Delhi H.C : The appellant is an HUF. According to the appellant as its income for the asst. yr. 1989-90 was below taxable limit, it did not file any return under s. 139(1) or s. 139(2) of the IT Act, 1961

High Court Of Delhi

Makhan Singh Gurcharan Singh (HUF) vs. Assistant Commissionerof Income Tax

Section 147, CPC 151

Asst. Year 1989-90

S.B. Sinha, C.J. & D.K. Jain, J.

C.M. No. 73 of 2001 in IT Appeal No. 132 of 2001

21st December, 2001

Counsel Appeared

K.R. Manjani, for the Petitioner : R.C. Pandey with Ajay Jha, for the Respondent


S.B. SINHA, C.J. :

In this application under s. 151, CPC, a prayer has been made for rectifying a mistake stated to have occurred in the order dt. 8th Oct., 2001.

2. The fact of the matter lies in a very narrow compass. The appellant is an HUF. According to the appellant as its income for the asst. yr. 1989-90 was below taxable limit, it did not file any return under s. 139(1) or s. 139(2) of the IT Act, 1961 (in short, the ‘Act’). However, in relation to certain receipts the assessment proceedings were reopened by the AO in terms of ss. 147 and 148 of the Act. The said assessment proceedings were allegedly initiated after the expiry of 4 years from the date of assessment. The assessment proceedings relating to the said assessment year were completed on 12th Jan., 1993, by determining a total income of Rs. 2,98,800, as having been derived from capital gains. An appeal thereagainst was filed by the appellant herein and by order dt. 2nd March, 1994, the said appeal was allowed holding that the AO was not justified in treating the receipt of the security money as consideration of sale/transfer of the leasehold land. The Department preferred an appeal against the aforementioned order before the Income-tax Appellate Tribunal (in short, the ‘Tribunal’). Cross-objection was filed by the appellant herein inter alia, on the ground that the learned CIT(A) had failed to render any decision as regards its plea of invalidity of the proceedings initiated under s. 147 of the Act. Allowing appellant’s cross- objection, the Tribunal inter alia, held : “8. I have carefully considered the whole gamut of facts and circumstances of the case and the rival submissions. As is mentioned in para 5 above, validity of notice is a matter of jurisdiction and it goes to the very root of the assessment. The assessee had raised this issue before the learned CIT(A), as is evident from the discussion in pp. 3 and 4 of the appellate order, but no finding is recorded by the learned CIT(A). However, the fact that the notice under s. 148 was actually issued after obtaining the satisfaction of the CIT and not that of the Dy. CIT, as was legally required in terms of provisions of s. 151(2) of the Act requires verification, because possibility of an inadvertent error in filing the printed proforma cannot be ruled out. It would be relevant to point out that if for failure of the AO to obtain the previous sanction of the “prescribed authority”, before issuing notice under s. 148, the reassessment proceedings are held liable to be quashed, the objections raised in the Department’s appeal against the decision of the learned CIT(A) on merits and the other objections of the assessee will not survive, because they will remain only of academic interest. I would, therefore, set aside the order of the learned CIT(A) and restore the matter to his file for firstly deciding in accordance will law, the question of validity of the proceedings under s. 147 of the Act, after affording both the parties an opportunity of being heard and after looking into the records. In this view of the matter, it is not considered necessary to refer to the arguments advanced by the rival parties in relation to Department’s appeal.” While passing aforesaid order, the Tribunal did not consider the merits of the matter in the appeal preferred by the Department.

3. A Division Bench of this Court, (of which one of us D.K. Jain, J. was a Member), on 8th Oct., 2001, passed the following order : “Heard. As the matter has been remitted back to the CIT(A), we do not think it necessary to entertain the appeal. However, we find substance in the plea of the learned counsel for the appellant that the AO may start recovery proceedings because the CIT(A)’s order is no longer in existence after the matte has been remitted back to the said authority by the Tribunal. We direct that till the matter is decided by the CIT(A) afresh no steps for recovery shall be taken for the disputed amount, which is relatable to the order of remand. We make it clear that we have not said anything about the merits of the case which shall be adjudicated by the CIT(A). Appeal is accordingly disposed of.”

4. Mr. K.R. Manjani, the learned counsel appearing on behalf of the appellant, submitted that an error apparent on the face of the record has been committed by this Court inasmuch as the CIT(A) on remand will have no power to alter his decision so far as the issue relating to merit of the matter is concerned inasmuch as he is bound by his previous decision thereon.

5. We agree with the said contention. The order of remand would result in futility, as the appellate authority having regard to its earlier order will have no other option but to allow the appeal, even if it comes to the conclusion that the proceedings were validly initiated. It is beyond any cavil of doubt whatsoever that in the event the CIT(A) decides the question of validity or otherwise of the proceedings under ss. 147 and 148 of the Act in favour of the assessee, the Revenue may prefer an appeal thereagainst whereupon, the contention of the Revenue on both the questions, namely, the validity of action under s. 147 and the merit of the addition made to the total income, would have to be determined afresh. However, in the event, the CIT(A) determines the question against the assessee, he will also have a right to prefer an appeal thereagainst wherein again both the aforenoted questions have to be considered afresh by the Tribunal.

6. For the reasons aforementioned, interest of justice will be subserved if the order of the Tribunal is modified to the extent that the order of remand shall be confined to the validity of the reassessment proceedings and till a decision on such a question is arrived at by the CIT(A), the Revenue’s appeal before the Tribunal shall be deemed to be pending. In other words, the order of remand shall be a limited remand and not an open one. With the aforementioned observations and directions, the order dt. 8th Oct., 2001, is modified and the application is disposed of accordingly.

[Citation : 254 ITR 645]

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