TaxTMI 
TaxTMI 
2004 (1) TMI 62
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....closing income of Rs. 27,374.28. The petitioner has alleged that it has maintained regular and proper books of account in the ordinary and regular course of business. The petitioner appeared before the Assessing Officer/Income-tax Officer, Ward No.5, Allahabad, and the Assessing Officer by his order dated March 15,2000, determined the petitioner's income at Rs. 7,40,750. True copy of the assessment order dated March 15, 2000 is annexure 1 to the writ petition. This assessment was made under section 143(3) of the Income-tax Act. It is alleged in para. 7 of the petition that during the course of the hearing the Assessing Officer issued notices under section 133(6) of the Income-tax Act to M/s. Shiv Datt and Sons, M/s. K. Lal and Company and M/s. Shakumbari Pulp and Paper Mills Ltd., apart from other parties. It is alleged that these notices were issued only for obtaining copies of accounts of the petitioner's firm from the books of the above three respective parties in compliance to the notices under section 133(6) of the Act. The parties sent copies of the accounts to the Assessing Officer, and on the basis of those copies of accounts additions were made in the hands of the pe....
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.... copies with the accounts of the third parties and the matter should be decided after considering each and every ground taken by the petitioner. True copy of the order of the Tribunal dated December 30, 2002, is annexure 4 to the petition. The appeal is now pending before the Commissioner of Income-tax (Appeals). In the meantime respondent No. 1, the Tax Recovery Officer, issued notices under section 226(3) for realisation of the demand assessed by the Assessing Officer. True copy of this notice issued to various parties is annexure 5 to the writ petition. It is alleged in para. 15 of the petition that due to the notice under section 226(3) issued to Saraiya Distillery Limited, Gorakhpur, by respondent No. 1, the Saraiya Distillery Ltd., Gorakhpur, has deducted Rs. 2 lakhs from the account of the petitioner and has deposited the same with the Income-tax Department vide annexure 6 to the petition. The Saraiya Distillery Limited has also withheld the payment which is due to the petitioner on supply of the packaging materials to them on the ground of notice under section 226(3). Thus a huge amount of the petitioner has been detained by Saraiya Distillery Limited, Gorakhpur, b....
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....is issued under section 148 then the order dated March 15, 2000, should remain under abeyance and hence the demand should be withdrawn. True copy of the letter dated October 22, 2001, is annexure 8 to the writ petition. The petitioner relied on the decision of this court reported in Saran Engineering Co. Ltd. v. CIT [1983] 143 ITR 765, in which it was observed: "Once reassessment proceedings are started, the earlier order cease to exist, and the Income-tax Officer starts the assessment proceedings afresh." The ratio of this decision has been affirmed by the Supreme Court in ITO v. K.L. Srihari (HUF) [2001] 250 ITR 193. On the basis of the said decision it is alleged in para. 22 of the petition that since a notice under section 148 has been issued the assessment order dated March 15, 2000, has become non-existent, and hence the Income-tax Department cannot make any demand on the basis of the assessment order dated March 15, 2002. True copy of the notice under section 148 is annexure 9 to the writ petition. It is alleged in para. 23 of the petition that Saraiya Distillery Ltd., Gorakhpur, has deducted Rs. 2 lakhs from the petitioner's account on the basis of the illegal n....
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....ommissioner of Income-tax (Appeals) in turn merged into the order of the Income-tax Appellate Tribunal dated December 30, 2002, copy of which is annexure 4 to the writ petition. A perusal of the order of the Tribunal dated December 30, 2002, shows that the Tribunal has set aside the order of the Commissioner of Income-tax (Appeals) on the ground that the Assessing Officer as well as the Commissioner of Income-tax (Appeals) had not given copies of the accounts of the third party to the petitioner. Thus under the doctrine of merger the orders of the Assessing Officer dated March 15, 2000, and the Commissioner of Income-tax (Appeals) dated April 30, 2002, have both merged into the order of the Tribunal dated December 30, 2002. Hence, the orders of the Assessing Officer dated March 15, 2000, and the Commissioner of Income-tax (Appeals) dated April 30, 2002, ceased to exist after the order of the Tribunal dated December 30, 2002. In Kunhayammed v. State of Kerala [2000] 245 ITR 360 (SC) ; AIR 2000 SC 2587 (vide para. 12), the Supreme Court observed: "Once the superior court had disposed of the lis before it either way-whether the decree or order under appeal is set aside or mod....
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.... The validity of an interim order, passed in favour of a party, stands reversed in the event of final decision going against the party successful at the interim stage. Unless otherwise ordered by the court, the successful party at the end would be justified with all expediency in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it." On the facts and circumstances of the case we quash the notice under section 226(3) and the recovery made in pursuance of the impugned notice under section 226(3) of the Income-tax Act. Any amount realised from the petitioner in pursuance of the notice under section 226(3) and the assessment order dated March 15, 2000, shall be refunded to him forthwith with interest at 12 per cent. per annum from the date of realisation to the date of refund. The refund must be made within a month from the date of production of copy of this order before the authority concerned. We hope and trust that the appeal pending before the Commissioner of Income-tax (Appeals) in pursuance of the remand order of the Tribunal will be decided expeditiously by the said authority. ....