TMI Blog2022 (3) TMI 1514X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate order and hence the original order cannot be revised under the revisional jurisdiction of the Commissioner u/s 263 of the Act. Similar view has been taken by the Honourable Calcutta High Court in the case of Oil India Limited [ 1981 (9) TMI 64 - CALCUTTA HIGH COURT] where in the court held that the order of the ITO having been merged in the order of the AAC on the question of allowability of depreciation, the Commissioner has no jurisdiction to pass an order of revision u/s. 263 of the Act. Appeal of the assessee is allowed. - ITA No. 274/JPR/2021 - - - Dated:- 15-3-2022 - DR. S. SEETHALAKSHMI , JM And SHRI RATHOD KAMLESH JAYANTBHAI , AM For the Assessee : Sh. Manish Agarwal ( C. A. ) For the Revenue : Sh. Ajey Malik ( CIT ) ORDER PER : RATHOD KAMLESH JAYANTBHAI , AM This appeal is filed by the assessee aggrieved from the order of the Learned Principal Commissioner of Income Tax-2, Jaipur [ herein after referred as ld. Pr.CIT ] for the assessment year 2014-15 dated 08.03.2019, which in turn arises from the order passed by the Assistant Commissioner of Income Tax, Circle-4 Jaipur under Section 143(3) of the Income Tax Act, 1961 (in sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit duly sworned and executed by director of the assessee company wherein it has been contended that; I, Saurabh Kakkar, Director of M/s Jaipur Telecom Pvt. Ltd. aged about 50 years S/o Late Shri V.K. Kakkar R/o A-65, Ram Marg, Shyam Nagar, Jaipur-302019 (Rajasthan) do hereby solemnly affirm on oath as under: 1. That, as soon as the impugned order passed by Id. Pr. CIT was received, the same was forwarded to the office of counsel of assessee so as to decide if appeal against such order was required to be filed. 2. That, the counsel of assessee advised that no appeal is required to be filed against impugned order and appeal would be filed against the order passed u/s 143(3) r.w.s.263 of the Income Tax Act. 3. That, order u/s 143(3) r.w.s. 263 was passed on 02.12.2019, and when the same was discussed with another counsel, assessee was advised as to why no appeal was filed against order u/s 263. However, by that time, there was countrywide lockdown and offices of counsels remained closed due to COVID 19 pandemic and again appeal could not be filed against order passed u/s 263. 4. Thus, it is submitted that the delay in filing the appeal is absolutely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . c) ITAT Jaipur Bench in the case of Shri Rakesh Tak vs. ITO ITA No. 316 to 318/JP/2020 dated 28.01.2021. 2.3 Per contra the ld. DR appearing on behalf of the revenue strongly objected to the condonation petition on reasons placed before the bench. The assessee is a company availing the professional services of chartered accountant. Their turnover exceeded the audited limit. Company has it s own legal professional to deal with such matters. The assessee left with the sufficient time before covid 19 also, but failed to file the appeal even before covid. So, the assessee has no merits on this condonation petition and the appeal should not be entertained as the assessee failed to justify the delay in filling the present appeal. The affidavit filed by the director has no support of any evidence to support the contention so raised. In the case law relied upon by the ld. AR of the assessee is having the independent reasons for the delay. The ld. DR has filed the following judgement in support of his contentions objecting the condonation petition filed by the assesse : 3. We have heard the rival contentions and also persuaded the material available on record made avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order passed u/s. 263 of the Act. 3.4 As there was county wide lockdown and office of the counsel remained closed due to pandemic and the delay is based on that set of advice of the counsel the company could not file the appeal in time and there was delay of about 932 days including the delay on account of covid-19. 3.5 From the decision cited by the ld. AR of the assessee we refer to the decision the Hon'ble Bombay High Court in case of Vijay VishinMeghani vs. DCIT wherein it has referred to the decision in case of Concord of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi Ors. AIR 1979 SC 1666 wherein the Hon'ble Supreme Court has held that a legal advice tendered by a professional and the litigant acting upon it one way or the other could be a sufficient cause to seek condonation of delay and coupled with the other circumstances and factors for applying liberal principles and then said delay can be condoned. Eventually, an overall view in the larger interest of justice has to be taken. None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate finds that the litigant has deliberately and intentionally delayed filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e part of the assessee in delayed filing of the present appeal and he does not stand to benefit by resorting to such delay. Similar view is taken by the apex court in the case of Improvement Trust, Ludhiana in civil appeal no. 2395 of 2008, wherein the court ruled that in the legal arena, an attempt should always be made to allow the matter to be contested on merits rather than to throw it on such technalities. The apex court further held that it is the duty of the court to see to it that justice should be done between the parties. 