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2016 (7) TMI 619 - AT - Income TaxEntitlement to exemption u/s 11 - AO denied exemption u/s 11 on the ground that there was violation by the assessee of the provision of section 13(1)(c ) and section 13(2)(g) - maintainability of the application of the Assessee before the DIT(E) u/s.264 - whether here was no power under the Act under which an assessee can withdraw an appeal filed before CIT(A)? - Held that - The CIT considered the petition u/s 264 of the Act and passed an order dated 28.11.2011. At the time of hearing before CIT(A), Jalpaiguri on 10.01.2013 the assessee again brought to the notice of the CIT(A) of the facts with regard to the petition u/s 264 of the Act and the order passed by CIT u/s 264 of the Act. The CIT was also informed that pursuant to the order u/s 264 of the Act the AO has also passed an order giving effect dated 29.12.2011. The CIT(A)-XIV, Kolkata, if he had desired to exercise his powers of enhancement ought to have informed the Assessee that he wishes to exercise powers of enhancement and therefore the request for withdrawal of the appeal would not be acceded to. This is because the period of limitation for filing an application for revision u/s.264 of the Act in terms of Sec.264(3) is one year from the date on which the order sought to be revised was communicated to the Assessee. The order of assessment in the present case was passed on 29.12.2010. The period of limitation would therefore end by 29.12.2010. In the given circumstances, the CIT(A) could not have question the maintainability of the application of the Assessee before the DIT(E) u/s.264 of the Act. The effect of the order dated 28.11.2011 is that the order of the AO dated 29.12.2010, ceased to exist and got merged with the order of the DIT(E) passed u/s.264 of the Act. On the date when CIT(A) came to decide the appeals the orders of assessee has already been revised by CIT u/s 264 of the Act and thereby the appeal before CIT(A) were rendered incompetent. In the given facts and circumstances the CIT(A) ought not to have exercised his appellate jurisdiction on the appeal filed by the assessee. As we have already observed that when CIT(A) cannot question the jurisdiction of CIT u/s 264 of the Act on the ground that there was violation of the provision of section 264(4)(c) of the Act. We are of the view that in the light of the above conclusions the question whether the assessee can withdraw an appeal filed before CIT(A), becomes academic, since the appeal before CIT(A) itself was incompetent. We, therefore hold that the order passed by CIT(A) has to be cancelled as incompetent and superfluous, in view of the order of CIT u/s 264 of the Act. In view of the above conclusions the other contentions put forth before us are not taken into consideration. - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction of CIT(A) Jalpaiguri. 2. Denial of exemptions under Section 11 due to late filing of return. 3. Maintainability of the petition under Section 264. 4. Summary dismissal of the appeal by CIT(A). 5. Confirmation of the assessment order by CIT(A). 6. Merger of the assessment order with the order under Section 264. 7. Withdrawal of the appeal filed before CIT(A). Detailed Analysis: 1. Jurisdiction of CIT(A) Jalpaiguri: The assessee argued that the CIT(A) Jalpaiguri had no jurisdiction to decide the appeal as it was initially filed before CIT(A) XIV Kolkata, as directed by the AO in the demand notice under Section 156. The Tribunal agreed with the assessee, stating that the CIT(A) Jalpaiguri should not have exercised jurisdiction over the appeal. 2. Denial of Exemptions under Section 11: The CIT(A) erred in holding that the late filing of the return automatically resulted in the denial of exemptions under Section 11 of the Income Tax Act. The Tribunal noted that the assessee filed the return within the due date under Section 139(1) and a revised return on 27.03.2009, which should not have led to the denial of exemptions. 3. Maintainability of the Petition under Section 264: The CIT(A) held that the petition under Section 264 was not maintainable as an appeal against the assessment order was pending. The Tribunal, however, referred to the CBDT Circular No. 367, which clarifies that an order cannot be said to be the subject of an appeal if the appeal has been disposed of without passing an order under Section 251(1) or 254(1) on merits. The Tribunal concluded that the CIT(A) should not have questioned the maintainability of the application under Section 264. 4. Summary Dismissal of the Appeal by CIT(A): The CIT(A) dismissed the appeal summarily without deciding the grounds of appeal on merit, which was in contravention of the provisions of Section 250(6) of the Income Tax Act. The Tribunal emphasized that the CIT(A) should have addressed the grounds of appeal on their merits rather than dismissing the appeal summarily. 5. Confirmation of the Assessment Order by CIT(A): The CIT(A) confirmed the assessment order passed by the AO. The Tribunal found this to be erroneous, given that the order of the AO had already been revised by the DIT(E) under Section 264, rendering the appeal before CIT(A) incompetent. 6. Merger of the Assessment Order with the Order under Section 264: The Tribunal highlighted that once the DIT(E) passed an order under Section 264, the original assessment order ceased to exist and merged with the order under Section 264. Therefore, the CIT(A) should not have proceeded with the appeal as the assessment order had already been revised. 7. Withdrawal of the Appeal Filed before CIT(A): The Tribunal addressed the issue of whether the assessee could withdraw the appeal filed before CIT(A). It concluded that this issue became academic since the appeal itself was rendered incompetent due to the order passed under Section 264. Therefore, the Tribunal held that the CIT(A) should have allowed the withdrawal of the appeal. Conclusion: The Tribunal allowed the appeal of the assessee, stating that the order passed by CIT(A) was incompetent and superfluous in light of the order passed under Section 264. The Tribunal canceled the order of CIT(A) and did not consider the other contentions put forth. Order Pronounced: The order was pronounced in the Court on 08.07.2016.
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