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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Chandra Poojari, AM & Shri George George K, JM
Per George George K., JM
This appeal at the instance of the Department is directed against CIT(A)’s order dated 09.07.2018. The relevant assessment year is 2005-2006.
There is a delay of 32 days in filing this appeal before the Tribunal by the Department. The Dy.Commissioner of Income-tax, Alappuzha had filed an affidavit stating the reasons for the delay in filing this appeal. We have perused the reasons stated in the affidavit for the delayed filing of the above appeal. We find the reasons stated are reasonable and there was sufficient cause for filing the appeal belatedly. Hence, we condone the delay of 32 days in filing this appeal and proceed to dispose off the appeal on merits.
ITA No.505/Coch/2018. 2 M/s.NSS Karayogam Br. No.1365. 3. The solitary issue that is raised by the Revenue is whether the assessment completed vide order dated 28.03.2014 pursuant to ITAT’s order dated 21.10.2011 was barred by limitation u/s 153(2A) of the I.T.Act.
The brief facts of the case are as follows:- For the assessment year 2005-2006, the return of income was filed by the assessee on 11.11.2005 declaring a loss of Rs.2,67,54,251. Notice u/s 148 of the I.T.Act was issued on 19.02.2007. The assessee requested the A.O. to treat the return filed originally as the return in response to the notice issued u/s 148 of the I.T.Act. The assessment was completed u/s 143 r.w.s. 147 of the I.T.Act vide order dated 24.12.2007 by assessing the total income at Rs.2,43,52,680. Aggrieved by the reassessment, the assessee preferred appeal to the first appellate authority. The CIT(A) granted relief to the assessee. The Revenue being aggrieved, filed further appeal to the ITAT. The ITAT vide its order dated 21.10.2011 in ITA No.14/Coch/2009 restored the case to the file of the A.O. for fresh adjudication after giving reasonable opportunity to the assessee. Consequent to the order of the ITAT, the Assessing Officer passed an order dated 28.03.2014 assessing the total income at Rs.2,43,52,680. The relevant observation of the Assessing Officer, while passing the assessment oder pursuant to the ITAT order, reads as follows:-
“The Hon. Income Tax Appellate Tribunal, Cochin Bench, vide order dated 21.10.2011 in ITA 14/Coch/2009 has restored back to the Assessing Officer certain issues with a direction to adjudicate
ITA No.505/Coch/2018. 3 M/s.NSS Karayogam Br. No.1365. the matter after allowing a reasonable opportunity to the assessee to state and present its case in the matter. In this regard the assessee was requested vide this office letter dated 28.10.2013 to attend the office on 05.11.2013. However, the secretary of the Trust appeared on 26.11.2013. He was asked to produce the books of account and other details on 28.11.2013. Since there was no response from the assessee, another opportunity of being heard and furnish the requirements on 03.12.2013 was afforded to it vide this office letter dated 24.12.2013. However, the Secretary vide letter dated 04.01.2014 has informed that he will furnish certain details of documents as early as possible. Considering the assessee's request, one more opportunity was given to the assessee for compliance on 24.01.2014 vide this office letter dated 20.01.2014. However, 'till the date, the assessee has not responded and co-operated with the directions of the Assessing Officer. Under these circumstances, I have no other alternative but to give effect to the order of the Hon. Income Tax Appellate Tribunal supra as follows:”
Aggrieved by the order of the Assessing Officer pursuant to the order of the Tribunal, the assessee preferred an appeal to the first appellate authority. Before the first appellate authority, the assessee raised a legal ground stating that the assessment concluded by the Assessing Officer vide order dated 28.03.2014 is barred by limitation u/s 153(2A) of the I.T.Act. According to the assessee, the fresh assessment ought to have been passed within nine months from the end of the financial year in which the order u/s 254 of the I.T.Act was received by the Commissioner of Income-tax. According to the assessee, the fresh assessment ought to have been passed on or before 31.12.2012. It was submitted that the fresh
ITA No.505/Coch/2018. 4 M/s.NSS Karayogam Br. No.1365. assessment order was passed only on 28.03.2014 i.e. long after the period of limitation. Therefore, it was prayed that fresh assessment order passed pursuant to the ITAT’s order is barred by limitation and the same need to be quashed.
5.1 The CIT(A) by following the order of the Kolkata Bench of the Tribunal in the case of DCIT v. Sanjay Jaiswal [(2016) 68 taxmann.com 310 (Kol)] held this is a case of setting aside of the assessment and consequently the time limit for completion of assessment / reassessment is governed by the provisions of section 153(2A) of the I.T.Act. Therefore, it was concluded by the CIT(A) that the assessment order pursuant to the order of the ITAT is barred by limitation and he quashed the same.
The Revenue being aggrieved by the order of the CIT(A) has filed this appeal raising the following grounds:-
“The order of the learned Commissioner of Income tax (Appeals), Kottayam in so far as the points stated below are concerned, is opposed to law on the facts and in the circumstances of the case.
