2004 (4) TMI 255 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the CIT's jurisdiction to revise assessment orders under Section 263.
2. Validity of assessment orders for block periods in the cases of individuals.
3. The impact of CIT(A)'s orders on the assessed income.
4. The requirement of a specific order for charging interest under Section 158BFA(1).

Detailed Analysis:

1. Validity of the CIT's jurisdiction to revise assessment orders under Section 263:

The CIT, Gwalior, issued notices under Section 263 to revise the assessment orders for block periods in the cases of individual appellants. The appellants argued that the jurisdiction over their cases was never transferred to Gwalior, and thus, only CIT, Jabalpur, had jurisdiction to revise the assessments. The tribunal held that the jurisdiction over the individual cases of the appellants was indeed with the AO, Chatarpur, within the territorial jurisdiction of CIT, Jabalpur. Consequently, CIT, Gwalior, had no jurisdiction to revise the assessments. The orders of CIT, Gwalior, were declared void ab initio for want of jurisdiction.

2. Validity of assessment orders for block periods in the cases of individuals:

The assessments were completed in the individual capacity of the appellants, not as partners of M/s New Alankar Jewellers. The tribunal noted that the orders under Section 263 were passed in the cases of partners of M/s New Alankar Jewellers, who were HUFs and not individuals. Therefore, the orders under Section 263 were illegal and bad in law, and consequently, they were quashed.

3. The impact of CIT(A)'s orders on the assessed income:

The CIT(A) had deleted the whole of the undisclosed income in the cases of Ajay Kumar Agarwal and Anand Kumar Agarwal, reducing their assessed income to nil. The tribunal held that since the assessed income ceased to exist after the CIT(A)'s orders, there was no assessed income on which interest could be levied under any section. Therefore, the orders under Section 263 in these cases were not sustainable in law and were set aside.

4. The requirement of a specific order for charging interest under Section 158BFA(1):

The tribunal noted that the assessment order and the order for levying interest are two separate orders. The absence of an order for charging or waiving interest cannot be presumed as a waiver, as the levy of interest under Sections 234A, 234B, and 234C is mandatory. Since there was no specific order for charging interest under Section 158BFA(1) in the assessment orders, the CIT could not invoke Section 263 to direct the AO to charge interest. The tribunal declared the orders of CIT, Gwalior, under Section 263 as illegal and bad in law.

Conclusion:

In conclusion, the tribunal allowed the appeals of the appellants, declaring the orders of CIT, Gwalior, under Section 263 as illegal, bad in law, and void ab initio. The tribunal emphasized the importance of jurisdiction, the necessity of specific orders for charging interest, and the impact of CIT(A)'s orders on assessed income.