9911796707
TMI Blog2012 (8) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Tribunal, it will not be able to take a view on the assessee's challenge that the CIT did not exercise his independent mind while initiating proceedings under Section 263. Power of tribunal to stay - Held that:- The order of the Tribunal in staying the assessment proceedings is well settled by the judgment in ITO v. Mohd. Kunhi, (1968 (9) TMI 5 - SUPREME COURT ) that while exercising its appellate powers under the Income Tax Act Tribinal has also the power to ensure that the fruits of success are not rendered futile or nugatory and for this purpose it is empowered, to pass appropriate orders including orders of stay - staying the assessment proceedings pending before the AO consequent to the directions of the CIT given in orders passed under Section 263 is part of the exercise of the appellate power of the Tribunal under Section 254 (1) with an aim to prevent multiplicity of proceedings and harassment to the assessee, with the possibility of the proceedings before the AO becoming meaningless if ultimately the order passed by the CIT is found to be invalid on grounds of jurisdiction or on merits - As it has not been shown before us by the petitioner as to what error was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income at ₹ 10,36,86,880/-, the only addition made being the disallowance of the technical know-how fees of ₹ 25,20,000/-. 3. On 23.07.2007 the CIT sought to revise the assessment order under Section 263 of the Act on the ground that it was erroneous and prejudicial to the interest of the Revenue and accordingly issued a show-cause notice to the assessee. After hearing the assessee, he passed an order under Section 263 on 19.06.2008 by which he set-aside the assessment order dated 01.06.2006 with directions to the Assessing Officer to frame the assessment afresh after affording an opportunity of being heard to the assessee and after making proper inquiries and verification. The assessee challenged the order passed by the CIT as above in W.P. (C) No.4722/2007, in which the principal contentions were that the order of the CIT was in violation of principles of natural justice, that the assessment order dated 01.06.2006 was passed after being monitored by the CIT/ Central Board of Direct Taxes (CBDT), that the proceedings under Section 263 were on the instructions of the authorities superior to the CIT and that no satisfaction was arrived at by the CIT independent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While these proceedings were pending, the assessee filed SLP (C) No.7712/2010 before the Supreme Court on 22.03.2010 against the order passed by this Court on 11.12.2009 in WP(C) No.4722 of 2008. It appears that the Supreme Court in its interim order passed on 22.03.2010 directed the assessee to give a complete breakup of the world-wide income and allocation of expenses towards learning business and software business. While so, on 01.04.2010 the CIT passed orders under Section 263 for the assessment years 1999-2000 to 2005-06 setting-aside the assessment orders passed by the Assessing Officer on the ground that it was erroneous in so far as it was prejudicial to the interest of the Revenue. He directed the Assessing Officer to pass a fresh assessment orders in accordance with law and after giving the assessee adequate opportunity of being heard. 7. On 12.04.2010 the Supreme Court permitted the assessee to withdraw the Special Leave Petition. It would be better to reproduce the order passed by the Court: - Recently an order(s) has been passed by the Commissioner under Section 263 of the Income Tax Act, 1961 remanding the matter(s) to the Assessing Officer on all points, includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be priority appeals. The Ld. A. R. of the assessee has assured that he will not be taking any adjournment. Similarly, we expect from the revenue that they will also not seek any adjournment. Therefore, if the hearing of these appeals took place then these appeals can be disposed of prior to 30th September 2010. Keeping in view of all these fact, we are of the opinion that if the A.O. is allowed to proceed with the assessment proceedings already undertaking by him, then the prejudice will cause to the assessee as it has to go for multiplicity of proceedings. In case it is held that powers u/s 263 were wrongly exercised then consequential order will have no legs to stand. Therefore, we consider it just and proper to issue a direction to Ld. A.O. not to continue with the assessment proceedings in pursuance to the order u/s 263 up to 30th September 2010. Even after 30th September 2010 ample time will be available to the A.O. to frame the assessment in case the validity of 263 is upheld. Considering the entirety of facts we issue such direction to the A.O. not to proceed with the assessment proceedings up to 30th September 2010 or till the disposal of the present appeals, whichever is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The contention of the petitioner is that it is not open to the assessee, the second respondent herein, to question the order passed by the CIT on 01.04.2010 on the ground that he did not validly assume jurisdiction to revise the assessment orders. Particularly, it is contended, it is not open to the assessee to take up the contention that the CIT did not independently apply his mind before taking action under Section 263 and had acted on the dictates or instructions of his superiors, viz., CBDT. It is further contended that the stay granted by the Tribunal on the assessment proceedings was barred by the principle of res judicata. It is pointed out that the challenge to the jurisdiction of the CIT to revise the assessment orders was already adjudicated upon by this Court in W.P. (C) No.4722/2007 dated 11.12.2009 and thereafter the assessee itself had submitted before the Supreme Court that all issues were remitted back to the Assessing Officer by the CIT and, therefore, the SLP may be dismissed as withdrawn. The contention of the learned Additional Solicitor General appearing for the petitioner, is that the assessee agreed before this Court that the CIT may look into the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the assessee that in any event the question of assumption of jurisdiction by any statutory authority and its validity can be set up by the aggrieved party at any point or at any stage of the proceedings and can even be taken during collateral proceedings. In support of this submission, which was made without prejudice to the main contention noted in the preceding paragraph, our attention was drawn to the judgment of the Gujarat High Court in P. V. Doshi v. CIT, (1978) 113 ITR 22. 15. In Kiran Singh Ors. v. Chaman Paswan Ors., AIR 1954 SC 340 it was observed by T. L. Venkatarama Ayyar, J. speaking for a Bench of four Judges as follows: - It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came back to the assessing officer the assessee specifically raised the point of jurisdiction to reopen the assessment, contending that the notice of reopening was prompted by a mere change of opinion. This plea was rejected. Even on merits the addition was repeated in the reassessment order. The assessee again carried the reassessment order before the AAC. In this appeal the assessee again took up the point of jurisdiction. The AAC found from the assessment record that no reasons had been recorded by the Income Tax Officer before issuing notice under Section 148 (1) of the Act. According to him, Section 148 (2) which requires the Assessing Officer to record reasons for reopening the assessment was mandatory and failure to obey the mandate was fatal to the jurisdiction of the Assessing Officer to reopen the assessment. The AAC, therefore, accepted this ground and also held the reassessment to be bad on the further ground that in the original assessment proceedings themselves the assessee had explained the investments and, therefore, the reopening of the assessment was the result of a mere change of opinion. Thus, on both the grounds he annulled the reassessment order. Against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly gave up the plea against the erroneous assumption of jurisdiction by the assessing authority. According to the Court, the finality or conclusiveness could only arise in respect of orders which are competent orders with jurisdiction and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could never have any finality or conclusiveness. If the original order is without jurisdiction, it would be only a nullity confirmed in further appeals . In this view of the matter, the Court finally answered the reference in favour of the assessee. 17. A learned Single Judge of this Court in the case of Must. Shahaba Begum v. Must. Pukhraj Begum Ors., AIR 1973 (Del.) 154 held that where the final decree was not engrossed a proper stamp paper, it was not a decree that could be acted upon until proper stamp was supplied and if on the basis of the decree, the executing Court directs sale of property and distribution of the sale proceeds, it is open to the judgment debtor to take up the claim for the first time before the executing Court that the decree which was insufficiently stamped was a nullity and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment or not in the relevant assessment years in which the AO had already passed the assessment orders. No doubt, some anxiety is shown by the CBDT in this behalf. However the argument of the respondents is that the CBDT had wanted the matter to be examined and never intended that the orders are to be passed in one particular manner only. It was pointed out that no such directions were given by the CBDT to the respondent No.4 directing him to pass an order under section 263 of the Act, necessarily reopening the assessments. He was called upon to examine the matter. The Commissioner passed detailed order under section 263 of the Act, which depicts his independent mind, and various observations made in this order are not at the dictates of any authority. It was for this reason that submission of learned senior counsel for the petitioner was not that any such specific direction was given. Attempt was to demonstrate that the CBDT had almost dictated the line of action to the respondent No.4 making him virtually impossible to exercise independent judgment and unfettered discretion in discharge of his statutory function under section 263 of the act. It is not necessary for us to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the learned ASG certainly deserves deep consideration. However, there is difficulty in accepting the same as it would run counter to the established legal position adumbrated in the judgments of the Supreme Court to which we have referred earlier. This Court no doubt observed that the CIT passed a detailed order under Section 263 of the Act depicting his independent mind and not at the dictates of any higher authority and it was only after realising this position that the learned senior counsel for the petitioner did not put forth any submission to the effect that specific directions were given by the higher authority to the CIT and that the attempt was only to demonstrate that the CBDT had almost dictated the line of action to the CIT making him virtually impossible to exercise his independent judgment and unfettered discretion. Having made these observations this Court, however, also observed that it was not necessary for it to give any authoritative pronouncement in the facts of the case, the reason being that once the order of the CIT was set-aside, then the effect would be that the CIT will have to go into the issue afresh for considering the submissions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject matter. The observations of this Court can, therefore, only be understood in the context of the order of the CIT that was before it. It cannot be understood as placing an embargo on the assessee from raising the plea, when the authority considered the matter afresh, that that order suffers from the same jurisdictional defect, namely, that it did not show an independent application of mind and was authorised by the dictates of some other authority. In any event, even if the plea of the petitioner to the effect that the objection to the jurisdiction of the CIT to initiate proceedings under Section 263 vanished after the order of this Court, either by consent or waiver is accepted, since these acts on the part of the assessee have been held insufficient in law to clothe the CIT with jurisdiction to pass orders under Section 263, the assessee cannot be estopped from putting forth that plea before the CIT in the fresh round of proceedings. The assessee cannot also be prevented from taking up the plea in the appeals filed before the Tribunal against the orders passed by the CIT on 01.04.2010. Consequently, the Tribunal cannot be faulted for directing, by its order dated 06.07.2010, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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