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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI ARUN KHODPIA
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the revenue is directed against the order passed by the CIT(Appeals), Raipur dated 22.01.2009, which in turn arises from the order passed by the A.O. u/s.143(3) of the Income-tax Act, 1961 (for short ‘Act’), dated 29.11.2007 for A.Y. 2006-07. The revenue has assailed the impugned order on the following grounds of appeal before us:
“1. That the Ld. CIT(A) has erred in law in holding that the assessment order passed u/s.143(3) of the Income-tax Act, 1961 dated 29.11.2007 (against which the appeal was filed by the assessee) was no more in existence.
2. That the Ld. CIT(A) has erred in law in not appreciating that whatever law that might have prevailed earlier on the said issue, after the enactment of the 2nd proviso to section 147 of the Income-tax Act, 1961 (which was inserted w.e.f. 01.04.2008) stating that "Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable- tax, has escaped assessment.", the law is clear that the appellant authorities will continue to exercise their jurisdiction over the already completed and appealed assessment order.
3. The prayer is that such erroneous order of the Ld. CIT(A) be set aside and restored the file to the Ld. CIT(A) to adjudicate afresh on the merits of the case.
4. Any other ground that may be adduced at the time of hearing.”
Succinctly stated, the assessee company, i.e. Chhattisgarh State Electricity Board, which is engaged in the activity of generation, transmission, and distribution of electricity within the State of Chhattisgarh, had e-filed its return of income for A.Y.2006-07 on 30.11.2006, declaring an income of Rs
3 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board Nil (after claiming deduction u/s. 80IA(4)(iv) of Rs.592,36,15,293/-). The return of income filed by the assessee company was processed as such u/s. 143(1) of the Act. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s. 143(2) of the Act.
Original assessment was, thereafter, framed by the A.O. vide his order passed u/s. 143(3) of the Act dated 29.11.2007 and the income of the assessee company was determined at Rs.821,75,10,572/- after making the following additions/disallowances:
Sr. No. Particulars Amount 1. Disallowance of the Rs.592,36,15,293/- assessee’s claim for deduction u/s.80IA (4)(iv) of the Act. 2. Disallowance of the Rs.150,03,09,434/- assessee’s claim for deduction of bad debts 3. Disallowance out of the Rs. 92,73,52,227/- assessee’s claim for deduction of repair and maintenance expenses (after treating the same expenditure allowing consequential depreciation on the same)
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals), wherein the latter observed that after framing the impugned assessment u/s. 143(3) of the Act, dated 29.11.2007, the income of the 4 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board assessee company was reassessed vide order passed by the A.O u/s.147 r.w.s. 143(3) of the Act, dated 30.12.2008. The CIT(Appeals) believed that after the income of the assessee company was reassessed vide order u/s 147 r.w.s 143(3), dated 30.12.2008, the impugned order u/s 143(3), dated 29.11.2007 based on which the appeal was preferred before him did not exist anymore. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under:
“The appeal has been instituted on 27-12-2007 from the order of Smt. Shital Shaswai Verma, ACIT-2(1), Raipur dated 29-11-2007. During the course of appellate proceedings on 27-11-2008, the appellant brought to my notice that subsequently the assessment has been reopened by issuance of notice u/s 148 dated 07-01-2008 and in response to the same, it has filed a return of income u/s 148 on 08-02-2008. Accordingly, a letter dated 27-11-2008 was written to the A.O requesting him to state the status quo of the assessment order against which the appeal was filed. Later on, during the course of appellate proceedings on 22-01-2009, Shri Praveen Khandelwal, CA and Id. AR filed a written submission dated 22-01-2009 stating that the A.O has passed a re-assessment order u/s 147 r.w.s. 143(3) for the relevant assessment year. A copy of the order was also enclosed. In view of the above facts, the order against which the appeal has been preferred exist no longer. Hence the appeal is dismissed.”
Subsequently, the assessee company, during the assessment proceedings for the immediately preceding year i.e. A.Y. 2005-06, stated before the AO that its income of Rs. 19,06,60,125/- which was classified as “prior period income” was, in fact, its income for the immediately succeeding year i.e. A.Y. 2006-07. Based on the aforesaid concession of the assessee company, the AO, holding a conviction that its income chargeable to tax
5 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board amounting to Rs. 19.06 Crores (approx.) had escaped assessment, thus reopened its case for A.Y. 2006-07 under Section 147 of the Act. Notice u/s 148 of the Act, dated 07.01.2008 was issued to the assessee company. In compliance, the assessee company filed its return of income wherein its initially returned income (gross) was increased by Rs.19.06 Crores (supra). The assessee company claimed that the amount of Rs. 19.06 Crores (supra) had inadvertently remained omitted to be considered while filing the original return of the income. Also, the assessee company filed with the A.O. an application u/s 154 of the Act, dated 16.01.2018, to rectify the mistake mentioned above in the assessment order. At the same time, the assessee company claimed the enhanced income of Rs. 19.06 Crores (supra) as eligible for deduction u/s 80IA of the Act.
After deliberating on the aforesaid claim of the assessee company, the AO did not find favor with the same. Observing that the assessee’s claim for deduction u/s 80IA(4)(iv) of the Act was declined by his predecessor while framing the original assessment, the A.O, on the said count itself, rejected its claim for said deduction on the amount of enhanced income. Accordingly, the A.O. vide his order passed u/s 143(3) r.w.s 147 of the Act, 30.12.2008, assessed its income at Rs. 840.75 crores (approx).
6 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board
7. Aggrieved, the assessee company assailed the reassessment order passed by the A.O u/s 143(3) r.w.s 147, dated 30.12.2008 before the CIT(Appeals). Although the assessee company had, inter alia, assailed the validity of the jurisdiction that the A.O had assumed for framing the reassessment in the absence of a valid notice u/s 143(2) of the Act, the same, however, did not find favor with the CIT(Appeals). On merits, the CIT(Appeals), though, vacated the disallowance of the assessee’s claim for deduction of “bad debts” of Rs.150.03 crores (approx.) but sustained the other additions/disallowances. Accordingly, the CIT(Appeals) vide his order dated 06.11.2009 partly allowed the assessee’s appeal.
Being aggrieved, both the assessee company and the revenue assailed the order of the CIT(Appeals) before the Tribunal. The Tribunal observed that the A.O. had framed the reassessment vide his order passed u/s 143(3) r.w.s 147 of the Act, dated 30.12.2008, without issuing any notice u/s 143(2) of the Act within the prescribed period. Based on its observation that the A.O. had, despite inherent lack of jurisdiction, framed the reassessment vide his order passed u/s 143(3) r.w.s 147, dated 30.12.2008, the Tribunal quashed the same. For the sake of clarity, the observations of the Tribunal are culled out as follows:-
7 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board
“7.4 Therefore, there is no doubt that the amended provisions will apply to the pending returns as on 01.04.2008 irrespective of assessment year to which it pertains and notice u/s 143(2) can only be issued on or before 30/09/08 in that year In this case the notice was issued on 18/12/08 beyond time limit prescribed. As considered by the Hon’ble jurisdictional High Court in the case of CWT vs. HUF of H.H. Late J.M. Scindia (300 ITR 193) (Bom.), the scrutiny proceedings are not valid. Respectfully following the principles established therein and following the Board Circular, we have no hesitation in holding that the reassessment order dt. 30/12/08 was in-valid. Ground No. 3 raised by the assessee on this issue is upheld and consequential re-assessment order cancelled.
