2022 (7) TMI 123 - AT - Income Tax

Revision u/s 263 - Period of limitation - HELD THAT - The only material brought on record by the assessee in the instant case is as to the date of dispatch by the postal department which in our view does not for the reason of its variance with the date of the order dislodge the statutory presumption (under the Evidence Act) of the date of it s issue. That is cannot be regarded as conclusive of the matter. Tribunal as indeed any fact finding authority has necessarily to go by the material on record and it s findings are to be based on relevant material (CIT v. Radha Kishan Nandlal 1975 (3) TMI 2 - SUPREME COURT Daulat Ram Rawatmull 1972 (9) TMI 9 - SUPREME COURT Oman Salay Mohammed Sait 1959 (3) TMI 2 - SUPREME COURT Dhirajlal Girdhari Lal 1954 (10) TMI 8 - SUPREME COURT - We have already indicated of a much higher workload attending the year-end which may explain the time lag of a few days between the date of its passing and the date of its despatch which is of a certified copy thereof prepared by the staff. Under the circumstances given the clear law in the matter we do not think that it could be said that the date of issue of the impugned order/s is not the date on which the same is apparently signed i.e. 31/3/2017. The assessee s challenge therefore fails. Invalidity of the impugned orders on the basis of doctrine of merger inasmuch as the assessment sought to be revised has been subject to appellate jurisdiction in all cases and which stands passed on 29/8/2016 i.e. prior to the issue of notice u/s. 263(1) - We have for the purpose perused the appellate orders forming part of the paper-book in all cases save Anuradha Upadhyay so that the argument is not applicable in her case. The revision in all cases on the other hand is on the basis that the AO has failed to in view of the frequent transactions of purchase and sale of land during the year as well as in the immediately preceding and succeeding year as also the fact that the sales are to real estate developer failed to investigate further making proper inquiries from the stand point that the income from these transactions is liable to be assessed as business income i.e. as against capital gains. We fail to see as to how the doctrine of merger would operate in the instant case to oust the jurisdiction of the revisionary authority. In fact as stated by the Pr. CIT the Revenue has not accepted the stand of the AO resulting in it being in appeal before the Tribunal. The assessee s claim is untenable and stands made only for the sake of it; the two issues being different. Sale of immovable property - The revision in the instant cases has been for the reason of lack of enquiry i.e. as regards sale of immovable property valued at Rs. 30 lacs or more information in respect of which came to the notice of the Revenue while the sale value disclosed in the return filed was much lower. Or in other cases on account of discrepancies observed due to sale being not registered. No serious contention was in fact raised before us in this regard. That absence of proper enquiry i.e. as warranted in the facts and circumstances of the case would make an order erroneous inasmuch as there is no proper application of mind is trite law. The same is among the four tests; the other three being wrong assumption of facts; incorrect application of law; and omission to observe the principles of natural justice laid down by the Apex Court as in Malabar Indl. Co. Ltd. 2000 (2) TMI 10 - SUPREME COURT The law as amended w.e.f. 01/6/2015 statutorily deems an order made without inquiry which should have been made as liable for revision on that account. That is treats the order per se erroneous and prejudicial to the interests of the Revenue for that reason as explained decades ago in Gee Vee Enterprises 1974 (10) TMI 29 - DELHI HIGH COURT The plea is without merit. Revised stands passed without the issue of notice u/s. 143(2) - We are again unable to persuade ourselves to agree with him. Yes an assessment u/s. 143(3) would normally arise only on the service of notice u/s. 143(2) in the matter inasmuch as the same as explained in Asst. CIT v. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT assumes the nature of a jurisdictional notice. The decision of this aspect i.e. if it in the given facts and circumstances represents a jurisdictional fact would therefore need to be ascertained; there being contrary decisions as well where the Hon ble Court have otherwise. This is in view of the words so far as may be occurring in s. 148(1). A non-issue or non-timely issue of a notice u/s. 143(2) may not therefore operate to disturb the jurisdiction already assumed by the AO to frame the assessment u/s. 147 upon verification of the assessee s claims. The fact of non-issue of notice u/s. 143(2) itself is not conclusively established i.e. as a fact inasmuch as non-mention of issue of notice u/s. 143(2) in the order cannot by itself be regarded as conclusive of the said fact. It is only thereupon that we could proceed to examine the issue of the same resulting in an absence or otherwise of a valid assumption of jurisdiction to frame an assessment. These it may be appreciated are collateral proceedings. Only proved or admitted facts in the proceedings could therefore be taken into account in the instant proceedings the scope of which cannot be extended to decide the factual or legal aspects attending the former which has to be taken as having assumed finality. The finality of concluded proceedings cannot be lightly if at all disturbed. The Courts are in fact even in the relevant proceedings slow to adopt a construction which deprives the parties of valuable rights inasmuch as when the right of appeal is not preferred within the time prescribed therefor the other side acquires a valuable right (refer inter alia Mela Ram Sons 1956 (2) TMI 5 - SUPREME COURT ). The plea is for the reasons afore-stated without basis both on facts and in law. Decided against assessee.

Summary

Issues Involved:

1. Limitation period for passing the revision order under section 263.
2. Doctrine of merger and its applicability.
3. Validity of the assessment order based on lack of inquiry.
4. Requirement of notice under section 143(2) for the validity of the assessment order.
5. Procedural issues regarding the furnishing of reasons recorded in the assessment proceedings.

Detailed Analysis:

1. Limitation Period for Passing the Revision Order:
The appellants argued that the revision orders dated 31.03.2017 were dispatched only on 07.04.2017, thus rendering them barred by limitation under section 263(2) of the Income Tax Act, 1961. The Tribunal examined the legal principle that an order is considered made or issued only when it goes out of the control of the authority making it. However, the Tribunal emphasized that the date of dispatch is not conclusive and must be verified against the date of signing and release of the order. The Tribunal cited the Supreme Court decision in CIT v. Mohammed Meeran Shahul Hameed, which clarified that the date of receipt or dispatch cannot be equated with the date of making or issuing an order. The Tribunal concluded that the orders were signed and handed over to the secretarial staff on 31.03.2017, and the delay in dispatch was due to administrative processes. Therefore, the challenge based on the limitation period failed.

2. Doctrine of Merger and Its Applicability:
The appellants contended that the revision orders were invalid due to the doctrine of merger, as the assessment orders had already been subject to appellate jurisdiction. The Tribunal found no merit in this argument, noting that the appellate orders dealt with the computation of capital gains, whereas the revision orders concerned the classification of income from frequent land transactions as business income. The Tribunal held that the issues before the appellate authority and the revisionary authority were different, and the doctrine of merger did not apply. Consequently, the revision orders were valid.

3. Validity of the Assessment Order Based on Lack of Inquiry:
The appellants argued that the assessment orders were not erroneous or prejudicial to the interest of revenue, and thus, the initiation of revision proceedings was unjustified. The Tribunal disagreed, stating that the revision was warranted due to the lack of proper inquiry by the Assessing Officer (AO) regarding the sale of immovable property and discrepancies in sale values. The Tribunal cited the principle that an order made without proper inquiry is erroneous and prejudicial to the revenue. The Tribunal upheld the revision orders, emphasizing the necessity of thorough investigation by the AO.

4. Requirement of Notice Under Section 143(2) for the Validity of the Assessment Order:
The appellants claimed that the assessment orders were invalid as they were passed without issuing notice under section 143(2). The Tribunal noted that while notice under section 143(2) is generally required for assessments under section 143(3), the absence of such notice does not necessarily invalidate the assessment. The Tribunal stated that the finality of concluded proceedings cannot be lightly disturbed and that the non-issue of notice under section 143(2) was not conclusively established. Therefore, the plea regarding the invalidity of the assessment orders was rejected.

5. Procedural Issues Regarding the Furnishing of Reasons Recorded in the Assessment Proceedings:
The appellants argued that the revision was procedurally flawed as the reasons recorded in the assessment proceedings were not furnished to them. The Tribunal found this argument unsubstantiated and irrelevant to the current proceedings. The Tribunal dismissed this ground, stating that it did not affect the validity of the revision orders.

Conclusion:
The Tribunal dismissed the appeals, upholding the validity of the revision orders dated 31.03.2017. The Tribunal found that the orders were issued within the limitation period, the doctrine of merger did not apply, the assessment orders were erroneous due to lack of inquiry, the absence of notice under section 143(2) did not invalidate the assessments, and procedural issues regarding the furnishing of reasons were irrelevant.