Delhi High Court
Commissioner Of Income Tax vs Flamingo Finance And Investment on 10 October, 2007
Bench: M B Lokur, S Muralidhar
ORDER
1. The reference (ITR 35/1995) under Section 256(2) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') and appeal (ITA 248/2007) under Section 260A of the Act have chequered backgrounds.
2. Initially an assessment was framed by the Assessing Officer ('AO') accepting the return of the assessed declaring a loss of Rs. 6,721/-.
3. In respect of the assessment order, the Commissioner of Income Tax ('CIT') exercising powers conferred by Section 263 of the Act by an order dated 1st December, 1988 took the view that the assessment order was erroneous and prejudicial to the interests of the Revenue. By the said order, which was passed after hearing the assessed, the CIT remanded the matter to the AO with the direction to reframe the assessment after making relevant and appropriate enquiries with respect to the unexplained share capital which was stated to have been introduced in the assessed's books.
4. Against the order passed by the CIT, the assessed preferred an appeal to the Income Tax Appellate Tribunal (for short the Tribunal). By an order dated 29th September, 1992 the Tribunal quashed the order passed by the CIT under Section 263 of the Act. In ITR No. 35/1995, which arises from the order dated 29th September, 1992 of the Tribunal, relevant to the Assessment Year 1984-85, the following question has been referred for our opinion:
Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in quashing the order of the Commissioner of Income Tax passed Under Section 263 of the Income-tax Act?
5. Meanwhile, pursuant to the order of the CIT passed under Section 263 of the Act, the AO re-framed the assessment at a total income of Rs. 13,93,210/- after making an addition of Rs. 14 lakhs on account of unexplained share capital.
6. The assessment order passed by the AO was challenged by the assessed before the CIT(A). The CIT (A) deleted the addition by an order dated 20th January, 1992 on the basis of the judgment of this Court in Commissioner of Income Tax v. Stellar Investment .
7. Against the order passed by the CIT (A), the Revenue preferred an appeal before the Tribunal. By its order dated 13th February, 1998 the Tribunal set aside the order passed by the CIT and restored the matter back to the file of AO to decide the issue afresh in the light of the decision of the Full Bench of this Court in Commissioner of Income Tax v. Sophia Finance Limited .
8. Pursuant to the order dated 13th February 1998 passed by the Tribunal, the AO on 23rd January, 2001 once again made the addition of Rs. 13,99,930/- on account of unexplained share capital. This was the third order passed by the AO in the matter.
9. In the meanwhile, aggrieved by an order dated 13th February, 1998 passed by the Tribunal restoring the matter back to the file of the AO, the assessed filed a miscellaneous application under Section 254(2) of the Act before the Tribunal for rectification of that order. This rectification application was allowed by the Tribunal by an order dated 11th June, 2002 whereby the Tribunal recalled its order dated 13th February, 1998. This order dated 11th June, 2002 of the Tribunal recalling its order dated 13th February, 1998 has not been challenged by the Revenue. Thus, the order dated 13th February, 1998 of the Tribunal no longer subsists.
10. Pursuant to the order dated 11th June, 2002 on the rectification application, the Tribunal passed the following consequential order in the appeal:
In the light of these facts and the material on record, it is obvious that the order of the CIT Under Section 263 which constituted the basis for making addition by the AO itself has been quashed by the Tribunal. Therefore, the structure on which the building was erected by the AO ceases to exist. Consequently, all the further actions flowing out of the said order are valid. We, therefore, uphold the action of the CIT (A).
11. The admitted position is that even the order passed by the Tribunal on 20th August, 2002 has not been challenged by the Revenue.
12. Consequently, the question whether the order passed by the CIT under Section 263 of the Act on 1st December, 1998 is sustainable or not has become academic.
13. Under the circumstances, the reference in ITR No. 35 of 1995 is returned unanswered.
14. In so far as the ITA No. 248/2007 is concerned, the Revenue is aggrieved by the order dated 1st June, 2006 passed by the Tribunal which in turn affirms the order dated 10th February, 2003 passed by the CIT (A) deleting the addition made by the AO in the third order of assessment.
15. With the order dated 13th February, 1998 having being recalled by the Tribunal by its order dated 11th June, 2002, the re-assessment order passed by the AO on 23rd January, 2001 in the third round is rendered infructuous. All consequential appellate proceedings and orders are also rendered infructuous. Therefore, the entire exercise of ascertaining whether the order of the Tribunal dated 1st June 2006 is purely academic. We are, therefore, of the view that no substantial question of law arises in ITA No. 248/2007. It is, accordingly, dismissed.
16. At this stage, learned Counsel for the Revenue submits that copies of the order passed by the Tribunal on 1st June, 2006 recalling the order dated 13th February, 1998 as well as the order dated 20th August, 2002 have not been received by the Revenue and further that since the order dated 1st June, 2006 has been made beyond the statutory time period stipulated, it should not be taken note of.
17. We are not inclined to go into this issue. It is open to the Revenue, if it is aggrieved by orders dated 1st June, 2006 and 20th August, 2002 to take whatever appropriate remedies are available to it in law.
18. Accordingly, the reference is returned unanswered and the appeal is dismissed.
