TaxTMI 
TaxTMI 
2023 (5) TMI 1208
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....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 arise since no document, much less incriminating document, was found or seized in t....
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....ourt 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 (Grounds of appeal) 1 (a) The learned CIT(A) erred in stating that the provisions of section 154 did not apply to the request of the appellant in relation 'to adoption of S.R.O. value' as per....
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....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 filed three separate applications u/s 154 requesting the Assessing Officer to rectify the assessment orders. Assessing Officer had disposed of all those three applications filed u/s 154 by passing a combined order dt.31.03.2014 holding that ....
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....w. 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. (Bombay) Ltd. v. CIT (1969) 73 ITR 283 (bom) where the question of jurisdiction came up for decision u/s. 154 after the matter had been decided on merits in the appellate for a by then. The High Court held that the issue of jurisdiction was covered u/s. 154 and if the....
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.... 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 on the merits. The Tribunal was not justified in recalling its previous finding restoring the addition, more so when an application for the same relief had been earlier dismissed." 8. The scope and ambit of application of section 254(2) is very limited. The same is restricted to rectification of mistakes apparent from the record.....
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....ification 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 error, then the Tribunal would be justified in rectifying its mistake. The "rule of precedent" is an important aspect of legal certainty in the rule of law and that principle is not obliterated by s. 254(2) of the Act and non-consideration of precedent by the Tribunal causes a prejudice to the assessee. (c) Thirdly, power to rectify a mistake is not equivalent to a power to review....
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....sed 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 by the highest fact finding authority i.e. ITAT as the appeal filed by the assessee against the order of CIT(A) and Mise. Petition filed against the Tribunal order were dismissed. Hence, the A.O. has no powers to rectify the order. g) the same can not be raised at this juncture as the assessment made has become final for the afore said reasons in (f) above. Hence, it is beyond the scope of rectification. Further, various courts have held that order made under section ....
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....9;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 be done only by filing revised return as held by Hon'ble Supreme court. View points of the Assessing Officer: 1. The CIT(A) ought to have followed the decision of Hon'ble Madras High Court in the case of CIT vs. K.M.Ganesham reported in 333 ITR 562 wherein it was held that notice issued under section 158BC is only in accordance with the provisions of section 158BD. 2. The CIT(A) erred in holding that the AO erred in observing that the assessee sought to review / recall the concluded issues in his application u/s.154 and without appreciating the fact that the provisions of....
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....ubmission, 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 and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. 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." 16. The aforesaid principle was reiterated by the Supreme Court in Superintendent of Taxes v. Onkarmal Nathmal Trust AIR 1975 SC 2065 and Dasa Muni Reddy v. Appa Rao AIR 1974 SC 2089. In the first of these decisions it was pointed out that revenue statutes protect the public on the one hand and ....
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....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 AAC, therefore, accepted this ground and also held the reassessment to be bad on the further ground that in the original assessment proceedings themselves the assessee had explained the investments and, therefore, the reopening of the assessment was the result of a mere change of opinion. Thus, on both the grounds he annulled the reassessment order. Against the order of the AAC the Revenue went in appeal before the Tribunal and specifically raised the plea that the question of jurisdiction to reopen the assessment having been expressly given up by the assessee in the appeal against the reassessment order in the first round, the assessee was debarred from raising that point agai....
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....d 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 assessee, therefore, there was no reason for making the addition in the hands of the assessee. It was submitted that addition made by the Assessing Officer and confirmed by the Tribunal were rightly annulled by the ld.CIT(A) in 154 proceedings and therefore, the appeal of the Revenue is required to be dismissed. 14.1 Ld. AR had submitted Para-wise comments to the arguments of ld.DR, which is to the following effect : "The opening sentence of the synopsis of the arguments furnished by the learned DR states that the search warrant was in the name of the karta of the HUF. This is factually incorrect, devious, misleading and mischievous in intent. It gives an impression that the ....
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....f 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. 143(3). 4. In paragraph 4, the learned DR deals with the scope of section 154. He has relied upon the decisions in T. S. Balram, ITO v. Volkart Brothers reported in 82 ITR 50 (SC), CIT v. Hero Cycles (Pvt.) Ltd. [1997] 228 ITR 463 (SC) and many others to say that a matter which is debatable cannot be covered within the scope of section 154. The decisions cited by the learned DR in fact support the assessee's plea because an issue relating to assumption of jurisdiction strikes at the very root of any decision and the settled Law is that it can be raised at me. In fact, in paragraph 4.3, the learned DR states that an order can be rectified u/s 154 by taking cognizance of the settled legal position. In the ca....
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....ing 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 that a jurisdictional defect cannot be cured. This has been followed by the Karnataka High Court in CIT v. Micro Labs Ltd. [2012] 348 ITR 75 (Kam). (3) The department has raised a ground that there is no difference between notices u/s 153A and u/s 153C. The department has relied on the decision in the case of CIT v. K. M. Ganesan [2011] 333 ITR 562 (Madras) in support of this view. It is submitted that this decision is not an authority on the proposition that issue of notice u/s 153A in law would tantamount to issue of notice u/s 153C. In the case of Manish Maheswari v. ACIT [2007] 289 ITR 341 (SC), the Apex Court has held that satisfaction that money, bullion, etc. belong to the party other than the searched person is a precondition to initiate proceedin....
