We, therefore, allow the appeal by setting aside the order of the Tribunal and remand the case back to the Tribunal for deciding the appeal on merit. Since the assessee failed to appear before the Tribunal, we direct the assessee to enter appearance before the Tribunal, if the assessee wants to be heard in the appeal. The Tribunal is directed to issue notice to the assessee as well as the Department and dispose of the appeal within a period of four months from the date of I.T.A. NO.95 of 2009 :-6-: receipt of a copy of this judgment. The Income Tax Appeal is disposed of with the above direction. C.N.Ramachandran Nair, Judge. V.K.Mohanan, Judge. MBS/ I.T.A. NO.95 of 2009 :-7-: C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. --------------------------------------------------- I.T.A.NO. OF 200 -------------------------------------- ------ J U D G M E N T I.T.A. NO.95 of 2009 :-8-: DATED: -9-2009 I.T.A. NO.95 of 2009 :-9-: "