M/S. SHIVJI PALACE HOTEL & CLUB PVT. LTD.,SAHARANPUR vs. DCIT, UTTAR PRADESH

(PAN : AACCS6882R) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Anil Chopra, FCA & Shri V.K. Garg, Advocate REVENUE BY : Smt. Anima Barnwal, Senior DR O R D E R PER BENCH :

These appeals, at the instance of the assessee, are filed against the order of CIT (Appeals), Muzaffarnagar dated 01.07.2014 for the assessment years 1998-99 to 2002-03. 2. First, we deal with the ground of appeal taken by the assessee that the ld. CIT (A) has erred on facts and in law in dismissing the appeal as not maintainable.

3. Brief facts of the case are that the assessee is a private limited company engaged in the business of hotel running. Return declaring nil income was filed on 25.11.1998 and originally, assessment was completed u/s 143(3) of the Income-tax Act, 1961 on 14.12.2000 on an income of Rs.2,27,800/- as against Nil income. Thereafter, notice u/s 148 was issued on 18.03.2004 which was duly served on 19.03.2004. The said notice was issued after taking prior approval of the ld. Commissioner of Income-tax, Muzaffarnagar vide letter dated 11.03.2004. Accordingly, the AO completed the assessment u/s 144/148 of the Act on 31.12.2004 determining income at Rs.97,97,500/- after making various additions.

4. In the appeal before the CIT (A), the CIT (A) observed that against the assessment order passed by the AO u/s 144/148 of the Act dated 31.12.2004, the assessee did not file appeal before the CIT (Appeals), Muzaffarnagar but rather preferred to file Writ Petitions before the Hon’ble Allahabad High Court wherein their Lordships were pleased to dismiss the writ petition vide order dated 20.08.2013. The CIT (A), after going through the submissions of the ld. AR and after perusal of the order of the Hon’ble High Court, dismissed the appeals filed of the assessee by holding that the appeals filed by the assessee are not maintainable and beyond jurisdiction and so the same are not entertainable.

5. Ld. AR for the assessee submitted that the assessee challenged the validity of reassessment/assessment orders in Writ Petitions before the Hon’ble Allahabad High Court on the ground of arbitrariness and violation of natural justice and for non-providing copies of the impounded material. He submitted that the Hon’ble High Court vide interim order dated 03.02.2005 had stayed the operation of the impugned reassessment/assessment orders u/s 144/148 dated 31.12.2004. He submitted that as the stay was granted by the Hon’ble High Court against the impugned reassessment/assessment orders, no appeal was filed before the CIT (A). He further submitted that the Hon'ble High Court vide order dated 20.8.2013 dismissed the Writ and upheld the validity of reassessment/assessment orders and shot down the ground of arbitrariness and violation of natural justice raised by the assessee. He submitted that in the Writ before the Hon'ble High Court, there was no issue on the validity of reassessment / assessment u/s 147/144 and the Hon’ble Court had also not decided on the merits of the additions made. It was pointed out by the ld. AR that once the Hon’ble High Court dismissed the writ petition on 20.08.2013, the assessee promptly on 17.09.2013 filed appeal before the ld. CIT (A) against the re-assessment/assessment orders both on merits and validity of re-assessment along with an application for condonation of delay. He submitted that the assessee filed the appeal before the ld. CIT (A) within 30 days of receipt of final writ order dated 20.08.2013.

He further submitted that invoking writ jurisdiction of the Hon’ble High Court and pursuing an alternate remedy available as envisaged in the Constitution of India by way of writ, does not take away assessee’s statutory right of filing appeal before CIT (A). He also submitted that there was no issue of legality of reassessment/assessment or issues on merits of additions before the Hon’ble High Court, therefore, various issues raised in the appeal before the CIT (A) were not decided and settled by the Hon’ble High Court while dismissing writ petition preferred by the assessee. He submitted that the ld. CIT (A) was not reviewing or interfering in the decision of superior court and where grounds of appeal before him are not covered by the Hon’ble High Court’s order in the writ. He further submitted that it is a settled law that delay if any in filing appeal including where it was for pursuing alternate remedy should be condoned and the approach of the courts should be pragmatic and liberal in condoning the delay caused for good and sufficient cause; and also for advancing substantial justice is of prime importance. In this regard, the assessee relied on various judicial pronouncements. Further, as regards the ld. CIT(A)'s remarks that the assessee is not entitled to avail the channel of CIT(A) where the assessee has already chosen to file a Writ before the Hon'ble High Court, he submitted that the same is not acceptable and it is a settled law that pursuing alternate remedy of writ does not take away assessee's remedy of filing of appeal to CIT(A). He also relied on various judicial pronouncements in this regard. Accordingly, he pleaded that the appeals of the assessee be admitted as maintainable and the matter be restored back to the file of the ld. CIT (A) to be decided on merits after giving opportunity of being heard to the assessee.

She further submitted that dismissal of the writ petitions shut out the appeal before the CIT (A) and even the Tribunal.

The Hon’ble Allahabad High Court vide order dated 03.02.2005 stayed the order of the AO dated 30.12.2004. The relevant portion of the interim order is reproduced as below:-

“….Until further orders we stay the operation of the Assessment Order dated 31.12.2004/Annexure-IV to the writ petition passed by respondent no.2/Assistant Commissioner of Income Tax, Circle Saharanpur, Saharanpur, U.P. pertaining to Assessment Year 1988-99 to 2002-03.”

Thereafter, we find that the writ petition preferred by the assessee was dismissed on 20.08.2013. The assessee preferred an appeal before the CIT (A) on 17.09.2013 which is within 30 days from the receipt of the Hon’ble High Court’s order. The CIT (A) has dismissed the appeal by observing as under :-

After dismissal of the Writ petitions by the Hon'ble Allahabad High Court vide order dated 20-08-2013, the assessee filed appeal before the CIT(Appeals), Muzaffarnagar on 17-09-2013. The appellant has not explained as to why such appeals were filed after a gap of 8 years, seven months and 20 days against the order of the AO dated 31.12.2004. The appellant is not entitled to avail the channel of CIT(Appeals) at this stage. The appellant has already chosen to file a writ petition before the Hon'ble High Court of Allahabad instead of filing appeal before the CIT(Appeals). The Hon'ble Allahabad High Court has dismissed the writ of the appellant. The impugned issues raised in the appeals have been decided and settled by the Hon'ble Allahabad High Court as under.-

We take note that the assessee preferred the writ petitions alleging fundamental right violation and invoking the writ jurisdiction of the Hon’ble High Court wherein the interim order of stay of the assessment order was passed by the Hon’ble High Court by order dated 03.02.2005 and the writ petition was dismissed on 20.08.2013. The DR’s contention is that since the Hon’ble High Court has dismissed the writ petition neither the CIT (A) nor the Tribunal can review the order passed by the Hon’ble High Court.

According to her, dismissal of the writ petition forecloses the appeal before the CIT (A) and the Tribunal. This argument of the revenue is misplaced and misconceived, so is not tenable. What the CIT (A) has to decide in the appeal preferred by the assessee is the adjudication of grounds raised by the assessee against the order dated 31.12.2004 passed by the AO and not to sit in appeal or review the order of the Hon’ble High Court. The assessee has invoked the writ jurisdiction alleging fundamental right violation and other rights under Article 226 of the Constitution of India and the Hon’ble High Court stayed the operation of the assessment order dated 31.12.2004 and the stay order was in force up to 20.08.2013, since it was not vacated and the revenue could not place any material to show whether the interim order of stay was vacated before the writ petition was dismissed on 20.08.2013. An act of court shall not prejudice any one is reiterated in the case of Krishnaswamy S PD and Anr. vs UOI and Ors - 281 ITR 305 :-

“16. The maxim 'actus curiae neminem gravabit' i.e. , an act of Court shall prejudice no man is an important one. The maxim "is founded upon justice and good sense, and affords a safe and certain guide for the administration of the law", said Cresswell, J. in Freeman v. Tranah 12 CB 406. An unintentional mistake of the Court which may prejudice the cause of any party must and alone could be rectified.

and its administration is understood to disclaim as it does in its general aphorisms, all intention of compelling impossibilities, and the administration of law must adopt that general exception in the consideration of particular cases - UP SRTC v. Imtiaz Hussain [2006J 1 SCC 380, Shaikh Salim Haji Abdul Khagumsab v. Kumar [2006J 1 SCC 46, Mohammad Gazi Vs. State of MP [2000J 4 SCC 342 and Gursharan Singh v. New Delhi Municipal Committee [1996J 2 SCC 459. "

“Broom Legal Maxims (Page 73 Tenth Edition) Actus Curle Neminem Gravabit- An act of the court shall prejudice no man. This maxim “ is founded upon justice and good sense; and affords a safe and certain guide for the administration of law”. In virtue of it, where a case stands over for argument an account of the multiplicity of business in court, or for judgment from the intricacy of the question, the party ought not to be prejudiced by that delay, but should be allowed to enter up his judgement retrospectively to meet the justice of the case.”

As it can be seen from the aforesaid maxim, that the act of court does not prejudice anyone which means, in this case, the assessee did not prefer the appeal against the order of the AO dated 30.12.2004 before the ld. CIT (A) since the Hon’ble High Court was pleased to stay it on 03.02.2005and it was not vacated till it was dismissed on 20.08.2013. So the delay caused for disposal of writ petition cannot prejudice any one and so the assessee’s statutory right to file an appeal cannot be foreclosed by the CIT(A).

7.4 We find that the assessee, after the dismissal of the writ petitions, has duly filed the appeals within the 30 days, therefore, the period between 03.02.2005 and 20.08.2013 cannot be counted for the purpose of filing of appeal and we find that the assessee in fact had filed the statutory appeal well within 30 days from the date of disposal of the writ petition. Since the assessee has preferred an appeal on dismissal of the writ petition within 30 days, CIT (A) ought to have entertained the statutory appeal preferred u/s 246A which is a statutorily recognized right of the assessee and must have been admitted and adjudicated the issue on merits. Accordingly, we direct the CIT (A) to admit all the appeals since they are maintainable and restore the matters back to the file of the CIT (A) to be decided on merits after providing sufficient opportunity to the assessee. We order accordingly.