M/s Radhishwari Devlopers P Ltd, Indore V. Pr CIT -2 Indore, Indore

SA 67/Ind/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0407 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 07-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: GAGAN TIWARI A RS
• Keywords: Opportunity of being heard; Period of limitation; Application of stay
• Section: 250; 263

Judgement Text

[SP NO.67/IND/2018] [M/S. RADHISHWARI DEVELOPERS P. LTD., INDORE] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER SP NO.67/IND/2018 (ARISING OUT OF ITA NO.493/IND/2018) ASSESSMENT YEAR: 2013-14 M/S. RADHISHWARI DEVELOPERS PVT. LTD. F/H-198, SCHEME NO.54, VIJAY NAGAR INDORE / VS. PCIT - II INDORE ( APPELLANT ) ( REVEN UE ) P.A. NO. AAFCR1916A APPELLANT BY SHRI SUMIT NEMA & SHRI GAGAN TIWARI, A.RS RESPONDENT BY SHRI R.P. MOURYA, D.R. DATE OF HEARING: 17.12.2018 DATE OF PRONOUNCEMENT: 19.12.2018 / O R D E R PER KUL BHARAT, J.M: BY PRESENT STAY APPLICATION, THE ASSESSEE IS SEEKING STAY OF PROCEEDINGS PERTAINING TO THE ASSESSMENT YEAR 2013-14 BEING UNDERTAKEN BY THE A.O. PURSUANT TO THE [SP NO.67/IND/2018] [M/S. RADHISHWARI DEVELOPERS P. LTD., INDORE] 2 ORDER DATED 28.3.2018 PASSED U/S 263 OF THE INCOME TA X ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. LD. SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FILED APPLICATION AGAINST THE EXERCISING POW ER UNDER SECTION 263 OF THE ACT. HE SUBMITTED THAT THE ASSESSING OFFICER IS IN THE PROCESS OF CONCLUDING TH E ASSESSMENT PROCEEDINGS BEING FRAMED IN PURSUANCE TO TH E IMPUGNED ORDER OF THE LD. CIT. HE SUBMITTED THAT TH E ORDER OF THE LD. CIT HAS BEEN CHALLENGED BEFORE THIS TRIBUNAL AND IS PENDING ADJUDICATION IN ITA NO.493/IND/2018. LD. COUNSEL SUBMITTED THAT THERE WOULD BE MULTIPLICITY OF LITIGATION IN CASE THE ASSESS EE SUCCEEDS IN HIS APPEAL. THEN THE ASSESSMENT PROCEEDI NGS SO MADE WOULD BECOME NULLITY. LD. COUNSEL SUBMITTE D THAT THIS TRIBUNAL HAS ALL THE POWER TO STAY THE ASSESSMENT PROCEEDINGS IN VIEW OF THE JUDGEMENT OF THE HON'BLE A.P. [SP NO.67/IND/2018] [M/S. RADHISHWARI DEVELOPERS P. LTD., INDORE] 3 HIGH COURT RENDERED IN THE CASE OF ITO VS. KHALID MEH DI KHAN (1977) 110 ITR 79. 3. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSIO NS AND SUBMITTED THAT NO PREJUDICE WOULD BE CAUSED TO THE ASSESSEE AND THE ASSESSEE HAS NO PRIMA FACIE CASE. 4. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS A PRIMA FACIE STRONG CASE AND IF THE PROCEEDINGS ARE NOT STAYED, THEN THE ASSESS EE WOULD BE FORCED TO FACE MULTIPLICITY OF LITIGATION. HE SUBMITTED TO AVOID MULTIPLICITY OF LITIGATION AND IN T HE INTEREST OF JUSTICE, THE ASSESSMENT MADE IN PURSUANCE TO THE IMPUGNED ORDER MAY BE STAYED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT QUESTION OF VALIDITY OF INVOKING PROVISIO N OF [SP NO.67/IND/2018] [M/S. RADHISHWARI DEVELOPERS P. LTD., INDORE] 4 SECTION 263 OF THE ACT IS