2018 (8) TMI 2088 - AT - Income Tax

Reopening of assessment u/s 147 - denial of deduction u/s 80IA - scope of original order of assessment as merged with the judgment of Madras High Court - Tribunal and Madras High Court allowed the claim of the assessee u/s 80-IA on the very same windmill but AO by referring the amendment made by Finance Act, 1998, claims that windmill cannot be equated with power generating unit and he withdrew the deduction granted when the original order of assessment is merged with the judgment of Madras High Court, can the Assessing Officer reopen the assessment and withdraw the claim of deduction granted under Section 80-IA of the Act? - HELD THAT - This Tribunal is of the considered opinion that the Assessing Officer has no jurisdiction to overturn the judgment of Madras High Court. The judgment of Madras High Court is binding on all the authorities in the State. Whatever may be the reason, the Assessing Officer has to follow the judgment of Madras High Court. Now the Revenue claims that an SLP was filed before the Apex Court. It is open to the Revenue to pursue remedy before the Apex Court in a manner known to law. However, the Assessing Officer cannot reopen the assessment and withdraw the claim of deduction under Section 80-IA of the Act which was already allowed by the Madras High Court. This Tribunal cannot permit the Assessing Officer to overturn the judgment of Madras High Court merely because an SLP is pending before the Apex Court. After the judgment of Madras High Court confirming the order of this Tribunal, the Assessing Officer cannot reopen the assessment on the ground that windmill cannot be equated to power generating unit. The Assessing Officer ought to have raised this issue before this Tribunal or High Court. Having failed to raise the issue before the Tribunal or before the High Court, the Assessing Officer cannot reopen the assessment. The High Court, being constitutional High Court, its judgment has to be followed by all the authorities in this State. Therefore, reopening of the issue of deduction under Section 80-IA of the Act after the order of this Tribunal and the judgment of the Madras High Court is not justified. Hence, the CIT(Appeals) has rightly allowed the appeal of the assessee. - Decided against revenue.

Summary

Issues:
Reopening of assessment under Section 148 for deduction under Section 80-IA of the Income-tax Act, 1961 for assessment years 2005-06 and 2006-07.

Analysis:
The appeals of the Revenue were against the order of the Commissioner of Income Tax (Appeals) regarding the deduction under Section 80-IA of the Income-tax Act, 1961 for windmill units for assessment years 2005-06 and 2006-07. The Assessing Officer had reopened the assessments under Section 148, claiming windmills did not qualify as power generating units for the deduction. The Revenue argued the reopening was valid, while the assessee contended that the order was merged with the Tribunal and High Court judgments, making the reopening invalid.

The Tribunal and Madras High Court had previously allowed the deduction under Section 80-IA for windmills. The Assessing Officer, citing the Finance Act, 1998, withdrew the deduction. The Tribunal held that once an order is merged with a High Court judgment, the Assessing Officer cannot overturn it. The judgment of the High Court is binding on all authorities, and the Assessing Officer must follow it. The Tribunal emphasized the importance of upholding judicial decisions for public confidence in the system.

The power to decide disputes lies with the Assessing Officer, but true power stems from public trust in the judiciary. The Tribunal stressed the need to adhere to High Court judgments. It noted that the Assessing Officer cannot challenge a High Court decision, especially after the matter has been decided by the Tribunal and High Court. The Tribunal upheld the CIT(Appeals) decision to allow the deduction, stating that the Assessing Officer lacked justification to reopen the assessments.

In conclusion, the Tribunal dismissed the Revenue's appeals, affirming the CIT(Appeals) decision. The judgment highlighted the importance of respecting judicial decisions and emphasized the binding nature of High Court judgments on all authorities. The Tribunal underscored the need for consistency in following legal precedents to maintain public trust in the judicial system.