M/S G.R.CONTRACTORS vs. I.T.O.WARD-1,SRIGANGANAGAR

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ITA/84/2010HC RajasthanRJHC01042483200909 November 2010Author: ABHAY MANOHAR SAPRE,DINESH MAHESHWARI6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal was devoid of any merit and did not involve any substantial question of law within the meaning of Section 260-A of the Income Tax Act. The Court agreed with the Tribunal's reasoning for remanding the case. It observed that the CIT(A) had made uncalled-for adverse comments on the Tribunal's earlier remand order and had decided factual issues contrary to the Tribunal's directions. The Court emphasized that a subordinate appellate authority is legally obligated to exercise its powers within the parameters set by a higher appellate authority and that the CIT(A) had no jurisdiction to comment adversely on the Tribunal's order or to ignore its mandate. The Court found that the Tribunal, as an appellate court, had the jurisdiction to remand the case. Since the impugned order was a remand order and did not decide any issue on merits, and the entire issue was left open for decision by the CIT(A), no prejudice was caused to either party. The Court found that the case laws relied upon by the assessee were not applicable to the facts of the present case. Consequently, the appeal was dismissed in limine.

What were the facts?

The assessee, M/s. G.R. Contractors, filed an appeal under Section 260-A of the Income Tax Act against an order dated 7.7.2009 passed by the Income Tax Appellate Tribunal (Tribunal). The Tribunal, in its impugned order, allowed the Revenue's appeal, set aside the order of the Commissioner of Income Tax (Appeals) [CIT(A)], and remanded the case back to the CIT(A) for a fresh decision on merits. This remand order was passed because the CIT(A) had allegedly made adverse comments on the Tribunal's previous remand order dated 22.2.2008 and had recorded findings contrary to the Tribunal's directions. The dispute pertains to assessment years 2004-2005 and 2005-2006. The CIT(A) had previously decided the assessee's appeal in his favour, setting aside the assessing officer's order, which led to the Revenue's appeal to the Tribunal.

What were the issues?

1. Whether the appeal involves any substantial question of law within the meaning of Section 260-A of the Income Tax Act, given that the Tribunal's order under challenge is a remand order and does not decide any issue on merits. Assessee's Contention: The assessee relied on several case laws, including Commissioner of Income Tax Vs. Simplex (Indore) P.Ltd., Commissioner of Income Tax Vs. Choudhary Builders (P) Ltd., Rameshchandra M. Luthra Vs. Assistant Commissioner of Income Tax, Income Tax Officer, A-Ward, District (A) & Ors. Vs. R.L.Rajghoria, Munibyrappa Vs. Commissioner of Income Tax, Dhandhia Jewelers Vs. CIT, and Maddi Sudarsanam Oil Mills Company Vs. CIT. The assessee likely argued that the present appeal, arising from a remand order, should be considered on its merits or that the Tribunal's remand was not justified. Revenue's Contention: The judgment does not explicitly record the Revenue's arguments. However, the Tribunal's decision to set aside the CIT(A)'s order and remand the case suggests the Revenue argued that the CIT(A) had erred in his findings and approach, failing to adhere to the Tribunal's previous directions.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR J U D G M E N T D.B. INCOME TAX APPEAL NO. 84/2010 M/s.G.R.Contractors Vs. I.T.O. Ward No.1 Sriganganagar Date of Judgment :

9.11.

2010 HON'BLE MR. JUSTICE A.M. SAPRE HON'BLE MR. JUSTICE DINESH MAHESHWARI Mr. Suresh Ojha, for the appellant. BY THE COURT : (PER HON'BLE A.M. SAPRE,J.) The decision rendered in this appeal shall also govern the disposal of other connected appeal because both these appeals arise out one impugned order passed by the Tribunal and secondly it relates to same assesse.

2.

This is an appeal filed by the assessee under section 260-A of Income Tax Act (for short hereinafter called “The Act”) against the order dated 7.7.2009 passed by the Income Tax Appellate Tribunal (for short hereinafter called “Tribunal”) in case No.ITA 668/JU/09 and case No.ITA 669/JU/09. 3. By impugned order, the Tribunal allowed the appeal filed by the Revenue and while setting aside of the order passed by Commissioner of Income Tax (Appeals) remanded the case to Commissioner of Appeals for deciding the appeal filed by the assessee afresh on merits as indicated in the order. As a consequence of the remand order, the Tribunal did not consider it necessary to decide the cross objection filed by the assessee on it merits.

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4.

So the question that arises for consideration in this appeal is whether this appeal involves any substantial question of law within the meaning of Section 260-A of the Act?

5.

Since the issue involved in this appeal is short one and hence, it is not necessary to take note of the facts of the case in detail except those, which are necessary to understand the controversy and how it was decided by the Tribunal and lower taxing authorities.

6.

