Income Tax Appellate Tribunal - Lucknow
Allahabad Bank Karmchari Cooperative ... vs Assistant Commissioner Of Income ... on 14 June, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH "A", LUCKNOW
BEFORE SHRI. A. D. JAIN, VICE PRESIDENT
AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER
S.A. No.29/LKW/2019
[In ITA No.327/LKW/2019]
Assessment Year: 2008-09
The Allahabad Bank Karamchari Co- v. The Income Tax Officer-4(1)
operative Credit Society Ltd. Kanpur
Bada Chauraha
Kanpur
TAN/PAN:AADAT5211C
(Applicant) (Respondent)
ITA No.327/LKW/2019
Assessment Year: 2008-09
The Allahabad Bank Karamchari Co- v. The Income Tax Officer-4(1)
operative Credit Society Ltd. Kanpur
Bada Chauraha
Kanpur
TAN/PAN:AADAT5211C
(Appellant) (Respondent)
Assessee by: Shri Swaran Singh, FCA
Respondent by: Smt. Alka Singh, D.R.
Date of hearing: 06 06 2019
Date of pronouncement: 14 06 2019
ORDER
PER A. D. JAIN, V.P.:
In the stay petition, the assessee has taken the following grounds:
1. That limitation of six years provided in section 149 of the Income Tax Act, 1961 relating to AY 2008-09 expired on 31/03/2015. Therefore, the Ld. CIT(A)-II, Kanpur by virtue of section 150(2) read with section 149 of the Income Tax Act, 1961 cannot issue direction to the AO to initiate reassessment proceedings under section 148 of the Income Tax Act, 1961 on 02/05/2019 (date of first appellate order) on which date such S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 2 of 12 'Direction' is clearly barred by limitation and liable to be expunged. Reliance is placed on the following decisions:
(a) Decision of Hon'ble ITAT Lucknow in the case of Sandeep Jam Vs ITO, Ward 1(4), Kanpur in ITA 811/LKW/2017
(b) Decision of Hon'ble ITAT Lucknow in the case of Smt Neelam Gupta Vs ITO [2007] 110 TTJ 714 (Lucknow)
(c) Decision of Hon'ble ITAT Jaipur Bench in the case of Ramesh Chand Soni HUF Vs ITO [2018] 89 Taxmann.com 71 (Jaipur-Trib)
(d) Decision of Hon'ble ITAT Indore bench in the case of Shri Narayandas Tolani Vs ITO 3(1) Bhopal in ITA 834/Ind/2016.
In this case, under similar circumstances the Hon'ble ITAT Indore expunged and deleted the 'Direction' under section 150(1) of the Income ax A4, 1961 and held as under:
"14. in view of Section 150(2) of the Act, the provisions of sub section (1) of Section 150 of the Act is not applicable in respect of the assessment year in which the assessment, reassessment or recomputation could not have been made at the time of order, which was subject matter of appeal passed by reason of any other provisions limiting the time within which the action for reassessment or recomputation should be taken. Th. e provision of Section 149 of the Act provides that notice under section 148 can be issued within the maximum period of six years from the end of the relevant assessment year in case where the income chargeable to tax exceeds Rs. 1 lakh. in the case before us, we find that the relevant assessment years are 2004-05, 2005-06 and 2006-07 for which direction u/s 150(1) have been issued Therefore, for the purpose of issue of notice u/s 148, the period of6 years from the end of relevant assessment year i.e. 2004-05, 2005-06 and 2006-07 expires on 31.03.2010, 31.03.2011 and 31.03.2012 respectively, whereas the id CIT(A) has passed the appeal order on 22.03.2016 Therefore, the AO could have taken any action as per limitation provided u/s 150(2) on the basis of the order of the id. CIT(A) dated 22.03.2016 for invoking Section 150(1) of the Act, if the order of appeal was passed on or before 31.03.2012. Thus, we are of the considered opinion that the AO can pass an order u/s 150(1) S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 3 of 12 of the Act, provided the appellate/original order was passed within the period of limitation available for reopening the relevant assessment. In this case, on the date of appellate order i.e. 22.03.2016, the limitation period for taking action in accordance with the directions of CIT(A) u/s 150(1) had expired Therefore, the direction issued by the id CIT(A) to take action for assessment years 2004-05 to 2006-07 by issuing notice for reopening of assessment for aforesaid years is barred by limitation. This view is supported by the decision of Third Member Bench in the case of Emgeeyar Pictures (P) Limited vs: Dy. CIT, Media Circle-I, Chennai (Chennai - Trib) (TM). If we read sub Section (2) of Section 150, it provided