TMI Blog2018 (6) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. CIT(A) then the 263 order passed by the ld. CIT would fail. The arguments by ld. DR, in our opinion, are without any merit and has to be rejected. Since the CIT(A) in the instant case has not decided the validity of the reassessment proceedings challenged before him and had dismissed the appeal as infructuous because of the revisionary powers exercised by the ld. CIT u/s 263, therefore, we deem it proper to restore the issue to the file of the ld. CIT(A) with a direction to decide the legal ground raised before him challenging the validity of the reassessment proceedings. Matter is restored to the file of the ld. CIT(A) with a direction to adjudicate the validity of reassessment proceedings. - Decided in favour of assessee for statistical purposes. - ITA No. 6698/Del/2016 - - - Dated:- 8-6-2018 - Shri R. K. Panda, Accountant Member And Smt. Beena A. Pillai, Judicial Member Assessee by : Shri Ajay Vohra, Sr. Adv. Shri Rohit Jain, Adv. Shri Deepesh Jain, CA Department by : Shri Vijay Verma, CIT-DR ORDER PER R. K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 01.12.2016 of the CIT(A)- 1, Gurgaon relating to asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, confronted the assessee to explain as to why the appeal filed by the assessee should not be dismissed being infructuous. The assessee made elaborate submissions regarding the maintainability of the appeal. The assessee also challenged the validity of the re-assessment proceedings. 3.1 However, ld. CIT(A) dismissed the appeal filed by the assessee by observing as under :- 3.2 I have carefully considered the appellant s submissions. It is an undisputed fact on record that the order against which the present appeal has been filed has already been set aside by the CIT, Hisar u/s 263 of the I.T. Act. The only addition made in the order under appeal was addition u/s 80IB. This addition has been set aside by the CIT, Hisar and no addition survives in the original order. It is also a fact on record that the AO has already passed a fresh assessment order in accordance with the direction given by the CIT, Hisar vide order u/s 263 of the IT Act. 3.3 In view of the aforesaid facts there is no addition or disallowance which can be considered for adjudication at this stage. As such, the appeal filed by the appellant has became in-fructuous and is accordingly dismissed. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO: 259 ITR 19. 2.2 That the CIT(A) erred on facts and circumstances of the case and in law in not holding reassessment order to be illegal and bad in law, being based on mere change of opinion/reappraisal of existing material/information. 2.3 That the CIT(A) erred on facts and circumstances of the case and in law in not holding that initiation of reassessment proceedings under section 147 of the Act was barred by limitation prescribed in first proviso to that section. 2.4 That the CIT(A) erred on facts and circumstances of the case and in law in not holding that reassessment order passed under section 147, in contravention of provisions of sections 149 to 151 of the Act, was invalid and bad in law. 3. That the CIT(A) erred on facts and circumstances of the case and in law in not holding that losses of ₹ 8,83,95,939 pertaining to the unit eligible for deduction under section 80IB of the Act for earlier years, which already stood set off against profits for those years, were not required to be notionally brought forward and set off while computing eligible profits of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2016 on jurisdictional grounds; and (b) disallowance of deduction on merits on the ground that the said appeal had become infructuous as addition/disallowance made in the reassessment order dated 04.03.2016 was set aside by the ld. CIT u/s 263 of the I.T. Act. 6. Referring to the order passed u/s 263 for the impugned assessment year, ld. counsel for the assessee submitted that the reassessment order was set aside by the CIT exercising revisionary jurisdiction under section 263 to the limited extent of examining issues relating to deduction under sections 80lA/80IB of the Act. In other words, the reassessment order dated 04.03.2013 under section 147 of the Act was not set aside by CIT in toto. Referring to various decisions, he submitted that where the Commissioner in exercise of revisionary power under section 263 of the Act sets aside the assessment, the assessment is not completely effaced; only the issues set aside by the CIT in the order under section 263 of the Act are to be adjudicated afresh by the assessing officer. Therefore, the reassessment dated 04.03.2013 challenged in appeal before the CIT(A) was not set aside in toto but only to the extent of re-examining the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any scope of sustainability of subsequent revisionary order under section 263 of the Act. The first step, therefore, would be to examine the validity/ legality of the reassessment order passed by the assessing officer. It will, thus, be appreciated that the jurisdictional legal issue challenging the validity of reassessment proceedings arise out of the impugned reassessment order and could have and had to be examined by the CIT(A). Being so, it was of paramount importance to first examine the issue of legality of the reassessment order in the appeal by the CIT(A). 