The Learned Commissioner of Income tax (Appeals), Kottayam erred both law and facts in concluding that the Hon'ble Tribunal had set aside and remitted the assessment for determining afresh the issues raised by the learned AO. The Hon'ble ITAT had only restored back the issue to the file of the AO after applying their mind while quoting the judgement of the Hon'ble Apex Court in the case of Kapurchand Shrimal Vs. CIT 131ITR451 and Vishnu Kumar Gupta Vs CIT 143 ITR69 (All.) whereas in the case relied upon by the CIT(A) there was no
ITA No.505/Coch/2018. 5 M/s.NSS Karayogam Br. No.1365. application of mind regarding applicable of any judgement. 3. The Ld. CIT (A) ought to have considered that the ITAT was directing the assessing officer to verify certain issues and did not set aside the original assessment order to be made afresh.
The Ld. CIT (A) failed to appreciate the fact that the order dated 28-03-2014 is not a fresh assessment order only giving effect to the Tribunal order as per provisions of section 153 (3) of the Income-Tax Act, 1961 and is within the period allowed under law. He failed to appreciate that provisions of section 153(2A) were not applicable in the instant case.
The Ld. CIT (A) ought to have considered that the assessee has not cooperated with department during the course of reassessment, that is, the assessee has not responded to the hearing notices and submitted the required details for verification as per the direction of Hon'ble ITAT. 6. The Ld. CIT (A) ought to have appreciated that the reassessment completed on 28-03-2014 as per the direction of the Hon'ble ITAT, Cochin was covered as per provisions of section 153(3) and there was no time limit for carrying out directions of the Hon'ble ITAT in view of clear cut provisions.
The Ld. CIT (A) ought to have considered the judgement of High court of Bombay in the case of Rikhabdas Jhaverchand reported in 249 ITR 774 (2001) held that section 153(3), inter alia lays down that the provisions of subsections (1) and (2) of section 153 shall not apply to assessments, re- assessments and re-computations made on the assessee in order to give effect to any directions contained in an order under section 254 and only 153(3) attracts.
ITA No.505/Coch/2018. 6 M/s.NSS Karayogam Br. No.1365. 8. For these and other grounds that may be advanced at the time of hearing, the order of the learned Commissioner of Income tax (Appeals) on the above points may be set aside and that of the Assessing Officer restored.”
The learned Departmental Representative strongly relied on the grounds raised. The learned AR, on the other hand, submitted that the issue in question is squarely covered by the recent order of the Cochin Bench of the Tribunal in the case of Sri.T.Abdul Majeed v. DCIT (ITA Nos.70 to 74/Coch/2017 – order dated 19.12.2018).
We have heard the rival submissions and perused the material on record. The original reassessment order completed u/s 143 r.w.s. 147 of the I.T.Act the A.O. had assessed the income at Rs.2,43,52,680. On further appeal, the first appellate authority had granted relief vide order dated 30.10.2008. Copy of the order of the CIT(A) and order of the Assessing Officer giving effect to the CIT(A)’s order is placed on record. While giving effect to the order of the CIT(A)’s order dated 30.10.2008, we have noticed that the Assessing Officer has assessed the total income at loss. The Revenue being aggrieved by the order of the CIT(A), had filed an appeal to the Tribunal. The Tribunal in the first round of adjudication passed an ex parte order. The issues raised by the Revenue were restored to the Assessing Officer for fresh adjudication. Therefore, admittedly, in this case, there was no demand that was subsisting when the issue was restored to
ITA No.505/Coch/2018. 7 M/s.NSS Karayogam Br. No.1365. the A.O. by the ITAT in its earlier order dated 21.10.2011. Section 153(2A) of the I.T. Act states as follows:-
Time limit for completion of assessments and reassessments. 153. (2A) Notwithstanding anything contained in sub-sections (1) , (1A), (1 B)] and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner: Provided that where the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner, on or after the 1 st day of April, 1999 but before the 1 st day of April, 2000, such an order of fresh assessment may be made at any time up to the 31st day of March, 2002 : Provided further that where the order under section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264is passed by the Commissioner on or after the 1st day of April, 2005, the provisions of this sub-section shall have effect as if for the words "one year", the words "nine months" had been substituted:" 9. Admittedly in this case fresh assessment was directed to be made by the Tribunal consequent to restoring the matter to
ITA No.505/Coch/2018. 8 M/s.NSS Karayogam Br. No.1365.
the Assessing Officer. Therefore, the provisions of section 153(2A) of the I.T. Act has application. In an identical case, the Cochin Bench of the Tribunal by following the judgment of the Hon’ble jurisdictional High Court in the case of Dr.R.P.Patel v. ACIT [WP(C) No.29193 of 2008 (A) – order dated 9th March, 2015] had decided a similar issue in favour of the assessee. The relevant finding of the Cochin Bench of the Tribunal reads as follows:-
“10. We have heard the rival submissions and perused the material on record. The issue raised in the additional ground was an issue raised before the Assessing Officer and the CIT(A). The issue raised in additional grounds is a pure legal issue and same was omitted to be raised in the original memorandum of appeal. Therefore, we admit the additional grounds raised and take up the same for adjudication.
