Income Tax Appellate Tribunal - Rajkot
Digjam Liited (Formerly Known As Birla ... vs The Assistant Commissioner Of Income ... on 18 March, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL
"RAJKOT" BENCH, RAJKOT
BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER
& SMT. MADHUMITA ROY, JUDICIAL MEMBER
आयकर अपील सं./I.T.A. No. 1248/Rjt/2010
( नधा रण वष / Assessment Years : 2005-06)
Digjam Limited बनाम/ The Asstt. Comm. of
(Formerly Birla VXL Vs. Income Tax
Limited) Circle - 2, Jamnagar
Aerodrome Road,
Jamnagar
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : ACKPS0126P
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से /Appellant by : Shri Vimal Desai, A.R.
यथ क ओर से / Shri M. N. Mourya, CIT.D.R.
Respondent by :
सन
ु वाई क तार ख / Date of
Hearing 05/03/2020
घोषणा क तार ख /Date of
Pronouncement 18/03/2020
आदे श/O R D E R
PER WASEEM AHMED - AM:
The captioned appeal has been filed at the instance of the
assessee against the order of the Commissioner of Income Tax
(Appeals), Jamnagar (CIT(A) in short) dated 07/09/2010 relevant
to Assessment Year (AY) 2005-06.
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2. The Assessee has raised following grounds of appeal:
"1. The assessment order u/s. 143(3) is bad in law.
2. The learned CIT(A) has erred in law as well as on facts in holding that the
assessment order passed by the A.O. merges with the order of the CIT
u/s. 264.
3. The learned CIT(A) has erred in law as well as on facts of the case in
holding that the appeal before him has become in-competent because
the assessment order cannot be adjudicated by him in appeal after the
same has merged with the order u/s. 264 passed by the CIT and that
the only course of action available to the assesses is to agitate grounds
arising from the assessment order which are taken in this appeal and
were not subject matter of proceedings u/s. 264 before the High Court.
4. The learned CIT(A) failed to appreciate that it is section 264(4)(a) which
prohibits the CIT from revising an order u/s. 264 if an appeal against
the order lies to the CIT(A) and the assessee has not waived his right of
appeal and there is no provision u/s. 246A imposing similar prohibition
on CIT(A) to the effect that the CIT(A) shall not adjudicate appeal
against an order where the order has been made subject matter of
revision proceedings u/s. 264. The CIT(A) has seriously erred in
applying provisions of section 264(4) conversely
5. The appellant ought not to have been taxed in respect of transfer of
capital assets being land and depreciable assets of its undertaking
known as OCM Division of the appellant company to OCM India Limited
since, pursuant to the Scheme of Arrangement duly approved by the
Hon'ble High Courts of Gujarat as well as Punjab 8t Haryana, the said
Division was vested as a going concern in OCM India Limited.
6. The learned CIT(A) ought to have decided on merits the following
disallowances / additions made by the A.O.:
> Rs. 60,66,537/- u/s. 43B in respect of payments made during
the period 1.4.2004 to 31.10.2005 out of pre-existing liability
brought forward from earlier years,
> Rs. 14,36,449/- u/s. 40A(2)(a) out of interest,
> Rs. 12,14,759/- out of Repairs to Plant & Machinery considering
it as capital expenditure.
> Rs. 3,00,000/- on lump sum basis out of various business
expenses.
> Rs. 8,80,800/- out of Long Term Capital Loss on sale of
Land at Joka, Kolkatta."
3. The interconnected issue raised by the assessee in ground No. 1 to 4 is
that the Ld. CIT (A) erred in not adjudicating the appeal filed by the assessee
on the reasoning that the issue has been decided by the Ld. CIT under section
264 of the Act.
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4. The facts in brief as culled out from the order of the authorities below
are that the assessee is a public limited company and engaged in the business
of Manufacturing and trading of wollen, worsted fabrics, readymade garment
and job work. The assessment for the year under consideration was made by
the AO under section 143(3) of the Act dated 31st December 2007 after making
certain additions/disallowances to the total income of the assessee.
5. The assessee against the assessment order preferred an appeal to the
Ld. CIT (A) dated 29th January 2008 within the time specified under the
provisions of section 249 of the Act.
6. The assessee subsequently without withdrawing the appeal filed before
the learned CIT (A) as discussed above also filed the revisionary application
under section 264 of the Act to the Commissioner of Income Tax dated 31st
December 2008 within the time as specified under section 264 of the Act.