9. The ld. counsel for the assessee submitted that upholding the action of CIT(A) in dismissing the appeal as infructuous would render the appellant remediless insofar as the issue of validity of reassessment proceedings under section 147 of the Act is concerned. In the appeal against order passed by CIT under section 263, the appellate authorities would not, it is submitted, consider the issue of jurisdiction of the assessing officer in passing the impugned reassessment order under section 147 of the Act. Therefore, the assessee would be rendered remediless qua the jurisdictional issue raised in the present appeal ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 213 (Bom.). (iv) Janardhan Reddy v. The State: AIR 1951 SC 124. 12. He accordingly submitted that the right to appeal being a valuable right cannot be taken away/dismissed because of any subsequent act (order under section 263 in the present case). Right to appeal was vested in the appellant when proceedings under section 147/148 of the Act were initiated. The appeal was validly filed by the appellant under section 246A of the Act. Being so, the same could not have been dismissed as infructuous. He submitted that the two fundamental grievances of the appellant, viz. validity of the reassessment and legal issue of notional set off of loss, continues to survive and the said issues do not arise out of/form part of the revisionary proceedings. The appeal filed by the appellant could not, therefore, have been regarded as infructuous. 13. In grounds of appeal no.2 to 2.4, the assessee has challenged the validity of the re-assessment proceedings. Referring to the following decisions, ld. counsel for the assessee submitted that if the reasons recorded do not specify any allegation of failure on the part of the assessee to disclose the material facts necessary for completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Guj.). 15. He submitted that in the instant case the reassessment has been made on the basis of change of opinion. Referring to para 2.7 to 2.8 of the original assessment order, he submitted that there was categorical expression of opinion by the Assessing Officer in the original assessment that notional losses are not required to be set off for the purpose of computing deduction u/s 80IB of the I.T. Act. Therefore, the present re-assessment proceedings are clearly initiated on mere change of opinion and, therefore, patently without jurisdiction, illegal and bad in law. Relying on various decisions, he submitted that the reassessment proceedings on the basis of change of opinion are not permissible. Third proviso to section 147 restrict assessing officer to reassess issues which have already been subject matter of appeal, reference or revision before higher authority. He submitted that in present case, third proviso is squarely applicable in respect of deduction under section 801A/80M since (a) Claim of deduction under section 80IA and consequential computation under section 801B was extensively examined/ considered and varied in original assessment order; (b) Appeal aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment order illegal and bad in law. 18. He submitted that the reasons for reopening in the instant case was not provided or communicated for which it constituted a jurisdictional error and, therefore, the impugned proceedings should be rendered as null and void. It was incumbent upon the Assessing Officer to provide reasons for reopening of the assessment. For the above proposition, he relied on the decision of the Hon ble Bombay High Court in the case of CIT vs. Trend Electronics reported in 379 ITR 456. Referring to the decision of the Hon ble Delhi High Court in the case of PCIT vs. Jagat Talkies Distributors reported in 398 ITR 13, he submitted that the Hon'ble High Court in the said decision has held that where the assessee was not given copy of reasons for issuing notice u/s 148 by the Assessing Officer, whole assessment proceedings and resultant order of assessment passed u/s 143(3) r.w.s. 148 of the I.T. Act was to be quashed. 19. Ld. counsel for the assessee submitted that the preliminary legal objection filed by the assessee was not disposed of by passing a separate speaking order and, therefore, the reassessment order is illegal and bad in law. Referrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessing officer in reducing the amount of deduction claimed by appellant under section 801B of the Act in respect of MBF Unit by the aggregate amount of losses of such unit for assessment years 2003-04 and 2004-05, in view of the facts of the case and correct position in law, is incorrect, illegal and unsustainable. 23. Ld. counsel for the assessee referring to provisions of section 80IA(5) submitted that the said sub-section provides that the eligible unit claiming deduction under section 80-lA of the Act would be treated as a separate source of income and deduction has to be allowed only vis-a-vis profits derived from the eligible unit unaffected by the profits/losses of other units owned by the assessee. The assessing officer, in the present case has grossly misconstrued the application of the aforesaid provisions of sub-section (5) of section 80lA of the Act. The aforesaid provisions do not provide that the losses/ depreciation of the eligible unit relating to any earlier assessment year(s) which are already absorbed against profits of other units/ other incomes in the respective year(s) should once again be notionally brought forward and adjusted against the profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been framed for the first time. Accordingly, for that reason, too. no interest was leviable under Section 234B of the Act. 28. Referring to the decision of Hon ble Madras High Court in the case of CIT v. Rameo Industries Ltd. in Tax Appeal No. 1343 of 2009, wherein, on similar fact, the High Court held that interest under section 234B of the Act can be levied only when the assessee is granted refund under section 143( I) of the Act and the same is payable back to the Revenue on completion of assessment under section 143(3) of the Act. The said section 234D was held not applicable where reassessment is completed under section 147 of the Act. He also relied on the following decisions :- (i) ACIT v. Oracle India (P) Ltd.: I.T.A. No. 4639 and 4640/Del/2007 (Del Trib.). (ii) MMTC Limited vs. DCIT: ITA No.4321/Del/2009 (Del.). (iii) ACIT v. Bank of Rajasthan Ltd. in ITA No.2246/Mum/2009 (Mum). (iv) Dredging Corporation of India Ltd. vs ACIT: 142 TTJ 252 (Vishakapatnarn). (v) K. Anji Reddy vs. DCIT: 59 SOT 92 (Hyderabad) 29. He accordingly submitted that the assessing officer erred in charging interest under section 234B of the Act and withdrawal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 92,06,88,890/-. In the said return of income, the assessee had claimed deduction of ₹ 254.83 crores in respect of the following items :- a) Deduction u/s 80IA in respect of the various captive power plants. b) Deduction u/s 80IB in respect of Mini Blast Furnace (MBF) unit. c) Deduction u/s 80IB in respect of others independent/ separate eligible units/ undertakings. 32. We find the Assessing Officer completed the assessment u/s 143(3) on 31.12.2007 determining the total income at ₹ 212,42,01,723/-. We find the Assessing Officer reopened the assessment by issuing notice u/s 147/148 of the I.T. Act on 23.03.2012 and, thereafter, passed the order u/s 143(3)/147 on 04.03.2013 determining the total income at ₹ 156,02,61,476/-. We find the assessee filed an appeal before the ld. CIT(A) and during the pendency of such appeal before the ld. CIT(A) revisionary proceedings u/s 263 were initiated by the ld. CIT by issuance of show-cause notice dated 21.10.2013. We find the ld. CIT vide order dated 27.03.2015 passed u/s 263 of the I.T. Act had set-aside the reassessment order on the limited issue of examination of deduction u/s 80IA/80IB of the I.T. Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are without any merit and has to be rejected. Since the ld. CIT(A) in the instant case has not decided the validity of the reassessment proceedings challenged before him and had dismissed the appeal as infructuous because of the revisionary powers exercised by the ld. CIT u/s 263, therefore, we deem it proper to restore the issue to the file of the ld. CIT(A) with a direction to decide the legal ground raised before him challenging the validity of the reassessment proceedings. We again reiterate that since ld. CIT in the order passed u/s 263 had not set-aside the reassessment proceedings and had set-aside the order for limited purpose of examining the deduction u/s 80IA/80IB of the I.T. Act, therefore, ld. CIT(A) was duty bound to decide the validity of the legal ground raised before him. 34. We, therefore, restore the issue to the file of the ld. CIT(A) with a direction to adjudicate the legal ground raised before him challenging the validity of the reassessment proceedings. Since we are restoring the issue to the file of the ld. CIT(A) for adjudication of the legal ground, therefore, we are not deciding the other grounds raised before us by ld. counsel for the assessee. The su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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