Taxap/386/2013 Of J B Construction v. Deputy Commissioner Of Income Tax

O/TAXAP/559/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL NO. 559 of 2013With TAX APPEAL NO. 386 of 2013 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH -sd/-and HONOURABLE MS JUSTICE SONIA GOKANI -sd/- =============================================1.Whether Reporters of Local Papers may be allowed to see NOthe judgment ?2.To be referred to the Reporter or not ?NO3.Whether their Lordships wish to see the fair copy of the NOjudgment ?4.Whether this case involves a substantial question of law as to NOthe interpretation of the constitution of India, 1950 or any order made thereunder ?5.Whether it is to be circulated to the civil judge ?NO =============================================J B CONSTRUCTION....Appellant(s)Versus ASSISTANT COMMISSIONER OF INCOME TAX....Opponent(s)=============================================Appearance: MR B S SOPARKAR, ADVOCATE for the Appellant(s) No. 1MS PAURAMI B SHETH, ADVOCATE for the Opponent(s) No. 1=============================================CORAM: HONOURABLE MR.JUSTICE M.R. SHAH andHONOURABLE MS JUSTICE SONIA GOKANI Date : 24/09/2013ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0.As common question of law and facts arise in both these appeals and as such arise out of the common judgment and order passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as “ITAT”), both these appeals are finally decided and disposed of by this Court by this common judgment and order. 2.0.Both these appeals have been preferred by the common appellant herein -original assessee challenging the impugned judgment and order passed by the learned ITAT dated 12.10.2012 passed in IT(SS) A Nos.169 & 222 of 2003, by which, the learned Tribunal has allowed the appeal preferred by the assessee being Appeal No.169 of 2003 and remitted the matter back to the file of the learned CIT(A) to decide the issue with respect to the validity of the notice issued under Section 158BD of the Income Tax Act. By the impugned judgment and order the learned Tribunal has also allowed the appeal preferred by the revenue being Appeal No.222 of 2003 and has quashed and set aside the order passed by the learned CIT(A) and had remitted the matter back to the learned CIT(A). 3.0.The facts leading to the present appeals necessary for the determination of the present appeal in nutshell are as under: 3.1.The Assessing Officer passed the assessment order on dated 31.10.2002 making total addition of Rs.1,12,69,955/- as undisclosed income and also directed to issue notice under Section 158BFA(2) and charge interest as per the provision of Section 158BFA(1) of the Act total amounting to Rs.75,73,413/-. 3.2.Feeling aggrieved and dissatisfied with the assessment order dated 31.10.2002, the assessee preferred appeal before the CIT(A) and the CIT(A) partly allowed the appeal deleting the addition made by the Assessing Officer assessing the amount of Rs.2,51,519/- being cash received by one M/s. Raj Granites. 3.3.Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) in deleting the addition made by the Assessing Officer assessing the amount of Rs.2,51,519/- being cash received by one M/s. Raj Granites., revenue preferred appeal before the ITAT being Appeal No.222 of 2003. Simultaneously, against the order passed by the learned CIT(A) confirming the addition of Rs.2,51,519/- being cash received by M/s. Raj Granites, the assessee preferred Appeal No.169 of 2003 before the learned ITAT. Thus, there were cross appeals by the revenue as well as assessee against the order passed by the learned CIT(A). 3.3.Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) in deleting the addition made by the Assessing Officer assessing the amount of Rs.2,51,519/- being cash received by one M/s. Raj Granites., revenue preferred appeal before the ITAT being Appeal No.222 of 2003. Simultaneously, against the order passed by the learned CIT(A) confirming the addition of Rs.2,51,519/- being cash received by M/s. Raj Granites, the assessee preferred Appeal No.169 of 2003 before the learned ITAT. Thus, there were cross appeals by the revenue as well as assessee against the order passed by the learned CIT(A). 3.4.It appears that during the hearing of the aforesaid appeals, the assessee raised additional ground challenging the validity of the notice under Section 158BD of the Act. The learned Tribunal permitted the assessee to raise additional ground with respect to the validity of the notice under Section 158BD of the Act. The Tribunal was of the opinion that as the additional ground raised by the assessee against the validity of notice issued under Section 158BD of the Act, the same goes to very root of the initiation and legality of proceedings and same was not raised before the learned CIT(A), it would subserve the interest of natural justice, if the said additional ground is remitted back to the file of the learned CIT(A) to decide the said issue on merits. Consequently, learned Tribunal allowed the appeal preferred by the assessee and remitted the matter back to the file of the learned CIT(A) to decide the issue with respect to validity of notice issued under Section 158BD of the Act on merits. As the matter was remitted to the learned CIT to decide the aforesaid issue, the learned Tribunal did not examine the issue raised by the assessee with respect to the addition of Rs. 2,51,519/- on merits. Similarly, as the matter was remitted back to the file of the learned CIT(A) to consider the aforesaid issue with respect to validity of notice issued under Section 158BD of the Act on merits, allowed the appeal preferred by the revenue being Appeal No.222 of 2003 and also remitted the appeal of the revenue back to the file of the learned CIT(A) by further observing that the same be disposed of after disposal of additional ground of assessee’s appeal. 3.5.Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the learned ITAT passed in IT(SS) A Nos.169 & 222 of 2003 in remitting both the appeals – appeal preferred by the revenue as well as appeal preferred by the assessee to the file of the learned CIT(A), the assessee has preferred the present appeals with following proposed question of law. “Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in remitting the matter back to the file of the CIT(A) for adjudicating the additional ground, simply because a similar view was taken in the assessee’s appeal and especially when the appeals were completely unconnected ?” 4.0.Shri B.S. Soparkar, learned advocate for the appellant has vehemently submitted that as such learned Tribunal has materially erred in remitting the matter back to the learned CIT(A) to consider the additional ground -issue with respect to the validity of the notice under Section 158BD of the Act. It is submitted that it is true that the said question was not raised before the learned CIT(A), however when the learned Tribunal permitted the assessee to raise additional ground and when the same could have been decided by the learned Tribunal on the basis of the material on record, the learned Tribunal ought to have decided the said issue / additional ground itself. 4.1.It is further submitted that even otherwise the learned 4.0.Shri B.S. Soparkar, learned advocate for the appellant has vehemently submitted that as such learned Tribunal has materially erred in remitting the matter back to the learned CIT(A) to consider the additional ground -issue with respect to the validity of the notice under Section 158BD of the Act. It is submitted that it is true that the said question was not raised before the learned CIT(A), however when the learned Tribunal permitted the assessee to raise additional ground and when the same could have been decided by the learned Tribunal on the basis of the material on record, the learned Tribunal ought to have decided the said issue / additional ground itself. 4.1.It is further submitted that even otherwise the learned Tribunal has materially erred in remitting the appeal preferred by the revenue to the file of learned CIT (A) without deciding the said appeal on merits. It is submitted that as such assessee succeeded before the learned CIT(A) to the extent of approximately 90% and therefore, unless and until the appeal against the said order is considered on merits, the learned Tribunal is not justified in remitting the matter to the learned CIT(A) to consider the issue afresh which have already held in favour of the assessee. 4.2.Therefore, it is requested to quash and set aside the impugned common judgment and order and remitted the appeal back to the file of the learned Tribunal by directing the learned Tribunal to decide and dispose of both the appeals -appeal preferred by the assessee as well as revenue on merits inclusive of additional ground with respect to the validity of the notice issued under Section 158BD of the Act, by the Tribunal itself. 5.0.Ms. Paurami Sheth, learned advocate for the revenue has fairly conceded that as such the learned Tribunal has not entered into the merits of the appeal preferred by the revenue against the order passed by the learned CIT(A) deleting the addition made by the Assessing Officer except the amount of Rs.2,51,519/-. However, has submitted that as the learned Tribunal was of the opinion that the validity of notice under Section 158BD of the Act goes to the root of the matter and if the said issue is held in favour of assessee and the assessee succeeds then the entire assessment would become nullity and therefore, learned Tribunal has remitted the appeal preferred by the revenue also to the file of the learned CIT(A). However, she has left it to the Court to remit the appeals to the file of the learned Tribunal as there is no decision by the learned Tribunal on merits so far as the appeal preferred by the revenue is concerned, more particularly the learned Tribunal has not entered into the legality and validity of the order passed by the CIT(A) on merits in so far as deleting the addition made by the learned Assessing Officer except the amount of Rs.2,51,519/-. by the revenue is concerned, more particularly the learned Tribunal has not entered into the legality and validity of the order passed by the CIT(A) on merits in so far as deleting the addition made by the learned Assessing Officer except the amount of Rs.2,51,519/-. 