Apropos the addition of Rs. 19.06 Crores (supra) made by the A.O vide his order u/ss. 143(3)/147 of the Act, dated 30.12.2008, the Tribunal taking cognizance of the fact that the assessee company had offered the said amount as its income vide application u/s 154 of the Act, thus, sustained the addition to the said extent. Regarding the other additions/disallowances assailed by the assessee and revenue, the Tribunal observed that as the same did not arise out of the reassessment proceedings, i.e., the order passed by the AO u/ss. 143(3) r.w.s 147 of the Act, dated 30.12.2008; therefore, there was no necessity to adjudicate the said issues. The Tribunal observed that the CIT(Appeals) should have confined his adjudication only to the validity of the jurisdiction that the A.O. had assumed for framing reassessment u/ss. 143(3)/147 of the Act, dated 30.12.2008. For the sake of clarity, the observations of the Tribunal are culled out as follows:-
8 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board
“As the other issues does not arise out of these proceedings, there is no necessity to adjudicate those issues. In fact, the ld. CIT(A) should have restricted to the jurisdiction issue alone which arise out of the proceedings of the AO. Therefore, we are of the opinion that this forum need not adjudicate any of those issues which are not subject matter of present assessment order. Since reassessment order itself was held bad in law in ground no.3, rest of the ground are academic in nature. (emphasis supplied by us) Resultantly, the Tribunal vide its order passed in & 40/BPLR/2010 dated 13.09.2013 allowed the assessee’s appeal (on the jurisdictional aspect) and dismissed that filed by the Revenue.
After receiving the aforesaid order of the ITAT, the A.O, vide his order dated 16.01.2014 giving appeal effect to the order of the Tribunal, assessed the total income of the assessee company at Rs. 840.75 crores (approx.) as follows:-
“Total income as per assessment order u/s 143(3) dtd. 29.11.2007 Rs. 8,21,75,10,572/- Add: As discussed above : Income offered by the assessee with respect to which there is no dispute Rs. 19,00,06,125/- Total income Rs. 8,40,75,70,697/-
Aggrieved with the order dated 16.01.2014 passed by the A.O giving appeal effect to the order of the Tribunal, wherein its income was determined
9 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board at Rs. 840.75 Crores (approx.), the assessee company carried the matter in appeal before the CIT(Appeals).
Before the CIT(Appeals), the assessee company claimed that the A.O ought to have observed, viz. (i). the CIT(Appeals) had vide his order dated 22.01.2009 quashed the original assessment order passed u/s 143(3), dated 29.11.2007.; and (ii). the Tribunal had quashed the reassessment proceedings for want of valid assumption of jurisdiction vide its order dated 13.09.2013. Based on its claim above, it was stated by the assessee company that its original return of income and that filed in compliance to notice u/s 148 of the Act, both declaring nil income, had become final. However, the CIT(Appeals) did not find favor with the aforesaid claim of the assessee company. Accordingly, the CIT(A) vide his order passed in Appeal No. 532/13- 14, dated 23.04.2014, dismissed the appeal of the assessee company against the order passed by the A.O. u/ss. 147/143(3) r.w.s. 254 of the Act, dated 16.01.2014.
12. The assessee company aggrieved with the order of the CIT(Appeals), dated 23.04.2014, carried the matter in appeal before the Tribunal. After deliberating at length on the issue before them, it was observed by the Tribunal vide its order dated 26.07.2019 that now when the assessment order passed by the A.O u/s 143(3), dated 29.11.2007 was held to be non-existent
10 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board by the CIT(Appeals) vide his order dated 22.01.2009 and the same had attained finality; and reassessment order passed u/s 143(3) r.w.s. 147 of the Act dated 30.12.2008 was also set aside by the Tribunal; therefore, the A.O while giving effect to the order of the Tribunal dated 13.09.2013 (supra), was neither justified in making any addition towards disallowance of the assessee’s claim for deduction u/s 80IA of the Act nor on account of disallowance of any part of its claim for deduction of repair and maintenance expenses based on the original assessment. For the sake of clarity, the relevant observations of the Tribunal vide its order passed in & 205/RPR/2014 dated 26.07.2019 are culled out as follows:-
“19. Now, sole question for our adjudication is that once the original assessment passed u/s 143(3) on 29-11-2007 was held to be non-existent by the ld.CIT(A) vide order dated 22nd January 2009 and the re-assessment order passed u/s 143(3) r.w.s. 147 on 30-12-2008 was also set aside by Tribunal. can still the AO, while giving effect to the order of the Tribunal entitled to make the addition on account of disallowance u/s 801A and disallowance of repair and maintenance on the basis of the original assessment. Notably the order of the CIT(A) dated 22.01.2009 had become final. In our considered view, the answer is a NO. Hence, the grounds of appeal raised by the assessee are allowed.
20. In the final analysis the question arises as to what is the final income liable to be computed by the AO in order giving effect to the order of the Tribunal dated 13.09.2013. In this context when it is the accepted that the appellate authority has given a finding that the original order does not exist, the same would be continue to be binding on all authorities till the same is reversed or varied by a higher authority, which in the present case, it is not disputed that such finding of the Id. CIT(A) has been accepted by the department, therefore, there is no question of the original order subsisting.Thus, as the assessee has 11 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board filed a return in pursuance of the notice under section 148 of the Act, the income in the return of income filed by the assessee pursuant to the said notice has to be accepted as final income. Notably, the Tribunal in its order dated 13.09.2013 has only cancelled the re-assessment order and not the reassessment proceedings. Therefore, the notice under section 147 is valid and the return filed pursuant thereto is also valid. As no change have been made to the said return of income, the return has become final. Hence, the income of the assessee has to be computed on the basis of said return of income. Therefore, we direct the AO to recompute the final income accordingly.”
13. On receipt of the order of the Tribunal, dated 13.09.2013, which in turn arose from the order passed by the AO u/ss. 143(3)/147 of the Act dated 30.12.2008, wherein it was, inter alia, observed by the Tribunal that the CIT(Appeals) should have restricted his adjudication to the validity of the jurisdiction assumed by the AO to frame assessment u/ss. 143(3)/147 of the Act, dated 30.12.2008 and there was no necessity to adjudicate the other issues, the AO filed an application u/s 154 of the Act with the CIT(Appeals), wherein referring to the aforesaid observation of the Tribunal, it was claimed that the allowing of relief of “bad debts” of Rs. 150.03 Crores (supra) vide his appellate order dated 06.11.2009 (supra) suffered from a mistake apparent from record. Accordingly, the AO sought for withdrawal of the relief of Rs. 150.03 crores (supra) that was granted by the CIT(Appeals) while disposing of the assessee’s appeal vide his order passed in dated 06.11.2009. Acting upon the application filed by the A.O u/s 154 of the Act,
12 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board the CIT(Appeals) vide his order dated 23.04.2014 rectified his order and withdrew the relief of “bad debts” of Rs. 150.03 crores (supra) that was earlier allowed by him to the assessee company.
14. The assessee company, aggrieved with the order passed by the CIT(Appeals) u/s 154 of the Act, dated 23.04.2014, carried the matter in appeal before the Tribunal. After considering the issues at length, the Tribunal vide its order passed in dated 26.07.2019, observed that now, when it had held the original assessment order passed u/s 143(3) of the Act as non-existent and the reassessment order passed u/ss. 143(3)/147 of the Act, dated 30.12.2008, was held as invalid for want of valid assumption of jurisdiction in the absence of issuance of notice u/s 143(2) within the prescribed period; therefore, the appeal filed by the assessee company arising from the order passed by the CIT(Appeals) u/s 154 of the Act, dated 23.04.2014 was rendered as merely academic.
As is discernible from the record, the revenue had on 31.01.2020 preferred an appeal before us against the order passed by the CIT(Appeals), dated 22.01.2009, which in turn arises from the order passed by the A.O u/s 143(3) of the Act, dated 29.11.2007. As the appeal filed by the Revenue has been filed beyond the prescribed period, therefore, the department has filed
13 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board an application seeking condonation of the delay involved in the filing of the present appeal, which, thereafter, had been revised twice, as under:
(i). After filing the appeal with the Tribunal on 31.01.2020, the department had filed an application, dated Nil, seeking condonation of delay of 4,025 days involved in the filing of the appeal along with an “affidavit” of the Dy. CIT-4(1), Raipur, dated 05.02.2020.
(ii). After that, the department filed an application (revised) marked as “Annexure-“A’’ to the letter dated 04.01.2023 of the Dy. CIT, Circle-1(1), Raipur, along with an “affidavit” dated 04.01.2023 of the Dy. CIT-1(1), Raipur, seeking condonation of the delay of 3,599 days involved in filing the appeal.
(iii). On the last occasion, the department had filed an application (revised for the second time) marked as “Annexure -“A” to a letter dated 06.03.2023 of the Dy. CIT, Circle-1(1), Raipur, seeking condonation of delay of 3,966 days that was involved in the filing of the present appeal (though the same is not accompanied with any supporting “affidavit”).
The application (revised for the second time) marked as “Annexure -“A” to a letter dated 06.03.2023 of the Dy. CIT, Circle-1(1), Raipur, seeking condonation of delay of 3,966 days involved in the filing of the present appeal which supersedes the earlier applications reads as under:
14 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board 15 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board 16 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board 17 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board 18 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board 19 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board
As there is a delay in filing of the present appeal by the Revenue, therefore, we shall first deal with the application filed by the Revenue seeking condonation of the delay therein involved.
The ld. Departmental Representative (for short, “DR”), at the very outset of the hearing of the appeal, took us through the application filed by the department explaining the reasons leading to the delay of 3966 days in filing the present appeal before us. Elaborating on the reasons leading to the aforesaid delay, it was submitted by the ld. DR that the same had occasioned because the AO was carried with the view that was taken by the CIT(Appeal), Raipur, vide his order dated 22.01.2009, wherein the assessee’s appeal against order passed u/s 143(3) of the Act, dated 29.11.2007, was dismissed by him on the ground that pursuant to the reassessment order u/ss. 147/143(3) of the Act, dated 30.12.2008 the order passed by the A.O u/s 143(3) of the Act, dated 29.11.2007 had lost its existence and was wiped out. The Ld. D.R drew our attention to the order of the CIT(Appeals), dated 22.01.2009 arising out of the order passed by the AO u/s 143(3), dated 29.11.2007, Page 47-48 of APB. Apart from that, it was submitted by the ld. D.R that the aforesaid conviction of the AO was further supported by the judgment of the Hon’ble Supreme Court in the case of V. Jaganmohan Rao Vs. CIT/CEPT (1970) 75 ITR 373 (SC). Referring to the aforesaid judgment, it
20 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board was averred by the ld. D.R that the Hon’ble Apex Court, while approving the view taken by the High Court, had held that once an assessee's case is reopened, the previous under-assessment is set aside and the whole assessment proceedings start afresh. The Ld. D.R averred that the Hon’ble Apex Court had thereafter followed its aforesaid view in ITO & Anr. vs. K. L. Srihari (HUF) & Anr. (2001) 250 ITR 193 (SC), wherein it had observed that on reopening the original assessment order and making a fresh order of assessment of the entire income of the assessee, the earlier assessment order would stand effaced by the subsequent order. The Ld. D.R submitted that the firm conviction of the A.O that pursuant to the reassessment order u/ss. 143(3)/147 of the Act, dated 30.12.2008, the original assessment order passed in its case u/s 143(3) of the Act, dated 29.11.2007 stood effaced was not only supported by the view taken by the CIT(Appeals) vide his order dated 22.01.2009 but was also fortified by the aforesaid judgments of the Hon’ble Supreme Court.
The Ld. D.R further submitted that it was only when the Chief Commissioner of Income Tax, Raipur, while discussing the order passed in the case of the assessee company u/ss. 143(3)/147 of the Act, dated 30.12.2008, had observed that pursuant to insertion of the “3rd proviso” to Sec. 147 of the Act, wherein the A.O was vested with the jurisdiction to assess or 21 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board reassess such income, other than the income involving the matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment, it was only then that the A.O taking notice of the aforesaid amendment had considered it expedient to file an appeal against the order of the CIT(Appeals), dated 22.01.2009. The ld. D.R. further submitted that as a substantial amount of tax was involved in the present appeal, therefore, a lenient view may be taken and the delay therein involved be condoned. The Ld. D.R., to support his aforesaid contention, had relied upon a plethora of judgments of the Hon’ble Supreme Court, as follows:
(i). Collector, Land Acquisition v. Mst. Katiji and 9 Ors. (1987) 167 ITR 471 (SC) (ii). Commissioner of Income-tax, (Exemptions) Pune v. Progressive Education Society ([2019] 410 ITR 370 (SC) : (iii). Improvement Trust Vs. Ujagar Singh & Ors. ,Civil Appeal No. 2395 of 2008 dated 26.06.2010 (SC) (iv). Vedabai @ Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil & Ors., Appeal (Civil) No. 4494 of 2001, dated 20.07.2001 (SC): (v). CIT Vs. West Bengal Infrastructure Development Finance Corporation . Ltd. (2011) 334 ITR 269 (SC) (vi). G. Ramegowda, Major and others Vs. Special Land Acquisition Officer, Bangalore, (1988) 2 SCC 142: (vii). State of Haryana Vs. Chandra Mani and others (1996) 3 SCC 132: (viii). State of U.P. and others v. Harish Chandra and others, (1996) 9 SCC . 309 (ix). National Insurance Co. Ltd. V. Giga Ram and others, (2002) 10 SCC . . 176.
22 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board (x). State of Nagaland v. Lipok Ao and others (2005) 3 SCC 752 The Ld. D.R. heavily relied upon the order of the Hon’ble Apex court in the case of CIT vs. West Bengal Infrastructure Development Finance Corporation Ltd. (2011) 334 ITR 269 (SC). The Ld. D.R further submitted that the fact that multiple proceedings in the assessee’s case were going on before the appellate authorities was also one of the reasons leading to the delay in filing the present appeal. The Ld. D.R took us through the application of the A.O. seeking condonation of delay wherein the sequence of events was mentioned in a chronological manner, Page 2 of the application. Once again, the ld. DR submitted that the delay in filing the present appeal had crept in due to an inadvertent mistake as the A.O remained under a bonafide belief that the reassessment order covered all the issues involved in the original assessment order passed u/s 143(3) of the Act, dated 29.11.2007, and the same were carried in appeal before the CIT(Appeals). Accordingly, the ld. DR submitted that the failure of the A.O to prefer an appeal against the order passed by the CIT(Appeals), dated 22.01.2009 within the prescribed time period before the Tribunal, was for the reason that he had remained under a bonafide belief that as the said order i.e. original assessment order u/s 143(3) of the Act, dated 29.11.2007 was no more in existence, therefore, no further appeal was required to be filed. Elaborating further on her contention, it was averred by 23 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board the ld. DR that as there was no malafides in delaying the filing of the present appeal by the department, therefore, in all fairness and the interest of justice, the delay involved in filing the present appeal may be condoned and the appeal be disposed of on merits. The ld. DR further submitted that as the failure to file the appeal within the prescribed time was not attributable to any lethargy, negligence, malafide, or callous conduct of the officers of the department but because of a bonafide misinterpretation of the law, therefore, the same in all fairness be condoned.
Per contra, Shri. Praveen Khandelwal, Chartered Accountant, the ld. Authorized Representative (for short “AR”) for the assessee company submitted that as there was an inordinate delay involved in filing the present appeal by the department, i.e. 3966 days, for which it had not come forth with any cogent explanation, therefore, the same being barred by limitation was liable to be dismissed at the threshold on the said count itself. The Ld. A.R, in support of his contention above, had relied on the Hon’ble Supreme Court’s judgment, viz. Office of the Chief Post Master General Vs. Living Media India Ltd. (2012) 348 ITR 7 (SC). Referring to the aforesaid judgment, the ld. AR submitted that the Hon’ble Apex Court had observed that in the absence of acceptable and cogent reasons sufficient to condone the delay involved in filing an appeal by the Government department, the same was to be dismissed
24 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board as being barred by limitation. The ld. AR submitted that it was incomprehensible that it took more than a decade for the department to correctly interpret the law and file the present appeal involving an inordinate delay of 3966 days.
Rebutting the claim of the Ld. DR that due to a bonafide misinterpretation of the law by the A.O, which, thus, had resulted in an inadvertent failure on his part to assail the order passed by the ld. CIT(Appeals), dated 22.01.2009 before the Tribunal, the ld. A.R. submitted that the same was factually incorrect. Elaborating on his aforesaid contention, it was averred by the ld. AR that the A.O. had, after receiving the order of the Tribunal dated 06.11.2009, filed an application with the CIT(Appeals) u/s 154 of the Act, dated 16.01.2014. Referring to the application filed by the A.O u/s 154, dated 16.01.2014, the Ld. A.R submitted that the A.O. had brought it to the notice of the CIT(Appeals) that the Tribunal, while disposing of the cross- appeals of the assessee/revenue arising from the order passed u/s 143(3) r.w.s 147, dated 30.12.2008, had observed that the CIT(Appeals) should have restricted his adjudication only to the validity of the jurisdiction that the AO had assumed for framing the assessment vide his order passed u/s 143(3) r.w.s. 147 of the Act, dated 30.12.2008, and should not have adjudicated any of those issues which were not the subject matter of the impugned assessment
25 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board order before him. Carrying his contention further, the Ld. A.R submitted that the A.O in his aforesaid application filed u/s 154 of the Act, dated 16.01.2014, had submitted before the CIT(Appeals) that as the disallowance of “bad debts” of Rs. 150.03 Crores (approx.) made in the original assessment framed u/s 143(3) of the Act, dated 29.11.2007 did not arise from the impugned order u/s 143(3) r.w.s. 147 of the Act, dated 30.12.2008, that the asseseee company had assailed before him; therefore, the deletion of the said disallowance by him while disposing of the appeal vide his order dated 06.11.2009 was not in conformity with the order of the Tribunal, dated 13.09.2013, and thus, had rendered the same as suffering from a mistake apparent from record making it amenable for rectification u/s 154 of the Act. The ld. A.R submitted that when the A.O at the time of filing of application u/s 154 of the Act, i.e., on 16.01.2014, had rightly interpreted the observations recorded by the Tribunal in its order dated 13.09.2013 (supra), as per which the jurisdiction of the CIT(Appeals) while disposing of the appeal vide his order dated 06.11.2009 (arising from reassessment order u/ss. 143(3)/147, dated 30.12.2008) was limited to the issues which arose from the impugned reassessment order and could not be extended to such issues which were not the subject matter of the said appeal, then, in case the order of the CIT(Appeals), dated 22.01.2009 which had impliedly knocked down the additions that were made by the A.O u/s 143(3) of the Act, dated 29.11.2007, resulting to determining of its income
26 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board at Rs. 821.75 Crores (supra) [as against the returned income of Rs. Nil (as revised)] by holding the order u/s 143(3), dated 29.11.2007 as non-existent, was not to be accepted, then the recourse available with him was to assail the order of the CIT(Appeals), dated 22.01.2009 by filing an appeal within the prescribed time period before the Tribunal, which, however, was not done. In sum and substance, it was the claim of the Ld. A.R that as the application filed by the A.O u/s 154 of the Act, dated 16.01.2014, clearly revealed his understanding that additions made by the A.O in the original assessment order u/s 143(3), dated 29.11.2007 could not be challenged in the appeal filed against the reassessment order u/s 143(3) r.w.s 147 of the Act, dated 30.12.2008, therefore, having been enlightened about the said position of law as was canvassed by the Tribunal in its order dated 13.09.2013 (supra), it was incumbent upon him to have at least then preferred an appeal against the order passed u/s 143(3), dated 29.11.2007 before the Tribunal. Carrying his contentions further, it was averred by the Ld. A.R that as the Tribunal vide its order dated 13.09.2013 (supra) had dislodged the view that was taken by the CIT(Appeals) vide his order 22.01.2009 (arising from original assessment order u/s 143(3), dated 29.11.2007), wherein it was observed by him that pursuant to the subsequent reassessment order passed u/s 147 r.w.s. 143(3) of the Act, dated 30.12.2008 the impugned original order of assessment u/s 143(3), dated 29.11.2007 had ceased to exist and was wiped off, the A.O,
27 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board thus, being well conversant with the aforesaid observations of the Tribunal should have at least then carried the order of the CIT(Appeals), dated 22.01.2009 (supra) in appeal before the Tribunal. The Ld. A.R submitted that the fact that the A.O despite having well understood the order of the Tribunal, dated 13.09.2013 (supra), had though acted upon the aforesaid observations of the Tribunal and filed an application for rectification u/s 154 of the Act, dated 16.01.2014 with the CIT(Appeals) for withdrawing the relief of “bad debts” of Rs. 150.03 crores (supra) which the latter had allowed to the assessee company while disposing off its appeal vide his order dated 06.11.2009 (supra); but had at the said point of time not taken any steps to file an appeal against the order of the CIT(Appeals), dated 22.01.2009 (supra) before the Tribunal, revealed beyond doubt the lackadaisical and callous approach that he had adopted for filing the present appeal. The ld. AR submitted that the AO, despite being fully aware of the fact that the view taken by the CIT(Appeals), dated 22.01.2009 (supra), i.e., pursuant to the reassessment order u/s 143(3) r.w.s 147, dated 30.12.2008, the original order of assessment passed u/s 143(3), dated 29.11.2007 was wiped off was not approved by the Tribunal vide its order dated 13.09.2013 (supra), had however acted most carelessly and had not assailed the impugned order of the CIT(Appeals), dated 22.01.2009 (supra) for 6 years (approx.) thereafter, i.e. upto 31.01.2020. The Ld. A.R further submitted that the failure of the A.O., who
28 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board admittedly on 16.01.2014 (supra) was very well aware of the fact that in case the additions/disallowances that were impliedly vacated by the CIT(Appeals), vide his order dated 22.01.2009 (supra) were not to be accepted, then, the said order was required to be challenged before the Tribunal, had, however, sat tight over the matter and had woken up from his slumber only as on 31.01.2020 (i.e., the date on which appeal against the order of CIT(Appeals), dated 22.01.2009 was filed with the Tribunal) i.e. 6 years after getting fully aware about the view taken by the Tribunal vide its order dated 13.09.2013 (supra). The Ld. AR, based on the facts mentioned above and drawing support from the judgment of the Hon’ble Apex Court in the case of Officer of Chief Postmaster General v. Living Media India Ltd. (2012) 348 ITR 7 (SC), submitted that as the appeal filed by the department involved an inordinate delay of more than 10 ½ years (approx.), therefore, it was liable to be dismissed at the threshold on the ground that the same was barred by limitation.
We have deliberated at length on the issue in hand, i.e., the delay of 3966 days involved in filing of the present appeal by the Revenue and the reasons based on which it is sought to be condoned.
Admittedly, the appeal filed by the Revenue involves a delay of 3966 days, which, as stated by the Ld. A.R and, rightly so, is an inordinate delay.
29 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board Considering that the Revenue had delayed filing the present appeal before us, i.e., filed the appeal after the lapse of more than 10 ½ years, we shall carefully look into the reasons it had given to explain the same. Ostensibly, it is the claim of the Ld. D.R. that the delay in filing the present appeal had occasioned because the A.O, who was carried by the view that was taken by the CIT(Appeals) vide his order dated 22.01.2009 (arising from the order passed by the A.O u/s 143(3) of the Act, dated 29.01.2007), believed that as a result of the reassessment order passed u/ss. 143(3)/147, dated 30.12.2008, now when the original assessment order u/s 143(3) of the Act, dated 29.01.2007, had lost its existence and was wiped off; therefore, there remained no occasion for him to assail the order of the CIT(Appeals) dated 22.01.2009 dismissing the appeal of the assessee company against order u/s 143(3), dated 29.11.2007 (which was held as non-existent) any further in appeal before the Tribunal. As observed by us hereinabove, the Ld. D.R had further supported the aforesaid firm conviction of the A.O by the judgments of the Hon’ble Supreme Court in the case of V. Jaganmohan Rao vs. CIT/CEPT 175 ITR 373 (SC) and Income Tax Officer vs. K.L. Srihari (HUF) 250 ITR 193 (SC). The Ld. D.R has averred before us that the Hon’ble Apex Court, in its orders mentioned above, had concluded that on reopening the original assessment order and framing a fresh order of reassessment of the entire
30 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board income of the assessee, the subsequent order effaced the earlier assessment order.
