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TMI Blog2012 (9) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... n its order in ITA No.180 of 2002 dt.16.11.2007 reversed the decision of the Tribunal on this issue accepting the fact as stated by the assessee that considering the date of writing off this amount by the Karnataka Bank Ltd., the said amount is not exigible to tax in the current year i.e, at 1990-91. The Hon'ble Court held that if the same is not disclosed by the assessee in the subsequent year, it is open to Revenue to take action in accordance with law. The relevant portion of the Hon'ble High Court order, on this ground found in paras 9 and 11 thereof is as under : " 9. In regard to question No.2 is concerned, admittedly the assessee has admitted the amount written off by the Karnataka Bank. According to the assessee considering the date of written off by the Bank, the said amount has to be disclosed by the assessee not in the current year but for the subsequent year. When the assessee has clearly stated that these amounts are to be disclosed in the subsequent assessment order, we are of the opinion that the Assessing Officer did not consider the case of the assessee properly. In the circumstances, we answer question NO.2 in favour of the assessee giving liberty for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and hence invalid and therefore, the order passed by the learned A.O. founded on the invalid and illegal notice under section 148 of the Act deserves to be cancelled. 5. Without prejudice to the above, the order of re-assessment is bad in law and void-abinitio for want of requisite jurisdiction especially, the mandatory requirements to assume jurisdiction under section 148 of the Act did not exist and have not been complied with and consequently, the re-assessment requires to be cancelled. 6. The authorities below are not justified in reopening the assessment by invoking section 150 of the Act as there is no finding or direction in the order of the Hon'ble High Court in the appellant's own case for the Assessment Year 1990-91 on the facts and circumstances of the case. Thus the reopening is bad in law. 7. Without prejudice the authorities below are not justified in law in making an addition of Rs. 4,40,653 under the head cessation of liability under the facts and circumstances of the case of the appellant. 8. The appellant denies himself liable to be charged to interest under section 234A & 234B of the Income Tax Act, 1961under the facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or direction in an appellate order. If, however, an assessment is made not pursuant to a finding or direction by an appellate authority then section 150(1) of the Act does not come into play. It is the contention of the learned counsel for the assessee that in the instant case it cannot be said that the assessment is made in consequence of or to give effect to the finding or direction in an appellate order in as much as when the Hon'ble High Court in its order grants liberty to an Assessing Officer to examine a particular issue, it does not amount to a direction given by the Hon'ble High Court. 4.2 The learned counsel for the assessee further contended that the order of assessment passed by the Assessing Officer is bad in law, void-ab initio as the Assessing Officer has issued notice u/s. 148 of the Act without observing the conditions mandated in the Income Tax Act for doing so, for the following reasons : (i) The Assessing Officer, it is submitted, has not independently recorded any reasons to come into the ambit of the essential ingredient and condition precedent for reopening an assessment u/s. 148 i.e. "Reason to believe" that income has escaped assessment. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's contention, the learned Departmental Representative has relied on several judicial decisions. 6.0 In the light of the above arguments, the issues for adjudication in the instant appeal are : A. Whether the order of the Hon'ble Karnataka High Court in ITA No.180 of 2002 for Asst. Year 1990-91 in the assessee's case can be construed as an order giving a direction to the Assessing Officer. B. Whether the notice u/s.148 of the Act is a notice issued in accordance with law. Each of these issues will be considered and decided hereunder. 7.1 A. Whether the order of the Hon'ble Karnataka High Court in ITA No.180 of 2002 for Asst. Year 1990-91 in the assessee's case can be construed as an order giving a direction to the Assessing Officer. 7.2 We have heard both parties and perused the material on record. It would be relevant to take note of the findings given by the Hon'ble Apex Court and several High Courts which have a bearing on the issue at hand. Rajinder Nath Vs. Commissioner of Income Tax 120 ITR 14 (SC) In this decision the Hon'ble Apex Court has explained "Finding" and "Direction" as follows : "The expressions Finding and Direction are limited in meaning." " A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 13,03,008 as unproved credits." 7.3 (i) From a perusal of para 9 of the High Court order (supra), the operative portion of the para is found in the last four lines which, are : "In the circumstances, we answer question No.2 in favour of the assessee giving liberty to the assessee to show the said amount of Rs. 4,40,653 in the subsequent years. If the same is not shown by the assessee in the subsequent years, it is open for the Revenue to take action in accordance with law." It is clear from the above that - (i) the High Court gives liberty to the assessee to show the said amount of Rs. 4,40,653 in the subsequent years, and (ii) If the same is not shown by the assessee in the subsequently years, it is open for the revenue to take action in accordance with law. 7.4 Applying the decision of the Hon'ble Apex Court at 120 ITR 14 (supra), it appears that when the Hon'ble High Court has chosen to use the words that "it is open for the revenue to take action, then revenue has the option to take or not to take action." It is, therefore, clear that by using the words 'it is open for the revenue' the High Court has not given any direction to the Revenue to take action. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,40,653 has been shown by the assessee for the subsequent year. Here again it appears that the Hon'ble High Court has not directed the Assessing Officer to examine but grants liberty to examine if he so wishes to do and the only direction given is to delete the addition made for Assessment Year 1990-91. The fact that the Hon'ble High Court has chosen to use the word 'liberty' in para 9 and once again in para 11 only signifies that the Assessing Officer is given the option or discrection to examine, if he so wishes to do so. This clearly is not a direction in terms of the judgment of the Hon'ble Apex Court cited above. 8.0 Consolidated Coffee Ltd. Vs. ITO 155 ITR 729 (Kar) 8.1 The Hon'ble High Court of Karnataka, relying on the decisions of the Hon'ble Apex Court in the cases of Rajinder Nath (supra) and ITO Vs. Muralidhar Bhagwan Das (52 ITR 355) held that a direction or finding should be in respect of the year under review, revision or appeal as the case may be. It is only in such circumstances that the provision of section 150(1) of the Act will come into play. In the cited case, the jurisdictional High Court has already held -- " The expression Find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above, decision of the Hon'ble High Court of Madras, a High Court has no jurisdiction to give a finding or direction in respect of either an earlier assessment year or a subsequent assessment year. 12.1 Kausali Vs. 6th ITO 155 ITR 739 (Kar) In the above case, the jurisdictional High Court has clearly held that by virtue of the provisions of section 153(3)(ii) of the Act, the period of limitation shall not apply where assessment, reassessment or re-computation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order u/s.250, 254, 260, 262, 263 or 264 of the Act or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Income Tax Act, 1961. 12.2 Thus it follows that in respect of any appeal or reference under this Act, the order should have been passed u/s.250, 254, 260, 262, 263 or 264. In the instant case, the order of the Hon'ble High Court is passed u/s.260A of the Act and this section finds no mention amongst the sections mentioned in section 153 (3)(ii) of the Act. In fact in the reasons recorded prior to the issue of notices u/s.148, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has been rendered earlier to the decision of the very same High Court in the case of Pieco Electronics & Electricals Ltd (supra) relied on by the assessee. It is also seen that the judgement in the case of Pieco Electronics & Electricals (supra) has been rendered following the decision of the Hon'ble Apex Court in the case of Muralidhar Bhagawan Das (supra) and also by referring to the judgement of the Hon'ble High Court of Karnataka in the case of Consolidated Coffee Ltd (supra) and we find that both these decisions have been relied upon by the assessee in support of its contention whereas the Hon'ble High Court of Calcutta in the case of Hope India Ltd. (supra) has not considered any judgment of any Court while deciding the case. 14.2 All the other cases cited by the learned Departmental Representative as also the three cases discussed above, have been perused and we are of the opinion that they would come into play if and only if it is held that the order of the Hon'ble High Court of Karnataka, in the assessee's case, passed u/s.260A of the Act, is in the nature of a direction or is said to contain a finding that the impugned amount of Rs. 4,40,653 did constit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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