that sub Section (1) thereof will not apply toa case of assessment, reassessment or recomputation of income, if it related to assessment year in respect of which assessment, reassessment etc. could not have been made at the time when the order, which was the subject matter of appeal, reference or revision was made, by reason of the time limits fixed u/s 153 for making the reassessment, it would be seen that sub section (2) of Section 150 does not refer to Section 153. It only refers to "any other provisions limiting the time within which any action for assessment, reassessment or recomputation may be taken. The word "taken" refers only to initiation of proceedings and not to completion. The time limit for initiation of such proceedings are contained in Section 149 & 150 while the time limit for completion of such proceedings are mentioned in sub Section (2) & (3) of Section 153 just as Section 150 is the proviso to Section 149, sub Section (3) of Section 153 is a proviso to sub section (2) thereof. We find that the plain language of sub-section (2) of Section 150 clearly restricts the application of sub-section (1) of Section 150 to enable the authorities to reopen the assessments which have not already be become final on the expiry of the period of limitation prescribed u/s 149(2) of the Act.
15. In the light of above discussion in respect of provisions of Section 150(1) and (2) of the Act and relying on various judicial pronouncements as relied on by the ld. Authorized Representative of the assessee as well as discussed as above by us and the decision of Jurisdictional High Court in the case of Computer Science Corporation India (P) Limited (supra), we S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 4 of 12 are of the considered opinion that the directions issued by the ld. CIT(A) u/s 150(1) of the Act for the assessment years 2004-05 to 2006-07 are barred by limitation legally and not permissible considering the facts of the present case. Accordingly, the same are directed to be expunged and deleted."
That in para 5.5 of the impugned appellate order, without adjudicating the specific ground(s) raised by the appellant and without hearing the appellant on issues relating to merits of the additioin/disallowance made by the ld. A.O, the ld. CIT(A)-II, Kanpur has erred in law and on facts in forming his 'view' on such issues and such 'view' cannot be termed as 'Finding' in terms of section 153 of the Income Tax Act, 1961 . This 'view'/'finding' of the ld. CIT(A)-II, Kanpur was not at all necessary for the disposal of the present appeal as the assessment was annulled on legal grounds at para 5.4 of the impugned appellate order and the Grounds taken by appellant on merit of the case were not adjudicated by the Ld. CIT Appeal and were considered infructous.
Reliance in this regard in placed on the judgment of Hon'ble Supreme court of India in the case of Rajinder Nath Vs CIT [1979] 120 ITR 14 (SC) in which it was held:-
"ii. The expressions 'finding" and "direction" are limited in their meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year. To be a necessary finding it must be directly involved in the disposal of the case. It is possible in certain cases that in order to render a finding in respect of A, a finding in respect of B may be called for. For instance, where the facts show that the income can belong either to A or B and to no one else, a finding that it belongs to B or does not belong to B would be determinative of the issue whether it can be treated as A income. A finding respecting B is intimately involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A liability can be directly arrived at without necessitating a finding in respect of B, then finding made in respect, of B is an S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 5 of 12 incidental finding only. It is not a finding necessary for the disposal of the case pertaining to A. The same principles seem to apply when the question is whether the income under enquiry is taxable in the assessment year under consideration or any other assessment year. As regards the expression "direction" in section 153(3) (ii) of the Act, it is now well settled that it must be an express direction necessary for the disposal of the case before the authority or court. It must also be a direction which the authority or court is empowered to give while deciding the case before it."
3. That the reassessment proceedings consequent to aforesaid illegal 'Direction' by the Ld. CIT(A)-II, Kanpur will result in illegal reassessment proceeding and multiplicity proceedings and litigation. Such multiplicity of proceedings and litigation will result in k of precious manpower/efforts/time/financial resources of government officials and appellant. Under these circumstances, it is humbly prayed that the reassessment proceedings directed so be initiated by ACIT-1, Kanpur may please by Stayed till disposal of appeal before Hon'ble ITAT in ITA No. /LKW/2019. It is further prayed that said appeal before your honours may be fixed at an early date. Reliance is placed on following judgments and decisions:
(a) Decision of Hon'ble ITAT Indore in the case of M/s Radhishwari Developers Pvt Limited Vs PCIT-II Indore in SP No./67/Ind/201 8 (Arising out of ITA No. 493/Ind/201 8)
(b) Judgment of Hon'ble Andhra Pradesh High court in the case of ITO Vs Khalid Mehdi Khan 91977) 110 ITR 79."
2. The stay application seeks stay of reassessment proceedings consequent to the direction issued by the ld. CIT(A). The applicant also states in the application that there is no demand outstanding against it, and that an amount of Rs.16,24,180/- stands already paid. The grounds raised by the assessee in the stay application directly impinge upon the result of the appeal itself. Since it is a question of law, we have taken up the appeal itself for hearing, with the consent of the parties.
S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 6 of 123. The appeal of the assessee in ITA No.327/LKW/2019 is directed against the order of the ld. CIT(A)-II, Kanpur, dated 2/5/2019, for the assessment year 2008-09, taking the following grounds of appeal:
1. That the Ld. C.I.T.(A)-II, Kanpur has erred in law and on facts in giving direction under section 150 of the Income Tax Act, 1961 to A.C.I.T.-1. Kanpur to execute remedial action under section 148 of the Income Tax Act, 1961, ignoring the provisions of section 150(2) of the Income Tax Act, 1961, therefore, the said 'direction' is liable to be expunged and deleted from the first appellate order dated 02.05.2019
2. That the 'direction' issued under section 150 of the Income Tax Act, 1961 by the Ld. C.I.T.(A)-II, Kanpur is unsustainable in law and barred by limitation under section 150(2) read with section 149 of the Income Tax Act, 1961, therefore, such 'direction' is liable to be expunged and deleted from the first appellate order dated 02.05.2019.
3. That without adjudicating the specific grounds raised by the appellant on issue(s) relating to merits of additions/ disallowance made by Ld AO, the Ld. CIT(A)-II, Kanpur has erred in law and on facts in forming his 'view' on such issues and such 'view' cannot be treated as 'finding' in terms of section 150 of the Income Tax Act, 1961. Therefore, such 'View'/ 'Finding' and 'Direction' contained in para. 5.5 of the first Appellate Order dated 02.05.2019 is liable to be deleted and expunged.
4. That the Order of the Ld. C.I.T.(A)-II, Kanpur is arbitrary, biased and against the principles of natural justice and equity.
4. Since no return of income was filed, assessment proceedings under section 147 of the Act were initiated. Vide order (APB: 18-20) dated 19/3/2014, passed under sections 143(3)/147 of the Act, the A.O disallowed the assessee's claim under section 80P of the Act. The assessment was completed at a total income of Rs.26,38,100/-.
S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 7 of 125. The ld. CIT(A), vide order (APB: 21-22) dated 21/11/2017, dismissed the assessee's appeal ex-parte qua the assessee.
6. The Tribunal, vide order (APB: 23-25) dated 19/9/2018, remanded the matter to the file of the ld. CIT(A), to be decided afresh on affording due opportunity of hearing to the assessee. The ld. CIT(A), vide order dated 2/5/2019, i.e., the impugned order, annulled the assessment order, holding as under:
"5.2 The undersigned has carefully gone through the assessment order, written submissions and verbal arguments of the Ld. A.R. of the appellant. The main objection of the appellant for challenging the proceedings u/s 147 is that no action shall be taken u/s 147 after the expiry of four year from end of the relevant AY, unless any income chargeable to tax has escaped assessment for such AY by reason of the failure on the part of the assesses to make a return or to disclose fully and truly all material facts necessary for assessment for that assessment year, (ii) that where the assessment has completed u/s 143(3) no case can be reopened under section 148 after the expiry of 04 years from end of the relevant AY unless the CCIT or CIT is satisfied, on the reasons recorded by the AO aforesaid, that it is a fit case of issue of such notice.
It is seen that appellant has raised the issue of jurisdiction vide letter dated 15.04.2015, which has been rejected by the A.O. as per provision of section 124(3)(b) of I.T Act vide letter dated 20.05.2035. It is also seen that the A.O. recorded reasons to initiate proceedings u/s. 147 of the I.T. Act. Neither there is any quantification of income which has escaped assessment nor in the reasons recorded the AO has mentioned that escaped income amounts to or likely to be 1.00 lacs or more. The Ld. Pr. CIT-II, Kanpur passed the order No. 518/2015-16 dated 03.03.2016 u/s. 127 of the I.T. Act transferring the jurisdiction from ITO 4(1), Kanpur to ACIT, Circle-I, Kanpur. The Id. Pr. CIT-II, Kanpur as point No.2 noted as under:-
"In view of the above facts, jurisdiction over the case does not lie with the Income Tax Officer-4(1), Kanpur and lies with the ACIT, Circle-I, Kanpur"S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 8 of 12
The Pr. CIT-II, Kanpur issued letter F. No. Pr. CIT- II/KNP/Tech/127/2015-16/2441 dated directing the ITO-4(1), Kanpur to complete assessment proceedings for AY 2008-09 in the appellant case. The Ld. Pr, CIT-II, Kanpur failed to notice that once order u/s. 127 has been passed in the case of the appellant transferring the case to ACIT-I, Kanpur and the Pr. CIT-II, Kanpur cannot pass any direction in respect of the appellant after passing the order u/s. 127 of the IT Act dated 06.03.2016. 5.3 In view of the above, the Assessing Officer on the basis of the material before him, may have been satisfied that he has reason to believe that the income of the assessed had escaped the assessment to a certain extent but it no where records any finding that particulars as submitted by the appellant were not sufficient or were otherwise lacking in some way making it impossible to assess its income originally.
It is a fact that there is no finding or the reason recorded by the Assessing Authority that the appellant had failed to disclose fully and truly all material facts, which were necessary for the assessment. The appellant admittedly had submitted the complete details on all the issues during the original assessment. No material in this regard was suppressed by the appellant and at the same time no incorrect disclosure in that regard was made by it. The above disclosure was well within the knowledge of the Assessing Officer during the regular assessment proceedings. 5.4 After considering the facts of the case of the appellant as narrated above, and arguments placed by the learned AR of the assesses , the undersigned is of the considered view that the A.O. had no jurisdiction to issue notice u/s 148 and to recomputed the income of the appellant u/s. 143(3) & u/s. 147 of the Act. Therefore, issue of notice u/s. 148 assessment by ITO-4(1), Kanpur is ab-initio invalid and bad in law, hence the assessment order is hereby annulled. As the assessment order is annulled, the other grounds of appeal are not adjudicated and treated as infructuous."
7. However, while annulling the assessment order, as above, the ld. CIT(A) issued the following direction to the jurisdictional A.O:
S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 9 of 12"5.5 Even though, assessments in present appeal has been annulled on legal ground, undersigned is of the view that income of the appellant amounting to Rs.26,38,000/- is chargeable to tax in view of Supreme Court judgement in the case of Citizen Co- operative Society, 397 ITR 1 (SC) and Totgars Cooperative Sale Society Limited vs. Income Tax Officer, 322 ITR 283 (SC). Hence, jurisdictional A.O., i.e., ACIT-1, Kanpur is directed to execute remedial action under section 148 of the Act. This may be considered as direction under section 150 of the Act."
8. It is the above direction which brings the assessee once again before us, by way of the present appeal.
9. The ld. A.R. of the assessee has contended that the ld. CIT(A)-II, Kanpur has erred in law and on facts in giving direction under section 150 of the Act to the A.C.I.T.-1, Kanpur to execute remedial action under section 148 of the Act, ignoring the provisions of section 150(2) of the Act; that the direction issued under section 150 of the Act by the ld. CIT(A) is unsustainable in law and barred by limitation under section 150(2) read with section 149 of the Act; that without adjudicating the specific grounds raised by the assessee on the issue(s) relating to the merits of the additions/disallowance made by the AO, the ld. CIT(A) has erred in law and on facts in forming his view on such issues and such view cannot be treated as a finding in terms of section 150 of the Act; and that therefore, such finding and direction contained in para. 5.5 of the impugned order be ordered to be deleted.
10. On the other hand, the ld. D.R. has placed strong reliance on the impugned order.
11. Heard. The ld. CIT(A) has annulled the assessment order, holding the issuance of the notice under section 148 of the Act as bad in law for want of jurisdiction of the A.O to do so. The Department is not in appeal. Thus, the assessment stands annulled for all intents and purposes. The ld. CIT(A), while annulling the assessment, has directed S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 10 of 12 the jurisdictional the A.O to execute remedial action under section 148 of the Act, since in his (the ld. CIT(A)'s) view, the assessee's income of Rs.26,38,000/- is chargeable to tax in view of the Supreme Court judgments in 'Citizen Co-operative Society' (supra) and 'Totgars Cooperative Sale Society Limited vs. Income Tax Officer' (supra). The question is whether this action of the ld. CIT(A) is correct as per law.
12. The assessment year in question is assessment year 2008-09. The order passed by the ld. CIT(A) is dated 2/5/2019. Section 150 of the Act relates to cases where assessment is in pursuance of an order on appeal, etc. According to section 150(1) of the Act, a notice under section 148 may be issued at any time for the purpose of making an assessment in consequence of or to give effect to any finding or direction contained in an order passed on appeal. Section 150(2) of the Act, however, provides that the provisions of section 150(1) of the Act shall not apply in any case where any such assessment, made in consequence of an appellate order relates to an assessment year in respect of which an assessment could not have been made at the time the order, which was the subject matter of the appeal, was made, by reason of any other provision limiting the time within which any action for assessment may be taken. Section 149 of the Act lays down the time limit for issuance of notice under section 148 of the Act. In accordance with section 149(1)(b) of the Act, if four years, but not more than six years have elapsed from the end of the relevant assessment year, and if the income chargeable to tax which has escaped assessment amounts to one lakh rupees or more for that year, notice under section 148 of the Act for the relevant assessment year shall be issued. In other words, in such a case, a notice under section 148 of the Act can be issued upto a maximum period of six years from the end of the relevant assessment year.
S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 11 of 1213. In the present case, the impugned order was passed on 2/5/2019. The assessment year involved is assessment year 2008-09. Thus, in accordance with the provisions of section 149(1)(b) of the Act, notice under section 148 of the Act could have issued by the end of assessment year 2015-16. This period had already elapsed when the impugned order came to be passed. Therefore, the law not permitting initiation of proceedings under section 147 when the order under appeal was passed, the direction of the ld. CIT(A) is not in accordance with law. It is a non est direction.
14. It is well settled that an appellate authority cannot confer jurisdiction which the A.O does not have, e.g., as in the case of an assessment being barred by limitation. This has been held by the Hon'ble Gauhati High Court in the case of 'Bengal Tea And Fabrics Ltd. vs. ACIT', 223 ITR 729 (Gau).
15. Reference may also be had to 'CIT vs. Rameshwardas Ram Narain', 107 ITR 710 (All.) and 'CIT vs. Estate Of Late Sri N. Veeraswamy Chettiar', 49 ITR 13 (Mad.).
16. In 'CIT vs. Rameshwardas Ram Narain' (supra), the penalty was imposed by the ITO without obtaining the prior approval of the IAC. The Hon'ble Allahabad High Court held that the AAC was not justified in directing the ITO to proceed in accordance with law. In 'CIT vs. Estate Of Late Sri N. Veeraswamy Chettiar' (supra), the Hon'ble Madras High Court has held that conferment of jurisdiction on the ITO, which he is not lawfully seized of, is not within the scope of the appellate powers of the AAC.
17. In view of the above, finding the grievance of the assessee to be justified, the same is accepted. The direction in question, i.e., the direction issued by the ld. CIT(A) vide para 5.5 of the impugned order, as reproduced in para 7 of this order, is hereby ordered to be expunged.
S.A. No.29/LKW/2019 & ITA No.327/LKW/2019 Page 12 of 1218. Nothing further has been challenged in this appeal, nor was anything else argued.
19. In the result, the appeal is allowed. The stay application no longer survives and it is rejected as infructuous.
Order pronounced in the open Court on 14/06/2019.
Sd/- Sd/-
[T. S. KAPOOR] [A. D. JAIN]
ACCOUNTANT MEMBER VICE PRESIDENT
DATED:14/06/2019
JJ:0706
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
By order
Assistant Registrar