VENKATESH KARRIERS LIMITED vs. THE DIRECTOR OF INCOME TAX .,

The Tribunal has dismissed the appeal of the Appellant/ Assessee on the ground that the order of remand passed by the Commissioner on 15th October,2009 under Section 264 of the Act setting aside the assessment made on 12th December,2008 under Section 172(4) of the Income Tax Act is final and binding on the Appellant. The Commissioner of Income Tax (International Taxation), Bangalore made the order dated 15th October,2009 because no opportunity was given to the Appellant / Assessee. The issuing officer did not give a proper and reasonable opportunity to point out as to how the Appellant/ Assessee is entitled to the benefit claimed by it. In these circumstances, the matter was remitted to the file of the Assessing Officer with a direction to give an opportunity to the Assessee before passing a fresh order giving reasons.

Paragraph 8 and 9 of the Order of the Tribunal reads as under : “We have heard parties with reference to material on record. The learned IT(International Taxation), Bangalore in his order dated 15.10.2009mae under Section 264 of the Act is found to have set aside the order dated 2.12.2008 passed under Section 172(4) of the Act as no opportunity was given to the assessee for making a disallowance of relief of Rs.6,79,945/- claimed under Double Taxation Agreement between Government of India and Government of U.A.E. and restored the matter to the file of the Assessing Officer with a direction to give an opportunity to the assessee before passing a fresh order giving reasons for not allowing the relief under the DTAA between Government of India and Government of U.A.E. as claimed by the assessee. This order has been accepted by the assessee and no appeal or writ against such order is shown to have been made by him. The assessee thus has failed to raise any issue with respect to the correctness thereof at the appropriate stage. Thus the order passed under Section 264 on 15.10.2009 has acquired finality. That being so the Assessing Officer in remand proceedings had no jurisdiction to consider the admissibility or otherwise allowability of the relief under the DTAA to the assessee. The jurisdiction of the Assessing Officer as such has to be found in the remand order itself which he would not ignore or act contrary to or in excess of the said order and thus was required only to pass speaking order assigning reasons therein for not allowing the relief under the DTAA towards Government of India and Government of U.A.E. as claimed by the assessee by considering his written submissions and affording opportunity to him.

Under the aforesaid principles and as the Assessing officer as well as the assessee have failed to raise any issue before any higher forum against the order passed under Section 264 of the Act, the Assessing Officer thus committed error in allowing relief to the assessee which goes contrary to the directions contained in the order dated 15.10.2009 passed under Section 264 of the Act. The assessment order dated 25.1.2010 passed by Income Tax Officer( International Taxation), Margao, Goa being erroneous for the aforesaid reasons is also prejudicial to the interest of the revenue as it has not only caused the loss of revenue by Rs.6,79,945/- but also sets a bad precedence beyond the direction contained in the order dated 15.10.2009 the Assessing Authority could not give a re- look and come to a different conclusion so as to allow relief to the assessee under DTAA and thus the arguments advance by the assessee for supporting the said assessment do not advance the case in his favour for showing any error in the impugned order. We

Mr. Pardiwalla, learned senior counsel appearing on behalf of the Appellant submits that these observations and finding would give rise to a substantial question of law and whether an order of remand remitting the matter back to the Assessing Officer can be construed as limited to only giving reasons for such conclusion as the Assessing Officer has reached earlier or whether the matter stands remitted to Assessing Officer for de novo consideration and passing a fresh order.

After hearing Mr. Pardiwala at some length and Ms. Dessai for Respondent-Revenue, we are of the opinion that the above quoted observations of the Tribunal together with the submissions of Shri Pardiwala gives rise to a substantial question of law as to what is the ambit and scope of the order of remand in the facts and circumstances of this case.

After scrutiny of the impugned order of the Tribunal we are of the opinion that the finding of the Tribunal that the Appellant / Assessee did not challenge the order dated 15th October,2009 and that would prevent it from claiming the Double Taxation avoidance agreement benefits between Government of India and Government of UAE is clearly erroneous and unsustainable in law. This is not a matter where the order of remand which we have carefully perused only directs giving reasons for the conclusion reached by the Assessing Officer. It is an order under which the Assessing Officer is directed to consider the matter afresh and pass a reasoned order. This is an remand for de novo consideration of the entire matter. That is how it is remitted to the Assessing Officer. The Tribunal was in complete error in holding that the order dated 15th October,2009 would not enable the appellant/ assessee to canvas the submissions before the Assessing Officer in support of his claim of benefits under the DTAA Agreement and will not enable the Assessing Officer in passing a fresh order. Upon this short ground alone this Appeal succeeds. The impugned Order passed by the Appellate Tribunal, Panaji would stand quashed and set aside. The ITA No.88/PNJ/2011 would stand remitted to the Income Tax Appellate Tribunal and the Income Tax Appellate Tribunal shall pass a fresh order after hearing both the assessee as well as the Revenue and without being influenced by any of the findings and conclusions its earlier Order. All contentions on merits are kept open.

Appeal is allowed accordingly. There will be no order as to costs. S.C. DHARMADHIKARI,J. U.V. BAKRE,J. MV