PENDING BEFORE THIS TRIBU NAL IN ITA NO.493/IND/2018. IT IS ALSO NOT DISPUTED THAT THE ASSESSMENT HAS BEEN FRAMED IN PURSUANCE TO ORDER PASSED U/S 263 OF THE ACT. LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE JUDGEMENT OF HON'BLE A.P. HIGH COURT IN THE CASE OF ITO VS. KHALID MEHDI KHAN (SUPRA) WHEREIN THE HON'BLE HIGH COURT HELD AS UNDER: 1. THESE TWO WRIT PETITIONS FILED BY THE INCOME-TA X OFFICER RAISE A COMMON QUESTION FOR OUR CONSIDERATION AND CAN BE DISPOSED OF TOGETHER. IT IS SUFFICIENT IF WE STATE THE FACTS IN W. P. NO. 1440/1976. 2. IN RESPECT OF THE ASSESSMENT YEARS 1971-72 AND 1 972-73 THE RESPONDENT- ASSESSEE FILED RETURNS OF HIS INCOME SHOWING THE RE CEIPT OF CERTAIN AMOUNTS TOWARDS HIS L/5TH SHARE IN THE LEASE AMOUNT IN RESP ECT OF SKYLINE THEATRE BUILDING, FURNITURE, FITTINGS AND MACHINERY. THE SAID RETURN WAS ACCEPTED BY THE INCOME-TAX OFFICER. HOWEVER, THE COMMISSIONER OF INCOME-TAX, I N EXERCISE OF HIS POWERS UNDER SECTION 263 OF THE INCOME-TAX ACT, REVISED THE ORDER OF ASSESS MENT AND DIRECTED THE INCOME-TAX OFFICER TO REASSESS THE SAM E ACCORDING TO LAW. UNDER THE SAID ORDER DATED FEBRUARY 27, 1976, THE COMMISSIONE R OF INCOME-TAX EXPRESSED HIS PRIMA FACIE OPINION THAT THE LEASE INCOME FROM THE SAID THEATRE SHOULD BE ASSESSED IN THE HANDS OF THE ASSOCIATION OF PERSONS COMPRISING OF THE RESPONDENT- ASSESSEE HEREIN AND OTHER INTERESTED PERSONS, AND N OT SEPARATELY IN THE HANDS OF EACH ASSESSEE. AS AGAINST THE SAID ORDER OF THE COM MISSIONER, THE ASSESSEE PREFERRED APPEALS BEFORE THE INCOME-TAX APPELLATE T RIBUNAL, HYDERABAD. TWO APPEALS WERE PREFERRED IN RESPECT OF THE TWO ASSESS MENT YEARS. ALONG WITH HIS APPEALS, THE ASSESSEE APPLIED FOR STAY OF FURTHER P ROCEEDINGS IN PURSUANCE OF THE ORDERS OF THE COMMISSIONER. THE APPELLATE TRIBUNAL, BY ITS ORDER DATED APRIL 2, 1976, GRANTED STAY OF FURTHER PROCEEDINGS, INCLUDIN G THE MAKING OF A FRESH ASSESSMENT IN PURSUANCE OF THE ORDERS OF THE COMMIS SIONER. UNDER THE SAME ORDER, THE TRIBUNAL DIRECTED THE APPEALS TO BE POST ED FOR HEARING WITHIN TWO MONTHS FROM THE SAID DATE. IT IS AGAINST THE SAID O RDER GRANTING STAY THAT THESE TWO WRIT PETITIONS HAVE BEEN FILED BY THE DEPARTMENT. [SP NO.67/IND/2018] [M/S. RADHISHWARI DEVELOPERS P. LTD., INDORE] 5 3. IT IS CONTENDED BY SRI P. RAMA RAO, THE LEARNED STANDING COUNSEL FOR THE DEPARTMENT, THAT EVEN IF THE INCOME-TAX APPELLATE T RIBUNAL IS PRESUMED TO HAVE THE POWER TO GRANT STAY OF OPERATION OF THE ORDER A PPEALED AGAINST, AS HELD BY THE SUPREME COURT IN INCOME-TAX OFFICER V. M.K. MOHAMMED KUNHI [1969]71 ITR 815 (SC), EVEN THEN, BY VIRTUE OF THE INTRODUCTION OF SUB-SECTION (2A) IN SECTION 153 OF THE ACT BY THE TAXATION LAWS (AMENDMENT) ACT , 1970, WITH EFFECT FROM APRIL 1, 1971, THE SAID POWER OF THE TRIBUNAL BECOM E CURTAILED AND MUST NOW BE READ IN THE LIGHT OF THE SAID SUB-SECTION, AND PART ICULARLY CLAUSE (II) IN EXPLANATION 1 IN SECTION 153(3) . HE SUBMITS THAT INASMUCH AS THE TRIBUNAL HAS NOT BEEN HELD TO BE A 'COURT', THE DEPARTMENT CANNO T HAVE THE BENEFIT OF CLAUSE (II) IN EXPLANATION 1 AND CANNOT, THEREFORE, SEEK T O EXCLUDE THE PERIOD DURING WHICH THE STAY GRANTED BY THE TRIBUNAL IS IN OPERAT ION. HE SUBMITS THAT, IN A GIVEN CASE, IT MAY HAPPEN THAT THE STAY-GRANTED BY THE TR IBUNAL MAY BE OPERATIVE FOR A SUFFICIENTLY LONG PERIOD, LEAVING NO SUFFICIENT TIM E FOR THE DEPARTMENT TO COMPLETE THE ASSESSMENT WITHIN THE PERIOD OF LIMITATION PRES CRIBED BY SUB-SECTION (2A) OF SECTION 153 , WHICH WOULD NATURALLY RESULT IN GRAVE PREJUDICE T O THE REVENUE. 4. FOR THE PURPOSE OF EXAMINING THE SAID CONTENTION , IT IS NECESSARY TO REFER TO THE RELEVANT PROVISIONS IN THE ACT. SECTION 253 PROVIDES FOR AN APPEAL TO THE APPELLATE TRIBUNAL AGAINST THE ORDERS OF THE APPELLATE ASSIST ANT COMMISSIONER, AND THE COMMISSIONER, PASSED UNDER SPECIFIED PROVISIONS OF THE ACT. SUB-SECTION (1) OF SECTION 254 EMPOWERS THE TRIBUNAL TO PASS SUCH ORDERS ON THE A PPEAL AS IT THINKS FIT, AFTER GIVING BOTH THE PARTIES TO THE AP PEAL AN OPPORTUNITY OF BEING HEARD. IN INCOME-TAX OFFICER V. M. K. MOHAMMED KUNHI [1969] 71 ITR 815 (SC), THE SUPREME COURT HELD THAT SECTION 254 OF THE ACT CONFERS ON THE APPELLATE TRIBUNAL POWERS OF WIDEST AMPLITUDE IN DEALING WITH APPEALS BEFORE IT AND THAT, BY NECESSARY IMPLICATION, IT ALSO CONFERS ON THE TRIBU NAL THE POWER OF DOING ALL SUCH ACTS OR EMPLOYING ALL SUCH MEANS AS ARE ESSENTIALLY NECESSARY FOR THE EXERCISE OF ITS SUBSTANTIVE POWER, VIZ., A PROPER AND EFFECTIVE DISPOSAL OF THE APPEAL. IN OTHER WORDS, IT WAS HELD THAT THE CONFERMENT OF THE SUBST ANTIVE POWER TO ENTERTAIN AND DISPOSE OF THE APPEAL CARRIED WITH IT, BY NECESSARY IMPLICATION, ALL THE ANCILLARY AND INCIDENTAL POWERS WHICH ARE NECESSARY TO MAKE T HE EXERCISE OF THE SUBSTANTIVE POWER FULLY EFFECTIVE. WHILE HOLDING THAT THE INCOM E-TAX APPELLATE TRIBUNAL IS NOT A 'COURT', IT WAS HELD THAT IT EXERCISES ALL THE JU DICIAL POWERS SIMILAR TO AND IDENTICAL WITH THE POWERS OF AN APPELLATE COURT UND ER THE CIVIL PROCEDURE CODE AND THAT, THEREFORE, THE POWER TO GRANT STAY IS NEC ESSARILY IMPLIED. HOWEVER, IT WAS OBSERVED THAT THE SAID POWER SHALL NOT BE EXERC ISED BY THE TRIBUNAL IN A ROUTINE MANNER OR AS A MATTER OF COURSE, BUT WILL B E EXERCISED ONLY WHERE A STRONG PRIMA FACIE CASE IS MADE OUT AND AFTER CONSIDERING THE SEVERAL RELEVANT CIRCUMSTANCES, AND ONLY ON BEING SATISFIED THAT THE ENTIRE PURPOSE OF THE APPEAL WILL BE FRUSTRATED OR RENDERED NUGATORY IF THE PROC EEDINGS SOUGHT TO BE STAYED ARE ALLOWED TO CONTINUE DURING THE PENDENCY OF THE APPE AL. 5. THE QUESTION THAT THEN ARISES IS, WHETHER THE IN TRODUCTION OF SUB-SECTION (2A) OF SECTION 153 OF THE ACT MAKES ANY DIFFERENCE TO THE PRINCIPLE E NUNCIATED BY THE [SP NO.67/IND/2018] [M/S. RADHISHWARI DEVELOPERS P. LTD., INDORE] 6 SUPREME COURT IN THE ABOVE DECISION. SUB-SECTION (2 A) OF SECTION 153 READS AS FOLLOWS : '(2A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SEC TIONS (1) AND (2), IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1971, AND ANY SUBSEQUENT ASSESSMENT YEAR, AN ORDER OF FRESH, ASSE SSMENT UNDER SECTION 146 OR IN PURSUANCE OF AN ORDER, UNDER SECTION 250 , SECTION 254 , SECTION 263 OR SECTION 264 , SETTING ASIDE OR CANCELLING AN ASSESSMENT, MAY BE MADE AT ANY TIME BEFORE THE EXPIRY OF TWO YEARS FROM THE END OF ME FINANCIA L YEAR IN WHICH THE ORDER UNDER SECTION 146 CANCELLING THE ASSESSMENT IS PASSED BY THE INCOME- TAX OFFICER OR THE ORDER UNDER SECTION 250 OR SECTION 254 IS RECEIVED BY THE COMMISSIONER OR, AS THE CASE MAY BE, THE ORDER UNDER SECTION 263 OR SECTION 264 IS PASSED BY THE COMMISSIONER. ' 6. IT WOULD ALSO BE RELEVANT TO SET OUT EXPLANATION 1 IN SO FAR IT IS RELEVANT: 'EXPLANATION 1.--IN COMPUTING THE PERIOD OF LIMITAT ION FOR THE PURPOSES OF THIS SECTION--......... (II) THE PERIOD DURING WHICH THE ASSESSMENT PROCEED ING IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT......SHALL BE EXCLUDED.' 7. NOW, IT WOULD BE SEEN THAT NEITHER SUB-SECTION ( 2A) NOR ANY OTHER PROVISION IN THE ACT EXPRESSLY QUALIFIES OR ABRIDGES THE POWER O F THE TRIBUNAL TO PASS ALL NECESSARY ORDERS UNDER SECTION 254(1) OF THE ACT. DOES IT DO SO BY NECESSARY IMPLICATION? IT IS, NO DOUBT, TRUE THAT CLAUSE (II) IN EXPLANATION 1 MAY NOT HELP THE DEPARTMENT IN SEEKING TO EXCLUDE THE PERIOD DUR ING WHICH THE STAY GRANTED BY A TRIBUNAL IS IN OPERATION, SINCE THE TRIBUNAL IS, ADMITTEDLY, NOT A COURT, YET WE ARE NOT CONVINCED THAT SUBSECTION (2A) HAS THE EFFE CT OF DEPRIVING OR ABRIDGING THE POWER OF THE TRIBUNAL TO GRANT APPROPRIATE INTE RIM ORDERS UNDER SECTION 254(1) OF THE ACT. THE DECISION OF THE SUPREME COURT WAS RENDERED IN SEPTEMBER, 1968, WHILE SUB-SECTION (2A) WAS INTRODUCED BY THE TAXATION LAWS (AMENDMENT) ACT , 1970. PARLIAMENT MUST BE PRESUMED TO HAVE KNOWN A BOUT THE SAID DECISION OF THE SUPREME COURT WITH REFERENCE TO THE POWERS OF T HE TRIBUNAL UNDER SECTION 254 OF THE ACT, AND IF IT WANTED TO DEPRIVE THE TRIBUN AL OF THE SAID POWER OR TO ABRIDGE THE SAME, IT COULD HAVE DONE SO EXPRESSLY. MOREOVER, NO REASONS ARE PLACED BEFORE US COMPELLING US TO HOLD THAT SUB-SEC TION (2A) CUTS DOWN THE POWER OF THE TRIBUNAL UNDER SECTION 254(1) OF THE ACT IN ANY MANNER. HOWEVER, IT IS OBVIOUS THAT THE PROVISION CONTAINED IN SUB-SECTION (2A) SHALL HAVE TO BE AN ADDITIONAL FACTOR WHICH THE TRIBUNAL HAS TO TAKE IN TO CONSIDERATION WHILE PASSING AN ORDER OF STAY OR OTHER INTERLOCUTORY ORDER PENDI NG THE APPEAL BEFORE IT. IN OTHER WORDS, WHILE GRANTING THE STAY OR ANY OTHER I NTERLOCUTORY ORDER, THE TRIBUNAL SHALL HAVE TO KEEP IN MIND THE PERIOD OF L IMITATION PRESCRIBED IN SECTION 153(2A) OF THE ACT AND PASS ORDERS IN THE LIGHT OF THE SAM E. IT IS ALWAYS OPEN TO THE DEPARTMENT TO BRING TO THE NOTICE OF THE TRIBUN AL THE PARTICULAR DIFFICULTIES, IF [SP NO.67/IND/2018] [M/S. RADHISHWARI DEVELOPERS P. LTD., INDORE] 7 ANY, IT WOULD FACE IN CASE A STAY IS GRANTED, AND T HE TRIBUNAL SHALL OF COURSE CONSIDER THE SAID PLEA AND ALL OTHER RELEVANT CIRCU MSTANCES AND SHALL EXERCISE ITS POWER HAVING REGARD TO THEM AND IN THE LIGHT OF THE PRINCIPLES ENUNCIATED BY THE SUPREME COURT IN INCOME-TAX OFFICER V. MOHAMMED RUN KI [1969] 71 ITR 815 (SC). THAT THE TRIBUNAL HAS TAKEN INTO CONSIDERATIO N THE RELEVANT CIRCUMSTANCES IN THIS CASE IS EVIDENT FROM THE FACT THAT, HAVING GRA NTED A STAY, IT DIRECTED THE APPEALS TO BE POSTED FOR HEARING WITHIN TWO MONTHS THEREFROM. WE ARE TOLD, HOWEVER, THAT THE APPEALS COULD NOT BE SO HEARD ON ACCOUNT OF THE FILING OF THESE WRIT PETITIONS WHICH NECESSITATED THE REMITTANCE OF RELEVANT RECORDS TO THIS COURT. 8. WE MAY ALSO POINT OUT THAT GRANTING OF STAY OR A NY OTHER INTERLOCUTORY ORDER PENDING THE APPEAL IS WITHIN THE DISCRETION OF THE TRIBUNAL, AND THIS COURT WILL NOT ORDINARILY INTERFERE WITH THE EXERCISE OF DISCRETIO N BY A TRIBUNAL, UNLESS A STRONG CASE IS MADE OUT ESTABLISHING THAT THE TRIBUNAL HAS EXERCISED ITS POWER IN A TOTALLY ARBITRARY MANNER, OR UNDER A TOTAL MISAPPREHENSION OF LEGAL POSITION, OR WITHOUT APPLYING ITS MIND TO THE RELEVANT CIRCUMSTANCES AND WITHOUT REGARD TO THE PRINCIPLES ENUNCIATED BY THE SUPREME COURT IN THE A FOREMENTIONED DECISION IN [1969] 71 ITR 8 3 5 (SC). OF COURSE, THE GROUNDS IN DICATED BY US ARE NOT EXHAUSTIVE ; THE QUESTION OF INTERFERENCE WILL BE A MATTER TO BE DECIDED BY THE COURT IN EACH CASE HAVING REGARD TO THE FACTS OF TH E CASE. IN VIEW OF THE ABOVE CIRCUMSTANCES, WE DO NOT FIND ANY GROUNDS WARRANTIN G INTERFERENCE WITH THE INTERLOCUTORY ORDERS PASSED BY THE TRIBUNAL AND, AC CORDINGLY, THESE WRIT PETITIONS ARE DISMISSED BUT, IN THE CIRCUMSTANCES, WITHOUT CO STS. ADVOCATE'S FEE RS. 150 IN EACH. 6. THEREFORE, WE HEREBY DIRECT THE A.O. TO STAY THE ASSESSMENT PROCEEDINGS FOR A PERIOD OF 60 DAYS OR TIL L THE DISPOSAL OF PRESENT APPEAL IN ITA NO.493/IND/2018, WHICHEVER IS EARLIER. WE ARE ALSO SUPPORTED BY THE D ECISION OF HON'BLE A.P. HIGH COURT RENDERED IN THE CASE OF I TO VS. KHALID MEHDI KHAN (SUPRA). CONSIDERING THE TOTALITY OF THE FACTS, WE DEEM IT NECESSARY THAT HEARING OF APPEAL BE TAK EN UP OUT OF TURN. ACCORDINGLY, THE REGISTRY IS DIREC TED TO FIX [SP NO.67/IND/2018] [M/S. RADHISHWARI DEVELOPERS P. LTD., INDORE] 8 THE HEARING OF APPEAL ON 15.01.2019, IN VIEW OF THE HO N'BLE PRESIDENTS DIRECTIVE TO DISPOSAL OF STAY GRANTED MATT ERS EXPEDITIOUSLY. 7. IN THE RESULT, THE STAY APPEAL FILED BY THE ASSESS EE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19 . 12.2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 19/12/2018 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE