Sh Hari Singh, Ex-MLA, Zira V. The Income-tax Officer, Ferozepur

MA 76/ASR/2014

• Counselvise Citation: [2018] 111 COUNSELVISE.COM (IT) 1487 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 5 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-08-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM DEB
• Assessee Lawyers: P N ARORA
• Keywords: Rectification of order; Audi alteram partem
• Section: 54F; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER M. A. NO. 76/(ASR)/2014 (ARISING OUT OF M.A. NO.09(ASR)/2013) (ARISING OUT OF I.T.A NO.394(ASR)/2013) ASSESSMENT YEAR: 2007-08 HARI SINGH, EX.-MLA, MAKHU ROAD, ZIRA. [PAN: AYOPS 9612C] VS. INCOME TAX OFFICER, RANGE III(2), FEROZEPUR (APPLICANT) (RESPONDENT) APPLICANT BY : SH. P. N. ARORA (ADV.) RESPONDENT BY : SH. GAUTAM DEB (D.R.) DATE OF HEARING : 10.08.2018 DATE OF PRONOUNCEMENT : 05.11.2018 ORDER PER SANJAY ARORA, AM THIS IS A MISCELLANEOUS APPLICATION (MA) BY THE ASS ESSEE IN RESPECT OF AN ORDER U/S. 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) BY THE TRIBUNAL DISPOSING THE ASSESSEES MA (NO. 09/ASR/20 13, DATED 15.4.2014/COPY ON RECORD) ARISING IN CONSEQUENCE TO THE ORDER U/S. 25 4(1) BY THE TRIBUNAL DISMISSING THE ASSESSEES APPEAL (IN ITA NO. 394/ASR/2013, DAT ED 31.10.2013/COPY ON RECORD). THE SOLE ISSUE RAISED BY THE ASSESSEE PER ITS FIRST MA WAS THAT GROUNDS 2 AND 3 OF HIS APPEAL, AGITATING THE DISALLOWANCE OF DEDUCTION U/S. 54F, WERE NOT ADJUDICATED BY THE TRIBUNAL WHILE DISPOSING HIS APPEAL. THE TRI BUNAL, AFTER REPRODUCING THE SAID GROUNDS IN ITS RECTIFICATION ORDER DATED 15.4.2014 (SUPRA) (AT PARA 1 THEREOF), NOTING MA NO.76/ASR/2014 (AY: 2007-08) (ARISING OUT OF MA NO.09 /(ASR)/2013) (ARISING OUT OF ITA NO. 394 /(ASR)/2013) HARI SINGH V. ITO 2 THE ARGUMENTS BY THE OPPOSING SIDES (AT PARA 2 AND 3 OF ITS ORDER), CONCLUDED VIDE PARA 4 OF ITS ORDER, WHICH READS AS UNDER: 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ISSUE RAISED IN THE MISC. APPLICATION BY THE ASSESSEE, HAS ALREA DY BEEN DEALT WITH IN OUR ORDER DATED 31.10.2013 AND NOW THE ISSUE RAISED BY THE LD. COUN SEL FOR THE ASSESSEE TANTAMOUNT TO REVIEW OF OUR ORDER, WHICH IS NOT PERMISSIBLE UNDER THE LAW. THEREFORE, THE MISC. APPLICATION FILED BY THE ASSESSEE IS DISMISSED. 2. THE ASSESSEE PER HIS INSTANT PETITION HAS REITER ATED THAT THE GROUNDS 2 AND 3 OF HIS APPEAL REMAIN YET UNDISPOSED AS ONE OF THE G RIEVANCE PER THE SAID GROUNDS IS THAT THE FIRST APPELLATE AUTHORITY HAD DIRECTED WIT HDRAWAL OF DEDUCTION U/S. 54F, ALLOWED AT RS.66 LACS BY THE ASSESSING OFFICER (AO) , WITHOUT ISSUING ANY ENHANCEMENT NOTICE TO THE ASSESSEE, PROVIDING HIM T HUS AN OPPORTUNITY TO STATE HIS CASE IN THE MATTER. THE LD. COUNSEL SH. ARORA, WOUL D TOWARD THIS TAKE US, IN SERITAM, THROUGH THE TRIBUNALS ORDERS WHERE IT CONSIDERED T HE ASSESSEES SAID GROUNDS, AND THEN THROUGH THE ORDER BY THE FIRST APPELLATE AUTHO RITY (BOTH ON RECORD). IN FACT, THE ADJUDICATION BY THE TRIBUNAL IS BY WAY OF CONCURREN CE WITH THE FINDINGS BY THE LD. FIRST APPELLATE AUTHORITY, WHOSE FINDING/S IT REPRO DUCES FOR THE SAKE OF CONVENIENCE. THE RELEVANT PART OF THE TRIBUNALS ORDER U/S. 254( 1) SUPRA READS AS UNDER: 7. AS REGARDS GROUND WITH REGARD TO DISALLOWANCE O F DEDUCTION U/S 54F TO THE TUNE OF RS.66.00 LACS, WE CONCUR WITH THE VIEWS OF LD. CIT( A) AT PAGE 4 OF HIS ORDER, WHICH FOR THE SAKE OF CONVENIENCE ARE REPRODUCED AS UNDER: I HAVE PERUSED THE ASSESSMENT ORDER AND I FIND THA T AS PER THE WRITTEN SUBMISSIONS OF THE A/R OF THE APPELLANT A SUM OF RS.70,09,220/- HAS BE EN DECLARED AS COST OF CONSTRUCTION, OF THE HOUSE AT ZIRA AND RS.1,39,66,942/- HAS BEEN DECLARE D AS THE COST OF LAND AS PER THE VALUATION OFFICER. IT DOES NOT TRANSPIRE FROM THE RECORD THAT IN WHICH PERIOD THE APPELLANT CONSTRUCTED THE HOUSE AND THE RECORDS ARE ALSO SILENT REGARDING THE FACT THAT WHETHER THE APPELLANT INCURRED ANY EXPENDITURE ON PURCHASE OF LAND. BECAU SE NEITHER THE APPLICATION OF THE APPELLANT ADDRESSED TO TEHSILDAR DATED 16.03.2011 N OR THE CERTIFICATE OF THE EXECUTIVE ENGINEER, PWD, B&R, ZIRA DATED 05.07.2011 STATES AB OUT THESE FACTS. THE A/R OF THE APPELLANT HAS STATED IN HIS SUBMISSIONS THAT DATED 16.12.2010 FURNISHED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND REPRODUCED BY THE AO IN PARA 5 AND PAGE 5 OF THE ASSESSMENT ORDER, THAT THE MAP OF THE HOUSE AS GOT PASSED FROM THE MUNICIPAL COMMITTEE ZIRA MA NO.76/ASR/2014 (AY: 2007-08) (ARISING OUT OF MA NO.09 /(ASR)/2013) (ARISING OUT OF ITA NO. 394 /(ASR)/2013) HARI SINGH V. ITO 3 ON 18.05.2007 BUT NO SUCH DOCUMENT HAS BEEN PLACED IN THE PAPER BOOK. THE YEAR OF CONSTRUCTION IS VERY IMPORTANT FOR CLAIMING THE DED UCTION U/S 5AF. IN MY OPINION, THE AO HAS ALLOWED THE DEDUCTION U/S 54F WITHOUT APPLICATION O F MIND AND PROPER INVESTIGATION DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. BECAUSE O F THE POWERS VESTED WITH THE CIT(APPEAL) IN SECTION 251(1) (A) WHICH ALLOWS THE ENHANCEMENT OF THE ASSESSMENT, I DIRECT THE AO TO DISALLOW THE DEDUCTION OF RS.66,00,000/- ALLOWED U/ S. 54F. THIS GROUND OF APPEAL IS DISMISSED. 7.1. ACCORDINGLY, IN VIEW OF OUR FINDINGS HEREINABO VE, ALL THE GROUNDS OF ASSESSEE ARE DISMISSED. CLEARLY, THEREFORE, IT WAS ARGUED BY SH. ARORA, THE ADJUDICATION BY THE LD. CIT(A) (THE FIRST APPELLATE AUTHORITY) IS ON MERITS, WHICH FINDS CONFIRMATION BY THE TRIBUNAL. THE ASSESSEES GRIEVANCE OF NOT BEING ALLOWED OPPOR TUNITY TO STATE HIS CASE BEFORE THE FIRST APPELLATE AUTHORITY IS NOT ADDRESSED BY T HE TRIBUNAL EITHER PER ITS ORDER U/S. 254(1) (SUPRA) OR U/S. 254(2) (SUPRA). IT WAS ACCOR DINGLY PRAYED THAT THE ASSESSEES APPEAL BE RESTORED IN RESPECT OF THE SAID GROUNDS O R, IN THE ALTERNATIVE, THE MATTER RESTORED BACK TO THE FILE OF THE FIRST APPELLATE AU THORITY FOR THE PURPOSE. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) COULD NOT REBUT TH E ASSESSEES CLAIM THAT HIS GRIEVANCE OF NOT BEING ALLOWED OPPORTUNITY BY THE L D. CIT(A) BEFORE EFFECTING THE IMPUGNED ENHANCEMENT REMAINS UN-ADJUDICATED BY THE TRIBUNAL DESPITE BEING SPECIFICALLY RAISED BEFORE IT PER HIS GROUNDS IN AP PEAL AS WELL AS THE APPLICATION U/S. 254(2). 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 MUCH LESS IN THE ORDER BY THE FIRST APPELLATE A UTHORITY, WE DO NOT FIND MENTION OF ANY ARGUMENT BY THE ASSESSEE EVEN BEFORE THE TRIBUNAL WHICH SHOULD HAVE, AT ANY RATE, REQUIRED THE ASSESSEE TO STATE H IS CASE, MEETING THE PRINCIPLE OF AUDI ALTERAM PARTEM , WHICH IS WHAT THE NOTICE OF ENHANCEMENT BY THE FI RST APPELLATE AUTHORITY SEEKS TO SATISFY. WE ARE THUS I NCLINED TO AGREE WITH THE ASSESSEE THAT THERE HAS BEEN, TO THAT EXTENT, A MISTAKE BY T HE TRIBUNAL IN-AS-MUCH AS WHICH MA NO.76/ASR/2014 (AY: 2007-08) (ARISING OUT OF MA NO.09 /(ASR)/2013) (ARISING OUT OF ITA NO. 394 /(ASR)/2013) HARI SINGH V. ITO 4 HAS FAILED TO ADDRESS THE GRIEVANCE OF THE ASSESSEE PER GDS. 2 & 3 OF HIS APPEAL IN- SO-FAR AS IT RELATES TO THE NON-GRANT OF THE OPPORT UNITY BY THE FIRST APPELLATE AUTHORITY BEFORE EFFECTING THE ENHANCEMENT IMPUGNED PER THE SAID GDS. THE ADJUDICATION ON MERITS BY THE LD. CIT(A), WHICH STA NDS UPHELD BY THE TRIBUNAL, AND WHICH IS WHAT WITHOUT DOUBT THE MATTER IN SUBSTANCE IS, COULD FOLLOW ONLY AFTER HEARING THE PARTIES, EVEN AS THE ASSESSEE ADMITTEDL Y HAS NOT BEEN ALLOWED OPPORTUNITY TO DO SO AT ANY STAGE. 3.2 WE, IN VIEW OF THE FOREGOING, ONLY CONSIDER IT PROPER THAT, ADMITTING THE MISTAKE BY THE TRIBUNAL, I.E., AS HIGHLIGHTED BY TH E LD. COUNSEL, THE APPEAL IS RESTORED BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY F OR PROVIDING AN OPPORTUNITY TO THE ASSESSEE TO STATE HIS CASE QUA EACH OF THE SEVERAL OBJECTIONS TO THE DEDUCTION U/ S. 54F AS RAISED BY THE SAID AUTHORITY, ALSO CONSIDERI NG EVIDENCE, IF ANY, THAT MAY BE LED BY THE ASSESSEE IN THIS REGARD, AND DECIDE IN A CCORDANCE WITH LAW PER A SPEAKING ORDER. WHILE ORDINARILY WE WOULD FIRST RESTORE THE APPEAL FOR BEING DECIDED BY THE TRIBUNAL, THIS MAY NOT BE NECESSARY IN THE INSTANT CASE AS OUR ORDER IS ITSELF BASED ON THE FINDING OF THE SAID GROUNDS, TO THE EXTENT THEY RAISE THE ISSUE OF NON-ISSUE OF ENHANCEMENT NOTICE BY THE FIRST APPELLATE AUTHORITY , I.E., QUA THE WITHDRAWAL OF THE SAID DEDUCTION, AS VALID. WHERE NOT VALID, IT MAY B E APPRECIATED, THE RESTORATION OF APPEAL (IN THE RELEVANT GROUNDS), EVEN IF UNDISPOSE D, WOULD BE OF NO RELEVANCE OR CONSEQUENCE. NO USEFUL PURPOSE WOULD THEREFORE, I.E ., GIVEN THIS