TaxTMI 
TaxTMI 
2023 (10) TMI 25
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.... might have prevailed earlier on the said issue, after the enactment of the 2nd proviso to section 147 of the Income-tax Act, 1961 (which was inserted w.e.f. 01.04.2008) stating that "Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable- tax, has escaped assessment.", the law is clear that the appellant authorities will continue to exercise their jurisdiction over the already completed and appealed assessment order. 3. The prayer is that such erroneous order of the Ld. CIT(A) be set aside and restored the file to the Ld. CIT(A) to adjudicate afresh on the merits of the case. 4. Any other ground that may be adduced at the time of hearing." 2. Succinctly stated, the assessee company, i.e. Chhattisgarh State Electricity Board, which is engaged in the activity of generation, transmission, and distribution of electricity within the State of Chhattisgarh, had e-filed its return of income for A.Y.2006-07 on 30.11.2006, declaring an income of Rs Nil (after claiming deduction u/s. 80IA(4)(iv) of Rs. 592,36,15,293/-). The return of incom....
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....ed. In view of the above facts, the order against which the appeal has been preferred exist no longer. Hence the appeal is dismissed." 5. Subsequently, the assessee company, during the assessment proceedings for the immediately preceding year i.e. A.Y. 2005-06, stated before the AO that its income of Rs. 19,06,60,125/- which was classified as "prior period income" was, in fact, its income for the immediately succeeding year i.e. A.Y. 2006-07. Based on the aforesaid concession of the assessee company, the AO, holding a conviction that its income chargeable to tax amounting to Rs. 19.06 Crores (approx.) had escaped assessment, thus reopened its case for A.Y. 2006-07 under Section 147 of the Act. Notice u/s 148 of the Act, dated 07.01.2008 was issued to the assessee company. In compliance, the assessee company filed its return of income wherein its initially returned income (gross) was increased by Rs. 19.06 Crores (supra). The assessee company claimed that the amount of Rs. 19.06 Crores (supra) had inadvertently remained omitted to be considered while filing the original return of the income. Also, the assessee company filed with the A.O. an application u/s 154 of the Act, dated 1....
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....ble jurisdictional High Court in the case of CWT vs. HUF of H.H. Late J.M. Scindia (300 ITR 193) (Bom.), the scrutiny proceedings are not valid. Respectfully following the principles established therein and following the Board Circular, we have no hesitation in holding that the reassessment order dt. 30/12/08 was in-valid. Ground No. 3 raised by the assessee on this issue is upheld and consequential re-assessment order cancelled. Apropos the addition of Rs. 19.06 Crores (supra) made by the A.O vide his order u/ss. 143(3)/147 of the Act, dated 30.12.2008, the Tribunal taking cognizance of the fact that the assessee company had offered the said amount as its income vide application u/s 154 of the Act, thus, sustained the addition to the said extent. Regarding the other additions/disallowances assailed by the assessee and revenue, the Tribunal observed that as the same did not arise out of the reassessment proceedings, i.e., the order passed by the AO u/ss. 143(3) r.w.s 147 of the Act, dated 30.12.2008; therefore, there was no necessity to adjudicate the said issues. The Tribunal observed that the CIT(Appeals) should have confined his adjudication only to the validity of the jurisdic....
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....- 14, dated 23.04.2014, dismissed the appeal of the assessee company against the order passed by the A.O. u/ss. 147/143(3) r.w.s. 254 of the Act, dated 16.01.2014. 12. The assessee company aggrieved with the order of the CIT(Appeals), dated 23.04.2014, carried the matter in appeal before the Tribunal. After deliberating at length on the issue before them, it was observed by the Tribunal vide its order dated 26.07.2019 that now when the assessment order passed by the A.O u/s 143(3), dated 29.11.2007 was held to be non-existent by the CIT(Appeals) vide his order dated 22.01.2009 and the same had attained finality; and reassessment order passed u/s 143(3) r.w.s. 147 of the Act dated 30.12.2008 was also set aside by the Tribunal; therefore, the A.O while giving effect to the order of the Tribunal dated 13.09.2013 (supra), was neither justified in making any addition towards disallowance of the assessee's claim for deduction u/s 80IA of the Act nor on account of disallowance of any part of its claim for deduction of repair and maintenance expenses based on the original assessment. For the sake of clarity, the relevant observations of the Tribunal vide its order passed in ITA No. 204 & ....
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....o frame assessment u/ss. 143(3)/147 of the Act, dated 30.12.2008 and there was no necessity to adjudicate the other issues, the AO filed an application u/s 154 of the Act with the CIT(Appeals), wherein referring to the aforesaid observation of the Tribunal, it was claimed that the allowing of relief of "bad debts" of Rs. 150.03 Crores (supra) vide his appellate order dated 06.11.2009 (supra) suffered from a mistake apparent from record. Accordingly, the AO sought for withdrawal of the relief of Rs. 150.03 crores (supra) that was granted by the CIT(Appeals) while disposing of the assessee's appeal vide his order passed in ITA No. 782/08-09, dated 06.11.2009. Acting upon the application filed by the A.O u/s 154 of the Act, the CIT(Appeals) vide his order dated 23.04.2014 rectified his order and withdrew the relief of "bad debts" of Rs. 150.03 crores (supra) that was earlier allowed by him to the assessee company. 14. The assessee company, aggrieved with the order passed by the CIT(Appeals) u/s 154 of the Act, dated 23.04.2014, carried the matter in appeal before the Tribunal. After considering the issues at length, the Tribunal vide its order passed in ITA No. 205/MUM/2014, dated 26....
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....e Revenue seeking condonation of the delay therein involved. 18. The ld. Departmental Representative (for short, "DR"), at the very outset of the hearing of the appeal, took us through the application filed by the department explaining the reasons leading to the delay of 3966 days in filing the present appeal before us. Elaborating on the reasons leading to the aforesaid delay, it was submitted by the ld. DR that the same had occasioned because the AO was carried with the view that was taken by the CIT(Appeal), Raipur, vide his order dated 22.01.2009, wherein the assessee's appeal against order passed u/s 143(3) of the Act, dated 29.11.2007, was dismissed by him on the ground that pursuant to the reassessment order u/ss. 147/143(3) of the Act, dated 30.12.2008 the order passed by the A.O u/s 143(3) of the Act, dated 29.11.2007 had lost its existence and was wiped out. The Ld. D.R drew our attention to the order of the CIT(Appeals), dated 22.01.2009 arising out of the order passed by the AO u/s 143(3), dated 29.11.2007, Page 47-48 of APB. Apart from that, it was submitted by the ld. D.R that the aforesaid conviction of the AO was further supported by the judgment of the Hon'ble Sup....
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....ve Education Society ([2019] 410 ITR 370 (SC) : (iii). Improvement Trust Vs. Ujagar Singh & Ors. ,Civil Appeal No. 2395 of 2008 dated 26.06.2010 (SC) (iv). Vedabai @ Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil & Ors., Appeal (Civil) No. 4494 of 2001, dated 20.07.2001 (SC): (v). CIT Vs. West Bengal Infrastructure Development Finance Corporation . Ltd. (2011) 334 ITR 269 (SC) (vi). G. Ramegowda, Major and others Vs. Special Land Acquisition Officer, Bangalore, (1988) 2 SCC 142: (vii). State of Haryana Vs. Chandra Mani and others (1996) 3 SCC 132: (viii). State of U.P. and others v. Harish Chandra and others, (1996) 9 SCC . 309 (ix). National Insurance Co. Ltd. V. Giga Ram and others, (2002) 10 SCC . . 176. (x). State of Nagaland v. Lipok Ao and others (2005) 3 SCC 752 The Ld. D.R. heavily relied upon the order of the Hon'ble Apex court in the case of CIT vs. West Bengal Infrastructure Development Finance Corporation Ltd. (2011) 334 ITR 269 (SC). The Ld. D.R further submitted that the fact that multiple proceedings in the assessee's case were going on before the appellate authorities was also one of the reasons leading to the delay in filing the present a....
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....le and cogent reasons sufficient to condone the delay involved in filing an appeal by the Government department, the same was to be dismissed as being barred by limitation. The ld. AR submitted that it was incomprehensible that it took more than a decade for the department to correctly interpret the law and file the present appeal involving an inordinate delay of 3966 days. 21. Rebutting the claim of the Ld. DR that due to a bonafide misinterpretation of the law by the A.O, which, thus, had resulted in an inadvertent failure on his part to assail the order passed by the ld. CIT(Appeals), dated 22.01.2009 before the Tribunal, the ld. A.R. submitted that the same was factually incorrect. Elaborating on his aforesaid contention, it was averred by the ld. AR that the A.O. had, after receiving the order of the Tribunal dated 06.11.2009, filed an application with the CIT(Appeals) u/s 154 of the Act, dated 16.01.2014. Referring to the application filed by the A.O u/s 154, dated 16.01.2014, the Ld. A.R submitted that the A.O. had brought it to the notice of the CIT(Appeals) that the Tribunal, while disposing of the cross-appeals of the assessee/revenue arising from the order passed u/s 14....
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....as the claim of the Ld. A.R that as the application filed by the A.O u/s 154 of the Act, dated 16.01.2014, clearly revealed his understanding that additions made by the A.O in the original assessment order u/s 143(3), dated 29.11.2007 could not be challenged in the appeal filed against the reassessment order u/s 143(3) r.w.s 147 of the Act, dated 30.12.2008, therefore, having been enlightened about the said position of law as was canvassed by the Tribunal in its order dated 13.09.2013 (supra), it was incumbent upon him to have at least then preferred an appeal against the order passed u/s 143(3), dated 29.11.2007 before the Tribunal. Carrying his contentions further, it was averred by the Ld. A.R that as the Tribunal vide its order dated 13.09.2013 (supra) had dislodged the view that was taken by the CIT(Appeals) vide his order 22.01.2009 (arising from original assessment order u/s 143(3), dated 29.11.2007), wherein it was observed by him that pursuant to the subsequent reassessment order passed u/s 147 r.w.s. 143(3) of the Act, dated 30.12.2008 the impugned original order of assessment u/s 143(3), dated 29.11.2007 had ceased to exist and was wiped off, the A.O, thus, being well co....
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....that as the appeal filed by the department involved an inordinate delay of more than 10 ½ years (approx.), therefore, it was liable to be dismissed at the threshold on the ground that the same was barred by limitation. 22. We have deliberated at length on the issue in hand, i.e., the delay of 3966 days involved in filing of the present appeal by the Revenue and the reasons based on which it is sought to be condoned. 23. Admittedly, the appeal filed by the Revenue involves a delay of 3966 days, which, as stated by the Ld. A.R and, rightly so, is an inordinate delay. Considering that the Revenue had delayed filing the present appeal before us, i.e., filed the appeal after the lapse of more than 10 ½ years, we shall carefully look into the reasons it had given to explain the same. Ostensibly, it is the claim of the Ld. D.R. that the delay in filing the present appeal had occasioned because the A.O, who was carried by the view that was taken by the CIT(Appeals) vide his order dated 22.01.2009 (arising from the order passed by the A.O u/s 143(3) of the Act, dated 29.01.2007), believed that as a result of the reassessment order passed u/ss. 143(3)/147, dated 30.12.2008, n....
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....t only erroneous but also against the phraseology of section 147 and the object of reassessment proceedings. Accordingly, the support that the A.O had sought to draw by relying on the judgment of the Hon'ble Apex Court in V. Jaganmohan Rao (supra) and K.L. Srihari (HUF) (supra) [which in turn relies upon its earlier order in V. Jaganmohan Rao (supra)] is found to be clearly misconceived. Apart from that, when the Hon'ble Apex Court in CIT Vs. Alagendran Finance Ltd. (2007) 293 ITR 1 (SC) had clarified that for the purpose of computing the period of limitation for revision of an order by the Commissioner of Income-tax u/s 263 of the Act, on an issue that does not arise from the reassessment order, the period of limitation provided for under sub-section (2) of Section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment; therefore, the co-existence of both the original assessment order u/s 143(3) and re-assessment order u/s 143(3) r.w.s 147 stands impliedly approved by the Hon'ble Apex Court. Although the view taken by the A.O that pursuant to the re-assessment order u/s 143(3) r.w.s 147, dated 30.12.2008, the original orde....
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....ly the previous under-assessment and not the original assessment proceedings. An order made in relation to the escaped turnover does not effect the operative force of the original assessment, particularly if it has acquired finality, and the original order retains both its character and identity. It is only in cases of "under-assessment" based on clauses (a) to (d) of Explanation (1) to section 147, that the assessment of tax due has to be recomputed on the entire taxable income. The judgment in V. Jaganmohan Rao's case (supra), therefore, cannot be read to imply as laying down that in the reassessment proceedings validly initiated the assessee can seek reopening of the whole assessment and claim credit in respect of items finally concluded in the original assessment." (emphasis supplied by us) Considering the fact that the A.O was swayed by the order of the CIT(Appeals), dated 22.01.2009 (supra), and had remained under a bonafide belief that as pursuant to the re-assessment order passed u/s 143(3) r.w.s 147, dated 30.12.2008 the original assessment order passed u/s 143(3), dated 29.11.2007 had lost its existence and was wiped off, therefore, there remained no occasion for him to....
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....h the view taken by the Tribunal in its aforesaid order dated 13.09.2013 (supra). 26. Admittedly, it is a fact borne from the record that the A.O after appreciating the aforesaid view of the Tribunal had filed an application u/s 154, dated 16.01.2014, seeking correction/rectification of the order of the CIT(Appeals) on the ground that as the relief of "bad debts" of Rs. 150.03 crores (supra) that was allowed by him to the assessee company while disposing off its appeal vide his order dated 06.11.2009(supra) was not the subject matter of re-assessment order u/s 143(3) r.w.s 147, dated 30.12.2008 which was under challenge before him, therefore, the same was not in conformity with the view taken by the Tribunal in its aforesaid order dated 13.09.2013 (supra). Based on the fact that the A.O having well understood the order of the Tribunal, dated 13.09.2013, had filed an application u/s 154, dated 16.01.2014 (supra) with the CIT(Appeals) but had not carried the order of the CIT(Appeals), dated 22.01.2009 (supra) in appeal before the Tribunal (which was already substantially delayed), it is the claim of the Ld. A.R. that the same revealed a lackadaisical conduct and a callous approach t....
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....), dated 22.01.2009 (supra) in appeal before the Tribunal, we, however, are unable to subscribe to the claim of the Ld. A.R. that the said delay was due to an irresponsible approach adopted by the A.O. on the issue of filing the present appeal before us. Rather, the firm conviction of the A.O that even after the order of the Tribunal, dated 13.09.2013, the income of the assessee company that was originally assessed at Rs. 821.75 crores (supra) vide order passed u/s 143(3), dated 29.11.2007 subsisted, can be gathered from the fact that he had while giving appeal effect to the order of the Tribunal, dated 13.09.2013 (supra) vide his order u/s 143(3)/147 r.w.s 254 of the Act, dated 16.01.2014 taken the originally assessed income determined by him u/s 143(3), dated 29.11.2007 i.e Rs. 821.75 crores (supra) as the base figure. Although the aforesaid order of the A.O u/ss. 143(3)/147 r.w.s 254, dated 16.01.2014, had thereafter been set aside by the Tribunal, but we have referred to the same only for understanding the bonafide view of the A.O that the originally assessed income of the assessee subsisted and had merged in the re-assessment order. As observed by us hereinabove, we may once a....
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.... in filing the present appeal before us, which we are unable to fathom is being attributed to the A.O, who, as observed by us hereinabove, had though remained vigilant in filing an application u/s 154, dated 16.01.2014 with the CIT(Appeals) seeking rectification of his order dated 13.09.2013, wherein the latter had allowed a substantial relief of "bad debts" of Rs. 150.03 crores (supra) which was not in conformity with the order of the Tribunal, dated 13.09.2013, and had thereafter succeeded in getting the order rectified vide order passed by the CIT(Appeals), dated 23.04.2014, but had failed in his duty in carrying the order of the CIT(Appeals) by preferring an appeal before the Tribunal, even after the order of the Tribunal, dated 13.09.2013 (supra). We put to ourselves a selfposer, i.e., why the aforesaid A.O. would have delayed the filing of the present appeal before us.? In the totality of the facts involved in the present appeal, we are of the view that the delay in filing the appeal cannot be held to be conscious, purposive, intentional, or malafide. Also, we are unable to impute irresponsible, callous, or lackadaisical conduct of the A.O. in preferring the present appeal. A....
