TMI Blog2023 (1) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed any appeal against the above order of the Tribunal before Hon ble High Court of Gujarat. The Ld. PCIT before passing this Revision order has not given due weightage to the Appellate order passed by the Tribunal, which is against the fundamental principle of Judicial Discipline, that is required to be followed by all the lower authorities. Not following the Judicial Discipline by the highest Officer of the Income Tax Department is highly deprecated. In this connection, it is appropriate to rely upon the celebrated judgment of the Hon ble Supreme Court in the case of Union of India Others vs. Kamlakshi Finance Corporation [ 1991 (9) TMI 72 - SUPREME COURT] wherein held order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,260/-. 3. Perusal of above assessment order by the Ld. PCIT the assessee has received a loan of Rs. 88,25,649/- from Leela Tubes Pvt. Ltd. in which the assessee had 51.42% share and also key managerial personnel in the company having more than 20% share holding during the Financial Year. It is further seen that as on 31.03.2015, the Reserve and Surplus and Profit Loss Account is Rs. 38,41,609/-, as per Section 2(22)(e) of the Act, why the same be treated as deemed income in the hands of the assessee. Thus, the Assessing Officer failed to consider the provisions of Section 2(22)(e) of the Act while passing the assessment order which is erroneous in so far as it is prejudicial to the interest of revenue. In view of this, Ld. PCIT issued a showcause notice dated 09.01.2020 to the assessee. 4. In response the assessee filed a detailed reply stating that the company M/s. Leela Tubes Pvt. Ltd. set up a project at Daman in the year 2000-01 with the help of the bank finance and also enjoying working capital facilities. During the year 2004-05 due to very huge default the company was declared Non Performing Asset (in short NPA ), later IBDI Bank insisted for the strict conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) is not reproduced by the PCIT. However, Ld. PCIT set-aside the assessment order stating that is erroneous and prejudicial to the interest of revenue thereby directing the Assessing Officer to pass fresh assessment order, after giving proper opportunity to the assessee and examine the issue to ascertain the applicability of Section 2(22)(e) of the Act. 5. Aggrieved against the same assessee is in appeal before us raising the sole ground of appeal as follows: 1. In view of the facts and circumstances of the case, the Ld. Prin. CIT ought to have accepted the decision of Hon. ITAT in assessee s own case on this issue in appeal No. ITA/382/AHD/2017 as there is no change in the facts except some figures and ought not to have passed the order to make the assessment afresh on this issue of deemed dividend U/s. 2(22)(e) of The Income Tax Act and hence Your Appellant prays that the action of the Prin. CIT -2, Ahmedabad be quashed. 5.1 Reiterating the above Ground of Appeal the Ld. Counsel for the assessee has taken as through page No. 410 to 421 of the Paper Book filed by the assessee more particularly Clause 3 of the reply filed before PCIT which is reproduced as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y went into near bankrupt situation. The company was declared NPA. Meanwhile, the bank the United Western Bank Ltd. who were the bankers of the company also came into financial problem and that bank was acquired by IDBI Bank Ltd. As a result, the company was in a fix and it was empiric. IDBI Bank insisted for the very strict restricting of the loans and for that the several conditions were laid down. As a result, neither the bankers of the Company IDBI Bank Ltd. were giving the credit facilities and because of the defaults, the bankers were not allowing the company to pay to the creditors. As a result, it was very it was very difficult to get the raw-material from the market. Under the circumstances, the assessee asked his uncles and cousins to agree to permit him to offer as security the ancestral residence being Flat No.203 at Shripalnagar and avail the funding. In such fashion, some funding was availed from YES Bank and assessee opened a personal account and transferred the surplus funds of the company into his account and as and when the amount was falling due for payment he used to transfer back the amount to the account of company and make the payment and with working like th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Tribunal before Hon ble High Court of Gujarat. The Ld. PCIT before passing this Revision order has not given due weightage to the Appellate order passed by the Tribunal, which is against the fundamental principle of Judicial Discipline, that is required to be followed by all the lower authorities. Not following the Judicial Discipline by the highest Officer of the Income Tax Department is highly deprecated. 9. In this connection, it is appropriate to rely upon the celebrated judgment of the Hon ble Supreme Court in the case of Union of India Others vs. Kamlakshi Finance Corporation (1992) 1 SCC 648 where it has been categorically held as follows: 6. . The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate heirarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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