The solitary issue that is raised in the additional grounds is whether the time limit prescribed u/s 153(2A) of the I.T.Act is applicable for the assessment i.e. completed on 01.03.2010, pursuant to the ITAT’s order dated 08.03.2007. The Hon’ble Kerala High Court in the case of Dr.R.P.Patel v. ACIT (supra) have held that even when one issue has been directed to be considered afresh, time limit prescribed u/s 153(2A) of the I.T.Act is attracted. The Hon’ble High Court had followed the judgment of the Hon’ble Punjab & Haryana High Court in the case of Bharti Engineering Corporation v. Union of India and others [(2008) 298 ITR 400 (P&H)] and the Hon’ble Delhi High Court in the case of CIT v. Bhan Textile P. Ltd. [(2008) 300 ITR 176 (Delhi)]. The relevant finding of the Hon’ble Kerala High Court, after extracting the findings of the Hon’ble Delhi High Court, reads as follows:-
“12. The resultant position therefore is that, even in a case where only one issue has been directed to be considered afresh, the limitation under Section 153(2A) would apply. It is clear from the passage in [(2008)300 ITR176 (Delhi] (supra) extracted above that, sub section (3) of Section 153 applies to a different situation where only a consequential order has to be passed in implementation of a direction issued by the appellate forum. In the present case, as already found above the direction was to consider the issue afresh. Therefore, Section 153(2A) of the Act is
ITA No.505/Coch/2018. 9 M/s.NSS Karayogam Br. No.1365.
attracted. In view of the above, this is a case in which the Assessing Officer ought to have passed a consequential order within the time limit stipulated. Since no such order was passed the petitioner is entitled to succeed.
In view of the above findings the writ petition is allowed. It is held that in so far as the issue that was remitted to the respondent Assessing Officer for fresh consideration, the time bar contained in Section 153(2A) of the Act operates. The petitioner shall therefore be entitled to the refund sought for, in accordance with law. It is made clear that on all other aspects the assessment order is final and binding on the assessee. Such refund shall be made as expeditiously as possible and at any rate within a period of three months of the date of receipt of a copy of this judgment.”
It was submitted by the learned AR that the judgment of the Kerala High Court in the case of Dr.R.P.Patel v. ACIT (supra) was accepted by the Department and no further appeal was preferred by the Revenue. The learned DR was unable to controvert the above assertion of the learned AR. Section 153(2A) states – “Notwithstanding anything contained in sub-section (1), (1A), (1B) and (2), in relation to the AY commencing on the 1st day of April 1971, and any subsequent AY, an order of fresh assessment in pursuance of an order u/s 250, sec. 254, sec. 263, or sec.264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order u/s 250 or sec. 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order u/s 263 or sec. 264 is passed by the Chief Commissioner or Commissioner.” In the instant case, the Tribunal order dated 08.03.2007 was admittedly served on the Commissioner of Income-tax on 20.03.2007. Therefore, going by the dictum laid down by the judgment of the Hon’ble jurisdictional High Court in the case of Dr.R.P.Patel v. ACIT (supra), the assessment ought to have been completed on or before 31.12.2007. Since the assessment order pursuant to the Tribunal order was completed only on 01.03.2010, going by the dictum laid down by the Hon’ble jurisdictional High Court cited supra, we hold that the assessment was barred by limitation. It is ordered accordingly.
In the result, the appeals filed by the assessee are partly allowed, as indicated above.”
ITA No.505/Coch/2018. 10 M/s.NSS Karayogam Br. No.1365. 10. In the instant case having found that provisions of section 153(2A) has application, the fresh assessment ought to have been completed within 9 months from the end of the financial year in which the order of the Tribunal is received by the Office of the Commissioner of Income-tax. The order of the Tribunal dated 21.10.2011 was admittedly received by the Office of the Commissioner of Income-tax on 21.11.2011. Therefore, the fresh assessment ought to have been completed on or before 31.12.2012. Hence, the assessment completed on 28.03.2014 was much beyond the time limit prescribed u/s 153(2A) of the I.T.Act and was barred by limitation. Therefore, the CIT(A) has correctly quashed the assessment pursuant to the ITAT’s order. It is ordered accordingly.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced on this 05th day of March, 2019.
Sd/- Sd/- (Chandra Poojari) (George George K.) ACCOUNTANT MEMBER JUDICIAL MEMBER
Cochin ; Dated : 05th March, 2019. Devdas* Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The Pr.CIT Kottayam. 4. The CIT(A), Kottayam. 5. The DR, ITAT, Cochin. 6. Guard file. BY ORDER,
AR-ITAT- Cochin