Appeal details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 75126 (ITAT-LUCKNOW)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
07-01-2014
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2003-2004
Appeal Filed On
15-10-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKN OW BENCH A : LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A. K. GARODIA , ACCOUNTANT MEMBER I.T.A. NO. 702 /LKW/201 3 ASSESSMENT YEAR :2003 - 2004 M/S SHRI NAV DURGA BANSAL COLD VS. INCOME TAX OFFICER - II, STORAGE & ICE FACTORY, FAIZABAD. RAEBARELI ROAD, USRU, FAIZABAD. PAN:AAVFS3786L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH GARG, ADVOCATE RESPONDENT BY : SHRI ALOK MITRA, D.R. DATE OF HEARING : 26 / 11 /2013 DATE OF PRONOUNCEMENT : 07/01/2014 ORDER PER SUNIL KUMAR YADAV: TH IS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , INTER ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER: 1. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN REJECTING THE CLAIM OF THE ASSESSEE FOR RECTIFICATION OF THE ORDERS, CLAIMING THE SET OFF OF LONG TERM BROUGHT FORWARD CAPITAL LOSSES AMOUNTING TO RS . 12,49,310/ - , WHICH CAPITAL LOSS RELATING TO A.Y. 2002 - 03 DULY DETERMINED, WAS ALLOWABLE AGAINST THE LONG T ERM CAPITAL GAINS FOR THE YEAR UNDER CONSIDERATION. 2 2. BECAUSE THE CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER IN OBSERVING THAT THE MATTER OF SET OFF OF LONG TERM BROUGHT FORWARD CAPITAL LOSSES MIGHT HAVE BEEN EXAMINED AND CORRECTLY DISALLOWED ON PRESUMPTION AND SURMISES THERE BRING NO FINDING TO THIS EFFECT IN ANY OF THE ORDERS PASSED BY THE AUTHORITIES BELOW. 3. BECAUSE THE ACTION OF THE CIT(A) IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER PASSED AGAINST THE APPLICATION U/S 154 I S UNJUST, UNWARRANTED AND BE QUASHED. 4. BECAUSE ON A PROPER APPRAISAL OF FACTS AND CIRCUMSTANCES OF THE CASE, THE CLAIM OF SET OFF OF LONG TERM BROUGHT FORWARD CAPITAL LOSSES DETERMINED IN A.Y. 2002 - 03 BE DIRECTED TO BE ALLOWED AND SET OFF AGAINST THE LO NG TERM CAPITAL GAINS FOR THE YEAR UNDER CONSIDERATION. 5. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT THE ISSUE REGARDING SET OFF CAPITAL LOSS BROUGHT FORWARD FROM THE EARLIER YEARS IS PART AND PARCEL OF THE COMPUTATION OF CAPITAL GAINS FOR THE YEAR (I.E. SUBJECT MATTER OF APPEAL) AND AS SUCH IN ORDER TO DETERMINE THE CORRECT LIABILITY OF CAPITAL GAINS, THE LOSS BROUGHT FORWARD FROM EARLIER YEARS IS TO BE SET OFF AGAINST THE CAPITAL GAINS COMPUTATION FOR THE YEAR UNDER CONSIDERATION. 6. BECAUSE THE CIT(A) HAS MISINTERPRETED THE PROVISIONS OF LAW AND HAS ARBITRARILY HELD THAT THE ORDER SOUGHT TO BE RECTIFIED IS NOT THE 'ORDER CONCERNED' OVERLOOKING THE WELL SETTLED LAW OF THE CONCEPT OF MERGER OF ORDERS, AND AS SUCH, THE ORDER PASSED BY CIT(A) IS E RRONEOUS, BAD IN LAW AND BE QUASHED. 7. BECAUSE WITHOUT BEING PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW BE DIRECTED TO STATE IN THE ASSESSMENT ORDERS PASSED U/S. 143(3), 254 AND 144 OF THE ACT, THE YEAR IN WHICH THE LOSS DETERMINED FOR THE A.Y. 2002 - 0 3 IS TO BE SET OFF, IF NOT FOR THE YEAR UNDER CONSIDERATION. 3 2. THOUGH VARIOUS GROUNDS ARE RAISED IN THIS APPEAL BUT THEY ALL RELATE TO THE REJECTION OF APPLICATION FOR RECTIFICATION CLAIMING THEREIN A SET OFF OF LONG TERM BROUGHT FORWARD CAPITAL LOSS A MOUNTING TO RS.12,49,310/ - AGAINST THE CAPITAL GAIN. 3. THE FACTS, IN BRIEF, RELATING TO THE CONTROVERSY RAISED IN THIS APPEAL, BORNE OUT FROM THE RECORD, ARE THAT THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 31/03/2006 DENYING THE SET OFF OF BROUGHT FORWARD CAPITAL LOSS OF RS.12,49,310/ - . AN APPEAL WAS PREFERRED AGAINST THE SAID ASSESSMENT ORDER BEFORE THE CIT(A) AND THE CIT(A), VIDE ORDER DATED 27/12/2006, PARTLY ALLOWED THE APPEAL ON THE ISSUE OF DISALLOWANCE MADE OUT OF THE APPE LLANT CLAIM FOR INTEREST BUT THE COMPUTATION OF LONG TERM CAPITAL GAIN WAS CONFIRMED BY THE CIT(A) AGAINST WHICH AN APPEAL WAS FILED BEFORE THE TRIBUNAL AND THE TRIBUNAL, VIDE ITS ORDER DATED 13/06/2008 IN I.T.A. NO. 239/LKW/2007 DECIDED THE ISSUE OF DISALL OWANCE OUT OF VARIOUS CLAIMS IN THE PROFIT & LOSS ACCOUNT AND REMITTED THE ISSUE OF COMPUTATION OF LONG TERM CAPITAL GAIN TO THE FILE OF THE ASSESSING OFFICER FOR A LIMITED PURPOSE TO ARRIVE AT THE FAIR MARKET VALUE ON THE DATE OF TRANSFER BY REFERRING TO THE VALUATION OFFICER. THE ASSESSING OFFICER PASSED A CONSEQUENTIAL ORDER ON 31/12/2009 AND RE - COMPUTED THE LONG TERM CAPITAL GAIN AT RS.33,40,926/ - . AGAINST THIS ORDER, THE ASSESSEE AGAIN PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT TH E ASSESSING OFFICER HAD NOT FOLLOWED THE DIRECTION OF THE TRIBUNAL IN AS MUCH AS HE DID NOT COMPUTE THE CAPITAL GAIN AFTER OBTAINING THE REPORT OF THE D.V.O. AS DIRECTED BY THE TRIBUNAL AND INSTEAD TOOK THE DEEMED SALES CONSIDERATION U/S 50C OF THE ACT AS ADOPTED ORIGINALLY IN THE ASSESSMENT. 4 THE CIT(A) ACCORDINGLY CALLED A REMAND REPORT FROM THE ASSESSING OFFICER IN THIS REGARD AND DURING THE REMAND PROCEEDINGS, THE ASSESSING OFFICER VIDE ITS ORDER DATED 25/01/2011 RE - COMPUTED THE LONG TERM CAPITAL GAIN I N THE LIGHT OF REPORT OF THE D.V.O. AT RS.13,19,962/ - . HAVING NOTED THAT THE ASSESSING OFFICER HAS RE - COMPUTED THE CAPITAL GAIN AS PER THE DIRECTIONS OF THE TRIBUNAL, THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BEING INFRUCTUOUS AS THE PROPER COMPLIAN CE OF THE DIRECTIONS OF THE TRIBUNAL HAS BEEN MADE IN ORDER DATED 25/01/2011. 3.1 THEREAFTER, THE ASSESSEE HAS MOVED AN APPLICATION U/S 154 OF THE ACT AGAINST THE ORDER DATED 25/01/2011 BEFORE THE ASSESSING OFFICER WITH THE SUBMISSION THAT THE CARRY FOR WARD CAPITAL LOSS OF RS.12,49,310/ - RELATING TO ASSESSMENT YEAR 2002 - 03 HAS BEEN MISSED/LEFT BY THE ASSESSING OFFICER WHILE COMPUTING LONG TERM CAPITAL GAIN, THEREFORE, THE SET OFF OF THE SAME BE ALLOWED AGAINST THE CAPITAL GAIN FOR THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICER HAS DENIED THE RECTIFICATION ON THE GROUND THAT THE SET OFF OF CARRY FORWARD CAPITAL LOSS WAS DENIED IN THE ORIGINAL ASSESSMENT PASSED ON 31/03/2006, THEREFORE, THE RECTIFICATION AFTER A PERIOD OF 4 YEARS IS NOT PERMISSIBLE. 3.2 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE ORDER DATED 2 5/01/2011 HAS BEEN MERGED WITH THE ORIGINAL ASSESSMENT ORDER DATED 31/03/2006, THEREFORE, RECTIFICATION U/S 154 OF THE ACT IS PERMISSIBLE AS THE PERIOD OF LI MITATION WILL START FROM 25/01/2011 AND NOT FROM 31/03/2006. THE CIT(A) RE - EXAMINED THE ISSUE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND HAS COME TO THE CONCLUSION THAT THE LIMITATION FOR THE PURPOSE OF SECTION 154 STARTS FROM 5 THE DATE OF THE ORI GINAL ASSESSMENT I.E. 31/03/2006 AND NOT FROM THE ORDER DATED 25/01/2011 PASSED CONSEQUENT TO REMAND PROCEEDINGS AND DIRECTIONS OF THE CIT(A) & TRIBUNAL . THE RELEVANT OBSERVATIONS OF THE CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: 5. I HAVE CONSIDERED THE MATTER. IN THE PRESENT CASE THE AO HAS PASSED THREE ORDERS. IN THE ORIGINAL ORDER PASSED U/S 143(3) ON 31.03.2006 TOTAL INCOME WAS DETERMINED AT RS.66,56,400/ - WHICH INCLUDED CERTAIN DISALLOWANCES AND LONG TERM CAPITAL GAINS WAS COMPUTE D AT RS.62,99,941 / - TAKING INTO ACCOUNT DEEMED SALE CONSIDERATION IN TERMS OF P ROVISIONS OF SECTION 50C. NO SET OFF OF BROUGHT FORWARD LONG TERM CAPITAL LOSS PERTAINING TO AY 2002 - 03 WAS ALLOWED AGAINST THE ABOVE GAINS. SECOND, ORDER WAS PASSED BY THE AO U/S 143(3)/254 ON 31.12.2009 IN ACCORDANCE WITH THE DIRECTIONS OF THE HON'BLE I TAT TO REFER THE DETERMINATION OF FAIR MARKET VALUE OF THE PROPERTY TO THE DVO AND THE LONG TERM CAPITAL GAINS WAS COMPUTED AT RS.33,40,926/ - . IN THIS ORDER THE ASSESSING O FFICER STATED THAT THE ORDER IS BEING PASSED WITHOUT THE FAIR MARKET VALUE DETERMINED BY THE VALUATION OFFICER AND SUBJECT TO SUITABLE MODIFICATION ON THE BASIS OF DVO'S REPORT AS AND WHEN THE SAME IS RECEIVED. THIRD ORDER U/S 154/254/143(3) WAS PASSED BY THE ASSESSING OFFICER ON 25.01.2011 AFTER RECEIVING THE VALUATION REPORT OF THE DVO AND LONG TERM CAPITAL GAIN WAS DETERMINED AT RS.13 , 19 , 962/ - . AN APPLICATION U/S 154 DATED 09.05.2011 WAS FILED BEFORE THE AO ON 18.05.2011 SEEKING TO RECTIFY THE ORDER DAT ED 25.01.2011. 5.1 SECTION 154 PROVIDES THAT NO AMENDMENT U/S 154 SHALL BE MADE AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED. HENCE, THE ISSUE INVOLVED IN THIS CASE IS WHETHER THE LIM ITATION SHOULD BE TAKEN FROM THE DATE OF ORIGINAL ORDER DATED 31.03.2006 IN WHICH THE MISTAKE OF NOT ALLOWING THE SET OFF OF LONG TERM CAPITAL GAINS HAS OCCURRED OR THE PERIOD OF FOUR YEARS SHOULD BE COUNTED WITH REFERENCE TO THE ORDER DATED 25.01.2011 WHI CH HAS BEEN PASSED BY THE AO TO GIVE EFFECT TO THE DIRECTIONS OF THE HON'BLE ITAT. THE APPELLANT HAS 6 PLACED RELIANCE ON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF HIND WIRE INDUSTRIES LTD. V. CIT, 212 ITR 639 AND THAT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. TONY ELECTRONICS LIMITED, 320 ITR 378. I HAVE GONE THROUGH THESE JUDGMENTS AND FIND THAT THE FACTS IN THE PRESENT CASE ARE DIFFERENT. IN THIS CASE BOTH THE SUBSEQUENT ORDERS PASSED ON 31.12.2009 AND 25.01.2011 ARE CONSEQUENTIAL ORDER S PASSED TO GIVE EFFECT TO T HE DIRECTIONS OF THE HON'BLE IT AT AND NOT RECTIFICATORY ORDERS. THE MISTAKE OF NOT ALLOWING SET OFF OF LOSS HAS OCCURRED IN THE ORIGINAL ORDER WHICH WAS PASSED U/S 143(3) ON 31.03.2006. SINCE, THE ISSUE OF SET OFF OF LOSS WAS NO T DEALT WITH IN THE SUBSEQUENT CONSEQUENTIAL ORDERS HENCE NONE OF THESE ORDERS GOT SUBSTITUTED FOR THE ORIGINAL ORDER ON THIS ISSUE. IT MAY BE MENTIONED THAT THE DOCTRINE OF MERGER WOULD NOT A PPLY IN THIS CASE AS THE CONSEQUENTIAL ASSESSMENT PROCEEDINGS TA KEN UP AS PER DIRECTIONS OF THE HON'BLE ITAT HAS NOTHING TO DO WITH SET OFF OF LOSSES. THE DOCTRINE OF MERGER APPLIES ONLY IN RESPECT OF SUCH ITEMS WHICH ARE THE SUBJECT MATTER OF APPEAL AND ON W HI CH THE DIRECTIONS HAVE BEEN ISSUED BY THE HON'BLE ITAT. SIN CE, THE SUBSEQUENT CONSEQUENTIAL ORDERS WERE NOT IN RESPECT OF SET OFF OF LONG TERM CAPITAL LOSS, DOCTRINE OF MERGER WOULD HAVE NO APPLICATION AND THE PERIOD OF LIMITATION PROVIDED FOR UNDER SUB - SECTION (7) OF THE SECTION 154 WOULD BEGIN TO RUN FROM THE DATE OF THE ORDER OF ORIGINAL ASSESSMENT AND NOT FROM THE DATES OF CONSEQUENTIAL ORDERS. SINCE THE ORIGINAL ASSESSMENT ORDER HAS BEEN PASSED ON 31.03.2006 THE PERIOD OF FOUR YEARS HAS EXPIRED ON 31.03.2010. SINCE, THE APPLICATI ON FOR RECTIFICATION U/S 154 HAS BEEN FILED BY THE APPELLANT ON 18.05,2011 THE AO CANNOT RECTIFY THE MISTAKE U/S 154 OF THE ACT AS THE SAME IS BEYOND THE PERIOD OF LIMITATION. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: THE HON'BLE ITAT, BANGALORE BENC H IN THE CASE OF SYNDICATE BANK V. DEPUTY COMMISSIONER OF INCOME - TAX , [1998] 65 ITD 141 (BANG.) HAS HELD THAT 'SECTION 154 OF THE INCOME - TAX ACT, 1961 - RECTIFICATION OF MISTAKE - APPARENT FROM RECORDS - ASSESSMENT YEAR 1975 - 76 - ORIGINAL ASSESSMENT ORDER WAS PASSED ON 7 - 2 - 1978 AND IT WAS RECTIFIED ON 19 - 12 - 1989 - WHETHER THERE BEING NO 7 ORDERS OF RECTIFICATION IN BETWEEN ABOVE TWO DATES, AND TWO SUBSEQUENT ORDERS PASSED ON 17 - 9 - 1980 AND 16 - 5 - 1986 BEING CONSEQUENTIAL ORDERS AND NOT RECTIFICATORY ORDERS, IMP UGNED RECTIFICATION ORDER WAS BARRED BY LIMITATION AND H A D TO BE CANCELLED - HELD, YES' THE HON'BLE ITAT, CHENNAI BENCH IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME - TAX, COMPANY CIRCLE 1(1), COIMBATORE V. PRECOTT MILLS LTD., [2009] 178 TAXMAN 15 (CHENNAI) (MAG.) HAS HELD THAT 'A READING OF THE PROVISIONS OF SECTION 154 CLEARLY INDICATES THAT AS PER SECTION 154(7), THERE IS A LIMITATION TO RECTIFY ANY MISTAKE ARISING IN ANY ORDER WITHIN FOUR YEARS FROM THE END OF THE FINA NCIAL YEAR, IN WHICH THE ORDER WAS PASSED. IN THE NOTICE UNDER SECTION 154(3) DATED 17 - 3 - 2005, THE ASSESSING OFFICER HAD SOUGHT TO RECTIFY THE RECTIFICATION ORDER DATED 30 - 1 - 2004 FOR RECTIFYING THE MISTAKE THAT HAD CREPT INTO THE WORKING OF EXEMPTION UNDE R SECTION 10B. THE MATTER PERTAINING TO WORKING OF EXEMPTION UNDER SECTION 10B WAS NEITHER DEALT WITH IN THE RECTIFICATION ORDER DATED 30 - 1 - 2004 NOR IN ANY OF THE INTERVENING RECTIFICATION ORDERS. THEREFORE, BY THE IMPUGNED RECTIFICATION ORDER DATED 3 - 3 - 20 06, THE A SSESSING OFFICER HAD RECTIFIED THE MISTAKE WHICH, IF AT ALL WAS THERE, WAS ONLY IN THE ORIGINAL ASSESSMENT ORDER UNDER SECTION 143(3), DATED 30 - 9 - 1999. T H US, NONE OF THE INTERVENING ORDERS GOT SUBSTITUTED FOR THE ORIGINAL ORDER ON THAT ISSUE. HEN CE, AS PER THE CLEAR MANDATE OF SECTION 154(7), RECTIFICATION BEING SOUGHT BY THE REVENUE WAS BEYOND FOUR YEARS FROM THE DATE OF THE ORIGINAL ORDER. THEREFORE, THE COMMISSIONER (APPEALS) WAS CORRECT IN HOLDING THE IMPUGNED RECTIFICATION ORDER AS INVALID, BEING TIME - BARRED. THUS, THE APPEAL OF T HE REVENUE WAS TO BE DISMISSED. THE HON'BLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX, CHENNAI V. ALAGENDRAN FINANCE LTD., [2007] 162 TAXMAN 465 (SC) HAS HELD THAT 'A BARE PERUSAL OF THE ORDER PASSED BY THE COMMISSIONER WOULD CLEARLY DEMONSTRATE THAT ONLY THAT PART OF ORDER OF ASSESSMENT WHICH RELATED TO LEASE 8 EQUALIZATION FUND WAS FOUND TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE PROCEEDINGS FOR REASSESSMENT HAD NOTHING TO DO WITH THE SAID HEAD OF INCOME. DOCTRINE OF MERGER, THEREFORE, WOULD NOT APPLY IN THE INSTANT CASE. [PARA 7] FURTHERMORE, EXPLANATION (C) APPENDED TO SUB - SECTION (1) OF SECTION 263 IS CLEAR AND UNAMBIGUOUS AS IN TERMS THEREOF DOCTRINE OF M ERGER APPLIES ONLY IN RESPECT OF SUCH ITEMS WHICH ARE THE SUBJECT - MATTER OF APPEAL AND NOT WHICH ARE NOT. [PARA 8] THERE MAY NOT BE ANY DOUBT OR DISPUTE THAT ONCE AN ORDER OF ASSESSMENT IS REOPENED, THE PREVIOUS UNDERASSESSMENT WILL BE HELD TO BE SET ASID E AND THE WHOLE PROCEEDINGS WOULD START AFRESH BUT THE SAME WOULD NOT MEAN THAT EVEN WHEN THE SUBJECT MATTER OF REASSESSMENT IS DISTINCT AND DIFFERENT, THE ENTIRE PROCEEDING OF ASSESSMENT WOULD BE DEEMED TO HAVE BEEN REOPENED. [PARA 10] EVEN THE TRIBUNAL FOUND THAT ALL THE SUBSEQUENT EVENTS WERE IN RESPECT OF THE MATTER OTHER THAN T H E ALLOWANCE OF 'LEASE EQUALIZATION FUND'. THE SAID FINDING OF FACT WAS BINDING. DOCTRINE OF MERGER, THEREFORE, IN THE FACT SITUATION OBTAINING IN THE INSTANT CASE COULD NOT BE SAID TO HAVE ANY APPLICATION W H ATSOEVER. IT WAS NOT A CASE WHERE THE SUBJECT MATTER OF REASSESSMENT AND SUBJECT MATTER OF ASSESSMENT WERE THE SAME. THEY WERE NOT. [PARA 12] THEREFORE, IN THE INSTANT CASE, THE DOCTRINE OF MERGER WOULD HAVE NO APPLICATION. [PARA 13] THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE AND, IN PARTICULAR, HAVING REGARD TO THE FACT THAT THE COMMISSIONER EXERCISING ITS REVISIONAL JURISDICTION REOPENED THE ORDER OF ASSESSMENT ONLY IN RELATION TO LEASE EQUA LIZATION FUND WHICH, WAS NOT THE SUBJECT OF REASSESSMENT PROCEEDINGS, THE PERIOD OF LIMITATION PROVIDED FOR UNDER SUB - SECTION (2) OF SECTION 263 WOULD BEGIN TO RUN FROM THE DATE OF THE ORDER OF ORIGINAL ASSESSMENT AND NOT FROM THE ORDER OF REASSESSMENT. THE REVISIONAL JURISDICTION, HAVING, THUS, 9 BEEN INVOKED BY THE C O MM I SSIONER BEYOND THE PERIOD OF LIMITATION, IT WAS WHOLLY WITHOUT JURISDICTION, RENDERING THE ENTIRE PROCEEDING A NULLITY. [PARA 15] TRIBUNAL AND THE HIGH COURT, THEREFORE, WERE CORRECT IN PASSING THE IMPUGNED JUDGMENT. THE APPEAL THEREFORE, WAS TO BE DISMISSED.' THE HON'BLE HIGH COURT OF MADRAS IN THE CASE OF COMMISSIONER OF INCOME - TAX V. SHRIRAM ENGG. CONSTRUCTION CO. LTD., [2011] 11 TAXMANN.COM 151 (MAD.) HAS HELD THAT 'AS PER THE PROVISIONS SECTION 263(2) NO ORDER S H ALL BE MADE UNDER SUB - SECTION (1) OF SECTION 263, AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. [PARA 6] FROM THE ABOVE, IT WAS CLEAR THAT THE REVISIONAL ORDER UNDER SECTION 263 HAD TO BE PASSED WITHIN TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. W HI LE ISSUING THE SHOW - CAUSE NOTICE, FOR THE PURPOSE OF REVISION OF ASSESSMENT UNDER SECTION 263, T HE COMMISSIONER HAD STATED THAT FOR THE ASSESSMENT YEAR 2000 - 01 IT WAS SEEN THAT THE ASSESSES HAD FILED RETURN OF INCOME ON 30 - 11 - 2000 ADMITTING NIL INCOME, THAT THE ASSESSMENT WAS SUBSEQUENTLY COMPLETED UNDER SECTION 143(3) ASSESSING THE INCOME F O R THE YE AR AT RS.11,21,82,188 / - THAT WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAD AMONG OTHER THINGS DISALLOWED DEDUCTION UNDER SECTION 80 - IA RELATING TO WATER TREATMENT PROJECTS, THAT A SUM OF RS . 3,14,46,497 / - BEING THE PROFIT ON WATER SUPPLY PROJEC T HAD BEEN ALLOWED AS DEDUCTION UNDER SECTION 80 - IA, THAT WAS SUBSEQUENTLY MODIFIED VIDE ORDER UNDER SECTION 154, DATED 14 - 6 - 2003 AND THE DEDUCTION UNDER SECTION 80 - IA HAD BEEN RESTRICTED TO RS.2,89,93,730 / - . IT WAS FURTHER STATED THAT THE NATURE OF WORK DONE BY THE ASSESSEE IN RESPECT OF THE PROJECTS WAS ONLY THAT OF A CONTRACTOR AND AT NO POINT OF TIME T H E PROJECT WAS OWNED BY THE ASSESSEE THAT FACTUM HAS BEEN ADMITTED BY THE ASSESSEE IN LETTER DATED 24 - 3 - 2003. THE REASON SHO W N IN THE SHOW CAUSE NOTICE M ANIFESTS THAT WHAT WAS SOUGHT TO BE REVISED WAS THE ASSESSMENT ORDER AND NOT THE RECTIFICATION 10 ORDER PASSED BECAUSE THE RECTIFICATION ORDER WAS PASSED FOR THE LIMITED PURPOSE OF REDUCTION OF DEDUCTION UNDER SECTION 80 - IA. THAT PART OF THE ORDER WHICH WAS S OUGHT TO BE REVISED AS SEEN FROM THE SHOW CAUSE NOTICE HAD NOT MERGED WITH THE ORDER PASSED UNDER SECTION 154. [PARA 7] W ITH REFERENCE TO THE REASONING STATED IN THE SHOW - CAUSE NOTICE, ONE WAS OF THE VIEW THAT THE COMMISSIONER HAD REFERRED TO ONLY AN ORDE R PASSED UNDER SECTION 143(3). IF THAT ORDER WAS S O U GHT TO BE REVISED THE LIMITATION PRESCRIBED UNDER SECTION 263(2), IT WAS BARRED. [PARA 8] SECTION 263(1) REFERS TO 'ANY ORDER'. THE WORDS 'ANY ORDER' WOULD ONLY MEAN ANY ORDER UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE SECTION DEFINITELY GIVES POWER TO THE COMMISSIONER. THE DECIDING FACTOR IN T HE INSTANT CASE WAS THAT THE COMPLAI NT OF THE COMMISSIONER REFERS TO THE ORDER PASSED UNDER SECTION 143(3) AND NOT THE AMENDED ORDER UNDER SECTION 154. [PARA 11] FOR THE FOREGOING REASONS THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ORDER OF THE COMMISSIONER PASSED UNDER SECTION 263 WAS BARRE D BY LIMITATION.' IN VIEW OF THE ABOVE THE ACTION OF THE AO IN REJECTING THE APPLICATION OF THE APPELLANT FILED U/S 154 IS UPHELD. 4. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND REITERATED ITS CONTENTIONS THAT THE ORIGINAL ASSESSMENT ORDER DATED 31/03/2006 WAS MERGED WITH THE ORDER DATED 25/01/2011, THEREFORE, THE LIMITATION WILL START FOR THE PURPOSE OF SECTION 154 OF THE ACT (HEREINAFTER REFERRED TO AS THE ACT) FROM 25/01/2011. IN SUPPORT OF HIS CONTENTION, HE HAS ALSO PLACED RELIANCE UPON THE THEORY OF DOCTRINE OF MERGER WITH THE SUBMISSION THAT WHENEVER ANY RECTIFICATION OR APPELLATE ORDER IS PASSED, 11 THE ORIGINAL ORDER WOULD MERGE WITH THE RECTIFIED ORDER OR ORDER OF THE APPELLATE AUTHORITIES AND THE LIMITATIO N WOULD RECKON FROM THE DATE OF RECTIFIED ORDER OR THE ORDER OF A PPELLATE AUTHORITIES. IN SUPPORT OF HIS CONTENTION, HE HAS PLACED HEAVY RELIANCE UPON THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF HIND WIRE INDUSTRIES LTD. VS COMMISSIONER OF INCOME - TA X [1995] 212 ITR 639 (SC) AND THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS TONY ELECTRONICS LIMITED [2010] 320 ITR 378 (DEL) . 5. THE LEARNED D.R. SHRI ALOK MITRA, BESIDES PLACING HEAVY RELIANCE UPON THE ORDER OF THE CIT(A), HAS CONTENDED THAT THE ORDER DATED 25/01/2011 OF THE ASSESSING OFFICER WAS PASSED IN REMAND PROCEEDINGS CONSEQUENT TO THE ORDER/DIRECTION OF THE CIT, THEREFORE, ORDER DATED 25/01/2011 CANNOT MER GE WITH THE ORIGINAL ASSESSMENT ORDER DATED 31/03/2006. HE HAS ALSO INVITED OUR ATTENTION TO THE FACTS OF THE CASE LAWS REFERRED TO BY THE ASSESSEE WITH THE SUBMISSION THAT IN THE CASE OF HIND WIRE INDUSTRIES (SUPRA), THE HON'BLE APEX COURT HAS GIVEN A FI NDING WITH REFERENCE TO AN ORDER PASSED U/S 154 OF THE ACT RECTIFYING THE ORIGINAL ORDER. THE HON'BLE APEX COURT HAS HELD THAT ONCE THE ORIGINAL ORDER IS RECTIFIED U/S 154 OF THE ACT, THE ORIGINAL ORDER MERGES WITH THE RECTIFIED ORDER. IN THE CASE OF TON Y ELECTRONICS LIMITED (SUPRA), THEIR LORDSHIPS OF HON'BLE APEX COURT HAVING RELIED UPON THE ORDER OF HIND WIRE INDUSTRIES, HAVE HELD THAT ONCE APPEAL AGAINST THE ORDER PASSED BY AN AUTHORITY IS PREFERRED AND DECIDED BY THE A PPELLATE AUTHORITIES, THE ORDER OF THE LOWER AUTHORITY MERGES WITH THE ORDER OF THE A PPELLATE AUTHORITY. IN BOTH THE SITUATION, THE LIMITATION WOULD START FROM THE DATE OF THE RECTIFIED ORDER AND ORDER OF THE A PPELLATE AUTHORITY. BUT IN THE INSTANT CASE, ORDER DATED 12 25/01/2011 WAS NEITH ER A RECTIFIED ORDER PASSED U/S 154 OF THE ACT NOR IT WAS AN ORDER OF THE A PPELLATE AUTHORITY. THEREFORE, THE RATIO LAID DOWN THEREIN WOULD NOT APPLY IN THE INSTANT CASE. 5.1 THE LEARNED D.R. FURTHER CONTENDED THAT WHENEVER THE ASSESSING OFFICER IS REQUIRE D TO PASS CONSEQUENTIAL ORDER, THE SCOPE OF JURISDICTION OF THE ASSESSING OFFICER IS VERY LIMITED AND HE HAS TO A CT IN TERMS OF THE DIRECTIONS ISSUED BY THE A PPELLATE AUTHORITY. THE LEARNED D.R. FURTHER INVITED OUR ATTENTION TO THE PROVISION OF SECTION 15 4(1A) OF THE ACT, WHICH ENTAIL THE ASSESSEE TO MOVE AN APPLICATION FOR RECTIFICATION BEFORE THE A PPELLATE AUTHORITY WITH REGARD TO AN ISSUE, WHICH WAS NOT SUBJECT MATTER OF APPEAL BEFORE THE A PPELLATE AUTHORITY. AT THE MOST, IN THE INSTANT CASE, THE ASSES SEE COULD HAVE MOVED TO THE CIT(A) FOR NECESSARY RECTIFICATION IN THIS REGARD. BUT THE ASSESSING OFFICER HAS NO JURISDICTION TO ENTERTAIN THE APPLICATION FOR RECTIFICATION AGAINST AN ORDER DATED 25/01/2011 PASSED CONSEQUENT TO THE DIRECTIONS OF THE CIT(A) IN REMAND PROCEEDINGS. 6. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENTS REFERRED TO BY THE PARTIES, WE FIND THAT THE CONTROVERSY REVOLVES AROUND AN ISSUE AS TO WHICH WOULD BE THE DATE FROM WHICH LIMITATION STARTS FOR THE PURPOSE OF RECTIFICATION U/S 154 OF THE ACT, WHETHER IT WOULD BE DATE ON WHICH ORIGINAL ASSESSMENT ORDER WAS PASSED OR WOULD IT BE THE DATE WHEN THE ASSESSING OFFICER HAS PASSED AN ORDER CONSEQUENT TO THE DIRECTION OF THE CIT(A) IN REMAND PROCEEDINGS IN TERMS OF THE ORDER PASSED BY THE TRIBUNAL VIDE ORDER DATED 13/06/2008 IN I.T.A. NO.239/LKW/07. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS MADE A REFERENCE OF THE 13 JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF HIND WIRE INDUSTRIES (SUPRA) AND TONI ELECTRONICS LIMITED (SUPRA). IN HIND WIRE INDUSTRIES, THE ORIGINAL ASSESSMENT ORDER PASSED BY THE ASSESSING AUTHORITY WAS RECTIFIED U/S 154 OF THE ACT ON THE GROUND THAT INCOME TAX OFFICER HAS NOT TAKEN INTO CONSIDERATION THE SHIFT ALLOWANCE AVAILABLE TO THE APPELLANT. THEREAFTER, THE APPELLANT AGAIN APPLIED FOR RECTIFICATION OF THE FRESH ORDER OF 12 TH JULY, 2982 ON 4 TH JULY, 1986 CONTENDING THEREIN THAT ALREADY IT WAS ENTITLED TO DISALLOWANCE @10% BUT IT WAS ALLOWED DEPRECIATION ONLY @5%. THE ASSESSING OFFICER HAS DENIED THE RECTIFICATION ON THE GROUND THAT RECTIFICATION IS BARRED BY TIME AS IT WAS FILED AFTER A PERIOD OF FOUR YEARS FROM THE DATE O F ORIGINAL ASSESSMENT PASSED ON 21 ST SEPTEMBER 1979. IN THAT CASE, THE CONTROVERSY WAS RAISED WHETHER THE LIMITATION WOULD START FOR THE PURPOSE OF SECTION 154 OF THE ACT FROM THE DATE OF ORIGINAL ASSESSMENT ORDER OR THE DATE OF RECTIFIED ORDER PASSED U/S 154 OF THE ACT. IN THAT SITUATION, THE HON'BLE APEX COURT HAS CATEGORICALLY HELD THAT THE ORIGINAL ASSESSMENT ORDER HAS BEEN MERGED WITH THE RECTIFIED ORDER, THEREFORE, ANY RECTIFICATION IF CALLED FOR , THAT WOULD BE CALLED IN THE RECTIFIED ORDER AND LIMI TATION WOULD START FROM THE DATE OF RECTIFIED ORDER PASSED U/S 154 OF THE ACT. 6.1 IN THE CASE OF TONY ELECTRONICS LIMITED, THE HON'BLE DELHI HIGH COURT HAS AGAIN EXAMINED THE THEORY OF DOCTRINE OF MERGER AND HAS HELD THAT THE ORIGINAL ASSESSMENT ORDER W OULD MERGE WITH THE ORDER OF THE A PPELLATE AUTHORITY AND THE LIMITATION FOR THE PURPOSE OF SUB SECTION 7 OF SECTION 154 OF THE ACT WAS TO BE COUNTED FROM THE DATE OF THE ORDER OF THE A PPELLATE AUTHORITY. WITH RESPECT TO THE ABOVE PROPOSITION OF LAW, WE AR E OF THE VIEW THAT THERE IS NO DISPUTE ABOUT IT. WHEN THE ORIGINAL ORDER HAS BEEN 14 RECTIFIED U/S 154 OF THE ACT, THE ORIGINAL ORDER IS MERGED WITH THE RECTIFIED ORDER AND LIMITATION WOULD START FROM THE DATE OF THE RECTIFIED ORDER PASSED U/S 154 OF THE ACT . SIMILAR IS THE POSITION IN A CASE WHERE AN APPEAL IS FILED . T HE ORIGINAL ORDER WOULD MERGE WITH THE ORDER PASSED BY THE A PPELLATE AUTHORITY AND THE LIMITATION FOR THE PURPOSE OF SECTION 154 WOULD START FROM THE DATE OF THE ORDER PASSED BY THE A PPELLATE AUTHORITY. BUT THESE PROPOSITIONS WOULD NOT APPLY TO THOSE CASES WHERE THE SUBORDINATE AUTHORITIES ARE DIRECTED TO PASS AN ORDER CONSEQUENT TO THE ORDER OF THE A PPELLATE AUTHORITY. IN SUCH TYPE OF CASES, THE JURISDICTION WITH THE SUBORDINATE AUT HORITY OR THE ASSESSING OFFICER IS VERY LIMITED AND THEY HAVE TO ACT AND PERFORM IN TERMS OF THE DIRECTIONS ISSUED BY THE A PPELLATE AUTHORITY. THEY HAVE NO JURISDICTION TO ENLARGE OR RESTRICT THE SCOPE OF ENQUIRY/ADJUDICATION CONF ERRED BY THE A PPELLATE AU THORITY. 6.2 OUR ATTENTION WAS INVITED TO A JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS ALAGENDRAN FINANCE LTD. [2007] 293 ITR 1 (SC) IN WHICH WHILE DEALING WITH THE ISSUE OF LIMITATION U/S 263(2) OF THE ACT, THEIR LORDSH IPS HAVE OBSERVED THAT A BARE PERUSAL OF THE ORDER PASSED BY CIT WOULD CLEARLY DEMONSTRATE THAT ONLY PART OF THE ORDER OF ASSESSMENT WHICH RELATED TO LEASE EQUALIZATION FUND WAS FOUND TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE PROCEEDINGS FOR R EASSESSMENT HAVE NOTHING TO DO WITH THE SAID HEAD OF INCOME. THE DOCTRINE OF MERGER, THEREFORE, WOULD NOT APPLY IN A CASE OF THIS NATURE. THEIR LORDSHIPS FURTHER OBSERVED THAT THERE MAY NOT BE ANY DOUBT OR DISPUTE THAT ONCE AN ORDER OF ASSESSMENT IS REOP ENED, THE PREVIOUS ASSESSMENT WILL BE HELD TO BE SET ASIDE AND THE WHOLE PROCEEDINGS WOULD START AFRESH BUT THE SAME WOULD NOT MEAN THAT EVEN WHEN THE SUBJECT 15 MATTER OF REASSESSMENT IS DISTINCT AND DIFFERENT, THE ENTIRE PROCEEDINGS WOULD DEEM TO HAVE BEEN REOPENED. THEIR LORDSHIPS FURTHER HELD THAT IN RESPECT OF AN ISSUE, WHICH WAS NOT SUBJECT MATTER OF REASSESSMENT, THE LIMITATION U/S 263(2) WOULD RUN FROM THE DATE OF ORIGINAL ASSESSMENT AND REVISIONAL PROCEEDINGS INITIATED IN RESPECT OF SUCH ISSUE BEYOND THE PERIOD OF 2 YEARS FROM THE DATE OF ASSESSMENT, WAS BARRED BY LIMITATION. THE RELEVANT OBSERVATIONS OF HON'BLE APEX COURT IN THIS REGARD ARE AS UNDER: 7. A BARE PERUSAL OF THE ORDER PASSED BY THE CIT WOULD CLEARLY DEMONSTRATE THAT ONLY THAT PART OF ORDER OF ASSESSMENT WHICH RELATED TO LEASE EQUALIZATION FUND WAS FOUND TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE PROCEEDINGS FOR REASSESSMENT HAVE NOTHING TO DO WITH THE SAID HEAD OF INCOME. DOCTRINE OF MERGER, THEREFORE, WOULD NOT APPLY IN A CASE OF THIS NATURE. 8. FURTHERMORE, EXPLN. (C) APPENDED TO SUB - S. (1) OF S. 263 OF THE ACT IS CLEAR AND UNAMBIGUOUS AS IN TERMS THEREOF DOCTRINE OF MERGER APPLIES ONLY IN RESPECT OF SUCH ITEMS WHICH WERE THE SUBJECT MATTER OF APPEAL AND NOT WHICH WERE NOT. THE QUESTION CAME UP FOR CONSIDERATION BEFORE THIS COURT IN CIT VS. SUN ENGINEERING WORKS (P) LTD. (1992)107 CTR (SC) 209: (1992)198 ITR 297(SC). THEREIN THE ASSESSEE RAISED A CONTENTION THAT ONCE JURISDICTION UNDER S. 147 OF THE ACT IS INVOKED, THE W HOLE ASSESSMENT PROCEEDING BECAME REOPENED, WHICH WAS NEGATIVED BY THE COURT OPINING : 'SEC. 147, WHICH IS SUBJECT TO S. 148, DIVIDES CASES OF INCOME ESCAPING ASSESSMENT INTO TWO CLAUSES I.E. VIZ. (A) THOSE DUE TO THE NON - SUBMISSION OF RETURN OF INCOME OR NON - DISCLOSURE OF TRUE AND FULL FACTS AND (B) OTHER INSTANCES. EXPLANATION 1 DEFINES AS TO WHAT CONSTITUTES ESCAPE OF ASSESSMENT. IN ORDER TO INVOKE JURISDICTION UNDER S. 147(A) OF THE ACT, THE ITO MUST HAVE REASON TO BELIEVE THAT SOME INCOME CHARGEABLE TO TAX OF AN ASSESSEE HAS ESCAPED ASSESSMENT BY REASON OF THE 16 OMISSION OR FAILURE ON THE PART OF THE ASSESSEE EITHER TO MAKE A RETURN UNDER S. 139 FOR THE RELEVANT ASSESSMENT YEAR OR TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THAT YEAR. BOTH THE CONDITIONS MUST EXIST BEFORE AN ITO CAN PROCEED TO EXERCISE JURISDICTION UNDER S. 147(A) OF THE ACT. UNDER S. 147(B) THE ITO ALSO HAS THE JURISDICTION TO INITIATE PROCEEDINGS FOR REASSESSMENT WHERE HE HAS REASON TO BELIEVE, ON THE BASI S OF INFORMATION IN HIS POSSESSION, THAT INCOME CHARGEABLE TO TAX HAS BEEN EITHER UNDER - ASSESSED OR HAS BEEN ASSESSED AT TOO LOW A RATE OR HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THE ACT OR EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS BEEN COMP UTED. IN EITHER CASE WHETHER THE ITO INVOKES HIS JURISDICTION UNDER CL. (A) OR CL. (B) OR BOTH, THE PROCEEDINGS FOR BRINGING TO TAX AN 'ESCAPED ASSESSMENT' CAN ONLY COMMENCE BY ISSUANCE OF A NOTICE UNDER S. 148 OF THE ACT WITHIN THE TIME PRESCRIBED UNDER T HE ACT. THUS, UNDER S. 147, THE AO HAS BEEN VESTED WITH THE POWER TO 'ASSESS OR REASSESS' THE ESCAPED INCOME OF AN ASSESSEE. THE USE OF THE EXPRESSION 'ASSESS OR REASSESS SUCH INCOME OR RECOMPUTE THE LOSS OR DEPRECIATION ALLOWANCE' IN S. 147 AFTER THE COND ITIONS FOR REASSESSMENT ARE SATISFIED, IS ONLY RELATABLE TO THE PRECEDING EXPRESSION IN CLS. (A) AND (B) VIZ., 'ESCAPED ASSESSMENT'. THE TERM 'ESCAPED ASSESSMENT' INCLUDES BOTH 'NON - ASSESSMENT' AS WELL AS 'UNDER - ASSESSMENT'. INCOME IS SAID TO HAVE 'ESCAPED ASSESSMENT' WITHIN THE MEANING OF THIS SECTION WHEN IT HAS NOT BEEN CHARGED IN THE HANDS OF AN ASSESSEE IN THE RELEVANT YEAR OF ASSESSMENT. THE EXPRESSION 'ASSESS' REFERS TO A SITUATION WHERE THE ASSESSMENT OF THE ASSESSEE FOR A PARTICULAR YEAR IS, FOR TH E FIRST TIME, MADE BY RESORTING TO THE PROVISIONS OF S. 147 BECAUSE THE ASSESSMENT HAD NOT BEEN MADE IN THE REGULAR MANNER UNDER THE ACT. THE EXPRESSION 'REASSESS' REFERS TO A SITUATION WHERE AN ASSESSMENT HAS ALREADY BEEN MADE BUT THE ITO HAS, ON THE BASI S OF INFORMATION IN HIS POSSESSION, REASON TO BELIEVE THAT THERE HAS BEEN UNDER - ASSESSMENT ON ACCOUNT OF THE EXISTENCE OF ANY OF THE GROUNDS CONTEMPLATED BY THE PROVISIONS OF S. 147(B) R/W THE EXPLN. 1 THERETO.' 9. WE MAY AT THIS JUNCTURE ALSO NOTICE THE D ECISION OF THIS COURT IN HIND WIRE INDUSTRIES LTD. (SUPRA) WHEREIN THE 17 DECISION OF THIS COURT IN V. JAGANMOHAN RAO VS. CIT & CEPT (1970)75 ITR 373(SC) INTERPRETING THE PROVISIONS OF S. 34 OF THE (1922) ACT WAS REPRODUCED WHICH READS AS UNDER : 'SEC. 34 IN TERMS STATES THAT ONCE THE ITO DECIDES TO REOPEN THE ASSESSMENT, HE COULD DO SO WITHIN THE PERIOD PRESCRIBED BY SERVING ON THE PERSON LIABLE TO PAY TAX A NOTICE CONTAINING ALL OR ANY OF THE REQUIREMENTS WHICH MAY BE INCLUDED IN A NOTICE UNDER S. 22(2) AND MAY PROCEED TO ASSESS OR REASSESS SUCH INCOME, PROFITS OR GAINS. IT IS, THEREFORE, MANIFEST THAT ONCE ASSESSMENT IS REOPENED BY ISSUING A NOTICE UNDER SUB - S. (2) OF S. 22, THE PREVIOUS UNDERASSESSMENT IS SET ASIDE AND THE WHOLE ASSESSMENT PROCEEDINGS START AFRESH. WHEN ONCE VALID PROCEEDINGS ARE STARTED UNDER S. 34(1)(B), THE ITO HAD NOT ONLY THE JURISDICTION, BUT IT WAS HIS DUTY TO LEVY TAX ON THE ENTIRE INCOME THAT HAD ESCAPED ASSESSMENT DURING THAT YEAR.' 10. THERE MAY NOT BE ANY DOUBT OR DISPUTE THAT ON CE AN ORDER OF ASSESSMENT IS REOPENED, THE PREVIOUS UNDERASSESSMENT WILL BE HELD TO BE SET ASIDE AND THE WHOLE PROCEEDINGS WOULD START AFRESH BUT THE SAME WOULD NOT MEAN THAT EVEN WHEN THE SUBJECT MATTER OF REASSESSMENT IS DISTINCT AND DIFFERENT, THE ENTIR E PROCEEDING OF ASSESSMENT WOULD BE DEEMED TO HAVE BEEN REOPENED. 1113 14. THE MADRAS HIGH COURT IN A.K. THANGA PILLAI (SUPRA), IN OUR OPINION, HAS RIGHTLY CONSIDERED THE MATTER ALBEIT UNDER S. 17 OF THE WT ACT, 1957 WHICH IS IN PARI MATERIA WITH THE P ROVISIONS OF THE ACT. RELYING ON SUN ENGINEERING WORKS (P) LTD. (SUPRA), IT WAS HELD : 'UNDER S. 17 OF THE WT ACT, 1957, EVEN AS IT IS UNDER S. 147 OF THE IT ACT, PROCEEDINGS FOR REASSESSMENT CAN BE INITIATED WHEN WHAT IS ASSESSABLE TO TAX HAS ESCAPED ASSE SSMENT FOR ANY ASSESSMENT YEAR. THE POWER TO DEAL WITH UNDERASSESSMENT AND THE SCOPE OF REASSESSMENT PROCEEDINGS AS EXPLAINED BY THE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS (P) LTD. (1992)107 CTR (SC) 209: 18 (1992)198 ITR 297(SC), IS IN RE LATION TO THAT WHICH HAS ESCAPED ASSESSMENT, AND DOES NOT EXTEND TO REOPENING THE ENTIRE ASSESSMENT FOR THE PURPOSE OF REDOING THE SAME DE NOVO. AN ASSESSEE CANNOT AGITATE IN ANY SUCH REASSESSMENT PROCEEDINGS MATTERS FORMING PART OF THE ORIGINAL ASSESSMENT WHICH ARE NOT REQUIRED TO BE DEALT WITH FOR THE PURPOSE OF LEVYING TAX ON THAT WHICH HAD ESCAPED TAX EARLIER. CASES OF UNDERASSESSMENT ARE ALSO TREATED AS INSTANCES OF ESCAPED ASSESSMENT. THE ORDER OF REASSESSMENT IS ONE WHICH DEALS WITH THE ASSESSMENT AL READY MADE IN RESPECT OF ITEMS WHICH ARE NOT REQUIRED TO BE REOPENED, AS ALSO MATTERS WHICH ARE REQUIRED TO BE DEALT WITH IN ORDER TO BRING WHAT HAD ESCAPED IN THE EARLIER ORDER OF ASSESSMENT, TO ASSESSMENT. AN ASSESSEE WHO HAS FAILED TO FILE AN APPEAL AGA INST THE ORIGINAL ORDER OF ASSESSMENT CANNOT UTILISE THE REASSESSMENT PROCEEDINGS AS AN OCCASION FOR SEEKING REVISION OR REVIEW OF WHAT HAD BEEN ASSESSED EARLIER. HE MAY ONLY QUESTION THE EXTENT OF THE REASSESSMENT INSOFAR AS THE ESCAPED ASSESSMENT IS CONC ERNED. THE REVENUE IS SIMILARLY BOUND.' THE SAME PRINCIPLE WAS REITERATED BY A DIVISION BENCH OF THE CALCUTTA HIGH COURT IN CIT VS. KANUBHAI ENGINEERS (P) LTD. (2000)158 CTR (CAL) 219: (2000)241 ITR 665(CAL). 15. WE, THEREFORE, ARE CLEARLY OF THE OPINION T HAT KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THIS CASE AND, IN PARTICULAR, HAVING REGARD TO THE FACT THAT THE CIT EXERCISING ITS REVISIONAL JURISDICTION REOPENED THE ORDER OF ASSESSMENT ONLY IN RELATION TO LEASE EQUALIZATION FUND WHICH BEING NOT THE SUBJECT OF THE REASSESSMENT PROCEEDINGS, THE PERIOD OF LIMITATION PROVIDED FOR UNDER SUB - S. (2) OF S. 263 OF THE ACT WOULD BEGIN TO RUN FROM THE DATE OF THE ORDER OF ASSESSMENT AND NOT FROM THE ORDER OF REASSESSMENT. THE REVISIONAL JURISDICTION HAVING, THU S, BEEN INVOKED BY THE CIT BEYOND THE PERIOD OF LIMITATION, IT WAS WHOLLY WITHOUT JURISDICTION RENDERING THE ENTIRE PROCEEDING A NULLITY. 19 6. 3 IN THE LIGHT OF THE PROPOSITION LAID DOWN BY HON'BLE APEX COURT AND VARIOUS HIGH COURT THROUGH AFORESAID JUDICIAL PRONOUNCEMENT, WE ARE OF THE CONSIDERED VIEW THAT THE LIMITATION FROM THE LATEST ORDER WOULD START ONLY ON THOSE CASES WHERE THE ORIGINAL ORDER MERGES WITH THE SUBSEQUENT ORDER. AS PER THE AFORESAID JUDICIAL PRONOUNCEMENT, THE DOCTRINE OF MERGER WOULD APP LY IN TWO TYPE OF CASES; (1) WHERE THE ORIGINAL ORDER IS RECTIFIED U/S 154 OF THE ACT AND THE (2) WHERE THE ORIGINAL ORDER IS MODIFIED BY THE ORDER OF THE A PPELLATE AUTHORITY. IN SUCH TYPE OF CASES WHERE THE ORIGINAL ORDER IS MERGED WITH THE SUBSEQUENT O RDER, THE PERIOD OF LIMITATION FOR THE PURPOSE OF SECTION 154 OF THE ACT WOULD START FROM THE LATEST ORDER EITHER PASSED U/S 154 OF THE ACT OR BY THE A PPELLATE AUTHORITY. BUT IN THE INSTANT CASE, THE QUESTION ARISES, CAN THE LIMITATION FOR THE PURPOSE OF SECTION 154 STARTS FROM THE DATE OF THE ORDER OF THE ASSESSING OFFICER PASSED CONSEQUENT TO THE DIRECTIONS/ORDER OF THE A PPELLATE AUTHORITY. WE HAVE A SERIOUS DOUBT IN THIS REGARD BECAUSE WHILE PASSING A CONSEQUENTIAL ORDER, THE SCOPE OF JURISDICTION OF T HE ASSESSING OFFICER IS VERY LIMITED AND HE HAS TO ACT AND PERFORM PURSUANT TO THE DIRECTIONS OF THE A PPELLATE AUTHORITY IN TERMS MENTIONED/INDICATED IN THE ORDER . ONCE THE SCOPE OF JURISDICTION OF THE ASSESSING OFFICER IS RESTRICTED BY VIRTUE OF THE DIRE CTIONS OF THE A PPELLATE AUTHORITY, THE ASSESSING OFFICER WOULD NOT HAVE ANY INDEPENDENT JURISDICTION TO RECTIFY OR MODIFY THE ASSESSMENT ORDER ORIGINALLY PASSED BY HIM. THEREFORE, THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE CALLED TO BE THE RECTIFIED ORDER OF THE ORIGINAL ASSESSMENT ORDER. TH US , THE THEORY OF DOCTRINE OF MERGER WOULD NOT APPLY IN SUCH CASES AND THE ORIGINAL ASSESSMENT WOULD NOT CALLED TO HAVE BE EN MERGED WITH THE ORDER OF THE ASSESSING OFFICER PASSED CONSEQUENT TO TH E DIRECTIONS IN THE ORDERS OF THE A PPELLATE AUTHORITY. 20 ONCE THE ASSESSING OFFICER CANNOT EXCEED THE JURISDICTION CONFERRED BY THE A PPELLATE AUTHORITY FOR PASSING AN ORDER IN TERMS INDICATED IN THE APPELLATE ORDER, HOW THE ASSESSING OFFICER CAN ASSUME A JU RISDICTION TO MODIFY THAT RECTIFIED ORDER PASSED U/S 154 OF THE ACT . 6. 4 IN THE INSTANT CASE, THE ORDER DATED 25/01/2011 WAS PASSED DURING THE REMAND PROCEEDINGS PURSUANT TO THE REMAND ORDER DATED 06/01/2011 PASSED U/S 254(4) OF THE ACT AND IN TERMS OF DIRECTIONS ISSUED BY THE TRIBUNAL, THEREFORE, THIS ORDER CAN ONLY BE A PART OF THE APPELLATE PROCEEDINGS /ORDER OF THE CIT(A) AND DOES NOT ASSUME A CHARACTER OF THE INDEPENDENT ASSESSMENT ORDER FOR THE PURPOSE OF SECTION 154 OF THE ACT. 6. 5 OUR ATTENTION WA S ALSO INVITED TO THE PROVISIONS OF SECTION 154(1 A ) OF THE ACT, ACCORDING TO WHICH, A RECTIFICATION CAN BE SOUGHT WITH RESPECT TO ANY MATTER OTHER THAN THE MATTER, WHICH HAS BEEN SO CONSIDERED AND DECIDED BY THE A PPELLATE AUTHORITY MEANING THEREBY THE A PPE LLATE AUTHORITY HAS JURISDICTION TO ENTERTAIN THE REQUEST OF RECTIFICATION WITH RESPECT TO THOSE MATTERS, WHICH ARE NOT SUBJECT MATTER OF THE APPEAL BEFORE IT. FOR THE SAKE OF REFERENCE WE EXTRACT THE PROVISION OF SECTION 154(1 A ) OF THE ACT AS UNDER: 154 (1A) WHERE ANY MATTER HAS BEEN CONSIDERED AND DECIDED IN ANY PROCEEDING BY WAY OF APPEAL OR REVISION RELATING TO AN ORDER REFERRED TO IN SUB - SECTION(1), THE AUTHORITY PASSING SUCH ORDER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY LAW FOR THE TIME BEING IN FORCE, AMEND THE ORDER UNDER THAT SUB - SECTION IN RELATION TO ANY MATTER OTHER THAN THE MATTER WHICH HAS BEEN SO CONSIDERED AND DECIDED. 6. 6 THEREFORE, AT THE MOST THE ASSESSEE COULD HAVE APPROACHED TO CIT(A) FOR SUCH RECTIFICATION BUT ACCORDING TO US, HE CANNOT APPROACH THE 21 ASSESSING OFFICER FOR RECTIFICATION IN THE ORDER PASSED ON 25/01/2011 AS IT WAS PASSED CONSEQUENT TO THE DIRECTIONS OF THE CIT(A) AND THE TRIBUNAL. THEREFORE, THE LIMITATION CAN ONLY START FROM THE ORIGINAL ASSESSMENT ORDER FOR RECT IFICATION AS THE ORIGINAL ASSESSMENT CANNOT BE CALLED TO HAVE BEEN MERGED WITH THE ORDER DATED 25/01/2011 FOR THE PURPOSE OF SECTION 154 OF THE ACT. WE, THEREFORE, ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAS PROPERLY ADJUDICATED THE ISSUE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND SINCE WE DO NOT FIND ANY IN FIRMITY THEREIN, WE CONFIRM HIS ORDER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 07/01/2014 ) SD/. SD/. (A. K. GARODIA) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07/01/2014 *CL SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR
