2023 (10) TMI 25 - AT - Income Tax

Condonation of delay filing appeal before ITAT - delay of 3966 days in filing the present revenue appeal - HELD THAT - As delay in filing the present appeal before us as explained by the Ld. D.R had occasioned on the part of the A.O initially due to bonafide misconstruing of law (to which the assessee had also contributed) which thereafter was followed by an inadvertent failure on his part to appreciate the implication of the observations recorded by the Tribunal in its order dated 13.09.2013 (supra) to the additions/disallowances made vide order of original assessment u/s 143(3) dated 29.11.2007 read along with the order passed by the CIT(Appeals) dated 22.01.2009 (supra). Admittedly it is not a case where there is gross negligence or deliberate inaction or lack of bonafides but a case of bonafide misconstruing of law followed by unintentional inaction on the part of the A.O who had confined the application of the order of the Tribunal dated 13.09.2013 only to the order of reassessment u/s 143(3) r.w.s 147 dated 30.12.2008 which was the subject matter of appeal before the Tribunal and had due to a bonafide omission failed to stretch the application of the said order to the original assessment order u/s 143(3) dated 29.11.2007 r.w order of CIT(Appeals) dated 22.01.2009. Also it is not a case where the department is trying to take shelter of an explanation that the delay had taken place because the file was kept pending for several months/years due to a considerable degree of procedural red tape in the process. As there is an explanation as regards the bonafide reasons/omission on the part of the departmental officers to file the appeal within the prescribed period therefore the said explanation cannot be dismissed at the threshold. Considering the fact that there is an inordinate delay of 3966 days involved in filing the present appeal before us and the sustainability of a huge addition of Rs. 821.75 crores (approx.) based on multi-facet additions /disallowances is at stake we therefore respectfully following the judgment of the Hon ble Apex Court in the case of CIT Vs. West Bengal Infrastructure Development Finance Corporation Ltd 2010 (12) TMI 675 - SC ORDER condone the same subject to the imposition of a cost of Rs. 20, 000/-(rupees twenty thousand) on the department. Validity of the jurisdiction of A.O framing the reassessment in the absence of a valid notice u/s 143(2) - claim for deduction u/s 80IA(4)(iv) was declined - HELD THAT - Hon ble Apex Court in its order passed in the case of CIT Vs. Sun Engineering Works 1992 (9) TMI 1 - SUPREME COURT had observed that to read the judgment in V. Jaganmohan Rao s 1969 (7) TMI 4 - SUPREME COURT case as if laying down that reassessment wipes out the original assessment and that reassessment is not only confined to escaped assessment or under-assessment but to the entire assessment for the year and starts the assessment proceedings de novo giving the right to an assessee to re-agitate matters which he had lost during the original assessment proceedings which had acquired finality is not only erroneous but also against the phraseology of section 147 and the object of reassessment proceedings. Accordingly the support that impliedly is sought to be drawn by relying on the judgment of the Hon ble Apex Court in V. Jaganmohan Rao (supra) is found to be clearly misconceived. The view taken by the CIT(Appeals) that pursuant to the re-assessment order u/s 143(3) r.w.s 147 dated 30.12.2008 the original order of assessment passed u/s 143(3) dated 29.11.2007 did not exist anymore and was wiped off is found to be an incorrect view in light of the aforesaid judgments of the Hon ble Apex Court in CIT Vs. Sun Engineering Works and CIT Vs. Alagendran Finance Ltd. 2007 (7) TMI 304 - SUPREME COURT As is discernible from the records the CIT(Appeals) based on his conviction that pursuant to the reassessment order u/s 143(3) r.w.s 147 dated 30.12.2008 the original order of assessment u/s 143(3) dated 29.11.207 was no more in existence and was effaced had thus dismissed the appeal in limine and not adverted to the issues raised before him. As we have disapproved and dislodged the aforesaid view of the CIT(Appeals) therefore we restore the matter to his file with a direction to him to re-adjudicate the appeal. Grounds allowed for statistical purposes in terms of our aforesaid observations.

Summary

Issues Involved:
1. Validity of the assessment order passed under Section 143(3) of the Income-tax Act, 1961.
2. Jurisdiction of the Assessing Officer (AO) to reassess income under Section 147.
3. Condonation of delay in filing the appeal by the Revenue.
4. Merits of the additions/disallowances made by the AO.

Summary:

Issue 1: Validity of the Assessment Order under Section 143(3)
The revenue challenged the order of the CIT(Appeals) which held that the assessment order passed under Section 143(3) dated 29.11.2007 was no longer in existence after the reassessment order under Section 147 dated 30.12.2008. The Tribunal observed that the CIT(Appeals) dismissed the appeal in limine based on the belief that the original assessment order was effaced by the reassessment order. The Tribunal disapproved of this view, citing the Supreme Court's decision in CIT Vs. Sun Engineering Works (1992) and CIT Vs. Alagendran Finance Ltd. (2007), which clarified that reassessment does not wipe out the original assessment. Consequently, the matter was restored to the CIT(Appeals) for re-adjudication.

Issue 2: Jurisdiction of the AO to Reassess Income under Section 147
The Tribunal noted that the AO had framed the reassessment without issuing a notice under Section 143(2) within the prescribed period. This lack of jurisdiction rendered the reassessment order invalid. The Tribunal quashed the reassessment order dated 30.12.2008, stating that the CIT(Appeals) should have confined his adjudication to the validity of the jurisdiction assumed by the AO for framing the reassessment.

Issue 3: Condonation of Delay in Filing the Appeal by the Revenue
The Revenue filed an appeal against the order of the CIT(Appeals) dated 22.01.2009 with a delay of 3966 days. The Tribunal considered the reasons for the delay, which included the AO's bona fide belief that the original assessment order was effaced by the reassessment order, supported by certain Supreme Court judgments. The Tribunal condoned the delay, subject to the imposition of a cost of Rs. 20,000 on the department, to be paid to the Prime Minister National Relief Fund.

Issue 4: Merits of the Additions/Disallowances Made by the AO
The Tribunal observed that the CIT(Appeals) had not adjudicated on the merits of the additions/disallowances due to the belief that the original assessment order was non-existent. The Tribunal directed the CIT(Appeals) to re-adjudicate the appeal on merits, providing a reasonable opportunity of being heard to the assessee.

Conclusion:
The appeal filed by the Revenue was allowed for statistical purposes, subject to the payment of costs. The matter was remanded back to the CIT(Appeals) for re-adjudication on the merits of the case. The Tribunal emphasized that the original assessment order does not get wiped out by the reassessment order, and the CIT(Appeals) should have confined his adjudication to the validity of the jurisdiction assumed by the AO.