GANGADHAR N. AGARWAL, MARGAO-GOA. vs. THE INCOME TAX APPELLATE TRIBUNAL AND ANR.,

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TXA/68/2006HC BombayHCBM05002346200619 February 2013Author: V. M. KANADE,U. V. BAKRE5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the ITAT had committed an error of law apparent on the face of the record. The core issue before the ITAT was the jurisdiction of the Assessing Officer in levying the penalty, which had been decided in favour of the assessee by the CIT(A). The ITAT ought to have first decided this jurisdictional issue. By remanding the matter back to the CIT(A) to decide both jurisdiction and merits, the ITAT bypassed the primary legal contention. Therefore, the High Court set aside the ITAT's order and remanded the matter back to the ITAT with a specific direction to decide the issue of the Assessing Officer's jurisdiction first. The appeal was allowed with this direction.

What were the facts?

The assessee, Gangadhar N. Agrawal, HUF, debited Rs. 1.40 Crores to its Profit and Loss Account as Mining Land Restoration Charges for the assessment year 1997-98. The Assessing Officer (AO) disallowed this claim, treating it as a provision. Subsequently, penalty proceedings under Section 271(1)(c) were initiated. The Commissioner of Income Tax (Appeals) [CIT(A)] initially remanded the matter to the AO. The AO re-passed the order disallowing the charges and levied penalty. The assessee appealed to the CIT(A) challenging the AO's jurisdiction to levy penalty. The CIT(A) allowed the assessee's appeal on the ground of lack of jurisdiction. The Revenue appealed to the Income Tax Appellate Tribunal (ITAT), which set aside the CIT(A)'s order and remanded the matter back to the CIT(A) to decide the penalty issue on merits, along with jurisdiction. The assessee then appealed to the High Court.

What were the issues?

1. Whether the ITAT committed an error of law apparent on the face of the record by remanding the matter to the CIT(A) to decide both the issue of jurisdiction and the merits of the penalty, instead of deciding the jurisdictional issue first, as contended by the assessee. Assessee's Contention: The ITAT erred in law by not deciding the crucial issue of the Assessing Officer's jurisdiction first, which was the basis of the CIT(A)'s order in favour of the assessee. Instead, the ITAT wrongly remanded the matter back to the CIT(A) to decide both jurisdiction and merits, thereby bypassing the primary legal contention. Revenue's Contention: Since both issues (jurisdiction and merits) were remanded to the CIT(A) for its decision, there was no ground for the High Court to interfere with the ITAT's order.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
1 IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO.68 OF 2006 Gangadhar N. Agrawal, HUF, a Hindu Undivided Family having its address at Anand Bhavan, Station Road, Post Box No.107, Margao-Goa 403 601. Appellant Versus 1) The Income-tax Appellate Tribunal, Panaji Bench, Panjim, Goa 2) The Assistant Commissioner of Income-tax. Respondents Mr. Ashok Kulkarni and Ms. Alisha Shirodkar, Advocates for the appellant. Ms. Asha Dessai, Advocate for the respondents. Coram :-V. M. KANADE & U. V. BAKRE, JJ. Date : 19 th February, 2013

ORAL JUDGMENT : (Per V. M. Kanade, J.) Heard learned Counsel on behalf of the appellant and learned Counsel on behalf of the respondents.

2.

The appellant is challenging the order dated

2 07/04/2006 passed by Income Tax Appellate Tribunal ('ITAT' for short) whereby it has remanded the matter back to Commissioner of Income Tax (Appeals) ('CIT(A)' for short) with a direction to decide the issue of jurisdiction and matter on merits.

3.

Brief facts are as under : The appellant has filed his return on 31/10/1997 and 08/02/2000 by the Assessment officer disallowing the Mining Land Restoration Charges on the ground that the said charges are only in the nature of provision and no actual expenses were incurred by the assessee. After the said order of assessment was passed, penalty proceedings were initiated for non-payment of advance tax. In the meantime, the appellant challenged the said order before the CIT(A). The CIT(A) however by its order dated 16/11/2000 remanded the matter back to the Assessment Officer. After the matter remanded back to the Assessment officer, the Assessment

3 Officer again issued notice under Section 143(2) of Income Tax Act dated 19/12/2000. Thereafter, the Assessment Officer again passed an order dated 30/03/2001 confirming the earlier order and the same income was assessed. Thereafter, on 28/05/2001, he passed an order levying penalty under Section 271(1)(c) of the Act. This order was challenged by the appellant before CIT(A) and it was urged that the Assessment Officer did not have jurisdiction to levy penalty since as a result of his order being set aside by CIT(A) his earlier order of initiation of penalty proceedings was also set aside and as such, it was incumbent on the Assessment Officer to have again issued penalty proceedings. It was, therefore, contended that he did not have jurisdiction to pass order levying penalty dated 28/05/2001. The CIT(A) allowed the appeal of the appellant on this ground.

4.

Being aggrieved by the order passed by the CIT(A), revenue challenged the said order before the Appellate Tribunal and the Appellate Tribunal has passed the following order :

“6. In the light of above discussion, by considering the facts of the case, we are of the view that CIT(A) has cancelled they levy of penalty merely on technical ground without discussing the 4 merit of the case which is not desirable. Therefore, we deem fit to set aside the order of the CIT(A) and restore the matter to him to decide the penalty appeal also on merit, but by providing reasonable opportunity to the assessee. For the similar reasons, the cross objection filed by the assessee is also allowed.

7.

In the result, appeal filed by the department and cross objection filed by the assessee are allowed for statistical purposes as stated above and announced in the open Court.”

5.

Learned Counsel appearing on behalf of the appellant submitted that the ITAT has committed error of law which is apparent on the face of record. He submitted that since the appeal had been filed by the revenue against the order passed by CIT(A), the ITAT was under obligation to decide first the issue of jurisdiction and instead of passing a reasoned order on that issue, the ITAT remanded the matter back to CIT(A) to decide both the issue of jurisdiction and on merits.

6.

Learned Counsel appearing on behalf of the revenue, however, submitted that since both the issues are remanded to CIT(A) for its decision, no case was made out for interfering with the order passed by the ITAT.

5

7.

After having perused the order passed by CIT(A) and ITAT, it is obvious that the ITAT has committed error of law which is apparent on the face of record in the sense that the core issue which was challenged by the revenue was about the jurisdiction of Assessment Officer in levying penalty without issuance of penalty proceedings.

8.

After the said issue had been decided in favour of the respondent herein, then, the question of remand would have arisen. We, therefore, deem it necessary again to remand the matter to the Appellate Tribunal with a direction to decide the issue of jurisdiction of Assessment Officer.

9.

With this direction, the appeal is allowed and disposed of. V. M. KANADE, J. U. V. BAKRE, J. SMA

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