AI Drafter 
TaxTMI 
TaxTMI 
2018 (6) TMI 503
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....itions. Subsequently, the Assessing Officer reopened the assessment u/s 147 of the I.T. Act, 1961 by recording the following reasons :- "Reasons U/s 147 of the Income Tax Act, 1961 : On completion of scrutiny assessment proceedings U/s 143(3) of the Act vide order dated 31.12.2007, returned income of Rs. 1,46,94,07,460/- was enhanced by the AO to Rs. 2,12,42,01,723/- making certain additions. Subsequently, it has been noticed that deduction under Section 80IB of the Act has been allowed in this case at Rs. 41,20,57,046/-; being 100% of the income/profits of the Mini Blast Furnace Unit of the assessee. It has further transpired that accumulated losses upto the A/Y 2004- 05 amounting to Rs. 8,53,95,939/-, were required to be reduced for working-out allowable deduction U/s 80IB from the income of this Unit in view of the provisions of Section 80IB(13) read with Section 80IA(5) of the Act, but the same have not been reduced resulting into excess allowance of deduction U/s 80IB of the Act to this extent. Hence, the assessee has not disclosed fully & truly all material facts necessary for its assessment for the year under consideration. Therefore, I have reason....
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....43(3)/147 of the Income-tax Act, 1961 ('the Act'), holding the same to be infructuous. 1.1 That the CIT(A) erred on facts and in law in dismissing the appeal as infructuous on the ground that the reassessment order dated 04.03.2013 passed under section 147 was subsequently set aside by the CIT under section 263 on the issue of computation of deduction under section 80IB of the Act. 1.2 That the CIT(A) erred on facts and in law in dismissing the appeal as infructuous without adjudicating the grounds raised by the appellant challenging assumption of jurisdiction and validity of reassessment order dated 04.03.2013 passed under section 143/147 of the Act. 1.3 That the CIT(A) failed to appreciate that validity of subsequent revisionary order under section 263 of the Act was dependent upon the validity of reassessment order challenged in appeal and consequently, the appeal filed was not rendered infructuous merely on account of passing of subsequent revisionary order. 1.4 That the CIT(A) further failed to appreciate that the reassessment order had been set aside by the CIT under section 263 to the limited extent of examining issue relating to d....
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.... the order of ld. CIT(A) in treating the appeal filed by the assessee before him as infructuous, illegal and bad in law. 5.1 Ld. counsel for the assessee submitted that the original assessment was completed u/s 143(3) on 31.12.2007 determining the total income at Rs. 2,12,42,01,723/-. The notice u/s 148 was issued on 23.03.2012. The reasons recorded show that the issue on which re-assessment proceeding has been initiated is that loss of earlier assessment years of Mini Blast Furnace (MBF) unit, qua which deduction u/s 80IB was claimed, which were adjusted against taxable profits of earlier years, were required to be notionally carried forward and set off/adjusted against the current year profits of that unit while computing deduction u/s 80IB of the I.T. Act. He submitted that without disposing of the preliminary legal objections of the assessee, the Assessing Officer proceeded to pass the re-assessment order dated 04.03.2013 wherein he reduced eligible deduction of MBF unit from 41.20 crores to 32.36 crores, after adjusting notional loss of Rs. 8.83 crores pertaining to earlier assessment years. He submitted that during the pendency of the aforesaid appeal before the ld. CIT(A)....
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.... section 263 of the Act, the CIT assumed that the reassessment order dated 04.03.2013 was validly passed. In the appeal against the impugned reassessment order, the primary issue raised, as stated above, was challenge to the validity/ legality of proceedings under section 147 of the Act. In case the appellant is to succeed in demonstrating that jurisdiction under section 147 of the Act was not validly assumed, then, reassessment order would be quashed. Consequently, the order under section 263 of the Act seeking to revise the (non- existent) reassessment order would fail. Therefore, the validity of the order under section 263 of the Act is dependent on the fate of the reassessment order to be decided in appeal there against. To put it differently, the disposal of the appeal against the reassessment order by the CIT(A) on the grounds raised therein had material and significant bearing on the assumption of jurisdiction under section 263 of the Act, which is subject of challenge before the Tribunal (ITA No. 1462/Del/2016). In that view of the matter, the CIT(A) ought to have disposed off the appeal of the assessee on merits much less dismiss the same as infructuous. 8. He submitted....