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....th the order of the CIT(Appeals), dated 22.01.2009; coupled with his inaction in not seeking necessary instructions from the higher authorities on the issue at hand. 28. We find substance in the claim of Shri. Parveen Khandelwal, the Ld. A.R, that there may be justification in the claim of the A.O that as he was swayed with the view taken by the CIT(Appeal), Raipur, vide his order dated 22.01.2009 (supra), i.e. pursuant to the reassessment order u/ss. 147/143(3) of the Act, dated 30.12.2008, the order passed by the A.O u/s 143(3) of the Act, dated 29.11.2007 was wiped off, which, observation of his, as claimed by the Ld. D.R. was further supported by his bonafide misunderstanding of the judgments of the Hon'ble Supreme Court in the case of V. Jaganmohan Rao Vs. CIT/CEPT (1970) 75 ITR 373 (SC) and ITO & Anr. vs. K. L. Srihari (HUF) & Anr. (2001) 250 ITR 193 (SC); thus, for the said reason, he held a firm conviction that there was no occasion for him to have challenged the dismissal of the assessee's appeal by the CIT(Appeal) vide his order dated 22.01.2009 (supra) any further before the Tribunal; however, the aforesaid explanation of the A.O had thereafter outlived its life after 1....
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....s, the Department cannot take advantage of various earlier decisions. The claim on account of impersonal machinery and inherited bureaucratic methodology of making several notes cannot be accepted in view of the modern technologies being used and available. The law of limitation undoubtedly binds everybody including the Government. 13. In our view, it is the right time to inform all the government bodies, their agencies and instrumentalities that unless they have reasonable and acceptable explanation for the delay and there was bonafide effort, there is no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural red-tape in the process. The government departments are under a special obligation to ensure that they perform their duties with diligence and commitment. Condonation of delay is an exception and should not be used as an anticipated benefit for government departments. The law shelters everyone under the same light and should not be swirled for the benefit of a few. Considering the fact that there was no proper explanation offered by the Department for the delay except mentioning of various dates,....
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....that the same reads as under : "5. Looking to the amount of tax involved in this case, we are of the view that the High Court ought to have decided the matter on merits. In all such cases, where there is delay on the part of the Department, we request the High Court to consider imposing costs but certainly it should examine the cases on merits and should not dispose of cases merely on the ground of delay, particularly when huge stakes are involved. 6. Accordingly, the impugned order is set aside and the matter is remitted to the High Court to decide the case de novo in accordance with law. 7. We request the High Court to dispose of this case as early as possible, preferably within a period of four months from today. The civil appeal is, accordingly, allowed. 8. No order as to costs." (emphasis supplied by us) 31. After having given thoughtful consideration, we are of the considered view that the delay in filing the present appeal before us, as explained by the Ld. D.R had occasioned on the part of the A.O, initially due to bonafide misconstruing of law (to which the assessee had also contributed), which, thereafter, was followed by an inadvertent failure on his part to ap....
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....erved that to read the judgment in V. Jaganmohan Rao's case (supra) as if laying down that reassessment wipes out the original assessment and that reassessment is not only confined to "escaped assessment" or "under-assessment" but to the entire assessment for the year and starts the assessment proceedings de novo giving the right to an assessee to re-agitate matters which he had lost during the original assessment proceedings, which had acquired finality, is not only erroneous but also against the phraseology of section 147 and the object of reassessment proceedings. For the sake of clarity, the relevant observations of the Hon'ble Apex Court in the case of CIT Vs. Sun Engineering Works (supra) are once again culled out as folloes : " 37. The principle laid down by the Supreme Court in V. Jaganmohan Rao's case (supra) therefore, is only to the extent that once an assessment is validly reopened by issuance of notice under section 34(2) of the 1922 Act (corresponding to section 148 of the 1961 Act), the previous under-assessment is set aside and the ITO has the jurisdiction and duty to levy tax on the entire income that had escaped assessment during the previous year. What is set a....