M/s. MKR Palanisamy & Son, Salem V. ACIT, Coimbatore

ITA 1919/CHNY/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61112 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-05-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 22-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR STAND ING
• Assessee Lawyers: G BASKAR
• Keywords: Rectification of order; Competent authority
• Section: 143(3); 234B; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NOS.1919 TO 1925(MDS)/2009 ASSESSMENT YEARS : 2001-02 TO 2007-08 M/S. MKR PALANISAMY & SONS, 5/49, BAJANAI KOIL ST., ELAMPILLAI, SALEM-637 502. PAN AAEFM0745N. VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE II, COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.BASKAR, ADVOCATE RESPONDENT BY : SHRI KEB RENGARAJAN, JR.STAN DING COUNSEL DATE OF HEARING : 7 TH MAY, 2012 DATE OF PRONOUNCEMENT : 7 TH MAY, 2012 O R D E R PER BENCH:- THIS IS A GROUP OF SEVEN APPEALS. THE APPEALS RE LATE TO THE ASSESSMENT YEARS 2001-02, 2002-03, 2003-04, 200 4-05, 2005-06, 2006-07 AND 2007-08. THE APPEALS ARE DIRE CTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TA X (APPEALS)-II AT COIMBATORE, DATED 30-9-2009 AND ARI SE OUT OF THE - - ITA NOS.1919 TO 1925 OF 2009 2 ASSESSMENTS COMPLETED UNDER SECTION 143(3), READ WI TH SECTION 153C OF THE INCOME-TAX ACT, 1961. 2. THERE WAS A SEARCH ACTION UNDER SECTION 132 OF THE ACT IN THE RESIDENTIAL AND BUSINESS PREMISES OF S/S HRI P.SUNDARARAJ AND P.SUKUMAR, PARTNERS OF THE ASSESSE E FIRM. IN THE LIGHT OF THE DETAILS AND PARTICULARS COLLECTED IN THE COURSE OF THE SEARCH, THE ASSESSEE HAS BEEN PROCEEDED WITH UN DER SECTION 153C OF THE ACT. 3. THE MAIN GROUND RAISED BY THE ASSESSEE IN THESE APPEALS IS IN RESPECT OF THE JURISDICTION OF THE AS SESSING OFFICER TO COMPLETE THE IMPUGNED ASSESSMENTS UNDER SECTION 143(3), READ WITH SECTION 153C. IT IS THE CASE OF THE ASSE SSEE THAT THE ASSESSING OFFICER AT SALEM ALONE HAD THE JURISDICTI ON TO INITIATE AND COMPLETE THESE ASSESSMENTS, WHEREAS THE ASSISTA NT COMMISSIONER OF INCOME-TAX AT COIMBATORE HAD NO JUR ISDICTION AT ALL. IT IS THE CASE OF THE ASSESSEE THAT IN VIEW O F THE CBDT NOTIFICATION NO.285/2006 DATED 10-10-2006, THE OFFI CE AT COIMBATORE HAVING CONCURRENT JURISDICTION, DID NOT HAVE AUTHORITY TO PASS ORDERS UNDER SECTION 143(3) AND, THEREFORE, THE ASSESSMENTS SHOULD HAVE BEEN DECLARED AS INVALID. - - ITA NOS.1919 TO 1925 OF 2009 3 4. AT THE TIME OF HEARING OF THESE APPEALS IT WAS BROUGHT TO OUR NOTICE THAT THE CONNECTED APPEALS, A RISING FROM THE SAME SEARCH AND CIRCUMSTANCES, WERE CONSIDERED BY INCOME-TAX APPELLATE TRIBUNAL, CHENNAI BENCHES IN T HE FOLLOWING CASES:- 1. P.SUNDARARAJ HUF VS. ACIT ORDER OF C-BENCH D ATED 30-4-2010 IN ITA NOS.1740 TO 1746(MDS)/2009. 2. SHRI P.JEEVARATHINAM VS. ACIT ORDER OF D-BEN CH DATED 11-6-2010 IN ITA NOS.61 TO 67(MDS)/2010 . 3. P.SUKUMAR HUF VS ACIT ORDER OF C-BENCH DATED 30- 4-2010 IN ITA NOS.1731 TO 1737(MDS)/2009. 5. IN ALL THE ABOVE APPEALS THE TRIBUNAL HAS CONSIDERED THE NOTIFICATION NO.285/2006 ISSUED BY T HE CENTRAL BOARD OF DIRECT TAXES IN F. NO.133/38/2006-TPL DATE D 10-10-2006. IN THE SAID CIRCULAR IT IS STATED THAT THE AUTHORITIES GRANTED WITH CONCURRENT JURISDICTION SHALL ISSUE IN TIMATION AND REFUND UNDER SUB-SECTION(1) OF SECTION 143 AND PASS RECTIFICATION ORDERS UNDER SECTION 154 IN RESPECT OF SUCH INTIMAT ION. IN THE LIGHT OF THE ABOVE NOTIFICATION, THE TRIBUNAL HELD THAT THE ASSESSING AUTHORITY AT COIMBATORE HAD NO JURISDICTI ON TO ASSESS - - ITA NOS.1919 TO 1925 OF 2009 4 THOSE FILES UNDER SECTION 143(3). IN THOSE CASES T HE ASSESSING AUTHORITY WHO HAD THE ORIGINAL JURISDICTION WAS THE ASSISTANT COMMISSIONER AT SALEM AND FILES WERE ASSIGNED TO TH E ASSISTANT COMMISSIONER, COIMBATORE, WHO WAS VESTED WITH CONCU RRENT JURISDICTION. 6. IN THE ORDERS PASSED IN THE CASE OF SHRI P.SUNDARARAJ-HUF AND IN THE CASE OF SHRI P.SUKUMAR- HUF, THE ASSESSMENT ORDERS WERE HELD TO BE ULTRA VIRES AND W ERE QUASHED BY THE TRIBUNAL WITH OBSERVATION THAT THE CONCERNED ASSESSING OFFICER HAVING VALID JURISDICTION WAS AT LIBERTY TO TAKE FURTHER NECESSARY ACTION IN THE CASES, IF THE LAW SO PERMIT S SPECIFICALLY WITH REFERENCE TO LIMITATION, ETC. IN THE CASE OF SHRI P. JEEVARATHINAM, THE TRIBUNAL HAS QUASHED THE ASSESSM ENT ORDERS WITHOUT ANY OTHER OBSERVATION. 7. THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE, PLACED COPIES OF THE ORDERS OF THE TRIBUNAL BEFORE US AND SUBMITTED THAT THESE CASES ARE COVERED BY THE SAID ORDERS OF THE TRIBUNAL AND, THEREFORE, THE ASSESSMENTS HAVE TO BE QUASHED. 8. SHRI KEB RENGARAJAN, THE LEARNED STANDING COUNS EL APPEARING FOR THE REVENUE, ON THE OTHER HAND, SUBMI TTED THAT THE - - ITA NOS.1919 TO 1925 OF 2009 5 NOTIFICATION NO.285/2006 DATED 10-10-2006 ALONE IS NOT THE GUIDELINE ISSUED BY THE CENTRAL BOARD OF DIRECT TAX ES IN THE MATTER OF ASSESSMENT VIS--VIS CONCURRENT JURISDICT ION. HE EXPLAINED THAT THE SAID NOTIFICATION WAS WITH REFER ENCE TO INTIMATION PROCEEDINGS ALONE. HE INVITED OUR ATTEN TION TO THE NOTIFICATION OF THE CENTRAL BOARD OF DIRECT TAXES D ATED 23-8-2001 IN S.O. NO.822 ON JURISDICTION OF AUTHORITIES HAVIN G CONCURRENT JURISDICTION TO PERFORM FUNCTIONS OF ASSESSING AUTH ORITIES. HE ALSO PLACED RELIANCE ON A SIMILAR NOTIFICATION ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES ON 3 RD JULY, 2001 IN S.O. 732(E). SIMILARLY HE PLACED RELIANCE ON ANOTHER NOTIFICATION OF CENTR AL BOARD OF DIRECT TAXES, DATED 27-11-2008 (NO.1/2008-09). HE FURTHER SUBMITTED THAT THE EARLIER DECISIONS OF THE TRIBUNA L MAY NOT EXACTLY APPLY TO THE PRESENT APPEALS. 9. ON GOING THROUGH THE RECORDS OF THE CASE AND TH E EARLIER ORDERS OF THE TRIBUNAL, WE FIND THAT THE TR IBUNAL HAS CONSIDERED EXACTLY THE VERY SAME ISSUE OF JURISDICT ION IN THE APPEALS FILED BY THE CONNECTED PARTIES. THEREFORE, AS IS THE DUTY OF A CO-ORDINATE BENCH, WE HAVE TO GO BY THE DECISI ON ALREADY ARRIVED AT BY THE CO-ORDINATE BENCHES ON THE SUBJEC T. THEREFORE, - - ITA NOS.1919 TO 1925 OF 2009 6 WE FOLLOW THE FINDING OF THE TRIBUNAL IN THE EARLIE R ORDERS PASSED IN CONNECTED APPEALS THAT THE IMPUGNED ASSESSMENTS HAVE BEEN PASSED BY THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE II AT COIMBATORE WITHOUT JURISDICTION. ACCO RDINGLY, WE ALSO HOLD THAT THESE IMPUGNED ASSESSMENTS ARE NOT SUSTAI NABLE. 10. BUT, WE ALSO FIND THAT THESE IMPUGNED ASSESSME NTS ARE NOT SUSTAINABLE IN LAW ONLY BECAUSE OF PROCEDUR AL LAPSES IN PINPOINTING THE JURISDICTION OF THE AUTHORITIES AND NOT BECAUSE OF ANY INHERENT LAPSE OF JURISDICTION. THERE IS NO CA SE THAT THE IMPUGNED ASSESSMENTS ARE UNSUSTAINABLE IN LAW FOR W ANT OF ORIGINAL JURISDICTION. THE ORIGINAL JURISDICTION I S VERY MUCH THERE. BUT, WHILE THE FILES WERE BEING TRANSFERRED FROM ON E ASSESSING AUTHORITY TO ANOTHER ASSESSING AUTHORITY ON THE STR ENGTH OF THE ORDERS PASSED BY THE HIGHER AUTHORITIES, THE EXACT SPECIFICS OF FUNCTIONAL JURISDICTION HAVE NOT BEEN EXPLAINED IN THE LIGHT OF THE CONTEMPORANEOUS NOTIFICATIONS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES AND APPOINTING OF THOSE AUTHORITIES. THIS LACK OF CLARIFICATION, MADE THE WHOLE AFFAIR INCONCLUSIVE, ESPECIALLY IN VIEW OF THE CBDT CIRCULAR NO.285/2006 DATED 10-10-2 006, WHEREIN THE SUBJECT MATTER OF CONCURRENT JURISDICTI ON WAS - - ITA NOS.1919 TO 1925 OF 2009 7 CONFINED TO ISSUANCE OF INTIMATION AND REFUND UNDER SECTION 143(1) AND ITS RECTIFICATION UNDER SECTION 154. 11. BUT WE FIND THAT THE VACUUM IS CREATED NOT BY SUBSTANTIVE STATUTE, BUT BY PROCEDURES. AS THE INH ERENT JURISDICTION TO ASSESS THESE FILES ARE VERY MUCH WI TH THE REVENUE, THESE ASSESSMENT ORDERS CANNOT BE HELD AB INITIO VOID. AT THE MAXIMUM, THESE ASSESSMENTS ARE ONLY IRREGULA RITIES . THERE IS A GREAT DIFFERENCE BETWEEN AN ILLEGAL ORDE R AND AN IRREGULAR ORDER. IN THE PRESENT CASE, THESE IMPUGN ED ASSESSMENT ORDERS ARE ONLY IRREGULAR ORDERS AND THE Y ARE NOT ILLEGAL ORDERS. 12. IRREGULARITIES CAN BE RECTIFIED AND MADE GOOD AND THE ASSESSMENTS COULD BE RESUSCITATED. 13. THEREFORE, EVEN IF WE HOLD THAT THE IMPUGNED ASSESSMENTS ARE NOT SUSTAINABLE IN LAW, THESE ASSES SMENT ARE NOT QUASHED. THEY ARE ONLY SET ASIDE. THE FILES A RE REMITTED BACK TO THE ASSESSING AUTHORITY AT SALEM, WHO HAD T HE ORIGINAL JURISDICTION OVER THIS ASSESSEE. THE ASSESSING AUT HORITY AT SALEM, WHO HAD THE ORIGINAL JURISDICTION, SHALL PLA CE THESE FILES BEFORE THE COMPETENT AUTHORITY FOR DECLARING THE JU RISDICTION OF AN - - ITA NOS.1919 TO 1925 OF 2009 8 AUTHORITY UNDER THE ACT TO MAKE ASSESSMENTS UNDER S ECTION 143(3), READ WITH SECTION 153C OF THE ACT. THE COM PETENT AUTHORITY ONCE DECLARES THE JURISDICTION, THE AUTHO RIZED OFFICER SHALL PASS ASSESSMENT ORDERS UNDER SECTION 153C AFR ESH AFTER HEARING THE ASSESSEE. IN SHORT, WE ARE GIVING DIRE CTION TO THE REVENUE TO REDO THE ASSESSMENTS AFTER DETERMINATION OF THE JURISDICTION OF THE AUTHORITY TO DO THE ASSESSMENTS IN THESE CASES. 14. WHILE GIVING THE ABOVE DIRECTION, WE ARE CONCE RNED ABOUT THE LIABILITY OF THE ASSESSEE UNDER SECTION 2 34B. IN THESE CASES THE FINAL CULMINATION OF ASSESSMENTS HAS BEEN DELAYED BY THE FACTORS CONTRIBUTED BY THE REVENUE ITSELF. THE REFORE, THE ASSESSEE CANNOT BE CALLED UPON TO PAY INTEREST UNDE R SECTION 234B FOR THE PERIOD OF DELAY CAUSED BY THE ACTIONS OF THE REVENUE. THEREFORE, THE ASSESSING OFFICER, ON COMP LETION OF THE ASSESSMENTS, SHALL NOT LEVY INTEREST UNDER SECTION 234 IN A MECHANICAL WAY. HE SHALL GIVE THE ASSESSEE THE BEN EFIT OF THE DELAY CAUSED BY THE ACTIONS OF THE REVENUE. 15. IN RESULT, THESE APPEALS FILED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. - - ITA NOS.1919 TO 1925 OF 2009 9 ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON MONDAY, THE 7 TH OF MAY, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 7 TH MAY, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.