Case Law Details
Brief Facts
1. M/s Swastik Constructions, a proprietorship concern of the assessee, had under taken a construction project at Panchkula and claimed profit from this project of Rs.41,15,216/- as deduct ion under sect ion 80IB(10) of the Income Tax Act ,1961 (hereinafter refer red to as ‘Act ’ ) . The Assessing Officer examined the genuineness of claim of deduct ion under sect ion 80IB(10) of the Act . The Assessing Officer on the basis of the inquiries made, found that the project was granted approval on 15.02.1996 i .e. much before the date of October , 1998, provided in the Act for claiming deduct ion under sect ion 80IB(10) of the Act . The assessee had also not furnished completion certificate of the local authority that the project was completed by 31.03.2008. The Assessing Officer accordingly rejected assessee’s claim of deduct ion under sect ion 80IB(10) of the Act .
2. Assessee preferred an appeal before CIT(A) The assessee during course of appellate proceedings filed a copy of letter 12.04.1999 from the Di rector , Town and Count ry Planning, Chandigarh regarding “Approval of Service Plan/ estimates in respect of group housing colony in Swast ik Vihar , Mansa Devi Complex, Sector -5, Panchkula in an area of 2.99 acres at Panchkula” CIT(A) inferred that approval for the project was granted by the competent authority after 01.10.1998. The assessee had also f i led another let ter dated 09.08.2010 issued by District Town Planner (HQ. ) [for Director , Town and Count ry Planning, Haryana, Chandigarh] , clarifying that the letter dated 18.05.2010 issued by the Di rector , Town and Country Planning, Haryana, Chandigarh may be considered as completion certificate.
3. Since, completion certificate was not filed with AO, CIT(A) send it to AO for his comment and report. AO submitted his report. The learned CIT (Appeals) after taking into consideration the report of the Assessing Officer , held that in the absence of any specific provision regarding issuance of completion certificate in Punjab New Capital Periphery Control Act , 1952; the occupation certificate issued by District Town and Country Planning, Haryana, Chandigarh was to be treated as completion certificate, issued by the Government authorities for the purposes of claiming exempt ion u/s 80IB of the Act
4. Thereafter revenue preferred an appeal before Tribunal and the Tribunal remanded the matter to the learned CIT (Appeals) vide its order dated 23.11.2011 in 1TA No. 330/Chd/2011 by holding that:
“Considering the entire facts and circumstances of the present case, we set aside the order of CIT(A) in toto and remand the matter to the CTT(A) with a direction to decide the matter afresh in accordance with law considering the contentions raised by the Ld. DR. The CIT(A) shall give an opportunity of being heard to the assessee in the matter. As the same time, we also direct the Ld. CIT(A) to dispose of the assessee’s appeal preferably within three months from the date of receipt of order, (sic)”:
5. The learned CIT (Appeals) in view of the direct ions of the Tribunal refixed the appeal for hearing and after considering the submissions of the assessee passed the following order it is evident that my predecessor had take a particular view in the matter. In the absence of any additional evidence/ information before me, I cannot sit in judgement over the view taken by my predecessor. In any case, in my opinion, the view taken by my predecessor was correct. Ground of appeal No. 3 is allowed.
6. Aggrieved by the order of the CIT (A) revenue again preferred an appeal before ITAT.
Issue
1. The Ld. CIT(A) has erred in allowing the claim u/s 80IB(10) of the Act without completion certificate issued by the competent authority by simply relying on the order of his predecessor and without considering the contention of the revenue as directed by the Hon’ble 1TAT vide order dated: 23.11.2011 in IT A No. 330/Chd/2011.
Revenue contention
1. That the learned CIT (Appeals) in defiance of the order of the Tribunal has merely followed the order of this predecessor, which does not exist in the eyes of the law. Therefore, reliance of the learned CIT (Appeals) on the earlier order of his predecessor dated 1.11.2010 is wholly misplaced and is a clear violation of the order of the Tribunal.
2. The learned CIT (Appeals) should not have followed the order of his predecessor because it is already set aside by the Tribunal and the learned CIT (Appeals) should have decided the appeal of the assessee strictly on merits following the order of the Tribunal dated 23.11.2011.
