Prabhudas Kishordas Tobacco Products Pvt.Ltd., Ahmedabad V. The Dy.CIT.,Circle-5, Ahmedabad

ITA 2555/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80321 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-08-2014
• Assessment Year: 1987-1988
• Appeal Filed On: 25-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Section: 154

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.2280/AHD/2006 [ASSTT.YEAR : 1987-1988] ACIT, CIR.5 AHMEDABAD. /VS. PRABHUDAS KISHORDAS TOBACCO PRODUCTS PVT. LTD. 102, POPULAR HOUSE, ASHRAM ROAD AHMEDABAD. ITA NO.2555/AHD/2010 [ASSTT.YEAR : 1987-1988] PRABHUDAS KISHORDAS TOBACCO PRODUCTS PVT. LTD. 659/1, GULBHAI TEKRA PANCHVATI, AHMEDABAD. /VS. DCIT, CIR.5 AHMEDABAD. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI NIMESH YADAV, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI S.N. SOPARKAR 5 1 &(*/ DATE OF HEARING : 5 TH AUGUST,. 2014 678 1 &(*/ DATE OF PRONOUNCEMENT : 05/09/2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE CROSS APPEALS BY THE REVENUE AND THE ASSESSEE FOR THE ASSTT.YEAR 1987-88 , ARE DIRECTED AGAINST THE ORDER OF THE CIT(A). THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER: ITA NO.2280/AHD/2006 AND OTHER -2- ITA NO.2280/AHD/2006 (REVENUES APPEAL) 2. THE GROUNDS OF THE APPEAL OF THE REVENUE ARE AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DECIDING THE APPEAL RELATING TO THE ORDER PASSED UNDER SECTION 2 20(2) OF THE I.T.ACT, 1961 AGAINST WHICH NO APPEAL LIES BEFORE T HE CIT(A). 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN H OLDING THAT THE ASSESSEE IS NOT LIABLE TO PAY ANY INTEREST AND CANC ELING THE ORDER PASSED UNDER SECTION 220(2) OF THE I.T.ACT, 1961 LE VYING INTEREST OF RS.88,65,105/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO TO THE ABOVE EXTENT. 4. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD .CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE LEARNED DR SUBMITTED THAT IN THE FIRST ROUND OF LITIGATION, THE MATTER WAS CARRIED UPTO THE LEVEL OF HONBLE GUJARA T HIGH COURT, AND IN THE APPEAL PREFERRED BY THE REVENUE IN TAX APPEAL N O.1829 OF 2010 DATED 1.2.2012, THE HONBLE HIGH COURT HAS SET ASIDE THE ORDER OF THE TRIBUNAL, AND HAS REMANDED THE MATTER BACK TO THE TRIBUNAL FO R ADJUDICATION UPON THE ISSUE ON MERITS AFTER GIVING DUE OPPORTUNITIES TO BOTH THE SIDES TO PUT FORTH THEIR RESPECTIVE CASE. HE SUBMITTED THAT IN ACCORDANCE WITH THE ORDER OF THE HONBLE HIGH COURT DATED 1.2.2012, THE ISSUE MAY BE DECIDED ON ITS MERITS. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT AN IMPORTANT DEVELOPMENT HAS TAKEN PLACE IN THE FACTS OF THIS CA SE, AS THE CIT(A) HAS PASSED ORDER UNDER SECTION 154 OF THE ACT ON 19.7.2 010 AND HAS HELD THAT THE ORDER PASSED BY THE AO LEVYING INTEREST U/S.220 (2) WAS NOT AN APPEALLABLE ORDER, AND THEREFORE, BEING A PATENT MI STAKE APPARENT FROM RECORD, WAS RECTIFIED UNDER SECTION 154 BY HOLDING THAT THE APPELLATE ORDER ITA NO.2280/AHD/2006 AND OTHER -3- PASSED BY HIS PREDECESSOR ON 28.2.2006 WAS AB INITIO VOID AND NON-EST. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PREFERRED A SEPARATE APPEAL AGAINST THE ORDER PASSE D BY THE CIT(A) UNDER SECTION 154 OF THE ACT ON 19.7.2010. HOWEVER, THE PRESENT REVENUES APPEAL HAS BECOME INFRUCTUOUS SINCE THE APPLICATION OF THE AO UNDER SECTION 154 HAS BEEN ALLOWED BY THE CIT(A) AND THE CIT(A) HAS HELD THAT THE APPEAL IN FIRST ROUND OF LITIGATION WAS NOT MAI NTAINABLE BEFORE HIS PREDECESSOR. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND ALSO THE ORDER OF THE CIT(A) UNDER SECTION 154 OF THE ACT. WE HAVE ALSO GONE THROUGH THE ORDER OF TH E HONBLE JURISDICTIONAL HIGH COURT DTD.1.2.2012 CITED SUPRA. WE FIND THAT THE CASE OF THE DEPARTMENT BEFORE THE APPELLATE AUTHORITY WAS THAT NO APPEAL LIES AGAINST THE ORDER OF THE AO LEVYING INTEREST U/S.220(2) OF THE ACT, AND THAT THE ORDER OF THE CIT(A) IN THE FIRST ROUND OF LITIGATIO N WAS BAD IN LAW, AS THE APPEAL ITSELF WAS NOT MAINTAINABLE BEFORE HIM. WE FIND THAT SUCCEEDING CIT(A) VIDE HIS ORDER DATED 19.7.2010 HAS ALLOWED T HE RECTIFICATION APPLICATION OF THE AO UNDER SECTION 154 OF THE ACT, AND HAS HELD THAT THE ORDER PASSED BY THE AO DATED 28.2.2006 LEVYING INTE REST U/S.220(2) WAS NOT APPEALLABLE ORDER, AND THEREFORE, APPELLATE ORD ER PASSED BY THE CIT(A) WAS PATENT MISTAKE OF LAW APPARENT FROM RECORD, AND IS THEREFORE, AMENABLE TO RECTIFICATION UNDER SECTION 154 OF THE ACT, AND ACCORDINGLY, THE APPELLATE ORDER PASSED BY THE CIT(A) ON 28.2.20 06 WAS HELD AS AB INITIO VOID AND NON-EST . WE FIND THAT IN VIEW OF THE ORDER OF THE CIT(A) DTD. 19.7.2010 UNDER SECTION 154 OF THE ACT HOLDING THE ORDER OF THE CIT(A) DATED 28.2.2006 AS AB INITIO VOID AND NON-EST, THE PRESENT APPEAL HAS BECOME INFRUCTOUS, AS THE GRIEVANCE OF THE REVE NUE REGARDING NON- MAINTAINABILITY OF APPEAL AGAINST THE LEVY OF INTER EST U/S.220(2) HAS BEEN ITA NO.2280/AHD/2006 AND OTHER -4- REDEEMED BY THE CIT(A) BY HOLDING THAT THE ORDER U/ S.220(2) WAS NOT APPEALLABLE ORDER. WE HOLD ACCORDINGLY, AND THE RE VENUES APPEAL BEING INFRUCTOUS, IS DISMISSED. ITA NO.2555/AHD/2010 (ASSESSEES APPEAL) 6. THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN PASSING ORDER U/S.15 4 HOLDING THAT THE APPELLATE ORDER DATED 22/8/2006 PASSED BY HIS P REDECESSOR WAS VOID-AB-INITIO AND NON-EST. 2. THE ORDER PASSED BY CIT(A) U/S.154 IS VOID, ILLE GAL, AS CIT(A) HAS NO JURISDICTION TO PASS SUCH ORDER U/S.154 ON T HE DEBATABLE ISSUE AND THE CIT(A) ORDER HAVING MERGED WITH ITAT ORDER NO.2280/AHD/2006 DATED 26/02/2010. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IN THIS CASE THE VERY LEVY OF INTEREST U/S.220(2) WAS CHALLENGED BY THE ASSESSEE, AND NOT MERELY THE CALCULATION OF INTEREST UNDER THE SAID P ROVISION OF LAW. HE SUBMITTED THAT EVEN OTHERWISE, THE ISSUE BEING HIGH LY DEBATABLE, COULD NOT BE RECTIFIED BY ORDER UNDER SECTION 154 OF THE ACT, AS THE MISTAKE COULD NOT BE SAID TO BE APPARENT FROM RECORD. FOR THIS PROPO SITION, HE RELIED ON THE DECISION IN BALARAM (T.S.), ITO V. VOLKART BROTHERS , 82 ITR 50 (SC) AND BIRLA COTTON SPG. AND WVG. MILLS LTD. V. INCOME-TAX OFFICER, 211 ITR 610 (CAL). REGARDING THE SUBMISSION THAT SINCE VERY L EVY OF INTEREST U/S.220(2) HAS BEEN CHALLENGED IN THIS CASE, AND TH EREFORE, THE ORDER IS APPEALLABLE, THE LEARNED COUNSEL FOR THE ASSESSEE H AS RELIED ON THE DECISIONS IN VENUS ENGG. WORKS & FOUNDRY P. LTD., 21 TTJ 25 ( MUM), HEMENDRA M. KOTHARI, 5 ITR (AT) 646 (MUM), AND INDIA CARBON LTD., 122 TAXMANN 76 (GAUH.). THE LEARNED DR HAS OPPOSED THE SUBMISS IONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT IT IS A CASE OF WRONG ITA NO.2280/AHD/2006 AND OTHER -5- ASSUMPTION OF JURISDICTION BY THE CIT(A), AND THERE FORE, THERE IS NO QUESTION OF BEING A DEBATABLE ISSUE, AND THE ORDER PASSED WITHOUT JURISDICTION SHOULD BE CANCELLED. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND T HAT THE VERY LEVY OF INTEREST U/S.220(2) HAS BEEN CHALLENGED IN THIS CAS E, AND IT HAS BEEN HELD BY THE ITAT, MUMBAI AND GAUHATI BENCHES, THE CASES REL IED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, THAT WHERE THE AS SESSES DENIES ITS LIABILITY U/S.220(2), THE ISSUE WAS APPELLABLE BEFORE THE COM MISSIONER OF INCOME- TAX(APPEALS). NO CONTRARY DECISION HAS BEEN BROUGH T TO OUR NOTICE AT THE BAR. ACCORDINGLY, WE ARE OF THE VIEW THAT SINCE VE RY LEVY OF INTEREST U/S.220(2) HAS BEEN DENIED IN THIS CASE, THE APPEAL BEFORE THE CIT(A) WAS MAINTAINABLE AS PER LAW. WE FIND THAT THE CIT(A) I N THE IMPUGNED ORDER PASSED UNDER SECTION 154 OF THE ACT HAS NOT GONE IN TO MERITS OF THE ISSUE OF LEGALITY OF CHARGING OF INTEREST U/S.220(2) OF THE ACT, AND THEREFORE, IT SHALL BE JUSTIFIED TO RESTORE THE ISSUE OF LEGALITY OF CH ARGING OF INTEREST U/S.220(2), IN THE FACTS OF THE CASE OF THE ASSESSE E, TO THE FILE OF THE CIT(A) WITH DIRECTION TO DECIDE THE SAME IN ACCORDANCE WIT H LAW, AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES . WE DIRECT ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.2 280/AHD/2006 IS DISMISSED AND APPEAL OF THE ASSESSEE IN 2555/AHD/20 10 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT