TMI Blog2023 (1) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner, it was incumbent on the part of the Appellate Commissioner to have taken note of the latches and mistakes committed by the AO while passing the assessment order dated 27.03.1997 before remanding the case for passing a fresh assessment order. Equally, the Appellate Tribunal was at fault while passing the impugned order. It ought to have seen the mistakes committed by the Assessing Officer which resulted in an erroneous order being passed in favour of the respondent which was prejudicial to the interest of the revenue. In our view, the power was rightly exercised by the Commissioner of Income Tax while invoking Section 263 - Therefore, the Tribunal erred in allowing the respondent assessee's appeal. Allow this appeal and answer the substantial questions of law in favour of the appellant revenue. - T.C.A.No.739 of 2008 - - - Dated:- 21-12-2022 - Honourable Mr.Justice S.Vaidyanathan And Honourable Mr.Justice C.Saravanan For the Appellant : Mr.Karthik Ranganathan Standing Counsel Assisted by Mr.S.Rajesh, Junior Standing Counsel For the Respondent : Mr.T.Vasudevan JUDGMENT S.VAIDYANATHAN, J. AND C.SARAVANAN, J. The Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only a giving effect order. The revision order passed on 14.3.02 is time barred to consider the revision of order dt.27.3.1997. To sum up the assessment order dt.20.3.2000 is not erroneous though it was prejudicial to the interests of revenue, since the AO has carried out the direction given by the Commissioner (A0 vide order dt.26.3.1998 and he limited his findings to the extent which was subject matter of appeal before the Commissioner (A) and he is not expected to consider any extraneous issue while passing the giving effect order. Further, we draw support from the judgment of the Supreme Court in the case of CIT vs. Alagendran Finance Ltd. reported in 293 ITR 1 wherein it is held as follows: Held, affirming the decision of the High Court, that the Commissioner had sought to revise only that part of the order of assessment which related to Lease Equalisation Fund; but the proceedings for reassessment had nothing to do with that item of income. The doctrine of merger did not apply in a case of this nature: the period of limitation commenced from the dates of the original assessment and not from the reassessments since the latter had not had anything to do with the Lease Eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax:- i. Circular No.3/2018, dated 11.07.2018 [ F.No.279/Misc.142/2007-ITJ (Pt)]. ii. Circular No.17/2019, dated 08.08.2019 in [F.No.279/Misc.142/2007-ITJ (Pt)]. iii. Letter dated 26.11.2014 of the Deputy Commissioner of Income Tax, Central Circle-2(2), Chennai-34. 5. It is submitted that this appeal also ought to have been withdrawn and dismissed in the light of dismissal of T.C.A.No.313 of 2018 filed by the Principal Commissioner of Income Tax - 2 vide order dated 04.08.2022 for the Assessment Year 1996-1997. 6. A reference was made by the learned counsel for the respondent that Section 268A of the Income Tax Act, 1961 was inserted with retrospective effect from 01.04.1999. It is therefore submitted that the present appeal is liable to be withdrawn as admittedly the dispute amount of tax was below Rs.1 Crore. 7. A reference was also made to the following decisions of this Court and that of the Hon'ble Supreme Court:- i. Commissioner of Income Tax, Tamil Nadu-IV, Madras Vs. M/s.G.K. Enterprises , 2016 (4) TMI 1286. ii. Director of Income Tax, Circle 26(1) New Delhi Vs. S.R.M.B.Dairy Forming (P) Ltd. , 2017 (11). 8. Opposin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore dealing with the substantial questions of law framed in this appeal, we shall narrate the brief facts of the case in the present appeal. 15. The present case pertains to the Assessment Year 1994-95 (relevant to the previous year 1993-94). The facts on record indicate that the respondent had not filed return under Section 139(1) of the Income Tax Act, 1961 for the Assessment Year 1994-95 and therefore, a notice under Section 142(1) of the Income Tax Act, 1961 was issued on 08.11.1994. 16. Thereafter, a letter dated 25.02.1997 was issued requiring the respondent to furnish specific informations and clarifications called for in the said letter, pursuant to which, the respondent filed a return on 10.03.1997 admitting a taxable income of Rs.24,06,900/-. 