2015 (1) TMI 12 - HC - Income Tax

Withdrawal of deduction under section 36(1)(viia) - Rectification of order by the Tribunal u/s 254 - Validity of Tribunal s order Held that - The Application was filed by the assessee bringing to the notice of the Tribunal that the ground in respect of withdrawal of deduction u/s 36(1)(viia) of the IT Act of ₹ 405,17,20,944/- in relation to standard assets was raised in the Memo of Appeal - The Tribunal has merely followed its order for the preceding AY 2005-06 and upheld the order passed by the CIT, which is the complaint - what the Tribunal was called upon to consider in the Miscellaneous Application is that the Commissioner in AY 2005-06 has not decided the ground on merits but directed the AO to redo the assessment after giving sufficient opportunity of being heard to the Assessee - However, in the AY 2006-07, the CIT has decided the ground on merits - Hence, this part of the Tribunal's order is vitiated by an error of law apparent on the face of the record. If the Tribunal was required to devote so much time for assigning reasons in more than five paragraphs in a lengthy eight page order on the Miscellaneous Application so as to correct an obvious mistake by exercising powers u/s 254(2) of the IT Act, then, interest of justice would have been sub-served and better had the Tribunal revived the entire Appeal and not partially - the Tribunal does not find sufficient ground to uphold the objection raised by the assessee to the exercise of powers u/s 263 by the Commissioner - If there was a mistake and with regard to claim of deduction running into ₹ 405,17,20,944/-, then, the tribunal was justified in directing partial revival of the Appeal - the Tribunal should pass a fresh order not only in relation to the objection raised by the assessee to the exercise of powers u/s 263 of the IT Act, but on the merits of the claim as well - merely because such an opportunity is given does not mean that the Tribunal is obliged to uphold any of the grounds thus, the matter is remitted back to the Tribunal Decided in favour of assessee.

Summary

Issues:
1) Challenge to Tribunal's order on Miscellaneous Application
2) Revival of Income Tax Appeal
3) Grounds for revival of the Appeal
4) Tribunal's decision on the Miscellaneous Application
5) Assessment under section 263 of the IT Act
6) Tribunal's partial revival of the Appeal
7) High Court's modification of the Tribunal's order

Analysis:

1) The High Court dealt with the challenge to the Tribunal's order on a Miscellaneous Application related to an Income Tax Appeal. The Tribunal's order dated 4th June, 2014, revived the Income Tax Appeal for hearing afresh on merits concerning the withdrawal of deduction under section 36(1)(viia) of the IT Act, specifically related to standard assets. The Court noted the arguments presented by both parties regarding the Tribunal's decision on the Miscellaneous Application.

2) The Appeal under section 260A of the Income Tax Act challenged the Tribunal's earlier order disposing of Income Tax Appeal No. 3145/Mum/2009 for assessment year 2006-07. The Tribunal's subsequent order on the Miscellaneous Application prompted the parties to consider the readiness of the State Bank of India (SBI) for the disposal of the Appeal in light of the new developments.

3) The Tribunal's decision to partially revive the Appeal for specific grounds, excluding the challenge to the exercise of powers under section 263 of the IT Act by the Commissioner, raised concerns. The High Court emphasized the importance of hearing the Appeal on all original grounds raised, including the objection to the exercise of powers under section 263.

4) The Court reviewed the Tribunal's order on the Miscellaneous Application, noting discrepancies in the Commissioner's decisions for assessment years 2005-06 and 2006-07. The Tribunal's handling of the revival of the Appeal and the limited scope of the grounds allowed for argument were scrutinized in detail.

5) The assessment under section 263 of the IT Act was a crucial aspect of the case, with the Tribunal's previous orders and the Commissioner's decisions being central to the arguments presented. The High Court highlighted the need for a comprehensive review of the grounds raised by both parties to ensure a fair and just decision.

6) The High Court expressed dissatisfaction with the Tribunal's partial revival of the Appeal and emphasized the importance of considering all relevant materials and grounds raised in the Appeal. The Court directed the Tribunal to hear the Appeal on all original grounds and make a fresh decision based on merits and in accordance with the law.

7) Ultimately, the High Court modified the Tribunal's order on the Miscellaneous Application, directing the Tribunal to hear the Appeal on all grounds found in the Memo of Appeal. The Court stressed the need for a thorough and unbiased consideration of the contentions raised by both parties to ensure a just and lawful decision. The High Court's decision served as a reminder to the Tribunal to handle matters diligently and with proper consideration of all relevant factors.