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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SHRI G. D. AGRAWAL & MS SUCHITRA KAMBLE
This appeal is filed by the assessee against the order dated 07/03/2016 passed by CIT(A)- 1, Gurgaon for Assessment Year 2004-05.
2. The grounds of appeal are as under
“That the order of the learned Commissioner of Income Tax (Appeals) is against law and facts.
That in the facts and circumstances of the case of the appellant the order of the learned Commissioner of Income Tax( Appeals) in not adjudicating in respect of ground of appeal with regard to ACIT in not following the common order passed by Hon’ble ITAT in M.A.No.386,387 and 388 dated 11.09.2013 arising out of dt.31.07.2009 is altogether
arbitrary, illegal, void and uncalled for.
That in the facts and circumstances of the case of the appellant the order of the learned Commissioner of Income Tax(Appeals) in not adjudicating with respect to orders of ACIT in not following the orders u/s 154 dated 29.10.2013 passed by Commissioner of Income in the case of appellant for asstt.year 2003-04 on identical issue, identical facts and arising out of common ITAT orders which was also against precedent is altogether arbitrary, illegal, void and uncalled for.
That in the facts and circumstances of the case of the appellant the order of the learned Commissioner of Income Tax(Appeals) in upholding the order of the learned ACIT in reducing the claim of deduction u/s 80IB from Rs.37,70,562/- to Rs.3167571/- is altogether, arbitrary, illegal and uncalled for.”
3. The Assessee is a partnership firm and derives income from manufacture and export of rice. Return of income declaring income of Rs.81,85,030/- was filed on 26.10.2004. The assessee claimed deduction u/s 80HHC and 80IB in the return of income. The Assessing Officer disallowed claim of deduction u/s 80HHC and 80IB on DEPB income amounting to Rs. 15,39,749/-. The Assessing Officer also assessed interest received on FDRs as income from other sources. Thus, the income was assessed at Rs.9112645.
4. The assessee firm filed appeal against assessment order u/s 143(3) before Commissioner of Income Tax (Appeals) on the issues of disallowance of deduction u/s 80HHC and 80IB on export incentives i.e. DEPB and treatment of interest income on FDs as income from other sources. The CIT(A) vide order dated 24.09.2007 dismissed the appeal of the assessee. The assessee filed appeal against the orders of CIT(A) before ITAT, New Delhi and the Tribunal vide common orders dated 31.7.2009 for A.Ys. 2003- 04, 2004-05 and 2005-06 in ITAs No.3878-3879/Del/2007 and 795/Del/2008 partly allowed the appeal in respect of deduction u/s 80HHC and 80IB of the Act. As regards the amount of interest on FDRs the matter was restored to the file of assessing officer. The Assessing Officer passed Assessment Order after the order of the Tribunal vide order dated 3.12.2010 u/s 143/254 and assessed the income at Rs.9147412/-. Later on ACIT, Karnal issued notice u/s 154 dated 26.08.2011 in respect of assessment order u/s 143(3)/254 on 3.12.2010 wherein he wanted to re-compute income already assessed by first reducing deduction u/s 80IB and thereafter allowing deduction u/s 80HHC and as such intended to withdraw deduction of Rs. 1021379/-. The assessee pointed out to the ACIT that this method of deduction was neither followed while framing assessment, nor at the time of orders u/s 143(3)/254. The assessee further pointed out that all the method sought to be adopted is debatable and requires interpretation of provisions as such outside the provisions of u/s 154. On the objections raised by assessee, the Assessing Officer vide order dated 12.10.2011 u/s 154 dropped proceedings initiated on 26.8.2011.
The Tribunal while passing the order dated 31.7.2009 made certain observation under Para 10 of the order on the issue of deduction u/s 80HHC/80IB on certain aspects which neither arose out of the order of the CIT(A) nor there was any appeal or cross objection filed by the department. Later on in lieu of those observations under Para 10 of Order of the Tribunal, the Commissioner of Income Tax passed order dated 20.02.2013 under Section 263 for the A.Y. 2003-04 and directed the Assessing Officer to pass reassessment order after re-computing the deduction u/s 80HHC as per the said observations, although there were no specific directions of the Tribunal with regard to the same.
The assessee firm made strong protest before the Commissioner of Income Tax that the issue now raised by him was never raised in appeal before the Tribunal either by department or by assessee. The Commissioner of Income Tax observed that the contention of the assessee appears to be correct but he followed the observation and proceeded to direct Assessing Officer to frame reassessment orders for both the A.Ys. 2003-04 and 2004-05 for re- computing deduction u/s 80HHC.
The assessee moved Miscellaneous Application before the Tribunal against common order dated 31.7.2009 in for A.Y. 2003-04 ITA No.3878/Del/2007 for A.Y. 2004-05 and ITA No.3878/Del/2007 for A. Y. 2004-05 and ITA No.795/Del/2008 for A.Y. 2005-06. Vide application dated 8.9.2011, the assessee explained to the Tribunal that observation of the Tribunal under Para 10 deserves to be deleted as it was neither a case of the revenue nor that of the assessee and the same did not emanates from the grounds raised on the basis of the orders of the Assessing Officer or CIT(Appeals). The Tribunal vide order dated 11.9.2013 in M.A No.386/Del/2011 arising out ITA No. 3878 & 3879/Del/07 for 2003-04 and 2004-05 as well as ITA No. 795/Del/2008 for A.Y. 2005-06 held as under :-
“4. We find that the issue about eligibility of profits u/s 80IA(9) or 8014(B) does not arise out of the orders of CIT(A). In view thereof the para 10 of ITAT orders becomes superfluous. In these circumstances, the mistake is apparent and we hold that Para 10 has been incorporated due to inadvertence view thereof we allow the assessee’s MA by directing that Para 10 shall stand deleted from the order. ”
The assessee moved application u/s 154 on 07.10.2013 for rectification/cancellation of order dated 20.02.2013 passed u/s 263(1) in lieu of order passed by Tribunal in MA No. 386,387 388 for A.Y. 2003-04 and 2004- 05 wherein the Tribunal deleted the observation made under Para 10. The Commissioner of Income Tax passed orders u/s 154 on 29.10.2013 for A.Y. 2003-04 and held as under:-
“The order u/s 263(1) was passed on 20.02.2013 in the case of assessee while giving directions to the AO to follow Para 10 of the ITAT order dated 31.07.2009 passed in assessee’s case. Para 10 of ITAT order read as under:-
Para 10
“With regard to allowability of claim u/s 80HHC & 80IB, it is observed that the issue is no res-integra in view of the decision of Larger Bench in the case of Hindustan Mint & Agro Products in 7,1538 & 1539/Del/2007 wherein vide order dated 23.06.2009, the decision of Special Bench in the case of Rogini Garments- 108 ITD 495 was upheld after, discussing the various judgements of High Courts and Hon’ble Supreme Court and it was finally held that in view of the provisions of Section 80IA(9) and 80IA(13), the assessee is eligible for claim of deduction u/s 80HHC on the eligible profit which is worked out after reducing the amount of deduction allowed u/s 80IB. Meaning thereby assessee is not entitled to claim deduction on the very same amount of eligible profit u/s 80HHC and 80IB. In view of the above, matter is restored back to the file of the AO for computing the eligible amount of deduction u/s 80HHC and 80IB as per the observation made by the Special Bench in the above case:-
2. That assessee’s counsel had placed all relevant facts in proceedings u/s 263 before me and also pointed out that MA was pending before ITAT for deletion of para 10 in ITAT order.’ But on account of limitation, order u/s 263 was passed to give directions to the AO.
3. The assessee petitioner now claims that Hon’ble. IT AT has since deleted para 10 its order dated 31.07.2009 vide order dated 11.09.2013 passed in MA of Assessee copy of order produced).
In view of the same directions contained in order u/s 263(1) stand withdrawn and order u/s 263 is rectified accordingly that no action in terms of section 263 order is to be taken by the AO.”
The CIT(Karnal) vide order dated 29.10.2013 withdrew the order u/s 263 and directed the Assessing Officer that no action in terms of Section 263 be taken by the Assessing Officer for A.Y. 2003-04 but identical orders u/s 154 on the same for A.Y. 2004-05 were not mentioned by him.
Being aggrieved by the Assessment order dated 31.03.2014 for A.Y. 2004-05, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee on the ground that the appeal is filed at incorrect forum, therefore dismissed the appeal for want of jurisdiction.
The Ld. AR submitted that the ACIT while following orders u/s 154 passed by CIT, Karnal for A.Y. 2003-04 vide orders u/s 143(3)/263. Identical proceedings for A.Y. 2004-05 which were initiated on the very observation arising out of the same orders and which were withdrawn in common MA orders were overlooked to be dropped both by Commissioner of Income Tax, Karnal and ACIT, Karnal which in fact raises the issue of following common orders of Tribunal in A.Y. 2003-04 but disregarding the same for A.Y. 2004-05. The Ld. AR further submitted that the ACIT while following orders dated 11.9.2013 passed by ITAT in MA No.386,387 and 388/Del/2011 (arising out of and 795/Del/2008 dated 31.7.2009 dropped proceedings u/s 143(3) for A.Y. 2003-04 vide his orders dated 31.12.2013 and was also requested to drop the proceedings for A.Y. 2004-05 also as the proceedings u/s 263 were got initiated with respect to ITAT orders dated 31.7.2009 (Para 10) which now stands rectified under the plea that identical orders u/s 154 revising the orders u/s 263 has not been passed. The Ld. AR further submitted that the action of the Assessing Officer is against all judicial principles i.e. to follow the common Miscellaneous orders in one year and not to follow the same in another year by taking umbrage under the orders of CIT. The Ld. AR submitted that it is a matter of judicial precedent that decision of higher judicial authority must be followed (10 TTJ 338). The Ld. AR further submitted that the Rule of consistency is another principle of judicial precedent and Revenue having accepted the orders of the tribunal in one year then assessee identically placed for another year cannot be treated differently (222 CTR 246). In this case it is the same assessee in both the years. The Ld. AR further submitted that the decisions in favour of assessee for one year cannot be changed in subsequent years regarding the same issue. The Ld. AR relied upon the decision in case of CIT(A) Vs. Reita Biscuits Ltd. 309 ITR 154 (P & H). In absence of any change in circumstances revenue is bound by earlier decision (193 ITR 321). The decision of court in case of assessee for one year is binding on department 367 ITR 568(Bombay). The Ld. AR further submitted that the in the case of assessee, revenue is following orders of ITAT in one year and not following the same on some alleged technical issue which is against judicial precedent, arbitrary, illegal and uncalled for as also contravenes the order of ITAT i.e. higher judicial authority. The Ld. AR submitted that the Assessing Officer adopted calculation of deduction u/s 80HHC by fully giving details of calculations while framing assessment u/s 143(3). The matter travelled upto Tribunal who did not interfere with the same. The Assessing Officer then issued notice u/s 154 vide notice dated 26.08.2011 on which he intended to recalculate deduction u/s 80HHC (the method of calculation now adopted u/s 263) and on the objections of the assessee dropped method of recalculation vide orders u/s 154 dated 26.08.2011. Thus recalculation of section u/s 80HHC by the method already dropped is arbitrary, illegal and uncalled for as per the Ld. AR.
The Ld. DR relied upon the Assessment Order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Revenue followed orders u/s 154 passed by CIT, Karnal for A.Y. 2003-04, but for A.Y. 2004-05 which were initiated on the very observation arising out of the same orders and which were withdrawn in common MA orders were overlooked to be dropped both by Commissioner of Income Tax, Karnal and ACIT, Karnal which raises the issue of following common orders of Tribunal in A.Y. 2003-04. The ACIT while following orders dated 11.9.2013 passed by ITAT in MA No.386,387 and 388/Del/2011 (arising out of and 795/Del/2008 dated 31.7.2009 dropped proceedings u/s 143(3) for A.Y. 2003-04 vide his orders dated 31.12.2013 and was also requested to drop the proceedings for A.Y. 2004-05 also as the proceedings u/s 263 were got initiated with respect to ITAT orders dated 31.7.2009 (Para 10) which now stands rectified under the plea that identical orders u/s 154 revising the orders u/s 263 has not been passed. The Assessing Officer as well as the CIT(A) has overlooked these facts and has not followed the rule of consistency and the directions of the Tribunal. Thus, the order of the CIT(A) does not survive. Hence, appeal of the assessee is allowed.
In result, appeal of the assessee is allowed. Order pronounced in the Open Court on 8th January, 2019.