Ita/94/2010 Of The Commissioner Of Income Tax v. Shri.sushil Thomas Abraham

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY, THE 26TH DAY OF FEBRUARY 2018 / 7TH PHALGUNA, 1939 ITA.No. 94 of 2010 ------------------ AGAINST THE ORDER/JUDGMENT IN ITA 387/COCH/2008 of I.T.A.TRIBUNAL, COCHINBENCH DATED 13.8.2009 APPELLANT(S)/APPELLANT/REVENUE THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV.SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S)/RESPONDENT/ASSESSEE: SUSHIL THOMAS ABRAHAM, PROP. HOLEC BUILDERS, THYCAUD, THIRUVANANTHAPURAM. R1 BY ADV. SRI.K.J.SAJI ISAAC R1 BY ADV. DR.ELIZABETH VARKEY THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 26-02-2018,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA 94/2010 APPENDIX APPELLANT'S ANNEXURES ANNEXURE-A :COPY OF COMPUTATION OF THE TOTAL INCOME SUBMITTED BY THEASSESSEE ALONG WITH RETURN. ANNEXURE-B :COPY OF ORDER UNDER SECTION 143(3) OF THE ASSESSINGOFFICER DATED 26.3.1997. ANNEXURE-C :COPY OF ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) DATED 31.12.1997. ANNEXURE-D :COPY OF ORDER OF THE APPELLATE TRIBUNAL DATED 4.11.2003.ANNEXURE-E :COPY OF JUDGMENT OF THIS COURT DATED 27.1.2009. ANNEXURE-F :COPY OF JUDGMENT OF THIS COURT DATED 23.7.2008. ANNEXURE-G :COPY OF JUDGMENT OF THIS COURT DATED 27.1.2009. ANNEXURE-H :COPY OF ORDER UNDER SECTION 143(3)/254 OF THE ASSESSINGOFFICER DATED 11.1.2006. ANNEXURE-I :COPY OF ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) DATED 31.10.2007. ANNEXURE-J :COPY OF ORDER OF THE APPELLATE TRIBUNAL DATED 13.8.2009. RESPONDENT'S ANNEXURES ANNEXURE-R2(a) : COPY OF MP NO.32/C/10 IN ITA NO.387/2008 BEFORE THEINCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-R2(b) :COPY OF ORDER MP NO.32/C/10 IN ITA NO.387/2008 BEFORETHE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-R1(c) :COPY OF ORDER NO.AFCPA7962C/Cir.I(2)/TVM/2007-08. //TRUE COPY// jg-7/3 PS TO JUDGE. K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- ITA No. 94 of 2010 ------------------------------------------- Dated this the 26[th] day of February, 2018 J U D G M E N T Vinod Chandran, J. The Revenue is in appeal before this Court against the order ofthe Income Tax Appellate Tribunal (Annexure-J). At the outset wehave to notice the chequered path taken by the assessment forassessment year 1996-97. The assessee was a contractor who wasengaged in building works. In the previous year of the assessmentyear 1996-97, the assessee had undertaken works at the sites ofSkyline Builders. There arose disputes with the Skyline Builderswhich led to the assessee filing a suit claiming certain amounts.Since disputes were pending, the assessee did not file return ofincome for the assessment year. A search was conducted underSection 133A of the Income Tax Act, 1961 ('Act', for short) in thebusiness premises on 24.9.1996 and since no return of income wasfiled within the stipulated date of 31.8.1996, notice under Section142(1) of the Act was issued. The assessee filed a return disclosing an income of Rs.6,08,680/- but without making payment of theadmitted tax. The explanation of the assessee was that theamounts have not reached the hands of the assessee for reason ofthe claims still pending before the Civil Court. The AssessingOfficer, however, went ahead and after examining the books ofaccounts passed an assessment order at Annexure-B computingtotal income at Rs.25,95,260/-. an income of Rs.6,08,680/- but without making payment of theadmitted tax. The explanation of the assessee was that theamounts have not reached the hands of the assessee for reason ofthe claims still pending before the Civil Court. The AssessingOfficer, however, went ahead and after examining the books ofaccounts passed an assessment order at Annexure-B computingtotal income at Rs.25,95,260/-. 2.An appeal was filed before the Commissioner of IncomeTax (Appeals) which was rejected as per Annexure-C, finding thatthe assessee had not paid the admitted tax under Section 140A. Anappeal could not have been maintained without payment ofadmitted tax. The assessee filed a second appeal before theTribunal in which there was a remand made as per Annexure-D. InAnnexure-D, the Tribunal found that the Assessing Officer hadrelied on the claim made by the assessee against Skyline Builders toestimate the higher income. Since the disputes between SkylineBuilders and the assessee were yet to be resolved, there was adirection to the Assessing Officer to re-do the assessment, without An appeal was filed before the Commissioner of Income looking into the claims filed against Skyline Builders. An IncomeTax Appeal was filed by the Revenue before this Court as ITANo.91/2007. 3.In the meanwhile, the assessee had approached thisCourt with WP(C) No.28277/2004 against proceedings initiated forrecovery of admitted tax. The said Writ Petition was pending herefor four years. On 23.7.2008, that Writ Petition was dismissed asper Annexure-F judgment. By that time, the appellate order atAnnexure-D dated 4.11.2003 was passed. Since the Tribunal'sorder was produced before the learned Single Judge, the learnedSingle Judge invoked Article 227 of the Constitution of India and setaside the Tribunal's order finding that it is non est in law. Despitethat, the learned Single Judge granted time to the assessee to paythe admitted tax, upon which the Commissioner of Income Tax(Appeals) was also directed to re-consider the issue. 4.Later, the Income Tax Appeal (ITA No.91/2007) camebefore a Division Bench of this Court in which Annexure-E judgmentwas passed. In Annexure-E judgment, it was noticed that the order -4- remanding the matter, was complied with. There was anassessment made as per Annexure-H dated 11.1.2006. Hence, on27.1.2009, the Income Tax Appeal was dismissed as infructuousand the parties were left to agitate the matter in proceedingspursuant to the assessment. The judgments at Annexures-E and Fwere in conflict. Hence, the assessee filed a review from Annexure-F. By Annexure-G order, the judgment at Annexure-F was reviewedupholding the principle, but however absolving the assessee frommaking the payment as directed in the writ petition. 5.The assessment order at Annexure-H was taken up inappeal, in which a remand order was made as per Annexure-I.Annexure-I was challenged in appeal by the Revenue before theIncome Tax Appellate Tribunal, which was dismissed as perAnnexure-J. A petition filed under Section 254(2) also was rejectedas per Annexure-R2(b). The assessment order at Annexure-H was taken up in 6.The preliminary objection raised by the respondent-assessee is that there could be no appeal maintainable as againstthe original order of the Tribunal, since there is one passed under The preliminary objection raised by the respondent- Section 254 now. The assessee relies on the decisions of theHonorable Supreme Court in (1975) 1 SCC 774 [Sushil Kumar Sen v.State of Bihar] and (2000) 6 SCC 359 [Kunhayammed and Others v.State of Kerala and Another]. The decision in Susil Kumar Sen(supra) was with respect to a review under Order 47 Rule 1. Originaljudgment was challenged in a review, which came to be allowed andmodifications were made and a new decree was passed. TheSupreme Court held so in such fact situation : The assessment order at Annexure-H was taken up in 6.The preliminary objection raised by the respondent-assessee is that there could be no appeal maintainable as againstthe original order of the Tribunal, since there is one passed under The preliminary objection raised by the respondent- Section 254 now. The assessee relies on the decisions of theHonorable Supreme Court in (1975) 1 SCC 774 [Sushil Kumar Sen v.State of Bihar] and (2000) 6 SCC 359 [Kunhayammed and Others v.State of Kerala and Another]. The decision in Susil Kumar Sen(supra) was with respect to a review under Order 47 Rule 1. Originaljudgment was challenged in a review, which came to be allowed andmodifications were made and a new decree was passed. TheSupreme Court held so in such fact situation : “2.It is well settled that the effect of allowing anapplication for review of a decree is to vacate thedecree passed. The decree that is subsequentlypassed on review, whether it modifies, reverses orconfirms the decree originally passed, is a new decreesuperseding the original one (see Nibaran ChandraSikdar v. Abdul Hakim [AIR 1928 Cal 418], KanhaiyaLal v. Baldeo Prasad [ILR (1906) 28 All 240], BrijbasiLal v. Salig Ram [ILR (1912) 34 All 282] and PyariMohan Kundu v. Kalu Khan [ILR (1917) 44 Cal 1011 :41 IC 497]). 7.Kunhayammed (supra) is an authority for the principle of merger, insofar as the dismissal of a Special Leave Petition notbeing affirmation of the principles of the impugned judgment andeven a mere rejection of the Civil Appeal resulting in merger making the principles as laid down by the High Court being that of the Supreme Court itself. True the judgment in Susil Kumar Sen (supra)was followed, but we do not think that the principles laid downwould have any application here. 8.Order 47 Rule 1 has wider ambit and scope than Section254. Section 254 allows only rectification of errors, and in theinstant case, the Tribunal has merely rejected the application forrectification of error. Merely because the Revenue had taken all thegrounds in the appeal before the Tribunal that would not besufficient cause to non-suit the Revenue from the above appeal. Wehence, reject the said contention raised by the assessee. 9.Going back to the facts of the instant case, we see thatAnnexure-I order was passed again without the assessee havingpaid up the admitted tax. Merely because the assessment order wasset aside and remand was made for fresh assessment, the statementfiled by the assessee would not stand effaced. The appeals beforethe Commissioner of Income Tax (Appeals) as also that before theTribunal were not maintainable. Be that as it may, we see that on the remand made there was a reassessment carried out as is available atAnnexure R2(c). A reading of Annexure-R2(c) shows that the contract receiptsreceived during the year was Rs.14,67,187-/ on which the net profitis estimated at 8.1%. The income tax is calculated with interestunder Section 234 A, B and C and there was a demand of onlyRs.2,785/-; after adjusting the refund for the earlier year, whichwas paid by the assessee. We see from the statement of totalincome as filed by the assessee at Annexure-A that it was filedbased on the profit estimated on the income, which would havecome to the assessee, if the claims against Skyline Builders wereallowed. Definitely the tax on the income can only be assessed afterit comes to the hands of the assessee as per the real income theorypropounded by the Honourable Supreme Court inUnitedCommercial Bank v. Commissioner of Income Tax, [1999] 240 ITR355. In such circumstances, we do not think that there is anyreason to set aside the orders of the Commissioner of Income Tax(Appeals) and the Tribunal. The assessment carried out has taxed ITA 94/10 -8- the income which came to the assessee in the relevant year.In the above facts and circumstances, we refuse to answer the questionsof law framed and reject the Appeal of the Revenue. No costs.