TaxTMI 
TaxTMI 
2023 (5) TMI 1208
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....w. 2. The CIT(A) erred in holding that assessment U/s.153A of I.T. Act in pursuance of notice under section 153A issued to the appellant-HUF when the HUF was not searched U/s.132 of the I.T. Act is bad in law without appreciating the fact that the debatable issues cannot raised in the applications U/s.154. 3. The CIT(A) erred in not appreciating that section 153C is enabling section to make assessment of any other person other than the person referred in section 153A and the assessment of income of such other person shall have to be made in accordance with the provisions of section 153A, thereby the order of the Assessing officer is in order. 4. The CIT(A) out to ought to have appreciated that the orders made under section 153A are appealable as per section 246A(1) of the I.T. Act and orders under section 158C do not figure as applicable order from which it is very clear that all the orders made in pursuance of search and seizure are orders made U/s153A of I.T. Act. Hence the order of the AO. in framing the order under section 153A is in order. 5. The learned CIT(A) erred in concluding that even issuance of notice U/s153C to the HUF would not ari....
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....rder under section 154 is not possible wherever facts are to be examined. 17. The CIT(A) ought to have appreciated the principle laid by Hon'ble Apex Court in the case of Volkarts Brothers (82 ITR 50) that mistake must be obvious and patent-not something which can be established by a long drawn process of reasoning on points on which there may be two opinions. 18. The learned CIT(A) erred in observing an issue relating to jurisdiction can be raised at any time by relying on the decision of the Hon'ble Supreme Court in the case of Hotel Blue Moon (2010) 321 ITR 362. 19. The learned CIT(A) ought to have appreciated that the question before Hon'ble Supreme Court in the case of Hotel Blue Moon was whether issuance of notices under section 143(2) and 142(1) within prescribed time limit for the purpose of making the assessment under section 143(3) is mandatory? 20. The learned CIT(A) erred in not appreciating that the question before him was whether jurisdiction issue can be raised Under section 154 after the assessment has become final? 21. Any other ground that may be urged at the time of hearing." 3. CO.No.68/Hyd/2014 (Ground....
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.... show cause notice was issued dt.23.11.2009 calling for assessees' objections. After receiving the response from the assessee, AO had completed the assessment u/s 143(3) r.w.s. 153A against the assessee HUF for the aforesaid years. 5.1. Thereafter, assessee HUF filed an appeal to the ld.CIT(A), who had also dismissed the appeal of the assessee. Feeling aggrieved by the order passed by the Ld. CIT(A), the assessee filed an appeal before the income tax appellate tribunal. The income tax appellate tribunal after hearing the parties had decided all the grounds of the assessee appeal, against the assessee on 12.07.2012. 5.2 Thereafter the assessee had filed an application under section 254 before the tribunal seeking rectification of the order passed by it, however the said application for rectification was also dismissed by the tribunal through the speaking order dt 26.07.2013. 5.3 The assessee had not preferred any appeal before the Hon'ble High Court seeking the reversal of the order passed by the tribunal. In the light of the above the order passed by the tribunal had attained finality and was enforceable and executable against the assessee. 5.4. Thereafter the assessee ....
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....u/s. 153C. He probably meant that in the case of the assessee, HUF, notice u/s. 153C should have been issued whereas wrongly notice u/s. 153A was issued but both are interchangeable and hence the assessment was valid. There is no law which supports this view. Besides, even the contingency of issuing notice u/s. 153C to the HUF would not arise in this case since no document, much less an incriminating document, was found or seized in the course of search. Therefore, it is clear that the HUF could not have been visited with notice either u/s. 153A or u/s. 153C of the Income Tax Act, 1961 7.5.2 The question is whether the issue of jurisdiction can be raised u/s. 154 after the assessment on merits has gone through the appellate channels since in the case of the appellant, the issue on merits has already been adjudicated by the CIT(A) as also the ITAT. The judgments of the Supreme Court relied upon by the AR support his contention that an issue relating to jurisdiction can be raised at any time, including at the stage of recovery (execution of decree). The appellant's AR specifically invited my attention to the decision of the Bombay High court in blue Star Engineering co. (Bom....
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....the AR is totally misconceived. The Tribunal considered the issue in dispute in its order and given a categorical finding that the issue does not emanate from the order of the CIT(A). Now, the assessee's counsel wants to re-argue the case for which the Tribunal has no power to review its own order. 7. It is well settled that statutory authority cannot exercise power of review unless such power is expressly conferred. There is no express power of review conferred on this Tribunal. Even otherwise, the scope of review does not extent to re-hearing of the case on merit. It is held in the case of CIT vs. Pearl Woollen Mills (330 ITR 164): "Held, that the Tribunal could not readjudicate the matter under section 254(2). It is well settled that a statutory authority cannot exercise power of review unless such power is expressly conferred. There was no express power of review conferred on the Tribunal. Even otherwise, the scope of review did not extent to rehearing a case on the merits. Neither by invoking inherent power nor the principle of mistake of court not prejudicing a litigant nor by involving doctrine of incidental power, could the Tribunal reverse a decision ....
