Jabalpur Municipal Corporation v. Commissioner Of Income Tax – Tds, Bhopal

HIGH COURT OF MADHYA PRADESH : JABALPURI.T.A. No.90/2015 Jabalpur Municipal Corporation Vs. Commissioner of Income Tax – TDS, Bhopal I.T.A. No.91/2015 Jabalpur Municipal Corporation Vs. Commissioner of Income Tax – TDS, Bhopal I.T.A. No.92/2015 Jabalpur Municipal Corporation Vs. Commissioner of Income Tax – TDS, Bhopal ------------------------------------------------------------------------- Coram: Hon’ble Shri Justice Rajendra Menon, J.Hon’ble Shri Justice K.K. Trivedi, J. ------------------------------------------------------------------------- Shri Anshuman Singh, learned Counsel for the appellant. Shri Sanjay Lal, learned Counsel for the respondent. ------------------------------------------------------------------------------------ J U D G M E N T (30/11/2015) 1.In all these three appeals as common questions of lawin fact are involved, they are being disposed of by thiscommon order. 2.In these appeals filed by the Municipal Corporation,Jabalpur, a statutory authority created under the MadhyaPradesh Municipalities Act, challenge is made to orderspassed by the Income Tax Appellate Tribunal in the matterof remanding the question of assessment for the years2010-2011, 2011-2012 and 2012-2013 to the AssessingOfficer. As the questions framed for consideration are as towhether the Tribunal has committed an error in directing forremanding the matter to the Assessing Officer in the factsand circumstances of the case and whether the order ofremand is erroneous in nature, we propose to deal withthese questions in all the appeals by the common order asthe years of assessment are identical. 3.The authorities of the Income Tax Departmentconducted verification of the tax deducted at source (TDS)by the Municipal Corporation, Jabalpur with regard tovarious transaction for the assessment years in questionand on such examination it was found that in various itemswhere TDS should have been recovered and deposited withthe tax authorities, proper recovery and deposit has notbeen done. Accordingly, the Assessing Officer conductedthe assessment based on the material that came on recordand assessed the tax recoverable at a flat rate of 10% onthe over all income, which was found to have been accruedto the Municipal Corporation. On an appeal being filed bythe assessee before the Commissioner (Appeals), theCommissioner (Appeals) found that in a very vague mannerthe assessment has been done and without analyzing thematerial properly and in contravention of Chapter XVII-B, aflat 10% rate has been adopted over the board forassessing tax. It was also found that while conducting theassessment, the principles of natural justice and rules ofevidence in the matter of analyzing the documents and other material are ignored and finding the assessmentproceedings to be wholly unsustainable, the Commissioner(Appeals) quashed the entire assessment. However, on anfurther appeal being filed by the Revenue before theTribunal, the Tribunal found that when the assessment wasnot done properly, the matter should have been remandedback to the Assessing Officer for proper assessment and,therefore, the Appellate Tribunal having remanded thematter back to the Assessing Officer, these appeals by theassessee under Section 260-A of the Income Tax Act havebeen filed. other material are ignored and finding the assessmentproceedings to be wholly unsustainable, the Commissioner(Appeals) quashed the entire assessment. However, on anfurther appeal being filed by the Revenue before theTribunal, the Tribunal found that when the assessment wasnot done properly, the matter should have been remandedback to the Assessing Officer for proper assessment and,therefore, the Appellate Tribunal having remanded thematter back to the Assessing Officer, these appeals by theassessee under Section 260-A of the Income Tax Act havebeen filed. 4.Shri Anshuman Singh, learned Counsel for theappellant, invited our attention to the order passed by theCommissioner (Appeals), illegalities found by theCommissioner (Appeals) and argued that the Commissioner(Appeals) having quashed the order of assessment onproper consideration finding breach of principles of naturaljustice, no case is made out for remanding the matter. TheTribunal incorrectly placing reliance on the judgmentsdelivered in the cases of CIT vs. Eli Lilly & Co. (India)Ltd.[1] and M/s Hindustan Coca Cola Beverage Ptv. Ltd.vs. CIT[2], has remanded the matter back to the AssessingOfficer, which was not proper. It was tried to be argued byShri Anshuman Singh by placing reliance on a judgment ofthis Court in the case of Rajesh Maheshwari vs.Assistant Commissioner of Income Tax and another[3]that the Income Tax Appellate Tribunal is final facts findingauthority and if there was any error in the assessment done,the Tribunal itself can make the assessment and there was 1(2009) 312 ITR 225 (SC) 2(2007) 293 ITR 226 (SC) 3(2010) 320 ITR 58 (MP) no necessity for remanding the matter to the AssessingOfficer. 5.Shri Sanjay Lal, learned Counsel for the respondent,tried to argue that the order of assessment has beenproperly passed because the Commissioner (Appeals)having found the assessment to be in violation of principlesof natural justice, instead of making the assessment itself,has only simply quashed the order of assessment, therefore,in remanding the matter, the Tribunal has not committedany error warranting any further interference in theseappeals under Section 260-A of the Income Tax Act. 6.We have considered the rival submissions and wehave gone through the findings recorded by the AssessingOfficer, Commissioner (Appeals) and the Tribunal. TheAssessing Officer conducted the assessment proceedingsand imposed duty at 10% without evaluating the evidenceand the documents properly and finding out as to what isthe exact amount of evasion of TDS and to what extentliability can be imposed upon the Municipal Corporation.When the matter was considered by the Commissioner(Appeals), the said authority found that the AssessingOfficer has conducted the proceedings of assessmentignoring the principles of natural justice and evidenceavailable on record and without analyzing the documentsand finding out the exact nature of evasion of tax,proceeded to imposing tax at a flat rate, which was notpermissible. However, having held so, without finding outthe exact nature and extent of tax evaded, theCommissioner (Appeals) quashed the entire assessmentorder and even did not bother to make the assessmenthimself on the basis of documents and other materialavailable. In not remanding the matter back to the Skc Skc Assessing Officer and only quashing the order ofassessment, an error was committed by the Commissioner(Appeals) and, therefore, when the matter traveled to theTribunal, the Tribunal rightly remitted the case forreconsideration. In doing so, we are of the considered viewthat no error has been committed by the Tribunal. However,since both the appellate authorities are also facts findingauthorities, who can go into factual aspects, it would havebeen more appropriate either for the Tribunal or theCommissioner (Appeals) to have conducted the proceedingsthemselves instead of remanding the matter to theAssessing Officer so that assessment process could havebeen expedited and further appellate procedure avoided. 7.Accordingly, in the facts and circumstances of thecase, even though we find no error in remanding matterback to the Assessing Officer, with a view to expediteassessment proceedings, which are pending now for 3-4years, we deem it proper to modify the order of assessmentand the Commissioner (Appeals) shall conduct the processof re-assessment at the appellate stage after hearing allconcerned. Accordingly, modifying the orders passed by theTribunal and Commissioner (Appeals), we dispose of all thethree appeals. 8.With the aforesaid, the appeals are disposed of. (Rajendra Menon)Judge (K.K. Trivedi)Judge