6.0.Heard learned advocates for the respective parties at length. As stated above, in appeal preferred by the assessee, learned CIT(A) deleted the addition made by the Assessing Officer except the amount of Rs.2,51,509/-. Against the order passed by the learned CIT(A) deleting the addition made by the Assessing Officer except the amount of Rs.2,51,509/-, the revenue preferred appeal before the CIT (A). To the extent confirming the addition of Rs.2,51,509/- , the assessee also preferred appeal before the learned Tribunal. In the appeal preferred by the assessee, the assessee raised additional ground challenging the validity of notice under Section 158BD of the Act which was not raised before learned CIT(A) and / or even before the Assessing Officer. The learned Tribunal after admitting the additional ground, remitted the matter to the file of the learned CIT(A) to decide the issue with respect to the validity of notice under Section 158BD of the Act. Simultaneously, without deciding the appeal preferred by the revenue on merits and without considering the legality and validity of the order passed by the CIT(A) deleting the addition made by the Assessing Officer except the amount of Rs.2,51,509/-, as the appeal preferred by the assessee was remitted back to the learned CIT(A) to consider the additional ground of validity of notice under Section 158BD of the Act, the learned Tribunal also remitted the appeal preferred by the revenue back to the file of the CIT(A) and further directed that the appeal preferred by the revenue shall be disposed of after disposal of additional ground of assessee’s appeal. 6.1.Considering the fact that learned Tribunal has permitted the assessee to raise the additional ground with respect to the validity of notice issued under Section 158BD of the Act and it is reported that to decide the aforesaid issue no further additional evidence is required and said issue can be decided on the basis of material on record, learned Tribunal ought to have decided the said additional ground also on merits. In any case, learned Tribunal ought not to have remitted the appeal preferred by the revenue to the file of the learned CIT(A) without deciding the issue raised by the revenue on merits and without considering the legality and validity of the order passed by the learned CIT(A) with respect to the deletion of addition made by the Assessing Officer except the amount of Rs.2,51,509/-. The learned Tribunal as such ought to have decided the appeal preferred by the revenue on merits. Considering the above fact situation, there is broad consensus between the learned advocates for the respective parties that let both the appeals- appeal preferred by the assessee as well as appeal preferred by the revenue be remanded to the Tribunal and are directed to be heard by the learned Tribunal on merits inclusive of additional ground raised by the assessee with respect to validity of notice under Section 158BD of the Act. 7.0.In view of the above and for the reasons stated above, both these appeals succeed. The impugned judgment and order passed by the learned ITAT dated 12.10.2012 passed in IT(SS) A Nos.169 & 222 of 2003 is hereby quashed and set aside and both the appeals - appeal preferred by the assessee as well as appeal preferred by the revenue are remitted to the file of the learned Tribunal and learned Tribunal is hereby directed to decide and dispose of the aforesaid two appeals in accordance with law and on merits inclusive of additional ground of validity of notice issued under Section 158BD of the Act, raised by the O/TAXAP/559/2013 JUDGMENT 7.0.In view of the above and for the reasons stated above, both these appeals succeed. The impugned judgment and order passed by the learned ITAT dated 12.10.2012 passed in IT(SS) A Nos.169 & 222 of 2003 is hereby quashed and set aside and both the appeals - appeal preferred by the assessee as well as appeal preferred by the revenue are remitted to the file of the learned Tribunal and learned Tribunal is hereby directed to decide and dispose of the aforesaid two appeals in accordance with law and on merits inclusive of additional ground of validity of notice issued under Section 158BD of the Act, raised by the O/TAXAP/559/2013 JUDGMENT assessee which was permitted to be raised. It is clarified that if the learned Tribunal is of the opinion that while deciding the issue of validity of notice issued under Section 158BD of the Act any additional evidence is required and / or further investigation is required, it will be open for the Tribunal to exercise the powers with respect to the additional evidence available under the Act. Both these appeals are accordingly allowed to the aforesaid extent. No costs. sd/-(M.R.SHAH, J.) Kaushik sd/-(MS SONIA GOKANI, J.)