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TMI Blog2020 (2) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... upon contextual reading and understanding also suggests that in case, upon remand, the AO were to maintain his original position of disallowing the amount of ₹ 1,40,00,000/-, thereby maintaining the return income at ₹ 54,49,180/-, then, obviously, there could be no jurisdictional bar to the continuance of the penalty proceedings, initiated by the endorsement which is to be found in the AO's Order dated 8.2.2000. If the Order dated 16.11.2000 is read and interpreted in this fashion, then, it is difficult to agree with Mr. Kulkarni's submissions or to take a view at variance with that taken by ITAT in the impugned Order dated 28.8.2013. In this case the AO not only maintained the earlier income as determined in his Order dated 8.2.2000 but even the appeal instituted by the appellant against the same was withdrawn by the appellant. In such circumstances, we are unable to agree with the contentions of Mr. Kulkarni that at the stage of making order giving effect to the Order of the Commissioner (Appeals), there was necessity of making a fresh Order or there was a necessity of issuing a fresh notice for initiating the penalty proceedings. Such a contention appears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, there was jurisdiction in the respondent to levy the impugned penalty? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in giving a finding that as at the relevant time, the Commissioner of Income Tax (Appeals) had the power to partially set aside an order of assessment and any finding in the order of assessment so set aside as regards satisfaction as no concealment survives after such set aside? 6. Advocate Ms. Desai waives notice for the respondent . 3. The appellant in the present case filed a return of income disclosing a loss of ₹ 13,32,280/- and net agricultural income of ₹ 10,500/- for the Assessment Year 1997-1998 before the concerned Assessment Officer (AO). By Order dated 8.2.2000, made under Sec.143 (3) of the Income Tax Act, 1961 (said Act), the AO, disallowed the mining land restoration charges in an amount of ₹ 1,40,00,000/- and added back this amount to the return income. In the said Order dated 8.2.2000, the AO, also made the following endorsement, which was to form a part of the Order: Issue penalty notice u/s.271 (1) (c) 4. The appellant, aggrieved by the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easoned that since the entire Order had been set aside, even the endorsement regards issue of penalty notice stands set aside. 11. Accordingly, the AO's Order dated 28.5.2001 levying penalty upon the appellant was set aside. 12. The respondent Revenue appealed to the Income Tax Appellate Tribunal Panaji Bench (ITAT) against the Order dated 8.1.2002 made by the Commissioner (Appeals) setting aside the levy of penalty. This was disposed of by Order dated 7.4.2006, the operative portion of which, is contained in paragraphs 6 and 7, which reads as follows: 6. In the light of above discussion, by considering the facts of the case, we are of the view that CIT (A) has cancelled the levy of penalty merely on technical ground without discussing the merit of the case which is not desirable. Therefore, we deem fit to set aside the order of the CIT (A) and restore the matter to him to decide the penalty appeal also on merit, but by providing reasonable opportunity to the assessee. For the similar reasons, the cross objection filed by the assessee is also allowed. 7.In the result, appeal filed by the department and cross objection filed by the assessee are allowed for stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the present case, did the AO have jurisdiction to impose penalty upon the appellant based upon the initiation of the penalty proceedings as endorsed in AO's Order dated 8.2.2000, which Order was subject matter of appeal before the Commissioner (Appeals) and which appeal came to be disposed of vide Order dated 16.11.2000? 18. Mr. Kulkarni, the learned Counsel for the appellant submits that the Order dated 16.11.2000 made by the Commissioner (Appeals), upon being read in its entirety, clearly suggests that the AO's Order dated 8.2.2000 was set aside in its entirety, i.e. including the endorsement for initiation of penalty proceedings. He submits that merely because expressions like set aside or quash may not have been used by the Commissioner (Appeals), that does not mean that the AO's Order was not in fact set aside or quashed in its entirety. He submits that it is necessary to read the Order in its entirety and in the context in which it was delivered. He submits that from this it is apparent that the endorsement in the initiation of penalty proceedings was at least impliedly set aside by the Commissioner of Income-Tax (Appeals) in its Order dated 16.11.2000. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attacked the Order, insofar as it made a disallowance of ₹ 1,40,00,000/- being the provision made for expenses on restoration of land affected by mining. This is quite clear not only from the Appeal Memo handed in by the learned Counsel for the appellant but also from the Order dated 16.11.2000 made by the Commissioner (Appeals). 24. The crucial portion of the Order dated 16.11.2000 is to be found in paragraphs 7 and 8, which read as follows: 7. The AO has assumed without any tangible basis that in the case of Gogte Minerals, the amount of pit filling expenses was actually spent. The fact is that the whole question of deductibility of expenditure, its quatum and point of time of accrual was reverted back to the assessing authority in the said case. Since the AO in the present case has not addressed the question whether the relevant mine was abandoned in this year and whether a liability otherwise arose in this year and what was the basis of quantification of liability at such a huge figure, the matter deserves to be reconsidered by him in accordance with the law in the light of the above discussion. He is directed to ascertain the year of allowability and the precise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.11.2000 in its entirety and not merely to the extent which benefits only appellant assessee. Therefore, applying the principle that it is the substance of the Order which is important and not the mere form, we find that the interpretation of the ITAT in the impugned Order, is the interpretation which promotes such substance over mere form and therefore there is really no case made out to interfere with the impugned Order made by the ITAT. 28. Mr. Kulkarni, quite correctly urged that the observation made by ITAT on aspect of merger is incorrect. Ms. Razaq, also did not defend such observation. In fact, it is settled by the Hon'ble Apex Court in the case of Kunhayammed Vs. State of Kerela, AIR 2000 SC 2587 that it is the decree of the Trial Court which merges in that of the Appellate Court and the effect of the merger is that in the eyes of law it dies a civil death. However, based only upon the stray erroneous observation, there is no case made out to interfere with the impugned Order made by the ITAT. In fact, what the ITAT has held is that there was no merger, insofar as the endorsement for the initiation of penalty was concerned. If, upon remand, the AO were to maint ..... X X X X Extracts X X X X X X X X Extracts X X X X
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