Jharkhand High Court
The Principal Commissioner Of ... vs Padma Kumar Jain on 11 October, 2022
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Tax Appeal No. 7 of 2021
......
The Principal Commissioner of Income Tax (Central), Patna, 3rd Floor,
Central Revenue Building, Birchand Patel Path, P.O & P.S. Patna Sectt.,
Patna. ..... Appellant
Versus
Padma Kumar Jain, Resident of Ratanlal Surajmal Compound, Main
Road, P.O & P.S. G.T.O, District Ranchi. ..... Respondent
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CORAM: Hon'ble Mr. Justice Aparesh Kumar Singh
Hon'ble Mr. Justice Deepak Roshan
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For the Appellant :Ms. Amrita Sinha, Adv.
For the Respondent : Mr. Biren Poddar, Sr. Adv.,
M/s Mahendra Kr. Choudhary,
Devesh Poddar, Rakhi Sharma &
Piyush Poddar, Advs.
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13/11.10.2022 The instant appeal is directed against the order dated
08.07.2022 passed by learned Income Tax Appellate Tribunal, Ranchi
Bench, Ranchi (hereinafter to be referred as ITAT) in appeal being I.T.A
No. 289/Ran/2019 for the A.Y. 2012-13, preferred by the respondent
herein whereby the learned ITAT has allowed the appeal of the
respondent-Assessee and quashed the entire proceeding initiated under
Section 263 of the Income Tax Act, 1961 (hereinafter to be referred as
the Act)
2. The brief facts of the case are that a search and seizure operation
was carried out in the business and residential premises of respondent-
Assessee on 03.07.2014. After completion of search and seizure, a notice
under Section 153A of the Act was issued to the Assessee on 09.02.2015.
In response to the notice, the Assessee filed his return of income for the
assessment year 2012-13 on 02.10.2016 declaring total income of
Rs.15,34,97,400/-. On 28.12.2016, Assessment Order under Section
153(A) read with Section 143(3) of the Act was passed.
Subsequently, the Principal Commissioner of Income Tax
(Central), Patna (hereinafter referred to as PCIT) initiated a proceedings
u/s 263 of the Act and passed an order on 29.12.2017 directing the
Assessing Officer to pass a fresh order. Thereafter, on 3.12.2018, the A.O
in compliance to the aforesaid order passed by the PCIT issued notice
under Section 142(1) with letter of query and the Assessee filed a
detailed reply on 18.12.2018 before the A.O. Subsequently, the second
Assessment Order under Section 143(3) read with Section 263 was
passed on 31.12.2018 by the A.O.
On 28.3.2019, though the 1st Assessment Order dated 28.12.2016
was already cancelled by PCIT vide order dated 29.12.2017, a
proceeding u/s 263 of the Act was again initiated for the second time and
2nd order under Section 263 was passed by PCIT again cancelling the
non-existent 1st Assessment Order with a direction to the Assessing
Officer (AO) to pass a fresh order; however, the 2nd Assessment order
dated 31.12.2018 was never cancelled and as such, it remained as a valid
assessment order.
On 28.12.2019 an Email was sent by the respondent-Assessee to
the A.O objecting to pass of fresh assessment order on the ground that
aforesaid second assessment order dated 31.12.2018 has not been
cancelled and therefore for one assessment year there cannot be two
parallel assessment order and requested to drop the assessment
proceeding but instead of dropping, the A.O passed 3rd Assessment Order
under Section 263 r.w.s 143(3) of the Act.
On 30.12.2019, as the 3rd assessment proceeding was not
dropped by the Assessing Officer, the respondent-Assessee filed an
appeal before ITAT against the order dated 28.03.2019 passed under
Section 263 of the Act for the 2nd time. On 08.07.2020, learned ITAT
quashed the aforesaid 2nd order under Section 263 dated 28.03.2019 and
allowed the appeal of the respondent, which is impugned in the instant
Appeal.
3. Ms. Amrita Sinha, learned counsel appearing for the revenue
submits that pursuant to the second round of proceeding under Section
263 of the Act, an Assessment Order dated 28.12.2019 has already been
passed on an assessed income of Rs.32,13,19,780/- and the said
Assessment Order has not been challenged by the respondent Assessee.
On the contrary, the respondent has challenged the order dated 28.3.2019
passed by the PCIT under Section 263 of the Act. She further submits
that the Assessee duly participated in second round of proceeding under
Section 263 as well as in an assessment proceeding which took place
subsequent to second round of proceeding under Section 263. She
contended that the Assessee never raised a plea of jurisdiction of
authority with regard to invoking of revisional jurisdiction of PCIT u/s
263 of the Act for the second time.
Learned counsel referred to the judgment passed in the case of
Union of India Vs. Susaka Pvt. Ltd. & Ors. reported in (2018) 2 SCC
182 wherein the Hon'ble Apex Court has held that "if plea is available,
whether on facts or law, it has to be raised by the party at an appropriate
stage in accordance with law". Since the plea of jurisdiction under
Section 263 of the Act was not raised at an appropriate stage by the
respondent-Assessee, the respondent was debarred from raising the said
question of jurisdiction before the ITAT. The learned ITAT failed to
consider while allowing the appeal filed by the Assessee that the said
appeal challenging the order dated 28.03.2019 passed under Section 263
of the Act was preferred beyond limitation.
She lastly submits that Section 263 deals with calling for and
examine the records of any proceeding under this Act. Thus, non-
recording of the first round of proceeding under Section 263, in the
second round of order under Section 263 is merely a technical error. The
Hon'ble Apex Court time and again held that the entire assessment
proceeding cannot be vitiated only on technical ground. She concluded
her argument by submitting that during the first round proceeding under
Section 263 of the Act, the issues raised therein are entirely different with
the issue rose in second round of proceeding under Section 263 of the
Act.
Relying upon the aforesaid submissions, she prayed that the
instant application may be admitted on substantial questions of law and
finally be allowed in favour of Revenue.
4. Learned sr. counsel for the respondent-Assessee submits that the
order passed by the learned ITAT does not require any interference,
inasmuch as, the PCIT has initiated proceedings u/s 263 of the Act for
the second time and quashed the order of assessment proceeding which
was already quashed earlier. In other words, though the first Assessment
Order dated 28.12.2016 was already cancelled by the first round of 263
proceedings, but the second order under Section 263 was passed by the
PCIT again cancelling the non-existent first Assessment Order with a
direction to pass a fresh order. However, the second Assessment Order
dated 31.12.2018 was never cancelled which was passed in pursuance to
the 1st order of remand passed u/s 263 of the Act and as such it remained
as a valid Assessment Order.
Since, the 3rd assessment proceeding was not dropped by the
Assessing Officer on the plea raised by the Assessee, the respondent filed
the appeal before the ITAT against the order passed under Section 263
dated 28.3.2019 and the learned ITAT has rightly quashed the second
order passed by PCIT under Section 263 of the Act dated 28.3.2019. As
such since there is inherent mistake in the order passed by the PCIT
under Section 263 of the Act. The learned Tribunal has rightly allowed
the appeal of the Assessee; thus, the instant Appeal may be dismissed.
5. Having heard learned counsel for the parties and after going
through the documents, it appears that on 28.12.2016 first Assessment
Order under Section 153(A) read with Section 143(3) of the Act was
passed. Thereafter, the PCIT initiated a proceedings u/s 263 of the Act
and passed an order on 29.12.2017 directing the Assessing Officer to
pass a fresh order.
Thereafter, the A.O in compliance to the aforesaid order passed
by the PCIT u/s 263, issued notice under Section 142(1) with letter of
query. Thereafter, the Assessee filed a detailed reply. Subsequently, the
second Assessment Order under Section 143(3) read with Section 263
was passed on 31.12.2018. It appears that though the first Assessment
Order dated 28.12.2016 was already cancelled by the order passed by
PCIT under Section 263 of the Act on 29.12.2017, but the second order
under Section 263 was also passed again cancelling the non-existent first
assessment order dated 28.12.2016. Here lies the lacuna committed by
the PCIT while passing the order under Section 263 of the Act.
It is true that there is no bar in law in initiating two proceeding
under Section 263 of the Act for the same assessment year if proceedings
are within the time limit as per Section 263(2) of the Act; however, in no
case the PCIT is having jurisdiction to cancel the assessment order which
was already cancelled during the first proceeding of 263. In other words,
the 1st Assessment order dated 28.12.2016 (Annexure-C to the counter
affidavit) was already cancelled by Annexure-D to the counter affidavit
but a 2nd Order under Section 263 was passed by PCIT again cancelling
the non-existent 1st assessment order with a direction to pass a fresh
order, however the 2nd assessment order dated 31.12.2018 (Annexure-G
to the counter affidavit) was never cancelled and as such it remained as a
valid assessment order.
The PCIT has exercised his jurisdiction second time under
Section 263 of the Act mainly to examine the expenses/issues, which
were already examined by the assessing officer while passing original
assessment order under Section 153A/143(3) of the Act dated 28.12.2016
and while passing second assessment order under Section 143(3) read
with Section 263 of the Act dated 31.12.2018 in pursuant of first 263
order.
6. The learned Tribunal has considered each and every aspects of
the matter while allowing the appeal filed by the Assessee and held that
in Assessee's case the loss and damage expenses of Rs.4 Crores has been
examined by the Assessing Officer in the Original Assessment Order
dated 28.12.2016, and the said expenditure has also been examined by
the Assessing Officer in the second Assessment Order passed by the A.O
under Section 143(3) read with Section 263 of the Act which was framed
in pursuance to the direction given by the PCIT. Therefore, the said loss
and damage expenses of Rs.4 Crores have been examined by the A.O
twice. Again, in the Section 263 order, the PCIT has directed the A.O to
examine the said loss and damage expenses of Rs.4 Crores, this means
the A.O would examine 3rd time the said loss and damage expenses of
Rs.4 Crores. Likewise, the sales incentive expenses of Rs.9,45,96,300/-
has been examined by the A.O in the first Assessment Order and again he
examined the same and pass a fresh assessment order pursuant to the
order passed by the PCIT in first round of 263, as such again in the
second round of 263 the direction made by the PCIT is erroneous.
The learned Tribunal had further held that during the course of
original assessment proceeding, the Assessee submitted books of
accounts, balance sheet, profit and loss account etc. and the same was
duly acknowledged by the A.O. Since all these expenses have already
been scrutinized and examined by the A.O twice i.e., in the original
assessment order dated 28.12.2016 and in the second assessment order
passed after 263 order; thus, the order passed by the PCIT in the second
round of 263 is virtually directing the A.O. to scrutinize the accounts 3rd
time which is not permissible in the eye of law. In other words, the
learned Tribunal has considered each and every facet of the matter and
allowed the appeal of the Assessee holding the order passed by the PCIT
under Section 263 is bad in law.
7. At this stage it is pertinent to mention here that PCIT by invoking
his jurisdiction under Section 263 of the Act is giving another
opportunity to the assessing officer which is not permissible. The law is
now no more res-integra that once the issue is considered by the
Assessing Officer, the remedy of the revenue could not lie in invoking
the jurisdiction under Section 263 of the Act especially when the entire
books of accounts and documents were produced by the Assessee before
the Assessing Officer. However, in the instant case the Assessee was
directed to produce 3rd time the same books of accounts.
In addition, interestingly the PCIT while passing the order under
Section 263 for the 2nd time has quashed and set aside 1st Assessment
Order passed under Section 153(A)/143(3) of the Act dated 28.12.2016,
though the same was already cancelled by the first round of 263; which is
not permissible in the eye of law and the second assessment order which
was passed after the first round of 263 was never cancelled and is still in
existence.
8. At the cost of repetition, the learned Tribunal has taken notes of
each and every feature of the case, both on facts and on law, especially
the point of law that there cannot be any proceeding under Section 263
for change of opinion by subsequent officer. Admittedly, in the instant
case the entire documents were produced in the original assessment
proceeding as well as in the subsequent assessment proceeding which
was conducted after the first 263 order; as such again in the second round
of 263, the direction made by the PCIT is erroneous and has no legs to
stand in the eye of law.
9. As a result, since no error has been found in the order passed by
the learned ITAT, thus the same is hereby confirmed and the appeal filed
by the Revenue is dismissed at the admission stage itself as no
substantial question is involved in this case.
Consequently, we hold that the 3rd Assessment Order dated
28.12.2019 passed pursuant to the 2nd order under Section 263 dated
28.3.2019 passed by PCIT has no legal effect.
(Aparesh Kumar Singh, J.)
(Deepak Roshan, J.)
Fahim/-
