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Income Tax Appellate Tribunal, BANGALORE BENCH ‘C’, BANGALORE
Before: SHRI S.K.YADAV & SHRI A. K. GARODIA
This is an assessee’s appeal directed against the order of ld.CIT, Hubli passed by him on 16-12-2014 u/s 263 of the IT Act for assessment year 2010-11.
The assessee has raised the following grounds:
“1.The Order of the learned Commissioner of Income-tax, Hubli passed under section 263 of the Act in so far as it is against the Appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant’s case.
2. The learned Commissioner of Income-tax has grossly erred in revising the order passed by the learned Assessing officer without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore the order passed by the learned CIT is ultra vires to the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant’s case. The direction to make fresh assessment amounts to ordering for making fishing and roving enquires without any material in support thereof and consequently the impugned order passed is bad in law is liable to be cancelled.
3. The learned Commissioner of Income-tax failed to appreciate that the Assessing Officer before completing assessment order under section 143(3) of the Act on 27/04/2012 had made detailed enquiries and hence on the very same issue no action can be taken under section 263 of the Act as the action of the Assessing Officer is accordance with law on the facts and circumstances of the case.
The learned Commissioner of Income-tax failed to appreciate that the learned Assessing officer had indeed verified the details and after being fully satisfied by the said explanation and after application of mind passed the order under section 143(3) of the Act on the facts and circumstances of the case.
5. The learned Commissioner of Income-tax was not justified in law in passing the order under section 263 of the Act, without serving the addendum to the appellant and consequently the order passed is in violation of principles of natural justice and the order is liable to be set aside on the facts and circumstances of the case.
6. The learned Commissioner of Income-tax was not justified in law in passing the order on the issues which are not proposed in the notice issued under section 263 of the Act and consequently the order is bad in law and the order passed is in violation of principles of natural justice on the facts and circumstances of the case.
The learned Commissioner of Income-tax was not justified in law in directing the learned Assessing Officer to reframe the assessment after collecting all the necessary information, subject them to detailed scrutiny, with reference to books of accounts, keeping in view of the observations made in the order passed under section 263 of the Act in respect of the following on the facts and circumstances of the case.
a) Verification of creditors and debtors. b) Work in progress. c) Bad debts. d) Work expenses. e) Interest payments, other advances, advances to suppliers, advances made to suppliers also for non business purpose, disallowing proportionate interest from total interest payment account. f) Additions to the assets and sale of assets. g) Current liability. h) Motor vehicle expenses, fuel, diesel and oil, machinery repairs and maintenance and travelling expenses.
The learned Commissioner of Income-tax was not justified in law in setting aside the assessment passed under section 143(3) of the Act on the facts and circumstances of the case.
The learned Commissioner of Income-tax ought to have appreciated that the aforesaid issue on which the learned Commissioner of Income-tax had sought to revise the assessment order is a conscious view adopted by the learned assessing officer, which is not shown to be erroneous and consequently, the jurisdiction under section 263 of the Act stands outside the purview and accordingly the impugned order passed deserves to be cancelled.
The learned Commissioner of Income-tax did not provide the appellant with a reasonable
opportunity of hearing under the facts and circumstances of the case.
The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity”.
At the very outset, it was submitted by the ld. AR of the assessee that this issue is covered in favour of the assessee by the Tribunal order in the case of M/s R.N.Nyak & Sons in dated 6-09-2016. He submitted that a copy of this Tribunal order and drawn our attention to para-4 of the Tribunal order in which the Tribunal has re-produced the relevant portion of the judgment of the Hon’ble Karnataka High Court rendered in the case of Canara Housing Development Co. Vs DCIT274 CTR 222(Kar.). He further submitted that after reproducing the relevant portion from the judgment of the Hon’ble Karnataka High Court, it is held by the Tribunal in that case that since the original order itself has been re-opened by virtue of proceedings u/s 153A of the IT Act, 1961, the AO cannot pass an order giving effect to the impugned order passed u/s 263 of the IT Act, 1961. Therefore, the impugned order passed u/s 263 has become infructuous by virtue of proceedings initiated u/s 153A of the Act but to safeguard the interest of revenue in case the proceedings u/s 153A is quashed in any subsequent proceedings, it was held that the original assessment order itself would get revived and consequently, the revenue will be at liberty to apply for revival of these proceedings if need arise. He also submitted that in the present case also, proceedings u/s 153A were initiated as per the notice dated 30-07-2015 available on page-172 of the paper book and therefore, the impugned order passed by the ld. CIT u/s 263 of the Act should be held as infructuous.
4. The ld. DR of the revenue supported the order of the ld. CIT passed u/s 263 of the IT Act, 1961.
We have considered the rival submissions. We find that in the case of M/s R.N.Nayak & Sons(Supra), the Tribunal has considered and followed the judgment of the Hon’ble Karnataka High Court rendered in the case of Canara Housing Development Co.(Supra) and thereafter, it was held by the Tribunal that after initiation of proceedings u/s153A of the Act, the order passed by the ld.CIT u/s 263 of the Act becomes infructuous because, the AO cannot pass order giving effect to that order passed by the ld. CIT u/s 263 of the Act. After holding so, the Tribunal has also held that in case, proceedings u/s 153A of the Act is quashed in any subsequent proceedings, then the original assessment order would get revived and consequently, the revenue is at liberty to apply for revival of proceedings if need arises.
Respectfully following this Tribunal order and in turn following the judgment of the Hon’ble Karnataka High Court rendered in the case of Canara Housing Development Co. (Supra), we hold that in the present case also, the impugned order passed by the ld. CIT u/s 263 of the IT Act has become infructuous by virtue of proceedings initiated u/s 153A of the Act. However, to safeguard the interest of revenue, we also hold that in case proceedings u/s 153A of the Act are quashed in any subsequent proceedings, then the proceedings of original assessment order would get revived and consequently, the revenue would be at liberty to apply for revival of these proceedings if need arises.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on the date mentioned on the caption page.