HIGH COURT OF DELHI
Commissioner of Income-tax
versus
Income Tax Appellate Tribunal
W.P. (C) NO. 4684 OF 2010
AUGUST 3, 2012
JUDGMENT
R.V. Easwar, J. – This writ petition under Article 226/ 227 of the Constitution of India has been filed by the Commissioner of Income Tax seeking the issuance of a writ of certiorari or any other appropriate writ, order or direction quashing the orders dated 21.05.2010 and 06.07.2010, both passed by the Income Tax Appellate Tribunal, Delhi Bench “F”, New Delhi (hereinafter referred to as ‘Tribunal’), passed in Stay Application Nos. 24 to 30/Del/2010 (in ITA Nos. 2057 to 2063/Del/2010) and in ITA Nos. 2057 to 2063/Del/2010 respectively. These orders were passed by the Tribunal in the stay applications and in the appeals filed by the NIIT before the Tribunal. The petitioner has arrainged/arrayed the Tribunal as the first respondent and NIIT Ltd. (hereinafter referred to as the ‘Assessee’) as the second respondent.
2. The events leading to filing of the present writ petition are somewhat longish and we shall try to refer briefly to them. The assessee is a public limited company engaged in the business of information technology education and export of software services. We are concerned with the assessment year 1999-2000, the relevant previous year being the financial year ended on 31.03.1999 and in this year the assessee, besides the above income, derived income from export business, capital gains and income from other sources. A search was conducted under Section 132 (1) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act) in the office premises of the assessee and the residential premises of its Director on 10.11.2004. On 05.10.2005 the assessee filed its return for the assessment year under consideration, declaring an income of Rs. 10,11,66,660/-. An assessment order under Section 153A read with Section 143(3) of the Act was passed on 01.06.2006 determining the total income at Rs. 10,36,86,880/-, the only addition made being the disallowance of the technical know-how fees of Rs. 25,20,000/-.
3. On 23.07.2007 the CIT sought to revise the assessment order under Section 263 of the Act on the ground that it was erroneous and prejudicial to the interest of the Revenue and accordingly issued a show-cause notice to the assessee. After hearing the assessee, he passed an order under Section 263 on 19.06.2008 by which he set-aside the assessment order dated 01.06.2006 with directions to the Assessing Officer to frame the assessment afresh after affording an opportunity of being heard to the assessee and after making proper inquiries and verification. The assessee challenged the order passed by the CIT as above in W.P. (C) No. 4722/2007, in which the principal contentions were that the order of the CIT was in violation of principles of natural justice, that the assessment order dated 01.06.2006 was passed after being monitored by the CIT/Central Board of Direct Taxes (CBDT), that the proceedings under Section 263 were on the instructions of the authorities superior to the CIT and that no satisfaction was arrived at by the CIT independently to the effect that the assessment order was erroneous and prejudicial to the interest of the Revenue.
4. On 15.07.2009 this Court passed an interim order in the aforesaid writ petition allowing the assessee (petitioner in the writ petition No. 4722/2007) to inspect the records of the CIT. It would appear that similar proceedings under Section 263 initiated for the assessment years 2000-01 to 2005-06 which were also challenged in separate writ petitions were stayed by the Court on 06.08.2009. The Court directed the CIT to produce the records of the assessment/revisional proceedings and permitted the assessee to inspect them. As per the directions of the Court the records were shown to the representative of the assessee and its counsel on 11.08.2009.
5. On 11.12.2009, this Court passed final orders in the writ petition. The operative part of the judgment reads as under: –
“23. The upshot of the aforesaid discussion is that WP (C) No. 4722/2008 is allowed and the impugned order dated 19.6.2008 passed by the Commissioner of Income Tax (Central-II)/respondent No. 4 is hereby set aside. However, liberty is granted to the respondent No. 4 to appropriately deal with the matter and pass fresh order after giving opportunity of being heard to the petitioner on various points canvassed before us or which it intends to raise at the time of fresh hearing. We also make it clear that we have not authoritatively pronounced on the contentions raised by the petitioner, either way, and the Commissioner shall deal with such contentions objectively without being influenced by any observations in this judgments.
24. WP (C) Nos. 172/2009, 173/2009, 174/2009, 175/2009, 176/2009 & 177/2009
Insofar as these writ petitions are concerned, no order under Section 263 of the Act has been passed so far and only show cause notice is given. Needless to mention, in these cases as well, which relate to different assessment years, the commissioner shall be governed by the same parameters delineated above and these petitions stand disposed of in these terms. It is specifically clarified that as the petitions were pending in this Court, issue of limitation would not be raised by the petitioners.
25. All pending applications in these cases stand disposed of.”
6. On 05.02.2010 fresh proceedings for the assessment years 1999-2000 to 2005-06 were initiated under Section 263 of the Act by the CIT. While these proceedings were pending, the assessee filed SLP (C) No. 7712/2010 before the Supreme Court on 22.03.2010 against the order passed by this Court on 11.12.2009 in WP(C) No. 4722 of 2008. It appears that the Supreme Court in its interim order passed on 22.03.2010 directed the assessee to give a complete breakup of the world-wide income and allocation of expenses towards learning business and software business. While so, on 01.04.2010 the CIT passed orders under Section 263 for the assessment years 1999-2000 to 2005-06 setting-aside the assessment orders passed by the Assessing Officer on the ground that it was erroneous in so far as it was prejudicial to the interest of the Revenue. He directed the Assessing Officer to pass a fresh assessment orders in accordance with law and after giving the assessee adequate opportunity of being heard.
