TaxTMI 
TaxTMI 
2004 (4) TMI 255
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....d as M/s New Alankar Jewellers, constituted w.e.f. 4th Sept., 1997 by way of a deed of partnership executed on the same day, was carrying on the business of manufacturing and sale of gold and silver ornaments at Chawk Bazar, Chatarpur (MP). The firm was constituted of five partners, who were HUFs represented by their respective Kartas, namely Shri Vijay Kumar Agarwal. Shri Ajay Kumar Agarwal and Shri Anand Kumar Agarwal. These three partners were existing asses sees in their individual capacity as well as separately existing asses sees in the capacity of HUFs (being represented by them) as partners of the firm. M/s New Alankar Jewellers. The firm was also regular assessee. 4.1 On 19th Jan., 2000, the IT Department carried out a search action at the business premises of the partnership firm as well as at the residential premises at Sarrafa Mohalla, Chatarpur, which, as per the Revenue, was the residence of Shri Ajay Kumar Sarat, Vijay Kumar Saraf and Anand Kumar Saraf. Since the copy of search warrant is not on record, it is gathered from the copies of Panchnama placed at pp. 19 and 36 of the assessee's paper book, volume (0) that the same would have been in the name of Shri Asho....
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....mar Agarwal reads as under: Order "In exercise of the powers conferred by sub-s. (1) and sub-s. (3) of s. 127 of the IT Act, 1961 (43 of 1961) and all the other powers enabling him in this behalf, the CIT, Jabalpur, hereby directs that the cases, particulars of which are mentioned in Col. 2 of the Schedule below shall stand transferred from the AO mentioned in Col. 3 of the Schedule to the AO mentioned in Col. 4 of the following: 2. The transfer of records has been considered essential for administrative convenience and co-ordinated investigation. Schedule -------------------------------------------------------- Sl. Name of the assessee Assessed To be centralised No. with with -------------------------------------------------------- (1) (2) (3) (4) -------------------------------------------------------- 1....
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....; Dy. CIT, Cir. 2(1) Jabalpur Block period 1-4-1989 to 31-3-1999 And from 1-4-1999 to the date of search. Dt. 5th June, 2000 To, Vijay Agarwal S/o Late Shri Chotelal Sarraf, Galla Mandi, Chatarpur. As per the provisions of s. 158BC of the IT Act, 1961, you are required to file a return of income in the prescribed form No.2 verified in the same manner as return under cl. (i) of sub-so (1) of S. 142, setting forth your total income including the undisclosed income for the block period within 45 days from the service of this notice. ....
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....Shop Jewellery land ------------------------------------------------- 1. Vijay Kumar 1,98,330 1,14,500 1,00,000 2. Ajay Kumar -- -- 1,00,000 3. Anand Kumar -- -- 1,00,000 ------------------------------------------------- ------------------------------------------------- Undisc- In shares Total Total income losed After order cash of CIT ------------------------------------------------- --  ....
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....Rs. 3,300 per 10 gms., i.e., 33,000. The appellant gets relief of Rs. 1,65,030." 11. Before CIT(A), all these individuals objected to the validity of assessments for block period having been framed in their individual status on various grounds, but the learned CIT(A) did not deal with any of those grounds. 12. Thereafter, the CIT, Gwalior issued a notice under s. 263 of the Act in all these three cases on 20th Feb., 2003 wherein the CIT had proposed to give directions for charging of interest under s. 234A and for initiation of penalty proceedings under s. 271(1)(c) of the Act. 12.1 Later on the successor CIT issued fresh notice under s. 263 of the Act in all these cases on 4th June, 2003 whereby he had proposed to direct the AO to charge interest under s. 158BFA(1) and to initiate penalty proceedings under s. 158BFA(2) of the Act. All these three persons objected to the initiation of proceedings under s. 263 of the Act by CIT, Gwalior, on the point of jurisdiction as well as on merits and have relied on various decisions listed in the written arguments furnished before the CIT. 12.2 The learned CIT, Gwalior, however, rejected the assessees' all the objections both on l....