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....ordships while considering the powers of the Tribunal under s. 254(2) of the IT Act, 1961 observed as under: "Under s. 254(2) of the IT Act, 1961, the Tribunal has the power to rectify mistakes in its order. However, it is plain that the power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified. Rectification is a species of the larger concept of review. Although it is possible that the pre-requisite for exercise of either power may be similar (a mistake apparent from the record), by its very nature the power to rectify a mistake cannot result in the recall and review of the order sought to be rectified." 11. Thus the scope and ambit of application u/s. 254(2) is as follows: (a) Firstly, the scope and ambit of application of s. 254(2) of IT Act is restricted to rectification of the mistakes apparent from the record. (b) Secondly, that no party appearing before the Tribunal should suffer on account of any mistake committed by the Tribunal and if the prejudice has resulted to the party, which prejudice is attributable to the Tribunal's mistake/error or omission, and which an error is a manifest err....
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....er section 154 of the I.T.Act, the assessee can not be permitted to re-open and re-argue the whole matter as the same is beyond the scope of section 154 of the I.T.Act, particularly when the subject Asst.Order has suffered the test of second appeal and the assessee neve, raised the grounds either before the CIT(A) or the ITAT. d) There is a categorical finding, in respect issues raised in applications dt. 03.03.2014 and 20.03.2014, in the order passed that sought to be amended/rectified as mistake apparent from record. Now, the assessee prays to review the order passed by the Assessing Officer when there was a provision in the Act to raise the above grounds in appellate forums. e) The entire demand raised by the A.O in the aforesaid order was contested by the assessee before the Commissioner of Income tax(Appeals) as well as before ITAT but could not succeed in those appeals. The Hon'ble ITAT even rejected the Mise. Application filed by the assessee . Now, the assessee made last minute failed effort to thwart/postponement of the sale of attached properties. f) The order of the A.D. that sought to be amended stands concluded as the same has been upheld....
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....fficer u/s.154 dated 31.03.2014 in the case of the assessee, Krishna Kumar D. Shah, HUF AY. 2006-07 [p- 16] The application u/s.154 filed by the assessee is rejected on the following grounds: 1. The scope and ambit of section 154 is limited to mistakes apparent from record but is not used to review or recall the whole issue. 2. In the garb of an application u/s.154, the assessee cannot be permitted to reopen and re-argue the whole matter. Moreover, the subject Assessment Order suffered test of second appeal. 3. The assessee's prayer to review and recall the Order passed cannot be done as there is a provision in the act to raise the above grounds in appellate forums. 4. The order of the AO that sought to be amended stands concluded as the same has been upheld by the highest fact finding authority, ITAT. 5. Various courts have held that order made u/s.153A in the cases related to 153C is a valid order. 6. The assessee also raised a fresh claim u/s.54F for the first time in the 154 application. The same is rejected as no such claim can be with regard to issue raised questioning the validity of issue of notice and can b....
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.... the matter therefore the order passed by any authority, without jurisdiction would be void ab initio. Ld. AR further submitted that Hon'ble Delhi High Court in the case of CIT (Central - II) Vs. ITAT and others (W.P.(C) No.4684 of 2010) had examined the identical issue and held in para 14 to 16 of its order as under:- "14. It was further contended by the learned counsel for the assessee that in any event the question of assumption of jurisdiction by any statutory authority and its validity can be set up by the aggrieved party at any point or at any stage of the proceedings and can even be taken during collateral proceedings. In support of this submission, which was made without prejudice to the main contention noted in the preceding paragraph, our attention was drawn to the judgment of the Gujarat High Court in P.V. Doshi v. CIT [1978] 113 ITR 22. 15. In Kiran Singh v. Chaman Paswan AIR 1954 SC 340 it was observed by T.L. Venkatarama Ayyar, J. speaking for a Bench of four Judges as follows:- "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 a....
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....only controversy was with regard to the merits of the addition made in the reassessment order. The Tribunal restored the matter to the Assessing Officer with the directions to permit the assessee to cross-examine the witness, who had filed an affidavit implicating the assessee, and thereafter to complete the reassessment in accordance with law. When the matter came back to the assessing officer the assessee specifically raised the point of jurisdiction to reopen the assessment, contending that the notice of reopening was prompted by a mere change of opinion. This plea was rejected. Even on merits the addition was repeated in the reassessment order. The assessee again carried the reassessment order before the AAC. In this appeal the assessee again took up the point of jurisdiction. The AAC found from the assessment record that no reasons had been recorded by the Income Tax Officer before issuing notice under Section 148 (1) of the Act. According to him, Section 148 (2) which requires the Assessing Officer to record reasons for reopening the assessment was mandatory and failure to obey the mandate was fatal to the jurisdiction of the Assessing Officer to reopen the assessment. The AA....