17. The assessment was completed vide Assessment Order dated 27.03.1997 under Section 144 of the Income Tax Act, 1961 as the respondent failed to furnish any of the documents called for and return of income was not validly explained in the return filed beyond the stipulated time. 18. Meanwhile, a copy of the DVAC's (Directorate of Vigilance and Anti-Corruption) report was sent to the Assessing Officer on 24.07.1997 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Commissioner of Income Tax (Appeals) dated 26.03.1998 in ITA.No.88/97-98, the Assessing Officer passed an Assessment Order dated 20.03.2000 (signed on 28.03.2000) once again under Section 144 of the Income Tax Act, 1961. 24. The total income of the respondent was re-determined as Rs.28,86,030/-. The net tax payable by the respondent including the interest under Section 234A, 234B and 234C of the Income Tax Act, 1961 was computed as Rs.23,86,708/- less the amount already paid under Section 140A of the Income Tax Act, 1961. 25. Meanwhile, the Commissioner of Income Tax invoked Section 263 of the Income Tax Act, 1961 and issued a Notice dated 18.01.2002, to revise the Assessment Order dated 20.03.2000 (signed on 28.03.2000) passed by the Assessing Officer pursuant to the order dated 26.03.1998 of the Commissioner of Income Tax (Appeals). 26. The aforesaid proceedings was defended by the respondent. It culminated in an order dated 14.03.2002 of the Commissioner of Income Tax (Central), Chennai under Section 263 of the Income Tax Act, 1961, wherein, the Commissioner of Income Tax (Central), Chennai concluded that the Assessment Order dated 20.03.2000 (signed on 28.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer while passing the Assessment Order dated 20.03.2000 (signed on 28.03.2000). 30. It is submitted that the Income Tax Appellate Tribunal erred in concluding that the DVAC's report dated 07.12.1996 was not a report for the purpose of Section 263 of the Income Tax Act, 1961. It is submitted that the Income Tax Appellate Tribunal erred in holding that the Assessing Officer has not committed any mistake by ignoring DVAC's report sent on 24.07.1997. It is submitted that the assessment completed on 27.03.1997 had been set aside and therefore the assessing officer ought to have taken note of the DVAC's report dated 07.12.1996 which was forwarded earlier on 24.07.1997. 31. It is submitted that the expression 'record' in Explanation 1(b) to Section 263 of the Income Tax Act, 1961 reads as under:- record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner; 32. It is submitted that the order passed under Section 263 of the Income Tax Act, 1961 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned counsel for the respondent has relied on the following case laws in support of the case of the respondent:- i. Commissioner of Income Tax Vs. Alagendran Finance Ltd. , 2007 (7) TMI 304 : 2007 (7) SCC 215. ii. Kartar Singh Vs. Commissioner of Income Tax, Amritsar , 1976 (10) TMI 11 : [1978] 111 ITR 184. iii. Commissioner of Income Tax Vs. Late.Jawaharlal Nagpal (through legal representatives Smt.Kanta Nagpal and others) , 1987 (8) TMI 41 : [1988] 171 ITR 136. iv. SP.Kochhar Vs. Income Tax Officer, Dehradun , 1982 (5) TMI 3 : [1984] 145 ITR 255. v. Commissioner of Income Tax Vs. SV.Divakar (Through Legal Heir Srikumar Nair) , 1992 (5) TMI 10 : [1993] 201 ITR 914. vi. Deputy Commissioner of Income Tax (Assessment) Vs. Surat Electricity Co. Ltd. , 2011 (4) TMI 1163 : [2011] 337 ITR 271. 39. It is submitted that the scope of remand was limited and therefore there is no scope for invoking Section 263 of the Income Tax Act, 1961 against the second assessment order dated 20.03.2000 (signed on 28.03.2000). 40. Under these circumstances, it is prayed that the questions of law be answered in favour of the respondent. It is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny party aggrieved by an order of remand from which an appeal lies does not appeal therefrom, he shall thereafter be precluded from disputing its correctness. 48. In Maharajah Moheshur Singh Vs. The Bengal Government , (1859) 7 M.I.A. 283, 302, it was observed as follows:- We are of opinion that this objection cannot be sustained. We are not aware of any law or regulation prevailing in India which renders it imperative upon the suitor to appeal from every interlocutory order by which he may conceive himself aggrieved, under the penalty, if he does not so do, of forfeiting for ever the benefit of the consideration of the appellate court. No authority or precedent has been cited in support of such a proposition, and we cannot conceive that anything would be more detrimental to the expeditious administration of justice than the establishment of a rule which would impose upon the suitor the necessity of so appealing; whereby on the one hand he might be harassed with endless expense and delay, and on the other inflict upon his opponent similar calamities, We believe there have been very many cases before this Tribunal in which their Lordships have deemed it to be their duty to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mt.Deorajin Debi and another , AIR 1960 SC 941, after adverting to the decisions of the Privy Council in Ram Kirpal Shukul v. Musumat Rup Kuari , (1883) 11 I.A. (P.C.) 37, observed in paragraph Nos.15 16 as follows:- 15. ......As regards the orders of remand it had been held that under s. 591 of the Code a party aggrieved by an order of remand could object to its validity in an appeal against the final decree, though he might have appealed against the order under Section 588 and had not done so. The second sub-section of Section 105 precludes an appellant from taking, on an appeal from the final decree, any objection that might have been urged by way of appeal from an order of remand. 16. It is clear therefore that an interlocutory order which had not been appealed from either because no appeal lay or even though an appeal lay an appeal was not taken could be challenged in an appeal from the final decree or order. A special provision was made as regards orders of remand and that was to the effect that if an appeal lay and still the appeal was not taken the correctness of the order of remand could not later be challenged in an appeal from the final decision. If howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioners directions, he is of course bound by the directions, but, subject to them, he has the same powers as he had originally when making an assessment under section 23. The reassessment is nothing but a second assessment in substitution of the assessment made previously and set aside by the Appellate Assistant Commissioner on appeal. There are no restrictions at all on the powers of the Income-tax Officer when he proceeds to reassess the income; subject to the directions given in the Appellate Assistant Commissioners order, he has to proceed as if he were making an assessment under section 23 the time when he proceeds to reassess. He is not bound or restricted by anything that had happened either when he made the original assessment or when the appeal was heard by the Appellate Assistant Commissioner; he is governed only by the findings of the Appellate Assistant Commissioner. He is not bound by his own findings arrived at in the original assessment; they do not operate as res judicata and undoubtedly have not the force of an order. The findings arrived at by the Appellate Assistant Commissioner and the directions given by him are binding on him, not as res judicata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the respondent, in our view, is therefore unsustainable. The orders passed by the Assistant Commissioner both on 27.03.1997 before remand and after remand on 28.03.2000 pursuant to the remand order dated 26.03.1998 of the Commissioner of Income Tax (Appeals) in I.T.A.No.88/97-98 have not only resulted in an order which is prejudicial to the interest of the revenue but also in an erroneous order. As an Appellate Commissioner, it was incumbent on the part of the Appellate Commissioner to have taken note of the latches and mistakes committed by the Assessing Officer while passing the assessment order dated 27.03.1997 before remanding the case for passing a fresh assessment order. 57. Equally, the Appellate Tribunal was at fault while passing the impugned order. It ought to have seen the mistakes committed by the Assessing Officer which resulted in an erroneous order being passed in favour of the respondent which was prejudicial to the interest of the revenue. In our view, the power was rightly exercised by the Commissioner of Income Tax while invoking Section 263 of the Income Tax Act, 1961. Therefore, the Tribunal erred in allowing the respondent assessee's appeal. 58. U ..... X X X X Extracts X X X X X X X X Extracts X X X X
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