Only to the extent it is relevant in the context of the reason given by the department in its application, wherein it is stated that the A.O held a firm conviction that, as observed by the CIT(Appeals), vide his order dated 22.01.2009 (supra) that was further supported by the judgments of the Hon’ble Supreme Court in the case of V. Jaganmohan Rao vs. CIT/CEPT 175 ITR 373 (SC) and Income Tax Officer vs. K.L. Srihari (HUF) 250 ITR 193 (SC), pursuant to the reassessment order passed u/s 143(3) r.w.s 147, dated 30.12.2008 the original assessment order passed u/s 143(3), dated 29.11.2007 lost its existence and was effaced, therefore, there remained no occasion for him to have challenged any further the order of the CIT(Appeals), dated 22.01.2009 (supra), the same in our humble understanding is an incorrect view. We say so because the Hon’ble Apex Court, in its order passed in the case of CIT Vs. Sun Engineering Works (1992) 198 ITR 297 (SC), had way back observed that to read the judgment in V. Jaganmohan Rao’s case (supra) as if laying down that reassessment wipes out the original assessment and that reassessment is not only confined to “escaped assessment” or “under-assessment” but to the entire assessment for the year and starts the assessment proceedings de novo giving the right to an 31 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board assessee to re-agitate matters which he had lost during the original assessment proceedings, which had acquired finality, is not only erroneous but also against the phraseology of section 147 and the object of reassessment proceedings. Accordingly, the support that the A.O had sought to draw by relying on the judgment of the Hon’ble Apex Court in V. Jaganmohan Rao (supra) and K.L. Srihari (HUF) (supra) [which in turn relies upon its earlier order in V. Jaganmohan Rao (supra)] is found to be clearly misconceived. Apart from that, when the Hon’ble Apex Court in CIT Vs. Alagendran Finance Ltd. (2007) 293 ITR 1 (SC) had clarified that for the purpose of computing the period of limitation for revision of an order by the Commissioner of Income-tax u/s 263 of the Act, on an issue that does not arise from the reassessment order, the period of limitation provided for under sub-section (2) of Section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment; therefore, the co-existence of both the original assessment order u/s 143(3) and re- assessment order u/s 143(3) r.w.s 147 stands impliedly approved by the Hon’ble Apex Court. Although the view taken by the A.O that pursuant to the re-assessment order u/s 143(3) r.w.s 147, dated 30.12.2008, the original order of assessment passed u/s 143(3), dated 29.11.2007 did not exist anymore and was wiped off is found to be an incorrect view in light of the aforesaid judgments of the Hon’ble Apex Court in CIT Vs. Sun Engineering Works
32 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board (1992) 198 ITR 297 (SC) and CIT Vs. Alagendran Finance Ltd. (2007) 293 ITR 1 (SC), but we do find substance in the claim of the Ld. D.R. that as the A.O. at the relevant point of time was swayed by the order of the CIT(Appeals), dated 22.01.2009 (supra), and had remained under a bonafide belief that pursuant to the reassessment order passed u/s 143(3) r.w.s 147, dated 30.12.2008 the original assessment order passed u/s 143(3), dated 29.11.2007 had lost its existence and was wiped off, therefore, there remained no occasion for him to have carried the order of the CIT(Appeals), dated 22.01.2009 (supra) any further in appeal before the Tribunal. Apart from that, the claim of the Ld. D.R about the bonafide misconstruing by the A.O of the judgments of the Hon’ble Apex Court in V. Jaganmohan Rao (supra) and K.L. Srihari (HUF) (supra), which further fortified his aforesaid view, can also not be ruled out and summarily brushed aside. The fact that the Hon’ble Apex Court in CIT Vs. Sun Engineering Works (supra) had clarified the principle laid down in the case of V. Jaganmohan Rao (supra), i.e. once an assessment is validly reopened by the issuance of notice under section 34 of the 1922 Act (corresponding to section 147 of the 1961 Act), then, it is only the previous “under-assessment” and not the “original assessment” proceedings which is set-aside, therein, fortifies the existence of subscribers to the second school of thought, though erroneous, i.e the original assessment order on a valid reopening of such assessment was effaced. For the sake of clarity, the 33 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board relevant observations of the Hon’ble Apex Court in the case of CIT Vs. Sun Engineering Works (supra) are culled out as under :
“ 37. The principle laid down by the Supreme Court in V. Jaganmohan Rao’s case (supra) therefore, is only to the extent that once an assessment is validly reopened by issuance of notice under section 34(2) of the 1922 Act (corresponding to section 148 of the 1961 Act), the previous under-assessment is set aside and the ITO has the jurisdiction and duty to levy tax on the entire income that had escaped assessment during the previous year. What is set aside is, thus, only the previous under-assessment and not the original assessment proceedings. An order made in relation to the escaped turnover does not effect the operative force of the original assessment, particularly if it has acquired finality, and the original order retains both its character and identity. It is only in cases of “under-assessment” based on clauses (a) to (d) of Explanation (1) to section 147, that the assessment of tax due has to be recomputed on the entire taxable income. The judgment in V. Jaganmohan Rao’s case (supra), therefore, cannot be read to imply as laying down that in the reassessment proceedings validly initiated the assessee can seek reopening of the whole assessment and claim credit in respect of items finally concluded in the original assessment.” (emphasis supplied by us)
Considering the fact that the A.O was swayed by the order of the CIT(Appeals), dated 22.01.2009 (supra), and had remained under a bonafide belief that as pursuant to the re-assessment order passed u/s 143(3) r.w.s 147, dated 30.12.2008 the original assessment order passed u/s 143(3), dated 29.11.2007 had lost its existence and was wiped off, therefore, there remained no occasion for him to have carried the order of the CIT(Appeals), dated 22.01.2009 (supra) any further in appeal before the Tribunal, which 34 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board conviction of his as stated by the Ld. D.R was fortified by a misreading of the aforesaid judicial pronouncements; we are of the view sufficiently substantiates his bonafide for not assailing at the relevant point of time the order passed by the CIT(Appeals), dated 22.01.2009 (supra) before the Tribunal.
We shall now deal with the contention of the Ld. A.R that even if the claim of the department that the AO was swayed by the view that was taken by the CIT(Appeals) in his order dated 22.01.2009 (supra) - i.e. after passing of reassessment order u/s 143(3) r.w.s 147, dated 30.12.2008 the original order of assessment u/s 143(3), dated 29.11.2007 did no more exist and was effaced; and, thus, based on his said conviction was of the view that there remained no occasion for him to have assailed the said order any further before the Tribunal, was to be accepted to justify the non-filing within the prescribed time period the appeal against the impugned order of the CIT(Appeals), dated 22.01.2009 before the Tribunal, the said justification, however, could not be stretched beyond 16.01.2014, i.e. the date on which the A.O had after well understanding the view taken by the Tribunal dated 13.09.2013, i.e. the additions made in the original assessment order u/s 143(3), dated 29.11.2007 could not be challenged in the appeal filed against the reassessment order u/s 143(3) r.w.s 147 of the Act, dated 30.12.2008, had 35 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board filed an application u/s 154, dated 16.01.2014 with the CIT(Appeals) for bringing his order in conformity with the aforesaid observations of the Tribunal. After learning about the position of law as was canvassed by the Tribunal in its order dated 13.09.2013 (supra) the A.O had filed an application for rectification u/s 154 of the Act, dated 16.01.2014 with the CIT(Appeals) for withdrawing the relief of “bad debts” of Rs.150.03 crores (supra) which the latter had earlier allowed to the assessee company while disposing off its appeal vide his order dated 06.11.2009 (supra). The A.O, in his application u/s 154, dated 16.01.2014, had claimed that as the issue of “bad debts” did not emanate from the reassessment order passed u/s 143(3) r.w.s 147, dated 30.12.2008, therefore, allowing of such relief by the CIT(Appeals) was not in conformity with the view taken by the Tribunal in its aforesaid order dated 13.09.2013 (supra).
Admittedly, it is a fact borne from the record that the A.O after appreciating the aforesaid view of the Tribunal had filed an application u/s 154, dated 16.01.2014, seeking correction/rectification of the order of the CIT(Appeals) on the ground that as the relief of “bad debts” of Rs. 150.03 crores (supra) that was allowed by him to the assessee company while disposing off its appeal vide his order dated 06.11.2009(supra) was not the subject matter of re-assessment order u/s 143(3) r.w.s 147, dated 30.12.2008
36 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board which was under challenge before him, therefore, the same was not in conformity with the view taken by the Tribunal in its aforesaid order dated 13.09.2013 (supra). Based on the fact that the A.O having well understood the order of the Tribunal, dated 13.09.2013, had filed an application u/s 154, dated 16.01.2014 (supra) with the CIT(Appeals) but had not carried the order of the CIT(Appeals), dated 22.01.2009 (supra) in appeal before the Tribunal (which was already substantially delayed), it is the claim of the Ld. A.R. that the same revealed a lackadaisical conduct and a callous approach that the A.O. had adopted as regards the filing of the present appeal. At the first blush, the aforesaid contention of the Ld. A.R. appeared to be very convincing, but in the backdrop of the totality of the facts involved in the present case, we are unable to concur with the same and summarily impute an irresponsible and lackadaisical approach to the conduct of the A.O. On the contrary, the application filed by the A.O u/s 154, dated 16.01.2014, wherein he had sought for correction/rectification of the order of the CIT(Appeals) on the ground that the deletion of the disallowance of “bad debts” of Rs. 150.03 crores (supra) by the latter vide his order dated 06.11.2009 (supra), which was not the subject matter of re-assessment order u/s 143(3) r.w.s 147, dated 30.12.2008 that was challenged before him, thus, was not in conformity with the view taken by the Tribunal in its aforesaid order dated 13.09.2013 (supra) reveals that he was responsibly acting upon the orders of the appellate authorities. As 37 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board observed by us hereinabove, the CIT(Appeals) had acted upon the aforesaid application of the A.O, and vide his order dated 23.04;2014 (supra) on being pointed out by the A.O rectified his order and withdrawn the relief of “bad debts” of Rs. 150.03 crore (supra) that was earlier allowed by him to the assessee company. We have purposively referred to the aforesaid fact to refute the claim of the Ld. A.R that the failure of the department to carry the order of the CIT(Appeals), dated 22.01.2009 (supra) in appeal before the Tribunal was due to the callous approach and lackadaisical conduct that the A.O had adopted in the matter of filing of the present appeal. Admittedly, there is no gainsaying that the A.O should have remained extra-vigilant, and after understanding the ramifications of the order of the Tribunal, dated 13.09.2013 (supra), as per which the additions/disallowances made by the A.O u/s 143(3), dated 29.11.2007 in absence of an appeal against the order of the CIT(Appeals), dated 22.01.2009 (supra) could not be sustained, thus, involving any further loss of time should have filed an appeal with the Tribunal (which was already substantially delayed) along with an application explaining the reasons leading to the delay therein involved. Although the A.O had, even after the order of the Tribunal, dated 13.09.2013 (supra), not carried the order of the CIT(Appeals), dated 22.01.2009 (supra) in appeal before the Tribunal, we, however, are unable to subscribe to the claim of the Ld. A.R. that the said delay was due to an irresponsible approach adopted by the A.O. on the issue
38 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board of filing the present appeal before us. Rather, the firm conviction of the A.O that even after the order of the Tribunal, dated 13.09.2013, the income of the assessee company that was originally assessed at Rs. 821.75 crores (supra) vide order passed u/s 143(3), dated 29.11.2007 subsisted, can be gathered from the fact that he had while giving appeal effect to the order of the Tribunal, dated 13.09.2013 (supra) vide his order u/s 143(3)/147 r.w.s 254 of the Act, dated 16.01.2014 taken the originally assessed income determined by him u/s 143(3), dated 29.11.2007 i.e Rs. 821.75 crores (supra) as the base figure. Although the aforesaid order of the A.O u/ss. 143(3)/147 r.w.s 254, dated 16.01.2014, had thereafter been set aside by the Tribunal, but we have referred to the same only for understanding the bonafide view of the A.O that the originally assessed income of the assessee subsisted and had merged in the re-assessment order. As observed by us hereinabove, we may once again reiterate that the A.O ought to have remained extra-vigilant and should have preferred the appeal against the order of the CIT(Appeals), dated 22.01.2009 (supra) before the Tribunal, which was already substantially delayed, along with an application explaining the reasons leading to the delay. Although we do not approve the filing of the substantially delayed appeal against the order of the CIT(Appeals), dated 22.01.2009 by the department, but at the same time are of the considered view that the said delay can neither be attributed to any malafide purpose or intention; nor a gross lackadaisical or irresponsible
39 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board approach adopted by A.O in the matter of filing of the same. At this stage, we may herein observe that it was the assessee company that had, in its appeal filed against the re-assessment order u/s 143(3) r.w.s 147, dated 30.12.2008 before the CIT(Appeals) assailed the additions/disallowances that were made by the A.O u/s 143(3) of the Act, dated 29.11.2007, viz. (i). declining of deduction u/s 80IA(4)(iv): Rs. 611.36 crores (approx); (ii). disallowance of claim for deduction of “bad debts”: Rs. 150.03 crores (approx.); (iii). disallowance (on an ad hoc basis) out of a claim for deduction of repair & maintenance of building expenses: Rs. 10.67 crores; (iv). disallowance (on an ad hoc basis) out of a claim for deduction of repair & maintenance expenses of plant & machinery: 82.06 crores (approx.); and (v). re-characterization of the interest income (claimed by the assessee as business income) as income from “Other sources”. Accordingly, the fact that the assessee company had itself assailed in its appeal against the reassessment order passed u/s.143(3) r.w,s 147, dated 30.12.2008 before the CIT(Appeals), the additions/disallowances that were made by the A.O in the original assessment u/s 143(3), dated 29.11.2007, therein evidences that the assessee was also instrumental in the formation of and/or fortifying the conviction of the A.O that the additions made by the A.O u/s 143(3), dated 29.11.2007 had merged with the re-assessment order passed u/s 143(3) r.w.s 147, dated 30.12.2008. It is, thus, more or less, to some extent, a case of contributory negligence of both
40 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board the parties to the present appeal, i.e. the assessee and the revenue, which had resulted in the delay in filing of the appeal.