The dispute relates to assessment year 2004-2005 and 2005-2006. In the first round of litigation, the issue between the parties relating to facts reached up to the Tribunal and by order dated 22.2.2008, the Tribunal in ITA Appeal No.497 of / JDPR/2007 remanded the case to Commissioner of Appeals for deciding the appeal afresh in the light of the directions contained in its order. It is not in dispute that the order passed by the Tribunal dated 22.2.2008 was not challenged by any party and accordingly it attained finality. It had to be, therefore, given effect to by the Commissioner of Appeals, to whom the case was remanded for fresh decision. The Commissioner of Appeals, on remand, by order 21.10.2008 decided the assessee’s appeal in his favour and set aside the order of assessing officer. It is against this order of Commissioner of Appeal, the revenue felt aggrieved and filed the appeal before Tribunal out of which this appeal arises. As observed supra, the Tribunal by the impugned order set aside the order of Commissioner of Appeal and again remanded the case to him for deciding the assessee’s appeal afresh on merits giving rise to filing of this appeal by the Assessee.

7.

At this stage, we deem it appropriate to quote the operative part of the impugned order as under:-

3 “....The Ld. CIT(A) not only commented adversely on the order of Appellate Tribunal but also recorded facts contrary to the record when he says that the commission receipt of booking of truck is the net receipt requiring separate application of profit rate. The ld. CIT(A), has recorded not only the perverse findings of fact but has also transgressed his juri iction to commenting adversely on the order of superior authority amounting to judicial indiscipline and supported his order that stood obliterated by the order dated 22.2.2008 of the Appellate Tribunal. At places, the directions of the Ld. Tribunal are not considered in the right perspective.

Under such peculiar facts & circumstances and keeping in mind that administration of law is not brought into disrepute and also that a substantial justice is rendered to the assessee, we consider it proper to set aside such order of Ld. CIT(A) and remit the matter back to him for passing an order afresh having

regard

to the observations and directions of Appellate Tribunal as are given in the order dated 22.2.2008. Needless to add reasonable and effective opportunity of being heard shall be allowed to the parties before coming to the conclusion as may be reached after following the directions as aforesaid.

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5.

The Ld. CIT(A) decided

the appeal of the assessee for assessment year 2005-05 by following his findings for assessment year 2004-05 against which the revenue is in appeal in ITA No. 668/JU/2008 and the assessee has filed Cross objections. Since his order for assessment year 2004-05 has been set aside for adjudication afresh, in the interest of justice, we consider it proper and justified to set aside his decision for assessment year 2005-06 as well and remit the matter back to his file for fresh adjudication in the light of observations, findings and directions as are contained in the order for assessment year 2004-05 of Appellate Tribunal.”

8.

Mere perusal of the impugned order quoted supra would go to show that Tribunal was constrained to set aside the order of Commissioner of Appeal and remand the case again to him because it was noticed that firstly the Commissioner of Appeal had made certain, uncalled for, adverse comments on the reasoning and the manner in which the Tribunal decided the case in its remand order dated 22.2.2008 and secondly, he decided the factual issues contrary to directions contained in remand order. The Tribunal, therefore, took exception to the manner and approach of the Commissioner of Appeal; and expressing their strong disapproval, set aside the order, and remanded the case again to Commissioner of Appeal.

9.

We are inclined to agree with the reasoning and conclusion of the Tribunal. In the first place, the order being in 5 the nature of remand, it has not decided any issue on merits. Secondly, as there is no decision on merits and the issue is still left open for its decision by the first appellate authority i.e., Commissioner of Appeals then, the remedy of parties is to submit to the juri iction of first appellate authority and get the issue decided on its merit. Thirdly, in cases of remand, no prejudice is caused to either of the parties because the entire issue is left open for decision and if it is decided against any party then he has a right to challenge the same further in second appeal as in this case before the Tribunal and then before this court in appeal under section 260-A ibid. Fourthly, it can not be disputed that Tribunal being an appellate court, has the juri iction to remand the case to first appellate authority if a case to that effect is made out by the appellant.

10.

All the reasons mentioned above are present in this case to sustain the remand order passed by the Tribunal. Indeed, as has rightly been observed by the Tribunal, the Commissioner of Appeal being subordinate in the hierarchy of appellate juri iction to the Tribunal under the Income Tax Act, he was under legal obligation to exercise his appellate powers within the parameters mentioned in the remand order of the Tribunal while deciding the appeal. In no case he had juri iction to make any comment on the order passed by his higher appellate authority i.e. the Tribunal. The judicial discipline expects a lower authority to follow the mandate issued by its higher appellate authority. It has no juri iction to ignore the mandate or/and go contrary to Income Tax Officer, A-Ward, District (A) & Ors. Vs. substantial question of law within the meaning of section 260-A+ ibid. It is accordingly dismissed in limine. [Dinesh Maheshwari], J. [A.M. Sapre],J. /tarun/

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