TaxTMI 
TaxTMI 
2023 (1) TMI 178
X X X X Extracts X X X X
X X X X Extracts X X X X
....ese three issues only. He has not given any direction to consider any other issue. In such circumstances, is the AO expected to go beyond the issued considered by the Commissioner (A), more precisely, which are not subject matter of first appeal before the Commissioner (A)? In out humble opinion when an assessment order is set aside by appellate authority to AO, it is not open to him to go beyond the issues, to new issues thereby enhancing the assessment. His jurisdiction is limited to the issued which were subject matter of appeal. We place reliance on the decision in the case of Sri Gajalakshmi Ginning Factor Ltd. vs. CIT reported in 22 ITR 502. In the present case, the AO has carried out the directions given by the Commissioner (A) and as such we cannot find that AO's action is erroneous. He duty is to follow the direction of the Commissioner (A). he followed the direction of the Commissioner (A). The Commissioner (A) never directed to consider the DVAC report dt.7.12.1996 issued in the case of Miss J.Jayalalitha under Prevention and Corruption Act. Further in our opinion, the DVAC report is not a record to the proceedings under the I.T. Act. It can be considered for reopeni....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x Act, 1961, which deals with the power of the Commissioner in revision, is clear and unambiguous, as in terms thereof the doctrine of merger applies only in respect of such items which were the subject-matter of appeal and not in respect of those which were not." Accordingly we quash the revision order of the CIT under section 263. 7. In the result, the appeal is allowed. 3. This Tax Case Appeal was admitted on the following substantial questions of law:- i. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the Commissioner of Income Tax did not have the power to revise the de novo order of the assessing officer, as there was no specific direction of the first appellate authority on the issue, even though the entire assessment had been set aside to be redone after making enquiries? ii. Whether in the fact and circumstances of the case, the Tribunal was right in holding that the DVAC's report cannot be looked into by the Commissioner of Income Tax for the purpose of revision under Section 263 of the Income Tax Act, 1961 as it is not a proceeding under the Income Tax Act, 1961? iii.Whether i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....graph 10(e) & (f) of the aforesaid circular, the appellant was duty bound to proceed with the present appeal on merits. It is submitted that specifically there is an instruction to not to withdraw the present appeal in the light of the above mentioned circular as amended. 10. By way of rejoinder, the learned counsel for the respondent submits that Paragraph No.10(e) & (f) of the aforesaid Circular is not applicable to the facts of the present case as the prosecution initiated against the respondent was compounded by the respondent under Section 279(2) of the Income Tax Act, 1961 for the Assessment Year 1993-1994. 11. We have considered the arguments advanced by the learned Senior Standing Counsel for the appellant and learned counsel for the respondent. 12. We are inclined to overrule the preliminary objection raised by the learned counsel for the respondent in the light of the Paragraph No.10 of the aforesaid Circular No.03/2018 [F.No.279/Misc.142/2007-ITJ (Pt)], dated 11.07.2018 as amended by Letter F.No.279/Misc.142/2007-ITJ (Pt), dated 20.08.2018 and Circular No.5/2019 [F.No.279/Misc./M-84/2018- ITJ], dated 05.02.2019. Paragraph No.10(e) & (f) reads as under:- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Commissioner of Income Tax (Appeals) or rectifying any errors on the face of record. 20. Meanwhile, the respondent filed an appeal before the Commissioner of Income Tax (Appeals) - II, in ITA.No.88/97-98 against the Assessment Order dated 27.03.1997 passed by the Assessing Officer under Section 144 of the Income Tax Act, 1961. During the interregnum, the Assistant Commissioner of Income Tax passed an order dated 18.06.1997 under Section 154 of the Income Tax Act, 1961. 21. The Commissioner of Income Tax (Appeals), vide order dated 26.03.1998, after examining the issues, set aside the order of assessment dated 27.03.1997 with the following observations:- 15. The Assessing Officer has not chosen to examine the person confirming the lease transaction and the Manager who is stated to have looked after the agricultural operations. Statements of third parties, even if closely related to the appellant, cannot be summarily rejected. The Assessing Officer is required to consider the letters and affidavits of these parties as per law. The order of assessment deserves to be set aside on these points also. 16. In the light of the foregoing the entire assessment is set aside with....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tax Act, 1961 by giving effect to order dated 14.03.2002 of the Commissioner of Income Tax (Central), Chennai by re-computing the taxable income as Rs.1,34,33,485/- of the respondent and tax payable by the respondent as follows:- [Total taxable income - Rs.1,34,33,485/-] Income Tax thereon : Rs.53,52,394/- Add: Surcharge @ 12% : Rs. 6,42,287/- ---------------------- : Rs.59,94,681/- Add: Interest u/s 234A : Rs.37,16,652/- Interest u/s 234B : Rs.43,16,112/- Interest u/s 234C : Rs. 43,029/- ---------------------- Total : Rs.1,40,70,476/- Less : 140A Taxes paid 10.03.1997 : Rs.677543/- 31.03.1997 : Rs.750000/- 28.04.1997 : Rs.178000/- 29.04.1997 : Rs. 8000/- : Rs. 16,13,543/- ---------------------- Balance demand payable : Rs.1,24,56,931/- 29. On behalf of the appellant, it is submitted that the Income Tax Appellate Tribunal committed an error in allowing the respondent's appeal against the order dated 14.03.2002 passed under Section 263 of the Income Tax Act, 1961. It is submitted that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Commissioner of Income Tax (Appeals) dated 26.03.1998 remanding the case back to the assessing officer on three issues referred to supra and therefore, there was no error in the Assessment Order dated 20.03.2000 (signed on 28.03.2000). 35. It is submitted that the Revised Assessment Order dated 20.03.2000 (signed on 28.03.2000) indeed revises the first Assessment Order dated 27.03.1997 as is evident from a reading of the order. 36. It is submitted that the scope of remand was limited and therefore, there was no scope for invoking Section 263 of the Income Tax Act, 1961 against the second assessment order dated 20.03.2000 (signed on 28.03.2000). 37. It is submitted that the limitation for invoking Section 263 of the Income Tax Act, 1961 against the order dated 27.03.1997 would have expired on 31.03.1999. It is further submitted that even if Section 154 of the Income Tax Act, 1961 was to be invoked, the limitation would have expired on 31.03.2001. It is submitted that even if the orders were prejudicial to the interest of the revenue, it cannot be said that the order dated 20.03.2000 (signed on 28.03.2000) was erroneous and therefore, reliance was placed on the decisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of Income Tax (Appeals) when the aforesaid order dated 26.03.1998 was passed by the latter. 44. When the second Assessment Order dated 28.03.2000 was passed pursuant to the order dated 26.03.1998 of the Commissioner of Income Tax (Appeals) in I.T.A.No.88/97-98, the Assessing Officer had necessary information that was forwarded after the order dated 27.03.1997 was passed. However, this could not be considered as the scope of remand was limited to the three issued as stated above. 45. At the same time, order dated 26.03.1998 of the Appellate Commissioner remanding the case back to the Assessing Officer to pass a fresh de novo order on the three grounds specified therein, is to be construed as an interlocutory order. Law relating to the interlocutory order has been dealt with by the various Courts. 46. Under Section 105(1) of the Civil Procedure Code, 1908, no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but, where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal. 47. As per Sub-S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....il, 1976, of the Appellate Assistant Commissioner. The effect of non-filing of an appeal is that the finding is binding on the assessing authority when the case went back to that authority and also on the Appellate Assistant Commissioner while disposing of the appeal from the revised decision of the assessing authority. It is not binding on the Appellate Tribunal in the appeal filed under S ection 39 against the decision of the Appellate Assistant Commissioner. The Appellate Tribunal was free to arrive at its own decision on the question of liability of the petitioners to assessment to sales tax. 18. It is thus clear that it was under an erroneous interpretation of the law that the Appellate Tribunal held that it had no jurisdiction to decide the issue regarding the petitioners' liability to assessment. The order of the Appellate Tribunal is, therefore, set aside. The cases are remitted to the Appellate Tribunal for fresh disposal on the merits. The revision cases are disposed of accordingly. (emphasis applied) 51. The above view of the Full Bench of the Kerala High Court was recently followed by a Division Bench of this Court in State of Tamil Nadu Vs. Sharada E....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecorded a finding that the plaintiff was not entitled to seek reopening of the partition on the ground of unfairness when there was neither fraud nor misrepresentation. It is true that the plaintiff did not further pursue the matter at that stage by taking it in appeal to the Supreme Court but preferred to proceed to the trial of his suit. It is also true that a decision given at an earlier stage of a suit will bind the parties at later stages of the same suit. But it is equally well settled that because a matter has been decided at an earlier stage by an interlocutory order and no appeal has been taken therefrom or no appeal did lie, a higher Court is not precluded from considering the matter again at a later stage of the same litigation. (emphasis applied) 54. In J. K. Cotton Spinning & Weaving Vs. Commissioner of Income Tax, 1963 47 ITR 906 All, one of the questions referred to the Allahabad High Court was "whether the Income Tax Officer could include the dividend income deemed to have been received by the assessee at such reassessment, which could not have been included in the total income at the time of original assessment". The High Allahabad Court answered as follows:-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee was deemed to have received larger income from the dividends. The assessment for 1941-42 was based on the income of the accounting year 1940. The original assessment was made on December 31, 1945, and the order was set aside by the Appellate Assistant Commissioner on March 31, 1947. In the meantime, the section 23A order had been passed on December 14, 1946, and on March 3, 1949, on which the Income-tax Officer reassessed the assessee, he had to reassess him on the basis of the income deemed to have been received by it in accordance with the section 23A order. If he had not made the original assessment and was making the assessment for the first time on March 12, 1949, it cannot be disputed that he would make it on the basis that the assessee had received the larger income in accordance with the section 23A and, when he are assessed it, he had the same jurisdiction as he would have if the reassessment were an assessment for the first time. 55. Thus, it follows that the remand order of the Commissioner of Income Tax (Appeals) was not binding on the Appellate Tribunal in the appeal filed before it. The Appellate Tribunal was free to arrive at its own decision on the quest....