M/s. Allahabad Tannery, Kanpur V. JT. C.I.T., Kanpur

ITA 196/LKW/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78480 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 18-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAKESH GARG SHRI AJAY KUMAR D
• Keywords: Opportunity of being heard; Retrospective amendment
• Section: 143(3); 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.196/LKW/2011 ASSESSMENT YEAR:2005 - 06 M/S ALLAHA D AD TANNERY, 99/85A, JAJMAU, KANPUR. PAN:AAEFA9951C VS. JT.C.I.T.01, KANPUR. (APPELLANT) (RESPONDENT) ITA NO.255/LKW/2011 ASSESSMENT YEAR:2005 - 06 A.C.I.T. - 1, KANPUR. VS. M/S ALLAHA D AD TANNERY, 99/85A, JAJMAU, KANPUR. PAN:AAEFA9951C (APPELLANT) (RESPONDENT) O R D E R PER SUNIL KUMAR YADAV: THESE CROSS APPEALS ARE PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF CIT(A) PERTAINING TO ASSESSMENT YEAR 2005 - 2006. SINCE THESE APPEALS WERE HEARD TOGETHER, THE SAME ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. WE HOWEVER, PREFER TO ADJUDICATE THEM ONE AFTER THE OTHER. ASSESSEE BY SHRI RAKESH GARG, ADVOCATE REVENUE BY SHRI AJAY KUMAR, D.R. DATE OF HEARING 26/02/2014 DATE OF PRONOUNCEMENT 11/04/2014 2 I.T.A. NO.196/LKW/2011 2. THIS IS AN APPEAL OF THE ASSESSEE IN WHICH THE ASSESSEE HAS RAISED, INTER ALIA, VARIOUS GROUND WHICH ARE AS UNDER: 1. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT WHICH ASSESSMENT IS WITHOUT JUR ISDICTION IN AS MUCH AS THE JCIT PASSING THE ASSESSMENT ORDER DID NOT HAVE THE JURISDICTION TO FRAME THE ASSESSMENT. 2. BECAUSE THE JURISDICTION, TO FRAME THE ASSESSMENT WAS WITH DCIT - I, KANPUR AND THERE BEING NO ORDER U/S 127 OF THE ACT, THE ORDER PASSED BY JCIT - I IS WITHOUT JURISDICTION; THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THE SAME AS A VALID ORDER, WHICH IN FACT BEING AN ORDER WITHOUT JURISDICTION SHOULD OUGHT TO HAVE BEEN ANNULLED. 3. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE IN RESPECT OF RS.2,13,36,950/ - RECEIVED AS INCENTIVES WHILE COMPUTING DEDUCTION U/S 80IB OF THE ACT. 4. BECAUSE WHILE UPHOLDING THE DISALLOWANCE OF RS.2,13,36,950/ - (BEING INCENTIVES ON EXPORTS) THE CIT(A) HAS NOT APPRECIATED T HE FACTS AND HAS ERRED IN NOT ALLOWING DEDUCTION U/S 80 - IB IN RESPECT OF SELF CONSUMED INCENTIVES, WHICH DEDUCTION SHOULD OUGHT TO HAVE BEEN ALLOWED WHILE COMPUTING DEDUCTION U/S 80 - IB. 5. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE OF 1/5 TH OF THE TOTAL EXPENDITURE INCURRED ON TELEPHONE FOR PERSONAL PURPOSES. 3. THROUGH GROUND NO. 1 & 2, THE APPELLANT HAS CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICER WHO FRAMED THE ASSESSMENT WITH THE SUBMISSIONS THAT ONCE THE ASSESSMENT IS FRAMED BY INCOMPETENT OFFICER, THE ASSESSMENT IS ILLEGAL, NULL AND VOID AND DESERVES TO BE SET ASIDE. IN SUPPORT OF HIS CONTENTION, THE LEARNED COUNSEL FOR THE ASSESSEE HAS 3 SUBMITTED THAT RETURN FOR THE IMPUGNED ASSESSMENT YEAR WAS FILED DECLARING INCOME OF RS.2,28,31,762/ - ALONG WITH THE BALANCE SHEET, PROFIT & LOSS ACCOUNT AND TAX AUDIT REPORT AFTER CLAIMIN G DEDUCTION U/S 80IB OF THE ACT BEFORE THE DCIT, RANGE - 1, KANPUR HAVING JURISDICTION OVER THE ASSESSEE . THE RETURN WAS PROCESSED BY DCIT, RANGE - 1, KANPUR U/S 143(1) ON 28/03/2006 AND REFUND WAS ISSUED. THEREAFTER, A NOTICE U/S 143(2) HAS BEEN ISSUED BY J T. CIT, RANGE - 1, KANPUR. SINCE THERE WAS NO ORDER FOR TRANSFER OF THE FILE FROM DCIT, TO JT.CIT, THE ASSUMPTION OF JURISDICTION BY THE JT.CIT WAS NOT PROPER. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE PROVISIONS OF SECTION 127 OF THE INCOME - TAX ACT (HEREINAFTER REFERRED TO AS THE ACT) WITH THE SUBMISSION THAT THE POWER FOR TRANSFERRING THE FILE FROM ONE ASSESSING OFFICER TO OTHER ASSESSING OFFICER CAN BE EXERCISED BY THE CIT AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BUT IN THE INSTANT CASE, NO NOTICE WAS ISSUED BY THE CIT WHILE TRANSFERRING THE JURISDICTION FROM DCIT, RANGE - 1 TO JT. CIT, RANGE - 1. IN SUPPORT OF HIS CONTENTION THAT TRANSFER OF FILE FROM ONE ASSESSING OFFICER TO ANOTHER ASSESSING OFFICER WITHOUT ANY ORDER U/S 127 OF THE ACT IS BAD IN LAW, THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE JUDGMENT OF HON'BLE CALACUTTA HIGH COURT IN THE CASE OF BERGER PAINTS INDIA LTD. VS ASSISTANT COMMISSIONER OF INCOME - TAX [2000] 246 ITR 133 (CAL) AND THAT OF HON'BLE DELHI HIGH COURT IN THE CASE OF VALVOLINE CUMMINS LIMITED VS DEPUTY COMMISSIONER OF INCOME - TAX [2008] 307 ITR 103 (DEL) . THE RELIANCE WAS ALSO PLACED UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF PRACHI LEATHER S PVT. LTD. VS. ADDL. CIT IN I.T.A. NO.26/LKW/2010. 4. THE LEARNED D.R., ON THE OTHER HAND, HAS CONTENDED THAT THE DCIT AND JT.CIT ARE HAVING CONCURRENT JURISDICTION OVER THE ASSESSEE BY VIRTUE OF NOTIFICATION ISSUED BY THE CBDT. LEARNED D.R. HAS ALSO INVITED O UR ATTENTION TO THE PROVISIONS OF SECTION 120 OF THE ACT RELATING TO JURISDICTION 4 OF INCOME - TAX AUTHORITIES WITH THE SUBMISSION THAT EXPLANATION TO SUB SECTION (1) CLARIFIES THAT ANY INCOME - TAX AUTHORIT Y, BEING AN AUTHORITY HIGHER IN RANK , MAY, IF SO DIREC TED BY THE BOARD, EXERCISE THE POWERS AND PERFORM THE FUNCTIONS OF THE INCOME - TAX AUTHORITY LOWER IN RANK AND ANY SUCH DIRECTION ISSUED BY THE BOARD SHALL BE DEEMED TO BE A DIRECTION ISSUED UNDER SUB SECTION (1). THE LEARNED D.R. FURTHER CONTENDED THAT IT HAS ALREADY BEEN NOTIFIED BY THE BOARD THAT THE AUTHORIT Y HIGHER IN RANK SHALL HAVE THE CONCURRENT JURISDICTION/POWER TO PERFORM THE FUNCTION S OF INCOME - TAX AUTHORIT Y LOWER IN RANK. ADMITTEDLY, THE DCIT IS SUBORDINATE TO JT.CIT AND BY VIRTUE OF NOTIFICAT ION, THE JT.CIT HAS SUPERVISORY POWER OVER THE DCIT AND ALSO ACT AS AN ASSESSING OFFICER OF ALL THE ASSESSEES, WHO WERE TO BE ASSESSED BY DCIT. THEREFORE, THERE IS NO ILLEGALITY IN THE ASSESSMENT, WHICH WAS FRAMED BY JT.CIT. 4.1 THE LEARNED D.R. FURTHER CONTENDED THAT DCIT HAS PROCESSED THE RETURN OF INCOME U/S 143(1) OF THE ACT AND ISSUED REFUND TO THE ASSESSEE. THEREAFTER, THE JT.CIT ISSUED NOTICE U/S 143(2) OF THE ACT AND COMPLETED THE ASSESSMENT. THE LEARNED D.R. FURTHER CON TENDED THAT THERE ARE TWO MODES OF ASSESSMENT. ONE IS U/S 143(1) OF THE ACT WHERE ONLY ADJUSTMENTS ARE PERMISSIBLE IN THE RETURNED INCOME AS PER CLAUSE A TO E OF SUB SECTION (1) OF SECTION 143 OF THE ACT. T HEREAFTER THE INTIMATION IS TO BE ISSUED TO THE ASSESSEE U/S 14 3 (1) ALONG WITH THE NOTICE OF DEMAND OR REFUND AS THE CASE MAY BE . THIS MODE OF ASSESSMENT IS CALLED SUMMARY ASSESSMENT AND IN MOST OF THE CASES, THE PROCESS OF ASSESSMENT IS COMPLETED IN THIS MODE. W HEREVER, SOME ENQUIRY OR INVESTIGATION IS CALLED FOR, THE ASSESSING OFFICER FRAMING THE ASSESSMENT ISSUES NOTICE U/S 143(2) TO THE ASSESSEE SEEKING REQUIRED INFORMATION . THEREAFTER , THE ASSESSMENT IS COMPLETED U/S 143(3) OF THE ACT AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . W HEREAS THE ASSESSMENT U/S 143(1) IS FRAMED IN 5 THE ABSENCE OF THE ASSESSEE. THEREFORE, BOTH THE ASSESSMENTS ARE INDEPENDENT AND IF ONE ASSESSMENT IS COMPLETED BY THE JUNIOR OFFICER, THE OTHER ASSESSMENT CAN BE COMPLETED BY OTHER SENIOR OFFICER AND THERE IS NO ILLEGALITY OF IRREGULARITY THEREIN. THE LEARNED D.R. FURTHER CONTENDED THAT EVEN OTHERWISE, THE SENIOR OFFICER, AT ANY POINT OF TIME, CAN SEIZE WITH THE MATTER AND FRAME THE ASSESSMENT THOUGH THE PROCESS WAS INITIATED BY HIS SUBORDINATE OFFICER . TH E PURPOSE AND OBJECT OF GRANTING CONCURRENT JURISDICTION TO THE AUTHORITY HIGHER IN RANK IS TO PROVIDE/CONFER THE POWERS TO A SENIOR OFFICER TO HAVE PROPER SUPERVISION OVER ASSESSMENT FRAMED BY THE SUBORDINATE OFFICER. WHENEVER, THE AUTHORITY, HIGHER IN RANK, FEELS THAT ASSESSMENT IS TO BE FRAMED BY HIM, HE CAN SEIZE WITH THE FILE OF THE ASSESSING OFFICER WHO IS JUNIOR TO HIM AND COMPLETE THE ASSESSMENT. THE LEARNED D.R. HAS ALSO COMMENTED