2013 (12) TMI 1159 - HC - Income Tax

Validity of order of CIT(A) - Held that - A perusal of the order passed by the ITAT reveals that, though, arguments were addressed on the question of legality of order passed by the CIT(A) - The ITAT has not recorded any opinion thereon - The order passed by the ITAT, suffers from an error of jurisdiction and must necessarily be rectified. The CIT(A) and the ITAT have apparently ignored Section 153(1)(a) as well as judgment of the Hon ble Supreme Court of India in Assistant Commissioner of Income-tax v. J.K.Synthetics Ltd., 2001 (2) TMI 17 - SUPREME Court - The matter was restored for fresh adjudication.

Summary

Issues:
1. Challenge to order of Income Tax Appellate Tribunal regarding assessment years 1989-90 and 1990-91.
2. Failure to consider argument on the legality of order passed by CIT (A) under Section 154 of the Income Tax Act.
3. Whether ITAT erred in not addressing the argument raised by revenue regarding setting aside the order under Section 154.
4. Ignoring Section 153(1)(a) and Supreme Court judgment on additional income demand when there is still a loss of income.

Analysis:
1. The High Court addressed the challenge to the order of the Income Tax Appellate Tribunal (ITAT) regarding the assessment years 1989-90 and 1990-91. The substantial question of law raised was whether the ITAT was justified in deleting the additional tax and confirming the order of the Commissioner of Income Tax (Appeals) despite amendments to the provisions relating to charging of additional tax. The Court noted that the revenue had failed to frame a significant question regarding the legality of the order passed by the CIT (A) under Section 154 of the Income Tax Act.

2. The Court considered the argument raised by the revenue that the order passed by the CIT (A), setting aside the order under Section 154, was contrary to law. The Court found that the ITAT had not dealt with this argument, leading to an error of jurisdiction. Consequently, a substantial question of law was framed to address whether the ITAT had erred in failing to consider this argument, highlighting the need for rectification.

3. Regarding the second substantial question of law, the Court observed that both the CIT (A) and the ITAT had overlooked Section 153(1)(a) and a judgment of the Supreme Court which were crucial in determining whether additional income could be demanded when the addition made still resulted in a loss of income. The Court emphasized the significance of these provisions and judgments in the controversy at hand.

4. In conclusion, the Court allowed the appeal, set aside the impugned order, and remitted the matter back to the ITAT for a fresh decision in accordance with the law. The parties were directed to appear before the ITAT on a specified date for further proceedings in the case. The detailed analysis provided a comprehensive overview of the judgment's handling of the various issues raised during the legal proceedings.