Commissioner of Income Tax vs Pratapbhai K. Soni

Akil Abdul Hamid Kureshi, J.—The Revenue is in appeal against the judgment of the income tax Appellate Tribunal (hereinafter referred to as "the Tribunal") dated April 26, 2013, raising the following questions for our consideration: (i) Whether, in the facts and in the circumstances of the present case, the learned income tax Appellate Tribunal has erred in law in confirming the order of the Commissioner of income tax (Appeals) cancelling the assessment order u/s 158BC of the income tax Act, 1961 without appreciating that the assessee''s return for the block period filed u/s 158BC of the income tax Act beyond the time limit of 45 days was invalid and, therefore, notice u/s 143(2) was not required to be issued?

(ii) Whether, in the facts and in the circumstances of the present case, the Department is required to issue notice u/s 143(2) of the income tax Act even though the assessee had not filed the return of income for the block period within the maximum prescribed limit of 45 days pursuant to the notice u/s 158BC of the income tax Act?

The issue pertains to the assessment for the block assessment period from April 1, 1989, to March 28, 2000. This is the second round of litigation till the stage of the Tribunal. In the previous round, the Tribunal by its order dated May 16, 2008, issued the following directions : In view of the aforesaid totality of facts and circumstances of the case, we are of the opinion that the facts and circumstances of the two appeals of different assessees before us, so far the issuance and service of notice u/s 143(2) of the Act, in the case of block assessment within the stipulated/prescribed limitation period is concerned, being the same as were in the case of Ramesh Kumar Surajmal Soni (supra), we, following the Tribunal''s decision in the case of Ramesh Kumar Surajmal Soni (supra), admit the additional ground in both the present cases and further, after following the findings as contained in paragraphs 9, 10 and 11 of the aforesaid order of the Tribunal in the case of Ramesh Kumar Surajmal Soni, restore the issue back to the file of the Commissioner of income tax (Appeals) with the direction that he will verify from the assessment records as to whether any notice u/s 143(2) of the Act in the case of these two assessees had ever been issued and served before the limitation period prescribed u/s 143(2) of the Act. In the case, it is found that no notice u/s 143(2) of the Act has been served upon on any of that two assessees within the limitation prescribed as per the proviso to section 143 of the Act he will cancel the assessments as illegal and bad in law in the light of the decision of the hon''ble Gauhati High Court in the case of Smt. Bandana Gogoi Vs. Commissioner of Income Tax and Another, In case, it is found that these assessees or any one of them had been served with notice u/s 143(2) of the Act within the prescribed period, then will restore his original orders and the assessee will be free to come before the Tribunal for decision on the merits.

Pursuant to this order, the Appellate Commissioner passed an order dated April 27, 2010 and held as under :

After going through the entire facts of the case it is seen that the block return was filed on November 29, 2000, and a notice u/s 142(1) was issued by the Assessing Officer dated January 24, 2002. In my opinion, this notice is equivalent to a notice u/s 143(2) because through the notice u/s 142(1) the appellant was required to produce or cause to be produced the documents/ accounts in the office of the Assessing Officer which is as good as affording an opportunity of hearing u/s 143(2) but this notice has not been issued within a year of filing of the block return, therefore, following the hon''ble income tax Appellate Tribunal Ahmedabad Bench ''A'' decision dated May 16, 2008, quoted above in the case of the appellant himself the block assessment order is directed to be cancelled, as the hon''ble income tax Appellate Tribunal has already directed the Commissioner of income tax (Appeals) to cancel the assessments as illegal and bad in law in the light of the decision of the hon''ble Gauhati High Court in the case of Smt. Bandana Gogoi Vs. Commissioner of Income Tax and Another,

This order of the Appellate Commissioner was carried in appeal before the Tribunal. In the second round, the Tribunal rejected the Revenue''s appeal with the following observations :

Having heard the submissions of both the sides, we have noted that the question of issuance of notice u/s 143(2) as prescribed was very much in the knowledge of the Revenue Department and a remand report has also been called for by the learned Commissioner of income tax (Appeals). In the absence of any specific information in respect of the issuance of notice u/s 143(2) of the Act the learned Commissioner of income tax (Appeals) was left with no option but to quash the impugned order in view of the directions of the Tribunal. The directions of the Tribunal were that the Commissioner of income tax (Appeals) will verify from the assessment record as to whether any notice u/s 143(2) of the Act had ever been issued and served before the limitation period prescribed and in case it is found that no notice u/s 143(2) has been served upon, he will cancel the assessments as illegal and bad in law in the light of the decision of the hon''ble High Court in the case of Smt. Bandana Gogoi Vs. Commissioner of Income Tax and Another, Since the directions were very specific and the Revenue has not demonstrated about the issuance of the notice u/s 143(2) of the Act as per the provisions of the Act, therefore, the assessment orders were cancelled by categorically mentioning that, ''assessment order is directed to be cancelled, as the hon''ble income tax Appellate Tribunal has already directed the Commissioner of income tax (Appeals) to cancel the assessments as illegal and bad in law in the light of the decision of hon''ble Gauhati High Court in the case of Smt. Bandana Gogoi Vs. Commissioner of Income Tax and Another,

3.1 We find no fallacy in the aforesaid decision of the learned Commissioner of income tax (Appeals) because he was expected to pass such an order which ought to be in line with the directions of the Tribunal being a superior authority in the judicial hierarchy as held in the case of Bank of Baroda Vs. H.C. Shrivatsava and Another, Resultantly, we find no force in this ground of the Revenue, hence dismissed. Thus, these two appeals bearing IT (ss) A Nos. 571/Ahd/2010 and 572/Ahd/2010 of the Revenue Department are hereby dismissed.

The short question, therefore, involved in this appeal is whether the Tribunal committed error in rejecting the Revenue''s appeal confirming the decision of the Commissioner of income tax (Appeals). We notice that in the order dated April 26, 2013, which is impugned in this appeal, all that the Tribunal has done is to confirm the decision of the Commissioner of income tax (Appeals) when it was found that there was no dispute about non-issuance of notice u/s 143(2) of the Act to the respondent-assessee. On such basis, the Commissioner of income tax (Appeals) following the directions of the Tribunal given in the earlier order allowed the assessee''s appeal and declared the assessment proceedings as invalid.

We have reproduced the relevant portion of the decision of the Tribunal, in which specific directions were given to the Commissioner of income tax (Appeals) regarding the question whether such notice u/s 143(2) of the Act was issued or not. The Commissioner of income tax (Appeals) only followed the direction and when found that no such notice was issued, passed the consequential order. The Revenue, if at all, was perturbed by the directions of the Tribunal in the order dated May 16, 2008, should have challenged the same. Admittedly, this was not done. In that view of the matter, there was consequential order passed by the Commissioner (Appeals), which was in turn confirmed by the Tribunal.

The learned counsel, Mr. Varun Patel, appearing for the Revenue, however, vehemently contended that when the assessee failed to file return within the time in response to the notice u/s 158BC of the Act there would thereafter be no requirement of issuing notice u/s 143(2) of the Act. We do not enter into this question simply because such a contention could have been raised only while challenging the order dated May 16, 2008, which was not done. Subject to the above observations, the tax appeal is dismissed.