3.7 In light of above discussions and in the entirety of facts and circumstances of the case, we are of the considered view that the assessee in his averments has made out a clear case that there was sufficient cause which being beyond his control, prevented him from filing the present appeal in time before the Tribunal. The assessee has sought advice from his Counsels and was not guilty of negligence on his part and it cannot be said that the delay was due to the negligence and inaction on the part of the assessee, which could have been avoided by the assessee if he had exercised due care and attention. We find that there is no culpable negligence or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 on a total income of Rs. 1,69,76,200/- after making disallowance of Rs. 22,50,530/- on account of excess depreciation on building, LTCG Rs. 3,47,485/- on sale of land and disallowance of Rs. 1,37,346/- on account of excess depreciation on vehicle. 6. On culmination of the assessment proceeding the ld. PCIT on perusal of the assessment record observed that the assessee company has shown profit on sales of fixed assets of Rs. 2,66,53,550/- under the head extraordinary items in Profit Loss account ( Notes-18). The ld. PCIT also observed that the assessee company has reduced profit on sale of fixed assets to the extent of Rs. 2,66,53,550/- as per computation of income filed with the return, as a result the MAT u/s. 115JB has also been reduced to that extent. Considering these facts, a show cause notice u/s. 263 of the Act was issued to the assessee vide notice no. Pr.CIT-II/ITO(T J)/JPR/263-264/2018-19/1104 dated 06.12.2019 to explain as to why the assessment order passed by the ACIT, Circle-4, Jaipur may not be revised u/s. 263 and may not be treated as erroneous and prejudicial to the interest of the revenue regarding the taxability of income as per the prevalent law on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said order has been passed by the Assessing Officer in a routine and perfunctory manner without verification of the computation of book profit us 115JB and MAT as shown by the assessee The order has thus resulted in short levy of taxes. The order of the Assessing Officer is therefore liable to revision under the explanation (2) clause (b) and clause (a) of section 263 of the Income Tax Act. Hence, the assessment order is set aside on the determination of book profit u/s 115JB and calculation of MAT as per law to be redone afresh de novo in the light of the observation made in this order and with direction to the Assessing Officer to verify and examine the claim made by the assessee regarding computation of book profit u/s 115JB and calculation of MAT and finalize the assessment in accordance with the prevailing law to quantify the correct income of the assessee liable to tax for AY 2014-15 after according reasonable opportunity to the assessee. 8. Aggrieved from the said order of the PCIT u/s. 263 the assessee company is in appeal before this tribunal on the grounds as reproduced here in above in para 4 above. In support of the grounds so raised by the assessee, the ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputing of Book profit u/s 115JB of the Income Tax Act. Since both the grounds of appeal are interrelated, the same are canvassed together for the sake of convenience. At the outset brief facts of the case are submitted as under: The assesse company was engaged in business of lease rentals. During the year under consideration, assesse sold a building out of its fixed assets for a consideration of Rs.3,35,00,000/-, on which profit was earned to tune of Rs. 2,66,53,550/-. Since, sale of asset was not a part of regular business activities, profit earned on same was reported as Extraordinary item under the Profit Loss account (APB 21, 23). Accordingly, sum of Rs.2,66,53,550/- was reduced while computing total income as well as book profits. In scrutiny assessment, such profit on sale of asset was duly examined by ld.AO and certain additions/disallowances were made while determining Capital Gain earned on such sale. The ld. AO also made adjustments in block of assets for building after examining the sale value of the asset sold on which profit has been earned. Assessee preferred appeal before ld. CIT(A) against order passed by ld.AO u/s 143(3), (which has been directed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the appeal court. In CIT v. AmritlalBhogilal Co. 1959 SCR 713, another decision which touches upon the doctrine of merger, the Supreme Court observed: 10. There can be no doubt that, if an appeal is provided against an order passed by a tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the Tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law the position would be just the same even if the appellate decision merely confirms the decision of the Tribunal. As a result of the confirmation or affirmance of the decision of the tribunal by the appellate authority, the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement . In Gojer Bros. (P) Ltd. v. Ratan Lal Singh(1974) 2 SCC 453 the Supreme Court held that there cannot be, at the same time, more than one operative order governing the same subject matter . Court also reiterated that insofar as the doctrine of merger was concerned there could be no distinction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order Original order cannot be revised by Commissioner to Income Tax Income Tax Act, 1961, s. 263. 138 ITR 836 Oil India Ltd. vs. CIT (Cal.) Where an appeal is preferred before the AAC and a subject is particularly raised, the Commissioner cannot revise such an order taking into account an aspect not dealt with by the AAC. In view of above, it is submitted that by virtue of Doctrine of Merger, Revision proceedings initiated and completed by ld. PCIT are not in accordance with law and deserves to be set aside. Without prejudice to above and in the alternative: It is submitted that ld. PCIT has issued direction for inclusion of profit on sale of land and building in books for the purpose of calculation of MAT. Your honours would appreciate that the provisions contained in section 115JB are alternative taxation mechanism and comes into play in the event, tax as per normal provisions of the Act is lower than tax on Book profits. Also, tax credit of such excess tax paid is available to the assesse in the years it is liable to pay tax as per normal provisions of the Act. In other words, mechanism of payment of taxes under MAT would be tax neutral exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e building was disallowed as claimed by the assessee when computing the capital gain and thus the long term capital gain was also increased while making the assessment. The assessee has preferred an appeal before the commissioner of income tax against that order of the assessment and the Commissioner of Income tax has already dismissed the appeal of the assessee. Thus, the order of the assessment made merges with the order of the Commissioner of Income Tax and thus that order cannot be subjected to revision u/s. 263 of the Act. To support this view the ld.AR of the assessee relied on the decision of Calcutta High Court in the case of Oil India Ltd. Vs. Commissioner of Income Tax (138 ITR 836 cal) and Bombay High Court in the case of CIT Vs. Saraf Bandhu Private Limited (216 ITR 833 Bom). Based on that aspect the revision order of the PCIT is against the law and judicial precedent available. 9.1 As regards the issue of MAT calculation on merits the ld. AR of the assessee demonstrated from the computation sheet issued by the assessing officer wherein, he has separately determined MAT liability after completing the assessment. Thus, the issue now that the PCIT is raising is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the various aspects issue of capital gain and has made adjustments to the returned income. Against the said order of the assessing officer the assessee has preferred an appeal before the Commissioner of Income Tax, Appeals- 2, Jaipur and the appeal of the assessee was dismissed vide order dated 31.01.2018. Whereas the order in question was passed on 08.03.2019. Therefore, the order of the Commissioner of Income Tax, Appeals-2 order mergers with the order of the Assessing Officer. The Bombay High Court has also held in the case of SarafBandhu Private Limited (supra), that once the original order goes in appeal and the appeal is decided, the original order ceases to exist since it merged in the appellate order and hence the original order cannot be revised under the revisional jurisdiction of the Commissioner u/s 263 of the Act. It is relevant to state that the ld. CIT(A) passed the order on 31.01.2018 that is much before the notice u/s 263 was issued by the ld. PCIT. The finding of the Bombay High Court in the case of SarafBandhu Private Limited (supra) is reproduced here in below: We notice catena of decisions rendered by this Court as well as the Supreme Court taking a view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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