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Income Tax Appellate Tribunal, AMRITSAR BENCH AMRITSAR
Before: SHRI L.P. SAHU, AM & SHRI RAVISH SOOD, JM
आदेश आदेश Per L.P.Sahu, AM: The assessee has filed this appeal against the order of Pr.CIT-II, Amritsar, dated 31.03.2016 passed u/s.263 of the Act for the assessment year 2011-2012 on the following grounds of appeal :- “1. That order u/s.263 passed by the ld. Pr. Commissioner of Income Tax-II, Amritsar is beyond juri iction and hence perverse in law and void abinitio.
That the Ld. Pr. Commissioner of Income Tax-II, Amritsar has erred in recording his finding that office note recorded by ITO Ward 5(3), Amritsar while framing the assessment is incorrect.
That the Ld. Pr. Commissioner of Income Tax-2, Amritsar has erred in holding that order u/s.143(3) dated 7.3.2014 is erroneous and prejudice to the interest of the revenue.
That the order is bad in law and on facts.
That the appellant craves leave to add or amend the ground of appeal before the appeal is heard and disposed off.”
The assessee has also filed revised grounds of appeal vide application dated 01.05.2017, which reads as under :-
2 1 That the proceedings invoked u/s 263 by Id. Pr. CIT-II, Amritsar are beyond juri iction and hence the order passed is perverse in law and void abinitio. 2 That the order u/s 263 by the Id. Pr. CIT-II, Amritsar was passed under pressure of the Audit Wing and without independent application of mind which is evident from the letter of the ITO HQ CIT (Audit) and the petition of Assessing Officer to the Pr.CIT- II for passing order u/s 263 whereas he had stoutly defended the assessment order passed by his predecessor before CIT (Audit).
Hence the order u/s 263 is not sustainable in law. 3 That the Id. Pr. CIT-II, Amritsar has erred in law and on facts in passing order u/s 263 since the same is without appreciating the fact that the order of the AO is neither erroneous nor prejudicial to the interest of the revenue since the assessment order was passed by the AO only after making detailed indepth enquiries as is evident from detailed queries raised during the assessment proceedings and Office Note appended to the assessment order. 4 That the Id. Pr. CIT-II, Amritsar has erred in law and on facts in holding that the Office Note appended to the Assessment Order by the AO, giving detailed reasons for accepting the contention of the appellant, is incorrect. 5 That the order is bad in law and on facts. 6 That the appellant craves leave to add or amend the ground of appeal before the appeal is heard and disposed off.
Brief facts of the case are that the assessee is an individual and derives income from salary, working remuneration and interest on capital from partnership firm. The assessee filed his return on 15.12.2011 declaring his total income of Rs.7,61,950/-, which was processed u/s.143(1) of the Act and selected for scrutiny under CASS.
Thereafter the AO framed the assessment and assessed the total
income of the assessee at Rs.7,61,950/- creating an additional demand
of Rs.NIL.
Subsequently, the Pr. CIT-II, Amritsar, invoking powers u/s.263
of the Act has quashed the order passed by the AO u/s.143(3) of the Act
3 holding the same is erroneous and prejudicial to the interest of Revenue.
Against the above order of Pr.CIT, the assessee is in appeal before
the Income Tax Appellate Tribunal.
Ld.AR before us submitted that the AO has rightly observed that there is no demand against the assessee as the assessed income and returned income are same. Therefore, the Pr.CIT has erred in quashing
the assessment order and directed the AO to do fresh assessment
holding the same as erroneous and prejudicial to the interest of justice.
Accordingly, ld. AR submitted that the order passed by the Pr.CIT
deserves to be dismissed.
On the other hand, ld. DR relied on the order of Pr. CIT. He
further submitted that the AO had not done any enquiry in this regard,
therefore, the order of the AO is erroneous and prejudicial to the interest of the Revenue.
After considering the submissions of both the parties and perusing the entire material available on record, we are of the view
that the Pr.CIT has rightly directed the AO to frame the assessment
afresh as he found that the office note recorded by the then ITO Ward-
5(3), Amritsar is factually incorrect. The Pr. CIT also found that the amount of Rs.29,69,855/- belonged statedly to the HUF was deposited
not in the account of the HUF but into the account of the individual.
4 During the course of hearing the ld. AR was also unable to substantiate
that this issue was examined by the AO and there is any conclusive
findings by the AO as per law. From the order of Pr. CIT, it is clear that this issue was not examined by the AO. It was expected from the AO
that he has assessed the taxable income as per law. Firstly, the Assessing Officer is investigating officer thereafter he is an adjudicating
officer. If the AO failed to carry out adequate enquiry about the alleged
transactions in the name of the assessee, which are present in this case,
therefore, the Pr. CIT has rightly invoked the provisions of Section 263
of the I.T.Act to reopen the completed assessment.
Further in the revised grounds of appeal the assessee has challenged only one issue for invoking the revisonary proceedings by the Pr. CIT u/s.263 of the I.T.Act without application of mind by the Pr.
CIT. It is clear from the order of the Pr. CIT at page 2 that the Pr. CIT
before invoking the revisionary power u/s.263 of the Act has asked for the report of the AO and receipt of the report from the AO the same has been confronted to the counsel of the assessee. The observations of the Pr. CIT at page 2 (first para) read as under :-
“This office asked for the report of the AO and the range head on one hand and fixed the case for hearing of the assessee on the other hand as per order sheet enteries. Sh Ashwani Kalia, C.A and Counsel of the assessee attended the proceeding from time to time. The report of the A.O received through the Joint Commissioner of Income Tax, Range -5, Amritsar was confronted to the counsel of the assessee and also visa versa.”
5 From the above, it is clear that the ld. Pr. CIT has enquired before
invoking the provisions of Section 263 of the I.T.Act. Accordingly, the revised grounds of appeal raised by the assessee have no merit and the same are dismissed. We, therefore, of the opinion that the Pr. CIT has taken a right view in quashing the assessment framed by the AO and directing the AO to make fresh assessment. Accordingly, we uphold the findings recorded by the Pr. CIT and dismiss the appeal of the assessee.
Now, a procedural issue comes before us that though the hearing
of the captioned appeal was concluded on 06.02.2020, however, this order is being pronounced much after the expiry of 90 days from the date of conclusion of hearing. We find that Rule 34(5) of the Income
tax Appellate Tribunal Rules, 1962, which envisages the procedure for pronouncement orders, provides as follows:
34(5) The pronouncement may be in any of the following manners: - (a) The Bench may pronounce the order immediately upon the conclusion of hearing. (b) in case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date of pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board.
As such, “ordinarily”, the order on an appeal should be pronounced by the Bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression
6 “ordinarily” has been used in the said rule itself. This rule was inserted
as a result of directions of Hon’ble High Court in the case of Shivsagar inter alia, observed as under:
“We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now),all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment”.
In the rules so framed, as a result of these directions, the expression
“ordinarily” has been inserted in the requirement to pronounce the order within a period of 90days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any “extraordinary” circumstances.
We also find that the aforesaid issue has been answered by a coordinate Bench of the Tribunal viz; ITAT, Mumbai ‘F’ Bench in DCIT,
Central Circle-3(2), & ors (ITA
No.6264/Mum/18 dated 14.5.2020, wherein, it was observed as under:
“ 9. Let us in this light revert to the prevailing situation in the country. On 24th March,2020, Hon’ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories
7 with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon’ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also afew more days prior to, and after, the lockdown by observing that “In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the juri ictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown”. Hon’ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, “It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”, and also observed that “arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June2020”. It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus “should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure...”. The term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an event or effect that can be neither anticipated nor controlled’ When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an “ordinary” period.
In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only inconsonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High Court did not approve an order being
8 passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon’ble Bombay High Court itself has, vide judgment dated 15th April2020, held that directed “while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”. The extraordinary steps taken suo motu by Hon’ble juri ictional High Court and Hon’ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words“ ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. “
Respectfully following the above judicial decision of Hon’ble
Bombay High Court and the Tribunal, we are of the considered view
that the period during which the lockdown was in force shall stand
excluded for the purpose of working out the time limit for pronouncement of orders, as envisaged in Rule 34(5) of the Appellate
Tribunal Rules, 1963.”
In the result, appeal of the assessee is dismissed.
Order pronounced in pursuance with Rule 34(4) of ITAT Rules,
1963 by putting the copy of the same on Notice Board on 30/06
/2020 at Amritsar. (RAVISH SOOD) (L.P.SAHU) "याियक सद"य "याियक सद"य / JUDICIAL MEMBER "याियक सद"य "याियक सद"य लेखा सद"य लेखा सद"य लेखा सद"य / ACCOUNTANT MEMBER लेखा सद"य अमृतसर/ Amritsar; ,दनांक Dated 30/06/2020 अमृतसर अमृतसर अमृतसर Prakash Kumar Mishra, Sr.P.S.
9 आदेश आदेश क" आदेश आदेश क" क" "ितिल-प क" "ितिल-प "ितिल-प अ.े-षत "ितिल-प अ.े-षत अ.े-षत/Copy of the Order forwarded to : अ.े-षत 1. अपीलाथ" / The Appellant- Sh. Rajan Bhardwaj, 182-C, Basant Avenue, Amritsar
" यथ" / The Respondent- Pr. CIT-II, Amritsar 3. आयकर आयु/(अपील) / The CIT(A), 4. आयकर आयु/ / CIT 5. -वभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अमृतसर अमृतसर अमृतसर/DR, ITAT, Amritsar अमृतसर 6. गाड" फाईल / Guard file. स या-पत "ित //// आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार
(Senior Private Secretary) ITAT Amritsar Bench, Amritsar