2013 (3) TMI 516 - HC - Income Tax

Validity of Assessment U/s 143(3) read with section 154 passed by successor AO - Held that - The Tribunal by its judgement dated 17 February 2010 set aside the order of the Commissioner of Income-tax (Appeals) and restored the assessment proceedings back to the Assessing Officer for a fresh examination. In this view of the matter, once the Assessing Officer had given effect to the order of the Tribunal, his successor in office had no jurisdiction to pass a fresh order dated 27 December 2011. The impugned order dated 27 December 2011 in fact reflects an awareness of the Assessing Officer of the earlier order which was passed in order to give effect to the order of the Tribunal. The Assessing Officer in the table which has been extracted earlier has in his computation commenced with a total income as computed in the order of the Assessing Officer dated 27 December 2010 (viz., a loss of Rs.16.82 crores). The Assessing Officer has not purported to exercise the jurisdiction under section 154. Once effect was given to the order of the Tribunal by the passing of an order under section 254 on 27 December 2010, that order could have been modified or set aside only by following a procedure which is known to the Income-tax Act, 1961. What the Assessing Officer has done by the impugned order is to conduct a substantive review of the earlier order dated 27 December 2010 which was clearly impermissible. - Decided in favor of assessee.

Summary

Issues:
1. Jurisdiction of Assessing Officer to pass a fresh order after giving effect to Tribunal's order.

Analysis:
The case involves a petition related to the Assessment Year 2001-02 where the assessee filed a return of income showing a loss from share transactions. The Assessing Officer disallowed the loss, which was upheld by the Commissioner of Income-tax (Appeals) but set aside by the Tribunal for re-examination. Subsequently, the Assessing Officer passed an order giving effect to the Tribunal's decision, recomputing the total loss. However, another order was passed by a different Assessing Officer re-computing the income, which the petitioner challenged for lack of jurisdiction. The High Court held that once an Assessing Officer had given effect to the Tribunal's order, a successor had no jurisdiction to pass a fresh order. The impugned order of assessment dated 27 December 2011 was deemed to be without jurisdiction as it attempted a substantive review of the earlier order, which was impermissible. The High Court quashed the impugned order, allowing the petition and clarifying that the Revenue could pursue other remedies available in law.

This case primarily delves into the jurisdictional aspect of an Assessing Officer to pass a fresh order after giving effect to a Tribunal's decision. The Assessing Officer, in this instance, re-computed the loss after the Tribunal's order, leading to a challenge regarding the legality of the subsequent order. The High Court emphasized that once an Assessing Officer had given effect to the Tribunal's order, any modification or setting aside of that order could only be done through specific procedures outlined in the Income-tax Act, 1961. The court highlighted that conducting a substantive review of the earlier order, as done in this case, was impermissible and without jurisdiction. Therefore, the impugned order dated 27 December 2011 was quashed on the grounds of lacking legal authority.

In conclusion, the High Court's judgment focused on upholding the procedural integrity and jurisdictional boundaries within the context of income tax assessments. By emphasizing the limitations on Assessing Officers' powers post giving effect to Tribunal orders, the court clarified the necessity of following prescribed procedures for any modifications or setting aside of such orders. The ruling serves as a reminder of the legal framework that governs the actions of Assessing Officers and underscores the importance of adhering to established procedures to maintain the integrity and legality of assessment processes.