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....(before ITAT) nor in appeal against consequential order under section 143(3)/263 of the Act. He submitted that any cause of action is rendered infructuous if the very cause, leading to the grievance, against which legal remedy is pursued, itself ceases to operate/ exist. The legal remedy (appeal) cannot be regarded as infructuous when the cause and the fundamental grievance of the assessee/ petitioner/ litigant continues to survive. Referring to various decisions he submitted that it is quite fundamental that no one can be rendered remediless. The fundamental of law is captured in the maxim' Ubi Jus Ibi Remedium' which means for every wrong, law provides a remedy. Referring to the decision of the Hon'ble Supreme Court in the case of Canon Steels (P) Limited V. Commissioner of Customs: (2007) 14 SCC 464, he submitted that the Apex Court in the context of territorial jurisdiction of Court, observed, "But no person should be left without remedy ..... ". 11. He submitted that the statutory provision of appeal under section 246A of the Act is for the benefit of the assessee. So long as the grievance of the appellant continues to subsist, the appeal cannot be regarded and,....
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.... Milk Producers Union Ltd. v. ACIT: 216 ITR 371 (Guj.) (i) Fenner India Ltd. v. DCIT: 241 ITR 672 (Mad.). (j) Hindustan Lever Ltd. : 268 ITR 332 (Bom.). (k) Babu Lal Jug Raj & Co. vs. ITO: 289 ITR 115 (Raj.). (l) Haryana Acrylic Manufacturing Company v. CIT: 308 ITR 38 (Del.). (m) CIT v. Indian Farmers Fertilizer Cooperative Ltd.: 171 Taxman 379 (Del.). (n) Wel Intertrade (P) Ltd. v. ITO: 308 ITR 22 (Del.). (o) Atma Ram Properties (P) Ltd. : 343 ITR 141 (Del.). (p) Unitech Ltd. v. DCIT : WP(C) 12324/2015 (Del) dated 24.7.2017. 14. Referring to the following decisions, he submitted that the assessee is only required to state the primary facts. Legal inferences, if any, has to be drawn by the Assessing Officer. If true and full disclosure of facts made, reassessment is held to be invalid :- (a) Calcutta Discount Co. Ltd. v. ITO: 41 ITR 191 (SC). (b) Atma Ram Properties (P) Ltd. : 343 ITR 141 (Del.). (c) Haryana Acrylic Manufacturing Company v. CIT: 308 ITR 38 (Del.). (d) CIT v. Shri Tirath Ram Ahuja (HUF): 306 ITR 173 (Del.). (e) CIT v. Motor & General Finance Ltd.:....
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....gh notice in present case was issued on 24.03.2012, but reasons and sanction accorded under section 151 were not provided and accordingly, notice was not complete/ valid. He submitted that the reasons were admittedly communicated to the appellant much after the completion of reassessment proceedings. Sanction has in fact not been provided till date. He accordingly submitted that under the aforementioned facts, it cannot be held that notice was issued within period of 6 years, since notice was not complete and was not accompanied by reasons and the satisfaction note and consequently, impugned reopening is barred by limitation of 6 year prescribed in section 149. For the above proposition, he relied on the following decisions :- (i) Haryana Acrylic Manufacturing Company v. CIT: 308 ITR 38 (Del.), (ii) Balwant Rai Wadhwa vs. ITO: ITA No.4806/D/2010 (Del Trib.). 17. Referring to the law and procedure laid down in the case of GKN Driveshafts (India) Ltd. v. ITO: 259 ITR 19 (SC), the ld. counsel for the assessee submitted that the same is sacrosanct and binding on the assessee and the Revenue. He submitted that as per the said decision (a) Pursuant to notice under se....
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....f GKN Draveshaft (supra) and various other decisions, he submitted that the action of the Assessing Officer in not disposing of objection raised by the assessee by way of separate speaking order makes the reassessment proceedings illegal, bad in law and is liable to be quashed. 20. So far as ground no.3 is concerned, ld. counsel for the assessee submitted that MBF Unit was set up as a separate and independent industrial undertaking /unit and is engaged in manufacture of liquid/pig iron. The said unit commenced production on 12th April, 2002 falling in the previous year relevant to the assessment year 2003-04. 21. In the assessment years 2003-04 and 2004-05, despite the fact that the MBF Unit was eligible for deduction under section 80IB(5)(ii) of the Act since the said unit suffered losses. no deduction was claimed in the return of income. The said losses were completely set off by appellant with the taxable income for the respective assessment years and accordingly, no loss was left to be carried forward to future assessment years, including the relevant assessment year. The quantum of losses for the said assessment years were as under: Assessment Year Amount (Rs.) ....
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....CIT reported in 371 ITR 275, he submitted that the Hon'ble High Court has dealt with one of the question of law as under: "1. Whether on the facts and circumstances of the case, the Tribunal was right in holding that the losses incurred by the industrial undertaking claiming deduction under Section 801, which has been already set off against the profits of the other industrial undertaking should be notionally carried forward and set off against profit generated by the industrial undertaking during the relevant assessment year for determining the deduction under Section 80I?" 25. The Hon'ble High Court, in context of section 801(6) which is, in substance, similar to provisions of section 80IA(5) as is applicable to section 80IB of the Act, held that losses for past assessment years which were fully set off against the total income of those assessment years could not be notionally carried forward and set off against income of the current year. 26. So far as ground no.4 and 5 are concerned, he submitted that the Assessing Officer, in the impugned assessment, has given no direction to levy any interest under the Act. However, in the computation of income, annexed....
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....der does not exist and shall not exit till the order u/s 263 is quashed. Therefore, the appealable order is that u/s 143(3) r.w.s. 147 r.w.s. 263 and the original order u/s 143(3) r.w.s. 147 does not exist as on date. He submitted that after order u/s 263 only notice u/s 148 survived and not the order. Therefore, deciding this appeal amounts to reviewing the order of Hon'ble High Court in writ jurisdiction dated 24.02.2016 in CWP 10702 of 2015 dismissing the writ of assessee against the order u/s 263. If the order u/s 263 is upheld by the Tribunal in ITA No.1462/Del/2016 then validity of notice u/s 148 can be examined in appeal against the order u/s 143(3) r.w.s. 147 r.w.s. 263 of the I.T. Act. He submitted that if the Tribunal quashes the order u/s 263 in ITA No.1462/Del/2016 then this appeal may go back to the file of the ld. CIT(A) as he has not decided the issue on merits. He submitted that vide order dated 30.03.2016 in SA No.198/Del/2016, para 8.8 of the Assessing Officer was allowed to pass assessment order u/s 143(3) r.w.s. 263 of the I.T. Act. He accordingly submitted that ITA No.1462/Del/2016 filed by the assessee against the order passed u/s 263 may be decided first ....
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....ent order dated 04.03.2013 passed u/s 143(3)/147 was not set-aside by the ld. CIT in toto. Therefore, when the ld. CIT in exercising of revisionary power u/s 263 sets aside the assessment, the assessment is not completely effaced and only the issue set-aside by the ld. CIT in the order passed u/s 263 are to be adjudicated by the Assessing Officer. It is also his submission that the ld. CIT while exercising the jurisdiction u/s 263 assumed the reassessment order dated 04.03.2013 was validly passed. Therefore, when the issue of validity or legality of proceedings u/s 147 of the I.T. Act was challenged before the ld. CIT(A) and if the assessee succeeds in demonstrating that the jurisdiction u/s 147 was not validly assumed, then the reassessment order would have to be quashed and consequently, the order u/s 263 seeking to revise the reassessment order would fail. 33.1 We find merit in the above arguments of the ld. counsel for the assessee. A perusal of the order of ld. CIT passed u/s 263 shows that the ld. CIT by invoking powers conferred on him u/s 263 has set-aside the reassessment order on the limited issue of examination of deduction u/s 80IA/80IB. In other words, the entire or....