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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ NEW DLEHI
Before: SHRI N.K. BILLAIYA & SHRI N.K. CHOUDHRY
This appeal has been preferred by the Assessee against the order dated 08.05.2019, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)-42, New Delhi (in short “Ld. Commissioner”), u/s. 250 of the Income-tax Act, 1961 (in short ‘the Act’) for the assessment year 2012-13.
Brief facts, relevant for adjudication of the instant appeal, are that the Assessee had filed an application on dated 23.07.2012 before the Hon’ble AAR for Ruling on the issue of liability of deduction u/s. 54F of the Act qua Rs.24,72,86,100/- invested for the purchase of residential house in foreign out of sale proceeds of the residential house in India. Though the Assessee did not file any return of income u/s. 139 of the Act, however, lateron filed its return of income on dated 02.01.2015 in response to the notice dated 29.12.2014u/s. 148 of the Act, issued by the Assessing Officer, whereby the Assessee had declared income of Rs.55,48,95,950/- and claimed the refund of Rs.5,15,63,080/-.
2.1 The Hon’ble AAR vide its order dated 22.12.2017 allowed the deduction to the Assessee u/s. 54 of the Act for the amount of Rs.24,77,86,100/-, being an amount invested in the purchase of residential house .
2.2 Later on the Assessing Officer accepted the return of income of the Assessee and passed the assessment order dated 26-02- 2018 u/s 147/143(3) of the Act without issuing any refund. The Assessing Officer restricted the credit of tax deducted at source only to the chargeable tax amount as per the Income-tax Return.
Being aggrieved, the Assessee preferred a rectification application u/s. 154 of the Act on dated 23.03.2018 for issue of refund of Rs.5,15,63,080/-. The said application of the Assessee was decided by the Assessing Officer vide its order dated 28.03.2018 u/s. 154 of the Act, whereby the refund of Rs.5,15,63,077/- was determined as refundable u/s. 154 of the Act.
3.1 Subsequently, the Assessing Officer while referring the same application dated 23.03.2018 for the claim of refund, which was already decided by the same Assessing Officer on dated 28.03.2018, passed the order dated 27.09.2018 u/s. 154 of the Act and rejectedthe said rectification application.
3.2 The Assesseebeing aggrieved with the said order dated 27.09.2018 u/s. 154 of the Act, preferred first appeal before the ld. Commissioner, who vide impugned order quashed the same and directed the Assessing Officer to allow the opportunity to the Assessee, to decide on the issue of rectification application, by concluding as under:
5.2. I find that the appellant has challenged the order u/s. 154 dated 27.09.2018 on the following grounds: (i). No application filed by Appellant under section 154 of the Act was pending for disposal on date of impugned order; (ii) No show cause notice u/s 154(3) was issued proposing to reduce the refund already determined; (iii) Impugned order passed wrongly referring to Application dated 23.03.2018 filed by Appellant which was already disposed off vide order dated 28.03.2018; (iv) There is no mistake which was obvious, patent not requiring application of Mind, constituting Mistake Apparent from Record to enable assumption of Jurisdiction;
5.3 Perusal of order u/s 154 of the Actdated 27.09.2018 shows that the AO has rejected the claim of refund because the return of income was not filed within the prescribed time as mentioned in section 139 of Income Tax Act. In this case, it is a fact that the appellant has not filed return u/s 139of the Income Tax Act. The return of income has been filed only in response to notice u/s 148 of the I T Act, The AO while passing the assessment order has accepted the returned income. 5.4 The AO invoked the provision under section 239(2)(c) of the Act which provides for the time limitation for claim of refund. However, the AO has taken a plea that the same are not applicable in case of Appellant because the refund is due to the appellant under section 240 of Act. The appellant submitted that Section 240 carves out an exception to section 239 and as per section 240 of the Act, the assessee need not even make a demand or file an application. Accordingly, the appellant argued that it is a mandate on the revenue to make the refund even without any claim for refund in the prescribed manner and within the prescribed period. 5.5 The appellant has taken a position that the order of Advance Authority for Ruling (AAR) is well covered in the phrase "other proceedings under this Act'. 5.6 I find that the AO has passed order dated 27.09.2018 under section 154 of the act without affording an opportunity to the appellant. It may be relevant to refer to the provisions of Section 154(3) of the Act which read as under: "An amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this section unless the authority concerned has given notice to the assessee of its intention so to do and has allowed the assessee a reasonable opportunity of being heard". 5.7 Since the AO has not complied with the provisions of section 154(3), therefore, the rectification order dated 27,09.2018 does not hold good in the eyes of law. Accordingly, the AO is directed to allow opportunity to the assessee to decide on the issue of rectification application.”
3.3 The Assessee, being aggrieved with the impugned order, has preferred the instant appeal.
Heard the parties and perused the material available on record. Ld. AR at the outset by raising preliminary objection contended thatthe ld. Commissioner erred in law in issuing the directions to the Assessing Officer to allow the opportunity to the Assessee to decide on the issue of rectification application, even though no such application was pending for disposal. The Assessee further contended that the said directions are opposed to law for the reason that it amounts to remand of the case,for which the Ld. Commissioner in not empowered as per the provisions of section 251 of the Act and the order passed by the coordinate Bench of the Tribunal in SMC case (ITA No. 9687/Del/2019) wherein para 9 of the order, the Hon’ble coordinate Bench has held “that from the above, it is clear that the ld. CIT(A) is empowered to confirm, reduce, enhance or annul the assessment. In the present case, ld. CIT(A) annulled the assessment and further directed to issue notice u/s. 148 of the Act. No such power has been granted by the Act, therefore, the impugned direction of ld. CIT(A) in excess of the jurisdiction conferred by section 251 of the Act, hence, the same is set aside. Thus, ground raised by the Assessee in this appeal is allowed.”
