M/s Southern India Plywood Company, Mangalore V. ACIT, Mangalore

ITA 722/BANG/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60788 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-05-2012
• Assessment Year: 1991-1992
• Appeal Filed On: 26-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SARAVANAN
• Assessee Lawyers: V CHANDRASHEKAR
• Keywords: Invalid notice; Principle of natural justice; Period of limitation; Reason to believe
• Section: 234B; 260A; 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO.722/BANG/2010 (ASSESSMENT YEAR : 1991-92) M/S. SOUTHERN INDIA PLYWOOD COMPANY, C/O SRI YAKUB A, M.R. BHAT LANE, OPP. AZAD FACTORY, JEPPU, MANGALORE-575 001. . APPELLANT. VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), MANGALORE. .. RESPONDENT. APPELLANT BY : SHRI V. CHANDRASHEKAR. RESPONDENT BY : SHRI B. SARAVANAN. DATE OF HEARING : 17.05.2012. DATE OF PRONOUNCEMENT : 29.6.2012. O R D E R PER SHRI JASON P. BOAZ, A.M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), MANGALORE DATED 29.03.2010 FOR ASSESSMEN T YEAR 1991-92. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE, AN UNREGISTERED FIRM HAD NOT FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 1991 - 92. IN THE ASSESSMENT ORDER PASSED UNDER SECTION 1 43(3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED AS 'THE ACT') ON 30.3.1992 FOR ASSESSMENT YEAR 1990-91, AN AMOUNT OF RS. 4,40,653 WAS ADDED BACK UNDER SECTION 41(1) OF THE ACT TO THE TO TAL INCOME OF THE ASSESSEE AS M/S. KARNATAKA BANK LTD. HAD WRITTEN OFF THE AMOUNT, WHICH WAS PAYABLE TO IT BY THE ASSESSEE. THIS ADDITION WAS CONFIRMED BY THE CIT(A) AND TRIBUNAL. IN FURTHER A PPEAL, THE HON'BLE HIGH COURT OF KARNATAKA IN ITS ORDER IN ITA NO.180 OF 2002 DT.16.11.2007 REVERSED THE DECISION OF THE TRIBUNAL ON THIS ISSUE 2 ITA NO.722/BANG/2010 ACCEPTING THE FACT AS STATED BY THE ASSESSEE THAT C ONSIDERING THE DATE OF WRITING OFF THIS AMOUNT BY THE KARNATAKA BANK LTD., THE SAID AMOUNT IS NOT EXI GIBLE TO TAX IN THE CURRENT YEAR I.E, AT 1990-91. T HE HON'BLE COURT HELD THAT IF THE SAME IS NOT DISCLOSE D BY THE ASSESSEE IN THE SUBSEQUENT YEAR, IT IS OPE N TO REVENUE TO TAKE ACTION IN ACCORDANCE WITH LAW. THE RELEVANT PORTION OF THE HON'BLE HIGH COURT ORDER, ON THIS GROUND FOUND IN PARAS 9 AND 11 THERE OF IS AS UNDER : 9. IN REGARD TO QUESTION NO.2 IS CONCERNED, ADMIT TEDLY THE ASSESSEE HAS ADMITTED THE AMOUNT WRITTEN OFF BY THE KARNATAKA BANK. ACCORDING TO THE ASSESSEE CONSIDERING THE DATE OF WRITTEN OFF BY THE BANK, THE SAID AMOUNT HA S TO BE DISCLOSED BY THE ASSESSEE NOT IN THE CURRENT YEAR BUT FOR THE SUBSEQUENT YEAR. WHEN THE ASSESSEE HAS CLEARLY STATED THAT THESE AMOUNTS ARE TO BE DISCLOSED IN THE SUBSEQUENT ASSESSMENT ORDER, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER DID NOT CONSIDER THE CASE OF THE ASSESSEE PROPERLY. IN THE CIRCUMSTANCES, WE ANSWER QUESTION NO.2 IN FAVOU R OF THE ASSESSEE GIVING LIBERTY FOR THE ASSESSEE TO SHOW THE SAID AMOUNT OF RS. 4,40,65 3 IN THE SUBSEQUENT YEARS. IF THE SAME IS NOT SHOWN BY THE ASSESSEE FOR THE SUBSEQUEN T YEARS, IT IS OPEN FOR THE REVENUE TO TAKE ACTION IN ACCORDANCE WITH LAW. 10. .. 11. IN THE RESULT, WE ALLOW THE APPEAL-IN-PART D IRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 22 LAKHS AND RS. 4,40,653 RESPE CTIVELY, GRANTING LIBERTY FOR THE ASSESSING OFFICER TO EXAMINE WHETHER RS. 4,40,653 H AS BEEN SHOWN BY THE ASSESSEE FOR THE SUBSEQUENT ASSESSMENT YEAR. WE CONFIRM THE AD DITION OF RS. 13,03,008 AS UNPROVED CREDITS. 2.2 PURSUANT TO THE ABOVE ORDER OF THE HON'BLE HIGH COURT, THE ASSESSING OFFICER INITIATED PROCEEDINGS UNDER SECTION 147 OF THE ACT FOR ASSESS MENT YEAR 1991-92 IN ORDER TO BRING TO TAX THE SUM OF RS. 4,40,653 UNDER SECTION 41(1) OF THE ACT IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF KARNATAKA BANK LTD. WRITING OFF THIS AMOUNT WHICH W AS PAYABLE BY THE ASSESSEE TO THIS BANK. THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME FOR ASS ESSMENT YEAR 1991-92 DECLARING THIS AMOUNT OF RS. 4,40,653 AS ITS INCOME. THE ASSESSING OFFICER CONCLUDED THE ASSESSMENT BY AN ORDER UNDER SECTION 144 RWS 147 OF THE ACT DT.14.12.2009 BRINGI NG TO TAX THIS AMOUNT OF RS. 4,40,653 UNDER SECTION 41(1) OF THE ACT IN THE ASSESSEES HANDS. THIS ORDER OF THE ASSESSING OFFICER WAS CONFIRMED B Y 3 ITA NO.722/BANG/2010 THE LEARNED CIT(A), MANGALORE BY ORDER DT.29.3.2010 . THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), IS NOW IN APPEAL BEFORE THIS TRIBUN AL. 3.1 THE GROUNDS OF APPEAL RAISED BY THE ASSESSE E IN THIS APPEAL ARE AS UNDER : 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT, IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, NATURAL JUSTICE, PROBAB ILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. 2. THE APPELLANT DENIES HIMSELF LIABLE TO BE ASSES SED ON A TOTAL INCOME OF RS. 4,40,653 AS AGAINST THE DECLARED INCOME OF RS. NIL UNDER THE FA CTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED CIT(A) IS NOT JUSTIFIED IN LAW IN UPHOLDING THE ORDER OF ASSESSMENT PASSED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 WITHOUT GIVING THE APPELLANT A REASONABLE OPPORTUNITY OF BE ING HEARD UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE ORDER OF RE-ASSESSMENT IS BAD IN LAW AND VOID-AB-INITIO IN AS MUCH AS THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT IS BARRED BY LI MITATION AND HENCE INVALID AND THEREFORE, THE ORDER PASSED BY THE LEARNED A.O. FOU NDED ON THE INVALID AND ILLEGAL NOTICE UNDER SECTION 148 OF THE ACT DESERVES TO BE CANCELL ED. 5. WITHOUT PREJUDICE TO THE ABOVE, THE ORDER OF RE-ASSESSMENT IS BAD IN LAW AND VOID-AB- INITIO FOR WANT OF REQUISITE JURISDICTION ESPECIALL Y, THE MANDATORY REQUIREMENTS TO ASSUME JURISDICTION UNDER SECTION 148 OF THE ACT DID NOT E XIST AND HAVE NOT BEEN COMPLIED WITH AND CONSEQUENTLY, THE RE-ASSESSMENT REQUIRES TO BE CANCELLED. 6. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN REO PENING THE ASSESSMENT BY INVOKING SECTION 150 OF THE ACT AS THERE IS NO FINDING OR DI RECTION IN THE ORDER OF THE HON'BLE HIGH COURT IN THE APPELLANTS OWN CASE FOR THE ASSESSMEN T YEAR 1990-91 ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THUS THE REOPENING IS B AD IN LAW. 7. WITHOUT PREJUDICE THE AUTHORITIES BELOW ARE NO T JUSTIFIED IN LAW IN MAKING AN ADDITION OF RS. 4,40,653 UNDER THE HEAD CESSATION OF LIABILI TY UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT. 8. THE APPELLANT DENIES HIMSELF LIABLE TO BE CHAR GED TO INTEREST UNDER SECTION 234A & 234B OF THE INCOME TAX ACT, 1961UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELET E OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 10. IN THE VIEW OF THE ABOVE AND OTHER GROUNDS THA T MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 3.2 ADDITIONAL GROUNDS OF APPEAL WERE ALSO URGE D WHICH ARE AS UNDER : THE APPELLANT BEGS TO SUBMIT THE UNDER MENTIONED ADDITIONAL GROUNDS OF APPEAL WHICH WERE NOT URGED SPECIFICALLY IN THE ORIGINAL GROUNDS OF APPEAL FILED AT THE TIME OF INSTITUTION OF APPEAL OR BEFORE THE CIT(A), BANGALORE SPECIFICA LLY DUE TO INADVERTENCE. THESE GROUNDS DO NOT INVOLVE ANY INVESTIGATION OF ANY FACTS OTHER WISE ON THE RECORD OF THE DEPARTMENT AND ARE ALSO PURE QUESTIONS OF LAW, IT IS PRAYED TH AT THE ADDITIONAL GROUNDS MAY KINDLY BE 4 ITA NO.722/BANG/2010 ADMITTED AND DISPOSED OFF ON MERITS FOR THE ADVANCE MENT OF SUBSTANTIAL CAUSE OF JUSTICE. RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE A PEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT REPORTED IN 229 ITR 383. ADDITIONAL GROUNDS NOT SPECIFICALLY URGED 1. THE NOTICE ISSUED BY THE LEARNED ASSESSING OFFIC ER UNDER SECTION 148 OF THE ACT IS BAD IN LAW AND WITHOUT JURISDICTION IN AS MUCH AS THE PROV ISIONS OF SECTION 151 OF THE ACT ARE NOT COMPLIED WITH AND CONSEQUENTLY THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER ON AN INVALID NOTICE IS BAD IN LAW AND VOID-AB-INITIO. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELE TE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 3. IN THE VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 3.3 IN THE COURSE OF HEARINGS, THE LEARNED COUN SEL FOR THE ASSESSEE HAD GIVEN IN WRITING THAT ONLY GROUND OF APPEAL NO.4 IS BEING PRESSED IN THIS APP EAL AND ALL OTHER GROUNDS ARE NOT PRESSED. IN THIS VIEW OF THE MATTER, GROUNDS OF APPEAL AT S.NOS.1 TO 3, 5 TO 9 AND ADDITIONAL GROUNDS AT S.NOS.1 TO 3 ARE DISMISSED AS INFRUCTUOUS. 4.1 THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE ASSESSING OFFICER IS UNDER THE ERRONEOUS IMPRESSION THAT THE PROVISIONS OF SEC TION 150(1) OF THE ACT APPLY TO THE FACTS OF THE ASSESSEES CASE IN AS MUCH AS SECTION 150(1) OF THE ACT COMES INTO PLAY ONLY IF AN ASSESSMENT IS MADE IN CONSEQUENCE OF OR TO GIVE EFFECT TO A FINDI NG OR DIRECTION IN AN APPELLATE ORDER. IF, HOWEVER , AN ASSESSMENT IS MADE NOT PURSUANT TO A FINDING OR DIRECTION BY AN APPELLATE AUTHORITY THEN SECTION 150(1) OF THE ACT DOES NOT COME INTO PLAY. IT IS TH E CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSE E THAT IN THE INSTANT CASE IT CANNOT BE SAID THAT THE ASSESSMENT IS MADE IN CONSEQUENCE OF OR TO GIVE EFFECT TO THE FINDING OR DIRECTION IN AN APPELLATE ORDER IN AS MUCH AS WHEN THE HON'BLE HIGH COURT IN ITS ORDER GRANTS LIBERTY TO AN ASSESSING OFFICER TO EXAMINE A PARTICULAR ISSUE, IT DOES NOT AMOUNT TO A DIRECTION GIVEN BY THE HON'BLE HIGH COURT. 4.2 THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ORDER OF ASSESSMENT PASSED BY THE ASSESSING OFFICER IS BAD IN LAW, VOID-AB INITIO AS THE ASSESSING OFFICER HAS ISSUED NOTICE U/S. 14 8 OF 5 ITA NO.722/BANG/2010 THE ACT WITHOUT OBSERVING THE CONDITIONS MANDATED I N THE INCOME TAX ACT FOR DOING SO, FOR THE FOLLOWING REASONS : (I) THE ASSESSING OFFICER, IT IS SUBMITTED, HAS NO T INDEPENDENTLY RECORDED ANY REASONS TO COME INTO THE AMBIT OF THE ESSENTIAL INGREDIENT AND CONDITION PRECEDENT FOR REOPENING AN ASSESSMENT U/S. 148 I.E. REASON TO BELIEVE THAT INCOME HAS ESCAPED AS SESSMENT. IT IS SUBMITTED THAT THE ASSESSING OFFICER IN THE REASONS RECORDED, STATES THAT SINCE HE HAS BEEN GIVEN LIBERTY BY THE HON'BLE HIGH COURT TO EXAMINE WHETHER A SUM HAS BEEN OFFERED TO TAX OR NOT, HE HAS REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. NOTHING IN THE REASONS RECO RDED CAN BE CONSIDERED AS INDICATING THAT AN AMOUNT HAS ESCAPED ASSESSMENT. EVEN IN AN EXTREME CASE, IT IS ARGUED THE REASONS DO NOT INDICATE THE PROCESS OF REASONING TO COME TO THE CONCLUSION OF REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT IT IS SETTLED LAW THAT FOR TESTING THE VALIDITY OF A NOTICE U/S. 148 OF THE ACT, REASONS R ECORDED ALONE HAVE TO BE TAKEN INTO ACCOUNT AND THE SAME CANNOT BE SUPPLEMENTED BY ANY OTHER ASPECT OR FACTOR TO IMPROVE THE CASE OF REVENUE. ACCORDING TO THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE, AT BEST IT MAY BE A REASON TO SUSPECT AND NEVER CAN COME ANYWHERE NEAR THE MANDAT ORY REQUIREMENT OF REASON TO BELIEVE. (II) IT IS FURTHER CONTENDED BY THE LEARNED COUNSE L FOR THE ASSESSEE THAT IN THE REASONS RECORDED, TH E ASSESSING OFFICER STATES THAT INCOME HAS ESCAPED AS SESSMENT W.R.T. SECTION 260A R.W.S. 151(3) OF THE ACT AND THE SAME CANNOT BE SAID TO CONSTITUTE REAS ON TO BELIEVE U/S.147. (III) IT IS ALSO CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE NOTICE ISSUED U/S.148 I S BARRED BY LIMITATION AND (IV) THAT THE NOTICE ISSUED U/S.148 DOES NOT HAVE THE PRIOR SANCTION OF THE JOINT COMMISSIONER OF INCOME TAX AS WARRANTED U/S.151(2) OF THE ACT. 6 ITA NO.722/BANG/2010 5.0 THE LEARNED DEPARTMENTAL REPRESENTATIVE SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW. HE CONTENDED THAT THE ORDER OF THE HIGH COURT IS A DIR ECTION AND FURTHER IN VIEW OF THE PROVISIONS LAID DOWN IN SECTION 150(1), THE PROVISIONS OF SECTION 1 49 OF THE ACT ARE NOT APPLICABLE. THEREFORE, WHEN A NOTICE U/S.148 IS ISSUED IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY DIRECTION OR FINDING CONTAINED I N AN APPELLATE ORDER, THE PROVISIONS OF SECTION 149 A S A WHOLE WOULD NOT BE APPLICABLE. IN THIS VIEW OF THE MATTER, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE TIME LIMIT LAID DOWN IN SECTION 149 AND THE SANCTION OF HIGHER AUTHORITIES AS PRESCRIBED IN SECTION 151 OF THE ACT ARE NOT APPLICABLE FOR AN ASSESSMENT MADE IN CONSEQUENCE OF OR TO GIVE EFFECT TO A FINDING OR DIRECTION IN AN APPELLATE ORDER. IN SUPPORT OF REVENUES CONTENTIO N, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON SEVERAL JUDICIAL DECISIONS. 6.0 IN THE LIGHT OF THE ABOVE ARGUMENTS, THE ISSUES FOR ADJUDICATION IN THE INSTANT APPEAL ARE : A. WHETHER THE ORDER OF THE HONBLE KARNATAKA HIGH COURT IN ITA NO.180 OF 2002 FOR ASST. YEAR 1990-91 IN THE ASSESSEES CASE CAN BE CONSTRUED AS AN ORDER GIVING A DIRECTION TO THE ASSESSING OFFICER. B. WHETHER THE NOTICE U/S.148 OF THE ACT IS A NO TICE ISSUED IN ACCORDANCE WITH LAW. EACH OF THESE ISSUES WILL BE CONSIDERED AND DECIDED HEREUNDER. 7.1 A. WHETHER THE ORDER OF THE HONBLE KARNATA KA HIGH COURT IN ITA NO.180 OF 2002 FOR ASST. YEAR 1990-91 IN THE ASSESSEES CASE CAN BE CONSTRUED AS AN ORDER GIVING A DIRECTION TO THE ASSESSING OFFICER. 7.2 WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIAL ON RECORD. IT WOULD BE RELEVANT TO TAKE NOTE OF THE FINDINGS GIVEN BY THE HON'BLE APEX COUR T AND SEVERAL HIGH COURTS WHICH HAVE A BEARING ON THE ISSUE AT HAND. 7 ITA NO.722/BANG/2010 RAJINDER NATH VS. COMMISSIONER OF INCOME TAX 120 I TR 14 (SC) IN THIS DECISION THE HON'BLE APEX COURT HAS EXPLAIN ED FINDING AND DIRECTION AS FOLLOWS : THE EXPRESSIONS FINDING AND DIRECTION ARE LIMITED IN MEANING. A FINDING GIVEN IN AN APPEAL, REVISION OR REFEREN CE ARISING OUT OF AN ASSESSMENT MUST BE A FINDING NECESSARY FOR THE DISPOSAL OF THE PARTICU LAR CASE, THAT IS TO SAY, IN RESPECT OF THE PARTICULAR ASSESSEE AND IN RELATION TO THAT PARTICU LAR ASSESSMENT YEAR. AS REGARDS THE EXPRESSION DIRECTION U/S.153(3)( II) OF THE ACT, IT IS NOW WELL SETTLED THAT IT MUST BE AN EXPRESS DIRECTION NECESSARY FOR THE D ISPOSAL OF THE CASE BEFORE THE AUTHORITY OR THE COURT. IT MUST ALSO BE A DIRECTION WHICH TH E AUTHORITY OR COURT IS EMPOWERED TO GIVE WHILE DECIDING THE CASE BEFORE IT. IN ANY EVENT WHATEVER ELSE IT MAY AMOUNT TO, ON I TS VERY TERMS THE OBSERVATIONS THAT THE ITO IS FREE TO TAKE ACTION TO ASSESS THE EXCE SS IN THE HANDS OF THE CO-OWNERS CANNOT BE DESCRIBED AS A DIRECTION. A DIRECTION BY A STATUTORY AUTHORITY IS IN THE NAT URE OF AN ORDER REQUIRING POSITIVE COMPLIANCE. WHAT IS LEFT TO THE OPTION AND DISCRET ION OF THE ITO WHETHER OR NOT TO TAKE ACTION, IT CANNOT, IN OUR OPINION, BE DESCRIBED AS A DIRECTION. THE IMPLICATION OF THE ABOVE OBSERVATION BY THE HON 'BLE APEX COURT ON THE INSTANT CASE OF THE ASSESSEE CAN BE UNDERSTOOD BY ANALYZING PARAS 9 AND 11 OF THE HON'BLE HIGH COURT ORDER IN THE ASSESSEES CASE FOR ASST. YEAR 1990-91. IN REGARD TO QUESTION NO.2 IS CONCERNED, ADMITTEDL Y THE ASSESSEE HAS ADMITTED THE AMOUNT WRITTEN OFF BY THE KARNATAKA BANK. ACCOR DING TO THE ASSESSEE CONSIDERING THE DATE OF WRITTEN OFF BY THE BANK, TH E SAID AMOUNT HAS TO BE DISCLOSED BY THE ASSESSEE NOT IN THE CURRENT YEAR B UT FOR THE SUBSEQUENT YEAR. WHEN THE ASSESSEE HAS CLEARLY STATED THAT THESE AMO UNTS ARE TO BE DISCLOSED IN THE SUBSEQUENT ASSESSMENT ORDER, WE ARE OF THE OPIN ION THAT THE ASSESSING OFFICER DID NOT CONSIDER THE CASE OF THE ASSESSEE PROPERLY. IN THE CIRCUMSTANCES, WE ANSWER QUESTION NO.2 IN FAVOUR OF THE ASSESSEE GIVI NG LIBERTY FOR THE ASSESSEE TO SHOW THE SAID AMOUNT OF RS. 4,40,653 IN THE SUBSEQU ENT YEARS. IF THE SAME IS NOT SHOWN BY THE ASSESSEE FOR THE SUBSEQUENT YEARS, IT IS OPEN FOR THE REVENUE TO TAKE ACTION IN ACCORDANCE WITH LAW. IN THE RESULT, WE ALLOW THE APPEAL-IN-PART DIREC TING THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 22 LAKHS AND RS. 4,40,65 3 RESPECTIVELY, GRANTING LIBERTY FOR THE ASSESSING OFFICER TO EXAMINE WHETHER RS. 4, 40,653 HAS BEEN SHOWN BY THE ASSESSEE FOR THE SUBSEQUENT ASSESSMENT YEAR. WE C ONFIRM THE ADDITION OF RS. 13,03,008 AS UNPROVED CREDITS. 8 ITA NO.722/BANG/2010 7.3 (I) FROM A PERUSAL OF PARA 9 OF THE HIGH CO URT ORDER (SUPRA), THE OPERATIVE PORTION OF THE PAR A IS FOUND IN THE LAST FOUR LINES WHICH, ARE : IN THE CIRCUMSTANCES, WE ANSWER QUESTION NO.2 IN F AVOUR OF THE ASSESSEE GIVING LIBERTY TO THE ASSESSEE TO SHOW THE SAID AMOUNT OF RS.4,40,653 IN THE SUBSEQUENT YEARS. IF THE SAME IS NOT SHOWN BY THE ASSESSEE IN THE SUBSEQUENT YEAR S, IT IS OPEN FOR THE REVENUE TO TAKE ACTION IN ACCORDANCE WITH LAW. IT IS CLEAR FROM THE ABOVE THAT - (I) THE HIGH COURT GIVES LIBERTY TO THE ASSESSEE TO SHOW THE SAID AMOUNT OF RS.4,40,653 IN THE SUBSEQUENT YEARS, AND (II) IF THE SAME IS NOT SHOWN BY THE ASSESSEE IN T HE SUBSEQUENTLY YEARS, IT IS OPEN FOR THE REVENUE T O TAKE ACTION IN ACCORDANCE WITH LAW. 7.4 APPLYING THE DECISION OF THE HON'BLE APEX C OURT AT 120 ITR 14 (SUPRA), IT APPEARS THAT WHEN TH E HONBLE HIGH COURT HAS CHOSEN TO USE THE WORDS THAT IT IS OPEN FOR THE REVENUE TO TAKE ACTION, THEN REVENUE HAS THE OPTION TO TAKE OR NOT TO TAKE ACTI ON. IT IS, THEREFORE, CLEAR THAT BY USING THE WOR DS IT IS OPEN FOR THE REVENUE THE HIGH COURT HAS NOT GIVEN ANY DIRECTION TO THE REVENUE TO TAKE ACTION. THE HON'BLE APEX COURT HAS STATED THAT A DIRECTIO N BY A STATUTORY AUTHORITY IS IN THE NATURE OF AN ORDER REQUIRING POSITIVE COMPLIANCE. WHAT IS LEFT TO THE OPTION AND DIRECTION OF THE ITO WHETHER OR NOT TO TAKE ACTION, IT CANNOT, IN OUR OPINION, BE D ESCRIBED AS A DIRECTION. FURTHER, THE DIRECTION, IF ANY, IS ONLY THAT REVENUE SHALL TAKE ACTION ONLY IN ACCORDANCE WITH LAW. IN OTHER WORDS, NO ACTION WHICH IS OPPOSED TO THE PROVISIONS OF THE I.T. ACT CAN BE TAKEN BY THE REVENUE. 7.5 THE ONLY FINDING BY THE HONBLE HIGH COURT IS THAT THE AMOUNT OF RS.4,40,653 CANNOT BE CONSTRUED AS INCOME FOR ASSESSMENT YEAR 1990-91. T HERE IS NO SPECIFIC FINDING BY THE HON'BLE HIGH COURT THAT THE SAID AMOUNT CONSTITUTES INCOME OF AS SESSMENT YEAR 1991-92. THE HON'BLE APEX COURT IN 120 ITR 14 HAS CLEARLY ST ATED A FINDING GIVEN IN AN APPEAL, REVISION OR 9 ITA NO.722/BANG/2010 REFERENCE ARISING OUT OF AN ASSESSMENT MUST BE A FI NDING NECESSARY FOR THE DISPOSAL OF THE PARTICULAR CASE, THAT IS TO SAY, IN RESPECT OF A PARTICULAR AS SESSEE AND IN RELATION TO THAT PARTICULAR ASSESSMEN T YEAR. IN THE INSTANT CASE, THE FINDING GIVEN BY T HE HON'BLE HIGH COURT IS IN RESPECT OF DISPOSING OF F THE APPEAL FOR ASSESSMENT YEAR 1990-91 BY HOLDING T HAT THE SUM OF RS.4,40,653 IS NOT TAXABLE IN ASSESSMENT YEAR 1990-91 BUT IN THE SUBSEQUENT YEAR S. IT IS, THEREFORE, CERTAIN THAT THIS AMOUNT IS NOT TAXABLE IN ASSESSMENT YEAR 1990-91 BUT THE HON BLE COURT HAS NOT GIVEN A FINDING THAT IT IS EXIGIBLE TO TAX IN ASSESSMENT YEAR 1991-92. THERE IS NO FINDING BY THE HON'BLE HIGH COURT THAT THE SAID INCOME FORMS PART OF THE INCOME FOR ASSESSMENT YEAR 1991-92. AS PER THE OPERATIVE PORTION OF THE ORDER OF THE HON'BLE HIGH COURT PARA 11 THEREOF READS AS UNDER : 11. IN THE RESULT, WE ALLOW THE APPEAL-IN-PART DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 22 LAKHS AND RS. 4,40,653 RESPE CTIVELY, GRANTING LIBERTY FOR THE ASSESSING OFFICER TO EXAMINE WHETHER RS. 4,40,653 H AS BEEN SHOWN BY THE ASSESSEE FOR THE SUBSEQUENT ASSESSMENT YEAR. 7.5 IT IS CLEAR FROM THE OPERATIVE PORTION AT P ARA 11 OF THE HON'BLE HIGH COURT ORDER (SUPRA) THA T THERE ARE TWO PARTS : (I) THE FIRST BEING A CLEAR DIRECTION THAT THE ASS ESSING OFFICER SHOULD DELETE THE ADDITIONS OF RS.22 LAKHS AND RS.4,40,653 AND (II) IN WHICH THE HON'BLE HIGH COURT GRANTS THE LIB ERTY TO THE ASSESSING OFFICER TO EXAMINE WHETHER RS.4,40,653 HAS BEEN SHOWN BY THE ASSESSEE FOR THE SUBSEQUENT YEAR. HERE AGAIN IT APPEARS THAT THE HON'BLE HIGH COURT HAS NOT DIRECTED THE ASSESSING O FFICER TO EXAMINE BUT GRANTS LIBERTY TO EXAMINE IF HE SO WISHES TO DO AND THE ONLY DIRECTION GIVEN IS TO DELETE THE ADDITION MADE FOR ASSESSMENT YEAR 1990-91. THE FACT THAT THE HON'BLE HIGH COURT HAS CHOSEN TO USE THE WORD LIBERTY IN PARA 9 AND ONCE AGAIN IN PARA 11 ONLY SIGNIFIES THAT THE ASSESSING OFFICER IS GIVEN THE OPTION OR DISCRECTION TO EXAMI NE, 10 ITA NO.722/BANG/2010 IF HE SO WISHES TO DO SO. THIS CLEARLY IS NOT A DI RECTION IN TERMS OF THE JUDGMENT OF THE HON'BLE APE X COURT CITED ABOVE. 8.0 CONSOLIDATED COFFEE LTD. VS. ITO 155 ITR 729 (KAR) 8.1 THE HON'BLE HIGH COURT OF KARNATAKA, RELYIN G ON THE DECISIONS OF THE HON'BLE APEX COURT IN THE CASES OF RAJINDER NATH (SUPRA) AND ITO VS. MURALIDH AR BHAGWAN DAS (52 ITR 355) HELD THAT A DIRECTION OR FINDING SHOULD BE IN RESPECT OF THE YEAR UNDER R EVIEW, REVISION OR APPEAL AS THE CASE MAY BE. IT I S ONLY IN SUCH CIRCUMSTANCES THAT THE PROVISION OF SE CTION 150(1) OF THE ACT WILL COME INTO PLAY. IN TH E CITED CASE, THE JURISDICTIONAL HIGH COURT HAS ALREA DY HELD -- THE EXPRESSION FINDING AS WELL AS THE EXPRESSION DIRECTION CAN BE GIVEN FULL MEANING NAMELY THAT THE FINDING IS A FINDING NECESSARY FORG IVING RELIEF IN RESPECT OF THE ASSESSMENT OF THE YEAR IN QUESTION AND THE DIRECTION IS A DIRE CTION WHICH THE APPELLATE OR REVISIONAL AUTHORITY, AS THE CASE MAY BE, IS EMPOWERED TO GIVE UNDER THE SECTIONS MENTIONED THEREIN. APPLYING THIS DECISION OF THE JURISDICTIONAL HIGH C OURT TO THE INSTANT CASE, IT IS CLEAR THAT THERE IS NO FINDING GIVEN BY AN APPELLATE, REVIEW OR REVISIONAL AUTHORITY THAT THE AMOUNT OF RS.4,40,653 OUGHT TO BE ASSESSED IN ASSESSMENT YEAR 1991-92, NOR IS THER E A DIRECTION BY SUCH AUTHORITIES TO DO SO. 9.0 ITO VS. MURALIDHAR BHAGWAN DAS 52 ITR 335 (SC) IN THIS CASE, IT IS SEEN THAT THE HON'BLE APEX COUR T HAS IN PAGE 345 THEREOF, OBSERVE D AS UNDER : THE WORDS IN CONSEQUENCE OF OR TO GIVE EFFECT TO DO NOT CREATE ANY DIFFICULTY, FOR THEY HAVE TO BE COLLATED WITH, AND CANNOT ENLARGE THE SC OPE OF THE FINDING OR DIRECTION UNDER THE PROVISO. IF THE SCOPE IS LIMITED, AS AFORESAID, THE SAID WORDS MUST BE RELATED TO THE SCOPE OF THE FINDING AND DIRECTIONS. IN VIEW OF THE ABOVE DEFINITION GIVEN BY THE HON'BL E APEX COURT, THERE NECESSARILY HAS TO BE A FINDING OR DIRECTION IN RESPECT OF A PARTICULAR ASSESSMENT YEAR AND CONSEQUENTIAL ACTION IF ANY MUST BE IN RESPECT OF THAT ASSESSMENT YEAR ALONE AND CANNOT EX TEND TO AN EARLIER OR SUBSEQUENT ASSESSMENT 11 ITA NO.722/BANG/2010 YEAR. AS REGARDS THE INSTANT CASE, AS THERE IS NO FINDING OR DIRECTION FOR ASSESSMENT YEAR 1991-92, T HE PROVISIONS OF SECTION 150(1), OF THE ACT CANNOT COM E INTO PLAY. 10. PEICO ELECTRONICS AND ELECTRICALS LTD. VS. DCIT 21 0 ITR 991 (CAL) THE HON'BLE CALCUTTA HIGH COURT, RELYING ON THE DE CISION OF THE HON'BLE HIGH COURT OF KARNATAKA (SUPRA) HAS HELD THAT IN ORDER TO ATTRACT THE PROVISIONS OF SECTION 150(1) OF THE ACT, IT IS NECESSARY THAT THE FINDING OR DIRECTION MUST BE IN RESPECT OF THE ASSESSMENT YEAR IN QUESTION. AS REGARDS THE INSTANT CASE, THE HON'BLE HIGH COURT OF KARNATAKA HAS GIVEN A FINDING AND A DIRECTION ONLY IN RESPECT OF ASSESSMENT YEAR 1990-91 AND THERE IS NONE FOR ASSESSMENT YEAR 1991-92. 11. CIT VS. LOYAL TEXTILES LTD. 231 ITR 573 (MAD) THE HON'BLE HIGH COURT OF MADRAS IN THE ABOVE CASE HELD THAT THE HIGH COURT HAS, IN ITS ADVISORY JURISDICTION, NO JURISDICTION TO GIVE ANY FINDING OR DIRECTION FOR AN EARLIER OR SUBSEQUENT Y EAR. IN VIEW OF THE ABOVE, DECISION OF THE HON'BLE HIGH COURT OF MADRAS, A HIGH COURT HAS NO JURISDICTION TO GIVE A FINDING OR DIRECTION IN RESPECT OF EITHER AN EARLIER ASSESSMENT YEAR OR A SUBSEQUENT ASSESSMENT YEAR. 12.1 KAUSALI VS. 6 TH ITO 155 ITR 739 (KAR) IN THE ABOVE CASE, THE JURISDICTIONAL HIGH COURT H AS CLEARLY HELD THAT BY VIRTUE OF THE PROVISIONS OF SECTION 153(3)(II) OF THE ACT, THE PERIOD OF LIM ITATION SHALL NOT APPLY WHERE ASSESSMENT, RE- ASSESSMENT OR RE-COMPUTATION IS MADE ON THE ASSESSE E OR ANY PERSON IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER U/S.250, 254, 260, 262, 263 OR 264 OF THE ACT OR IN AN ORDER OF ANY COURT IN A PROCEEDING OTHERWI SE THAN BY WAY OF APPEAL OR REFERENCE UNDER THE INCOME TAX ACT, 1961. 12.2 THUS IT FOLLOWS THAT IN RESPECT OF ANY APPEA L OR REFERENCE UNDER THIS ACT, THE ORDER SHOULD HAV E BEEN PASSED U/S.250, 254, 260, 262, 263 OR 264. IN THE INSTANT CASE, THE ORDER OF THE HON'BLE HIGH 12 ITA NO.722/BANG/2010 COURT IS PASSED U/S.260A OF THE ACT AND THIS SECTIO N FINDS NO MENTION AMONGST THE SECTIONS MENTIONED IN SECTION 153 (3)(II) OF THE ACT. IN FA CT IN THE REASONS RECORDED PRIOR TO THE ISSUE OF NOTICES U/S.148, THE ASSESSING OFFICER STATES THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT W.R.T SECTION 260A R.W.S. 153(3) OF THE ACT. IN VIEW OF THE ABOVE ORDER, WE ARE OF THE OPINION THAT THE PERIOD OF LIMITATION WOULD APPLY T O THE INSTANT CASE. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE HA S ALSO RELIED UPON SEVERAL JUDICIAL DECISIONS IN SUPPORT OF REVENUES CONTENTIONS. AMONG THE OTHER DECISIONS RELIED UPON, THE DR HAS RELIED ON TWO DECISIONS OF THE JURISDICTIONAL HIGH COURT. A PERU SAL OF THE FACTS OF THESE CASES INDICATE THAT THEY ARE DIFFERENT FROM THAT OF THIS ASSESSEE. 13.1 IN THE CASE OF POONJA ARCADE VS. ACIT REPORTED IN 326 ITR 123 (KAR), THE FACTS OF THE CA SE INDICATE THAT THERE WAS A CLEAR FINDING GIVEN BY TH E ITAT THAT A PARTICULAR INCOME FORMED PART OF THE INCOME OF ASSESSMENT YEAR 1985-86 AND THAT THE SAID INCOME BELONGED TO THE PARTNERSHIP FIRM. IT WAS BASED ON THIS CLEAR FINDING OF THE APPELLATE AU THORITY THAT THE IMPUGNED INCOME BELONGED TO THE IMPUGNED ASSESSEE AND THE IMPUGNED ASSESSMENT YEAR THAT THE ASSESSING OFFICER RESORTED TO THE PROVISIONS OF SECTION 150 OF THE ACT AND BROUGHT TH E SAID INCOME TO TAX IN THE HANDS OF THE FIRM FOR ASSESSMENT YEAR 1985-86. 13.2 IN THE CASE OF SPENCES HOTELS PVT. LTD VS. DCIT REPORTED IN 289 ITR 145 (KAR), IT IS EVIDENT FROM THE FACTS OF THE CASE THAT THE TRIBUNAL HAD CLEARLY GIVEN A FINDING THAT THE IMPUGNED AMOUNT CONSTITUTED INCOME OF ASSESSMENT YEAR 1996-97. IT WAS BASED ON THIS FINDING THAT THE ASSESSING OFFICER TOOK RECOURSE TO THE PROVISIONS OF SECTION 150(1) OF THE ACT, WHICH ACTION WAS HELD TO BE VALI D BY THE HON'BLE HIGH COURT. 13.3 IN THE INSTANT CASE OF THE ASSESSEE, THERE IS NO SPECIFIC FINDING OR DIRECTION GIVEN BY ANY O F THE APPELLATE AUTHORITIES THAT THE AMOUNT OF RS.4,40,65 3 SOUGHT TO BE TAXED, FORMED THE INCOME IN THE 13 ITA NO.722/BANG/2010 PERIOD RELEVANT TO ASSESSMENT YEAR 1991-92. THE ON LY CLEAR FINDING BY THE HON'BLE HIGH COURT IS THAT THE IMPUGNED AMOUNT DOES NOT CONSTITUTE INCOME FOR THE ASSESSMENT YEAR 1990-91. WE ARE, THEREFORE, OF THE VIEW THAT THE ABOVE DECISIONS OF THE JURISDICTIONAL HIGH COURT CITED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE DO NOT APPLY TO THE FAC TS OF THE INSTANT CASE OF THE ASSESSEE. 14.1 THE LEARNED D.R. HAS ALSO PLACED RELIANCE ON THE DECISION OF THE HON'BLE HIGH COURT OF CALCUTTA IN THE CASE OF HOPE (INDIA) LTD. VS. CIT R EPORTED IN 203 ITR 118. WE FIND THAT THIS DECISION HAS BEEN RENDERED EARLIER TO THE DECISION OF THE VE RY SAME HIGH COURT IN THE CASE OF PIECO ELECTRONICS & ELECTRICALS LTD (SUPRA) RELIED ON BY THE ASSESSEE . IT IS ALSO SEEN THAT THE JUDGEMENT IN THE CASE O F PIECO ELECTRONICS & ELECTRICALS (SUPRA) HAS BEEN RE NDERED FOLLOWING THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF MURALIDHAR BHAGAWAN DAS (SUPRA ) AND ALSO BY REFERRING TO THE JUDGEMENT OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CONS OLIDATED COFFEE LTD (SUPRA) AND WE FIND THAT BOTH THESE DECISIONS HAVE BEEN RELIED UPON BY THE ASSESS EE IN SUPPORT OF ITS CONTENTION WHEREAS THE HON'BLE HIGH COURT OF CALCUTTA IN THE CASE OF HOPE INDIA LTD. (SUPRA) HAS NOT CONSIDERED ANY JUDGMENT OF ANY COURT WHILE DECIDING THE CASE. 14.2 ALL THE OTHER CASES CITED BY THE LEARNED DE PARTMENTAL REPRESENTATIVE AS ALSO THE THREE CASES DISCUSSED ABOVE, HAVE BEEN PERUSED AND WE ARE OF THE OPINION THAT THEY WOULD COME INTO PLAY IF AND ONLY IF IT IS HELD THAT THE ORDER OF THE HON'BL E HIGH COURT OF KARNATAKA, IN THE ASSESSEES CASE, PASSED U/S.260A OF THE ACT, IS IN THE NATURE OF A D IRECTION OR IS SAID TO CONTAIN A FINDING THAT THE IMPUGNED AMOUNT OF RS.4,40,653 DID CONSTITUTE INCOM E FOR ASSESSMENT YEAR 1991-92 AND HENCE WOULD NOT COME TO THE RESCUE OF REVENUE IN THE GIVE N FACTS AND CIRCUMSTANCES. 15. IN VIEW OF THE DECISION OF THE HON'BLE APEX COURT IN RAJINDER NATHS CASE (SUPRA), AND ALSO THE DECISION OF THE VARIOUS HIGH COURTS RELIED UPON BY THE ASSESSEE AND PARTICULARLY THE DECISIONS OF THE 14 ITA NO.722/BANG/2010 JURISDICTIONAL HIGH COURT CITED ABOVE, IN OUR CONSI DERED OPINION, IT IS CLEAR THAT THE ORDER PASSED BY THE HON'BLE HIGH COURT IN THE ASSESSEES CASE FOR A SSESSMENT YEAR 1990-91 IS NOT IN THE NATURE OF A DIRECTION AND HENCE THE PROVISION OF SECTION 150(1) OF THE ACT WILL NOT BE APPLICABLE TO THE ASSESSEE S CASE. IT IS, THEREFORE, HELD THAT THE ORDER OF THE HON'BLE HIGH COURT OF KARNATAKA RENDERED IN ITA NO.180 OF 2002, RELIED ON THE REVENUE, IS NOT A DIR ECTION AS DEFINED BY THE HON'BLE APEX COURT IN RAJINDER NATHS CASE (SUPRA) AND THEREFORE THE PROV ISION OF SECTION 150(1) OF THE ACT WILL NOT OPERATE IN THIS CASE AND HENCE THE QUESTION OF GOING INTO T HE OTHER ASPECTS OF THE MATTER IN AS MUCH AS THE COMPLIANCE OF THE PROVISIONS OF SECTIONS 147, 148, 151(2) OF THE ACT DOES NOT ARISE. ALL CONTENTIONS OF BOTH PARTIES ARE KEPT OPEN IN THE EVENT THE NEED ARISES IN FUTURE ON ACCOUNT OF ANY ORDER OF THE HIGHER COURTS ON THIS ORDER. 16. IN SHORT : (I) THE ORDER OF THE HON'BLE HIGH COURT, RELIED ON BY REVENUE, IS NOT A DIRECTION AS DEFINED BY THE HON'BLE APEX COURT IN THE CASE OF RAJINDER NATH (SU PRA) AND THEREFORE THE PROVISIONS OF SECTION 150(1) OF THE ACT WILL NOT OPERATE IN THIS CASE. (II) THE PROVISIONS OF SECTIONS 147, 148, 149 AND 151(2) OF THE ACT APPLY TO THIS CASE FOR ASSESSMENT YEAR 1991-92. 17. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2012. SD/- SD/- (P. MADHAVI DEVI) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 29.06.2012. *REDDY GP 15 ITA NO.722/BANG/2010 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - A BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDE R SR. PRIVATE SECRETARY, ITAT, BANGALORE .