U PON ALL THE CASE LAWS REFERRED TO BY THE ASSESSEE WITH THE SUBMISSION THAT IN THESE CASE LAWS IT HAS BEEN HELD THAT ONCE THE JURISDICTION IS INVOKED BY THE AUTHORITY HIGHER IN RANK, THE AUTHORITY SUBORDINATE TO IT, FORFEITS HIS RIGHT OR POWER TO PROCEED WI TH THE REMAINING ASSESSMENT PROCEEDINGS. THEREFORE, THESE CASE LAWS ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS IN THE INSTANT CASE, THE DCIT HAS SIMPLY ISSUED THE INTIMATION U/S 143( 1 ) BY MAKING PRELIMINARY ADJUSTMENTS AND THE PROCEEDINGS U/S 143(3) FOR FRAMING A REGULAR ASSESSMENT WAS COMPLETED BY THE JT.CIT. 5. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RELEVANT PROVISIONS OF THE ACT AND THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT DCIT, RANGE - 1 HAS PROCESSED THE RETURN OF INCOME U/S 143(1) OF THE ACT B Y MAKING ADJUSTMENTS AND ISSUED THE REFUND. NOTICE U/S 143(2) WAS ISSUED AND ASSESSMENT WAS FRAMED U/S 143 (3) BY THE JT.CIT, RANGE - 1. DURING THE COURSE OF HEARING OF THE APPEAL, NO CONTROVERSY WAS RAISED WITH REGARD TO THE CONCURRENT JURISDICTION OF THE DCIT AND JT.CIT OVER THE APPELLANT. MEANING THEREBY 6 BOTH THE OFFICERS ARE QUITE COMPETENT TO FRAME AN ASSESSMENT OF THE RETURNS FILED BY THE ASSESSEE. THE MOOT QUESTION ARISES BEFORE US IS WHETHER THE JT.CIT, WHO IS ADMITTEDLY SENIOR OFFICER HAV ING SUPER VISORY POWER /JURISDICTION OVER THE DCIT, CAN FRAME THE ASSESSMENT U/S 143(3) OF THE ACT WHERE RETURN OF INCOME WAS PROCESSED U/S 143(1) BY THE DCIT? 5.1 BEFORE DWELLING UP ON THE ISSUE, WE HAVE TO LOOK TOWARDS THE OBJECT AND PURPOSE OF CONFERRING THE CONCU RRENT JURISDICTION TO THE AUTHORITY HIGHER IN RANK OF THE INCOME - TAX AUTHORI TY/ASSESSING OFFICER WHO WAS SUPPOSE TO FRAME THE ASSESSMENT IN NORMAL COURSE. OUR ATTENTION WAS INVITED TO THE PROVISIONS OF SECTION 120 OF THE ACT WITH THE SUBMISSION THAT THROU GH THE EXPLANATION BELOW SUB SECTION (1) INSERTED BY FINANCE ACT, 2006 WITH RETROSPECTIVE EFFECT FROM 01/04/88 CLARIFYING THAT ANY INCOME - TAX AUTHORITY BEING A HIGHER AUTHORITY IN RANK, MAY, IF SO DIRECTED BY THE BOARD, EXERCISE THE POWERS OR PERFORM THE F UNCTION OF THE INCOME - TAX AUTHORITY LOWER IN RANK AND ANY SUCH DIRECTION ISSUED BY THE BOARD SHALL BE DEEMED TO BE A DIRECTION ISSUED UNDER SUB SECTION (1). MEANING THEREBY THE INCOME - TAX AUTHORITY BEING AN AUTHORITY HIGHER IN RANK WHILE EXERCISING ITS SU PERVISORY POWERS, MAY SEIZE THE MATTER PENDING WITH THE ASSESSING OFFICER WHO IS JUNIOR IN RANK AND EXERCISE THE POWERS AND PERFORM THE FUNCTIONS OF THAT ASSESSING OFFICER AT ANY POINT OF TIME WHEREVER THE INTERVENTION IS CALLED FOR. IF WE LOOK THE OBJECT AND PURPOSE OF THIS EXPLANATION, WE FIND THAT THE CONCURRENT JURISDICTION ARE PROVIDED TO AUTHORITIES HIGHER IN RANK IN ORDER TO HAVE BETTER SUPERVISION O VER ITS SUBORDINATES AND IF THEY FEEL NECESSARY, THEY MAY SEIZE WITH THE MATTER AND COMPLETE THE REMA INING ACT O R FUNCTION, WHICH WAS TO BE EXERCISED BY THE ASSESSING OFFICER WHO IS JUNIOR TO HIM. 5.2 WE HAVE EXAMINED THE MATERIAL REFERRED TO BY THE ASSESSEE WITH REGARD TO CONCURRENT JURISDICTION AND WE FIND THAT IN EXERCISE OF POWER 7 CONFERRED BY SECTION 120(4)(B) OF THE ACT, THE CENTRAL BOARD OF DIRECT TAXES (IN SHORT CBDT) ISSUED A NOTIFICATION DATED 17 TH SEPTEMBER, 2001 CONFERRING THE POWERS AND FUNCTIONS OF AN ASSESSING OFFICER ON JT. COMMISSIONER OF INCOME TAX WHICH BY VIRTUE OF SECTION 2(28C) OF THE ACT INCLUDES THE ADDL. COMMISSIONER OF INCOME TAX. SUBSEQUENT TO THE NOTIFICATION DATED 17 TH SEPTEMBER 2001, THE CBDT ISSUED AN ORDER DATED 16 TH MAY 2007 TO THE E FFECT THAT IN VIEW OF THE INCREASING GAP BETWEEN THE WORKLOAD AND SCRUTINY ASSESSMENT, IT HA S BEEN DECIDED TO ENTRUST THE RANGE HEADS WITH THE RESPONSIBILITY OF MAKING ASSESSMENTS IN TOP REVENUE POTENTIAL CASES OF THE RANGE TO BE SELECTED ON THE BASIS OF THE RETURNED INCOME. 5.3 ON THE ISSUE OF CONCURRENT JURISDICTION, THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BERGER PAINTS INDIA LTD. (SUPRA) HAD EXPLAINED THE MEANING OF EXPRESSION CONCURRENT TO MEAN TWO AUTHORITIES HAVING EQUAL POWERS TO DEAL WITH THE SITUATION, BUT THE SAME WORK CANNOT BE DIVIDED BETWEEN THEM. THE RELEVANT OBSERVATIONS OF HON'BLE CALCUTTA HIGH COURT ARE EXTRACTED HEREUNDER: CONCURRENT JURISDICTION MEANS A SUBORDINATE AUTHORITY CAN DEAL WITH THE MATTER EQUALLY WITH ANY SUPERIOR AUTHORITY IN ITS ENTIRETY SO THAT EITHER ONE OF SUCH JURISDICTIONS CAN BE INVOKED. IT CANNOT BE CONSTRUED AS CONCURRENT JURISDICTION WHEN ONE PART OF THE ASSESSMENT WILL BE DEALT WITH BY ONE SUPERIOR OFFICER AND THE OTHER PART WILL BE DEALT WITH BY ONE SUBORDINATE OFFICER. 5.4 THE DISTINCTION BETWEEN CONCURRENT EXERCISE AND JOINT EXERCI SE OF JURISDICTION WAS ALSO EXAMINED BY HON'BLE DELHI HIGH COURT IN THE CASE OF VALVOLINE CUMMINS LIMITED (SUPRA) IN WHICH IT HAS BEEN OBSERVED AS UNDER: 8 IT APPEARS TO US QUITE CLEARLY THAT THERE IS A DISTINCTION BETWEEN CONCURRENT EXERCISE OF POWER AND JOINT EXERCISE OF POWER. WHEN POWER HAS BEEN CONFERRED UPON TWO AUTHORITIES CONCURRENTLY, EITHER ONE OF THEM CAN EXERCISE THAT POWER AND ONCE A DECISION IS TAKEN TO EXERCISE THE POWER BY ANY ONE OF THOSE AUTHORITIES, THAT EXERCISE MUST BE TERMINATED BY THAT AUTHORITY ONLY. IT IS NOT THAT ONE AUTHORITY CAN START EXERCISING A POWER AND THE OTHER AUTHORITY HAVING CONCURRENT JURISDICTION CAN CONCLUDE THE EXERCISE OF THAT POWER. THIS PERHAPS MAY BE PERMISSIBLE IN A SITUATION WHERE BOTH THE AUTHORITIES JOI NTLY EXERCISE POWER BUT IT CERTAINLY IS NOT PERMISSIBLE WHERE BOTH THE AUTHORITIES CONCURRENTLY EXERCISE POWER. ONE EXAMPLE THAT IMMEDIATELY COMES TO THE MIND IS THAT OF GRANT OF ANTICIPATORY BAIL. BOTH THE SESSIONS JUDGE AND THE HIGH COURT HAVE CONCURR ENT POWER. IT IS NOT AS IF A PART OF THAT POWER CAN BE EXERCISED BY THE HIGH COURT AND THE BALANCE POWER CAN BE EXERCISED BY THE SESSIONS JUDGE. IF THE HIGH COURT IS SEIZED OF AN APPLICATION FOR ANTICIPATORY BAIL IT MUST DEAL WITH IT AND SIMILARLY IF TH E SESSIONS JUDGE IS SEIZED OF AN ANTICIPATORY BAIL, HE MUST DEAL WITH IT. THERE CAN BE NO JOINT EXERCISE OF POWER BOTH BY THE HIGH COURT AS WELL AS BY THE SESSIONS JUDGE IN RESPECT OF THE SAME APPLICATION FOR ANTICIPATORY BAIL. 5.5 WE HAVE EXAMINED THE FACTS OF BOTH THE CASES. WE FIND THAT IN THIS CASE THE PROCESS WAS INITIATED BY THE AUTHORITY HIGHER IN RANK BUT THE SUBSEQUENT ACTION WAS TAKEN BY THE AUTHORITY JUNIOR IN RANK. THE SITUATION WHERE THE PROCESS WAS INITIATED BY THE JU NIOR OFFICER AND SUBSEQUENT ACTION WAS TAKEN BY THE AUTHORITY HIGHER IN RANK, WAS NEITHER EXAMINED BY THEIR LORDSHIPS IN THIS CASE NOR CONCEPTUALIZED. 6. WE HAVE ALSO EXAMINED THE THEORY OF MODE OF ASSESSMENT AS PROPOUNDED BY THE LEARNED D.R. AND WE FIN D FORCE THEREIN. THERE ARE TWO MODE OF ASSESSMENTS. ONE IS CALLED PRELIMINARY /SUMMARY ASSESSMENT OR THE ASSESSMENT FRAMED U/S 143(1) AND THE OTHER IS CALLED REGULAR ASSESSMENT FRAMED U/S 143(3) OF THE ACT. THE CBDT TIME TO TIME ISSUES THE GUIDELINE FOR FRAMING THE REGULAR ASSESSMENT U/S 143(3) AFTER ISSUING 9 NOTICE U/S 143(2) OF THE ACT. REST OF THE ASSESSMENTS ARE PROCESSED U/S 143(1) OF THE ACT. UNDISPUTEDLY, MAXIMUM ASSESSMENTS ARE FRAMED U/S 143(1) WHERE THE ASSESSING OFFICER HAS ISSUED THE INTIMATI ON AFTER MAKING A PRIMA FACIE ADJUSTMENT. ALONG WITH THE INTIMATION THE ASSESSING OFFICER EITHER RAISES THE DEMAND OR ISSUES THE REFUND BUT WHENEVER CASE FALLS WITHIN THE GUIDELINES ISSUED BY CBDT, IT IS TO BE TAKEN FOR SCRUTINY AND THE ASSESSMENT IS REQU IRED TO BE COMPLETED U/S 143(3) OF THE ACT AND F OR COMPLETING THE ASSESSMENT U/S 143(3), THE ASSESSING OFFICER IS REQUIRED TO ISSUE A NOTICE U/S 143(2) WITHIN A PERIOD PRESCRIBED U/S 143(2) OF THE ACT. THEREAFTER THE ASSESSMENT IS FRAMED U/S 143(3) AFTER PROVIDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE, THERE ARE TWO MODE OF ASSESSMENT AND THEY ARE INDEPENDENT TO EACH OTHER. 7. WE HAVE ALSO CAREFULLY EXAMINED THE OTHER JUDGMENTS REFERRED TO BY THE ASSESSEE. IN ALL THOSE JUDGMENTS, THE PROCEEDINGS FOR ASSESSMENT WAS INITIATED BY THE AUTHORITY HIGHER IN RANK AND REST OF THE ASSESSMENT IS COMPLETED BY THE ASSESSING OFFICER WHO IS JUNIOR TO THE OFFICER WHO HAS INITIATED TH E PROCESS FOR ASSESSMENT. IN THOSE CASES, IT WAS REPEATEDLY HELD THAT ONCE THE AUTHORITY HIGHER IN RANK HAS SEIZED WITH THE MATTER, THE AUTHORITY LOWER IN RANK FORFEITS ITS JURISDICTION TO PROCEED WITH THE MATTER IN ANY MANNER AND TO COMPLETE THE REMAINI NG ASSESSMENT. THE OBJECT /BASIS FOR GIVING THAT FINDING, ACCORDING TO US, ARE THAT ONCE THE AUTHORITY HIGHER IN RANK SEIZED WITH THE MATTER PENDING BEFORE THE SUBORDINATE AUTHORITY FOR ADJUDICATION, THE SUBORDINATE AUTHORITY IS CEASED WITH THE JURISDICTIO N TO PROCEED FURTHER IN THAT MATTER. THE REASON FOR DOING SO IS QUITE OBVIOUS AS ONCE THE HIGHER AUTHORITY HAS STARTED APPLYING HIS MIND TO THE ISSUE IN DISPUTE, THE SUBORDINATE AUTHORITY CANNOT PROCEED WITH THE MATTER. IF IT IS NOT DONE, THERE WOULD BE CHAOS IN THE ADMINISTRATION OF JUSTICE. BUT IN THE INSTANT CASE, THE DCIT HAS COMPLETED THE ONE MODE OF ASSESSMENT BY ISSUING INTIMATION U/S 143(1) OF THE ACT AND THE JT.CIT HAS INITIATED AND 10 COMPLETED THE SECOND MODE OF ASSESSMENT. THEREFORE, WE DO NOT FIND ANY ILLEGALITY IN THE ASSESSMENT AS THE FINAL ASSESSMENT WAS COMPLETED BY JT.CIT, RANGE - 1, WHO IS ADMITTEDLY SENIOR AND SUPERVISORY AUTHORITY OF DCIT, RANGE - 1. WE HASTEN TO ADD THAT ASSES SMENT BY THE HIGHER AUTHORITY MAY BE POSSIBLE EVEN IF THE PROCEEDINGS WERE INITIATED BY THE SUBORDINATE AUTHORITY WHO IS ALSO HAVING CONCURRENT JURISDICTION BUT IN ANY CASE TH IS ISSUE IS NOT BEFORE US AND WE RESTRICT OURSE L VES TO THE CONTROVERSY INVOLVED. WE, THEREFORE, DO NOT FIND ANY INFIRMITY AND ILLEGALITY IN THE ASSESSMENT ORDER FRAMED BY THE JT.CIT, RANGE - 1. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) IN THIS REGARD. 8. GROUND NO. 3 AND 4 OF THE APPEAL ARE COVERED AGAINST THE ASSESSEE IN VIEW OF TH E JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA VS COMMISSIONER OF INCOME - TAX [2009] 317 ITR 218 (SC) AND THE CIT HAS DECIDED THE APPEAL FOLLOWING THE JUDGMENT OF LIBERTY INDIA IN WHICH IT HAS BEEN HELD THAT THE RECEIPTS BY WAY OF D UTY DRAWB ACK RECEIPTS AND DEPB BENEFITS DO NOT FORM PART OF THE NET PROFITS DERIVED FROM THE INDUSTRIAL UNDERTAKINGS . THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A). ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE. 9. GROUND NO. 5 OF THE APPE AL RELATES TO THE DISALLOWANCE OF TELEPHONE EXPENSES. IN THIS REGARD, WE FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE TELEPHONE EXPENSES ON THE GROUND THAT TELEPHONE MIGHT HAVE BEEN USED FOR PERSONAL PURPOSES AS THE ASSESSEE H AS NOT MAINTAINED ANY RECORD TO PROVE THAT TELEPHONE WAS USED EXCLUSIVELY FOR BUSINESS PURPOSE. THE ASSESSING OFFICER ACCORDINGLY MADE DISALLOWANCE OF 1/5 TH OF THE TOTAL EXPENDITURE CLAIMED WHICH WAS CONFIRMED BY CIT(A). NOW THE ASSESSEE IS BEFORE US AND HAVING CAREFULLY EXAMINED THE ISSUE, WE FIND THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS ON HIGHER SIDE AND WE , THEREFORE, RESTRICT IT TO 1/10 TH TO MEET THE ENDS OF 11 JUSTICE. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE IN THIS REGARD UPTO 1/10 TH OF THE TOTAL CLAIM OF TELEPHONE EXPENDITURE. I.T.A. NO.255/LKW/2011 10. IN THIS APPEAL, THE REVENUE HAS ASSAILED THE ORDE R OF CIT(A) MAINLY ON THREE GROUNDS WHICH ARE AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN SHIFTING THE DEDUCTION OF INTEREST OF RS.15,72,862/ - FROM JAJMAU UNIT TO BANTHAR UNIT WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCES MAD E ON ACCOUNT OF REPAIR TO MACHINERY AND BUILDING WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. 3. THAT THE ORDER OF THE LD. CIT (A) - I, KANPUR DATED 14.02.2011 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER D ATED 24.12.2007 BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 11. APROPOS GROUND NO. 1, IT HAS BEEN POINTED OUT DURING THE COURSE OF HEARING THAT THE DEDUCTION U/S 80IB CANNOT BE ALLOWED TO THE ASSESSEE IN THE LIGHT OF THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA (SUPRA). THEREFORE, T HERE WOULD NOT BE ANY EFFECT ON TAX LIABILITY EVEN IF THE INTEREST IS DEBITED TO THE BANTHAR UNIT. THE DEPARTMENT HAS ALSO AGREED TO THE PROPOSITION. MOREOVER, WE HAVE ALSO EXAMINED THIS ORDER OF 12 CIT(A) AND WE DO NOT FIND ANY INFIRMITY THEREIN. ACCORDINGLY, WE CONFIRM H IS ORDER. 12. GROUND NO. 2 RELATES TO THE DISALLOWANCE OF REPAIR OF MACHINERY AND BUILDING. IN THIS REGARD, IT IS NOTICED THAT THIS DISALLOWANCE WAS MADE ON AD HOC BASIS WHICH IS NOT PERMISSIBLE IN LAW. WE HOWEVER HAVE CAREFULLY EXAMINED THE ORDER OF CI T(A) AND DO NOT FIND ANY INFIRMITY THEREIN. WE CONFIRM THE SAME. 13. THE OTHER GROUNDS ARE GENERAL IN NATURE AND NEED NO INDEPENDENT ADJUDICATION. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11/04/2014 ) SD/. SD/. ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEM BER JUDICIAL MEMBER DATED:11/04/2014 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR