M/s Tarakarama Enterprises., Hyderabad V. The ITO, Ward-2, Machilipatnam

ITA 203/VIZ/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7185 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-01-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 17-05-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: TH L PETER
• Assessee Lawyers: S RAMA RAO
• Keywords: Rectification of order; Period of limitation; Set aside
• Section: 143(3); 143(1); 264; 147; 148; 263; 154

Judgement Text

ITA 203/V/07 TARAKARAMA ENT., MACHILIPATNAM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 203 /VIZAG/ 20 07 ASSESSMENT YEAR : 2002 - 03 TARAKARAMA ENTERPR ISES, PACHARLANKA MACHILIPATNAM ITO WARD - 2 MACHILIPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AADFT 4317J APPELLANT BY: SHRI S. RAMA RAO, ADVOCATE RESPONDENT BY: SHRI TH.L. PETER, CIT(DR) ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED AGAINST THE ORDER OF CIT PASSED U/S 263 OF THE ACT SETTING ASIDE THE ORDER PASSED U/S 154 OF THE ASSESSING OFFICER. THE FACTS BORNE OUT FROM THE RECORD ARE THAT THE RETURN OF INCOME FILED BY THE ASSESSEE WAS ORIGINALLY ASSESSED U/S 143(1) OF THE I.T. ACT ON 26.2.2004. THERE AFTER A NOTICE U/S 148 WAS ISSUED UPON THE ASSESSEES TO RE - OPEN THE ASSESSMENT. IN THE ASSESSMENT ORDER ASSESSING OFFICER HAS NOTED THAT NOTICE U/S 148 WAS ISSUED ON 9.12.2003, WHEREAS DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. D.R. HAS FILED A COPY OF NOTICE SHOWING THAT IT WAS ISSUED ON 14.6.2004. THE ASSESSMENT U/S 143(3) READ WITH SECTION 147 WAS COMPLETED ON 29.3.2006 MAKING CERTAIN ADDITIONS. ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A) CHALLENGING THE ADDITIONS MADE BY THE A.O. 2. DURING THE PENDENCY OF THE APPEAL THE ASSESSEE HAS MOVED AN APPLICATION U/S 154 OF THE I.T. ACT TO THE ASSESSING OFFICER WITH THE CONTENTION THAT THE ASSESSMENT IS BARRED BY LIMITATION. H E HAS ALSO TAKEN A PLEA IN THE APPL ICATION U/S 154 THAT NOTICE U/S 148 WAS NOT SERVED UPON THE ASSESSEE. ACTING ON THIS APPLICATION, THE ASSESSING OFFICER HAS PASSED AN ORDER U/S 154 AND ACCEPTED THE CONTENTION OF THE ASSESSEE AND FRAMED THE ASSESSMENT ON THE RETURN ED INCOME. THIS ORDER P ASSED U/S 154 OF THE ACT WAS SET ASIDE BY THE CIT HAVING INVOKED ITS JURISDICTION U/S 263 OF THE ACT. ITA 203/V/07 TARAKARAMA ENT., MACHILIPATNAM 2 3 . THE LD. COUNSEL FOR THE ASSESSEE HAS CHALLENGED THE ORDER U/S 263 OF THE ACT ON THE GROUND THAT THE ASSESSING OFFICER HAS RIGHTLY RECTIFIED HIS ORDER BY ACCEPTING THE CONTENTION OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT EVEN IF THE NOTICE IS ISSUED ON 9.12.2003 THE TIME AVAILABLE FOR COMPLETING THE ASSESSMENT WAS UPTO 31.3.200 5 AND THE ASSESSMENT ORDER WAS PASSED ON 29.3. 