Cane Developement Council Titawi, Muzaffarnagar V. JCIT, Muzaffarnagar

CO 387/DEL/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7411 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 142(1); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4587/DEL/2011 A.Y. : 2006-07 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL SHAMLI, MZN (PAN/GIR NO. : AAALC0276E) CROSS OBJECTION NO. 382/DEL/2011 (IN ITA NO. 4587/DEL/2011) A.Y. : 2006-07 CANE DEVELOPMENT COUNCIL, SHAMLI, VILL. & PO, SHAMLI, DISTT. MUZAFFARNAGAR (UP) VS. JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAGAR (UP) I.T.A. NO. 4588/DEL/2011 A.Y. : 2006-07 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL TITAWI, MZN (PAN/GIR NO. : AAALC0173E) CROSS OBJECTION NO. 387/DEL/2011 (IN ITA NO. 4588/DEL/2011) A.Y. : 2006-07 CANE DEVELOPMENT COUNCIL, TITAWI, MUZAFFARNAGAR RAILWAY STATION ROAD, MUZAFFARNAGAR, DISTT. MUZAFFARNAGAR (UP) VS. JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAGAR (UP) I.T.A. NO. 4589/DEL/2011 A.Y. : 2006-07 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL ROHANA KALAN, MZN 2 (PAN /GIR NO. : AAALC0277F) CROSS OBJECTION NO. 400/DEL/2011 (IN ITA NO. 4589/DEL/2011) A.Y. : 2006-07 CANE DEVELOPMENT COUNCIL, ROHANAKALA, VILL. & PO ROHANAKALAN, DISTT. MUZAFFARNAGAR (UP) VS. JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAGAR (UP) I.T.A. NO. 4590/DEL/2011 A.Y. : 2006-07 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL MANSURPUR, MZN (PAN/GIR NO. : AAALC0282C) CROSS OBJECTION NO. 380/DEL/2011 (IN ITA NO. 4590/DEL/2011) A.Y. : 2006-07 CANE DEVELOPMENT COUNCIL, MANSOORPUR, VILL & PO MANSOORPUR, DISTT. MUZAFFARNAGAR (UP) VS. JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAGAR (UP) I.T.A. NO. 4591/DEL/2011 A.Y. : 2006-07 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL KHATAULI, MZN (PAN/GIR NO. : AAALC0278L) CROSS OBJECTION NO. 390/DEL/2011 (IN ITA NO. 4591/DEL/2011) A.Y. : 2006-07 CANE DEVELOPMENT COUNCIL VS. JOINT COMMISSIONER OF INCOME TAX, KHATAULI, VILL & PO KHATUALI, DISTT. RANGE -2 MU ZAFFARNAGAR MUZAFFARNAGAR (UP) (PAN/GIR NO. : AAALC0278L) 3 I.T.A. NO. 5688/DEL/2011 A.Y. : 2008-09 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL MANSURPUR, DISTT. MUZAFFARNAGAR (PAN/GIR NO. : AAALC0282C) CROSS OBJECTION NO. 53/DEL/2012 (IN ITA NO. 5688/DEL/2011) A.Y. : 2008-09 CANE DEVELOPMENT COUNCIL, MANSOORPUR, VILL & PO MANSOORPUR, DISTT. MUZAFFARNAGAR (UP) VS. JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAGAR (UP) I.T.A. NO. 5689/DEL/2011 A.Y. : 2008-09 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL TITAWI, MZN (PAN/GIR NO. : AAALC0173E) CROSS OBJECTION NO. 