TaxTMI 
TaxTMI 
2019 (8) TMI 1485
X X X X Extracts X X X X
X X X X Extracts X X X X
....an appeal nor a cross objection before the Tribunal? 2. Whether on the facts and circumstances of the case the Income Tax Appellate Tribunal is right in law in traversing beyond the scope of Section 254 of adjudicating on an issue of (validity of reopening of assessment) when the CIT(A) has not decided that matter? 3. Whether the Rule 27 of the Income Tax Tribunal Rules would entitle a respondent who has neither preferred an appeal nor cross objections to relief on a point decided in favour of the appellant by the lower appellate authority? and 4. Whether on the facts and circumstances of the case the Income Tax Appellate Tribunal is right in law in upholding that the CIT(A)'s order allowing relief under Section 80 I to the assessee on a sum of Rs. 9.89 Crores especially when the assessing officer has pointed out before the CIT(A) that the assessee is not at all entitled to relief under Section 80 I on account of loss in business? 3. The assessee is engaged in the manufacture of cement and for the assessment year under consideration, i.e. 1996-97, the assessee filed their return of income on 28.11.1996 admitting "Nil" income. The assessment was completed under Section 14....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peals-XI, Chennai [hereinafter referred to as "CIT(A")]. Before the CIT(A), the assessee contested the correctness of the assessment order dated 31.03.2004 under three heads namely, (i) the relief under Section 80-I of the Act read with Section 80AB of the Act; (ii) the validity of the reopening of the assessment under Section 147 of the Act; and (iii) the liability under Section 234D of the Act. The CIT(A) pointed out that the issue relating to the relief under Section 80-I of the Act and the validity of the reopening of assessment under Section 147 of the Act, were hotly debated before him, which made him to call for two remand reports from the Assessing Officer dated 25.10.2004 and 16.12.2004, copies of which were furnished to the assessee and the assessee was heard in the matter. 7. Though the CIT(A) recorded that the issue relating to the validity of the reopening of the assessment under Section 147 of the Act was hotly contested by the assessee, the said issue was not decided by the CIT(A) for the reason that the CIT(A) rendered a decision on the relief, which the assessee was entitled to, under Section 80-I of the Act and therefore, opined that it was not necessary for him ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of CIT Vs. Elgi Finance Ltd. [reported in (2006) 286 ITR 674] and in the case of CIT Vs. Premier Mills Ltd. [reported in (2008) 296 ITR 157]. 10. The Revenue, on the other hand, contended that the said issue was squarely covered in favour of the Department in the light of the decision of the Hon'ble Supreme Court in the case of Pandian Chemicals Vs. CIT [reported in (2003) 262 ITR 278]. 11. The Tribunal took up for consideration the contentions advanced by the assessee that in terms of Rule 27 of the Rules, they were entitled to agitate the issue regarding the correctness of the reopening of assessment under Section 147 of the Act. After referring to Rule 27 of the Rules, it was pointed out that a plain reading of Rule 27 of the Rules would clearly show that even if the respondent had not filed any appeal or cross objection, they could still agitate the points, which were decided against them. Further, it was pointed out that if any issue was not adjudicated by the Appellate Authority, then it was deemed to have been decided against the appellant. Following the said principle, the Tribunal held that the issue of reopening, having not been decided by the CIT(A), should be ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3, then there would be no necessity for us to decide substantial question of law No.4. With this caveat, we proceed to consider the case before us. 16. We have elaborately heard Mr.Karthik Ranganathan, learned Senior Standing Counsel for the appellant/Revenue and Mr.Vikram Vijayaraghavan learned counsel appearing on behalf of M/s.Subbaraya Aiyar Padmanabhan, learned counsel appearing for the respondent/assessee. 17. It was argued by Mr.Karthik Ranganathan, learned Senior Standing Counsel for the appellant/Revenue that the issue relating to the validity of the reopening of assessment was not adjudicated by the CIT(A) and without filing an appeal against the said order, the assessee was not entitled to agitate the issue before the Tribunal in an appeal filed by the Department. It was further submitted that the Tribunal traveled beyond the scope of Section 254 of the Act by adjudicating the issue relating to the validity of reopening of assessment, when the CIT(A) had not decided the said issue on the merits of the matter. It was vehemently contended that the CIT(A) erred in granting relief to the assesee under Section 80-I of the Act on a sum of Rs. 9.89 Crores ignoring the fact th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lier, we first proceed to decide the correctness of the order passed by the Tribunal in permitting the assessee to argue the validity of the reassessment under Section 147 of the Act, which issue was not decided by the CIT(A), without filing a separate appeal challenging that portion of the order of the CIT(A) dated 30.12.2004. A decision on this issue will cover substantial question of law Nos.1 to 3. 22. In the case of Kiran Singh Vs. Chaman Paswan [reported in AIR 1954 SC 340], the Hon'ble Supreme Court held that it is a fundamental principle well established that a decree passed by a Court without jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. It was further pointed out that a defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties. 23. This decision was taken note of in the case of Deep Chand Kothari, wherein one of the substanti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s deleted in entirety, there was no occasion for the assessee to feel aggrieved, that it was not necessary for the assessee to prefer an appeal and that the position in law was well settled that a cross-objection, for all intents and purposes, would amount to an appeal and the cross-objector would have the same rights, which an appellant has, before the Tribunal. It was further pointed out that in case a party, having succeeded before CIT(A), opts not to file cross-objection even when an appeal has been preferred by the other party, from that, it is not possible to infer that the said party has accepted the order or the part thereof, which was against the respondent. 26. Section 253 of the Act provides for appeal to the Tribunal. Under Sub- Section (1), an assessee is granted right to file an appeal. Under Sub-Section (2), the CIT is granted a right to file an appeal by issuing necessary direction to the Assessing Officer. Sub-Section (3) prescribes the period of limitation, within which, an appeal could be preferred. Section 253(4) of the Act lays down that either the Assessing Officer or the assessee, on receipt of notice that an appeal against the order of CIT(A) has been prefe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 of the Rules. Therefore, the Tribunal was right in permitting the assessee to argue on the issue relating to the validity of the reassessment proceedings. 30. Having held so, we need to consider as to whether the reassessment was validly done. The Tribunal held in favour of the assessee stating that the reassessment was bad in law. To decide this issue, we may straightaway refer to the decision in the case of Kelvinator of India Ltd., wherein the Hon'ble Supreme Court pointed out that post 01.04.1999, the power to reopen was much wider and that however, one needs to give a schematic interpretation to the words "reason to believe", failing which, Section 147 of the Act would give arbitrary powers to the Assessing Officer to reopen the assessment on the basis of "mere change of opinion", which cannot be, per se, reason to reopen. It was pointed out that there is a conceptual difference between the power to review and power to reassess, that the Assessing Officer has no power to review, that he has the power to reassess and that reassessment has to be based on fulfillment of certain pre-conditions and if the concept "change of opinion" is removed, then in the garb of reopening ....