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TMI Blog2016 (8) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER Per Bench These are two appeals by two Assessees against two different orders both dated 29.5.2015 of the CIT(A)-4, Kolkata, relating to AY 2008-09. The issues that arise for consideration in both these appeals are identical and arise under identical facts and circumstances. They were heard together. We deem it convenient to pass a common order. 2. We shall take up for consideration ITA No.976/Kol/2015 because in the order of CIT(A) which is challenged in this appeal by the Assessee, the CIT(A) has passed a detailed order and he has merely relied on the said order while deciding the appeal of the Assessee in ITA No.975/Kol/2015. The facts and circumstances giving rise to the appeal by the Assessee in ITA No.976/Kol/2015 are that the Assessee is a company. The Assessee filed return of income for AY 2008-09 on 28.7.2008 declaring a total income of Nil. The same was processed u/s.143(1) of the Income Tax Act, 1961 (Act). Subsequently notice u/s.148 of the Act was issued on 18.3.2010 on the basis of information that income under the head Consultancy Fees to the tune of ₹ 35,000/- during the FY 2007-08 had escaped assessment. An order of assessment u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. In the said letter the AO informed the Assessee that the assessment order along with demand notice were served at 164, M.G.Road, Kolkata-7. The Assessee was also informed by the said letter that the order of assessment dated 9.4.2010 passed u/s.147/143(3) of the Act by the AO determining the total income of the Assessee at ₹ 48,620/- was revised by the CIT in exercise of his powers u/s.263 of the Act vide order dated 22.3.2013 on the ground that the Assessee had received Share capital to the tune of ₹ 2,05,28,201/- and that the AO did not make proper enquiries with regard to the identity and creditworthiness of the shareholders and therefore the order of the AO was erroneous and prejudicial to the interest of the revenue. By the said order dated 22.3.2013, the AO was directed to make the required investigation and enquiries with regard to the identity and creditworthiness of the shareholders. The Assessee was informed by the said letter dated 3.11.2014 that pursuant to the aforesaid directions, the AO took up the Assessment of the Assessee. The AO passed an order dated 31.3.2014 u/s.144/263/147/143(3) of the Act. The said order passed by the AO was an ex-parte or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the address of the Assessee was changed from 2010 and the same was within the knowledge of the Assessing Officer as intimated to the Assessee in January 2011 and also by the fact that the Return for the assessment years 2011-12 onwards were filed wherein the current address of the appellant was reflected. The Assessee pointed out that the AO himself wrote a letter to the Assessee at new address on 7.9.2011. It was submitted that if the AO did not know in February 2014 who are the Directors of the Assessee then the AO would not have served notice in September 2014 to the present Directors informing them about nonpayment of the outstanding demand. It was submitted that notice under section 263 of the Act, order under section 263 of the Act, notice under section 142(1) and 143(2) of the Act as well as the order of Assessment and orders of penalty were issued at a wrong address and never served on the Assessee in spite of the AO fully knowing about the change in its address. It was submitted that the Assessing Officer erred in addition of income on the basis of an ex-parte order passed by him. The Assessee did not receive any notice in respect of the hearing. Though there is no f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any change in the e-databases, Intimating the AO is the correct intimation as per the statute. Having said so, even so I observe in the assessment records that the Postal authorities upon the envelopes returned have remarked as Addressee Moved . So, it should have struck the AO to check from the PAN Database, or, from the AR/person who had attended in the earlier assessment or to resort to sections 283, 284 to serve on the principal officer /member. It is also not the case where deeming provisions of section 292BB could be invoked - for there was no appearance at all. Thus on this issue of whether there was valid service of notice, the appellant having not intimated to the AO the change in address as required by law u/s 139A(5)(d), thus it cannot be fully taken that the appellant had duly intimated as required under the Act. The PAN Services per se is not the Department - it is only an outsourcing service agency. At the same time though, the Act specifically mentions that the notice for assessment 'shall be served on the.assessee' - which has not been the case here. So, impasse!! - which now requires that the episode be considered in entirety ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is per se not invalid for the appellant had not properly intimated the AO of change of address as per specific requirement u/s 139A(5)(d); because the appellant's intimation to the Income Tax PAN Services Unit [managed by NSDL] is intimation to an outsourcing data services agency only. On the other hand, it also is that there had not been 'service' of the notice upon the assessee/appellant. There is thus technical deficiency on both the part of the appellant as also the AO. Other than the technical aspect, very much hideous design is revealed from the assessment records and the proceedings till before the initiation of the revision proceeding u/s 263. The appellant has not appealed against the revision order u/s 263, and has intimated that it is not contemplating to appeal. So, what is the grievance left? Thus the only grievance left is for opportunity to be heard at the assessment. Ultimately