Considering the fact that there is a substantial delay in filing the present appeal before us, which we are unable to fathom is being attributed to the A.O, who, as observed by us hereinabove, had though remained vigilant in filing an application u/s 154, dated 16.01.2014 with the CIT(Appeals) seeking rectification of his order dated 13.09.2013, wherein the latter had allowed a substantial relief of “bad debts” of Rs. 150.03 crores (supra) which was not in conformity with the order of the Tribunal, dated 13.09.2013, and had thereafter succeeded in getting the order rectified vide order passed by the CIT(Appeals), dated 23.04.2014, but had failed in his duty in carrying the order of the CIT(Appeals) by preferring an appeal before the Tribunal, even after the order of the Tribunal, dated 13.09.2013 (supra). We put to ourselves a self- poser, i.e., why the aforesaid A.O. would have delayed the filing of the present appeal before us.? In the totality of the facts involved in the present appeal, we are of the view that the delay in filing the appeal cannot be held to be conscious, purposive, intentional, or malafide. Also, we are unable to impute irresponsible, callous, or lackadaisical conduct of the A.O. in preferring the present appeal. All that comes to our mind in the totality of the facts involved in the case before us is that the delay had occasioned because of an 41 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board inadvertent failure of the A.O to have initially properly appreciated the doctrine of merger and, summarily subscribing to the view taken by the CIT(Appeals) in his order dated 22.01.2009 (supra), that pursuant to the order u/s 143(3) r.w.s 147, dated 30.12.2008 the original assessment order u/s 143(3), dated 29.11.2007 had lost its existence and stood effaced. To our understanding, as the order of the Tribunal dated 13.09.2013 (supra) arose from the re- assessment order dated 30.12.2008 (supra), therefore, the A.O had remained focused on giving effect to the said appellate order w.r.t the impugned order, i.e reassessment order u/s 143(3) r.w.s 147, dated 30.12.2008 and had lost sight of the ramifications of the same to the additions/disallowances made vide original assessment order u/s 143(3), which, having been knocked down by the CIT(Appeals), vide order dated 22.01.2009, in absence of any appeal against the said order could not be sustained. As observed by us hereinabove, as the assessee company had also assailed the additions/disallowance made u/s 143(3), dated 29.11.2007 in its appeal before the CIT(Appeals) against reassessment order u/s 143(3) r.w.s 147, dated 30.12.2008, therefore, till the order of the Tribunal dated 13.09.2013 (supra) there was a clear case of contributory negligence by both the parties before us, i.e the assessee company and the department. In so far the delay subsequent to the order passed by the Tribunal dated 13.09.2013 (supra) is concerned, it transpires that the same has to be attributed to the fact that the A.O was not extra-vigilant
42 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board in not stretching the application of the said order to the original assessment u/s 143(3), dated 29.11.2007 r.w order of CIT(Appeals), dated 22.01.2009, and thus, appreciating the ramifications of the same to the sustainability of the additions/disallowances which were made vide order u/s 143(3), dated 29.11.2007 (supra) in case the order of the CIT(Appeals) dated 22.01.2009 (supra) was not carried in appeal before the Tribunal. Be that as it may, there is more or less some carelessness of the A.O leading to his ignorance about the ramifications of the order of the Tribunal dated 13.09.2013 to the original assessment framed u/s 143(3), dated 29.11.2007 read along with the order of the CIT(Appeals), dated 22.01.2009; coupled with his inaction in not seeking necessary instructions from the higher authorities on the issue at hand.
We find substance in the claim of Shri. Parveen Khandelwal, the Ld. A.R, that there may be justification in the claim of the A.O that as he was swayed with the view taken by the CIT(Appeal), Raipur, vide his order dated 22.01.2009 (supra), i.e. pursuant to the reassessment order u/ss. 147/143(3) of the Act, dated 30.12.2008, the order passed by the A.O u/s 143(3) of the Act, dated 29.11.2007 was wiped off, which, observation of his, as claimed by the Ld. D.R. was further supported by his bonafide misunderstanding of the judgments of the Hon’ble Supreme Court in the case of V. Jaganmohan Rao Vs. CIT/CEPT (1970) 75 ITR 373 (SC) and ITO & Anr. vs. K. L. Srihari (HUF)
43 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board & Anr. (2001) 250 ITR 193 (SC); thus, for the said reason, he held a firm conviction that there was no occasion for him to have challenged the dismissal of the assessee’s appeal by the CIT(Appeal) vide his order dated 22.01.2009 (supra) any further before the Tribunal; however, the aforesaid explanation of the A.O had thereafter outlived its life after 16.01.2014 (supra), i.e, the date on which he had filed an application for rectification u/s 154 with the CIT(Appeals).
We shall, in the backdrop of aforesaid peculiar facts involved in the case before us, which had led to the delay in filing of the present appeal, now look into the judgment of the Hon’ble Apex Court in the case of Office of the Chief Post Master General Vs. Living Media India Ltd. (2012) 348 ITR 7 (SC) as had been relied upon by the Ld. A.R., where in the absence of a proper explanation for the delay in filing the appeal, the Hon’ble Court had declined to condone the delay therein involved. The Hon’ble Apex Court categorically observed that unless the government bodies, their agencies, and instrumentalities have a reasonable and acceptable explanation for the delay and there was a bonafide effort, the delay involved in filing the appeal would not be condoned. It was further observed that the usual explanation of the government departments that the file was kept pending for several months/years due to a considerable degree of procedural red-tapisim in the 44 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board process was no more to be accepted as a reasonable explanation for the delay involved in filing the appeal. Also, as a word of caution, the Court had observed that condonation of delay is an exception and should not be used as an anticipated benefit for government departments. For clarity, the observations of the Hon’ble Apex Court in Chief Post Master General Vs. Living Media India Ltd. (supra) are culled out as follows :
It is not in dispute that the person(s) concerned were well aware or conversant with the issues involved including the prescribed period of limitation for taking up the matter by way of filing a special leave petition in this Court. They cannot claim that they have a separate period of limitation when the Department was possessed with competent persons familiar with court proceedings. In the absence of plausible and acceptable explanation, we are posing a question why the delay is to be condoned mechanically merely because the Government or a wing of the Government is a party before us. Though we are conscious of the fact that in a matter of condonation of delay when there was no gross negligence or deliberate inaction or lack of bonafide, a liberal concession has to be adopted to advance substantial justice, we are of the view that in the facts and circumstances, the Department cannot take advantage of various earlier decisions. The claim on account of impersonal machinery and inherited bureaucratic methodology of making several notes cannot be accepted in view of the modern technologies being used and available. The law of limitation undoubtedly binds everybody including the Government.
In our view, it is the right time to inform all the government bodies, their agencies and instrumentalities that unless they have reasonable and acceptable explanation for the delay and there was bonafide effort, there is no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural red-tape in the process. The government departments are under a special obligation to ensure that they perform their duties with diligence and commitment. Condonation of delay is an exception and should not be used as an anticipated benefit for government departments. The law shelters everyone under the same light and should not be swirled for the benefit of a few. Considering the fact that there was no proper explanation offered by the Department for the delay except mentioning of various dates, according to us, the Department has miserably failed to give any acceptable and cogent reasons sufficient to condone such a huge delay. Accordingly, the appeals are liable to be dismissed on the ground of delay.
45 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board
In view of our conclusion on issue (a), there is no need to go into the merits of the issues (b) and (c). The question of law raised is left open to be decided in an appropriate case. In the light of the above discussion, the appeals fail and are dismissed on the ground of delay. No order as to costs.”
On the other hand, as observed by us hereinabove, the Ld. D.R had relied on a host of judicial pronouncements of the Hon’ble Apex Court in order to impress upon us that as the delay involved in the filing of the present appeal had initially occasioned due to the A.O’s bonafide misconstruing of law, which, thereafter, had perpetuated due to an inadvertent failure on his part to apply the observations recorded by the Tribunal in its order dated 13.09.2013 (supra) to the order passed by the CIT(Appeals), dated 22.01.2009, which, thus, had resulted to the delay in filing of the present appeal, therefore, the same in all fairness be condoned. The Ld. D.R had pressed into service the judgment of the Hon’ble Apex Court in the case of CIT Vs. West Bengal Infrastructure Development Finance Corporation Ltd. (2011) 334 ITR 269 (SC). The Ld. D.R submitted that the Hon’ble Apex court, in its aforesaid order, had observed that in all such cases where there is a delay on the part of the department, the High Court should consider imposing costs but certainly, it should examine the cases on the merits and should not dispose of cases merely on the ground of delay, particularly when huge stakes are involved. Carrying her contention further, it was submitted by the Ld. D.R that as multi-facet additions/disallowances of Rs. 821.75 crores (approx.) were at 46 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board stake in the present appeal; therefore, the delay involved in the filing of the present appeal, which had occasioned for bonafide reasons /omissions be condoned and the appeal be admitted in the backdrop of the judgment of the Hon’ble Apex Court in West Bengal Infrastructure Development Finance Corporation Ltd.(supra). We have given thoughtful consideration and, on a perusal of the aforesaid order of the Hon’ble Apex Court in CIT Vs. West Bengal Infrastructure Development Finance Corporation Ltd. (supra) find that the same reads as under :
“5. Looking to the amount of tax involved in this case, we are of the view that the High Court ought to have decided the matter on merits. In all such cases, where there is delay on the part of the Department, we request the High Court to consider imposing costs but certainly it should examine the cases on merits and should not dispose of cases merely on the ground of delay, particularly when huge stakes are involved.