However the Ld. CIT under section 264 of the Act vide order dated 30th March
2010 dismissed the application filed by the assessee for the revision of the
order framed under section 143(3) of the Act by the AO vide order dated 30th
March 2010.
6.1 Subsequently, the appeal which was filed before the Ld. CIT (A) dated
29th January 2008 against the assessment order was also dismissed by the Ld.
CIT (A) by observing that the appeal filed before him is not maintainable on the
reasons as given under:
i. The order of the AO has been merged with the order of the Ld.
CIT under section 264 of the Act. Therefore, there cannot be any
appeal before him (the learned CIT (A)) against the revision order
passed by the Ld. CIT under section 264 of the Act in pursuance
to the provisions of section 246A of the Act.
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ii. The assessee has waived its right for the appeal before him (the
learned CIT (A)) as provided under the provisions of section 264
of the Act.
In view of the above, the Ld. CIT (A) dismissed the appeal filed by the
assessee without adjudicating the issue raised before him on merit.
7. Against the order of the Ld. CIT (A) dated 7th September 2010 the
assessee is in appeal before us.
8. The Ld. AR before us submitted that the assessee has not waived his
right for filing the appeal before the Ld. CIT(A) against the order of the
assessment dated 31st December 2007. As such the assessee first preferred the
appeal to the Ld. CIT(A) dated 29th January 2008 against the impugned
assessment order which was pending before him till 31st December 2008. But in
the meantime the assessee has made a revision application under section 264
of the Act dated 31st December 2008 which was dismissed by the Commissioner
of Income Tax on merit vide order dated 30th March 2010 before the disposal of
the appeal pending before the Ld. CIT(A). However the Ld. AR contended that
the Ld. CIT under section 264 of the Act has no power to pass the order once
the appeal has been preferred by the assessee before the Ld. CIT (A) as per
the provisions of section 264(4)(c) of the Act.
9. The learned AR in support his contention relied on the judgment Hon'ble
Allahabad High Court in the case of Yogendra Parsad Santosh Kumar Vs.
Commissioner of Income Tax reported in 44 taxmann.com 299.
10. On the contrary, the Ld. DR claimed that the order of the AO has been
merged with the order of the Ld. CIT under section 264 of the Act. Therefore
there cannot be any appeal before the Ld. CIT (A) against the impugned
assessment order.
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11. We have heard the rival contentions of both the parties and perused the
materials available on record. Before we go to the specific issue, we find
pertinent to note certain relevant dates which are necessary for deciding the
issue on hand:
i. Date of assessment order 31st December 2007
ii. Date of filing the appeal before the Ld. CIT (A) 29th of January
2008
iii. Date of filing the revisionary application under section 264 of the
Act 31st of December 2008
iv. Date of the order under section 264 of the Act 30th of March 2010.
v. Date of the order of the Ld. CIT (A) dismissing the appeal of the
assessee on the reasoning that it is not maintainable as the order
of the AO got merged with the order of the Ld. CIT under section
264 of the Act 7th September 2010.
11.1 Admittedly, the appeal to the Ld. CIT (A) against the impugned
assessment order was preferred by the assessee within the period of 30 days as
discussed above. Similarly, the assessee also filed the revisionary application
under section 264 of the Act within a period of almost in one year but within
the period as specified under section 264 of the Act. The revisionary application
was dismissed by the Ld. CIT under section 264 of the Act.
12. Now, the 1st issue arises for our consideration whether the order passed
under section 264 of the Act was a valid order.
13. An application made for the revision under section 264 of the Act can be
disposed of by the Ld. Commissioner of income tax subject to the following
conditions:
(4) The Commissioner shall not revise any order under this section in the
following cases--
(a) where an appeal against the order lies to the 56[Deputy
Commissioner (Appeals)] 57[or to the Commissioner (Appeals)] or to the
Appellate Tribunal but has not been made and the time within which
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such appeal may be made has not expired, or, in the case of an
appeal 58[to the Commissioner (Appeals) or] to the Appellate Tribunal,
the assessee has not waived his right of appeal; or
(b) where the order is pending on an appeal before the 59[Deputy
Commissioner (Appeals)]; or
(c) where the order 60 has been made the subject of an appeal 61[to the
Commissioner (Appeals) or] to the Appellate Tribun
14. In the present facts and circumstances, the conditions specified under
clause (c) as discussed above is applicable to the dispute on hand. The clause
(c) of the provision restricts the power of the Commissioner of Income Tax to
revise the order if any appeal has been preferred before the Ld. CIT(A).
