Hon'ble Dr. Satish Chandra,J.
The present appeal is filed by the Department under Section 260A of the Income Tax Act, 1961, against the impugned order dated 31.03.2005 passed by Income Tax Appellate Tribunal, Delhi in I.T.A. No. 745/Del/2004 for the assessment year 1997-98.
On 13.09.2007, a coordinate Bench has admitted the appeal on the following substantial question of law :
(i) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in law in confirming the order of the CIT(A) who cancelled the order passed by the A.O. under Section 154 for charging of interest under Section 234-B and 234-C of the Act which have been held to be mandatory in nature by the Supreme Court in the case of CIT Vs. Anjum M.H. Ghaswala and others-252 ITR page1?
The brief facts of the case are that during the assessment year under consideration, the assessee has shown that he had purchased a property in the urbanized village Masjid Moth, New Delhi. The matter was referred to the valuation cell. Finally, the A.O. has made the addition, while passing the assessment order dated 31.3.2000, which was challenged before the CIT(A), who vide its order dated 4.9.2000 has set aside the assessment order and remanded the matter to the A.O. for fresh adjudication. In pursuance to the order of the CIT(A), the A.O. again passed assessment order on 21.3.2002 under Section 143(3)/251 of the Act. The A.O. has also mentioned that the interest may be charged as per the rules.
Being aggrieved, the assessee has assailed the order before the CIT(A), who vide its order dated 27.3.2003 has allowed the claim of the assessee by observing that no interest can be charged. In other words, the CIT(A) observed that no interest can be charged as no specific mention was made in the assessment order.
However, the A.O. took a suo motu action and passed an order under Section 154 of the Act on 18.8.2003, where he has clarified that the interest can be charged under Section 234B and 234C. Being aggrieved, the assessee has again assailed the order before the CIT(A), who vide its order dated 4.11.2003 has cancelled the order passed by the A.O. under Section 154 of the Income Tax Act. The Department has challenged the same before the Tribunal. The Tribunal has dismissed the appeal filed by the Department and uphold the order passed by the CIT(A). Still not being satisfied, the Department has filed the present appeal.
With this background, we have heard Shri R.K. Upadhyay, the learned counsel for the Department and Shri Suyash Agrawal, the learned counsel for the assessee and perused the record.
From the record, it appears that when the CIT(A) has passed the order on 27.3.2003 and allowed the claim of the assessee that no interest can be charged, then it was not open for the Assessing Officer to pass the order suo moto under Section 154 of the Act. The best option was before the A.O. to assail the order passed by the CIT(A) before the Tribunal. But, he adopted the short cut method and took action suo moto and passed the order under Section 154 of the Act, which is not desirable as per provision of Section 154(1A), which is reproduced as under :
"Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided.
It may be mentioned that in the case of Utkal Galvanizers Private Limited Vs. Assistant Commissioner of Income Tax [2008] 298 ITR 0053 (Orissa High Court), it was observed that :
"Only when the regular assessment under section 143(3) was initiated and the income of the assessee was enhanced, did the additional income-tax become payable and, thus, no question of levy of interest for non-payment of advanced tax could arise. Since, the additions effected by the Income-tax Officer were deleted by the Commissioner (appeals), no question of payment of interest under section 234B arose and non-charging of interest could not be a "mistake capable of rectification" for initiating a proceeding under section 154."
Further, it may be mentioned in the case of Additional Commissioner of Income Tax Vs. India Tin Industries Pvt Ltd (1987) 166 ITR 454 (Karnataka High Court), it was observed that :
"Sub section (1A) of section 154 specifically provides that any matter which has not been considered and decided in any proceeding by way of appeal or revision, may be amended by the authority passing such an order in exercise of its power under Section 154(1). The doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by an inferior Tribunal and the other by a superior Tribunal passed in an appeal or revision, there is a fusion or merger of the two orders irrespective of the subject matter of the appeal. The order of assessment made by the Income-tax Officer merges in the order of the Commissioner in so far as it relates to items considered and decided by the Commissioner. That part of the order of assessment, which relates to items not forming the subject matter of the appellate order and left untouched does not merge in the order of the Commissioner. Even after an appeal from an order of assessment is decided by the Commissioner, a mistake in that part of the order of assessment which was not the subject matter of the appeal and was thereafter left untouched by the Commissioner, can be rectified by the Income-tax Officer".
In view of above, without going into the merits of the case, we are of the view that the Assessing Officer cannot pass order suo moto under Section 154 of the Act, when the superior authority has already passed the order.
Therefore, we find no reason to interfere with the impugned order passed by the Tribunal. The same is hereby sustained alongwith the reasons mentioned therein.
The answer the substantial questions of law in favour of the assessees and against the Department.
In the result, appeal filed by the Department is dismissed.
Order Date :- 05.09.2014 Anurag/-
(Dr. Satish Chandra, J.) (Tarun Agarwala, J.)