Ita/532/2014 Of Commissioner Of Income Tax v. M/S. New Mangalore Port

(R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12[th]DAY OF JANUARY 20106) PRESENT THE HON’BLE MR.JUSTICE N K PATIL AND THE HON’BLE MRS.JUSTICE S SUJATHA ITA Nos.532;5533/201 BETWEEN 1.Commissioner of Income-Tax Mangalore. 2.The Assistant Commissioner of Income-tax, Circle-1(1) Mangalore. ... Appellant (By Sri. Jeevan .J. Neeralagi, Advocate ) M/s. New Mangalore Port TrustPanambur. ...Responden (By Sri. A.Shankar and M.Lava, Advocates )_ These Income-tax appeals are filed under Section 260-A olf Income-tax Act, 1961, praying to set aside the common appellate orderdated 04.07.2014 passed by the Income Tax Appellate Tribunal, ‘C’Bench Bangalore, in appeal proceedings in ITA No.135/Bang/2013 andC O No.66/Bang/2014 for assessment year 2007-08 as sought for in thisappeal; and to grant such other relief as deemed fit, in the interest ofjustice. These appeals having been heard and reserved for orders on 8[th]January 2016, coming on for pronouncement of Judgment this day,S.Sujatha J.,delivered the following JUDGMENT These appeals are filed by the revenue under Section 260-A ofthe Income Tax Act, 1961 (the ‘Act’ for short) assailing the commonorder dated 04.07.2014 passed by the Income Tax Appellate|Tribunal (ITAT for short), Bangalore Bench “C”, Bangalore relating|to the assessment year 2007-08, in appeal proceedings No.ITA|No.135/Bang/2013 and C.O.No.66/Bang/2014. — ”.. The facts in brief:The assessee is a trust constituted under the Major PortTrust Act, 1963. The assessee being a Government undertaking|carrying on commercial activities is one of the major port trust|enjoying the benefits of provisions of sub-section 20 of Section 10|of the Act since its inception. The assessee applied for registrationunder Section 12A ot the Act on 27.03.2006. The Commissioner of.Income Tax (CIT) denied registration to the assessee. On appeal|before the ITAT, ITAT directed the CIT to grant registration under|Section 1IZAA to the assessee with effect from 01.04.2003. The.order passed by the Tribunal was given effect to by the authoritiesand registration under Section 12AA was granted to the assessee|on 27.07.2009. Originally the assessment order under Section| 143(3) of the Act was passed on 27.12.2009. On revision filed bythe assessee under Section 264 of the Act, the revision was allowedon 27.09.2010 by the CIT and the matter was remanded to theAssessing Officer. The Assessing Officer vide order dated2/.05.2011 has given effect to the order passed by the CIT undersection 264 of the Act. However, the original order passed undersection 143(3) of the Act dated 27.12.2009 was revised by the CIT.under Section 263 of the Act by order dated 22.03.2012. 3.This order of the CIT passed under Section 263 of theAct was challenged by the assessee for the assessment year 2007-O8 before the ITAT. The revenue has filed cross objections againstthe order passed under Section 263 of the Act for the relevant.assessment year. The Tribunal after considering the rivalsubmissions made by the parties, set-aside the order passed by theCIT under Section 263 of the Act as well as the cross objections.filed by the revenue. 4Being aggrieved by the said judgment of the Tribunal,revenue is in appeal raising the following substantial questions oflaw:| 1. “Whether Hon’ble Tribunal was right in law)in holding that the assessment order passed|in holding that the assessment order passed| on 29.12.2009 has got merged with the orderdated:27.05.2011 when the latter order was|only giving effect to the order passed by CIT.under Section 264 and it modified the previousorder to that extent only and hence the originalassessment order cannot be sqid to have lostits identity?” 4Being aggrieved by the said judgment of the Tribunal,revenue is in appeal raising the following substantial questions oflaw:| 1. “Whether Hon’ble Tribunal was right in law)in holding that the assessment order passed|in holding that the assessment order passed| on 29.12.2009 has got merged with the orderdated:27.05.2011 when the latter order was|only giving effect to the order passed by CIT.under Section 264 and it modified the previousorder to that extent only and hence the originalassessment order cannot be sqid to have lostits identity?” 2. “Whether Hon'ble Tribunal was right in law|in quashing the order of the Commissioner ofIncome Tax under Section 263 of the Act which|is as per law as the provisions of Section 14Aare applicable to the total income under the|Income tax Act and the fact whether the income|of the assessee is computed as per Section 11.or not is of no relevance?. 