Commissioner Of Income Tax v. Hirenbhai K Patel....opponent(S

O/TAXAP/643/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 643 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ============================================================ ==== 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus HIRENBHAI K PATEL....Opponent(s) ================================================================ Appearance: MR NITIN K MEHTA, ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKERDate : 24/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of this appeal, the appellant-revenue has challenged the order dated 13.10.2006 passed by the Income Tax Appellate Tribunal [for shortthe“theTribunal”],inITA No.3479/Ahd/2004, whereby the appeal preferred by the Assessee was allowed by the Tribunal. 2.The facts, in brief, are that the assessee filed its return for the Assessment Year 1984-85 on 29.06.1984, declared total income of Rs.5,27,547/-. After scrutiny, the Assessing Officer passed order under Section 143(3) of the Income Tax Act. Feeling aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The CIT(A) vide order dated 23.08.2004 dismissed the said appeal. Being aggrieved and dissatisfied with the order of th CIT(A), the assessee again filed an appeal before the Tribunal. The Tribunal vide impugned order dated 13.10.2006 allowed the said appeal. Hence, this appeal is filed at the instance of the revenue. 3.Whileadmittingthisappealon 28.11.2007, the Court has formulated the following substantial question of law:- O/TAXAP/643/2007 JUDGMENT “Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to allow interest under Section 244A and 244(1A) of the I.T Act in accordance with law, following Special Bench judgment of the Appellate Tribunal, in the group cases of Punitaben Karsanbhai Patel Oral Specific Deferred Family Trust and others in ITA No. 2157/Ahd/2003 dated 7.7.2006 ?” 4. Learned advocate for the appellant- revenue has submitted that the Tribunal has committed error in allowing the appeal of the assessee, following the decision of the Appellate Tribunal, Special Bench, Ahmedabad in the group cases of Punitaben Karsanbhai Patel Oral Specific Deferred Family Trust and other in ITA No.2157/Ahd/2003 dated 7.7.2006. It is the contention of learned advocate for the appellant-revenue that the Tribunal while passing the impugned order has not properly appreciated the material on record. Therefore, he urged that this Court may allow this appeal and answer the question in favour of the revenue and against the assessee. 5.Learned advocate for the respondent- O/TAXAP/643/2007 JUDGMENT Deferred Family Trust and other in ITA No.2157/Ahd/2003 dated 7.7.2006. It is the contention of learned advocate for the appellant-revenue that the Tribunal while passing the impugned order has not properly appreciated the material on record. Therefore, he urged that this Court may allow this appeal and answer the question in favour of the revenue and against the assessee. 5.Learned advocate for the respondent- O/TAXAP/643/2007 JUDGMENT assessee has supported the impugned order of the Tribunal and submitted that the issue involved in this appeal is already concluded by this Court in favour of the assessee and against the revenue in Tax Appeal No.1514 of 2006 and other allied matters. Therefore, learned advocate for the respondent urged that this Court may dismiss this appeal. 6.We have heard learned advocates appearing for the parties and perused the material on record. We have also perused the decision relied on by learned advocate for the respondent-assessee and find that the issue involved in this appeal is already concluded by this Court. Relevant paragraphs of the said decision read as under:- “Present Tax Appeals are of 354 cases of 100 Assessees. Special Bench of ITAT passed combined order dt. 07.07.2006. In these appeals, CIT revised assessment u/S.263 of I.T. Act of the order passed by A.O. Tribunal allowed Assesseeý"s appeal and reversed the order passed by CIT. Revenue preferred Tax Appeal by raising following questions of law. ...”Whether the Appellate Tribunal is right in law and on facts in holding that the assessee was entitled to refund of all the amount of tax paid on self assessment as well as advance tax or tax deducted at source or pre-paid tax with O/TAXAP/643/2007 JUDGMENT reference to the returned income, despite the judgment of this Court in the case of Saurashtra Cement reported in 194 ITR 659 ?... As regards refund of taxes paid on returned income, we find that facts of the present case are different than the two decisions in case of