the harping on 'service' only translates to opportunity to be heard. I thus would have remitted the matter back to the AO, but the power for CIT(A) to set-aside assessment and direct for fresh assessment is no more there in the statute [section 251(1)(a)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he observations made in this order and also the observations and guidance given in the order of revision u/s 263. Thus, as regards the impugned assessment order it hereby stands vacated only qua my direction given u/s 150. Thus, the main starting issue which has been harped upon - 'service of notice' - which in effect translates to opportunity to be heard - has been hereby addressed. It will be regularized and settled by my direction u/s 150 to the Assessing Officer. I am sure the appellant, considering that it had suo-moto intimated and pursued for regular assessment in the initial assessment - will definitely co-operate in the matter and the assessment. The Appeal is thus disposed of as per directions above. 12. Aggrieved by the order of the CIT(A), the Assessee has preferred ITA No.976/Kol/2015 before the Tribunal. The grounds of appeal raised by the Assessee read thus: 1. For that the Learned Commissioner of Income Tax (Appeals) (CIT(A)) should have allowed the appeal of the appellant and quashed the order of assessment appealed against. The CIT(A) should have held that the said order of assessment was vitiated on facts and in law and had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on his record, confirm, reduce, enhance or annul the assessment; ( b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; ( c) in any other case, he may pass such orders in the appeal as he thinks fit. ( 2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation.-In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant. It was pointed out by him that in an appeal against an order of assessment, prior to the amendment to Sec.251 of the Act by the Finance Act, 2001 w.e.f. 1.6.2001, the CIT(A) had the power to set aside an assessment. But after 1.6.2001, his powers are limited only to either, confirming, reducing, enhancing or annulling the assessment. The impugned order was passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The powers of the Id. CIT(A) has been given in section 251 of the Act and according to clause Ca) of sub-section (1) of section 251 of the Act, the Id. CIT(A) may confirm, reduce, enhance or annul the assessment. Nothing has been mentioned in this section with regard to the direction by the Id. CIT(A) to the Assessing Officer to frame an assessment in a particular manner. Prior to the amendment of section 251 of the Act w.e.f. 1.6.2001, the Id. CIT(A) was also empowered to set aside the assessment, but by virtue of amendment through Finance Act, 2001, the power to set aside the assessment order was withdrawn and the Id. CIT(A) was left with the power either to confirm, reduce, enhance or annul the assessment. For the sake of reference, we extract the provisions of section 251 of the Act as under:- Powers of the Commissioner (Appeals). 251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers- ( a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. 6. Since the Id. CIT(A) is not empowered to issue direction to the Assessing Officer after annulling the assessment to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remedied by affording the Assessee opportunity of being heard and passing a fresh assessment order. 17. We have given a very careful consideration to the rival submissions. The CIT(A) has himself admitted in page-20 of his order that he would have remitted matter back to the AO, but the power for CIT(A) to set-aside assessment and direct for fresh assessment was no more there in the statute. He also expressed his unwillingness to call for remand report from the AO because there was no service of notice on the Assessee before conclusion of the assessment proceedings. The CIT(A) having concluded as above, has proceeded to rely on the provisions of Sec.251(1)(d) which confers powers on the CIT(A) to pass such orders in the appeal as he thinks fit. The reason for coming to the above conclusion has been stated thus by the CIT(A): Having considered all these aspects, I hold that this appeal though it is presented against assessment order, however the issues encompass much deeper and larger matters, and so I hold that this appeal is in the category as envisaged in clause (d) to Sub-section (1) to Sec.251 . We are of the view that the present case would clearly fall w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of assessment which was challenged by the Assessee before the CIT(A) is an offshoot of an order u/s.263 of the Act. The order of assessment dated 9.4.2010 was revised by the CIT in exercise of his powers u/s.263 of the Act vide order dated 22.3.2013 on the ground that the Assessee had received Share capital to the tune of ₹ 2,05,28,201/- and that the AO did not make proper enquiries with regard to the identity and creditworthiness of the shareholders and therefore the order of the AO was erroneous and prejudicial to the interest of the revenue. The AO was directed by the said order u/s.263 of the Act to make enquiries with regard to proper enquiries with regard to the identity and creditworthiness of the shareholders. The scope of the proceedings before the AO was therefore limited. The proceedings commenced pursuant to an order of revision which was not based on belief regarding escapement of income but a case where the proceedings began as the order of the AO was found to be erroneous and prejudicial to the interest of the revenue . The CIT(A) in an appeal against such order cannot convert the proceedings to proceeding for assessing income which escaped assessment. Bes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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