M/s Sheikh Abdullah & Sons, Bhadohi V. DCIT, Varanasi

ITA 127/ALLD/2011

• Counselvise Citation: 12720714 RSA 2011
• Duration Of Justice: 4 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-10-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 17-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K
• Assessee Lawyers: R K N JAYA SWAL
• Keywords: Rectification of order
• Section: 143(3); 263; 154; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH ALLAHABAD BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO. 127 /ALLD/201 1 ASSESSMENT YEAR: 200 2 - 0 3 M/S SHEIKH ABDULLAH & SONS VS. DY. CIT VILL. ROTAHA, P.O. PERSIPUR, RANGE - 1 , DISTT. BHADOHI. VARANASI. PAN: AAIFS9339N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K.N. JAYA SWAL, AR REVENUE BY : SHRI A.K. PANDEY, DR . DATE OF HEARING: 12.10 .2015 ORDER PRONOUNCED ON: 17 / 11 /2015 ORDER AS PER P.K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(A), DATED 29 . 03 .201 1. 2. THE ONLY ISSUE INVOLVED IN THIS CASE RELATE S TO THE VALIDITY OF THE RECTIFICATION ORDER PASSED BY THE AO U/S 154 OF THE I.T. ACT, 1961. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN SHOWING AN INCOME OF RS.93,94,580/ - ON 31.10.2002. SUBSEQUENTLY THE ASSESSMENT WAS PROCESSED U /S 143(3) ON AN INCOME OF RS.1,02,30,610/ - ON 9.11.2004. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) , S UBSEQUENTLY THE INCOME WAS REDUCED TO ITA NO.127/ALLD/2011 2 RS.1,00,93,082/ - . S UBSEQUENTLY RECTIFICATION ORDER DATED 22.12.2008 WAS PASSED BY WHICH THE INCOME HAS BEEN E NHANCED TO RS.1,08,01,852/ - . THE MAIN ADDITION SUSTAINED WAS MADE ON ACCOUNT OF THE ISSUE OF INTEREST SOURCE ON EEFC - TDR (EXCHANGE EARNERS FOREIGN CURRENCY ACCOUNT TERM DEPOSIT RECEIPT). T HE ASSESSEE CLAIMED EXEMPTION OF SUCH INTEREST AMOUNTING TO RS.8,10, 526/ - U/S 10 (15) (IV)(E) OF THE I.T. ACT. THE ADDITION OF THE ASSESSEE WAS NOT ACCEPT ED, AND THE ADDITION WAS CONFIRMED BY THE LD. CIT(A) WHEN THE MATTER WENT BEFORE THE TRIBUNAL. THE TRIBUNAL SET ASIDE THE ORDER. 4. THE AO SUBSEQUENTLY RECTIFIED THE ORD ER U/S 154 WITHDRAW ING THE CLAIM OF EXEMPTION OF THE INTEREST U/S 10 (15) (IV)(E) AMOUNTING TO RS.8,10,526/ - . 5 . THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) CONFIRMED THE ORDER OF THE AO. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDER OF THE AUTHORITIES BELOW. WE NOTED THAT THE SIMILAR ISSUE HAS RISEN IN THE CASE OF ASSESSEE IN THE EARLIER YEARS WHERE THE AO HAS PASSED AN ORDER U/S 154 WITHDRAW ING THE CLAIM OF EXEMPTION U/S 10(15)(IV) (E ) OF THE I.T. ACT. WHEN THE MATTER PLACED BEFORE THE HONBLE HIGH COURT IN CIVIL MISCELLANEOUS WRIT PETITION NOS.197/2010, 217/2010 TO 220/2010 AND 210/2015, 159/2015 TO 162/2015 THE HONBLE HIGH COURT TOOK THE VIEW THAT THE ITA NO.127/ALLD/2011 3 HONBLE HIGH COURT QUASHED THE ORDER PASSED U/S 154 BY OBSERVING AS UNDER: 11. IN THE LIGHT OF THE AFORESAID DECISIONS, WE FIND THAT THE ASSESSING OFFICER WHILE PASSING A FRESH ASSESSMENT ORDER ON 29.12.2008 CONSIDERED THE DIRECTIONS OF THE TRIBUNAL AND ALSO CONSIDERED THE PROVISIONS OF SECTION 10(15)(IV)(E) OF THE ACT IN DETAIL AND, AFTER CONSIDERING THE EVIDENCE THAT WAS BROUGHT ON RECORD, CAME TO THE CONCLUSION THAT CONDITIONS PRESCRIBED UNDER SECTION 10(15)(IV)(E) OF THE ACT ARE SATISFIED AND THAT THE ASSESSEE WAS ENTITLED FOR EXEM PTION ON INTEREST RECEIVED. IN OUR VIEW, SUCH FINDING OF THE ASSESSING OFFICER, ASSUMING IT TO BE ERRONEOUS CANNOT BE RECTIFIED IN PROCEEDINGS UNDER SECTION 154 OF THE ACT ON THE GROUND THAT A MISTAKE APPARENT ON THE FACE OF THE RECORD HAD OCCURRED IN THE ASSESSMENT ORDER INASMUCH AS THE ASSESSMENT ORDER WAS PASSED BY A PROCESS OF REASONING AND AFTER APPLYING ITS MIND. ONCE AN ORDER HAS BEEN GIVEN BY A PROCESS OF REASONING AND ASSUMING THAT TWO VIEWS ARE POSSIBLE IT STILL CANNOT BE TREATED AS A MISTAKE APPA RENT FROM THE RECORD. 12. WE ALSO FIND THAT THE ORDER UNDER SECTION 154 OF THE ACT HAS BEEN PASSED BY THE ASSESSING OFFICER ON THE DICTATES OF THE COMMISSIONER. THE ASSESSING OFFICER IS A QUASI - JUDICIAL AUTHORITY AND IS REQUIRED TO APPLY ITS OWN MIND AND CANNOT FUNCTION ON THE DICTATES AND DIRECTIONS OF ANOTHER AUTHORITY. CONSEQUENTLY, ON THIS GROUND ALSO, THE ORDER OF THE ASSESSING AUTHORITY UNDER SECTION 154 OF THE ACT CANNOT BE SUSTAINED. 13. IN SO FAR AS THE APPEAL FILED BY THE DEPARTMENT IS CONCERNED , WE ARE OF THE OPINION, THAT THE COMMISSIONER OF INCOME TAX HAD NO JURISDICTION TO PASS AN ORDER UNDER SECTION 263 OF THE ACT. THE ITA NO.127/ALLD/2011 4 COMMISSIONER OF INCOME TAX ASSUMES JURISDICTION UNDER SECTION 263 OF THE ACT WHEN IT ISSUES A NOTICE TO THE ASSESSEE UNDER S ECTION 263 OF THE ACT TO SHOW CAUSE AS TO WHY THE ORDER OF THE ASSESSING AUTHORITY SHOULD NOT BE SET ASIDE ON THE GROUND THAT THE ASSESSMENT ORDER WAS PRE - JUDICIAL TO THE INTEREST OF THE REVENUE. ON THIS ASPECT, THE ASSUMPTION OF JURISDICTION TAKES PLACE W HEN A NOTICE IS ISSUED UNDER SECTION 263 OF THE ACT. THIS NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED BY THE COMMISSIONER ON 18.3.2011 MUCH AFTER THE ASSESSMENT ORDER DATED 29.12.2008 WAS MODIFIED BY AN ORDER DATED 9.2.2010 UNDER SECTION 154 OF THE ACT. 14. WE ARE OF THE OPINION THAT ONCE THE ASSESSING OFFICER MODIFIES THE ASSESSMENT ORDER UNDER SECTION 154 OF THE ACT, THE ORIGINAL ASSESSMENT ORDER DATED 29.12.2008 DOES NOT EXIST AND, THEREFORE, THERE WAS NO QUESTION OF THE ORDER OF THE ASSESSING AUTHOR ITY DATED 29.12.2008 BECOMING PRE - JUDICIAL TO THE INTEREST OF THE REVENUE. ONCE THE ASSESSMENT ORDER DATED 29.12.2008 MERGED WITH THE ORDER DATED 9.2.2010 PASSED UNDER SECTION 154 OF THE ACT, THE NOTICE UNDER SECTION 263 OF THE ACT QUESTIONING THE VERACITY AND LEGALITY OF THE ORIGINAL ASSESSMENT ORDER DATED 29.12.2008 WAS PATENTLY ERRONEOUS AND INVALID AND, CONSEQUENTLY, ALL THE PROCEEDINGS INITIATED PURSUANT TO THE SAID NOTICE INCLUDING THE ORDER DATED 30.3.2011, PASSED UNDER SECTION 263 OF THE ACT, WAS AL SO INVALID AND WAS RIGHTLY SET ASIDE BY THE TRIBUNAL THOUGH FOR DIFFERENT REASONS. 15. IN THE LIGHT OF THE AFORESAID, FOR THE REASONS STATED AFORESAID, THE IMPUGNED NOTICE DATED 27.11.2009 AND THE ORDER DATED 9.2.2010 PASSED UNDER SECTION 154 OF THE ACT A RE QUASHED. SIMILARLY ALL THE NOTICES AND ORDERS PASSED UNDER SECTION 154 OF THE ACT IN THE ITA NO.127/ALLD/2011 5 CONNECTED WRIT PETITIONS ARE ALSO QUASHED. ALL THE WRIT PETITIONS ARE ALLOWED. 7 . RESPECTFULLY FOLLOWING THE DECISION OF HONBLE HIGH COURT AS THE FACTS INVOLVED I N THIS YEAR ARE ALSO THE SAME. WE QUASH THE ORDER PASSED BY THE AO U/S 154. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 / 11 /2015. SD/ - SD/ - (MAHAVIR PRASAD) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 / 1 1 /2015 A.K.V. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR