2016 (11) TMI 1657 - AT - Income Tax

Revision u/s 263 - assessment made by AO is set-aside with the directions to the Assessing Officer to complete the assessment afresh by taxing interest income earned by its units entitled for deduction u/s.80IC, under the head Income from other sources - HELD THAT - It is not a case of a total set aside of assessment, but to a limited extent, so that it has to be modified to the stated extent only. The AO in the revised assessment is to interfere with the assessment only to the stated extent and, further, in doing so is only giving effect to the said directions by the ld. CIT. Clause (c) of Explanation 1 to section 263(1) is, again, specific, excluding parallel exercise of jurisdiction by the Administrative and the Appellant Commissioner. Once, therefore, the ld. CIT has, in exercise of his power of revision, held the interest income as assessable under section 56, the matter cannot be re-agitated before or revisited by the Appellant Commissioner, whose view is thus in accordance with the clear mandate of law. Reference in this context, explaining the clear position of law, may be made to the decision in the case of CIT v. Shri Arbuda Mills Ltd. 1996 (1) TMI 11 - SUPREME COURT being in fact clarified, in a similar fact situation, in the case of Herdillia Chemicals Ltd. ( 1995 (12) TMI 411 - BOMBAY HIGH COURT ) , so that the matter can only be said to be no longer res integra , being squarely covered by both, the clear position of law as well as said binding decisions. This is precisely the reason for our stating, at the outset, of the assessee as having no case. The assessee s appeal having been upheld by us as not maintainable, the question of adjudicating its grounds assailing the assessment on merits does not arise. Order u/s.263 filed only on 03.09.2015 which is time barred by 458 days - In our clear view, even as expressed during hearing, the assessee had clearly, and presumably, only on the basis of a legal opinion, taken a conscious decision not appeal against the revision order, passed with reference to and relying on several decisions, including by the Apex Court. No reasonable, much less sufficient, cause has been advanced for condonation of delay We have already expressed that the impugned order stands passed relying on several decisions, including by the Apex Court. The assessee could not make out a prima facie case, i.e., on the merits of the impugned directions issued by the ld. CIT, before us, with we on the contrary observing the assessee to have taken a conscious decision accepting the same. The said decision would thus also have no application in the present case. The instant appeal is not maintainable, and is accordingly dismissed. We decide accordingly.

Summary

Issues Involved:
1. Appeal against the Order under section 263 of the Income Tax Act, 1961.
2. Assessment framed pursuant to the order under section 263.
3. Delay in filing the appeal against the revision order.

Analysis:

Issue 1: Appeal against the Order under section 263
The judgment involves two Appeals, one against the Order under section 263 of the Income Tax Act, 1961. The revision order held the assessment as prejudicial to the Revenue's interests due to allowing a deduction under section 80-IC against interest income assessable under section 56. The CIT(A) dismissed the appeal, stating the AO had no discretion as the revision order explicitly directed the assessment. The Tribunal upheld the CIT's directions, emphasizing the lack of judicial discretion left for the AO, citing relevant case laws. The Tribunal found no substance in the assessee's case and dismissed the appeal.

Issue 2: Assessment framed pursuant to the order under section 263
The assessment was held erroneous as it allowed a deduction under section 80-IC against interest income assessable under section 56. The revision order directed the AO to assess the interest income as 'Income from other sources.' The Tribunal emphasized the clear and unambiguous directions by the CIT, leaving no discretion with the AO. The Tribunal held that the CIT's decision was in line with the law and binding decisions, thus upholding the revision order and dismissing the appeal against it.

Issue 3: Delay in filing the appeal against the revision order
The appeal against the revision order was delayed by 458 days. The appellant claimed a bona fide belief that the issues could be agitated in the assessment proceedings before the AO and appellate authorities. However, the Tribunal found no basis for this belief, emphasizing the clear and explicit directions by the CIT. The Tribunal noted the appellant's access to legal advice and dismissed the appeal, citing lack of reasonable cause for condonation of delay. Relevant case laws were cited to support the decision, and the appeal was deemed not maintainable and dismissed.

In conclusion, the Tribunal dismissed both appeals by the assessee, upholding the revision order and the assessment framed pursuant to it. The judgment emphasizes the importance of following clear directions in tax assessments and the consequences of delayed appeals without reasonable cause.