THE COMMISSIONER OF INCOME TAX V. AGRICULTURE PRODUCE MARKET COMMITTEE

T.A./52/2013

AI Insights

The case involves two appeals by the Commissioner of Income Tax, Dhanbad against the Agriculture Produce Market Committee, Dhanbad, concerning the assessment orders for the years 2003-04 and 2004-05. Initially, the CIT found the assessment orders erroneous and directed fresh assessments. The Tribunal set aside the CIT's order, leading to the present appeals. The High Court examined whether the Tribunal's finding that the CIT exceeded his powers under Section 263 was perverse. The court concluded that the CIT had the authority to act under Section 263, as the order of 8th July, 2008 was a rectification order and not a fresh assessment.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 727849 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 27-09-2018
• Assessment Year: misc
• Other Referred Cases: Tulsidas Gopalji Charitable and Chaleswar Temple Trust v. CIT (1994) 207 ITR 368 (Bom), CIT v. Ziarat Mr Syed Ali Hamdani (2001) 248 ITR 769 (J&K), Harmanjit Trust v. CIT (1984) 148 ITR 214 (P&H)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: BIREN PODDAR; MAHENDRA CHOWDHARY; PIYUSH PODDAR; MRINAL ROY; RAKHI SHARMA
• Assessee Lawyers: DEEPAK ROSHAN; RAHUL LAMBA
• Keywords: Assessment Order; Exemption; Income Tax; Rectification; Statutory Body
• Section: 147; 154; 263; 254; 12-AA

Judgement Text

"1 IN THE HIGH COURT OF JHARKHAND AT RANCHI Tax Appeal No. 52 of 2013 With Tax Appeal No. 53 of 2013 ----- The Commissioner of Income Tax, Dhanbad, MADA Building, Luby Circular Road, P.O., P.S. & District-Dhanbad ….. Appellant [In both cases] Versus Agriculture Produce Market Committee, P.O.,P.S. & District-Dhanbad Respondents [In both cases] CORAM : HON’BLE THE CHIEF JUSTICE HON’BLE MR. JUSTICE B.B.MANGALMURTI ----- For the Appellant : Mr. Deepak Roshan, Advocate Mr. Rahul Lamba, Advocate For the Respondents : Mr. Biren Poddar, Sr. Advocate Mr. Mahendra Chowdhary, Advocate Mr. Piyush Poddar, Advocate Mr. Mrinal Kanti Roy, Advocate Mr. Rakhi Sharma, Advocate ----- Order No.11: Dated 27th September, 2018 These two appeals arise out of a common order of the Income Tax Appellate Tribunal, Circuit Bench, Ranchi in I.T.A. Nos. 20 & 21/Ran/2009 setting aside an order of the Commissioner of Income Tax, Dhanbad passed in exercise of jurisdiction under Section 263 of the Income Tax Act, 1961 on 24th November, 2008. The C.I.T. had found two assessment orders for the assessment years 2003-04 and 2004-05 erroneous. The total income of the assessee for both the assessment years was found to be “nil”. Both the assessment orders were cancelled and the Assessing Officer was directed to pass fresh assessment orders. 2. The assessee is a statutory body, Agriculture Produce Market Committee, Dhanbad. For these two assessment years, the assessee initially wanted immunity from income tax as a statutory authority but it was refused. As a consequence thereof, the assessee applied for registration for exemption from income tax under Section 12 AA of the Income Tax Act, 1961. Scrutiny assessment orders for both assessment years was passed on 10th February, 2006. The Assessing Officer assessed total income of the assessee to be Rs. 1,66,32,550/- for the A.Y 2003-04 and Rs. 2,55,67,961 for the A.Y 2004-05. When these assessment orders were passed, their application under 2 the aforesaid provision was pending with the Commissioner. As points of law are broadly the same in both the appeals, in this judgment, we shall narrate henceforth briefly the facts pertaining to T.A. No. 53 of 2013, which relates to the assessment year 2003-04. In both the assessment orders we have referred to above, the Committee was treated as an ordinary assessee subjected to the full rigours of the 1961 Act. Those assessment orders, however, were ultimately set aside by the Tribunal in two appeals preferred by the assessee, which were registered as I.T.A. Nos. 14 & 15/Pat/2007. A common order to that effect was passed on 15th June, 2007. The matters were restored to the file of the Assessing Officer with a direction that the same be made afresh as per law only after the issue of registration under Section 12 A of the Act was finalised by the Commissioner. Registration was subsequently granted to the assessee on 17th/24th March, 2008 with retrospective effect from 1st April, 2002. 3. On 3rd September, 2007 the Assessing Officer passed an order carrying the caption “Order U/s 147/154/254 of the I.T.Act 1961”. This order is the genesis of dispute so far as the present proceeding are concerned. This order referred to the aforesaid decision of the ITAT Patna dated 15th June, 2017. Tax was recomputed to nil and net amount refundable was found to be Rs.88,66,425/- for the A.Y 2003-04. The refund question arose because certain sum was already realized by the Income Tax authorities through attachment process. The proposal for refund, however, was declined by the Commissioner by an order passed on 22nd April, 2008. The Commissioner while declining to give approval to the refund proposal took into cognizance the direction of the Tribunal that the Assessing Officer should have had reframed the assessment order pending CIT’s decision on the point of registration and the Assessing Officer ought not to have had worked out the refund proposal. The next order which was passed was on 8th July, 2008 by the Assessing Officer. This has been framed as rectification of the assessment order passed on 3rd September, 2007. The sections used as caption to this 3 order are 147/154/254 of the 1961 Act. In the body of the order also, the Assessing Officer has referred to technical infirmities in the order passed on 3rd September, 2007. Net refundable income to the assessee was recomputed to Rs. 92, 93, 751/-. 4. The Commissioner invoked his jurisdiction under Section 263 of the Act against this order. The Commissioner proceeded on the basis that the orders of 8th July, 2008 was assessment orders and on finding several procedural flaws, the Commissioner observed and held:- “In para 4 of the reply, it was submitted that “sub-section (4) of Sec 139 permits an assessee. Who has failed to furnish a return within the time allowed by sub-sec (1) or in a notice under sub-section (2), to file the same at any time before the assessment is made. Sub-section (1) and (4) of Sec.139 have to be read together and on such a reading the inevitable conclusion is that a return made within time specified in sub-section (4) has to be considered as have been made within the time prescribed in sub-section (1) or sub-section (2) of Sec 139. In support of above some case laws are referred which are as under” a. Tulsidas Gopalji Charitable and Chaleswar Temple Trust v. CIT (1994) 207 ITR 368 (Bom). b. CIT v. Ziarat Mr Syed Ali Hamdani (2001) 248 ITR 769 (J&K). c. Harmanjit Trust v. CIT (1984) 148 ITR 214 (P&H).” From the assessment records, it is seen that in the AY 2004-05, the notice was not even submitted in prescribed Form 10A but by a general letter. What is of particular significance is that these were not filed within the time prescribed u/s 139(1). For the AY 2003-04, it was submitted on 24.06.2005 and for AY 2004-05 on 24.02.2005 only alongwith the respective returns. By the submission made in para 4 reproduced above, the assessee wants to take the position that time of filing Form 10A is co-traveller of time permitted/extended for filing the return. In my considered opinion, this is not so. Moreover, the real point involved is that whether the Assessing Officer considered this aspect of the matter to his satisfaction or not. To go by the order, he had not done so. And in that view of things, the two assessment orders remain erroneous and prejudicial to the interest of revenue. The two assessment orders are, accordingly, cancelled under Section 263 of the Income-tax Act and the Assessing Officer is directed to pass fresh orders for the AY 2003-04 and AY 2004-05.” 5. On appeal by the assesse, the Tribunal held:- “These two appeals have been field by the assessee against the order of the C.I.T, Dhanbad dated 21.11.2008 for the assessment years 2003-04 and 2004-05. 2. In all these appeals by the assessee, the common issue relating to the validity of the order passed by the CIT under Section 263 is involved. Therefore, both these appeals are disposed off by this common order for the sake of brevity. 3. After hearing the rival submissions, we noted that the CIT invoked the power under Section 263 against the order of the Assessing Officer passed in consequence of the order of the Tribunal giving effect to the Tribunal’s order dated 08.07.2008. We are of the firm opinion that the CIT does not have the power against the order passed by the Assessing Officer in consequence of the order giving effect to the Tribunal’s order. This is not the case of the Revenue that the proceedings under section 263 has been initiated in respect of orginal assessment order containing the issue which was not before the Income Tax Appellate Tribunal. Once the Tribunal has decided the particular issue, the Order of the Assessing Officer on this issue must be the order of the Tribunal. In our opinion, the CIT had exceeded his power as entrusted under Section 263. We, therefore, set aside the order of the CIT invoking the section 263 in both the appeals filed by the assessee. 4. In the result, the appeals filed by the assessee are allowed.” 4 6. We admit both the appeals on the following point, which in our opinion, involves substantial question of law:- Whether the Tribunal’s finding that the CIT has exceeded his power as entrusted under Section 263 of the Act in passing the order on 21st November, 2008 is perverse or not? 7. We find that the Tribunal has proceeded in this matter on the reasoning that the order of 8th July, 2008 was passed in consequence of the order of the Tribunal passed earlier. We have already referred to that decision of the Tribunal. As per the said decision of the Tribunal passed on 15th June, 2007, assessment order was to be passed afresh after the registration issue was finalised. The order of 8th July, 2008, on the face of it, is not an order of fresh assessment. The caption of the order as well as the content of the order reflects that it was an order for curing technical infirmities in the earlier order dated 3rd September, 2007. But the order of 3rd September, 2007 itself was an order in a proceeding, inter-alia, under Section 154 of the Act in relation to the original assessment order of 10th February, 2006. That original assessment order was set aside by the Tribunal on 15th June, 2007 (ITA Nos. 14 & 15/Pat/2007). Once the original order is set aside, that could not be subject of a rectification proceeding. The order of 3rd September, 2007 records that the tax was being recomputed and bears the character of an order passed in a proceeding for rectification. Though there is reference to Section 147 of the Act in this order, there is no indication of any income escaping assessment. There is no other characteristic of an assessment order reflected in the order of 3rd September, 2007. The order of 8th July, 2008 ought to collapse for the same reason being that the orders which forms foundation of these two rectification orders stood set aside before these orders were passed. In a case where the original assessment order has been set aside, in our opinion there cannot be any rectification proceeding in relation thereto. We do not accept the Tribunal’s finding that the order of 8th July, 2008 was passed by the Assessing Officer in consequence of the order giving effect to the 5 Tribunal’s order. Ex-facie, it was not an assessment order passed afresh. Otherwise also, we do not find any jurisdictional error on the part of the revisional authority under Section 263 of the Act as under that provision any order passed by the Assessing Officer is revisable. 8. Mr. Biren Poddar, learned senior counsel for the assessee has argued that the fresh assessment could not be done at this stage as the issue is barred by limitation. But that is not the point of law involved in this appeal. We agree with the assessee’s argument that the order of 8th July, 2008 was not an assessment order but it was a rectification order. But that factor does not warrant interference with the ultimate conclusion and finding of the revising authority. 9. We accordingly set aside the decision of the Tribunal and retain the order of the revisional authority passed on 24th November, 2008. The question of limitation shall be kept open to be taken in the event fresh assessment proceedings are undertaken or have been undertaken. But we make it clear that the Assessing Officer shall not be influenced by any observation made by the Revising Authority in the order and shall independently undertake the assessment process, if such assessment at this stage is found to be otherwise permissible. 10. The question of law, as framed is answered accordingly. Both the appeals stand allowed in the above terms. 11. There shall be no order as to costs. (Aniruddha Bose, C.J.) (B.B.Mangalmurti,J.) Birendra/Amardeep "