TMI Blog2021 (3) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered its status to chargeability to tax as a trust and has paid taxes at the rates applicable for individual . In this bunch of fourteen appeals, wherever the liability to deposit tax was there keeping in view income offered to tax and rates as applicable to individual. The assessee had voluntarily come forward and deposited self assessment tax before filing its return of income with Revenue. Merely because objections raised by the assessee to reopening of the concluded assessment u/s 147 of the Act were disposed off by the AO does not mean that the assessee will be finally fastened with additions to income in its hand on merits. The assessee will always have an opportunity to appear before the AO during reassessment proceedings and raise objections on merits of the issue before any prejudice is caused to the assessee by way of adverse reassessment order to be passed u/s 147 read with Section 143(3) of the Act. The right to file an appeal with learned CIT(A) is a statutory right which emanates from the provisions of the Act and it could not be shown to us by the assessee that there existed any provision in the Act which enables it to file an appeal with learned CIT(A) ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. For this, assessees have raised 9 identical grounds in all the appeals. For the sake of brevity, we are reproducing grounds raised in ITA No.2849/Chny/2019 for AY 2013-14 and deal with the issue in this appeal. This decision will apply in all the appeals. The relevant grounds raised are as under:- 1. The Learned Commissioner of Income Tax (Appeals) is not justified in dismissing the appeal filed as not maintainable under section 246A of the Act. 2. The Learned Commissioner of Income Tax (Appeals) is not justified in alleging that the speaking order passed pursuant to reopening of assessment is not an order under section 147 appealable under section 246A (1) of the Act. 3. The Learned Commissioner of Income Tax (Appeals) erred in holding that the appellant has no locus standi to question the reopened proceedings under section 147 in a pre-assessment notice alleging that it determines neither the Income nor demand therefor. 4. The Learned Commissioner of Income Tax (Appeals) is not justified in rejecting the claim on maintainability of appeal filed which questions the jurisdiction of the Assessing Officer to mulct the assessee with a liability under the om ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e electronically and the same were processed under Section 143(1) of the Act. The question arises for consideration is when the Assessing Officer processed the returns under Section 143(1) of the Act, whether he can change the status of the assessees and levy tax at maximum marginal rate? We have carefully gone through the provisions of Section 143(1) of the Act. Section 143(1) of the Act enables the Assessing Officer to make prima facie adjustment on the basis of the material available on record. Changing of status is something outside the purview of the prima facie adjustment under Section 143(1) of the Act. Therefore, this Tribunal is of the considered opinion that changing of status of the assessees cannot be made while processing return under Section 143(1) of the Act. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the same are set aside. However, it is made clear that it is open to the Assessing Officer to take up the matter for scrutiny as provided under the provisions of the Income-tax Act. 3.1. Subsequently, ITO, Non-Corporate Ward-11(1) issued notice u/s.148 of the Act dated 28.03.2019, for the reason that there was un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The CIT(A) elaborately discussed from para No.6 to 10, as under:- 6. To call the aforesaid letter of the AO to the appellant / AR as an order u/s 147 to be appealed against as declared by the appellant in Form No. 35 in the strict sense as per the IT Act would be a misnomer and is only a communication / correspondence by the AO to the appellant rejecting his objections raised to such reopening of the assessment as stated earlier and has been used in a manner of ordinary usage in the usual English parlance and is meant as an order which speaks for itself the reasons providing therein a live link to the formation of the belief that income had escaped assessment which Section 147, authorises and permits the AO to assess or reassess income chargeable to tax if he has reason to believe that the said income has escaped assessment and further that the formation such belief of the AO being a condition precedent for assuming jurisdiction which precisely the AO has done by issue of notice u/s 148 and further rejecting the objections raised by the appellant thereto, in keeping with the ratio of the judement of GKN Driveshafts 259 ITR 19 (SC) which clearly enjoins upon the AO to disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO s averments therein as extracted in the foregoing discussion. 8.3. As can be seen from the aforesaid extracts the AO, vide the above order construed and argued as an order u/s 147 by the AR has not assessed or reassessed any escaped income or recomputed the loss or the deprecation or any other allowance and therefore the said speaking order as termed by the AR and appealed against is clearly not an order passed in terms of Sec 147 till date and therefore is not caught within the mischief thereof and as such, it is opined that the AR has acted hastily and jumped the gun, as it were, prematurely filing appeal against the said order u/s 147 as declared in Form no. 35 without waiting for the actual order u/s 147 r.w.s. 143/144 as the case may be, which is still not barred by limitation of time. Therefore the AO s speaking order rejecting the AR s objection is only a pre-assessment/ reassessment stage of proceedings, as of now and by no rationale or logic in itself be called an order u/s 147, which the appellant has, it is considered, to have erroneously and prematurely appealed against. 9. During the course of the appellate proceeding the AR has filed a note relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee claims that he is not liable to be proceeded against under Section 35, sub-section (1) which, paraphrasing it in the language of S.Sankappa s case [1968] 68 ITR 760 (SC), means that he is not liable to be assessed by a proceeding for rectification under Sec. 35, sub-section (1), he is not denying his liability to be assessed under this Act . His objection then is only against a proceeding for assessment under a particular provision of the Act. He does not say: I am not liable to be assessed at all under any provision of the Act which is what is connoted by the expression denies his liability to be assessed under this Act - these were the words used by the Gujarat High Court in Mandal Ginning and Pressing Co. Ltd. v. CIT [1973] 90 ITR 332 (Guj). 8. It went further to add that denial of liability to be assessed may be in respect of the whole income or any part of the income. It may be based on any ground, whether of fact or of law, and it may be total denial of liability or denial of liability under particular circumstances. 9. In this connection kind reference is invited to the circular of the CBDT when the jurisdiction of the first appellate authority was sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , essentially in the excerpts from the relevant respective submissions but on a relative and comparative consideration of the same, I am however persuaded by the more substantive and meritorious reasoning adduced by the AO on the issue at hand. Further, in view of the foregoing discussion, the assessee s appeal filed against Sec. 147 as per the AR is held to be not maintainable at the present stage of the proceedings in the impugned case and being clearly premature, is dismissed. 10.1 It is however mentioned in passing, that the AO would be well advised to incorporate atleast the operational parts of the aforesaid speaking order rejecting the AR s objections to the reopening in the interests of and while passing a timely well reasoned and logically sound order u/s 147. 5. Before us, the ld.counsel for the assessee Shri J. Prabakar, FCA, first of all argued that CIT(A) has erred while holding that the impugned order of the AO i.e., the speaking order is not order passed u/s.147 of the Act and that an appeal against such order is legally untenable in the given facts and circumstances of the case. He made first argument and stated that the phrases an order against the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnal. In view of the above, ld.counsel stated that apart from the decision of Hon ble Apex Court, even CBDT had admitted this position that in term of provisions of section 246(2) of the Act, still the pre-assessment orders remains appealable under sub-section (1) of section 246 of the Act. In term of these, he stated that CIT(A) has erred in not entertaining the appeal of assessee as not-maintainable. 7. On the other hand, the ld.senior Departmental Representative heavily relied on the order of CIT(A). He stated that disposal of objection i.e., objections regarding reasons recorded for re-opening is not order, which can be appealed against u/s.246A of the Act. He stated that there is no provision in the amended section 246A of the Act, which provides appeal for or against the communication of rejection of objections u/s.147 of the Act, particularly, when reassessment is not framed. Only appeal lies against the re-assessment framed u/s.147 r.w.s. 143(3) of the Act. In term of the above, he supported order of CIT(A) and stated that the CIT(A) has rightly held the appeal of the assessee to be not maintainable at the present state. 8. We have heard rival contentions and gone thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 92CD (c) an order made under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections [except an order referred to in sub-section (12) of section 144BA]; (d) an order made under section 163 treating the assessee as the agent of a non-resident; (e) an order made under sub-section (2) or sub-section (3) of section 170; (f) an order made under section 171; (g) an order made under clause (b) of sub-section (1) or under subsection (2) or sub-section (3) or sub-section (5) of section 185 in respect of an assessment for the assessment year commencing on or before the 1st day of April, 1992; (h) an order cancelling the registration of a firm under sub-section (1) or under sub-section (2) of section 186 in respect of any assessment for the assessment year commencing on or before the 1st day of April, 1992 or any earlier assessment year; (ha) an order made under section 201; (hb) an order made under sub-section (6A) of section 206C; (i) an order made under section 237; (j) an order imposing a penalty under- (A) section 221; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. (2) Notwithstanding anything contained in sub-section (1) of section 246, every appeal under this Act which is pending immediately before the appointed day, before the Deputy Commissioner (Appeals) and any matter arising out of or connected with such appeals and which is so pending shall stand transferred on that date to the Commissioner (Appeals) and the Commissioner (Appeals) may proceed with such appeal or matter from the stage at which it was on that day: Provided that the appellant may demand that before proceeding further with the appeal or matter, the previous proceeding or any part thereof be reopened or that he be re-heard. Explanation.-For the purposes of this section, appointed day means the day appointed by the Central Government by notification in the Official Gazette. 9. We noted that the above provisions of section 246A of the Act, was inserted by the Finance No.2 Act, 1998 w.e.f. 01.10.1998. The first legal argument made by ld.counsel for the assessee is that whether an appeal lies under erstwhile section 246 of the Act, in respect of pre-assessment orders as noted by the CBDT vide its Circular No.269 (supra). We noted that the ld.counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion whether such company is liable or not would be matters coming within the ambit of the first postulate referred to hereinabove. Similar is the situation with respect to provisions of Section 246A(1)(a) where again out of certain situations contemplated, one of them is an order against the assessee, where the assessee denies his liability to be assessed under this Act . The computation and extent of liability is determined under the provisions of Section 115QA of the Act. Such determination under the Act would squarely get covered under said expression. There is no reason why the scope of the such expression be restricted and confined to issues arising out of or touching upon assessment proceedings either under Section 143 or Section 144 of the Act. 13. If the submission of the appellant is accepted and the concerned expression as stated hereinabove in Section 246(1)(a) or in Section 246A(1)(a) is to be considered as relatable to the liability of an assessee to be assessed under Section 143(3) as contended, there would be no appellate remedy in case of any determination under Section 115QA. The issues may arise not just confined to the question whether the company is liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erits of the issue albeit the reopening was upheld by the AO on legal grounds. In any case, even if the reopening is upheld on legal ground by the AO and additions are also sustained on merits, then also the assessee will not be remedy less as the assessee will always be having remedy available to it by way of filing an appeal with learned CIT(A) u/s 246A of the Act against an reassessment order passed by the AO u/s 147 read with Section 143(3) of the Act. The assessee could challenge the legal ground i.e., re-opening of assessment as well as the issues on merits before CIT(A) after the assessment or re-assessment order is passed u/s.147 r.w.s. 143(3) of the Act. The assessee is entitled to file appeal on both the count i.e., on the jurisdictional issue as well as on merits. 14. So far as interlocutory order as was passed by the AO in the instant case, the assessee, if so advised, also had the remedy of filing writ petition under Article 226 with Hon ble High Court, but in our considered view, no appeal is maintainable with learned CIT(A) u/s 246A of the Act or any other provisions of the Act, against interlocutory order passed by AO disposing off of objections raised by asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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