2006 . THEREFORE, THE AS SESSING OFFICER HAS RECTIFIED THE ASSESSMENT ORDER AND ACCEPTED THE RETURNED INCOME HAVING REALIZED THAT THE ASSESSMENT IS BARRED BY LIMITATION. 4 . THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT CIT HAS WRONGLY INVOKED THE JURISDICTIONS U/S 263 OF THE I.T. ACT. HE HAS ALSO PLACED A RELIANCE UPON THE JUDGEMENT IN THE CASE OF CIT VS. K.M. PACHAYAPPAN 304 ITR 264 & CIT VS. HARI RAJ SWARUP & SONS 138 ITR 462. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE FACT THAT AFTER THE RECTIFICATION THE ASSESSEE HAS WITHDRAWN THE APPEAL PENDING BEFORE THE CIT(A). 5 . THE LD. D.R. ON THE OTHER HAND HAS EMPHATICALLY REFUTED THE CONTENTION OF THE ASSESSEE. HE HAS INVITED OUR ATTENTION THAT NOTICE U/S 148 WAS ISSUED ON 14.6.2004, THEREFORE, THE TIME AVAILABLE WITH THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT WAS 31.3.2006 AND THE ASSESSMENT WAS COMPLETED ON 29.3.2006. THEREFORE, IT WAS WITHIN TIME AND THE ASSESSING OFFICER HAS WRONGLY REVIEWED HIS OWN ORDER WITHO UT REALIZING THE FACT THAT ASSESSMENT WAS COMPLETED WITHIN THE PRESCRIBED PERIOD. MOREOVER, THE OFFICER WHO PASSED THE ASSESSMENT ORDER AND RECTIFICATION ORDER WAS THE SAME PERSON KNOWING FULLY WELL THAT HE HIMSELF HAS RECORDED IN THE ASSESSMENT ORDER THA T THE NOTICE U/S 148 OF THE I.T. ACT WAS ISSUED . UNDER THESE CIRCUMSTANCES, IT CANNOT BE PRESUMED THAT THE ASSESSING OFFICER HIMSELF HAS FORGOTTEN AS TO WHEN THE NOTICE WAS ISSUED. MOREOVER, THE ORDERS PASSED U/S 154 IS CONTRARY TO THE RECORD. THEREFORE , THE CIT HAS RIGHTLY EXERCISED HIS JURISDICTION U/S 263 AND SET ASIDE THE ORDER OF THE A.O. THE LD. D.R. FURTHER INVITED OUR ATTENTION THAT AT THE RELEVANT POINT OF TIME WHEN THE ASSESSING OFFICER HAS REVIEWED HIS ORDER, THE APPEAL RAISING BOTH THE ISSUE S WAS PENDING ITA 203/V/07 TARAKARAMA ENT., MACHILIPATNAM 3 BEFORE THE CIT(A) FOR ADJUDICATION. THE ASSESSING OFFICER SHOULD HAVE WAITED THE RESULT OF THE FIRST APPEAL INSTEAD OF REVIEWING HIS OWN ORDER UNDER THE GARB OF RECTIFICATION U/S 154 OF THE ACT. THUS T HE ACTION OF THE A.O. WAS TOTALLY AGAIN ST THE LEGAL PROVISIONS AND SETTLED PRINCIPLE OF LAW. THEREFORE, IT WAS RIGHTLY KNOCKED DOWN BY THE CIT BY EXERCISING HIS JURISDICTION U/S 263 OF THE I.T. ACT. 6 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORIT IES BELOW AND THE DOCUMENTS AVAILABLE ON RECORD, WE FIND THAT ASSESSING OFFICER HAS FRAMED THE ASSESSMENT U/S 143(3) READ WITH 147 OF THE ACT. IN THIS ASSESSMENT ORDER, THE ASSESSING OFFICER HAS CATEGORICALLY MENTIONED THAT NOTICE U/S 148 WAS ISSUED ON 9. 12.2003 BUT DURING THE COURSE OF HEARING, THE LD. D.R. HAS PLACED THE COPY OF THE NOTICE U/S 148 BEARING A DATE OF ISSUANCE AS 14.6.2004. IT IS ALSO PERTINENT TO MENTION HERE THAT THE OFFICER WHO HAS PASSED THE ASSESSMENT AND RECTIFICATION ORDER IS THE SA ME OFFICER I.E. CH. RAJASIRI. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSMENT ORDER WAS CHALLENGED BY THE ASSESSEE BEFORE THE CIT(A) AND AT THE TIME WHEN THE RECTIFICATION WAS DONE IT WAS PENDING BEFORE THE CIT(A) FOR DISPOSAL. IT IS ALSO EVIDENT FROM THE RECORD THAT DURING THE PENDENCY OF THE FIRST APPEAL, THE ASSESSEE HAS MOVED AN APPLICATION U/S 154 BEFORE THE ASSESSING OFFICER FOR RECTIFICATION ON THE GROUND THAT NO NOTICE U/S 148 WAS SERVED. IT WAS ALSO CONTENDED IN THIS APPLICATION U/S 154 THAT A SSESSMENT IS BARRED BY LIMITATION. THE ASSESSING OFFICER WITHOUT VERIFYING THESE FACTS OUTRIGHTLY ACCEPTED THE CONTENTION OF THE ASSESSEES AND RECTIFIED ITS ORDER. EVEN IN RECTIFICATION ORDER, HE DID NOT DISCUSS THE CONTENTIONS RAISED BY THE ASSESSEE IN HIS RECTIFICATION APPLICATION. HE SIMPLY MENTIONED THAT ASSESSEE HAS FILED A PETITION U/S 154 SEEKING FOR RECTIFICATION WHICH IS IN ORDER. HE ACCORDINGLY MODIFIED ITS ASSESSMENT ORDER. 7 . OUR ATTENTION WAS INVITED TO THE FACTS THAT SINCE THE NOTICE U /S 148 WAS ISSUED ON 14.6.2004 THE TIME AVAILABLE WITH THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT WAS 31 ST MARCH, 2006 AND THE ASSESSMENT WAS FRAMED ON 29.3.2006 I.E. WITHIN THE PERIOD OF LIMITATION. THEREFORE, THE ASSESSING OFFICER HAS WRONGLY ACCE PTED THE CONTENTION OF THE ASSESSEES THAT THE ASSESSMENT IS ITA 203/V/07 TARAKARAMA ENT., MACHILIPATNAM 4 BARRED BY LIMITATION. SO FAR AS SERVICE OF NOTICE U/S 148 IS CONCERNED, THE SAME ASSESSING OFFICER HIMSELF HAS MENTIONED IN THE ASSESSMENT ORDER THAT NOTICE U/S 148 WAS SERVED UPON THE ASSESSEE. THEN WE ARE UNABLE TO UNDERSTAND ON WHAT BASIS HE HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT NOTICE WAS NOT SERVED. IN THE LIGHT OF THESE FACTS, WE ARE OF THE VIEW THAT ASSESSING OFFICER HAS ACTED ERRONEOUSLY IN RECTIFYING HIS ORDER, THEREFORE, HIS ORDER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHEN THE APPEAL IS PENDING BEFORE THE CIT(A), HE SHOULD HAVE WAITED FOR THE OUTCOME OF THE FIRST APPEAL IN WHICH THE SIMILAR ISSUES WERE INVOLVED INSTEAD OF EXCEEDING HIS JURISDICTION TO MODIFY HIS OWN ASSESSMENT ORDER UNDER THE GARB OF RECTIFICATION. WE THEREFORE, OF THE CONSIDERED VIEW THAT CIT HAS RIGHTLY EXERCISED HIS JURISDICTION U/S 263 BY KNOCKING DOWN THE RECTIFICATION ORDER PASSED U/S 154 OF THE ACT. ACCORDINGLY, WE CONFIRM THE ORDER OF THE C IT. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 15.2 .20 1 1 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATN AM, DATED 15 TH FEBRUARY , 20 1 1 COPY TO 1 SRI S. RAMA RAO, ADVOCATE, FLAT NO.103, H.NO.3 - 6 - 542/4, INDIRADEVI NILAYAM, ST.NO.7, HIMAYATNAGAR, HYDERABAD - 500 029. 2 ITO WARD - 2, MACHILIPATNAM 3 THE CI T, VIJAYAWADA 4 THE CIT (A) , VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM