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TMI Blog2010 (8) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... C to the extent of Rs. 4,25,650/-. Gross bank interest of Rs. 8,10,462/- was treated as income from other sources by the Assessing Officer. The assessee preferred an appeal before the CIT(A), taking as many as seven grounds. The ground No.1 is raised against the initiation of proceedings under sec.147 of the Act. The said ground read as under: "The order of the Income Tax Officer, Ward-I(1), Tirupur is erroneous in law and unsustainable on the facts and circumstances of your appellant's case. Proceedings initiated under Section 147 are also bad in law." The other grounds related to taxability of bank interest earned which was considered by the Assessing Officer as a part of income under other sources and also consequential claims which had the implications on eligible claims of deduction under sec.80HHC of the Act. The CIT(A) vide order dated 3.12.2004 dismissed the assessee's appeal both on jurisdiction as well as on merits. 3. His order on jurisdiction read as under : "....In ground No.1, the appellant objects to the initiation of proceedings u/s.147 of the Act. However, the appellant has not pointed out the basis for raising such objection and, at the stage of the hearing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remitted the matter back to the file of the Assessing Officer to examine the purposes for which deposit was made with the bank and to find out the nexus of deposits with export business and decide the issues in accordance with law. According to him, the ITAT has not directed anything about the validity of proceedings u/s 147. The assessment is only to give effect to the order and question raised by the assessee on the validity of notice according to him was out of the purview of his order. The CIT(A) agreed with the Assessing Officer and the assessee came before the Tribunal in second round and challenged the issuance of notice under sec.148 of the Act. This contention thus came to be considered by both the Members of the Division Bench. 6. The ld. Vice-President who first wrote the order for the bench agreed with the assessee in the light of the decision of the Gujarat High Court in the case of P.V.Doshi vs CIT (113 ITR 22). The ld. V.P. examined the issue with reference to the first round as well as the second round of appeal and he extracted the operative portion of the order of the CIT(A) (para 3 above) which gives rise to the litigation and has given the following finding adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue on merits and rejected the ground as not pressed. Though it is not mentioned in so many words, the inference is that the assessee did not press the ground before the CIT (A). This being the case, and in view of the decisions cited earlier, as there cannot be any waiver in respect of the jurisdictional aspect of the matter, we hold that the present case clearly falls within the ambit of the judgment in the case of P. V. Doshi (supra). Therefore, respectfully following the judgment of the Gujarat High Court as well as other decisions cited before us, we are of the considered view that it was within the right of the assessee to raise the ground challenging the validity of reopening of the assessment before the Tribunal in the second round of litigation. 8. The only issue which now remains to be dealt with is whether the reopening of the assessment was in fact bad in law in view of the fact that the same had been initiated when the time limit for issuing notice under sec.143(2) was still available. In this connection, besides several decisions relied upon by the learned counsel, a recent Third Member decision is also there in the case of Super Spinning Mills Ltd. in I.T.A.No.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pursued the ground with any sort of argument or seriousness. In a way the ground was rejected and not disposed of on merits. He further clarified that there are only two methods for disposal of a matter when raised before the judicial forum. One is on merits and the other is 'as not pressed'. Before the CIT(A) in the first round the assessee was not at all serious about the ground. He did not give any material or specific objection to the ground that he has raised and it cannot be said that the CIT(A) has disposed of anything against the assessee except he has recorded a fact that the assessee has virtually given up the ground of appeal. Therefore, he justified the findings and the inferences drawn by the ld. V.P. to the effect that the conduct of the assessee is in the direction of not pressing the ground pertaining to the action taken under sec.147 of the Act. The assessee, it was argued, had not placed any material on the basis of which action under sec.147 was challenged. Not having done so, the CIT(A) had no occasion to deal with the issue on merits and rejected the ground as not pressed. He fairly agreed that in so many words the CIT(A) did not mention in the order in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in para 6 of that order pointed out that justice can be done only when the matter is fought on merits and in accordance with law rather than to dispose it of on such technicalities and that too at the threshold. The SC in this case has concerned with the condonation of delay in filing appeals. It was pointed out by their lordships in that case that only if malafides are writ large on the conduct of the party, generally as a normal rule, delay should be condoned. In the legal arena, an attempt should always be made to allow the matter to be contested on merits rather than to throw it on such technicalities. This part of the judgment was very heavily relied upon so as to impress me that the order of the J.M. is based on technicalities and not on the tests of substantial justice or merits. 10. The ld. D.R. on the other hand, vehemently argued that in the first round of litigation the issue relating to the validity of sec.147 proceedings has reached the finality and therefore, the views of the Assessing Officer as well as the CIT (A) in the second round and so also the views of J.M. in the second round are justified, in rejecting the assessee's contention. To challenge the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation, we will only be extending the rules of technicalities in the matter and thereby rendering injustice. It is for these reasons, in my opinion, the learned Vice President was correct to draw an inference having regard to the factual circumstances to say the assessee at best could be said to have not pressed the issue before the CIT (Appeals). I am conscious of the fact that the CIT (Appeals) did not record such a finding in so many clear and pointing words. But substance of the decision is that the disposal was never on merit. It was more like an assessee having taken the ground has given up that ground as was appreciated by the Gujarat High Court in the case of P.V. Doshi (cited supra). 12. The assessee in the first round of litigation did not raise this issue before the Tribunal, although it was in appeal before the Tribunal on merits. Therefore, there was no scope for the Tribunal in the first round even to have tinkered with the decision and to confer finality to such an order in a manner that in the second round that doors of justice would be closed to the assessee on the issue regarding the jurisdiction. It is now well established that the issue of jurisdiction of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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