We have given thoughtful consideration to the contention of the Assessee and perused the provisions of section 251 of the Act.No doubt the ld. Commissioner (Appeals) while deciding the appeal against the assessment order, having allpowers to confirm, reduce, enhance or annul the assessment but having no powers to remand the case or issue to the lower authority. However as per the provision of section 251(1)(c), the ld. Commissioner is fully empowered to pass such order(s)which include remanding the case/issue to the authority below, in appeal as he thinks fit, in any other case which is not covered under sub-clause (a), (aa) and (b) of sub-section (1) of section 251 of the Act. The decision referred to by the Assessee is factually dissimilar as the same pertainsto appeal against the Assessment order but not against any other order as involved in this case. Hence, the preliminary objection/contention of the Assessee is untenable being misconceivedand having no substance, resultantly rejected.
4.1 The Assesseealso raised the issue that at the time of passing the order dated 27.09.2018 u/s. 154 of the Act by the Assessing Officer, in which he has made the reference of application dated 23.03.2018, no such application was pending for adjudication, as the same was decided by the same Assessing Officer on 28.03.2018. Even otherwise, no show cause notice u/s. 154(3) of the Act was issued proposing to reduce the refund already determined by the Assessing Officer to the Assessee. The Assessee further claimed that the ld. Commissioner erred in law in not passing any speaking order and not disposing of each ground of appeal separately with cogent findings with regard to the contentions raised to the effect that the Assessing Officer passed the order by wrongly referring to application dated 23.03.2018, which was already stood disposed of vide order dated 28.03.2018 and no such or otherapplicationwas pending for disposal as on the date of impugned order. Further the provisions contained in section 239 of the Actwhich relate to grant of refund, shall not be applicable in the facts of the case, as in the present case, refund shall be granted as per provisions of section 240 of the Act.
4.2 On the contrary, the ld. DR relied upon the order passed by the ld. Commissioner and claimed that the ld. Commissioner has rightly passed the order under challenge by directing the Assessing Officer to allow the opportunity to the Assessee to decide on the issue of rectification application.
4.3 We have given thoughtful consideration to the facts and circumstances of the case and find that the Assessee in response to the notice dated 29.12.2014 u/s. 148 of the Act, filed its ITR on dated 02.01.2015, which was accepted by the Assessing Officer by passing the order dated 26.02.2018 u/s. 147/143(3) of the Act and the liability of tax was determined to the tune of Rs.11,42,39,474/- which was allowed to be credited from the advance tax of Rs.16,58,02,551/-deducted at source. However, the Assessing Officer did not issue the refund. Therefore, the Assessee vide application dated 23.03.2018u/s. 154 of the Act, sought rectification of the assessment order 26.02.2018 passed u/s. 147read with section 143(3) of the Act, and prayed for issue of refund of Rs.5,15,63,080/-.
4.3.1 The said application was disposed of by the Assessing Officer by passing an order dated 28.03.2018 u/s. 154 of the Act, whereby the amount of Rs.5,15,63,077/- was determined as refundable.
4.3.2 Subsequently, the very same Assessing Officer on dated 27.09.2018 passed another order on the same rectification application dated 23.03.2018 (which was already decided vide order dated 28.03.2018 u/s. 154 of the Actby the same AO) and rejected the same on the ground, since the return of income was not filed within prescribed time as mentioned in section 239 of the Act.
4.3.3 It is not the case of the department here that application dated 22.03.2018 filed by the Assessee before the Assessing Officer u/s. 154 of the Act was not decided vide order dated 28.03.2018 by the Assessing Officer u/s. 154 of the Act and/or the said order dated 28.03.2018 passed on application dated 23.03.2018 is reversed by the Higher forum or the same has not attained finality.
4.3.4 The question emerge, whether the Assessing Officer while taking refuge of section 154 of the Act, has rightly passedsecond order on the same application dated 23.03.2018 for rectification of the order which has already been decided on merit. In our considered view answer is ‘No’. There cannot be two orders on the single application as the same would be against principles of “interestrepublicaeut sit finis litium”(it concerns the State that there should be an end to litigation) and "Nemodebetbisvexari pro una at eademcausa" (no one should be vexed twice over for the same cause.
4.3.5 We observe even otherwise section 154 of the Act mandates that an amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the Assessee or (the deductor) or (the collector), shall not be made under this section unless the authority concerned has given notice to the person(s) referred above of its intention to doso and has allowed a reasonable opportunity of being heard.
The rule of ‘Audi laterampartem’ says ‘hear the other side’. If the order is passed by the authority without providing notice or the reasonable opportunity of being heard to the person affected by it, if mandatorily required under the statute, then the same would be invalid and liable to be set aside.
Coming to the instant case, from the record and order u/s 154 of the ACT, it clearly appears that the AO has neithergiven any notice to the Assessee qua its intention to do such amendment, which has the effect of enhancing or reducing a refund or otherwise increasing the liability of the Assessee, nor provided any opportunity of being heard to the Assessee, while passing an order on dated 27.09.2018 u/s. 154 of the Act, hence dents the roots of the case.
4.3.6 On the aforesaid analyzations, we are of the considered view that the order 27.09.2018 u/s. 154 of the Act by the AO, is un- sustainable being invalid and void ab initio. Consequently, the impugned order is also liable to be set aside.
In the result, the appeal filed by the Assessee stands allowed.
Order pronounced in the open court on 26/07/2022.