CIT LUDHIANA vs. M/S ARORA ALLOYS LTD.

PDF · subscribers
ITA/461/2009HC Punjab & HaryanaPHHC01084571200923 October 2009Author: MR. JUSTICE GURDEV SINGH,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Tribunal was not justified in directing the matter to be kept pending until the decision of the Excise Tribunal. The Court reasoned that the judgment in CIT v. K.S. Bhatia was not applicable as the facts were distinguishable. The revenue's submission that the AO should independently finalize reassessment, and that waiting for the Excise Tribunal's decision could render the proceedings time-barred under Section 153 of the Act, was accepted. The Court found that the assessee's counsel could not rebut this submission. Therefore, the appeal was allowed, the impugned order of the Tribunal was set aside, and the matter was remanded to the Tribunal for a fresh decision on merits in accordance with the law. The operative direction was to remand the matter to the Tribunal.

What were the facts?

The revenue, Commissioner of Income Tax-I, appealed to the High Court against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had directed the Assessing Officer (AO) to frame a fresh assessment for assessment year 2004-05, pending a decision by the Excise Tribunal regarding clandestine removal of stocks by the assessee, M/s Arora Alloys Ltd. The AO had initiated reassessment proceedings based on excise department findings. The CIT(A) had deleted additions, relying on higher excise authority findings. The ITAT, in turn, directed a fresh assessment after the Excise Tribunal's decision, citing CIT v. K.S. Bhatia. The appeal challenges this direction, particularly concerning potential limitation issues for the fresh assessment.

What were the issues?

1. Whether, on the facts and law, the Hon'ble Tribunal was justified in setting aside the order of the AO with a direction to frame a fresh assessment based on the decision of the Excise Tribunal, ignoring that proceedings before the Excise Tribunal are not barred by limitation whereas a fresh assessment as directed by the ITAT would be barred by limitation on 31.12.2009 as per Section 153 of the Income Tax Act, 1961? Assessee's Contention: The judgment does not record any specific contentions from the assessee's counsel regarding this issue, other than stating that the counsel was "not able to rebut the submission and in a way supports the view that matter should have been finalised on merits." Revenue's Contention: The revenue argued that the ITAT's reliance on CIT v. K.S. Bhatia was misplaced because in that case, the finding relied upon for reassessment had been set aside by a higher authority. The revenue contended that the AO should not be required to wait for the Excise Tribunal's decision, as it could lead to the reassessment proceedings becoming time-barred. They argued that excise proceedings were only relevant for forming an opinion of income escapement, and the AO should independently finalize reassessment irrespective of the final view in excise proceedings.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 153

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.461 of 2009 (O&M) Date of decision: 23.10.2009 The Commissioner of Income Tax-I. -----Appellant Vs. M/s Arora Alloys Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present:- Mr. Rajesh Sethi, Standing Counsel for the revenue. Mr. S.K. Mukhi, Advocate for the assessee. -----

ORDER:

1.

The revenue has preferred this appeal under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against order dated 11.07.2008 passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh in I.T.A. No.319/ Chandi/2008 for the assessment year 2004-05, proposing to raise following substantial question of law:- “Whether on the facts and law the Hon’ble Tribunal was justified in setting aside the order of AO with direction to frame fresh assessment on the basis of decision of Excise Tribunal in regard to appeal filed by the Customs and Excise Department ignoring the fact that proceedings before Excise Tribunal are not barred by limitation whereas fresh assessment as directed by ITAT will be barred by limitation on 31.12.2009 as per section 153 of the Income Tax Act, 1961.”

2.

The Assessing Officer initiated proceedings for re- assessment and made certain additions to the declared income of the assessee. Basis for re-assessment was proceedings under the Central Excise Act showing clandestine removal of stocks, outside the books of account. The CIT(A) deleted the said additions, taking into account finding of higher authority in proceedings under the Central Excise Act. On further appeal, the Tribunal directed framing of fresh assessment keeping in view judgment of this Court in CIT v. K.S. Bhatia 257 ITR 614, after the Excise Tribunal decided the appeal of the department.

3.

We have heard learned counsel for the parties.

4.

Learned counsel for the revenue submits that the judgment of this Court in K.S. Bhatia (supra), relied upon by the Tribunal was not applicable, as in that case the finding which was relied upon, as information for re-assessment, had been set aside by the higher authority. The assessing authority could not be required to wait till decision of the Excise Tribunal, by which time proceedings may become time barred. Proceedings under the Central Excise Act had relevance only for formation of opinion of escapement of income and thereafter, the authorities had to independently finalise re-assessment irrespective of final view in excise proceedings. Learned counsel for the assessee is not able to rebut the submission and in a way supports the view that matter should have been finalised on merits. Question of law is answered accordingly by holding that the Tribunal was not justified in directing that the matter be kept pending till the decision of the Tribunal.

5.

Accordingly, this appeal is allowed, impugned order of the Tribunal is set aside and the matter is remanded to the Tribunal for fresh decision on merits in accordance with law.

6.

Parties may appear before the Tribunal for further proceedings on 14.1.2010. (ADARSH KUMAR GOEL) JUDGE October 23, 2009 ( GURDEV SINGH ) ashwani JUDGE 3

More judgments on Section 260-A

All 2,570 judgments and leading authorities on Section 260-A →

Recent GST High Court judgments

Search GST case law →