7. On 12.04.2010 the Supreme Court permitted the assessee to withdraw the Special Leave Petition. It would be better to reproduce the order passed by the Court: –
“Recently an order(s) has been passed by the Commissioner under Section 263 of the Income Tax Act, 1961 remanding the matter(s) to the Assessing Officer on all points, including the issue involved in these matter. He, accordingly, prays for withdrawal of these Special Leave Petitions. Permission granted. Special Leave Petitions are dismissed as withdrawn.
May be noted that we are expressing no opinion on the merits of the case (s).”
8. Thereafter on 04.05.2010 the assessee filed appeals before the Tribunal against the orders passed by the CIT under Section 263 on 01.04.2010 for the assessment years 1999-2000 to 2005-06. By applications it sought stay of proceedings under Section 143 (3) read with Section 263 of the Act which had by then been commenced by the Assessing Officer pursuant to the orders of the CIT on 1.4.2010. Its main submission before the Tribunal in support of the stay applications was that since appeals had been filed against the order (passed by the CIT under Section 263 on 01.4.2010) there would be multiplicity of proceedings if the Assessing Officer were permitted to complete fresh assessments and such an exercise on the part of the Assessing Officer would be rendered futile if the Tribunal accepted the appeals filed by the assessee against the order passed under Section 263 and were to hold that the CIT had erroneously assumed jurisdiction to revise the assessments. Finding merit in this submission and possessing necessary powers to grant stay as prayed for, the Tribunal passed orders on 21.05.2010 granting stay of the assessment proceedings pending before the Assessing Officer pursuant to the order passed by the CIT under Section 263. The reasoning of the Tribunal for granting stay is as follows: –
“13. We have carefully considered the rival contentions in the light of the material placed before us. It is the case of the assessee that Ld. CIT was wrong in exercising powers u/s 263, as the order is based on dictates of superior authorities. Not going into merits of such contention, it can be stated here that the assessee has made a prima facie case. Earlier assessment in the present case was framed u/s 143(3) read with Section 153A and it is the contention of the assessee that while framing such assessment, the monitoring was done by CIT and assessee is able to establish such fact. The last date of framing the assessment in pursuance to the order u/s 263 is stated to be 31.12.2011. The appeals filed by the assessee are fixed for hearing on 06.07.2010. The appeals against the order u/s 263 are considered to be priority appeals. The Ld. A.R. of the assessee has assured that he will not be taking any adjournment. Similarly, we expect from the revenue that they will also not seek any adjournment. Therefore, if the hearing of these appeals took place then these appeals can be disposed of prior to 30th September 2010. Keeping in view of all these fact, we are of the opinion that if the A.O. is allowed to proceed with the assessment proceedings already undertaking by him, then the prejudice will cause to the assessee as it has to go for multiplicity of proceedings. In case it is held that powers u/s 263 were wrongly exercised then consequential order will have no legs to stand. Therefore, we consider it just and proper to issue a direction to Ld. A.O. not to continue with the assessment proceedings in pursuance to the order u/s 263 up to 30th September 2010. Even after 30th September 2010 ample time will be available to the A.O. to frame the assessment in case the validity of 263 is upheld. Considering the entirety of facts we issue such direction to the A.O. not to proceed with the assessment proceedings up to 30th September 2010 or till the disposal of the present appeals, whichever is earlier. The situation thereafter can be reviewed according to the facts prevalent at that time. These directions were pronounced in the open court on the date of hearing i.e. 21.05.2010. Both the parties had taken note of these directions.
14. In the result, the stay applications Nos.24, 25, 26, 27, 28, 29 & 30/Del/2010 filed by the assessee are allowed in the manner aforesaid.”
9. It would appear that the Tribunal took up for hearing the appeals filed by the assessee against the order passed by the CIT under Section 263 immediately thereafter. An order was passed on 06.07.2010, which is annexed to the writ petition. This is actually an order sheet entry made by the Tribunal during the hearing of the appeals and it is reproduced below: –
“Income tax Appellate Tribunal, Delhi Benches, New Delhi F-Bench
ITA No. 2057 to 2063/DEL/2010
Asstt. years 1999-2000 to 2005-2006
U/s 153 A/143(3)
NIIT Ltd. New Delhi v. Commissioner of Income-tax Central-II, New Delhi
Extract of the Order sheet Entry dated 06/07/2010
Present for the assessee : Shri Ajay Vohra, Advocate.
Present for the revenue : Smt. S. Naasamma, Sr. D.R.
The Ld. D.R. is directed to produce all records pertaining to assessment completed U/s 153A/ 143 (3) of the act for assessment year 99-00 to 05-06 and record pertaining to initiation and completion proceeding U/s 263 of the act for the said assessment years. Hearing adj. to 19/07/10 at the request of the Ld. D. R. Both parties are informed in the open court. (A/W ITA No.2058 to 2063/10).
