DCIT CIR 3(2)(1), MUMBAI vs. J.M. FINANCIAL INSTITUTIONAL SECURITIES LTD, MUMBAI

O R D E R Per Shamim Yahya, A. M.:

This appeal by the Revenue arises out of the order of the ld. Commissioner of Income Tax (Appeals) dated 16.02.2016 and pertain to assessment year 2006 -07.

raised in Revenue’s appeal read as under: 1. "Whether on the facts and circumstances and in law the Ld. CIT(A) is right in holding that the reopening of assessment u/s. 147 was invalid and bad in law and quashing the same. ?

2. "Whether on the facts and circumstances and in law the Ld. CIT(A) is right in holding the reopening of assessment u/s. 147 as invalid and bad in law without appreciating the fact that the reopening of assessment was not on the basis of M/s. J. M. Financial Institutional Securities Ltd. change of opinion since the issues on which reopening was made were not verified in the original assessment.?" 3. "Whether on the facts and circumstances and in law the Ld. CIT(A) is right in holding the reopening of assessment u/s. 147 as invalid and bad in law without following the decision of the Hon'ble Supreme Court in the case of Kalyanji Mavji & Co. v. CIT [1976] 102ITR 287 (SC), which was subsequently confirmed in Indian & Eastern Newspaper Society v. CIT [1979] 11 9ITR 996 (SC) and A.L.A, Firm v. CIT [1 991] 1 89 ITR 285 (SC). ?" 4. "On the facts and circumstances and in law the Ld. CIT(A) erred in not adjudicating the issue raised by the assessee in ground no. 9 to 11 of their appeal regarding addition of Rs. 63,65,638/- on merit and therefore it is humbly prayed that the Ld. CIT(A) may be directed to decide the issues contained in ground no. 9 to 11 on merit ?" 5. "The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored."

3. The grounds raised by the assessee under rule 27 of the ITAT rules read as under:

2. The learned CIT(A) and Assessing officer failed to appreciate that the reassessment order is bad in law as the reasons for reopening the Assessment as asked for by the Assessee were never communicated to the assessee. 2. The learned CIT(A) failed to adjudicate on merits on the grounds taken up by the assesse with regards to the addition made by the Assessing Officer during re- assessment proceedings.

In this case, the ld. Commissioner of Income Tax (Appeals) has quashed the reassessment by holding the same to be invalid due to change of opinion by the assessing officer. Thereafter, the ld. Commissioner of Income Tax (Appeals) held that the ground raised on merits therefore do not arise. Now by way of this application under rule 27 of the ITAT Rules, the assessee is aggrieved that the ld. Commissioner of Income Tax (Appeals) has not adjudicated other limbs of its challenge before the ld. Commissioner of Income Tax (Appeals). The assessee has duly raised ground before the ld. Commissioner

M/s. J. M. Financial Institutional Securities Ltd. of Income Tax (Appeals) that the statutory notice was never raised on the assessee. That reason for reopening of assessment as asked by the assessee were never communicated.

The assessee has also raised ground against the merits of the addition, but the ld. Commissioner of Income Tax (Appeals) did not adjudicated those issues. The Revenue in its grounds of appeal has also raised the ground that the ld. Commissioner of Income Tax (Appeals) has erred in not adjudicating the merits of the addition.

5. Upon hearing both the counsel and perusing the records, we are of the opinion that if a decision is challenged before the first appellate authority both on the issue of validity of jurisdiction as well as merits of the case, the adjudication on the issue of merits can by no stretch of imagination be liable for rejection on the ground that the assessment has been quashed due to change of opinion. Furthermore, the ld. Commissioner of Income Tax (Appeals) has not adjudicated upon other limbs of assessee's challenge to the validity of reopening, namely lack of communication of reason of reopening and non service of a statutory notice.

M/s. J. M. Financial Institutional Securities Ltd. raised before it on the ground that further issues will not arise in view of the finding on the issue decided by it. It was expounded that if the appellate authority declines to consider and decide the other issues, it could only protract and delay the proceedings for the assessee has to get the decision of the appellate authority on the initial point set aside by approaching a higher appellate authority and thereafter again go before the appellate authority for the decision on the other issues left undecided by it earlier. It was held that this will amount to multiplication proceedings under the Act. It was further expounded that the subordinate courts and tribunal's should as far as possible give their views on all the points raised before them so that the higher courts will have the benefit of the decision on other points also, if the necessity arises.

Needless to add that the ld. CIT(A) in his order shall also refer to the earlier adjudication by the ld. Commissioner of Income Tax (Appeals) , which we have not adjudicated in view of our remand here. After the order of the ld. Commissioner of Income Tax (Appeals) is M/s. J. M. Financial Institutional Securities Ltd. complete, upon adjudication of these issues, both the parties will be at liberty to file necessary appeals as and if necessary.