2022 (3) TMI 1378 - HC - Income Tax

Revision u/s 263 - Demand raised before disposal of the appeal which is pending before the ITAT - notice for demand made by the assessing officer against the assessee till the disposal of the appeal - HELD THAT - Once an appeal has been filed against the very revisional order under Section 263 of the Act, where date has been fixed for hearing, at least till such time the assessing authority can wait. However in this case, it is the submission of the learned Standing Counsel for the Revenue that, an assessing officer need not wait endlessly for the outcome of the decision to be made by the Tribunal. Assuming that, if the assessing officer goes ahead with the completion of the assessment pursuant to the notice dated 06.02.2022 and if ultimately he passes an order, based on which this Court feels that at least the assessing authority would not proceed further to make any demand pursuant to such order of assessment, at least till the disposal of the appeal which is pending before the ITAT. If this arrangement is made, that would save the interest of both the assessee as well as the Revenue. In that view of the matter, this Court is inclined to dispose of this writ petition with the following order. 1. That the assessing authority can go ahead with the assessment proceedings pursuant to the notice dated 06.02.2022 on the basis of the order passed by the revisional authority under Section 263 of the Act for which the petitioner shall cooperate by filing any reply or evidence or documents as sought for in the notice dated 06.02.2022 within a period of two weeks from the date of receipt of a copy of this order. 2. It is made clear that, once an order is passed by the assessing authority and if it goes against the interest of the assessee, then pursuant to which no further proceedings including the notice for demand shall be made by the assessing officer against the assessee till the disposal of the appeal which is pending before the Income Tax Appellate Tribunal, for which already date of hearing is given as 07.04.2022. 3.In view of the above, the ITAT is hereby directed to complete the hearing of the appeal proceedings and pass orders in the appeal on or before 31.05.2022 on its own merits and in accordance with law.

Summary

Issues:
1. Writ of Mandamus sought to prevent assessment proceedings for Assessment Year 2016-17.
2. Reopening of assessment under Section 263 of the Income Tax Act, 1961.
3. Appeal filed before the Income Tax Appellate Tribunal (ITAT).
4. Assessing authority's notice directing submission of documents.
5. Conflict between the petitioner and the Revenue on further proceedings.

Analysis:
1. The petitioner sought a Writ of Mandamus to halt assessment proceedings for the 2016-17 Assessment Year until the appeal in ITAT is decided. The revisional authority revised the assessment order of 2016-17 under Section 263 of the Act, leading to the appeal before the ITAT. The assessing officer issued a notice for submissions, prompting the petitioner's plea to prevent further proceedings until the appeal is resolved.

2. The revisional authority reopened the assessment under Section 263 of the Act, altering the initial order. The petitioner's appeal challenged this revision, leading to the current conflict regarding the continuation of assessment proceedings. The assessing officer's duty to complete assessment based on the revisional authority's findings was emphasized by the Revenue's counsel.

3. The appeal filed by the petitioner before the ITAT against the revisional order is a crucial aspect. The assessing authority was urged to wait for the ITAT's decision before proceeding with further actions. However, the Revenue argued that the assessing officer is not obligated to indefinitely delay assessment based on the ITAT's pending decision.

4. The assessing authority's notice demanding submissions from the petitioner added to the complexity of the situation. The petitioner's concern was that completing the assessment and issuing a demand notice could render the pending appeal ineffective. The petitioner emphasized the importance of preserving the appeal's relevance until the ITAT's decision.

5. The Court considered both parties' arguments and directed a balanced approach. It allowed the assessing authority to continue assessment proceedings based on the revisional authority's order but mandated cooperation from the petitioner. The Court also ensured that no further actions, including demand notices, would be taken against the petitioner until the ITAT's decision. The ITAT was instructed to expedite the appeal process and deliver a verdict by a specified date, maintaining the assessing authority's right to act in accordance with the ITAT's decision.

By providing these detailed analyses of each issue involved in the judgment, the summary offers a comprehensive understanding of the legal complexities and the Court's decision-making process.