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....ombay) 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 Supreme Court in Kiran Singh v. Chaman Paswan (AIR 1954 SC 340), The Delhi High Court in CIT v. ITAT in W.P. (C) No. 4684/2010 dated 3-8-2012 relied on the decision of the Supreme Court in Superintendent of Taxes v. Onkarmal Nathumal Trust (AIR 1975 SC 20 ) to state that the decision in Kiran Singh (supra) is applicable to the Income Tax Act (Paragraphs 15 & 16). The Court also referred to the decision of the Gujarat High Court in P. V. Doshi v. CIT [1978] 113 ITR 22 wherein it has been held that 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....
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....quired 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 raised any objection with respect to the jurisdiction of the Assessing Officer. Thereafter, the Assessing Officer had made addition and the said addition was confirmed by the ld.CIT(A). The assessee had preferred the appeal before the Tribunal and the Tribunal had also confirmed the additions against the assessee. Thereafter, the assessee had filed M.A. before the Tribunal and the Tribunal had also dismissed the said M.A. filed by the assessee vide order dt.26.07.2013. 15.1 As a matter of fact, before the Assessing Officer, ld.CIT(A) or before the Tribunal or in the rectification application, the grounds of jurisdiction were never raised by the assessee. Having failed at all forums, the assessee filed M.A. before the Assessing Officer and the details of which are mentioned hereinabove. The Assessing Officer has dismissed rectificati....
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....hority 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, an order shall be passed in writing by the income-tax authority concerned. (5) Where any such amendment has the effect of reducing the assessment or otherwise reducing the liability of the assessee or the deductor or the collector, the Assessing Officer shall make any refund which may be due to such assessee or the deductor or the collector. (6) Where any such amendment has the effect of enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee or the deductor or the collector, the Assessing Officer shall serve on the assessee or the deductor or the collector, as the case may be a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issued under section 156 and the provisions of this Act shall apply accordingly. (7) Save as otherwise provided in section 155 or sub-section (4) of section 186 no amendm....
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....r-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 relevant for our present purpose.) Section 17(1)can apply to a "person". The expression "person" is defined in section 2(9) of the Indian Income-tax Act, 1922, thus : "'Person' includes a Hindu undivided family and a local authority." Unless a firm can be considered as a "person", section 17(1) cannot govern the assessment of the first respondent. In the Income-tax Act, 1961 (section 2(31)), the expression "person" is defined differently. That definition reads : "'Person' includes- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (iv) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses." It is a matter for consideration whether the definition contained in section 2(31) of the Income-tax Act, 1961, is an amendment of the law or is merely declaratory of the law that was in force earlie....
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....sessments of the first respondent. For the reasons mentioned above, we dismiss this appeal with costs." 19. Similarly, in the case of PCIT Vs. Engineer Works reported in (2021) 132 taxmann.com 172, the Hon'ble Andhra Pradesh High Court vide paras 5 to 9 of its order, held as under : "5. Section 154 of the Act empowers an Assessing Officer to rectify a mistake which is apparent from the record. A mistake can be said to be apparent on the record when it is a palpable and glaring one and not something which can be established by a long drawn process of reasoning on which may conceivably yield two opinions. A debatable point of law is not a mistake apparent on the face of the record. Only when such patent and obvious mistake is apparent from the record, the Assessing Officer is permitted to rectify or amend the Assessment Order, vide T.S. Balaram Income Tax Officer v. Volkart Brothers [1971] 82 ITR 50 (SC) 6. Mrs. M. Kiranmayee, learned standing counsel contends that the Assessing Officer in palpable contradiction to the ratio in KNR Constructions (supra), allowed deduction on the ground of depreciation after gross income was estimated at 12.5% on the main contractual receipts u....
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....nd payment of interest is disbelieved. No finding of that nature was recorded by the Assessing Officer." 9. In view of the ratio laid down in Y. Ramachandra Reddy (supra), we are of the opinion deduction of depreciation from gross receipts of income estimated at the rate of 12.5% on main contractual receipts is a debatable question of law and fact. Since the issue is not a palpable mistake on record but involves interpretation of the ratio laid down in KNR Constructions in the light of the law declared in Y. Ramachandra Reddy (supra), we are of the opinion that the invocation of jurisdiction under section 154 of the Act was not justified. Hence, no case to admit the appeal on the proposed questions of law or otherwise is made out. 10. The appeal is, accordingly, dismissed. No order as to costs. 11. Miscellaneous petitions, if any pending in this appeal, shall stand closed." 20. The word "any" under the income tax authority is defined u/s 116 of the Act which includes the Assessing Officer and ld.CIT(A) and etc. However, the question which is required to be examined is whether the income tax authorities mentioned under section 116 of the Act can rectify any mistake in its ord....