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....mpetence of the Court to assume jurisdiction, either pecuniary or territorial or over the subject matter of the dispute. The Court further held that since neither consent or waiver can confer jurisdiction upon the Assessing Officer where it did not exist, no importance could be attached to the fact that the assessee, in the first round of proceedings, expressly gave up the plea against the erroneous assumption of jurisdiction by the assessing authority. According to the Court, the "finality or conclusiveness could only arise in respect of orders which are competent orders with jurisdiction and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could never have any finality or conclusiveness. If the original order is without jurisdiction, it would be only a nullity confirmed in further appeals". In this view of the matter, the Court finally answered the reference in favour of the assessee." 14. Ld. AR further submitted that in the present case, no search has been taken place in the hands of the assessee and therefore, there was no occasion to find out any incriminating material against the a....
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....s. Since the revenue has filed an appeal against that order, the assessee has filed the cross objections. In paragrpahs 3.4 and 3.5, the learned DR refers to the decision of the CIT(A) and states that he cancelled the original assessment order even though that was not the subject matter of appeal before him. The DR remarks that the CIT(A) exceeded his jurisdiction. The assessee's appeal before the CIT(A) was that the assessment was bad in law owing to the fact that it was the outcome of assumption of jurisdiction incorrectly. The CIT(A) allowed the appeal. The CIT(A) was competent to dispose of the appeal. There is no warrant for the DR to contend that the CIT(A) exceeded his jurisdiction. The claim of the DR (vide para No.3.5) that "the CIT(A) would have arrived at a conclusion ........directing the A.O. not to reject the rectification of application and consider the same on merits of the issue raised in such applications ........." is contrary to the provisions of section 251(1)(a) because w.e.f. 1.6.2001 the CIT(A) has no power to set aside an order of assessment. The order u/s 154, the subject matter of the appeal, is continuation of the assessment u/s 153(A) r.w.s....
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....lopment agreement vide his letter dated 29-9-2009 and it was furnished by the assessee on 8-10-2009. In the absence of seizure of any document, the AO have could not ever assume jurisdiction u/s 53C against the assessee HUF. Thus, the AO has had no authority to assume jurisdiction in the case either u/s 153A or u/s 153C. But he issued notice to the HUF u/s 153A and completed the assessment. The assessment made against the HUF the strength of an invalid notice is nullity in law. (2) Mistakes of jurisdiction are patent and obvious. In Mahendra V. Desai v. AAC [1975] 99 ITR 135, the Supreme Court has held that the record for the purpose of sec. 154 includes all proceedings and materials on which the assessment is based. In West Bengal State Warehousing Corporation v. CIT (1986) 157 ITR 149 (Cal), it was held that error of jurisdiction is a glaring and obvious error which could be rectified. In CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821 (SC), the Hon'ble Supreme Court has held that if a notice issued is invalid, the entire proceedings would become void for want of jurisdiction. In Asst. CIT v. Hotel Blue Moon [2010] 321 ITR 362 (SC), it has been held th....
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....4] 269 ITR 451. It is submitted that this decision in McDowell & Co. was rendered in the context of the scope of the power of the Tribunal u/s 35 of the Wealth Tax Act and is distinguishable on facts. Moreover, the High Court has referred to many other decisions with which it has differed. It is submitted that where two views are possible, the view favourable to the subject should be preferred as held in the judgments of the Apex Court, inter alia, in Union of India v. Onkar S. Kan war and Others reported in 258 ITR 760 and CIT v. Vegetable Product Ltd. [1973] 88 ITR 192. Thus, the decision in CIT v. McDowell & Co. Ltd. [2004] 269 ITR 451 may not be applied to the case of the assessee. Above all, it is submitted that decision in the case of Blue Star Engineering Co. (Bombay) Ltd. (supra) accords with the decisions of the Supreme Court. (5) It is settled law that jurisdiction defect can be raised even after the wrong order has been confirmed in appeal. When jurisdiction has been assumed by issue of an invalid notice, all orders passed consequent to such invalid notice are bad in law and a challenge against such orders can be set up at any time as has been held by the Suprem....