54/DEL/2012 (IN ITA NO. 5689/DEL/2011) A.Y. : 2008-09 CANE DEVELOPMENT COUNCIL, TITAWI, MUZAFFARNAGAR RAILWAY STATION ROAD, MUZAFFARNAGAR, DISTT. MUZAFFARNAGAR (UP) VS. JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAGAR (UP) I.T.A. NO. 5690/DEL/2011 A.Y. : 2008-09 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL KHATAULI, MZN (PAN/GIR NO. : AAALC0278L) 4 CROSS OBJECTION NO. 55/DEL/2012 (I.T.A. NO. 5690/DEL/2011) A.Y. : 2008-09 CANE DEVELOPMENT COUNCIL VS. JOINT COMMISSIONER OF INCOME TAX, KHATAULI, VILL & PO KHATUALI, DISTT. RANGE -2 MU ZAFFARNAGAR MUZAFFARNAGAR (UP) (PAN/GIR NO. : AAALC0278L) I.T.A. NO. 5691/DEL/2011 A.Y. : 2008-09 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL ROHANA KALAN, MUZZAFFARNAGAR (PAN/GIR NO. : AAALC0277F) I.T.A. NO. 5692/DEL/2011 A.Y. : 2008-09 JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAQAR VS. CANE DEVELOPMENT COUNCIL SHAMLI, DISTT. MUZAFFARNAGAR PAN/GIR NO. : AAALC0276E) CROSS OBJECTION NO. 56/DEL/2012 (IN ITA NO. 5692/DEL/2011) A.Y. : 2008-09 CANE DEVELOPMENT COUNCIL, SHAMLI, VILL. & PO, SHAMLI, DISTT. MUZAFFARNAGAR (UP) VS. JOINT COMMISSIONER OF INCOME TAX, RANGE-2, MUZAFFARNAGAR (UP) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : ASSESSEE BY : ASSESSEE BY : ASSESSEE BY : NONE (WRITTEN SUBMISSION) NONE (WRITTEN SUBMISSION) NONE (WRITTEN SUBMISSION) NONE (WRITTEN SUBMISSION) DEPARTMENT BY : SH. J.S. AHLAWAT, SR. D.R. DEPARTMENT BY : SH. J.S. AHLAWAT, SR. D.R. DEPARTMENT BY : SH. J.S. AHLAWAT, SR. D.R. DEPARTMENT BY : SH. J.S. AHLAWAT, SR. D.R. ORDER ORDER ORDER ORDER PER PER PER PER BENCH BENCH BENCH BENCH THESE APPEALS BY THE REVENUE AND CROSS OBJECTIONS BY THE ASSESSEES EMANATE OUT OF SEPARATE ORDERS O F LD. 5 COMMISSIONER OF INCOME TAX (A) ORDERS FOR SEPARATE A SSESSEES AND FOR SEPARATE ASSESSMENT YEARS. 2. THE COMMON ISSUE RAISED IN THE REVENUE APPEALS READ AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN LAW AND THE FACTS BY DECLARING THE ASSESSMENT MADE BY THE ASSESSING OFFICER AS NULL AND VOID BY OBSERVING THAT THE NOTICES U/S. 143(2) / 142(1) WERE NOT ISSUED IN THE STATUS OF ARTIFICIAL JURIDICIAL PERSON WITHOUT APPRECIATING THE FACT THAT THE PROFOR MA OF NOTICES U/S. 143(2)1/4291) ARE PRESCRIBED AND THERE IS NO CLAIM IN THESE NOTICES WHERE THE STATUS OF THE ASSE SSEE CAN BE MENTIONED. 3. IN THE CROSS OBJECTIONS THE ASSESSEES HAD CONTEN DED THAT LD. COMMISSIONER OF INCOME TAX (A) HAS FAILED TO CONSIDE R THE SPECIFIC AND MATERIAL GROUNDS RAISED IN THE GROUNDS OF APPEALS CH ALLENGING ADDITIONS AND ESTIMATE OF TOTAL INCOME MADE BY THE AS SESSING OFFICER. 4. IT HAS FURTHER BEEN CLAIMED THAT ASSESSMENT OF D IFFERENT AMOUNT IN THESE CASES IS WRONG AND ILLEGAL. IT HAS FURTH ER BEEN CLAIMED THAT ESTIMATE OF ANY INCOME IN THE HANDS OF THE ASSESSEE IS NOT JUSTIFIED. LASTLY, IT HAS BEEN CLAIMED THAT ASSESSEE DESERVES TO BE DECLARED NON- TAXABLE SUSTAINING THE ORDER OF THE LD. COMMISSIONE R OF INCOME TAX (A). 6 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, ASS ESSEE HAS FILED WRITTEN SUBMISSION. WE HAVE CAREFULLY CONSIDERED TH E SAME. WE FIND THAT IN ALL THESE CASES THE CONCLUDING PARAGRAPH O F THE LD. COMMISSIONER OF INCOME TAX (A) IS AS UNDER:- FROM THE ABOVE IT IS CLEAR THAT THE APPELLANT STATUS IS THAT OF ARTIFICIAL JURIDICAL PERSON AND NOT THAT OF LOCAL AUTHORITY AND ADMITTEDLY ITS INCOME I S TAXABLE UNDER THE INCOME TAX ACT, 1961 AS DISCUSSED ABOVE. AS PER THE APPELLANT THE ASSESSMENT WAS FRAMED IN THE STATUS OF ARTIFICIAL JURIDICAL PERSON HOWE VER, NO NOTICE U/S. 143(2)/142(1) OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER IN SAID STATUS. THUS IT HA S BEEN CONTENDED THAT THE ASSESSMENT ORDER PASSED U/S. 143(3)/254 IS BAD IN LAW. WITHOUT PREJUDICE TO THE ABOVE, IT IS OBSERVED THAT ADMITTEDLY THE APPELLANT HAD FILED RETURN OF INCOME FOR RELEVANT ACCOUNTING PERIO D IN THE STATUS OF LOCAL AUTHORITY THE ASSESSING OFFIC ER CANNOT FRAME ASSESSMENT IN ANY OTHER STATUS OTHER THAN THE ONE DECLARED IN THE RETURN OF INCOME. T HUS THE ASSESSMENT FRAMED IN THE STATUS OF ARTIFICIAL JURIDICAL PERSON WITHOUT GIVING ANY NOTICE OR EVEN AN INDICATION TO THE APPELLANT THAT ITS CLAIM FOR ASSESSMENT IN THE STATUS OF LOCAL AUTHORITY WAS NOT GOING TO BE ACCEPTED, THE ORDER OF THE ASSESSMENT I S 7 HELD AS BAD IN LAW. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS OF THE HONBLE COURTS:- (A) AAC VS. APPAIAH NAIDU (LATE) (B) (172) 84 ITR 258 (SC) (B) KARUNA RANI JAIN VS. C.I.T. (1989) 178 ITR 32 (P&H) (C) C.I.T. VS. SURESH CHANDRA GUPTA (1988) 183 ITR 407 (RAJ.). (D) SURENDRANATH (N) VS. C.I.T. 91993) 203 ITR 419 (KER.). IT IS FURTHER OBSERVED THAT EVEN IF THE ASSESSING O FFICER WAS DOUBTING THE STATUS OF THE APPELLANT IT WAS FO R HIM TO INITIATE ACTION U/S. 147 BY RECORDING THE RE ASONS IN RESPECT OF THE STATUS OF THE APPELLANT AS THAT O F ARTIFICIAL JURIDICAL PERSON AND COULD HAVE ISSUED NOTICE U/S. 148 OF THE ACT IN THE SAID STATUS. HOWEVER, THE ASSESSING OFFICER HAS NOT ADOPTED THE PROPER COURSE AND HAS CHANGED THE STATUS OF THE APPELLANT IN THE ASSESSMENT ORDER PASSED U/S. 143(3)/254 OF THE ACT WHICH IS LEGALLY UNTENABLE. THUS THE ORDER PASSED U/S. 143(3)/254 DATED 20.4.2010 IS RENDERED AS NULL AND VOID. HOWEVER, ASSESSING OFFICER IS ISSUED SPECIFIC DIRECTIONS U/ S. 150 OF THE ACT TO TAKE REMEDIAL ACTION IN THE CASE OF THE APPELLANT FOR A.Y. 2006-07 IN THE STATUS OF AN ART IFICIAL JURIDICAL PERSON. GROUND OF APPEAL IS ALLOWED WIT H THE ABOVE DIRECTIONS. 8 6. FOR OTHER ASSESSMENT YEARS LD. COMMISSIONER OF INCOM E TAX(A) HAS FOLLOWED THE AFORESAID ORDER AND ANNULLED THE A SSESSMENT AND HAS GIVEN SIMILAR DIRECTIONS AS ABOVE FOR THOSE ASSESSME NT YEARS. 7. AGAINST THE ABOVE ORDER THE REVENUE HAS FILED AP PEALS AND ASSESSEES HAVE FILED CROSS OBJECTIONS. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TA X (A) HAS NOTED THAT ASSESSEES CONTENTION THAT ASSESSMENT WAS FRAME D IN THE STATUS ARTIFICIAL JURIDICAL PERSON, HOWEVER, NO NOTICE U /S. 143(2)/142(1) WAS ISSUED BY THE ASSESSING OFFICER IN THE SAID STATUS . THUS, IT WAS CONTENDED THAT ASSESSMENT ORDER PASSED IN THESE CASE S IS BAD IN LAW. IT HAS FURTHER BEEN CLAIMED THAT AS THE ASSESSEE HA S FILED RETURN OF INCOME FOR THE RELEVANT ACCOUNTING PERIOD IN THE ST ATUS OF LOCAL AUTHORITY, THE ASSESSING OFFICER CANNOT FRAME AS SESSMENT IN ANY OTHER STATUS OTHER THAN THE ONE DECLARED IN THE RET URN OF INCOME. THUS, THE ASSESSMENT FARMED IN THE STATUS OF ARTIFI CIAL JURIDICAL PERSONS WITHOUT GIVING ANY NOTICE OR EVEN AN INDICA TION TO THE ASSESSEE THAT ITS CLAIM FOR ASSESSMENT IN THE STATU S OF LOCAL AUTHORITY WAS NOT GOING TO BE ACCEPTED, THE ORDER OF THE ASSESSMENT IS HELD AS BAD IN LAW. 8.1 LD. COMMISSIONER OF INCOME TAX (A) HAS FURTHER OBS ERVED THAT EVEN IF THE ASSESSING OFFICER WAS DOUBTING THE ST ATUS OF THE ASSESSEE IT WAS FOR HIM TO INITIATE ACTION U/S. 147 BY RECOR DING THE REASONS IN RESPECT OF THE STATUS OF THE ASSESSEE AS THAT OF A RTIFICIAL JURIDICAL PERSON AND COULD HAVE ISSUED NOTICE U/S. 148 OF THE ACT IN THE SAID STATUS. LD. COMMISSIONER OF INCOME TAX (A) FURTHER OBSERVED THAT HOWEVER, ASSESSING OFFICER HAS NOT ADOPTED THE PRO PER COURSE AND HAS 9 CHANGED THE STATUS OF THE ASSESSEE IN THE ASSESSME NT ORDER PASSED U/S. 143(3)/254 OF THE ACT WHICH IS LEGALLY UNTENAB LE. THUS, LD. COMMISSIONER OF INCOME TAX (A) HELD THAT ORDER PASSE D BY THE ASSESSING OFFICER IS NULL AND VOID. 8.2 FURTHERMORE, LD. COMMISSIONER OF INCOME TAX (A) IS SUED A SPECIFIC DIRECTIONS U/S. 150 OF THE ACT TO TAKE REM EDIAL ACTION IN THE CASE OF THE ASSESSEE FOR A.Y. 2006-07 IN THE STATUS OF AN ARTIFICIAL JURIDICAL PERSON. IN THIS REGARD, WE FIND THAT AS SESSEE HAS CONTENDED THAT DIRECTIONS GIVEN BY THE LD. COMMISSIONER OF INC OME TAX (A) IS ILLEGAL BEING WITHOUT AUTHORITY OF LAW AS THE LD. C OMMISSIONER OF INCOME TAX (A) IS NOT EMPOWERED TO GIVE ANY DIRECTIO N, IN THE ORDER PASSED U/S. 251. THE POWERS OF THE LD. COMMISSIO NER OF INCOME TAX (A) HAVE BEEN CLEARLY LAID DOWN U/S. 251(1) ACCORDI NG TO WHICH LD. COMMISSIONER OF INCOME TAX (A), WHILE DISPOSING OF AN APPEAL HAS, IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HAS POWER TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. IT HAS FURTHER BEEN CLAIMED THAT IT IS NO WHERE MENTIONED IN SECTION 251 THAT HE MAY ALSO GIVE ANY DIRECTION IN DISPOSING OF AN APPEAL AGAINS T AN ORDER OF ASSESSMENT. IN THE PRESENT CASE, THE APPEAL HAS B EEN AGAINST AN ORDER OF ASSESSMENT, HENCE, THE LD. COMMISSIONER OF I NCOME TAX (A) HAS WRONGLY GIVEN SAID DIRECTION IN ITS ORDER, HENC E, IT DESERVES TO BE DELETED. 10 8.3 WE FURTHER NOTE THAT IT HAS BEEN ONE OF THE GRO UNDS RAISED BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) BY THE ASSESSE E THAT PROPER OPPORTUNITY OF HEARING WAS NOT GRANTED TO THE ASSES SEE. 8.4 UPON CAREFUL CONSIDERATION, IN OUR CONSIDERED O PINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. COMMISSIONER OF INCOME TAX (A) WAS NOT CORRECT IN HOLDING THAT ASSESSMENT IS NULL AND VOID. THE DEFECT IN ISSUANCE OF NOTICE AND ASSESSMENT NOTED BY THE LD. COMMISSIONER OF INCOME TAX (A) WAS NOT FATAL SO AS T O RENDER THE ASSESSMENT NULL AND VOID. IT WAS CURABLE DEFECT. FURTHER, THERE IS COGENCY IN THE ASSESSEES SUBMISSION THAT LD. COMMISSI ONER OF INCOME TAX (A) CANNOT GIVE ANY DIRECTION, AS THE SAME IS BEYOND HIS APPELLATE JURISDICTION AS PER SECTION 251(1). 8.5 IN OUR CONSIDERED OPINION, UPON CAREFUL CONSIDE RATION, WE FIND THAT INTEREST OF JUSTICE WILL BE SERVED, IF THE MATTE R IS REMITTED TO THE FILE OF THE ASSESSING OFFICER, TO CONSIDER ALL THE ISSUE RAISED THEREIN AFRESH, AFTER GIVING THE ASSESSEES PROPER OPPORTUN ITY OF BEING HEARD. LD. DEPARTMENTAL REPRESENTATIVE FAIRLY ACCEPTED THIS PROPOSITION THAT THE ISSUES MAY BE REMITTED TO THE FILE OF THE ASSESSI NG OFFICER TO CONSIDER THE ISSUE AFRESH. 8.6 IN THIS REGARD, WE DRAW SUPPORT FROM THE APEX C OURT DECISION IN THE CASE OF KAPURCHAND SHRIMAL VS. CIT, 131 ITR 451 , WHEREIN IT WAS HELD THAT THE APPELLATE AUTHORITY HAS JURISDICTION AS WELL AS THE DUTY TO 11 CORRECT THE ERRORS IN THE PROCEEDINGS UNDER APPEAL AND ISSUE PROPER DIRECTION AS NECESSARY. 8.7 SINCE WE ARE REMITTING THE ISSUES TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE ISSUES DE NOVA, THE REVENU E APPEALS AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED FOR STA TISTICAL PURPOSES. 9. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03/7/2012, U PON CONCLUSION OF HEARING. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 03/7/2012 SRB SRB SRB SRBHATNAGAR HATNAGAR HATNAGAR HATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5.DR, I TAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES