M/s Chandrika Investments , Bangalore V. The Income Tax Officer Ward-4(3)(3), Bangalore

ITA 1454/BANG/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0726 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-06-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR ITAT BENGALURU
• Assessee Lawyers: S ANNAMALAI
• Keywords: Revised return; Set aside
• Section: 143(3); 142(1); 234B; 251; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER IT A NO S . 1454 & 1455/BANG/2018 ASSESSMENT YEAR : 2009 - 10 M/S. CHANDRIKA INVESTMENTS, NO.8/A, 24 TH A MAIN, 1 ST PHASE, J P NAGAR, BANGALORE 560 078. PAN: AAFFC 6379R VS. THE INCOME TAX OFFICER, WARD 4(3)(3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S ANNAMALAI, ADVOCATE RESPONDENT BY : SHRI PRADEEP KUMAR, CIT(DR)(ITA T), BENGALURU. DATE OF HEARING : 08 .0 6 .2020 DATE OF PRONOUNCEMENT : 10 .0 6 .2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT ITA NO.1454/BANG/2018 IS AN APPEAL BY THE ASSESS EE AGAINST THE ORDER DATED 28.02.2018 OF THE CIT(APPEALS)-4, BANGA LORE RELATING TO ASSESSMENT YEAR 2009-10 ARISING OUT OF AN ORDER PAS SED BY THE AO U/S. 154 OF THE INCOME-TAX ACT, 1961 [THE ACT] DATED 6.4 .2017. ITA NOS. 1454 & 1455/BANG/2018 PAGE 2 OF 7 2. ITA NO.1455/BANG/2018 IS ALSO AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 28.02.2018 OF THE CIT(APPEALS)-4, B ANGALORE RELATING TO ASSESSMENT YEAR 2009-10 WHICH ARISES OUT OF AN ORDE R PASSED BY THE AO U/S. 154 OF THE INCOME-TAX ACT, 1961 [THE ACT] DATE D 28.4.2017. 3. THE FACTS AND CIRCUMSTANCES UNDER WHICH THESE AP PEALS ARISE FOR CONSIDERATION ARE THAT THE ASSESSEE IS A PARTNERSHI P FIRM. THE BUSINESS OF ASSESSEE WAS ACQUIRING LAND AND CARRYING OUT CONSTR UCTION OF COMMERCIAL COMPLEXES, SHOPPING MALLS, RESIDENTIAL APARTMENTS, ETC. FOR THE AY 2009- 10, THE ASSESSEE FILED A RETURN OF INCOME IN RESPON SE TO NOTICE U/S. 142(1) DATED 17.3.2010 DECLARING TOTAL INCOME OF RS.3,42,4 5,991. THE ASSESSEE FILED A REVISED RETURN OF INCOME ON 31.3.2010 DECLA RING TOTAL INCOME OF RS.1,27,50,047. AN ORDER OF ASSESSMENT DATED 17.10 .2011 WAS PASSED BY THE ITO, WARD 4(3), BANGALORE. THE ASSESSEE CHALLE NGED THE ORDER OF ASSESSMENT BEFORE THE CIT(APPEALS). BY AN ORDER DA TED 17.10.2011 THE CIT(APPEALS) CONFIRMED THE ORDER OF AO. THE ASSESS EE PREFERRED APPEAL AGAINST THE ORDER OF CIT(A) IN ITA NO.631/BANG.2013 . THE TRIBUNAL BY ITS ORDER DATED 23.9.2016 HELD THAT THE ITO, WARD 4(3) DID NOT HAVE JURISDICTION OVER THE CASE OF ASSESSEE AND THAT THE COMPETENT OF FICER WAS ACIT/DCIT. THE ORDER OF ASSESSMENT WAS SET ASIDE AND THE SAME WAS RESTORED BACK FOR FRAMING A DE NOVO ASSESSMENT BY A COMPETENT OFFICER BEING ACIT /DCIT. 4. PURSUANT TO THE ORDER OF TRIBUNAL, THE AO I.E., ITO, WARD 4 (3), BANGALORE, PASSED AN ORDER DATED 17.2.2017 GIVING E FFECT TO THE ORDER OF THE TRIBUNAL DATED 23.9.2016 IN WHICH HE DETERMINED THE TOTAL INCOME OF THE ASSESSEE AS PER THE REVISED RETURN OF INCOME @ RS.1,27,50,050. BY VIRTUE OF THIS ORDER, A REFUND BECAME PAYABLE TO TH E ASSESSEE AS PER THE FOLLOWING CALCULATIONS: ITA NOS. 1454 & 1455/BANG/2018 PAGE 3 OF 7 AMOUNT IN RS. REVISED INCOME AS PER OGE TO ORDER OF CIT(A) - II, BANGALORE DATED 20.05.2013 14,99,13,600 L ESS: R ELIEF ALLOWED BY ITAT 13,71,63,550 TOTAL TAXABLE INCOME AS PER THE REVISED RETURN OF INCOME FILED ON 31.3.2010 1,27,50,050 T AX THEREON 38,25,015 ADD : SURCHARGE 10% 3,82,502 ADD : EDUCATIONAL CESS @ 3% 1,26,226 TOTAL TAX PAYABLE 43,33,743 ADD: INTEREST 234A 2,60,025 INTEREST 234B 5,20,050 INTEREST 234C 1,60,348 9,40,423 TOTAL TAX AND INTEREST PAYABLE 52,74,166 LESS: TAX PAID 1,00,00,950 BALANCE REFUNDABLE 47,26,784 ADD: INTEREST U/S. 24A 13,86,268 TOTAL TAX AND IN TEREST REFUNDABLE 61,13,052 ROUNDED OFF U/S. 288B 61,13,050 5. THE AO THEREAFTER PASSED AN ORDER U/S. 154 OF TH E ACT DATED 6.4.2017 IN AND BY WHICH HE OBSERVED THAT AS PER TH E CBDT INSTRUCTION NO.1725 DATED 22.8.2016 WHEREBY THE CBDT HAS LAID D OWN THAT IF AN ASSESSMENT IS SET ASIDE FOR BEING DONE AFRESH, THE DEMAND RELATING TO THE POINT ON WHICH THE ASSESSMENT HAS BEEN REMANDED SHO ULD NOT BE ENFORCED, BUT SHOULD BE KEPT IN ABEYANCE, TILL FRES H ORDERS ON THE POINTS ARE PASSED. THE AO THEREFORE MODIFIED THE ORDER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL PASSED BY HIM ON 17.2.2017 BY OBSERVIN G THAT THE DEMAND RAISED PURSUANT TO THE ORDER GIVING EFFECT SHOULD B E KEPT IN ABEYANCE TILL THE ASSESSMENT IS COMPLETED BY A COMPETENT OFFICER AS P ER THE DIRECTIONS OF THE TRIBUNAL. THE OFFICER PASSED THIS ORDER BECAUS E AS WE HAVE ALREADY OBSERVED, BY VIRTUE OF ORDER DATED 17.2.2017, A REF UND WAS TO BE ISSUED TO THE ASSESSEE AND WITH A VIEW TO ENSURE THAT REFUND IS NOT ISSUED TO THE ASSESSEE. ITA NOS. 1454 & 1455/BANG/2018 PAGE 4 OF 7 6. THE AO AGAIN ISSUED ANOTHER NOTICE U/S. 154 OF T HE ACT BY AN ORDER DATED 28.4.2017 WHEREBY THE AO RECTIFIED THE ORDER DATED 6.4.2017 WORKING OUT THE OUTSTANDING DEMAND AS FOLLOWS:- INCOME ASSESSED AS PER ASSESSMENT ORDER DATED 26.12 .2011 18,87,86,930 LESS: RELIEF ALLOWED BY CIT(A)-II, VIDE ORDER DATED 14.03.2013 3,88,73,330 TOTAL TAXABLE INCOME 14,99,13,600 TAX THEREON 4,49,74,080 ADD: SURCHARGE @ 10% 44,97,408 EDUCATION CESS @ 3% 14,84,145/ - 59,81,553 TOTAL TAX PAYABLE 5,09,55,633 INTEREST* 234A 30,57,336 234B 1,54,96,205 234C 1,60,348 TOTAL INTEREST 1,87,13,889 LESS: TAX COLLECTED 1,00,00950 BALANCE TAX COLLECTIBLE 5,96,68,572 * INTEREST COMPUTED ONLY TILL 26.12.2013 7. THIS ORDER IS BASED ON THE COMPUTATION AFTER GI VING EFFECT TO CIT(A)S ORDER DATED 14.3.2013. THE REASON GIVEN F OR PASSING THIS ORDER WAS THAT THE DEMAND AS DETERMINED IN THE ORDER DATE D 6.4.2017 WAS INCORRECT AND HENCE WAS BEING RECTIFIED BY ORDER DA TED 28.4.2017. 8. AGGRIEVED BY THE TWO ORDERS PASSED U/S. 154 OF T HE ACT DATED 6.4.2017 AND 28.4.2017, THE ASSESSEE FILED TWO APPE ALS BEFORE THE CIT(APPEALS). THE CIT(A) DISMISSED BOTH THE APPEAL S HOLDING THAT THE ORDER OF AO WAS LEGALLY AND FACTUALLY CORRECT. AGG RIEVED BY THE AFORESAID ORDERS, THE ASSESSEE HAS PREFERRED THE PRESENT APPE ALS BEFORE THE TRIBUNAL. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN BOTH TH E IMPUGNED ORDERS PASSED U/S. 154 OF THE ACT, THE REVENUE HAS RELIED ON THE CBDT CIRCULAR NO.1725 DATED 22.8.2016 OF THE CBDT WHICH READS AS FOLLOWS:- ITA NOS. 1454 & 1455/BANG/2018 PAGE 5 OF 7 INSTRUCTION NO: 1725 DATE OF ISSUE: 22/8/1986 ALLAHABAD AND ANDHRA PRADESH HIGH COURTS HAVE IN TH EIR JUDGEMENTS IN CIT VS. BANDARU SANYASI RAJU (1981) 127 ITR 453 (AP) AND S.P. KOCHER VS. ITO (1984) 145 ITR 255 (ALLD) HELD THAT FIRST APPELLATE AUTHORITIES HAVE POWER TO SET ASIDE ASSESSMENTS PAR TIALLY BY DECIDING SOME OF THE POINTS IN APPEAL BEFORE THEM AND REMAND ING THE CASE TO THE ASSESSING OFFICER FOR FRESH ASSESSMENT ON OTHER POINTS. IT IS FOUND THAT IN GIVING APPEAL EFFECT TO SUCH AP PELLATE ORDERS AS PARTIALLY SET ASIDE ASSESSMENT ORDERS DIFFERENT PRA CTICES ARE FOLLOWED IN DIFFERENT CHARGES. AFTER CONSIDERING VARIOUS PRA CTICES BEING FOLLOWED IN DIFFERENT CHARGES, THE BOARD HAS DECIDE D THAT IN GIVING EFFECT TO SUCH APPELLATE ORDERS, THE ORIGINAL ORDER SHOULD BE REVISED AS PER APPELLATE ORDER IN RESPECT OF THE POINTS WHICH ARE DECIDED IN THE APPELLATE ORDER. IN REGARDS TO POINTS ON WHICH THE ASSESSMENT HAS BEEN REMANDED FOR FRESH ORDER, THE AMOUNT AS ORIGINALLY ASSESSED MAY BE INCLUDED AND THE DEMAND BE RAISED ACCORDINGLY SUBJE CT TO RECTIFICATION ON COMPLETION OF FRESH ASSESSMENT ON THOSE POINTS. THE DEMAND RELATING TO THE POINTS ON WHICH THE ASSESSMENTS HAS BEEN REMANDED SHOULD NOT BE ENFORCED AND SHOULD BE KEPT IN ABEYAN CE TILT THE FRESH ORDER ON THOSE POINTS IS PASSED AND THE DEMAND IS R ECTIFIED ACCORDINGLY. THE BOARD DESIRES THAT THIS PRACTICE SHOULD BE UNIF ORMLY FOLLOWED IN ALL CHARGES. 10. A BARE PERUSAL OF THE AFORESAID INSTRUCTION WOU LD SHOW THAT IT IS ONLY APPLICABLE TO ORDER GIVING EFFECT TO THE ORDER OF T HE FIRST APPELLATE AUTHORITY VIZ., THE CIT(APPEALS). BY VIRTUE OF AMENDMENT TO THE PROVISIONS OF SECTION 251 OF THE ACT W.E.F. 1.6.2001, THE FIRST APPELLATE AUTHORITY DOES NOT HAVE ANY POWER TO SET ASIDE AN ASSESSMENT OR ISSUE FOR C ONSIDERATION BY THE AO. HENCE, AS RIGHTLY CONTENDED BY THE ASSESSEE, T HE AFORESAID INSTRUCTION CANNOT BE THE BASIS FOR PASSING THE IMPUGNED ORDERS . 11. SECONDLY, THE TRIBUNAL VIDE ORDER DATED 28.3.20 16 IN ITA NO.631/BANG/2013 HAS HELD THAT THE ASSESSMENT ORDER FRAMED BY THE ITO IS NOT VALID AND THAT THE ASSESSMENT HAS TO BE FRAM ED DE NOVO BY A ITA NOS. 1454 & 1455/BANG/2018 PAGE 6 OF 7 COMPETENT OFFICER EITHER ACIT/DCIT. BY VIRTUE OF T HIS ORDER OF TRIBUNAL, THE ORDER OF THE AO WHICH IS SOUGHT TO BE RECTIFIED IN THE PROCEEDINGS U/S. 154 OF THE ACT IS NO LONGER IN EXISTENCE AND EVEN ON TH IS GROUND, THE PROCEEDINGS U/S. 154 OF THE ACT ARE THOROUGHLY MISC ONCEIVED, AND IN OUR VIEW, DESERVES TO BE QUASHED. 12. THIRDLY, IT WAS ALSO BROUGHT TO OUR NOTICE BY T HE LD. COUNSEL FOR THE ASSESSEE THAT PURSUANT TO THE ORDER OF THE TRIBUNAL , THE ACIT, CIRCLE 4(3)(1), BANGALORE HAS PASSED AN ORDER U/S. 254 OF THE ACT R.W.S. 143(3) DATED 30.12.2017 DETERMINING THE TOTAL INCOME OF AS SESSEE AT RS.18,87,86,930. BY VIRTUE OF THIS ORDER OF ASSESS MENT, THE PREVIOUS DETERMINATION OF TOTAL INCOME AND TAX PAYABLE NO LO NGER SURVIVES AND THEREFORE THE ORDERS PASSED U/S. 154 OF THE ACT ARE PURELY ACADEMIC. THE ASSESSEE HAS ALREADY FILED AN APPEAL AGAINST THE OR DER DATED 30.12.2017 AND THE SAME IS STATED TO BE PENDING FOR ADJUDICATI ON BEFORE THE FIRST APPELLATE AUTHORITY. 13. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT T HE ORDERS PASSED U/S. 154 OF THE ACT ARE REQUIRED TO BE QUASHED AND ARE A CCORDINGLY QUASHED. 14. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF JUNE, 2020. SD/- SD/- ( B R BASKARAN ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 10 TH JUNE, 2020. / DESAI S MURTHY / ITA NOS. 1454 & 1455/BANG/2018 PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.