FINDING, BE SERVED IN RESTORING THE APPEAL FIRST BEFORE THE TRIBUNAL, THE RECTIFICATION OF WHICH WOULD NECESSARILY ENTAIL, EVEN AS ARGUED BY THE LD. COUNS EL FOR THE ASSESSEE, RESTORATION BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY F OR COMPLYING WITH THE PROCEDURAL LAW IN THE MATTER. THE FIRST APPELLATE AUTHORITY SH ALL PROVIDE DUE OPPORTUNITY TO THE ASSESSEE TO STATE HIS CASE QUA EACH OF THE SEVERAL OBJECTIONS TO THE DEDUCTION U/ S. 54F AS RAISED BY THE SAID AUTHORITY, ALSO CONSIDERI NG EVIDENCE, IF ANY, THAT MAY BE MA NO.76/ASR/2014 (AY: 2007-08) (ARISING OUT OF MA NO.09 /(ASR)/2013) (ARISING OUT OF ITA NO. 394 /(ASR)/2013) HARI SINGH V. ITO 5 LED BY THE ASSESSEE IN THIS REGARD, AND DECIDE IN A CCORDANCE WITH LAW PER A SPEAKING ORDER. 3.3 BEFORE PARTING WE MAY, HOWEVER, MEET AN ARGUMEN T VEHEMENTLY RAISED BY THE REVENUE DURING HEARING. THAT IS, THAT THERE CAN BE NO MISCELLANEOUS APPLICATION (MA) AGAINST A MA, SO THAT THE INSTANT MA, BEING TH E SECOND PETITION, IS NOT MAINTAINABLE AT THE THRESHOLD. WE DO NOT THINK THAT ANY SUCH BLANKET PROPOSITION CAN IN LAW BE HELD OUT. A RECTIFICATION ORDER ONLY SEEKS TO ELIMINATE A MISTAKE, APPARENT FROM RECORD, THAT IS ALLEGED TO INFORM AN ORDER SOUGHT TO BE RECTIFIED. THE SAME, I.E., A RECTIFICATION ORDER, AS U/S. 254(2), HAS NO LOCUS STANDI OF ITS OWN, AND MERGES WITH THE ORDER U/S. 254(1), MODIFYING THE LA TTER TO THE EXTENT OF MISTAKE AS RECTIFIED. IF, THEREFORE, A MISTAKE SUBSISTS DESPIT E AN ORDER U/S. 254(2), I.E., WHICH HAD IMBUED THE ORDER U/S. 254(1), WHAT IN LAW, ONE MAY ASK, PREVENTS THE APPLICANT TO SEEK RECTIFICATION OF THE SAID MISTAKE YET AGAIN BY MOVING A FRESH APPLICATION U/S. 254(2)? IN THE INSTANT CASE, THE ONLY MISTAKE THA T IS STATED TO INFLICT THE ORDER U/S. 254(1) IS THAT THE ASSESSEES GRIEVANCE WITH REGARD TO THE REQUIREMENT OF THE ENHANCEMENT NOTICE THERETO BY THE FIRST APPELLATE A UTHORITY U/S. 251(2), BEFORE WITHDRAWING DEDUCTION U/S. 54F, HAD NOT BEEN MET, D ENYING IT THUS AN OPPORTUNITY TO STATE HIS CASE BEFORE HIM. IF THEREFORE THE SAME SURVIVES THE ORDER U/S. 254(2), PASSED IN PURSUANCE TO THE ASSESSEES APPLICATION S EEKING REDRESSAL OF THE SAID MISTAKE, THE ASSESSEE CAN IN NO WAY BE FAULTED FOR REQUIRING TRIBUNALS CONSIDERATION OF THE SAID MISTAKE AND, WHERE SO, IT S REMOVAL. IT WOULD SURELY BE A DIFFERENT MATTER IF THE TRIBUNAL HAS, WHILE PASSING AN ORDER U/S. 254(2), EXPRESSED A VIEW THAT THE STATED MISTAKE DOES NOT EXIST OR RECT IFIES THE SAME TO THE EXTENT IT FINDS IT TO. AS, FOR EXAMPLE, WITH REFERENCE TO THE FACTS OF THE INSTANT CASE, IF THE FIRST APPELLATE AUTHORITY HAD INDEED MET THE REQUIR EMENT OF LAW IN GIVING DUE NOTICE TO THE ASSESSEE OF HIS INTENTION TO WITHDRAW THE DE DUCTION U/S. 54F. IT WOULD AGAIN MA NO.76/ASR/2014 (AY: 2007-08) (ARISING OUT OF MA NO.09 /(ASR)/2013) (ARISING OUT OF ITA NO. 394 /(ASR)/2013) HARI SINGH V. ITO 6 BE A DIFFERENT MATTER IF THE TRIBUNAL HAD EXPRESSED AN OPINION, EITHER WAY, IN THE MATTER, I.E., FOUND THE ASSESSEES GRIEVANCE AS VAL ID OR NOT SO. IT HAS NOT DONE SO, RESTRICTING ITSELF ONLY TO THE MERITS OF THE ADJUDI CATION BY THE FIRST APPELLATE AUTHORITY. WE HAVE IN FACT GONE AHEAD TO SAY THAT T HE SAME BEING ESSENTIALLY A MATTER OF PROVIDING AN OPPORTUNITY, WE MAY YET HAVE OPINED DIFFERENTLY WHERE SUCH AN OPPORTUNITY HAD BEEN PROVIDED TO THE ASSESSEE BY THE TRIBUNAL, PARTICULARLY CONSIDERING THAT IT HELD THE SAME OPINION, I.E., ON MERITS, AS EXPRESSED BY THE FIRST APPELLATE AUTHORITY. THE TRIBUNAL, HOWEVER, HAS NOT DONE SO IN THE INSTANT CASE. THE SAID MISTAKE IS A MATTER OF FACT, APPARENT FROM REC ORD, I.E., THE ORDER BY THE FIRST APPELLATE AUTHORITY AND THE TRIBUNALS ORDERS U/S. 254(1) AND U/S. 254(2), THE RELEVANT PART OF WHICH STAND REPRODUCED SUPRA. ALL THAT IS MEANT WHEN IT IS SAID THAT THERE COULD BE NO RECTIFICATION APPLICATION IN RESPECT OF A RECTIFICATION ORDER IS THAT THERE COULD BE NO REVIEW OF SUCH AN ORDER, A PROPOSITION WITH WHICH THERE COULD BE NO QUARREL. WHAT THUS WE HAVE IN SUBSTANCE HELD IS THAT THOUGH THERE COULD B E INDUBITABLY NO REVIEW OF AN ORDER U/S. 254(2), OR AN ORDER U/S. 254(1) FOR THAT MATTER, A MISTAKE CONTINUING THE INFORM THE ORDER U/S. 254(1) COULD BE SOUGHT TO BE RECTIFIED THROUGH A RECTIFICATION APPLICATION DESPITE THERE BEING AN ORDER U/S. 254(2 ), WHERE THE SAME IS, AS IN THE INSTANT CASE, SILENT IN THE MATTER. THERE COULD IN FACT ALSO BE A CASE WHERE THE ORDER U/S. 254(2) ITSELF IS IMBUED WITH A MISTAKE, FOR WH ICH THEREFORE THE ONLY RECOURSE LEFT OPEN FOR THE APPLICANT IS TO MAKE A FRESH APPL ICATION U/S. 254(2), STATING THE MISTAKE AS WELL AS THE REASON/S FOR THE SAID APPLIC ATION, I.E., WHY AND HOW THE SAID MISTAKE IS CONSIDERED TO SUBSIST, OR A FRESH MISTAK E HAD OCCURRED WHILE PASSING THE RECTIFICATION ORDER U/S. 254(2). WE ARE THUS UNABLE TO UPHOLD AN ABSOLUTE PROPOSITION TO THE EFFECT THAT NO RECTIFICATION APP LICATION IS MAINTAINABLE PURSUANT TO A RECTIFICATION ORDER. THE INSTANT APPLICATION BY T HE ASSESSEE IS MAINTAINABLE. MA NO.76/ASR/2014 (AY: 2007-08) (ARISING OUT OF MA NO.09 /(ASR)/2013) (ARISING OUT OF ITA NO. 394 /(ASR)/2013) HARI SINGH V. ITO 7 3.4 WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE INSTANT APPLICATION BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 05, 2018 SD/- SD/- (N.K.CHOUDHARY) (SANJAY A RORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 05 /11/2018 PK/ PS COPY OF THE ORDER FORWARDED TO: (1) HARI SINGH, EX.-MLA, MAKHU ROAD, ZIRA. (2) INCOME TAX OFFICER, RANGE III(2), FEROZEPUR (3) THE CIT (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T. TRUE COPY BY ORDER