Jabalpur Municipal Corporation vs. Commissioner Of Income Tax

1 HIGH COURT OF MADHYA PRADESH : JABALPUR I.T.A. No.90/2015 Jabalpur Municipal Corporation Vs. Commissioner of Income Tax – TDS, Bhopal I.T.A. No.91/2015 Jabalpur Municipal Corporation Vs. Commissioner of Income Tax – TDS, Bhopal I.T.A. No.92/2015 Jabalpur Municipal Corporation Vs. Commissioner of Income Tax – TDS, Bhopal ------------------------------------------------------------------------- Coram : Hon’ble Shri Justice Rajendra Menon, J. Hon’ble Shri Justice K.K. Trivedi, J. ------------------------------------------------------------------------- Shri Anshuman Singh, learned Counsel for the appellant. Shri Sanjay Lal, learned Counsel for the respondent. ------------------------------------------------------------------------------------ J U D G M E N T (30/11/2015) 1. In all these three appeals as common questions of law in fact are involved, they are being disposed of by this common order. 2 2. In these appeals filed by the Municipal Corporation, Jabalpur, a statutory authority created under the Madhya Pradesh Municipalities Act, challenge is made to orders passed by the Income Tax Appellate Tribunal in the matter of remanding the question of assessment for the years 2010-2011, 2011-2012 and 2012-2013 to the Assessing Officer. As the questions framed for consideration are as to whether the Tribunal has committed an error in directing for remanding the matter to the Assessing Officer in the facts and circumstances of the case and whether the order of remand is erroneous in nature, we propose to deal with these questions in all the appeals by the common order as the years of assessment are identical. 3. The authorities of the Income Tax Department conducted verification of the tax deducted at source (TDS) by the Municipal Corporation, Jabalpur with regard to various transaction for the assessment years in question and on such examination it was found that in various items where TDS should have been recovered and deposited with the tax authorities, proper recovery and deposit has not been done. Accordingly, the Assessing Officer conducted the assessment based on the material that came on record and assessed the tax recoverable at a flat rate of 10% on the over all income, which was found to have been accrued to the Municipal Corporation. On an appeal being filed by the assessee before the Commissioner (Appeals), the Commissioner (Appeals) found that in a very vague manner the assessment has been done and without analyzing the material properly and in contravention of Chapter XVII-B, a flat 10% rate has been adopted over the board for assessing tax. It was also found that while conducting the assessment, the principles of natural justice and rules of evidence in the matter of analyzing the documents and 3 other material are ignored and finding the assessment proceedings to be wholly unsustainable, the Commissioner (Appeals) quashed the entire assessment. However, on an further appeal being filed by the Revenue before the Tribunal, the Tribunal found that when the assessment was not done properly, the matter should have been remanded back to the Assessing Officer for proper assessment and, therefore, the Appellate Tribunal having remanded the matter back to the Assessing Officer, these appeals by the assessee under Section 260-A of the Income Tax Act have been filed. 4. Shri Anshuman Singh, learned Counsel for the appellant, invited our attention to the order passed by the Commissioner (Appeals), illegalities found by the Commissioner (Appeals) and argued that the Commissioner (Appeals) having quashed the order of assessment on proper consideration finding breach of principles of natural justice, no case is made out for remanding the matter. The Tribunal incorrectly placing reliance on the judgments delivered in the cases of CIT vs. Eli Lilly & Co. (India) Ltd.1 and M/s Hindustan Coca Cola Beverage Ptv. Ltd. vs. CIT2, has remanded the matter back to the Assessing Officer, which was not proper. It was tried to be argued by Shri Anshuman Singh by placing reliance on a judgment of this Court in the case of Rajesh Maheshwari vs. Assistant Commissioner of Income Tax and another3 that the Income Tax Appellate Tribunal is final facts finding authority and if there was any error in the assessment done, the Tribunal itself can make the assessment and there was 1 (2009) 312 ITR 225 (SC) 2 (2007) 293 ITR 226 (SC) 3 (2010) 320 ITR 58 (MP) 4 no necessity for remanding the matter to the Assessing Officer. 5. Shri Sanjay Lal, learned Counsel for the respondent, tried to argue that the order of assessment has been properly passed because the Commissioner (Appeals) having found the assessment to be in violation of principles of natural justice, instead of making the assessment itself, has only simply quashed the order of assessment, therefore, in remanding the matter, the Tribunal has not committed any error warranting any further interference in these appeals under Section 260-A of the Income Tax Act. 6. We have considered the rival submissions and we have gone through the findings recorded by the Assessing Officer, Commissioner (Appeals) and the Tribunal. The Assessing Officer conducted the assessment proceedings and imposed duty at 10% without evaluating the evidence and the documents properly and finding out as to what is the exact amount of evasion of TDS and to what extent liability can be imposed upon the Municipal Corporation. When the matter was considered by the Commissioner (Appeals), the said authority found that the Assessing Officer has conducted the proceedings of assessment ignoring the principles of natural justice and evidence available on record and without analyzing the documents and finding out the exact nature of evasion of tax, proceeded to imposing tax at a flat rate, which was not permissible. However, having held so, without finding out the exact nature and extent of tax evaded, the Commissioner (Appeals) quashed the entire assessment order and even did not bother to make the assessment himself on the basis of documents and other material available. In not remanding the matter back to the 5 Assessing Officer and only quashing the order of assessment, an error was committed by the Commissioner (Appeals) and, therefore, when the matter traveled to the Tribunal, the Tribunal rightly remitted the case for reconsideration. In doing so, we are of the considered view that no error has been committed by the Tribunal. However, since both the appellate authorities are also facts finding authorities, who can go into factual aspects, it would have been more appropriate either for the Tribunal or the Commissioner (Appeals) to have conducted the proceedings themselves instead of remanding the matter to the Assessing Officer so that assessment process could have been expedited and further appellate procedure avoided. 7. Accordingly, in the facts and circumstances of the case, even though we find no error in remanding matter back to the Assessing Officer, with a view to expedite assessment proceedings, which are pending now for 3-4 years, we deem it proper to modify the order of assessment and the Commissioner (Appeals) shall conduct the process of re-assessment at the appellate stage after hearing all concerned. Accordingly, modifying the orders passed by the Tribunal and Commissioner (Appeals), we dispose of all the three appeals. 8. With the aforesaid, the appeals are disposed of. (Rajendra Menon) (K.K. Trivedi) Judge Judge Skc