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....nsidered as having been filed by the individuals. 15. After considering the totality of facts and circumstances of the cases, the explanation of the counsel for the assessee is found to be correct and the same is accepted - meaning thereby that the present appeals are taken to have been filed by the present appellants in the capacity of individuals. 16. In view of the above facts and circumstances of the cases, the counsel for the assessee advanced lengthy arguments, but the gist of the arguments, vis-a-vis, the objections raised against the orders under s. 263 of the Act are in the following terms: (i) The first objection raised by the counsel for the assessee was that the CIT having mentioned the name of the assessee as Vijay Kumar Agarwal, P/o of M/s New Alankar Jewellers, one is led to think that he was going to revise the assessments for block period in the cases of partners of M/s New Alankar Jewellers, but there being no order of assessment for block period in the case of partners of M/s New Alankar Jewellers (partners were HUFs and not individuals); the CIT was not justified in revising the assessment orders of block period of individuals, who were not the partners....
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.... East India Commercial Co. AIR 1963 SC 1124 (v) Bhagwandas Kevaldas vs. N.D. Mehrotra (1959) 36 ITR 538 (Bom) (vi) Gopal Chandra Sen vs. ITO (1963) 50 ITR 87 (Cal) (vii) Kunhayammed & Ors. vs. State (viii) Ambabai & Ors. vs. Gopal, AIR 2001 SC 2003. (c) The third objection raised by the counsel for the assessee was that after the orders of CIT(A) dt. 4th April, 2003, the net assessed income in cases of Ajay Kumar Agarwal and Anand Kumar Agarwal had been reduced to nil and therefore, the assessment orders itself had ceased to exist. In view of all this plea, the counsel submitted that on 6th Aug., 2003, i.e., when the learned CIT passed order under s. 263, there were no assessment orders in the cases of Ajay Kumar Agarwal and Anand Kumar Agarwal and at least there was no assessed income and since the interest is leviable only if there is assessed income and tax on it is more than the tax paid by the assessee, no interest was leviable under any section of the Act. Consequently, the orders under s. 263 in the cases of these two persons were illegal and bad in law. 17. On the point of reliance by the CIT on the decision of (2001) 171 CTR (SC) 1 : (2001) 252 ITR 1 (SC)....
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....nitiated by the CIT in cases of the partners of M/s New Alankar Jewellers and this seems to be the reason that the final orders under s. 263 have also been passed in case of partners of M/s New Alankar Jewellers, but the assessment orders for block period in case of Vijay Kumar Agarwal, Ajay Kumar Agarwal and Anand Kumar Agarwal, having been passed in their "individual status" and while mentioning the name of the assessees, there is no reference of them being partners of any firm, and therefore, I am of the opinion that the orders under s. 263 passed m cases of partners of M/s New Alankar Jewellers, who happened to be HUFs and not the individuals, were illegal and bad in law and consequently, the same are quashed on this ground also. 20. So far as second objection raised by the counsel of the assessee that jurisdiction over the individual cases of these three appellants was never transferred either to Jabalpur or Gwalior, is concerned, I, after having considered the facts and circumstances as well as documents of record, have no hesitation to hold that the jurisdiction over the individual cases of these present three appellants was with the AO, Chatarpur, who was within the terr....
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.... the provisions of law-meaning thereby if CIT gives directions, the AO cannot comply with those directions. Such situation has not been envisaged by the framers of law or by the provision of s. 263 of the Act. 23.1 Simply because the Department has filed appeal against the orders of the CIT(A) deleting the whole of the undisclosed income before the Tribunal, the CIT cannot assume jurisdiction under s. 263 to hold that the assessment order was erroneous and prejudiced to the interest of Revenue. 24. In view of the above discussion, I am of the opinion that in case of Ajay Kumar Agarwal and Anand Kumar Agarwal, the assessed income having ceased to exist after the order of CIT(A), the order of the CIT passed thereafter are not sustainable in law. Consequently, the same are set aside. 25. Without prejudice to the above, I am further of the opinion that the language of the provision of s. 263, its purpose and scope, goes to show that before exercising jurisdiction under s. 263 by the CIT, existence of order is prerequisite condition; so in case the CIT requires the revision relating to charging of interest, existence of an order by the AO, either charging or waiving the interes....