this court in the case of CIT V/s Saurashtra Cement and Chemical Ind. Ltd. V/s I.T.O. 194 ITR 659 and Honý"ble Supreme Court in the case of Shelly Products 261 ITR 367. This is not the case of annulment of the assessment. Honý"ble Supreme Court in the case of Shelly Products held that refund of taxes paid on returned income cannot be given, if assessment order is held void, ab initio. In the present case, there is no assessment order which is held void, ab initio. Honý"ble Supreme Court at page 382 also specified some instances, wherein refund can be granted on tax paid on returned income. This is neither a case of annulment nor on account of failure on the part of revenue to pass assessment. In this case, refund arose on account of the assessments and further appellate proceedings. Hence, the refund should be granted, may be on account of taxes on the returned income, if the refund arose on exclusion of income from the beneficiaries case, where incomes were substantively assessed in the case of Main Trust. Mr. Bhatt referred to the decisions of Supreme Court in the case of ITO V/s. C.H. Atchaiah 218 ITR 239 S.P. Jaiswal V/s. CIT 224 ITR 619. We find that facts of these two decisions are not applicable to the present case. In the O/TAXAP/643/2007 JUDGMENT In this case, refund arose on account of the assessments and further appellate proceedings. Hence, the refund should be granted, may be on account of taxes on the returned income, if the refund arose on exclusion of income from the beneficiaries case, where incomes were substantively assessed in the case of Main Trust. Mr. Bhatt referred to the decisions of Supreme Court in the case of ITO V/s. C.H. Atchaiah 218 ITR 239 S.P. Jaiswal V/s. CIT 224 ITR 619. We find that facts of these two decisions are not applicable to the present case. In the O/TAXAP/643/2007 JUDGMENT present case, issue is of protective assessments and substantive assessments. Protectiveassessmentscannotbe continued in the appellate proceedings once substantive assessments become final. In the present case, revenue assessed income in the case of Main Trust on a substantive basis, which was accepted. The finding of CIT is contrary to the decision of Tribunal dated 03-04-2000 which is not permitted. CIT being subordinate authority to the Tribunal cannot take contrary to the decision of Tribunal. When CIT revised order, controversy was already decided by this court vide order dt. 30.07.01 (Coram: Mr. Justice A.R. Dave and Mr. Justice D.A. Mehta). The decision of CIT in the revision order is contrary to the above decision of court which cannot be permitted. Reference to the larger bench cannot be ground to revise assessment u/s.263 of I.T. Act. On this ground also we uphold the order of Special Bench of ITAT. We find that this is the only conclusion that once assessment in the substantive case is final, protective assessment cannot be continued in the case of beneficiaries. When CIT revised order, there exist order of this court dt.30.07.01. Hence, atleast this is one of the views, though we find that this is the only view, revision order u/s.263 is not permissible on jurisdictional ground. This is the decision of Honý"ble Supreme Court in the cases of Malabar Industries Co. Ltd. V/s CIT 243 ITR 83 and G.M. Mittal 263 ITR 255. When the O/TAXAP/643/2007 JUDGMENT decision of High Court was reversed by Supreme Court on merits, Hon’ble Supreme Court held that revision order cannot be sustained as on the date of revision order, order of High Court did exist. Following the same, we hold that CIT had no jurisdiction to pass revision order u/s.263 on 12.03.03. On that day, the order of this court dt.30.07.01 did exist. On the contrary, this order has become final. As regards grant of interest on refund, we find that Tribunal was justified in holding that refund should be granted with interest. We are in full agreement with the order of Special Bench of Tribunal. We repeat that revenue should not drag the respondents to unnecessary avoidable litigation. 7.Since the issue is already concluded by this Court, no elaborate reasons are required to be assigned by us for disposing this appeal. In that view of the matter, we are of the considered opinion that the present appeal deserves to be dismissed and the same is accordingly dismissed. The question of law raised in this appeal is answered in favour of the assessee and against the revenue. Accordingly, we hold that the Tribunal was right in law in directing the Assessing Officer to allow interest under Section 244A and 244(1A) of the I.T Act. (K.S.JHAVERI, J.) pawan (K.J.THAKER, J)