Undisputedly, in the present case the appeal has already been preferred to the
Ld. CIT(A). However, the Ld. CIT has passed the order under section 264 of the
Act. Thus it is transpired that the order passed by the Ld. CIT under section
264 of the Act is against the provisions of law as discussed above.
15. At this juncture, we also find pertinent to refer the provisions of section
246A of the Act which reads as under:
Appealable orders before Commissioner (Appeals).
246A. (1) Any assessee or any deductor or any collector aggrieved by any of the
following orders (whether made before or after the appointed day) may appeal
to the Commissioner (Appeals) against--
(a) an order passed by a Joint Commissioner under clause (ii) of sub-section (3)
of section 115VP or an order against the assessee where the assessee denies his
liability to be assessed under this Act or an intimation under sub-section (1) or
sub-section (1B) of section 143 or sub-section (1) of section 200A or sub-section
(1) of section 206CB, where the assessee or the deductor or the collector objects
to the making of adjustments, or any order of assessment under sub-section (3)
of section 143 except an order passed in pursuance of directions of the Dispute
Resolution Panel or an order referred to in sub-section (12) of section
144BA or section 144, to the income assessed, or to the amount of tax
determined, or to the amount of loss computed, or to the status under which he is
assessed;
(aa) an order of assessment under sub-section (3) of section 115WE or section
115WF, where the assessee, being an employer objects to the value of fringe
benefits assessed;
(ab) an order of assessment or reassessment under section 115WG;
(b) an order of assessment, reassessment or recomputation under section
147 except an order passed in pursuance of directions of the Dispute Resolution
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Panel or an order referred to in sub-section (12) of section 144BA or section
150;
(ba) an order of assessment or reassessment under section 153A except an order
passed in pursuance of directions of the Dispute Resolution Panel or an order
referred to in sub-section (12) of section 144BA;
(bb) an order 66[made] under sub-section (3) of section 92CD;
(c) an order made under section 154 or section 155 having the effect of
enhancing the assessment or reducing a refund or an order refusing to allow the
claim made by the assessee under either of the said sections except an order
referred to in sub-section (12) of section 144BA;
(d) an order made under section 163 treating the assessee as the agent of a
non-resident;
(e) an order made under sub-section (2) or sub-section (3) of section 170;
(f) an order made under section 171;
(g) an order made under clause (b) of sub-section (1) or under sub-section (2)
or sub-section (3) or sub-section (5) of section 185 in respect of an assessment
for the assessment year commencing on or before the 1st day of April, 1992;
(h) an order cancelling the registration of a firm under sub-section (1) or under
sub-section (2) of section 186 in respect of any assessment for the assessment
year commencing on or before the 1st day of April, 1992 or any earlier
assessment year;
(ha) an order made under section 201;
(hb) an order made under sub-section (6A) of section 206C;
(i) an order made under section 237;
(j) an order imposing a penalty under--
(A) section 221; or
(B) section 271, section 271A, section 271AAA, section 271AAB, section
271F, section 271FB, section 272AA or section 272BB;
(C) section 272, section 272B or section 273, as they stood immediately
before the 1st day of April, 1989, in respect of an assessment for the assessment
year commencing on the 1st day of April, 1988, or any earlier assessment
years;
(ja) an order of imposing or enhancing penalty under sub-section (1A) of section
275;
(k) an order of assessment made by an Assessing Officer under clause (c)
of section 158BC, in respect of search initiated under section 132 or books of
account, other documents or any assets requisitioned under section 132A on or
after the 1st day of January, 1997;
(l) an order imposing a penalty under sub-section (2) of section 158BFA;
(m) an order imposing a penalty under section 271B or section 271BB;
(n) an order made by a Deputy Commissioner imposing a penalty under section
271C, section 271CA, section 271D or section 271E;
(o) an order made by a Deputy Commissioner or a Deputy Director imposing a
penalty under section 272A;
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(p) an order made by a Deputy Commissioner imposing a penalty under section
272AA;
(q) an order imposing a penalty under Chapter XXI;
(r) an order made by an Assessing Officer other than a Deputy Commissioner
under the provisions of this Act in the case of such person or class of persons, as
the Board may, having regard to the nature of the cases, the complexities
involved and other relevant considerations, direct.
Explanation.--For the purposes of this sub-section, where on or after the 1st
day of October, 1998, the post of Deputy Commissioner has been redesignated
as Joint Commissioner and the post of Deputy Director has been redesignated
as Joint Director, the references in this sub-section for "Deputy Commissioner"
and "Deputy Director" shall be substituted by "Joint Commissioner" and "Joint
Director" respectively.
(1A) Every appeal filed by an assessee in default against an order under section
201 on or after the 1st day of October, 1998 but before the 1st day of June, 2000
shall be deemed to have been filed under this section.
(1B) Every appeal filed by an assessee in default against an order under sub-
section (6A) of section 206C on or after the 1st day of April, 2007 but before the
1st day of June, 2007 shall be deemed to have been filed under this section.
(2) Notwithstanding anything contained in sub-section (1) of section 246, every
appeal under this Act which is pending immediately before the appointed day,
before the Deputy Commissioner (Appeals) and any matter arising out of or
connected with such appeals and which is so pending shall stand transferred on
that date to the Commissioner (Appeals) and the Commissioner (Appeals) may
proceed with such appeal or matter from the stage at which it was on that day :
Provided that the appellant may demand that before proceeding further with the
appeal or matter, the previous proceeding or any part thereof be reopened or
that he be re-heard.
Explanation.--For the purposes of this section, "appointed day" means the day
appointed by the Central Government by notification in the Official Gazette.
On perusal of the above provisions, it is revealed that there is no restriction
imposed upon the Ld. CIT (A), like in the provisions of section 264 of the Act,
for not deciding the issue against the assessment order in a situation where the
assessee has made a revisionary application under section 264 of the Act.
16. We also find that the Hon'ble Allahabad High Court in the identical facts
and circumstances has decided the issue in favor of the assessee in the case of
Yogendra Parsad Santosh Kumar Vs. Commissioner of Income Tax reported in
44 taxmann.com 299.
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16.1 The facts in the above case are like this. The AO completed the
assessment under section 143(3) of the Act by order dated 26/12/2011. The
assesse preferred an appeal before the Ld. CIT(A) against such assessment
order on 10-01-2012. The assessee further filed an application before the
CIT(A) for withdrawal of appeal file against the order of the AO. Thereafter the
assessee on 28-02-2012 filed a revisionary application before the Ld. CIT under
section 264 of the Act by stating that he has already waived his right of appeal
before the ld. CIT-A. Accordingly the Ld. CIT partly deleted the addition made
by the AO. However the Ld. CIT(A) reject the withdrawal application of the
assesse and decided the matter on merit against the assessee.
16.2 For better understanding, the relevant finding of the Hon'ble Allahabad
High Court is reproduced as under:
"There is no provision in Income tax Act which permits withdrawal of an
appeal, once it is filed, and registered. Once right of appeal is exhausted, by
party concerned, and the appeal is filed before appropriate Appellate Authority,
who after receiving same has registered it, there is no provision in the statute
permitting withdrawal thereof.
In this particular case, however, the bar under section 264(4) would stand
against petitioner, when he preferred revision before CIT in as much as he had
already exhausted his right of appeal and that was actually pending before
Appellate Authority. Mere filing of an application seeking withdrawal of appeal
would not have resulted as if the appeal stood withdrawn or deemed withdrawn
unless an order is passed by Appellate Authority thereon for the reason that
appellant could have always requested Appellate Authority not to pass any order
on his withdrawal application. Since he does not press it and he could have
proceeded with his appeal. In the eyes of law, appeal continued to remain
pending even if application was filed by petitioner seeking withdrawal of appeal.
On the date when revision was filed by petitioner or when CIT passed order on
petitioner's revision, petitioner's appeal, as a matter of fact, was pending before
Appellate Authority. Hence the Revisional Authority was barred from revising
order of Assessing Authority by virtue of sub-section (4) of section 264.
There is another aspect of the matter. Clause (a) of section 264(4) talks of a
situation where assessee has not waived his right of appeal. When appeal is
filed, the right of appeal stands availed and exhausted by assessee, hence
question of waiver of right of appeal thereafter would not arise. Moreover,
Clauses (b) and (c) also makes a distinction in respect of an appeal preferred
before Commissioner (Appeals) or Appellate Tribunal vis-a-vis appeal preferred
before Deputy Commissioner (Appeals). For an appeal preferred before Deputy
Commissioner (Appeals), Clause (b) says that if an order on appeal is pending
but when an appeal is preferred before Commissioner (Appeals) or Appellate
Tribunal, Clause (c) contemplates that the order has been made subject of
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appeal, meaning thereby mere filing of appeal against assessment order is
sufficient to attract clause (c) and thereafter power of revision shall stand lost
and cannot be invoked.
In view thereof, it is to be held that Commissioner committed a manifest error in
exercising revisional power when petitioner's appeal was pending before
Commissioner (Appeals). The revisional order, therefore, was wholly without
jurisdiction. That being so, it has rightly been recalled. The Appellate Authority
has rightly proceeded to decide appeal in view of the fact that petitioner did not
press his application for withdrawal of appeal and more so in the light of
judgment of Apex Court in CIT v. Rai Bahadur Hardutroy Motilal
Chamaria [1967] 66 ITR 443 (SC), the appeal filed could not have been
withdrawn
17. The learned DR before us at the time of hearing has not brought any
iota of evidence suggesting that the appeal before the Ld. CIT(A) was not
pending either at the time of filing the revisionary application or passing the
revisionary order under section 264 of the Act. Thus as a matter of fact the
appeal of the assessee was pending before the Ld. CIT(A) during the relevant
time when the matter was decided by the Ld. CIT under section 264 of the Act.
In the light of the above discussion the Ld. CIT under section 264 has exceeded
his jurisdiction by passing the order which is not sustainable in the eyes of law.
18. Now coming to the facts of the case relied by the Ld. CIT (A) in his order
in case of CIT Vs. Eurasia Publishing house (p) ltd. reported in 232 ITR 381.
19. The facts of the case are like this. In this case the assessee filed a
rectification application dated 12-06-1970 to the AO under section 154 of the
Act which was rejected by him by order dated 21-12-1970.
20. The assesse preferred revision petition dated 17-12-1970 before the Ld.
CIT under section 264 of the Act against the original assessment order pass by
the AO under section 143(3) of the Act. The revision petition dismissed by Ld.
CIT vide order dated 28-03-1972.
21. The assesse further filed an appeal dated 04-jan 1971 before the Ld.
CIT(A) against the order framed by the AO dated 21-12-1970. The Ld. CIT
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allowed the appeal of the assesse vide order dated 22-02-1973. Thereafter the
ld. CIT(A) revised its order under section 154 of the Act, after filing a
rectification application by the ITO and invited the attention of the Ld. CIT(A)
on fact that the Ld. CIT rejected the revision petition of the assesse. Therefore
the Ld. CIT(A) could not have exercised his appellate jurisdiction.
22. In the above case it was decided that the order of the AO has been
merged with the order of the Ld. CIT under section 264 of the Act. As such
there was no question on the validity of the order passed by the Ld. CIT under
section 264 of the Act. Thus the facts of the case referred by the Ld. CIT (A) in
his order is distinguishable from the present facts of the case. Accordingly, in
our humble and considered opinion the principles laid down by the Hon'ble
Delhi High Court in the case of CIT Vs. Eurasia Publishing house (p) ltd (supra)
are not applicable in the present facts of the case. Accordingly, we are not
inclined to place our reliance on such judgment.
Before parting, we also note that the assessee is a limited company and has the
support of the professionals. Therefore it is not expected from such company to
move the appeal before the learned CIT (A) and also make application for the
revision under section 264 of the Act simultaneously which is unwanted under
the provisions of law. Thus the question arises whether the assessee has done
so intentionally or due to negligence. Whatever is the case, the assessee has
acted negligently therefore in our considered view some cost should be
imposed upon the assessee. Accordingly we direct the assessee to deposit a
sum of ₹40,000 to the income tax office before the commencement of the
proceedings before the learned CIT (A) for its negligent approached.
23. In view of the above and after considering the facts in totality, we set
aside the finding of the Ld. CIT(A) and direct him to admit the appeal filed by
the assessee and decide the issue afresh as per the provisions of law on merit.
It is also pertinent to note that the assessee shall cooperate during the
appellate proceedings before the Ld. CIT(A) and file the necessary supporting
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documents in support of its contention. Hence the ground of appeal of the
assessee is partly allowed for the statistical purposes.
24. In the result the appeal of the assessee is partly allowed for
the statistical purposes.
This Order pronounced in Open Court 18/03/2020
Sd/- Sd/-
(MADHUMITA ROY) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahm e da ba d : Da t e d 1 8 /0 3/ 2 0 20
True Copy
S. K. SINHA
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं*धत आयकर आयु,त / Concerned CIT
4. आयकर आयु,त- अपील / CIT (A)
5. 0वभागीय 3त3न*ध, आयकर अपील य अ*धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड9 फाइल / Guard file.
By ORDER
Deput y/Asstt.Registrar ITAT, Raj kot