2007 (9) TMI 336 - AT - Income Tax

Tribunal Quashes Assessment Due to Delayed Notice, Affirms Importance of Adhering to Higher Court Decisions.

Assistant Commissioner of Income Tax Versus Aurangabad Holiday Resorts Pvt Ltd

Assistant Commissioner of Income Tax Versus Aurangabad Holiday Resorts Pvt Ltd - ITD 118, 001, TTJ 111, 741, Issues Involved:1. Validity of assessment proceedings due to delayed issuance of notice under Section 143(2).2. Binding nature of non-jurisdictional High Court decisions on the Tribunal.3. Necessity to decide all issues raised in the appeal when the preliminary issue is resolved.Detailed Analysis:1. Validity of Assessment Proceedings Due to Delayed Issuance of Notice Under Section 143(2):The primary issue raised by the assessee was the invalidity of the assessment proceedings due to the notice under Section 143(2) being issued beyond the stipulated period of 12 months from the end of the month in which the block returns were filed. The assessee's counsel argued that this issue was covered by the judgment of the Hon'ble Gauhati High Court in the case of Smt. Bandana Gogoi vs. CIT & Anr., which held that if the AO does not issue the notice within the specified period, the scrutiny assessment proceedings cannot commence. The Tribunal upheld this objection, noting that there was no contrary decision by the jurisdictional High Court or any other High Court. The Tribunal emphasized the hierarchical judicial system, stating that the wisdom of the lower court must yield to the higher court, and thus, followed the Gauhati High Court's decision.2. Binding Nature of Non-Jurisdictional High Court Decisions on the Tribunal:The Departmental Representative contended that the decision of a non-jurisdictional High Court is not binding on the Tribunal, citing the Bombay High Court's judgment in the case of CIT vs. Thana Electricity Supply Ltd. However, the Tribunal referred to the Bombay High Court's earlier decision in CIT vs. Smt. Godavaridevi Saraf, which held that in the absence of a contrary decision by any other competent High Court, the Tribunal must respect the law laid down by a High Court, even if it is from a different state. The Tribunal concluded that the Thana Electricity Supply Ltd. case did not overrule the Godavaridevi Saraf case but dealt with whether a High Court decision is binding on another High Court. Therefore, the Tribunal decided to follow the Gauhati High Court's ruling, as it was favorable to the assessee and there was no jurisdictional High Court ruling to the contrary.3. Necessity to Decide All Issues Raised in the Appeal When the Preliminary Issue is Resolved:The Departmental Representative urged the Tribunal to decide all issues raised in the appeal, not just the preliminary issue. However, the Tribunal referred to a Special Bench decision in the case of Rahul Kumar Bajaj vs. ITO, which held that once the jurisdictional issue is decided, it is unnecessary to address the merits of the matter. The Tribunal followed this precedent, stating that since the assessment itself was quashed, addressing other issues would be academic and unnecessary.Conclusion:The Tribunal quashed the assessment proceedings due to the delayed issuance of notice under Section 143(2), following the Gauhati High Court's decision in Smt. Bandana Gogoi vs. CIT & Anr. Consequently, the appeal filed by the assessee was allowed, and the appeal filed by the AO was dismissed as infructuous. The Tribunal emphasized the importance of following higher judicial authority decisions, even if they are from non-jurisdictional High Courts, in the absence of contrary jurisdictional High Court rulings.