5.|Heard the learned counsel appearing for the parties and perused the material on record. 6.|Learned counsel Sri Jeevan J Neeralgi appearing for the revenue contends that the CIT had the power under Section 263 of|the Act to revise the assessment order passed on 27.12.2009, the|order passed on 27.05.2011 being an order giving effect to the|order passed by the CIT under Section 264 of the Act. The|Tribunal under a misconception held that the assessment order)passed on 29.12.2009 has got merged with the order dated2/.05.2011. It is further contended by the learned counsel that.cross objections filed by the revenue under Section 253(4) of theAct was wrongly rejected by the Tribunal as not maintainable, contrary to Section 253(4) of the Act. Accordingly, he seeks to.answer the question of law in favour of the revenue and against theaSSESSCEC. TS|Per contra, learned counsel Sri A Shankar appearing forthe assessee justifies the order passed by the ITAT and would.contend that the order passed by the Assessing Officer on2/.12.2009 under Section 143(3) of the Act do not exist subsequentto the order dated 27.09.2010 passed by the CIT under Section 264.of the Act which has been given effect to by the Assessing Officervide order dated 27.05.2011. The said order dated 27.12.2009which no longer subsists, was revised by the CIT under Section 268of the Act. As such, invoking of suo-moto revision powers by the.CIT under Section 263 of the Act is not justifiable as rightlyconsidered by the Tribunal, the same cannot be found fault with. Itis further submitted that cross objections filed by the revenue is—not maintainable in terms of Section 253(4) of the Act. Thus, theITAT rejected the cross objections filed by the revenue which does_not call for any interference by this Court. 8.|We have given careful consideration to the rivalsubmissions advanced by the learned counsel for the parties. The undisputed facts are that the assessment order under Section143(3) of the Act was passed by the Assessing Officer on2/.12.2009, subsequent to the registration under Section 12AA ofthe Act, granted to the assessee on 27.07.2009 with effect from.01.04.2003. The revision filed by the assessee under Section 264.of the Act was allowed accepting the claim of the assessee and thematter was remanded to the Assessing Officer to compute the.income oft the assessee in terms of the order of revision underSection 264 of the Act. The said order was given effect to by theAssessing Officer vide order dated 27.09.2011. Thus, it is clearthat the order dated 27.12.2009 passed by the Assessing Officer is_no longer in existence. CIT exercising the powers under Section263 of the Act revised the non-existing order dated 27.12.2009, the.Tribunal having considered this factual position arrived at a|conclusion that CIT had no jurisdiction to revise the order which|was not in existence. The order passed by the CIT, revising the|non-existing order isvoid ab-initioand is a nullity in the eye of law.As such, the Tribunal setting aside the said void order passedunder Section 263 of the Act, cannot be found fault with. 9. It is pertinent to note that the computation of the income|of the assessee has been done in accordance with Chapter III of the Act, the second question of law arises on the points urged in thecross-objection filed by the revenue before the Tribunal, which has_been rejected. 10.)section 2503(4) of the Act contemplates that theAssessing Officer or the assessee can file the cross objections beforethe ITAT only in an appeal against the order of: (i) the Deputy Commissioner -Appeals (11) the Commissioner of Appeals (111) the Assessing Officer preferring an appeal in pursuance ofthe directions of the Dispute Resolution Pannel. — In the present case, the revenue has filed cross objections underSection 253(4) of the Act raising the points involved in second.question of law now raised, in an appeal preferred by the assesee_against the order of the revisional authority exercising the powers—under Section 263 of the Act. No such cross objections aremaintainable in an appeal filed against the order of revision in terms ofsection 293(4) of the Act. Given the circumstances, the Tribunal,rejecting the cross objections filed by the revenue as not maintainable isjustifiable. 11.)For the foregoing reasons, the substantial questions of law raised by the revenue are answered in favour of the assessee_ �0�#&#�����������/��3��������������3'�(�����#,,�#'����#�0� 0�������0�� �*������������������������������������������������������*������������������������������4���