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Income Tax Appellate Tribunal, BENGALURU BENCH A, BENGALURU
Before: SHRI. A. K. GARODIA
Heard on : 13.11.2017 Pronounced on : 17.11.2017 O R D E R PER LALIT KUMAR, JUDICIAL MEMBER :
The present appeal and cross objection are filed by the Revenue and the assessee respectively against the order of the CIT(A), Hubballi, dt.30.07.2015, for the assessment year 2010-11.
ITA.1285/Bang/2015 Page - 2
The grounds raised by the Revenue are as under :
The grounds raised by the assessee in the cross objection are as under :
The brief facts are, the assessee is an undertaking of the Government of Karnataka which is in the business of plying buses and transport services. The assessee filed a return of income declaring nil income. The case was picked for scrutiny and assessment order u/s.143(3) of the Act was passed determining the total income at Rs.18,87,83,480/-. This was challenged by the assessee in its appeal before the CIT (A).
ITA.1285/Bang/2015 Page - 3
The CIT (A) has simply restored the matter back to the file of the AO, with a direction to pass a fresh assessment order, by observing as under in his order :
It is seen that the order u/s.143(3), which is under appeal for the assessment year 2011-12, has been framed by the Assessing Officer, ACIT, Circle -3(1), Hubli, treating the assessee as AOP and determined the total income as if the assessee was not having the benefit of registration u/s.12A(a) of the Act. Now that the order of the CIT, Hubli, has been set aside by the Hon’ble ITAT ‘A’ Bench, Bangalore, holding that cancellation of registration was not as per law. In view of this, the AO is directed to give effect to the order of the Hon’ble ITAT, Bangalore, and pass a fresh assessment order as if the assessee is enjoying the benefit of registration u/s.12A(a) of the Act. Revenue is aggrieved by the above order of the CIT (A) and is in appeal before us.
The Ld. DR has submitted that the CIT (A) while restoring the matter back to the file of the AO had exceeded the jurisdiction as laid down in Section 251 of the Act and it was submitted that the CIT (A) in the fitness of circumstances should have adjudicated the grounds raised before him after following the order of the Tribunal and also of the Hon’ble jurisdictional High Court in dt.01.07.2016, in the assessee’s own case.
On the other hand the Ld. AR has submitted that the Hon’ble jurisdictional High Court in its order in assessee’s own case (supra), after going through the order passed by the Tribunal has dismissed the ITA.1285/Bang/2015 Page - 4 appeal filed by the Revenue challenging the order of the Tribunal, dt.08.05.2015. It was therefore submitted that instead of remanding the matter to the file of the CIT (A), the Tribunal should have decided the matter on merit.
We have heard the rival submissions and perused the material on record. We are of the opinion that both the appeal of the Revenue and the cross objection filed by the assessee are required to be sent back to the file of the CIT (A) to be adjudicated by himself, after going through the order passed by the Hon’ble jurisdictional High Court and the Tribunal in assessee’s own case (supra). For ready reference we are hereby reproducing the order passed by the Hon’ble jurisdictional High Court in para 9, which is as under :
It is not in dispute that there is no violation of the said two conditions by the assessee. The activities carried on by the assessee is a genuine one. As could be seen from the profits they have generated, the said profit is earned by carrying on the activities in accordance with the object of the trust. Therefore, the two conditions stipulated in subsection (3) of Section 12AA of the Pct, which empowers the authority to cancel registration, do not exists in this ca-se. The registration granted is cancelled in view of the amendment of first proviso to Section 2(15) of the Act. That is not a ground specified in the Statute for cancellation of the registration. In fact, sub-section(S) to Section 13 which is introduced by ITA.1285/Bang/2015 Page - 5
Financial Act, 2012 which came into effect from 1.4.2009 categorically provides that, nothing contained in Section ii or Section 12 shall operate so as to exclude any income from the total income of the previous year or any receipt there of. If the provisions of the first proviso to Clause 15 of Section 2 becomes applicable in the case of such person in the said previous year, the Statute has protected the interest of revenue. Notwithstanding the fact that the assessee is conferred registration under Section 12A of the Act, unless the assessee falls within Section 2(15) of the Act, excluding the first proviso, the assessee would not be entitled to the benefit of exemption from the tax. If the case of the assessee falls with first proviso to Section 2(15) of the Act, the benefit of registration which flow from Section 12A of the Act is not available. Anyhow, that is a matter to be considered by the Assessing Authority. But on that ground, registration cannot be cancelled, which is precisely the Tribunal has held. In that view of the matter, we do not see any merit. The substantial questions of law are answered ii favour of the assessee and against the revenue.
9. Further in our view, the mandate of Section 251 is quite clear that the CIT (A) while hearing the appeal arising out of the order passed by the AO had coterminous power and therefore has no power to restore the matter back to the file of the AO, therefore CIT(A) instead of restoring the matter back to the AO, A) should have decided ITA.1285/Bang/2015 Page - 6 the appeal on his own. By referring the matter back to the AO the CIT (A) has violated the provisions of Section 251. Therefore, we have no hesitation to set aside the order of the CIT (A) , and restoring back the matter to the file of CIT (A) with a direction to decide the issues afresh after considering the binding judgement of the Hon’ble jurisdictional High Court as well as the decision of the Tribunal, in the case of assessee .
In the result, both the appeal of the Revenue and the cross objection of the assessee are allowed for statistical purpose.
Order pronounced in the open court on 17th day of November, 2017.