TMI Blog2018 (8) TMI 1887X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that merely because the entire assessment cannot be cancelled or set aside by the Tribunal, it would not come outside the purview of the time limit prescribed for completion of an assessment or reassessment u/s 153(2A) In view of the aforesaid facts and following the decision of Hon ble Delhi High Court in the case of Nokia India (P) Ltd. [ 2017 (9) TMI 1298 - DELHI HIGH COURT] , we are of the view that Ld.CIT(A) has rightly held that provisions of Sec.153(2A) of the Act was applicable to the present facts and the AO was therefore supposed to pass fresh assessment order within one year from the end of financial year in which the order of the Tribunal was received by Ld.CIT and therefore, the order passed by AO on 07.11.2014 was barred by limitation. Thus, the grounds of Revenue are dismissed. Levy of penalty u/s 271(1)(c) - HELD THAT:- The perusal of assessment order passed u/s 143(3) of the Act reveals that in the assessment order AO had recorded satisfaction for furnishing of inaccurate particulars of income. Thereafter, in the penalty order passed u/s 271(1)(c) of the Act, AO had levied penalty for concealing the particulars of income. It is a settled law that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t years but the issue involved in both the assessment years are identical except for the assessment years and therefore his arguments will also be common and therefore both the appeals can be heard and disposed of together. Ld. A.R. did not object to the aforesaid submission of Ld.D.R. We therefore first proceed to dispose of appeals of the Revenue by narrating the facts in ITA No.419/PUN/2016 for assessment year 1999-2000. 2.1. The relevant facts as culled out from the material on record are as under : Assessee is a company stated to be engaged in automation and control industry, who filed its original return of income for A.Y. 1999-2000 on 30.12.2009 showing loss of ₹ 7,40,56,692/- and the tax of ₹ 59,92,462/- was shown payable u/s 115JB of the Act. Thereafter assessment was framed u/s 143(3) of the Act vide order dt.25.02.2002 and the total income was determined at ₹ 10,93,47,716/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.23.05.2003 granted partial relief to the assessee. After giving appeal effect to the order of Ld.CIT(A), the revised total income was determined at ₹ 7,77,36,963/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered together. 4. Before AO, in the 2nd round, when AO had started proceedings to give effect to ITAT order, it was submitted by assessee that since the time limit for giving effect to the order of Hon ble ITAT has already elapsed, no assessment order can be passed by him. AO did not accept the contentions of assessee. According to AO, the case of assessee was covered by the provisions of Sec.153(3) of the Act and not Sec.153(2A) of the Act as claimed by assessee and therefore assessment as per directions of ITAT can be completed at any time. He thereafter passed order on 07.11.2014 u/s 254 of the Act to give effect to the Hon ble ITAT s order. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A). 5. Before Ld.CIT(A), assessee submitted that the order of the AO dt.07.11.2014 passed to give effect to the order of Hon ble Tribunal u/s 254 of the Act were time barred in view of the provisions of Sec.153(2A) of the Act. It was assessee s contention that as per the provisions of Sec.153(2A) of the Act, the AO was required to pass fresh assessment order as per ITAT s direction within 1 year from the end of the financial year in which the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO has tried to wriggle out of the situation by terming the order passed by him under the head order giving effect to the order of ITAT u/s 254 of the IT Act, 1961 . This attempt by the AO will not save the situation as the issue was restored to the file of the AO and he was supposed to pass a fresh order within the limit provided by sec. 153(2A) which was /3/2014, Since the order has been passed on 7/11/2014, the same is clearly barred by limitation. Accordingly, the ground taken is allowed. Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal before us. 6. Before us, Ld.D.R. pointing to the grounds raised by the assessee before the Tribunal in ITA Nos.399 400/PUN/2004 dt.10.08.2012 for A.Ys. 1999-2000 and 2000-01 submitted that vide ground No.1 assessee had objected to the initiation of proceedings u/s 147 of the Act, vide ground No.2 assessee had challenged the deduction computed u/s 10A of the Act, vide ground No.3, assessee had challenged the computation of deduction u/s 80HHC of the Act and vide ground No.4 assessee had challenged the upholding of interest u/s 234D of the Act. He pointing to the order of Tribunal submitted that ground No.1 with resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -03. The Tribunal while deciding the issue in A.Ys. 1999- 2000 and 2000-01 had followed the order of Co-ordinate Bench of the Tribunal dated 07.09.2011 for A.Ys. 2001-02 and 2002-03. He pointing to Para 24 of the order for A.Ys. 2001-02 and 2002-03 stated that the matter was restored by the Tribunal to the AO for fresh consideration on following points : 1) Nature and type of cost received by assessee as reimbursement from its group Companies. 2) Whether the reimbursement had any profit element in it and whether the profit element falls in the scope of provisions of Sec.10A of the Act, role of profit elements while computing the profit percentage on the cost. 3) Difference in the profiles of assessee and that of comparable cases and why they were not considered by AO. 4) Lack of clarity on the profit margin of 69.96% over the cost vis- -vis profit margins of 232.49%. 5) The reason for non-considering the figure of comparable cases. 6) Basis for additional 10% leverage granted by the AO to the assessee. Based on the aforesaid directions, the Tribunal has set aside the order of the Ld.CIT(A) for A.Ys. 1999-2000 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt s decision in the case of Nokia India (P) Ltd., Vs. DCIT (2017) 85 taxmann.com 291 (Del). He also placed on record the copy of the aforesaid orders. He therefore submitted that the Ld.CIT(A) has rightly held the order of AO giving effect to ITAT order to be time barred. He therefore submitted that the grounds of Revenue be dismissed. 9. We have heard the rival submissions and perused the material on record. The issue in the present appeal of Revenue is whether the time limit prescribed as per Sec.153(2A) of the Act or as per Sec.153(3) of the Act would be applicable for passing the order pursuant to the orders of the Tribunal. It is assessee s case that the provisions of Sec.153(2A) of the Act are applicable and therefore the order giving appeal effect passed by the AO after the end of financial year in which the order was received by CIT is time barred and bad-in-law. On the other hand, it is Revenue s case that the case falls u/s 153(3) of the Act and therefore no time limit has been prescribed for passing the order. 10. We find that Co-ordinate Bench of the Tribunal while passing the order for 1999-2000 on 10.08.2012 has noted the fact that the AO by fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the sound logic? Therefore, in our opinion, the AO and the CIT(A) have not done the best judgment in the manner provided in section 144 of the Act. There are large number of judicial precedents in operation on the issue of 'best judgment' referred to in section 144 of the Act. In principle, the best judgment does not mean wild and unreasonable estimations. The very expression 'best judgment assessment' imply the judgment of the AO and the said judgment must be supported by the material or data gathered by him for this purpose both from internal as well as the external sources. Thus, we can not approve the 'best judgment assessment' made by the AO and sustained by the CIT(A) in the present form. Therefore, we are of the considered opinion, the AO must make 'best judgment assessment' as per the manner provided in section 144 of the Act and for this we have decided to set aside the order of the CIT(A) for this limited purpose. It goes without saying that the AO must grant reasonable opportunity of being heard to the assessee. Assessee is directed to furnish any and every relevant information to advance his case for making of the best judgment as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire original assessment order is set aside. It was noted that, Under the existing provisions of section 153 (3), such fresh assessments are not subject to any time limit. Indeed, Section 153, as it stood at that time, did not prescribe any time limits. Section 153 (3) (ii), in particular, did not require the order passed thereunder to be issued within any particular time limit. Further there is a distinction between an 'assessment' that is set aside and an 'assessment order' being set aside. When the assessment on an issue is set aside and the matter remanded, with a direction that the issue has to be determined afresh, Section 153 (2A) of the Act would get attracted. 24. What is important to note is that, along with the insertion of subsection (2A), sub-section (3) underwent a simultaneous change. It was expressly made subject to the provisions of sub-section (2A). This meant that Section 153 (3) would thereafter apply only to such cases where Section 153 (2A) did not apply. In other words, in all instances of an AO having to pass a fresh assessment order upon remand where Section 153 (2A) would apply, the AO would be bound to follow the time-lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. In the result, the appeal of Revenue in ITA No.419/PUN/2016 is dismissed. 15. As far as the grounds raised in appeal in ITA No.420/PUN/2016 for A.Y. 2000-01 is concerned, in view of the submission of both the parties that the facts of the case in both the years being identical to the facts and issue of the case in ITA No.419/PUN/2016 for A.Y. 1999-2000, we therefore for the reasons stated herein while disposing of the appeal in ITA No.419/PUN/2016 for A.Y. 1999-2000 and for similar reasons, dismiss the grounds of appeal of Revenue in ITA No.420/ PUN/2016. Thus, the grounds of the Revenue are dismissed. 16. In the result, the appeal of Revenue in ITA Nos.420/PUN/2016 is dismissed. 17. Now we take up assessee s appeal in ITA No.405/PUN/2016 for A.Y. 2001-02. 17.1. Before us, at the outset, Ld.A.R. submitted that assessee s appeal in ITA No.405/PN/2016 for A.Y. 2001-02 and appeal No.406/PN/2016 for A.Y. 2002-03 though are for two different assessment years but the issue involved in both the assessment years are identical except for the assessment years and therefore his arguments will also be common and therefore both the appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal was justified in restoring the matter of computation of deduction u/s 10A of the Act to the file of AO with a view to look the matter afresh. The Hon ble Bombay High Court vide order dt.10.09.2014 in ITA Nos.955 of 2012 and 973 of 2012, while dismissing the appeals of Revenue on the question of issue of restoring the issue to the file of AO held that substantial question of law does not arise and the appeal of Revenue is devoid of merits. It further directed the AO to implement the order in accordance with the law. Pursuant to the directions of Hon'ble Bombay High Court, fresh assessment proceedings to give effect to the order of ITAT were initiated by the AO. Before AO, it was submitted that the proceedings were time barred in view of the provisions of Sec.153(2A) of the Act. The contention of the assessee was not found acceptable to the AO. He thereafter passed order on 07.11.2014 giving appeal effect to the order of ITAT u/s 254 of the Act wherein he reduced the deduction u/s 10A to ₹ 4,55,99,915/- as compared to the claim of assessee of ₹ 5,69,99,894/-. Aggrieved by the order of AO giving appeal effect to the order of Tribunal, assessee carried the matter be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... biguous directions of Hon'ble. High Court to implement the order of Tribunal, no fault can be found with the order of the AO. Accordingly, ground No.1 is dismissed. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us. 20. Before us, Ld.A.R. submitted that the Department while filing the appeal before the Hon'ble High Court had raised a ground to stay the order of the Hon ble Tribunal but the Hon'ble High Court has not issued any such directions granting the stay. He therefore submitted that the order of Hon'ble High Court has to be read in the context of the grounds raised by Revenue. Since the Hon'ble High Court has not stayed the order of the Tribunal, the view taken by the Revenue Authorities to exclude the period upto the date of order of the Hon ble Bombay High Court is devoid of merits. Ld.A.R. therefore submitted that in the present case since pursuant to the directions of ITAT, the issue has not been decided by the AO within time limit prescribed u/s 153(2A) of the Act, the order giving effect to ITAT order passed by the AO is bad-in-law. Ld.D.R. on the other hand supported the order of lower authorities and plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of law. The Appeal is devoid of merits. The Assessing Officer must now implement the order of the Tribunal and in accordance with law. 2. In the light of our earlier order passed in Income Tax Appeal No.973 of 2012, both the appeals are dismissed. No costs. Before us, it is Revenue s case that the provisions of Sec.153(2A) of the Act with respect to the order being barred by limitation is not applicable in view of the order of Hon ble High Court. 22. We find that Explanation 1 to Sec.153 of the Act provides for various situations under various clauses (Cl. (i) to ix) where the periods stated therein are to be excluded for computing limitation for the purpose of Sec.153 of the Act. For the present case, Cl.(ii) to Explanation 1 would be relevant. Explanation 1(ii) of Sec.153(2) of the Act states that for computing the period of limitation the period during which the assessment proceedings is stayed by the order or any injunction of any Court shall be excluded. 23. Before us, it is assessee s submission that though the ground for staying the order of Tribunal was raised before the Hon'ble High Court but the Hon'ble High Court did not issue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 271(1)(c) of the Act. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.08.12.2015 (in appeal No.PN/CIT(A)-1/ACIT/Cir.7/PN/689/14- 15) dismissed the appeal of the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds : On the facts and in the circumstances of the case and in law, the learned CIT(A) has : 1. erred in confirming the learned AO s action of levying penalty under section 271(1)(c) of the Act. 2. erred in concluding that the appellant had furnished inaccurate particulars of income; 3. failed to appreciate that the Appellant has suo-moto paid taxes before any enquiry was made by the learned Assessing Officer in respect of provisions for liquidated damages and C forms which inadvertently remained to be offered to tax in the return of income for A.Y. 2007-08. 28. Later, assessee filed additional ground which reads as under : On the facts and circumstances of the case, the penalty order passed by the AO u/s 271(1)(c) of the Act is bad in law due to nonapplication of mind which is evident from the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act for non-satisfaction of either of the limbs. While completing the assessment, the Assessing Officer has to come to a finding as to whether the assessee has concealed its income or furnished inaccurate particulars of income. The Hon ble Bombay High Court in CIT Vs. Shri Samson Perinchery (supra) held that where initiation of penalty is one limb and the levy of penalty is on other limb, then in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty. 32. Considering the facts of the present case in the light of the decision of Hon ble Bombay High Court in the case of Samson Perinchery (supra), we are of the view that in the present case, the basic condition for levy of penalty has not been fulfilled and that the penalty order suffers from non-exercising of jurisdiction power and therefore penalty order cannot be upheld. We accordingly set aside the penalty order passed by AO. Thus, the ground of assessee is allowed. 33. In the result, the appeal of the assessee in ITA No.407/PUN/2016 for A.Y. 2007-08 is allowed. 34. To sum up, the appeals assessee in ITA Nos.405 to 407/PUN/2016 are allowed and the appeals of Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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