Hon'ble Dr. Satish Chandra,J.
(Delivered by Hon'ble Dr. Satish Chandra, J) The present appeal is filed under Section 260-A of the Income Tax Act, 1961 against the order dated 09.12.2004 passed by the Income Tax Appellate Tribunal, Lucknow in ITA No.189/Alld/2000;ITA 254/Alld/2000 and CO No.17/Luc/2003 for the assessment year 1996-97 whereby, the Tribunal vide its impugned order has admitted the following additional ground and allowed relief to the assessee accordingly:
"That the learned A.O. is not justified in passing order of intimation under Section 143 (1) (a) of the Income Tax Act subsequent to issuance of notice under Section 143 (2) of the Income Tax Act for regular assessment."
The Tribunal in its order dated 09.12.2004 observed that:
"the learned counsel for the assessee has also filed before us copy of notice under Section 143 (2) dated 11.03.1997 and pointed out that the intimation under section 143(1) (a) was issued on 14.12.1998 i.e. after the issuance of notice under Section 143(2), which is bad in law in view of the decision of Hon'ble Supreme Court in 260 I.T.R. 84 in the case of CIT v. Gujarat Electricity Board wherein it has been held that it is not open to the revenue to issue intimation under section 143 (1) (a) of the Income Tax Act after the notice for regular assessment is issued under Section 143 (2). The additional ground raised by the assessee being purely legal in nature is admitted. In view of the decision of the Hon'ble Supreme Court, the intimation issued under section 143 (1) (a) being bad in law, is cancelled.
In the result, the appeal filed by the assessee is allowed and the appeal filed by the department is dismissed."
Being aggrieved, the department has filed the present appeal raising the following substantial question of law:
"Whether the Hon'ble Income Tax Appellate Tribunal has erred in law in holding that the intimation issued under Section 143 (1) (a) is bad in law without appreciating that intimation under section 143 (1) (a) was issued in respect of the revised return whereas the notice under section 143 (2) was issued in respect of the original return prior to the filing of the revised return by the respondent."
The brief facts of the case are that in the instant case, the original return of income was filed on 31.01.1997 declaring the total income of Rs.6,97,59,206/-. Thereafter, the assessee filed a revised return on 30.03.1998 declaring the loss of Rs.74,97,579/- in which expenses amounting to Rs.8,14,55,626/- were further claimed and in respect of the said claim, the assessee vide letter dated 30.03.1998 clarified that the necessity of revising the return has arisen as during the course of finalization of return for the assessment year 1997-98, it transpired that the expenses totaling to Rs.8,14,55,626/- relating to and which accrued for the previous year relevant to the assessment year 1996-97, have been paid and accounted for in the subsequent year and as per mercantile system of accounting, the same are allowable in the assessment year 1996-97 and, as such, claim thereof has been made in the revised return. The revised return was processed under Section 143 (1) (a) of the Act on 14.12.1998 on a total income of Rs.9,86,85,952/- by treating the status of the assessee as AOP under Section 185 and also making certain prima-facie adjustment in the return of negative income.
Not being satisfied, the assessee has filed an appeal before the CIT (A)-II, Lucknow, who has allowed the appeal vide its order dated 13.12.1999 for the assessment year under consideration. Being aggrieved, both the parties have filed appeals before the Tribunal, where the Tribunal has admitted the above mentioned additional ground and allowed the claim of the assessee.
With this background, Sri D.D. Chopra, learned counsel for the appellant, submits that the Tribunal has not appreciated the decision of the Hon'ble Supreme Court in the Case of C.I.T. v. Gujrat Electricity Board; 260 ITR (2003) 84, which is distinguishable from the facts of the case of the assessee. In the case of assessee, notice under section 143 (2) was issued by the A.O. against the original return and not after filing of the revised return.
In the case of Gujrat Electricity Board, it has been observed by the Hon'ble Supreme Court that it is not open to the Revenue to issue intimation under Section 143(1)(a) of the Act after the notice for regular assessment is issued under Section 143(2) of the Act. The legislature intended that where the summary procedure under Section 143(1) has been adopted, there should be scope available for Revenue, either suo motu or at the instance of the assessee, to make a regular assessment under Section 143(2). The converse is not available; a regular assessment proceeding having been commenced under Section 143 (2), there is no need for a summary proceeding under Section 143(1)(a) of the Act.
Learned counsel also submits that the order passed by the ITAT is erroneous for the reason that the Tribunal has admitted the additional ground raised by the assessee on the plea of same being purely legal and allowing the appeal in favour of the assessee on the basis of same very additional ground. The Tribunal has decided the additional ground on merits for the first time by itself, which is not desirable as per the ratio laid down in the case of CIT v. Tolla Ram Hassomal; 298 ITR 22 (M.P.) He further submits that the Tribunal has failed to appreciate that the affect of filing revised return is that the original return looses its sanctity. Once the original return is withdrawn or is substituted by filing a valid revised return, the natural consequence is that the earlier return would be effaced or obliterated for all purposes under the Act as per the ratio laid down in the case of CIT v. Mangalore Chemicals & Fertilizers Ltd. (1991) 191 ITR 156 (Kar). Lastly, he made a request to set aside the impugned order passed by the ITAT.
On the other hand, Sri Amit Shukla learned counsel for the assessee relied on the Tribunal's order by stating that the additional ground was a legal ground, which was rightly adjudicated by the Tribunal. For this purpose, he relied on the ratio laid down in the case of CIT v. Mohd. Ayub & Sons Agencies; (1992) 197 ITR 637 (Alld), where it was observed that if such a legal issue has been raised, it is not only the mandate of law to admit such ground/plea but also to adjudicate, if there is no requirement for investigation of facts.
He further submits that the revised return was a non-est return as the return can be revised only if the original return has been filed under Section 139(1) and not under Section 139 (4) of the Act. In the instant case, the revised return was filed on 30.03.1998, which was processed under section 143(1)(a) of the Act. The regular assessment order was passed on 23.04.1999.
According to the learned counsel for the assessee, as per the scheme of the assessment w.e.f. 01.04.1989, summary assessment has been provided under Section 143(1)(a) of the Act, wherein returns are processed and prima facie adjustment can be made for working out the tax liability, if any. Such a prima facie adjustment are strictly circumscribed to section 143(1)(a). For this purpose, he relied on the ratio laid down in the following cases:
I.Gujrat Poly-AVX Electronics v. Dy. CIT; reported in (1996) 222 ITR Pg. 140 (Guj);
II.Lakhan Lal National Ltd. v. Dy. CIT; reported in (1996) 222 ITR Pg. 151 (Guj.); and III.Pieco Electronics & Electricals Ltd. v. Dy. CIT reported in (1999) 236 ITR pg. 702 (Calcutta) According to the learned counsel for the assessee, the A.O. himself while passing the regular assessment order in scrutiny proceedings, treated the revised return, filed on 30.03.1998, as non est return, which is evident from page 3 of the regular assessment order. The ITAT has rightly held that the intimation issued under Section 143(1)(a) was bad in law after following the decision of the Hon'ble Supreme Court in the case of Gujrat Electricity Board (supra).
Lastly, he submits that if intimation has been issued on the revised return filed subsequent to issuance of notice under Section 143 (2) will not obliterate, the position of law that once regular assessment proceedings have been commenced, summary assessment comes to an end and the same cannot be pursued for the purposes of any additional tax liability to be fasten upon the assessee.
We have heard both the parties at length and gone through the material available on record.
There is no dispute that the Hon'ble Supreme Court in the case of Gujrat Electricity Board (Supra) held that it is not open to the revenue to issue intimation under Section 143(1)(a) of the Income Tax Act, 1961 after notice for regular assessment has been issued under Section 143(2) of the Act but in the instant case, intimation under Section 143(1)(a) was issued for the revised return while the notice under Section 143 (2) was issued for the original return of income. Therefore, the ratio laid down in the aforesaid case is distinguishable from the facts of the case in hand. The revised return was filed by the respondent on 30.03.1998 i.e. after the receipt of notice under Section 143 (2) dated 11.03.1997. Thus, the A.O. has rightly made the necessary adjustment on the basis of revised return. The said notice under section 143(2), which was issued prior to filing of the revised return by the assessee, cannot bar the A.O. from processing the said revised return under Section 143(1)(a) of the Act.
Moreover, the Tribunal while admitting the so-called additional ground has not discussed the full facts of the case.
Needless to mention that as per the ratio laid down in the case of Dhampur Sugar Mills Ltd. v. CIT; 1973 (90) ITR 236 (All), there is a distinction between a revised return and a correction of the return. If the assessee files some application for correcting a return already filed or making amendments therein, it would not mean that he has filed a revised return. It will still retain the character of an original return but once a revised return is filed, the original return must be taken to have been withdrawn and to have been substituted by a fresh return for the purpose of assessment. But in the instant case, revised return was filed by the assessee by showing the negative income.
When the facts of the case are neither clear nor discussed by the Tribunal, then in our considered view, the Tribunal having permitted the assessee to raise additional grounds treating it to be a legal ground in appeal for the first time, should have set aside the order of the CIT (Appeal) and remanded the case to him for deciding the appeal afresh, rather than to decide the same on merits for the first time by itself. Had the case been remanded by the Tribunal, CIT (Appeal) would have been in a position to examine the issue for the first time in relation to the additional ground, which he did not decide for want of any attack initially in the first round. It cannot be disputed that the CIT (A) had jurisdiction to examine the said additional ground, had it been raised before him in appeal even in the first round. Thus, we cannot subscribe to the approach and the manner in which the Tribunal allowed the assessee to raise the additional ground in appeal for the first time and then deciding the appeal on this ground by not only setting aside the order of the CIT (Appeal) but even proceeding to set aside the order of the A.O. Such approach is neither legal nor proper. It only exhibits the anxiety of the Tribunal to decide the appeal on the merits even on the point which did not arise for decision out of the order of the CIT (Appeal). In other words, instead of concentrating on the issues already decided by the CIT (Appeal), the Tribunal only concentrated on the additional ground, which had not been taken before the CIT (Appeal) and then answered it in favour of the assessee by completely setting aside the whole assessment. It is also relevant to point out that the ITAT while entertaining the additional ground has not given the reason for admitting the same and overlooked this vital fact that the said ground was not arising out of the order of the CIT (A) which was challenged by both the parties. It is well settled that a legal issue can be raised at any stage but there shall be good reason for admitting the additional ground. However, in the instant case, the ITAT has not given any reason while admitting the additional ground. Moreover, the assessment order dated 23.04.1999 was passed by the A.O. under section 144 of the Income Tax Act, 1961 on the basis of original return filed on 31.01.1997 and not on the basis of the revised return filed on 30.03.1998.
In view of above, we are of the view that there would have been no prejudice caused to either party if the case had been remanded to the CIT (Appeal).
Therefore, without entering into the merits of the case, we set aside the impugned order passed by the Tribunal and remand the matter back to the CIT (Appeal) for fresh adjudication as per law and, as such, the answer to the substantial question of law is not required.
The appeal filed by the department is allowed in above terms.
No costs.
Order Date :- 22.07.2011 VNP/-