C I T vs. M/S PUNAJB STATE WAREHOUSING CORP.

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ITA/825/2008HC Punjab & HaryanaPHHC01080856200802 February 2023Bench: MS. JUSTICE RITU BAHRI,MRS. JUSTICE MANISHA BATRA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the appeal, setting aside the impugned order of the ITAT dated 20.12.2007. The Court noted that similar issues were considered in ITA Nos. 826 and 848 of 2008, titled The Commissioner of Income Tax-I, Chandigarh Vs. M/s Punjab State Warehousing Corporation Limited. In those judgments, it was observed that the proviso to Section 14-A of the Income Tax Act, 1961, is not attracted when the assessment order was passed under Section 143(3) of the Act, and not under Section 147. Consequently, the provisions of Section 14-A, having retrospective applicability from 01.04.1962, would apply to the assessment years in question. The High Court found that the present case is squarely covered by those judgments. Therefore, the matter was remanded back to the Tribunal to decide afresh in accordance with law after hearing the parties. The High Court did not decide the merits of the disallowance under Section 14-A.

What were the facts?

The appeal concerns M/s Punjab State Warehousing Corporation (assessee) and the Commissioner of Income Tax I, Chandigarh (revenue). The assessment year(s) are not explicitly stated but relate to years prior to assessment year 2001-2002. The challenge is to the Income Tax Appellate Tribunal's (ITAT) order dated 20.12.2007, which dismissed the revenue's appeal. The ITAT had relied on the proviso to Section 14-A of the Income Tax Act, 1961, to hold that the Assessing Officer was debarred from reassessing under Section 147 for prior years. The assessment order was passed under Section 143(3), not Section 147. The revenue filed a review application, which was allowed on 07.02.2020, restoring the appeal. The High Court is now considering the main appeal.

What were the issues?

1. Whether the proviso to Section 14-A of the Income Tax Act, 1961, debars the Assessing Officer from reassessing under Section 147 of the Act for assessment years prior to assessment year 2001-2002, or passing any order under Section 154 rectifying prior assessment orders, when the original assessment order was passed under Section 143(3) and not under Section 147. Assessee's contention: The ITAT correctly dismissed the revenue's appeal, holding that the proviso to Section 14-A debars the Assessing Officer from reassessing under Section 147 for prior years, as the original assessment was not under Section 147. Revenue's contention: The revenue relies on this Court's previous judgments in ITA Nos. 826 and 848 of 2008, which held that if the assessment order was passed under Section 143(3), the proviso to Section 14-A is not attracted, and Section 14-A, having retrospective applicability from 01.04.1962, would apply to the assessment years in question. They argue that the ITAT's order was erroneous.

Which sections of the Income-tax Act were involved?

Section 14-A,Section 147,Section 154,Section 143(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 209 ITA-825-2008 (O&M) Date of decision:- 02.02.2023 The Commissioner of Income Tax I, Chandigarh .... Appellant Vs. M/s Punjab State Warehousing Corporation. ...Respondent CORAM: HON'BLE MS. JUSTICE RITU BAHRI HON'BLE MRS. JUSTICE MANISHA BATRA Present: Ms. Gauri Neo Rampal, Senior Standing Counsel with Mr. Aditya Mehtani, Junior Standing Counsel for the appellant. Mr. B.M. Monga, Advocate and Mr. Rohit Kaura, Advocate for the respondents. Ritu Bahri, J. (Oral) Learned counsel for the appellant has referred to the orders passed by this Court in ITA No. 826 and 848 of 2008, titled as The Commissioner of Income Tax-I, Chandigarh Vs. M/s Punjab State Warehousing Corporation Limited, wherein Section 14-A of the Income Tax Act, 1961 (for short 'the Act'), inserted in Chapter IV of the Act by Finance Act, 2001 with retrospective effect from 01.04.1962 was considered. As per the abovesaid provision, an assessing officer cannot open the assessment under Section 147 of the Act for any assessment year prior to assessment year 2001-2002 for this purpose or pass any order under Section 154 of the Act rectifying any assessment order for prior years to disallow such expenditure. The object and purpose of POOJA SAINI 2023.02.27 10:26 I attest to the accuracy and integrity of this order/judgment

ITA-825-2008 (O&M) -2- the proviso is to ensure that the retrospective amendment is not made as a weapon to reopen past settled cases which have attained finality. In the above said judgments it was observed that the assessment orders had been passed under Section 143(3) of the Act and therefore, proviso to Section 14-A of the Act was not attracted and provisions of Section 14-A having applicability retrospectively w.e.f. 01.04.1962 would thus be applicable to the assessment years in question. In this backdrop, after setting aside the order of the tribunal, the matter was remanded back to decide it afresh in accordance with law after hearing the parties. In the present case, the Tribunal had dismissed the appeal of the revenue vide order dated 20.12.2007, Annexure A-3 on the ground that the Section 14-A proviso debar the assessing officer to reassess under Section 147 of the Act. The assessment order has been passed under Section 143(3) of the Act, Annexure A-1 and thereafter order was passed by CAT(Appeals) on 27.03.2006, Annexure A-2 and tribunal's order is dated 20.12.2007, Annexure A-3. Since the order was not passed under Section 147 of the Act, as per the judgment referred to above the proviso to Section 14-A would not be applicable. In the present case, the revenue filed a review application, which was allowed vide order dated 07.02.2020, whereby the present ITA No. 825 of 2008 was restored to its original number. POOJA SAINI 2023.02.27 10:26 I attest to the accuracy and integrity of this order/judgment

ITA-825-2008 (O&M) -3- The main appeal is now listed for final disposal. Similar issue has come up for consideration before this Court in ITA Nos. 826 and 848 of 2008, titled as The Commissioner of Income Tax-I, Chandigarh Vs. M/s Punjab State Warehousing Corporation Limited and the present case is squarely covered by the above said judgments, present appeal is allowed, impugned order dated 20.12.2007, Annexure A-3 is set aside and matter is remanded back to the Tribunal to decide afresh in accordance with law after hearing the parties. ( RITU BAHRI ) JUDGE 02.02.2023

pooja saini ( MANISHA BATRA ) JUDGE Whether speaking/reasoned : Yes/No Whether reportable : Yes/No POOJA SAINI 2023.02.27 10:26 I attest to the accuracy and integrity of this order/judgment

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