3. the order of the learned CIT (Appeals) may be set aside and the matter may be remanded to the f i le of the learned CIT (Appeals) for deciding the appeal afresh in accordance with law and in accordance with the direct ions of the Tribunal dated 23.11.2011.
Assessee’s Contention
1. learned counsel for assessee defended the order of the learned CIT (Appeals) and submit ted that the learned CIT (Appeals) correctly followed the order of his predecessor because al l material was available before the learned CIT (Appeals) for giving relief to the assessee.
2. that even material was available in the first round of proceedings before the Tribunal , therefore, there is no need to remand the matter to the file of the learned CIT (Appeals) again.
ITAT Held that
1. Tribunal while deciding the departmental appeal has set aside the earlier order of the -learned CIT (Appeals) dated 1.11.2010 giving substantial relief to the assessee. Thus the earlier order of the predecessor of the learned CIT (Appeals) dated 1.11.2010 does not exist in the eyes of law It could not be taken into consideration for any purpose and even the same is not an order in the eyes of law. The learned CIT (Appeals) instead of following the order of the Tribunal dated 23.11.2011 and without considering the evidences and material on record and without giving his independent opinion on the matter in issue has preferred to follow the order of his predecessor dated 1.11.2010 in al lowing the appeal of the assessee.
2. The learned CIT (Appeals) also blatantly observed in the impugned order that he cannot sit in judgment over the view taken by his predecessor. The findings of the learned CIT (Appeals) noted above, clearly show that the learned CIT (Appeals) instead of deciding the appeal on merits and in compliance with the order of the Tribunal dated 23.11.2011 preferred to follow the view and order passed by his predecessor. The learned CIT (Appeals) has even gone to the extent of noting in the impugned order that the view taken by his predecessor was correct. Thus it is clear that the learned CIT (Appeals) has shown disobedience to the order of the Tribunal dated 23.11.2011.
3. when the earlier order of the predecessor of the learned CIT (Appeals) dated 1.11.2010 was set aside by the Tribunal in toto and the matter is remanded to him for passing the order afresh strictly in accordance with law, the earlier order of the predecessor of the learned CIT (Appeals) would not stand in the eyes of law. Therefore, the learned CIT (Appeals) has gravely erred in quoting the portion of the order of his predecessor in the impugned order. The learned CIT (Appeals) has also gravely erred in finding that the view taken by his predecessor was correct.
4. The learned CIT (Appeals) failed to note that when earlier order of his predecessor was subject matter in departmental appeal before the Tribunal and the order of his predecessor has been set aside and the matter in issue is remanded to his file for passing the order afresh, there is no quest ion of treating the order of his predecessor to be an order in accordance with law. Therefore, the learned CIT (Appeals) should not have quoted some portion of the order of his predecessor in the impugned order and should not have also held that the view taken by his predecessor was correct when the view of his predecessor was already set aside. I t is a clear case of showing disrespect to the order of the Tribunal. Therefore, contempt proceedings could have been initiated against the learned CIT (Appeals) for blatantly disobeying the order of the Tribunal.
5. The orders passed by the Tribunal are binding on all the revenue authorities functioning under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The Hon’ble Supreme Court in the case of Union of India Vs. Kamlakshi Finance Corporation, AIR 1992 SC 711 held that “Judicial discipline requires that the orders of the higher appellate authorities should be followed”
6. Considering the facts of the case in the light of the findings of the learned CIT (Appeals) in the impugned order , we are of the view that the order of the learned CIT (Appeals) cannot be sustained in law and is passed by the learned CIT (Appeals) clearly in defiance of the order of the Tribunal. Since it is a first matter reported to us during the course of arguments by the learned D.R for the Revenue that the order of the learned CIT (Appeals) shows complete defiance of the order of the Tribunal , therefore, we do not propose at the stage to initiate contempt proceedings against the learned CIT (Appeals) , however , we warn him to be careful in future in following the order of the Tribunal in accordance with law and should not show any defiance to the order of the Tribunal .
7. In this view of the matter , we set aside the impugned order of the learned CIT (Appeals) , Chandigarh and restore the matter in issue to his file with direct ion to redecide the appeal of the assessee strictly in accordance with law and in following the earlier order of the Tribunal dated 23.11.2011
Analysed by CA Rahul Sureka
