Allahabad H.C : Whether, in view of the provisions of section 80-IA(9) applicable to section 80-IB of the Income-tax Act, 1961, the restriction imposed by section 80-IA(9) is applicable at the stage of allowing deduction under section 80HHC or is applicable even at the stage of computing deduction under section 80HHC

High Court Of Allahabad

Anil Kumar Rastogi vs. ITO

Assessment Years : 2001-02 & 2002-03

Section : 263

Sunil Ambwani And Kashi Nath Pandey, JJ.

IT Appeal Nos. 211 Of 2008 And 253 Of 2011

October 21, 2011

JUDGMENT

1. We have heard Sri Piyush Kaushik, learned counsel for the appellants. Sri A. N. Mahajan appears for the respondents.

2. These two income-tax appeals for the assessment years 2001-02 and 2002-03 are directed against the order of the Income-tax Appellate Tribunal, Delhi Bench dated October 21, 2008, by which the appeal of the Revenue was allowed.

3. These appeals were admitted on the following substantial questions of law :

“(1) Whether, on the facts and in circumstances of the case and in the law, the Income-tax Appellate Tribunal is justified in allowing appeal of the Income-tax Department against the order of the Commissioner of Income-tax (Appeals) which has become non est and infructuous in law ?

(2) Whether, on the facts and in circumstances of the case and in the law, all the subsequent proceedings emanating therefrom the revision order under section 263 of the Commissioner of Income-tax being itself quashed become infructuous in law and the original assessment order whereby the assessment was made at the returned income shall prevail ?

(3) Whether, in view of the provisions of section 80-IA(9) applicable to section 80-IB of the Income-tax Act, 1961, the restriction imposed by section 80-IA(9) is applicable at the stage of allowing deduction under section 80HHC or is applicable even at the stage of computing deduction under section 80HHC ?”

4. Sri Piyush Kaushik, learned counsel for the appellant-assessee, submits that the Income-tax Appellate Tribunal has, vide order dated December 8, 2008, quashed the order of the Commissioner of Income-tax under section 263 of the Income-tax Act by which the Commissioner has issued directions for making assessment de novo. Having quashed the orders of the Commissioner of Income-tax, the Tribunal hearing the appeal against the decision of the Commissioner of Income-tax could not have allowed the appeal of the Revenue. The entire proceedings thus giving rise to the appeal before the Tribunal were without jurisdiction.

5. Sri Piyush Kaushik has relied upon the judgment of the court in CIT v. Sir Shadi Lal Enterprises Ltd. [2010] 325 ITR 561 (All) ; CIT v. Hari Om Agarwal [2001] 249 ITR 382 /118 Taxman 59 (All) and CIT v. Dhampur Sugar Mills Ltd. [1988] 170 ITR 449 /[1987] 34 Taxman 153 (All).

6. In Hari Om Agarwal (supra) the court held as follows (page 384) :

“The orders under section 263 having been cancelled by the Tribunal, the very basis of jurisdiction vanished and the reassessments orders passed by the Assessing Officer became res nullius and even without any appeal, etc., they could not be enforced. The answer to the questions proposed by the Commissioner is, therefore, self-evident because in the face of the earlier orders of the Tribunal quashing orders under section 263, the assessment orders could not stand.”

7. Sri A. N. Mahajan, learned standing counsel fairly states that after the order under section 263 of the Act was quashed, the Tribunal could not have allowed the appeal of the Revenue. He submits that this fact could have been brought to the notice of the Tribunal, and that it is open to the assessee-appellant to make a simple application to the Tribunal, to recall its order.

8. Without going into the merits of the matter and the objection that an application should be moved before the Tribunal to recall its order dated February 21, 2008, we find that the law is clearly settled that once the orders under section 263 of the Act passed by the Commissioner of Income-tax have been set aside by the Tribunal, it could not have allowed the appeal of the Revenue arising out of the order of the Commissioner of Income-tax). The entire proceedings, after quashing the order under section 263 of the Act, were infructuous.

9. Questions Nos. 1 and 2 are decided in favour of the assessee and against the Revenue. Question No. 3, thus does not require consideration.

10. Consequently, the orders of the Tribunal dated February 21, 2008, challenged in these appeals are set aside.

11. The income-tax appeals are allowed.

[Citation : 339 ITR 279]

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