Asiatic Industrial Gases Ltd.,, Bangalore v. ACIT, Bangalore

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.1122/BANG/2009 ASSESSMENT YEAR : 2000-01 ASIATIC INDUSTRIAL GASES LTD. NO.94 III MAIN DEFENCE COLONY INDIRANAGAR BANGALORE 560 038. : APPELLANT VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE 11(1) BANGALORE. : RESPONDENT APPELLANT BY : SHRI DILIP S. DAMLE C.A. RESPONDENT BY : SHRI JASON P. BOAZ CIT-I(DR) O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE IN ITA NO.1122/ B/09 DATED 26.11.09 IS DIRECTED AGAINST THE ORDER OF CIT(APPEA LS) ITA NO.204/AC- II(1)/CIT(A)-I/06-07 DATED 12.10.2009 FOR THE A.Y. 2000-01 UNDER SECTION 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED TEN GROUNDS IN THE APPEA L: 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS LEGALLY UNJUSTIFIED IN DISMISSING TH E APPEAL AS BEING NOT ADMITTED. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) FAILED TO APPRECIATE THAT THE A.O. HAVIN G PASSED AN ORDER FOR GIVING EFFECT TO THE ORDER OF THE TRIBUNA L; THE APPEAL COULD VALIDLY BE FILED AGAINST SUCH ORDER PASSED BY THE AO & THEREFORE HE OUGHT TO HAVE ADMITTED & ADJUDICATED THE APPEAL. ITA NO.1122/BANG/09 PAGE 2 OF 5 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) WAS UNJUSTIFIED IN DISMISSING THE APPEAL WITHOUT GIVING OPPORTUNITY OF REBUTTING HIS FINDING & ON TH IS GROUND ALONE THE CIT(A)S ORDER IS LIABLE TO BE CANCELLED. 4. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) OUGHT TO HAVE ADMITTED THE APPEAL AND TH EN SHOULD HAVE ADJUDICATED UPON THE GROUNDS OF APPEAL ON MERI TS. 5. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE ITAT A BENCH BANGALORE IN ITS ORDER DATED 11 TH JANUARY 2007 IN M.P. NO.141/BANG/06 HAVING ALREADY HELD THA T THE RIGHT COURSE OF ACTION FOR THE ASSESSEE WAS TO FILE AN AP PEAL AGAINST THE AOS ORDER DATED 27 TH JUNE 2006 THE CIT(A) SHOULD HAVE ADMITTED AND THEN ADJUDICATED THE APPEAL IN TERMS O F THE DIRECTION OF THE TRIBUNAL WHICH WAS BINDING ON HIM. 6. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER OF THE CIT(A) DISMISSING THE APPEAL BE CA NCELLED. 7. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE A.O. BE DIRECTED TO EXCLUDE FROM THE TOTAL INCO ME; LONG TERM CAPITAL GAINS AMOUNTING TO RS.1 98 60 648/- SINCE T HE CONSIDERATION RECEIVED FOR TRANSFER OF MARKETING IN FRASTRUCTURE WAS HELD BY THE TRIBUNAL TO BE CAPITAL RECEIPT. 8. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW WERE UNJUSTIFIED IN INCLUDING IN THE TOTAL INCOME ON LONG TERM CAPITAL GAINS OF RS.1 98 60 648 /- EVEN THOUGH ASSESSMENT OF LONG TERM CAPITAL WAS CANCELLE D BY THE CIT(A); AGAINST WHICH NO APPEAL WAS FILED BY THE RE VENUE. 9. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE SUM OF RS.1 98 60 648/- BE EXCLUDED FROM THE TO TAL INCOME ASSESSED IN THE ORDER DATED 27 TH JUNE 2006 SINCE THE ITAT IN ITS ORDER DATED 11 TH JANUARY 2007 CATEGORICALLY HELD THAT IN ITS APPELLATE ORDER THE TRIBUNAL HAD NOT DIRECTED THE A O TO MAKE ANY ADDITION AND THE TRIBUNAL HAD TREATED THE AMOUNT RE CEIVED AS CAPITAL RECEIPT. 10. FOR THAT THE APPELLANT CRAVES LEAVE TO FILE ADDITIO NAL GROUNDS AND/OR AMEND OR ALTER THE GROUNDS ALREADY T AKEN EITHER BEFORE OR AT THE TIME OF HEARING. 3. AT THE OUTSET IT WAS OBSERVED THAT THE CIT(APPE ALS) HAD DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE O RDER PASSED BY THE AO ITA NO.1122/BANG/09 PAGE 3 OF 5 IN ORDER TO GIVE EFFECT TO THE ITAT ORDER NO.1324/B /2003 DATED 18.11.2005 CANNOT BE HEARD SINCE THE POWER OF THE CIT(APPEALS) TO HEAR AN APPEAL IS CONFINED TO SECTION 246A AND 248 OF THE I.T. ACT 1 961. 4. LD. ARS SPIRITED ARGUMENT BEFORE US WAS THAT SU CH ORDER PASSED BY THE AO ALSO FORMS PART OF THE ASSESSMENT PROCEEDING S U/S. 143(3) OF THE ACT AND THEREFORE IT IS APPEALABLE UNDER SECTION 24 6A/248 OF THE ACT. TO SUBSTANTIATE HIS STAND THE FOLLOWING CASE LAWS WER E PREFERRED: (1) GOPI LAL V. CIT (1967) 65 ITR 477 (PUNJ.) (2) CIT V. WARNER HINDUSTAN LTD. (1979) 117 ITR 15 (AP) (3) CIT V.WARNER HINDUSTAN LTD. (1987) 165 ITR 403 (AP) 5. LD. DR SUPPORTED THE ORDER OF THE CIT(APPEALS). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD AND CASE LAWS REFERRED BY THE LD. DR. A GIS T OF THE CASE LAWS REFERRED BY LD. AR ARE HEREBELOW REPRODUCED: (1) GOPI LAL V. CIT (1967) 65 ITR 477 (PUNJ.) SECTION 35(5) OF ACT DOES NOT PROVIDE A SOURCE TO THE ITO FOR MAKING AN ORDER OF ASSESSMENT. THE TRIBUNAL WHILE GIVING DIRECTION UNDER SECTION 33(3) OF ACT 1922 MERELY AU THORIZES THE ITO TO AMEND ANY ASSESSMENT MADE ON ANY PARTNER OF THE FIRM AS A CONSEQUENT OF ANY CHANGE MADE IN THE ASSESSMENT O F A FIRM. IN CARRYING OUT THAT DIRECTION AND AMENDING THE ORDER OF ASSESSMENT IN ACCORDANCE THEREWITH THE ITO MERELY MAKES AN OR DER UNDER SECTION 23 IF ACT 1922 AND CONSEQUENTLY WHEN A PA RTNER FILES AN APPEAL HE IN EFFECT OBJECTS TO THE AMOUNT OF INC OME ASSESSED UNDER SECTION 23 OF ACT 1922. AGAIN IF A PARTNER I S NOT SATISFIED WITH THE REALLOCATION AND SAYS THAT THE SAME WAS NO T IN ACCORDANCE WITH THE DIRECTION OF THE TRIBUNAL HE I N EFFECT DENIES HIS LIABILITY TO BE ASSESSED UNDER THE ACT OF 1922 TO THE EXTENT TO WHICH HE CLAIMS TO HAVE BEEN WRONGLY ASSESSED. PAR TIAL DENIAL OF LIABILITY TO BE ASSESSED COMPRISES IN THE EXPRESSI ON DENYING HIS LIABILITY TO BE ASSESSED UNDER THIS ACT. IF AN OVER-ASSESSMENT IS MADE IN THE HANDS OF A PA RTNER AS A RESULT OF REALLOCATION THE CHALLENGE TO SUCH AN OV ER-ASSESSMENT ITA NO.1122/BANG/09 PAGE 4 OF 5 BY A PARTNER WOULD BE A DENIAL OF LIABILITY. LAST LY UNDER THE SECOND PROVISO TO SECTION 30 OF ACT 1922 THE PARTNE RS OF A FIRM WHO ARE INDIVIDUALLY ASSESSABLE ON THEIR SHARES IN THE TOTAL INCOME OF THE FIRM MAY APPEAL AGAINST ANY ORDER OF AN ITO APPORTIONING THE INCOME OF THE FIRM BETWEEN THE SEV ERAL PARTNERS. IN THE INSTANT CASE THE GRIEVANCE OF THE ASSESSEE WAS AGAINST THE APPORTIONMENT AND THEREFORE HIS APPEAL WOULD FALL IN TERMS UNDER THE SAID SECOND PROVISO. IT SHOULD BE REMEMB ERED THAT STATUTES PERTAINING TO RIGHT OF APPEAL HAVE TO BE G IVEN A LIBERAL CONSTRUCTION SINCE THEY ARE REMEDIAL. A RIGHT OF AP PEAL WILL NOT BE RESTRICTED OR DENIED UNLESS SUCH A CONSTRUCTION IS UNAVOIDABLE. THE COURTS RECOGNISE THAT AN APPEAL OF A CAUSE IS A VALUABLE RIGHT TO A LITIGANT AND IN THE ABSENCE OF UNMISTAKABLE I NDICATIONS TO THE CONTRARY STATUTES REGULATING APPEALS ARE GIVEN LIBERAL CONSTRUCTION. IT IS ALSO RECOGNISED THAT AN APPEAL IS A REMEDY THAT IS FAVORED IN LAW AND AN IMPORTANT RIGHT WHIC H SHOULD NEVER BE DENIED UNLESS ITS FORFEITURE OR ABANDONMENT IS CONCLUSIVELY SHOWN AND IN CASE OF DOUBT AN APPEAL SHOULD ALWAY S BE ALLOWED RATHER THAN DENIED. AS TO THE QUESTION OF RIGHT TO FURTHER APPEAL THE ORDER OF AAC DISMISSING THE APPEAL AS INCOMPETENT WOULD BE AN OR DER PASSED UNDER SECTION 31 OF THE ACT 1922. AS A MATTER OF F ACT THE ORDER WAS ITSELF DESCRIBED AS ONE UNDER SECTION 31 OF ACT 1922. THAT BEING SO THE APPEAL BEFORE THE TRIBUNAL MUST BE HE LD TO BE COMPETENT. (2) CIT V. WARNER HINDUSTAN LTD. (1979) 117 ITR 15 (AP) AS REGARDS THE SECOND QUESTION WHEN THE AAC DIRE CTED THE ITO TO REVISE THE ASSESSMENT IN ACCORDANCE WITH THE DIR ECTIONS GIVEN BY HIM THEN AN ORDER PASSED IN CONSEQUENCE OF THE DIRECTION OF THE APPELLATE AUTHORITY WOULD BE AN APPEALABLE ORDE R AND THIS POSITION IS WELL SETTLED. (3) CIT V.WARNER HINDUSTAN LTD. (1987) 165 ITR 403 (AP) THE FOLLOWING TWO QUESTIONS ARE REFERRED TO THIS COURT UNDER SECTION 256(1)OF THE INCOME-TAX ACT 1961 FOR ITS OPINION BY THE INCOME-TAX APPELLATE TRIBUNAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE APPEAL AGAINST THE ORDER OF THE INCOME-TAX OFFICER GIVEN EFFECT TO THE DIRECTIONS GIVEN BY THE APPELLATE ASSISTANT COMMISSIONER IS MAINTAINABLE. .. ITA NO.1122/BANG/09 PAGE 5 OF 5 LEARNED COUNSEL FOR THE REVENUE FAIRLY CONCEDED TH AT THE FIRST QUESTION IS COVERED BY A DECISION IN THE ASSESSEES CASE IN CIT V. WARNER HINDUSTAN LTD. [1979] 117 ITR 15 IN FAVOUR OF THE ASSESSEE. WE ACCORDINGLY ANSWER THE QUESTION IN TH E AFFIRMATIVE I.E. IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEP ARTMENT. 7. IT IS APPARENT FROM THE VARIOUS DECISIONS OF TH E HIGH COURT REFERRED SUPRA THAT THE APPEAL AGAINST THE ORDER OF THE ASSE SSING OFFICER GIVING EFFECT TO THE DIRECTION GIVEN BY THE ITAT IS MAINTA INABLE BEFORE THE CIT(A). RESPECTFULLY FOLLOWING THESE DECISIONS OF THE VARIO US HIGH COURTS WE HEREBY DIRECT THE LD. CIT(A) TO ADMIT THE APPEAL AN D PASS NECESSARY ORDERS ON MERITS AFTER AFFORDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. 8. SINCE WE HAVE DIRECTED THE CIT(APPEALS) TO ADMIT THE APPEAL AND PASS ORDERS AS PER MERITS WE REFRAIN FROM ADJUDICA TING THE OTHER GROUNDS RAISED BY THE ASSESSEE. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF APRIL 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 16 TH APRIL 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.