2019 (8) TMI 401 - AT - Income Tax

Direction of CIT(A) u/s 150 to take remedial action u/s 148 for same assessment year which is under appeal - deduction u/s 80P - time of six years have elapsed - earlier reassessment was quashed by CIT(A) and disposing that appeal direction was issued - HELD THAT - According to section 150(1), a notice u/s 148 may be issued at any time for the purpose of making an assessment in consequence of or to give effect to any finding or direction contained in an order passed on appeal. Section 150(2), however, provides that the provisions of section 150(1) shall not apply in any case where any such assessment, made in consequence of an appellate order relates to an assessment year in respect of which an assessment could not have been made at the time the order, which was the subject matter of the appeal, was made, by reason of any other provision limiting the time within which any action for assessment may be taken. Section 149 of the Act lays down the time limit for issuance of notice u/s 148. In accordance with section 149(1)(b), if four years, but not more than six years have elapsed from the end of the relevant assessment year, and if the income chargeable to tax which has escaped assessment amounts to one lakh rupees or more for that year, notice u/s 148 for the relevant assessment year shall be issued. In such a case, a notice u/s 148 can be issued upto a maximum period of six years from the end of the relevant assessment year. In the present case, the impugned order was passed on 2/5/2019. The assessment year involved is assessment year 2008-09. In accordance with the provisions of section 149(1)(b) of the Act, notice u/s 148 of the Act could have issued by the end of assessment year 2015-16. This period had already elapsed when the impugned order came to be passed. Therefore, the law not permitting initiation of proceedings u/s 147 when the order under appeal was passed, the direction of the ld. CIT(A) is not in accordance with law. It is a non est direction. An appellate authority cannot confer jurisdiction which the A.O does not have, e.g., as in the case of an assessment being barred by limitation. This has been held by the Hon'ble Gauhati High Court in the case of Bengal Tea And Fabrics Ltd. vs. ACIT 1996 (9) TMI 110 - GAUHATI HIGH COURT The Hon'ble Allahabad High Court held that the AAC was not justified in directing the ITO to proceed in accordance with law. In CIT vs. Estate Of Late Sri N. Veeraswamy Chettiar 1962 (8) TMI 98 - MADRAS HIGH COURT has held that conferment of jurisdiction on the ITO, which he is not lawfully seized of, is not within the scope of the appellate powers of the AAC. Finding the grievance of the assessee to be justified, the same is accepted. The direction in question, i.e., the direction issued by the ld. CIT(A) vide para 5.5 of the impugned order, as reproduced in para 7 of this order, is hereby ordered to be expunged.

Summary

Issues Involved:
1. Limitation under section 149 of the Income Tax Act, 1961.
2. Validity of the direction issued under section 150 of the Income Tax Act, 1961.
3. Jurisdictional errors in the reassessment proceedings.
4. Impact of the appellate authority's direction on reassessment proceedings.

Detailed Analysis:

1. Limitation under section 149 of the Income Tax Act, 1961:
The assessee argued that the limitation period of six years provided in section 149 for AY 2008-09 expired on 31/03/2015. Therefore, the CIT(A)-II, Kanpur could not issue a direction to the AO to initiate reassessment proceedings under section 148 on 02/05/2019, as it was barred by limitation. The Tribunal agreed, stating that according to section 149(1)(b), a notice under section 148 can be issued within six years from the end of the relevant assessment year if the income chargeable to tax exceeds ?1 lakh. Since the notice could only be issued by the end of AY 2015-16, the direction issued in 2019 was time-barred.

2. Validity of the direction issued under section 150 of the Income Tax Act, 1961:
The Tribunal examined whether the direction issued by the CIT(A) under section 150 was valid. Section 150(2) states that section 150(1) does not apply if the assessment could not have been made at the time the order was passed due to any provisions limiting the time for reassessment. Since the order was passed after the limitation period had expired, the direction under section 150 was deemed invalid. The Tribunal concluded that the CIT(A) could not confer jurisdiction on the AO that was not legally available.

3. Jurisdictional errors in the reassessment proceedings:
The Tribunal noted that the CIT(A) had annulled the assessment order on the grounds that the AO lacked jurisdiction to issue the notice under section 148. The CIT(A) had found that the AO did not record any finding that the assessee failed to disclose fully and truly all material facts necessary for the assessment. The Tribunal upheld this annulment, agreeing that the AO did not have the jurisdiction to issue the notice.

4. Impact of the appellate authority's direction on reassessment proceedings:
The Tribunal emphasized that an appellate authority cannot confer jurisdiction on the AO if it does not exist. Citing various case laws, the Tribunal held that the CIT(A)'s direction to the AO to execute remedial action under section 148 was non est (invalid) as it was issued after the limitation period. The Tribunal expunged the direction issued by the CIT(A), stating that it was not in accordance with the law.

Conclusion:
The Tribunal allowed the appeal, finding that the direction issued by the CIT(A) under section 150 was barred by limitation and invalid. Consequently, the stay application became infructuous and was rejected. The order was pronounced in the open court on 14/06/2019.