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.... that in case the revenue's appeals' on the challenge to the assumption of jurisdiction is allowed, then the remaining issues arising out of the Cross Objections filed by the Rejoinder to DR's arguments/ITA. No.1605/H/2014 and out of the Cross Objections filed by the assessees would be restored to the file of the CIT(Appeals) for adjudication on merits. > Hence the submission that cross objections filed against paragraphs 5 and 6 of the CIT(Appeals) order, are maintainable and not hit by the decision of the Bengaluru Bench. In view of the foregoing and the oral submissions made, it is prayed that the appeal of the department has no merit and may kindly be dismissed." 15. We have heard the rival submissions and perused the material on record. Before we deal with the issue, the facts of the case are required to be appreciated. In the present case, search proceedings have been initiated on the premises of the assessee and some incriminating documents were found. Thereafter, the Assessing Officer had issued notice to the assessee and in response thereto, the assessee had filed the return of income u/s 153A of the Act. The assessee at that time had not r....
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....sing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. (2) Subject to the other provisions of this section, the authority concerned- (a) may make an amendment under sub-section (1) of its own motion, and (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee or by the deductor or by the collector, and where the authority concerned is 71[the Joint Commissioner (Appeals) or] the Commissioner (Appeals), by the Assessing Officer also. (3) An amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee or the deductor or the collector, shall not be made under this section unless the authority concerned has given notice to the assessee or the deductor or the collector of its intention so to do and has allowed the assessee or the deductor or the collector a reasonable opportunity of being heard. (4) Where an amendment is made under this section, a....
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....kart Brothers (1971) 82 ITR 50 (SC), the Hon'ble Supreme Court had held as under : "We have now to see whether the Income-tax Officer was justified in opining that in the original orders of assessment, there was any apparent mistake. As seen earlier, in the original assessments of the firm for the relevant assessment years, the Income-tax Officer adopted the slab rates applicable to registered-firms. The question for decision is whether the first respondent's firm came within the mischief of section 17(1) of the Indian Income-tax Act, 1922. Section 17(1) reads : "Where a person is not resident in the taxable territories and is not a company, the tax, including super-tax, payable by him or on his behalf on his total income shall be an amount equal to- (a) the income-tax which would be payable on his total income at the maximum rate, plus (b) either the super-tax which would be payable on his total income at the rate of nineteen per cent. or the super-tax which would be payable on his total income if it were the total income of a person resident in the taxable territories, whichever is greater. ..." (Proviso to the section is not r....
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....rjunBhavanappa Tirumale [1960] 1 SCR 890, this court while spelling out the scope of the power of a High Court under article 226 of the Constitution ruled that an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record-see Sidhramappa And annappa Manvi v. Commissioner of Income-tax [1952] 21 ITR 333 (Bom.). The power of the officers mentioned in section 154 of the Incometax Act, 1961, to correct "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an "error apparent on the face of the record." In this case it is not necessary for us to spell out the distinction between the expressions "error apparent on the face of the record" and "mistake apparent from the record". But suffice it to say that the Income-tax Officer was wholly wrong in holding that there was a mistake apparent from the record of the assessments of the first respondent. For the reasons mentioned above, we dismiss t....
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....ned on percentage basis. Hence, the issue of deduction on the score of depreciation from gross income which is computed on the basis of estimation is a debatable one and cannot be a palpable error on the face of the record. 8. We also find much substance in the argument on behalf of the assessee that in Indwell Constructions (supra), the Bench was not dealing with the issue of depreciation. In this regard it may be profitable to refer to the observations of this Court in Y. Ramachandra Reddy (supra) where the Bench distinguished Indwell Constructions (supra) in the following manner:- "The learned counsel for the appellant relied on a judgment of this Court in Indwell Constructions v Commissioner of Income Tax. That was a case in which this Court took the view that once the books of account are disbelieved for a particular purpose, they cannot be relied upon in the context of interest. In the instant case, we are concerned with the depreciation. The occasion to deny the deduction of depreciation or interest would arise if only the material placed before the Assessing Authority in proof of purchase of machinery and other items and payment of interest is disbelieved.....
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....r words after approval of the order without modification by the superior authority, the order of the lower authority ceases to exist. 22. The order of the Tribunal/superior authority passed by it can only be modified, set aside and annulled by process known to law. Admittedly, the Tribunal has neither recalled its order nor an appeal has been preferred against the order passed by the Tribunal before the hon'ble High Court. Therefore, the order passed by the Tribunal has attained finality and is required to be executed / enforced by the Assessing Officer. We cannot subscribe the view of the ld. AR that by rectification, the alleged jurisdictional issue can be looked into by the Assessing Officer or ld.CIT(A) thereby annulling the entire assessment proceedings, more particularly, when the assessment proceedings have already attained finality by virtue of the order of the Tribunal. There cannot be two contradictory orders of the Tribunal one by upholding the assessment and other quashing the assessment based on the jurisdictional error. 23. Further, we may point out that the decisions relied upon by the assessee are not applicable to the facts of the case as there was no pending....