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Income Tax Appellate Tribunal, “C” BENCH : KOLKATA
Before: Hon’ble Shri J.Sudhakar Reddy, AM & Hon’ble Shri A.T. Varkey, JM ]
ORDER Per J.Sudhakar Reddy, AM
This is an appeal filed by the assessee directed against the order of the Principal Commissioner of Income Tax-2, Kolkata passed u/s 263 of the Income Tax Act, 1961 ( the ‘Act’).
The assessee is a company and is in the business of cultivation and manufacturing of tea. It filed its return of income on 30.09.2012 declaring total income of Rs. 1,28,381/-. This return was revised on 24.03.2014 and after setting off of, brought forward loss, Nil income was declared. The assessing officer passed an order u/s 143(3) of the Act, assessing income at Rs. 97,33,140/- under normal provisions and at Rs. 2,92,21,474/- under MAT provision of the Act.
Joonktollee Tea & Industries Ltd. A.Yr.2012-13 3. The Ld. Pr. CIT issued a notice u/s 263 of the Act on 28.10.2016, wherein he observed that the assessee officer had computed book profits for MAT purpose at Rs. 2,92,21,474/-, which was considerably less than the returned book profit of Rs. 5,37,02,730/- which resulted is under assessment of book profits to the extent of Rs. 2,88,64,607/- and consequently excess refund of Rs. 68,89,246/-. After hearing the submissions of the assessee the ld. Pr. CIT states that the assessee company failed to give reply of the specific quarry raised vide office notice dated 28.10.2016. Hence he in exercise of his revisionary powers, revised the assessment order and restored the issue to the AO with the direction to examine the issue and pass a speaking order after giving opportunity to the assessee company. This part of the order is not challenged by the assessee before us.
Further the ld. Pr. CIT has at page 4 of his order para 2 he further observed as follows:
“Assessee’s submission is that in accordance with decision of the Calcutta High Court in the case of CIT vs. Jayshree Tea & Industries Ltd. reported in 253 ITR 608, Dividend Distribution Tax has been rightly levied on the 40% of the amount of Dividend Distributed. But, the revenue has filed an SLP on this issue which is still pending before Hon'ble Supreme Court. In view of the above, I have decided to restore this issue to the AO with instruction to re-examine the issue and pass a speaking order after giving opportunity to the assessee company.
Aggrieved the assessee is in appeal before us challenged the only direction of the Ld. Pr. CIT in the order passed u/s 263 of the Act, given to the assessing officer, in respect of Dividend Distribution Tax which are at page 4 para 2 of his order, which is extracted above. The ld. counsel for the assessee has also not argued the grounds raised by the company on the legality or jurisdiction of the ld. Pr. CIT-2, Kolkata, in passing the order u/s 263 of the Act.
Joonktollee Tea & Industries Ltd. A.Yr.2012-13 5. The ld. counsel for the assessee, Mr. B.K. Chatorvedi, submitted that when the assessing officer passed the assessment order, the judgment of the hon’ble Calcutta High Court in the case of CIT vs. Jayshree Tea & Industries Ltd. reported in 253 ITR 608 was binding on him and the Hon'ble Supreme Court had dismissed the SLP filed by the Union of India against this judgment vide Special Leave to Appeal (Civil) CC 9853/2008 judgment dated 01.08.2008. He relied on the decision of the Hon’ble Calcutta High Court in the case of M/s Russells Properties Pvt. Ltd. vs. ACIT reported in 109 ITR 229 (Cal) wherein it is held that, when the assessing officer had merely followed the decision of the Appellate Tribunal and when the CIT had not pointed out that there were any materials before the Income Tax Officer, not to follow the decision of the Tribunal, the order of the ITO cannot, therefore, be said to be erroneous and hence the proposed exercise of the power of revision u/s 263 of the Act was illegal and without jurisdiction. He also relied on the decision of the Hon'ble Supreme Court in the case of CIT vs. G.M. Mittal Stainless Steel (P) Ltd. reported in 263 ITR 255 that, when an order is passed on the view based on the decision of the jurisdictional High Court and such High Court decision is not under appeal before the Hon'ble Supreme Court, no jurisdiction lies with the Commissioner to revise the assessment order u/s 263 of the Act. He also relied on the decision of the Hon’ble Bombay High Court in the case of CIT vs. Paul Brothers reported in 216 ITR 548 (Bom) for the proposition that the order of the assessing officer, based on the decision of the High Court, cannot be revised. He prayed that these directions of the ld. CIT be vacated.
The ld. CIT DR on the other hand submitted that the issue is covered against the assessee by the judgment of the Hon'ble Supreme Court in the case of Union of India and Ors. Vs. M/s Tata Tea Company Ltd. & Ors. CA no. 9178 of 2012 and other judgment dated 20.09.2017.
Joonktollee Tea & Industries Ltd. A.Yr.2012-13 7. He further submitted that the judgment of jurisdictional High Court in the case of Jayshree Tea & Industries Ltd. supra was challenged by the revenue before the Hon'ble Supreme Court, but the same was dismissed on ground of delay and hence it cannot be said that this is a precedent. He further pointed out that on the very same date i.e. 28.07.2006, an appeal has been filed in the case of Tata Tea Company Ltd. and Another, M/s George Willingson and other cases and the same were admitted by the Hon'ble Supreme Court and hence the law laid down in the judgment in the case of Jayshree Tea & Industries Ltd. was in challenge before the Hon'ble Supreme Court. Hence he submitted that none of the decision relied upon by the ld. counsel for the assessee applying to the facts of the case. He further submitted that the assessing officer has not applied his mind to the issue of dividend distribution tax as nowhere in the assessment order, this was discussed. Hence he submitted that the assessment order was erroneous and prejudicial to the interest of the revenue and prayed that the order of the ld. Pr. CIT be upheld.
After hearing rival submission and perusing the paper on record and the order of the authorities below as well as case laws cited we hold as follows.
The assessing officer has not discussed this issue of computation of dividend distribution tax in his assessment order. The assessee could not demonstrate that this was an issue enquired into by the AO. Hence there is no application of mind by the assessing officer on this issue during the course of assessment or in the assessment order. Hence the argument of the ld. counsel of the assessee, that the assessing officer has applied the proposition of law laid down by the Hon’ble High Court in the case of Jayshree Tea & Industries Ltd. to the facts of this case is factually incorrect. Non- application of mind by the AO to an issue makes the order of assessment erroneous. This error is prejudicial to revenue.
Joonktollee Tea & Industries Ltd. A.Yr.2012-13 10. Be as it may, this decision of M/s Jayshree Tea & Industries Ltd. was in challenge before the Hon'ble Supreme Court. While its SLP against the judgment of Jayshree Tea & Industries Ltd. was dismissed by the Hon'ble Supreme Court on the ground of delay, the appeals against the very same proposition of law laid down by the Calcutta High Court on the very same issue, was admitted by the Hon'ble Supreme Court on the very same date i.e. 28.07.2006.
Thus the decision relied upon by the ld. Counsel for the assessee, in our view does not apply to the facts of the case.
In the case of Russells Properties Pvt. Ltd., it was a case where the assessing officer passed orders based on the decision of the Tribunal. In the case of this assessee there is no discussion or application of mind by the assessing officer, so as to come to a conclusion that he had followed the judgment in the case of Jayshree Tea & Industries Ltd.(supra). Hence this judgment is not come to the rescue of the assessee.
In the judgment of M/s G.M. Mittal Stainless Steel Pvt. Ltd. the Hon'ble Supreme Court had held that if the judgment of the Hon’ble High Court is not in appeal before the Hon'ble Supreme Court, then the ld. CIT could not exercise the revisionary jurisdiction u/s 263 when the AO’s order is in line with the judgment of the High Court. In this case, the judgment of the Hon’ble Calcutta High Court was in appeal before the Hon'ble Supreme Court and hence the proposition of law laid down in the case law, does not apply to the facts on hand. Similarly in the case of Paul Brothers, it was a case where there was merger of the order of the assessing officer with the order of the AAC. In the case on hand, there is no such merger on the issue of dividend distribution tax and hence this case does not apply.
Joonktollee Tea & Industries Ltd. A.Yr.2012-13 14. Undisputedly, the issue is covered in favour of the revenue by the decision of the Hon'ble Supreme Court in the case of Union of India and Ors. Vs. M/s Tata Tea Company Ltd. and another supra. In view of the above discussion we dismiss the appeal of the assessee.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the Court on 18.05.2018