6. Accordingly, the impugned order is set aside and the matter is remitted to the High Court to decide the case de novo in accordance with law.
We request the High Court to dispose of this case as early as possible, preferably within a period of four months from today. The civil appeal is, accordingly, allowed.
8. No order as to costs.” (emphasis supplied by us)
After having given thoughtful consideration, we are of the considered view that the delay in filing the present appeal before us, as explained by the Ld. D.R had occasioned on the part of the A.O, initially due to bonafide
47 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board misconstruing of law (to which the assessee had also contributed), which, thereafter, was followed by an inadvertent failure on his part to appreciate the implication of the observations recorded by the Tribunal in its order dated 13.09.2013 (supra) to the additions/disallowances made vide order of original assessment u/s 143(3), dated 29.11.2007 read along with the order passed by the CIT(Appeals), dated 22.01.2009 (supra). Admittedly, it is not a case where there is gross negligence or deliberate inaction or lack of bonafides but a case of bonafide misconstruing of law followed by unintentional inaction on the part of the A.O who had confined the application of the order of the Tribunal, dated 13.09.2013 (supra) only to the order of reassessment u/s 143(3) r.w.s 147, dated 30.12.2008, which was the subject matter of appeal before the Tribunal, and had due to a bonafide omission failed to stretch the application of the said order to the original assessment order u/s 143(3), dated 29.11.2007 r.w order of CIT(Appeals), dated 22.01.2009. Also, it is not a case where the department is trying to take shelter of an explanation that the delay had taken place because the file was kept pending for several months/years due to a considerable degree of procedural red tape in the process. As there is an explanation as regards the bonafide reasons/omission on the part of the departmental officers to file the appeal within the prescribed period, therefore, the said explanation cannot be dismissed at the threshold. Considering the fact that there is an inordinate delay of 3966 days involved in filing the present
48 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board appeal before us, and the sustainability of a huge addition of Rs. 821.75 crores (approx.) based on multi-facet additions /disallowances is at stake, we, therefore, respectfully following the judgment of the Hon’ble Apex Court in the case of CIT Vs. West Bengal Infrastructure Development Finance Corporation Ltd. (supra) condone the same subject to the imposition of a cost of Rs.20,000/-(rupees twenty thousand) on the department.
Apropos the merits of the case, the revenue appellant claims that the CIT(Appeals) vide his impugned order dated 22.01.2009 (supra) had erred in concluding that pursuant to the reassessment order u/s 143(3) r.w.s 147, dated 30.12.2008 the original order of assessment u/s 143(3), dated 29.11.207 was no more in existence.
As observed by us hereinabove, the Hon’ble Apex Court, in its order passed in the case of CIT Vs. Sun Engineering Works (1992) 198 ITR 297 (SC) had observed that to read the judgment in V. Jaganmohan Rao’s case (supra) as if laying down that reassessment wipes out the original assessment and that reassessment is not only confined to “escaped assessment” or “under-assessment” but to the entire assessment for the year and starts the assessment proceedings de novo giving the right to an assessee to re-agitate matters which he had lost during the original assessment proceedings, which had acquired finality, is not only erroneous
49 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board but also against the phraseology of section 147 and the object of reassessment proceedings. For the sake of clarity, the relevant observations of the Hon’ble Apex Court in the case of CIT Vs. Sun Engineering Works (supra) are once again culled out as folloes :
“ 37. The principle laid down by the Supreme Court in V. Jaganmohan Rao’s case (supra) therefore, is only to the extent that once an assessment is validly reopened by issuance of notice under section 34(2) of the 1922 Act (corresponding to section 148 of the 1961 Act), the previous under-assessment is set aside and the ITO has the jurisdiction and duty to levy tax on the entire income that had escaped assessment during the previous year. What is set aside is, thus, only the previous under-assessment and not the original assessment proceedings. An order made in relation to the escaped turnover does not effect the operative force of the original assessment, particularly if it has acquired finality, and the original order retains both its character and identity. It is only in cases of “under-assessment” based on clauses (a) to (d) of Explanation (1) to section 147, that the assessment of tax due has to be recomputed on the entire taxable income. The judgment in V. Jaganmohan Rao’s case (supra), therefore, cannot be read to imply as laying down that in the reassessment proceedings validly initiated the assessee can seek reopening of the whole assessment and claim credit in respect of items finally concluded in the original assessment.” (emphasis supplied by us)
Accordingly, the support that impliedly is sought to be drawn by relying on the judgment of the Hon’ble Apex Court in V. Jaganmohan Rao (supra) and K.L. Srihari (HUF) (supra) [which in turn relies upon its earlier order in V. Jaganmohan Rao (supra)] is found to be clearly misconceived. Apart from that, when the Hon’ble Apex Court in CIT Vs. Alagendran Finance Ltd.
50 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board (2007) 293 ITR 1 (SC) had clarified that for the purpose of computing the period of limitation for revision of an order by the Commissioner of Income-tax u/s 263 of the Act, on an issue that does not arise from the reassessment order, the period of limitation provided for under sub-section (2) of Section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment; therefore, the co-existence of both the original assessment order u/s 143(3) and re-assessment order u/s 143(3) r.w.s 147 stands impliedly approved by the Hon’ble Apex Court. Accordingly, the view taken by the CIT(Appeals), vide his order dated 22.01.2009, that pursuant to the re-assessment order u/s 143(3) r.w.s 147, dated 30.12.2008, the original order of assessment passed u/s 143(3), dated 29.11.2007 did not exist anymore and was wiped off is found to be an incorrect view in light of the aforesaid judgments of the Hon’ble Apex Court in CIT Vs. Sun Engineering Works (1992) 198 ITR 297 (SC) and CIT Vs. Alagendran Finance Ltd. (2007) 293 ITR 1 (SC).
As is discernible from the records, the CIT(Appeals), based on his conviction that pursuant to the reassessment order u/s 143(3) r.w.s 147, dated 30.12.2008, the original order of assessment u/s 143(3), dated 29.11.207 was no more in existence and was effaced, had, thus, dismissed the appeal in limine and not adverted to the issues raised before him. As we have 51 DCIT, Circle-4(1), Raipur Vs. M/s. Chhattisgarh State Electricity Board disapproved and dislodged the aforesaid view of the CIT(Appeals), therefore, we restore the matter to his file with a direction to him to re-adjudicate the appeal. Needless to say, the CIT(Appeals) shall afford a reasonable opportunity of being heard to the assessee appellant in the course of the de- novo proceedings. The Grounds of appeal Nos. 1 to 3 are allowed for statistical purposes in terms of our aforesaid observations.
The Ground of appeal No. 4, being general, is dismissed as not pressed.
36. Resultantly, the appeal filed by the revenue is allowed for statistical purposes in terms of our aforesaid observations, subject to imposition of costs of Rs.20,000/- (rupees twenty thousand), the payment of which shall be made by the appellant department to the Prime Minister National Relief Fund within a period of thirty days from receipt of the order by the Ld. Principal Commissioner of Income-tax/Commissioner of Income-tax.