Sri.Joseph Philip, Cochin V. The ITO, Ernakulam

ITA 411/COCH/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8562 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 23-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Difference of opinion; Change of opinion
• Section: 6; 263

Judgement Text

ITA NO S 409 TO 414/C/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN (SMC) BEFORE SHRI B P JAIN , ACCOUNTANT MEMBER ITA NO S. 409 TO 414/COCH/2015 (A SST YEAR S 2000 - 01 TO 2005 - 06 ) SHRI JOSEPH PHILIP RACCA ENCLAVE PADAMUGHAL VAZHAKALA KOCHI 30 VS THE INCOME TAX OFF ICER WARD 2(1), ERNAKULAM ( APPELLANT) (RESPONDENT) PAN NO. ABOPP7516P ASSESSEE BY SH A S NARAYANA MOORTHY REVENUE BY SH A DHANARAJ SR DR DATE OF HEARING 20 TH JUNE 2016 DATE OF PRONOUNCEMENT 21 ST J UNE 2016 ORDER PER B P JAIN, AM : THESE SIX APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST CONSOLIDATED ORDER DATED 27.5.2015 OF THE CIT(A) FOR THE ASSESSMENT YEARS 2001 - 01 TO 2005 - 06. 2 SINCE IDENTICAL ISSUES AR E INVOLVED IN ALL T HESE APPEALS; THEREFORE, THEY WERE HEARD TOGETHE R AND DISPOSED OFF BY THIS CONSOLIDA T ED ORDER. 3 FIRST I SHALL TAKE UP THE APPEAL IN ITA 409/COCH/2015 AND THE ORDER HEREIN BELOW SHALL BE IDENTICALLY APPLICABLE FOR ALL OTHER ASSESSMENT YEARS. ITA NO S 409 TO 414/C/2015 2 4 THE LD COUNSEL FOR THE ASSESSEE ARGUED THA T THE ASSESSEE IS A MANAGING PARTNER IN THE FIRM M/S SKYLINE BUILDERS WHERE SEARCH WAS CONDUCTED AT THE PREMISES OF THE FIRM AND ALSO RESIDENTIAL HOUSE S OF THE PARTNERS. ACCORDINGLY, THE ASSESSMENT WAS FRAMED. THE CIT SET ASIDE THE ASSESSMENT U/S 263 OF TH E ACT BECAUSE CERTAIN DOCUMENTS WERE NOT SEEN BY THE AO AND ACCORDINGLY THE CIT HELD THAT THE SAME IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ISSUE IS TWO - FOLD ONE IS LEGAL ISSUE AND THE OTHER ONE IS FACTUAL ASPECT. 5 THE LD COUNSEL FOR THE ASSESSEE , AT THE OUTSET ARGUED THAT HE HAS A STRONG CASE ONLY ON LEGAL ISSUE AND THE ASSESSMENT IS TIME BARRED SINCE THE ASSESSMENT ORDER WAS DISPATCHED ON 12.4.2011 WHEREAS IT SHOULD HAVE BEEN DISPATCHED BY 31 ST DECEMBER 2010 I.E . AFTER ELAPSE OF NINE MONTHS FROM 31.3.2010 . H E RELIED ON THE JUDGMENT S OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS SREE NARAYANA CHANDRIKA TRUST REPORTED IN (1995) 212 ITR 0456 AND IN THE CASE OF COMMISSIONER OF AGRICULTURAL INCOME TAX VS K APPUMALAI ESTATE REPORTED IN (1998) 234 ITR 0187 IN THIS REGARD. 5. 1 ON THE OTHER HAND, THE LD DR ARGUED THAT AS PER THE DISPATCH REGISTERED PRODUCED, THE ASSESSMENT ORDER DISPATCHED WAS 31 ST DEC 2010. 6 I HAVE HEARD THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. I AGREE WITH THE CONTENTIONS OF THE LD COUNSEL OF THE ASSESSEE WHO RELIED ON TWO DECISIONS OF THE HONBLE KERALA HIGH COURT IN THE CASE OF SREE ITA NO S 409 TO 414/C/2015 3 NARAYANA CHANDRIKA TRUST (SUPRA) AND IN THE CASE OF COMMISSIONER OF AG RICULTURAL INCOME TAX VS KAPPUMALAI ESTATE (SUPRA). THE RELEVANT PORTIONS OF THE JUDGMENT IN THE CASE OF SREE NARAYANA CHANDRIKA TRUST (SUPRA) READ AS UNDER: WE SHALL NOW DEAL WITH THE OTHER REFERENCES AND APPLICATIONS UNDER SECTION 256(2) WHICH HAVE BEEN HEARD ALONG WITH THESE REFERENCES. THE QUESTIONS REFERRED FOR THE YEAR 1978 - 79 ARE SIMILAR, EXCEPT THAT ONE FURTHER QUESTION HAS BEEN REFERRED AT THE INSTANCE OF THE ASSESSEE, NAMELY, 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELL ATE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ORDER OF THE COMMISSIONER OF INCOME - TAX PASSED UNDER SECTION 263 IS NOT BARRED BY LIMITATION'. WE SHALL DEAL WITH THIS QUESTION WHICH ARISES IN INCOME - TAX REFERENCES NOS. 81 AND 82 OF 1986 RELATING TO THIS YEAR. THE INCOME - TAX OFFICER MADE AN ORDER OF ASSESSMENT ON JANUARY 12, 1981, HOLDING THAT INCOME ACCRUING TO THE ASSESSEE - TRUST FROM THE FIRMS OF WHICH IT WAS A PARTNER WAS EXEMPT UNDER SECTION 10(22A), AS INCOME ACCRUING TO THE HOSPITAL, DEVIATING FROM THE STA ND TAKEN BY HIM EARLIER. THE COMMISSIONER OF INCOME - TAX TOOK UP THE MATTER IN REVISION UNDER SECTION 263 AND SET ASIDE THE ORDER OF ASSESSMENT. THE REVISIONAL ORDER WAS PASSED ON JANUARY 11, 1983, AND COMMUNICATED WITHIN A PERIOD OF SIX DAYS THEREAFTER. TH E QUESTION WAS WHETHER THE EXERCISE OF THE REVISIONAL POWER WAS BARRED BY TIME. THE TRIBUNAL HELD OTHERWISE AND SUSTAINED THE ORDER. IT IS IN THESE CIRCUMSTANCES THAT THE ADDITIONAL QUESTION HAS BEEN REFERRED. SUB - SECTION (2) OF SECTION 263 AS IT STOOD AT THE RELEVANT TIME, PRESCRIBED THAT NO ORDER SHALL BE MADE UNDER SUB - SECTION (1) OF THE SECTION AFTER THE EXPIRY OF TWO YEARS FROM THE DATE OF THE ORDER SOUGHT TO BE REVISED. THE TRIBUNAL WAS OF THE VIEW THAT THE COMMISSIONER HAD PASSED HIS ORDER WITHIN TH E TIME PRESCRIBED, THOUGH IT WAS COMMUNICATED LATER. THE QUESTION AS TO WHEN AN ORDER CAN BE STATED TO HAVE BEEN MADE WAS THE SUBJECT OF CONSIDERATION BY THIS COURT IN GOVERNMENT WOOD WORKSHOP V. STATE OF KERALA [1988] 69 STC 62 ; [1987] 1 KLT 804 IN WHIC H THIS COURT STATED, AFTER RELYING ON VARIOUS DECISIONS OF THE SUPREME COURT CULMINATING IN B. J. SHELAT V. STATE OF GUJARAT, AIR 1978 SC 1109, AS FOLLOWS (AT PAGE 69) : ' THE ORDER OF ANY AUTHORITY CANNOT BE SAID TO BE PASSED UNLESS IT IS IN SOME WAY PRO NOUNCED OR PUBLISHED OR THE PARTY AFFECTED HAS THE MEANS OF KNOWING IT. IT IS NOT ENOUGH IF THE ORDER IS MADE, SIGNED, AND KEPT IN THE FILE, BECAUSE SUCH ORDER MAY BE LIABLE TO CHANGE AT THE HANDS OF THE AUTHORITY WHO MAY MODIFY IT, OR EVEN DESTROY IT, BEF ORE IT IS MADE KNOWN, BASED ON SUBSEQUENT INFORMATION, THINKING OR CHANGE OF OPINION. TO MAKE ITA NO S 409 TO 414/C/2015 4 THE ORDER COMPLETE AND EFFECTIVE, IT SHOULD BE ISSUED, SO AS TO BE BEYOND THE CONTROL OF THE AUTHORITY CONCERNED, FOR ANY POSSIBLE CHANGE OR MODIFICATION THEREIN. THIS SHOULD BE DONE WITHIN THE PRESCRIBED PERIOD, THOUGH THE ACTUAL SERVICE OF THE ORDER MAY BE BEYOND THAT PERIOD. ' THE TRIBUNAL HAS NOT REFERRED TO THIS DECISION THOUGH IT IS RELEVANT. WE FEEL THAT THE MATTER HAS NOT BEEN CONSIDERED BY THE TRIBUNAL IN THE MANNER IN WHICH IT SHOULD HAVE BEEN, PARTICULARLY AFTER ADVERTENCE TO THE AFORESAID DECISION. WE, THEREFORE, DECLINE TO ANSWER THE ADDITIONAL QUESTION REFERRED AT THE INSTANCE OF THE ASSESSEE IN INCOME - TAX REFERENCES NOS. 81 AND 82 OF 1986. 6.1 IN THE CASE OF COMMISSIONER OF AGRICULTURAL INCOME TAX VS KAPPUMALAI ESTATE (SUPRA), THE HONBLE HIGH COURT HELD AS UNDER: SECTION 35(2) PROVIDES THAT NO ORDER OF ASSESSMENT UNDER SECTION 18 OR OF ASSESSMENT OR REASSESSMENT UNDER SUB - SECTION (1) OF SECTI ON 35 SHALL BE MADE AFTER THE EXPIRY OF FIVE YEARS FROM THE END OF THE YEAR FROM WHICH THE AGRICULTURAL INCOME WAS FIRST ASSESSABLE. FOR THE YEAR 1979 - 80, IT IS SEEN THAT THE ASSESSMENT ORDER IS DATED MARCH 13, 1985, IT WAS DES PATCHED ON APRIL 22, 1985, A ND RECEIVED BY THE ASSESSEE ON APRIL 26, 1985. THE ASSESSMENT ORDER FOR THE YEAR 1980 - 81 WAS DATED MARCH 24, 1986, WAS DISPATCHED ON DECEMBER 2, 1986, AND WAS RECEIVED BY THE ASSESSEE ON DECEMBER 5, 1986. BY APPLYING THE PRINCIPLES LAID DOWN BY THIS COURT IN GOVERNMENT WOOD WORKS V. STATE OF KERALA [1988] 69 STC 62 AND IN AN EARLIER DECISION OF A BENCH OF THIS COURT IN MALAYIL MILLS V. STATE OF KERALA (T. R. C. NOS. 15 AND 16 OF 1981), IT HAS TO BE TAKEN THAT FOR BOTH THE YEARS THE ASSESSMENT ORDER HAD NOT BEEN MADE WITHIN THE PERIOD PRESCRIBED UNDER SECTION 35(2). THIS COURT HAD TAKEN THE VIEW THAT TO MAKE THE ORDER COMPLETE AND EFFECTIVE IT SHOULD BE ISSUED SO AS TO BE BEYOND THE CONTROL OF THE AUTHORITY CONCERNED, FOR ANY POSSIBLE CHANGE OR MODIFICATION. THIS SHOULD BE DONE WITHIN THE PRESCRIBED PERIOD, THOUGH THE ACTUAL SERVICE OF THE ORDER MAY BE BEYOND THAT PERIOD. FOR BOTH THE YEARS THE ASSESSMENT ORDERS WERE DISPATCHED AFTER THE PERIOD OF FIVE YEARS PRESCRIBED UNDER SECTION 35(2). IN THE LIGHT OF THE ABOVE, WE ANSWER THE QUESTION IN THE NEGATIVE, IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 7 IN THIS VIEW OF THE MATTER AND THE DECISIONS RELIED UPON BY THE LD COUNSEL FOR THE ASSESSEE IN THE CASE OF SREE NARAYANA CHANDRIKA TRUST (SUPRA) AND IN THE CASE OF COMMISSIONER OF AGRICULTURAL INCOME TAX VS KAPPUMALAI ESTATE (SUPRA), I AM OF THE OPINION THAT THE ASSESSMENT IS TIME ITA NO S 409 TO 414/C/2015 5 BARRED AND THEREFORE, THE ASSESSMENT MADE IS DIRECTED TO BE QUASHED. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED ON LEGAL ISSUE . 7.1 I DO NOT THINK PROPER TO GIVE A DECISION ON MERITS SINCE THE CASE OF THE ASSESSEE IS DECIDED ON LEGAL ISSUE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IN ITA NO 409 /COCH/2015 IS ALLOWED. 8 SINCE THE ISSUE IN ALL THE OTHER AP PEALS IS IDENTICAL , THEREFORE , MY ORDE R IN ITA NO.409/COCH/2015 IS APPLICABLE IN ALL OTHER APPEALS . THEREFORE, ALL TH E APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DAY OF JUNE 2016 SD/ - ( B P JAIN ) ACCOUNTANT MEMBER COCHIN: DATED 21 ST JUNE 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN