M/s Charam Vincom Pvt. Ltd., Kolkat V. I.T.O.,Ward-3(1), Kolkata

ITA 758/KOL/2019

• Counselvise Citation: [2020] 112 COUNSELVISE.COM (IT) 0170 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 12-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: S M SURANA
• Keywords: Revision of order; Question of law; Set aside
• Section: 143(3); 147; 148; 263

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( . . , . . , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A.L. SAINI, AM] I.T.A. NO. 758/KOL/2019 ASSESSMENT YEAR: 2009-10 M/S. CHARM VINCOM PVT. LTD. VS. ITO, WARD-3(1), KOLKATA. (PAN: AADCC 4524 B) APPELLANT RESPONDENT FOR THE APPELLANT SH. S.M. SURANA, ADV. FOR THE RESPONDENT DR. P.K. SRIHARI, CIT(DR) DATE OF HEARING 17.12.2019 DATE OF PRONOUNCEMENT 01.01.2020 ORDER PER SHRI A.T.VARKEY, JM : THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINS T THE ACTION OF THE CIT(A)-1, KOLKATA DATED 25.03.2019 U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) FOR ASSESSMENT YEAR (HEREINAFTER AY) 2009-10. 2. FIRST GROUND OF THE ASSESSEE IS AS UNDER: FOR THAT THE LD. PR. CIT ERRED IN INVOKING THE PRO VISIONS OF SEC. 263 WHEN THE ORIGINAL ASSESSMENT ITSELF PASSED U/S 147/143(3) WAS BAD IN LAW AND AB-INITIO-VOID AND SUCH ORDER CANNOT BE SET ASIDE U/S 263 SINCE THE REOPENING OF THE ASSESSMENT U/S 147 ITSELF WAS BAD IN LAW. 3. BRIEF FACTS OF THE CASE PERTAINING TO THE GROUND NO. 1 IS AS FOLLOWS. THE AO IN THE ASSESSMENT ORDER NOTES THAT THE CASE WAS REOPEN ED U/S 147 OF THE ACT WITH PRIOR APPROVAL FROM LD. ADDL. CIT, RANGE-3, KOLKATA IN AC CORDANCE WITH PROVISION OF SECTION 151 OF THE ACT. THEREAFTER HE NOTES THAT HE ISSUED NOTICE U/S 148 OF THE ACT ON 30.03.2016 AFTER RECORDING REASONS ON THE NOTE SHEE T AND THE NOTICE WAS DULY SERVED UPON THE ASSESSEE AND THEREAFTER COMPLETED THE ASSE SSMENT AFTER TRANSFERRING IT TO ITO, WARD-3(1) PURSUANT TO THE ORDER PASSED U/S 120 BY P R. CIT-1, KOLKATA AND THEREAFTER 2 I.T.A. NO. 758/KOL/2019 ASSESSMENT YEAR: 2009-10 M/S. CHARM VINCOM PVT. LTD. THE RE-ASSESSMENT ORDER WAS PASSED ON 08.12.2016. A CCORDING TO THE LD. COUNSEL FOR THE ASSESSEE SH. S.M. SURANA, THE AO HAS ISSUED NOT ICE ON 30.03.2016 U/S 148 OF THE ACT TO THE ASSESSEE CONVEYING HIS DESIRE TO REOPEN THE ASSESSMENT OF AY 2009-10 WHICH MEANS THE REOPENING NOTICE WAS ISSUED BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE LD. AR CLARIFIED THAT SINCE THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION IS AY 2009-10, FOUR YEARS EXPI RED FROM THE END OF THE RELEVANT ASSESSMENT YEAR ON 31.03.2014. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, SINCE IT IS A CASE WHEREIN THE AO DESIRES TO REOPEN AFTER TH E EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, HE CO ULD HAVE ISSUED NOTICE U/S 148 OF THE ACT ONLY AFTER TAKING APPROVAL FROM EITHER PR. CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PR. COMMISSIONER OR COMMISSIONER. A CCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE AO OUGHT NOT TO HAVE ISSUED A NY NOTICE U/S 148 OF THE ACT WITHOUT EITHER OF THESE OFFICERS RECORDED THEIR SATISFACTIO N ON THE REASONS RECORDED BY THE AO THAT IT IS A FIT CASE FOR ISSUE OF RE-OPENING NOTIC E AS ENVISAGED IN SECTION 151 OF THE ACT. HE DREW OUR ATTENTION TO SECTION 151 OF THE AC T WHICH READS AS FOLLOWS: 151. SANCTION FOR ISSUE OF NOTICE.(1) NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE PRINCIPAL CHIE F COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIO NER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. 4. WE NOTE THAT ADMITTEDLY, THE APPROVAL U/S 151(1) OF THE ACT, IN THE CASE ON HAND HAS BEEN GRANTED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE 3 AND NOT BY THE COMMISSIONER OF INCOME TAX AS MANDATED UNDER THE ACT. HENCE THE REOPENING IN QUESTION IS BAD IN LAW AS HELD BY THE HONBLE BO MBAY HIGH COURT IN THE CASE OF GHANSHYAMDAS KHABRANI VS. ACIT 346 ITR 443, WHEREIN IT HAS BEEN HELD AS FOLLOWS:- THE SECOND GROUND UPON WHICH THE REOPENING IS SOUG HT TO BE CHALLENGED IS THAT THE MANDATORY REQUIREMENT OF SECTION 151(2) HAS NOT BEE N FULFILLED. SECTION 151 REQUIRES A SANCTION TO BE TAKEN FOR THE ISSUANCE OF A NOTICE U NDER SECTION 148 IN CERTAIN CASES. IN THE INSTANT CASE, AN ASSESSMENT HAD NOT BEEN MADE UNDER SECTION 143(3) OR SECTION 147 FOR ASSESSMENT YEAR 2004-05. HENCE, UNDER SUB-SECTION ( 2) OF SECTION 151, NO NOTICE CAN BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER WH O IS BELOW THE RANK OF JOINT COMMISSIONER AFTER THE EXPIRY OF 4 YEARS FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUC H NOTICE. THE EXPRESSION 'JOINT COMMISSIONER' IS DEFINED IN SECTION 2(28C) TO MEAN A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME-TAX OR AN ADDITIONAL COMMISS IONER OF INCOME-TAX UNDER SECTION 117(1). IN THE INSTANT CASE, THE RECORD BEFORE THE COURT INDICATES THAT THE ASSESSING 3 I.T.A. NO. 758/KOL/2019 ASSESSMENT YEAR: 2009-10 M/S. CHARM VINCOM PVT. LTD. OFFICER SUBMITTED A PROPOSAL ON 28-3-2011 TO THE CO MMISSIONER (APPEALS) THROUGH THE ADDITIONAL COMMISSIONER. ON 28-3-2011, THE ADDITION AL COMMISSIONER FORWARDED THE PROPOSAL TO THE COMMISSIONER. ON THIS, A COMMUNICATION WAS ISSUED ON 29-3-2011 FR OM THE OFFICE OF THE COMMISSIONER (1) CONVEYING APPROVAL TO THE PROPOSAL SUBMITTED BY THE ASSESSING OFFICER. THERE IS MERIT IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE THAT THE REQUIREMENT OF SECTION 151(2) COULD HAVE ONLY BEEN FULFILLED BY THE SATISFACTION OF THE JOINT COMMISSIONER THAT THIS IS A FIT CASE FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148. SECTION 151(2) MANDATES THAT THE SATISFACTION HAS TO BE OF THE JOINT COMMISSIONER. T HAT EXPRESSION HAS A DISTINCT MEANING BY VIRTUE OF THE DEFINITION IN SECTION 2(28C). THE COMMISSIONER IS NOT A JOINT COMMISSIONER WITHIN THE MEANING OF SECTION 2(28C). IN THE INSTANT CASE, THE ADDITIONAL COMMISSIONER FORWARDED THE PROPOSAL SUBMITTED BY TH E ASSESSING OFFICER TO THE COMMISSIONER. THE APPROVAL WHICH HAS BEEN GRANTED I S NOT BY THE ADDITIONAL COMMISSIONER BUT BY THE COMMISSIONER. THERE IS NO S TATUTORY PROVISION UNDER WHICH A POWER TO BE EXERCISED BY AN OFFICER CAN BE EXERCISE D BY A SUPERIOR OFFICER. WHEN THE STATUTE MANDATES THE SATISFACTION OF A PARTICULAR F UNCTIONARY FOR THE EXERCISE OF A POWER, THE SATISFACTION MUST BE OF THAT AUTHORITY. WHERE A STATUTE REQUIRES SOMETHING TO BE DONE IN A PARTICULAR MANNER, IT HAS TO BE DONE IN THAT M ANNER. [PARA 6] ONCE THE COURT HAS COME TO THE CONCLUSION THAT THER E WAS NO COMPLIANCE OF THE MANDATORY REQUIREMENTS OF SECTIONS 147 AND 151(2), THE NOTICE REOPENING THE ASSESSMENT CANNOT BE SUSTAINED IN LAW. [PARA 7] 5. UNDER SIMILAR CIRCUMSTANCES, THE LUCKNOW BENCH O F THE ITAT IN THE CASE OF BALBIR SINGH, BEING ITA NO. 880/K/2014, DT. 13/03/2 015, WHEREIN THE JUDGEMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. SPLS S IDDHARTHA LTD. [2012] 345 ITR 223 (DELHI) WAS REFERRED, AND WHEREIN IT HAS BEEN H ELD AS FOLLOWS:- IT WAS APPARENT FROM RECORDS THAT THE ASSESSING OF FICER HAD SPECIFICALLY SOUGHT THE APPROVAL OF THE COMMISSIONER ONLY. THEREFORE, IT CO ULD NOT BE SAID THAT THE JOINT COMMISSIONER/ADDITIONAL COMMISSIONER HAD GRANTED TH E APPROVAL. FURTHER, NO DOUBT, THE FILE WAS ROUTED THROUGH ADDITIONAL COMMISSIONER . HOWEVER, HE ALSO, IN TURN FORWARDED THE SAME TO THE COMMISSIONER. [PARA 4] IT IS CLEAR THAT THE ADDITIONAL CIT DID NOT APPLY H IS MIND OR GAVE ANY SANCTION. INSTEAD, HE REQUESTED COMMISSIONER TO ACCORD THE APPROVAL. I T, THUS, CANNOT BE SAID THAT IT IS AN IRREGULARITY CURABLE UNDER SECTION 292B. [PARA 5] SECTION 116 ALSO DEFINES THE INCOME-TAX AUTHORITIES AS DIFFERENT AND DISTINCT AUTHORITIES. SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXE RCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN THE SPECIFIE D CIRCUMSTANCES. IF POWERS CONFERRED ON A PARTICULAR AUTHORITY ARE ARROGATED BY OTHER AU THORITY WITHOUT MANDATE OF LAW, IT WILL CREATE CHAOS IN THE ADMINISTRATION OF LAW AND HIERA RCHY OF ADMINISTRATION WILL MEAN NOTHING. SATISFACTION OF ONE AUTHORITY CANNOT BE SU BSTITUTED BY THE SATISFACTION OF THE OTHER AUTHORITY. IT IS TRITE THAT WHEN A STATUTE RE QUIRES, A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNER ALONE AND T HE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER. [PARA 7] THUS, IF AUTHORITY IS GIVEN EXPRESSLY BY AFFIRMATIV E WORDS UPON A DEFINED CONDITION, THE EXPRESSION OF THAT CONDITION EXCLUDES THE DOING OF THE ACT AUTHORISED UNDER OTHER CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS ALSO EST ABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO RECORD HIS/HER SATISFACTION ON ANY PARTICULAR 4 I.T.A. NO. 758/KOL/2019 ASSESSMENT YEAR: 2009-10 M/S. CHARM VINCOM PVT. LTD. ISSUE, THEN IT IS THAT AUTHORITY ALONE WHO SHOULD A PPLY HIS/HER INDEPENDENT MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY CONDITIO N IS THAT THE SATISFACTION RECORDED SHOULD BE 'INDEPENDENT' AND NOT 'BORROWED' OR 'DICT ATED' SATISFACTION. LAW IN THIS REGARD IS NOW WELLSETTLED. [PARA 8] THE APEX COURT IN THE CASE OF ANIRUDH SINHJI KARAN SINHJI JADEJA V. STATE OF GUJARAT [1995] 5 SCC 302 HAS HELD THAT IF A STATUTORY AUTHO RITY HAS BEEN VESTED WITH JURISDICTION, HE HAS TO EXERCISE IT ACCORDING TO ITS OWN DISCRETI ON. IF DISCRETION IS EXERCISED UNDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORI TIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. [PARA 9] THEREFORE, THE TRIBUNAL HAS RIGHTLY DECIDED THE LEG AL ASPECT, KEEPING IN VIEW WELLESTABLISHED PRINCIPLES OF LAW LAID DOWN IN CATE NA OF JUDGMENTS INCLUDING THAT OF THE SUPREME COURT. [PARA 10] NO QUESTION OF LAW ARISES. THIS APPEAL IS ACCORDING LY DISMISSED. [PARA 11] 6. WE NOTE THAT THE HONBLE SUPREME COURT IN THE CA SE OF RAMCHANDRA KESHAV ADKE & ORS VS GOVIND JOTI CHAVARE AND ORS 1975 AIR 915 (SC) HELD THAT WHERE A POWER IS GIVEN TO DO A CERTAIN THING IN A CERTAIN W AY, THE THING MUST BE DONE IN THAT WAY OR NOT AT ALL AND THAT OTHER METHODS OF PERFORM ANCE ARE NECESSARILY FORBIDDEN. WE NOTE THAT AS PER SUB-SECTION (1) OF SECTION 151, NO NOTICE COULD HAVE BEEN ISSUED U/S 148 OF THE ACT BY AN AO, AFTER THE EXPIRY OF FOUR Y EARS FROM THE END OF RELEVANT ASSESSMENT YEAR UNLESS THE PR. CHIEF COMMISSIONER O R CHIEF COMMISSIONER OR PR. COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE R EASONS RECORDED BY SUCH AO, THAT IT IS A FIT CASE FOR ISSUE OF SUCH NOTICE. SO WHEN THE STATUTE MANDATES THE SATISFACTION OF A PARTICULAR FUNCTIONARY/AUTHORITY FOR THE EXERCISE OF A POWER, THE SATISFACTION MUST BE OF THAT AUTHORITY. SO SINCE THE SATISFACTION/APPROV AL IS NOT OF ANY OF THE AUTHORITIES GIVEN IN SUB-SECTION (1) OF SECTION 151 OF THE ACT, THE NOTICE ISSUED BY AO U/S 148 OF THE ACT IS WITHOUT JURISDICTION AS A CONSEQUENCE TH E RE-ASSESSMENT FRAMED BY AO DATED 05.12.2016 IS NULL IN THE EYES OF LAW AND BAD IN LAW. SINCE THE RE-ASSESSMENT ORDER DATED 05.12.2016 ITSELF IS BAD IN LAW AND IS NON-EST IN THE EYES OF LAW, SINCE THE AO COULD NOT HAVE ISSUED THE NOTICE INTIMATING THE REOPENING U/S 148 WITHOUT THE APPROVAL OF THE COMMISSIONER OR AUTHORITIES SPECIFI ED IN SECTION 151(1) OF THE ACT, THE AO DOES NOT HAVE THE JURISDICTION TO ISSUE THE NOTI CE U/S 148 OF THE ACT. THEREFORE THE AOS ORDER DATED 05.12.2016 ITSELF IS WITHOUT JURIS DICTION AND IS NULL IN THE EYES OF LAW. 5 I.T.A. NO. 758/KOL/2019 ASSESSMENT YEAR: 2009-10 M/S. CHARM VINCOM PVT. LTD. 7. THE IMPUGNED ORDER OF THE PR. CIT WHICH IS CHALL ENGED BEFORE US IS ADMITTEDLY STEMMING FROM THE ORDER OF THE AO DATED 05.12.2016 WHICH WE HAVE ALREADY HELD TO BE NULL IN THE EYES OF LAW. THEREFORE ALL CONSEQUEN TIAL ACTION ON THE BASIS OF THE ORDER OF AO DATED 05.12.2016 IS ALSO NULL IN THE EYES OF LAW. THIS IS BASED ON THE LEGAL MAXIM SUBLATO FUNDAMENTO CREDIT OPUS MEANING IN C ASE A FOUNDATION IS REMOVED, THE SUPER STRUCTURE FALLS. IN BADRINATH VS. TAMILN ADU AIR 2000 SC 3243 THE HONBLE APEX COURT HELD THAT ONCE THE BASIS OF PROCEEDINGS IS GONE ALL CONSEQUENTIAL ORDER AND ACTS WOULD FALL IN THE GROUND AUTOMATICALLY WHICH I S APPLICABLE TO JUDICIAL AND QUASI JUDICIAL PROCEEDINGS. 8. FOR TAKING THIS DECISION WE ALSO RELY ON RATIO L AID IN THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CLASSIC FLOUR & FOOD PROCESSING VS. CIT IN ITA NOS. 764 TO 766/KOL/2014 DTD. 05.04.2017 AND M/S. D.D. DEPOSITS & ADVANCES PVT. LTD. VS. CIT IN ITA NO. 1214/KOL/2013 DTD. 11.05.2018 . 9. THEREFORE IN THE LIGHT OF THE DISCUSSION SUPRA, WE QUASH THE IMPUGNED ORDER OF THE LD. PR. CIT DATED 28.03.2019 PASSED U/S 263 OF THE ACT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2020 SD/- (A.L. SAINI) SD/- (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST JANUARY, 2020 BIDHAN (P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. CHARM VINCOM PVT. LTD., 46, BIPLAB IBARIN GHOSH SARANI, KOLKATA-700 054. 2. RESPONDENT ITO, WARD-3(1), KOLKATA. 3. CIT(A)- 1, KOLKATA. (SENT THROUGH E-MAIL) 4. CIT 5. DR, KOLKATA BENCHES, KOLKATA. (SENT THROUGH E-MAIL) /TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES