Case Law Details

Case Name : CIT (DR)- XII, ITAT Vs Simoni Gems (ITAT Mumbai)
Appeal Number : M.A. No. 240/Mum/2010
Date of Judgement/Order : 26/08/2011
Related Assessment Year : 1999- 2000
Courts : All ITAT (4340) ITAT Mumbai (1440)

CIT (DR)- XII, ITAT Vs. Simoni Gems (ITAT Mumbai) –In appeal assessee raised preliminary objection that the notice u/s 143(2) was not issued within the prescribed period of 12 months and  AO accepted that the notice under 143(2) notice was not been issued in time. Accordingly, the Tribunal, relying on Hotel Blue Moon 321 ITR 362 (SC), dismissed the department’s appeal without going into the merits of the appeal.

Thereafter, the CIT-DR written two letters to the ITAT Members in which he made the following arguments:-

(i) permitting the assessee to argue first in the department’s appeal was against “norms in appellate proceedings“,

(ii) the Bench had “passed the order in undue hurry” without waiting for the department’s written submissions to be filed and

(iii) the order was “ex parte”. It was also alleged that the letter was sent by post as the Bench clerk had refused to accept the letter. The letters were treated as a MA by the Tribunal and heard.

Thereafter, the CIT-DR filed a letter of apology clarifying that it was not his intention to “hurt the sentiments” of the Members.

Honourable ITAT has dealt precisely with each assertion made by the CIT-DR and termed them as “frivolous and untrue“and held as follows:-

We are of the view that the conduct of the learned CIT(A) in addressing correspondence to the Honourable Members in respect of an appeal which has been heard and under consideration for passing orders is improper. It is an attempt to interfere with the due course of any judicial proceeding and tends to interfere with or obstructs or tends to obstruct the administration of justice and as such would be “Criminal contempt” within the meaning of the Contempt of Courts Act, 1971. The allegations made in the letters dated 23.3.2010 and 24.3.2010 are serious enough to warrant an action seeking protection of the Honourable High Court in exercise of its powers to punish for contempt of the sub-ordinate Courts and Tribunals. In our opinion, there cannot be a fitter case for imposition of exemplary costs on the learned Departmental Representative, who in our view, is responsible for such a M.A. and for wasting the time of the Tribunal by raising frivolous arguments and making blatantly false submissions. The cost should have to be recovered from the salary of the delinquent employee, who is responsible for such actions and entry made in his service record on the adverse comments made against the D.R. by the Tribunal. We however refrain from doing so in the hope that such indiscretion would not be repeated in future and also in view of the letter of apology filed by the D.R. We find no merits in the case sought to be pleaded by the D.R. and therefore dismiss the miscellaneous applications. As we have decided the issue of limitation and jurisdiction, we do not deal with the submissions made on merits as it would be an academic exercise.

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “G”,MUMBAI

BEFORE SHRI J. SUDHAKAR REDDY (AM) & SHRI R.S. PADVEKAR (JM)

M.A. No. 240/Mum/2010

(Arising out of I.T.(SS) No.747/Mum/2003)

(Block Period: 1-4-1990 to 17-1-2000)

The Commr. of Income-tax (DR)-XII, ITAT, C-Bench,708, 7th floor, M.K. Road, Mumbai- 400020.

Vs.

M/s. Simoni Gems,36, Shreeji Arcade,Opp. Prasad Chambers, 1 & 2, Tata Road, Opera House, Mumbai-400004.

Applicant

Respondent

 

Applicant by Shri Virendra Ojha / Shri D. Songate / Shri Shantam Bose
Departmemt by Shri P.J. Pardiwala / Shri Nitesh Doshi / Ms. Indira Anand

Date of hearing: 26.08.2011                             

Date of order:

ORDER

PER J. SUDHAKAR REDDY, AM:

The circumstances under which the present M.A. arises for consideration by the Tribunal are as follows:

2. The Assessee is a partnership firm. It is engaged in the business of trading of diamonds. The Assessee is also engaged in export of diamonds. There was a search and seizure operation conducted u/s. 132 of the Income Tax Act, 1961 (the Act) on 17.1.2000 in the case of the Assessee. A notice dated 14.6.2000 was issued by the AO under the provisions of Sec. 158BC of the Act, calling upon the Assessee to file return of income for the Block period. On 19.7.2000, the Assessee filed a return of income for the Block period declaring undisclosed income for the Block period of Rs. 15,00,000. The Assessee also took a stand that the income declared in the return of income for the block period was eligible for deduction u/s.80HHC of the Act. According to the order of assessment a notice u/s. 143(2)/ 142(1) of the Act was issued on 15.10.2000. The correct date of issue of notice u/s.143(2) of the Act according to the Asssessee was 15.10.200 1 and there was a typographical error in mentioning the said date in the order of assessment as 15.10.2000. By an order dated 31.1.2002, the AO passed an order of assessment u/s. 158BC of the Act, determining the undisclosed income of the Assessee for the Block period at Rs.4,71,57,325/.

3. Against the said order the Assessee preferred appeal before CIT(A). Before CIT(A), the Assessee raised a ground challenging the validity of the order of assessment on the ground that the notice u/s. 143(2) was issued beyond the period of one year from the end of the month in which the return of income was filed by the Assessee and therefore the order assessment should be held to be invalid. The CIT(A), held that the said objection was not raised before AO and the Assessee participated in the proceedings before AO, therefore the ground cannot be raised before the CIT(A) irrespective of the merits of such contention. On merits the Assessee’s appeal was partly allowed. Against the relief allowed by the CIT(A), the Revenue had preferred appeal being IT (SS) No.747/Mum/2003 before the Tribunal.
4. Under 27 of the Income Tax Appellate Tribunal Rules, 1963 (Tribunal Rules), as a Respondent in the appeal, the Assessee is entitled to support order of CIT(A) on any grounds decided against him, though he may not have appealed. In the appeal filed by the Revenue, the Assessee in terms of Rule 27 of the Tribunal Rules, raised a plea challenging the validity of the order of assessment on the ground that the notice u/s. 143(2) was issued beyond the period of one year from the end of the month in which the return of income was filed by the Assessee and therefore the order assessment should be held to be void and annulled. Similar plea, as we have seen in the earlier paragraph had been raised by the Assessee before CIT(A) and decided against the Assessee by the CIT(A) and therefore the Assessee was entitled to raise this plea before the Tribunal without filing any appeal. When this plea was raised by the learned counsel for the Assessee, the question whether the date of notice u/s. 143(2)/ 142(1) of the Act mentioned as 15.10.2000 in the order of assessment is correct or not came up for consideration. As already mentioned, the correct date of issue of notice u/s. 143(2) of the Act according to the Asssessee was 15.10.200 1 and there was a typographical error in mentioning the said date in the order of assessment as 15.10.2000.

5. The Tribunal gave it’s finding on the above issue in para 8 to 12 of its order dated 23rd March, 2010 and came to the conclusion, based on the admission of the concerned assessing officer in a letter, that the correct date of issue of notice u/s.143(2) of the Act was 15.10.200 1 and there was a typographical error in mentioning the said date in the order of assessment as 15.10.2000. The relevant findings of the Tribunal were as follows:

“8. The letter dated 18/5/2009 written by CIT, DR to the ACIT, Cen. Cir. 11 reads as under:-

“No. CIT(DR)/ITAT/G-Bench/2009-1 0                  Date: 18th May, 2009
To

The Asst. Commissioner of Income Tax, Central Circle 11,

Mumbai.

Sub:-Departmental Appeal in the case of M/s. Simoni Gems vide ITA No.IT(SS) 747/M/03 – Reg.

***********

Please refer to the above.

The above case has been adjourned number of times and the case has been fixed for last hearing on 29/06/2009. the counsel of the appellant put forward a new plea that notice u/s. 143(2) has been issued beyond one year i.e. on 15/10/2001 and therefore the assessment is time barred . On going through the assessment order I find that a notice is stated to be issued on 15/10/2000. Please verify the records and send me a Xerox copy of the notice alongwith order sheet notings to the undersigned within 10 days from the receipt of this letter. As the Department has got a very good case in this appeal. Take the matter seriously and reply the same in advance.

Yours faithfully

Sd/-

(P.S. CHELLAPHAN)

CIT (DR), ITAT I , G-BENCH, MUMBAI

Copy: THE CIT (CENTRA)-I,MUMBAI

CIT (DR), ITAT I , G-BENCH, MUMBAI”


9. Letter dated 25/6/09 written by ACIT, Cen.Cir. 11, Mumbai to CIT, DR, ITAT “G” Bench reads as under:-

“No.ACIT/CC-1 1/Simoni Gems/2009-10           Dated 25/06/2009

To,

Commissioner of Income-tax (DR) ITAT “G” Bench

Mumbai.

Sir,

Sub: Departmental appeal in the case of M/s. Simony Gems Vide ITA No.IT(SS)747/M/03-reg.

Ref:- Your office letter No. CIT(DR)/ITAT/G-Bench/2009-1 0 Dated:18th May, 2009

*********

Kindly refer to the above.

The case records of above assessee for block assessment reveals that the assessee had filed return for block period on 19/7/2000 in response of notice u/s. 158 of I.T. Act. After that the case was transferred to this charge from Spl.Range-48 on 12/10/2001. The notice u/s. 143(2) was issued only on 15/10/2001. The copy of the notice u/s. 143(2) is enclosed herewith.

Submitted please.

Yours faithfully

(VINOD KUMAR)

ACIT, Central Cir. 11, Mumbai

Copy to:-

The Commissioner of Income-tax, Central-I, Mumbai

ACIT, Central Cir. 11, Mumbai.”

10. From the papers on record we find that on 17/8/2009 the CIT(DR) ITAT II, “G” Bench Mr. Pragati Kumar has addressed a letter to CIT(Central) I, which reads as under:-“No. CIT(DR)/ITAT/G-Bench/2009-1 0              Dated 17/08/2009
To

The CIT (Central)-I,

Mumba

Sir,

Sub:- Departmental appeal in case of M/s. Simoni Gems ITA No. IT(SS)747/M/03 – Hearing fixed for 18/8/2009.

It is a very good case of the department. The appellant had disclosed only Rs. 15.00 lakhs under the block return filed by it, whereas the AO assessed u/s. 158 BC(c) the undisclosed income at Rs. 4.71 crores.

The assessee’s counsel has taken a plea before the Bench that since the notice u/s. 143(2) was issued only on 15/10/2001 i.e. after the lapse of more than one year from the date of filing of block return on 19/07/2000, the entire block assessment order is time barred, as held by High Courts.

A report was called for from the AO by my predecessor in this connection. The AO has reported that the notice u/s. 143(2) was issued by him only on 15/10/2001. He has not mentioned whether before the transfer of the case records to him, his predecessor AO i.e. JCIT Spl. Range – 48, has issued any notice u/s. 143(2) or not/ He has also not enclosed the copy of the complete order sheet noting, although asked to do so by my predecessor CIT(DR). This report of AO is in sharp contrast to his recording on the assessment order at page no.2 para no.5 that notices u/s. 143(2)/1 42(1) dated 15/10/2000 have been issued and served.

If the actual date of notice is 15/10/2000 the department’s case survives.

If the actual date is 15/10/2001, the department’s case will most likely be dismissed on limitation matter alone.

You are therefore requested to look into this matter urgently, and direct the AO to send the Xerox copies of the entire order sheet nothings or preferably the entire assessment folder.

This may be treated as the most urgent matter as this case, as a last chance, has been fixed for hearing tomorrow itself and therefore the reply/records are needed here today only.

Encl: As above.

Yours faithfully

Sd/-

(Pragati Kumar) CIT DR ITAT-II “G” Bench

Copy to:

1. The ACIT Central Circle 11, Mumbai for information and immediate action.

2. The CCIT -VI , Mumbai for information.”

3. On 18/8/09 the Tribunal has directed the ld. D.R to produce the assessment records for verifying the date of issue of notice under section 143(2). Till date this has not been complied with.

4. On this factual matrix and in view of the letter written by ACIT, Central Circle 11, Mumbai to the CIT(DR) ITAT “G” Bench Mumbai dated 25/6/09, we hold that notice under section 143(2) was issued only on 15/10/2001 and not on 15/10/2000 and the date a para 5 of page -2 of the assessment order is a typographical mistake.”

6. The Honourable Supreme Court in the case of Assistant Commissioner of Income-tax v. Hotel Blue Moon 321 ITR 362 (SC), on the issue of service of notice u/s. 143(2) of the Act in an assessment for the Block period u/s.158BC of the Act had held that if the Assessing Officer, for any reason, repudiates the return filed by an assessee in response to notice under section 158BC(a) of the Income-tax Act, 1961 relating to a block assessment, the Assessing Officer must necessarily issue notice under section 143(2) of the Act within the time prescribed in the proviso to section 143(2). It was further held that by making the issue of notice mandatory, section 1 58BC, dealing with block assessments, makes such notice the very foundation for jurisdiction. Such notice is required to be served on the person who is found to have undisclosed income. Section 158BC provides for enquiry and assessment. After the return is filed, clause (b) of section 158BC provides that the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and “the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply”. This indicates that this clause enables the Assessing Officer, after the return is filed, to complete the assessment under section 143(2) by following the procedure like issue of notice under section 143(2) / 142. This does not provide accepting the return as provided under section 143(1)(a) : the officer has to complete the assessment under section 143(3) only. If an assessment is to be completed under section 143(3) read with section 158BC, notice under section 143(2) should be issued within one year from the date of filing of the block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and is not curable. Therefore, the requirement of notice under section 143(2), within the prescribed perio cannot be dispensed with.

7. In view of the aforesaid ruling of the Hon’ble Supreme Court, the Tribunal dismissed the appeal of the Revenue, without going into any other issues raised by the Revenue in its appeal. The result of such dismissal of the revenue’s appeal was that the order of the AO as modified by the order of CIT(A) would still hold good and the order of assessment was not annulled by the Tribunal. In other words the plea raised by the Assessee as a respondent was considered only to the extent of sustaining the CIT(A)’s order as required by Rule 27 of the Tribunal Rules.
8. The hearing concluded on 2/3/2010. The order of the Tribunal was pronounced on 23.3.2010 in open Court. The notice giving the date of pronouncement of the order was duly displayed in the notice board of the Tribunal, as is the practice followed by the Tribunal.

9. The Departmental Representative (CIT) , ITAT, C-Bench, Mumbai, Shri Ajit Kumar Sinha, vide letter dated 24-03-2010 and another letter dated 25- 03-2010, which is in continuation of the letter dated 24th March 2010, prayed for recalling of the order dated 23-03-2010 and that the appeal should be adjudicated afresh after considering the written submissions of the Department. The above letters were addressed to the Honourable Members who heard the appeal. The same was received by, both Inward Tapal as well as by Registered post. In view of the allegations made in those letters and in view of the specific submission to recall and adjudicate the appeal afresh, those letters were directed to be numbered as M.A. The Honourable Kerala High Court in the case of CIT vs. Income-tax Appellate Tribunal 289 ITR 191 (Ker) has held that no specific form of application is specified u/s.254(2) of the Act and therefore the power u/s.254(2) of the Act can be exercised even on a defective application. It was further held that the learned Departmental Representative can move an application under section 2 54(2) and that such an application is valid. Hence, the registry was directed to register the letters referred to above, as Miscellaneous application u/s.254(2) of the Act and post the same for hearing. The applications were according registered and posted for hearing by the Registry. The copies of these letters are annexed as Annexure- 1 and 2 to this order. Along with the letter dated 24.3.2010, the D.R. has also sent written submissions dated 19.3.2010, which is annexed as Annexure 3 to this order.

10. The gist of the letter dated 24.3.20 10 is that

a) In the appeal by the Revenue, the Tribunal had allowed the Assessee to speak first and raise a new issue regarding challenge to the validity of the order of assessment on the ground that the notice u/s. 143(2) was issued beyond the period of one year from the end of the month in which the return of income was filed by the Assessee.

b) In support of the submission on behalf of the Assessee, two decisions of the Honourable Bombay High Court were cited but copies of those judgements were not furnished to the Departmental Representative.

c) The Departmental representative had submitted before the Tribunal at the time of hearing of the appeal that since the Asssessee has raised a new issue verbally, the Assessee should furnish written submission with relevant case laws cited before the Bench so that the Departmental Representative can give his comments on the same.

d) On such submission, the Bench directed the parties to file written submissions and treated the case as heard.

e) The Departmental representative could file his written submissions only if the Assessee files his written submissions. The Assessee’s written submission dated 4.3.2010 was given to the D.R. only on 9.3.2010.

f) On 23.3.2010, the departmental representative sought to file written submissions on the new issue raised by the Assessee as well as on merits of the appeal but the same was not accepted by the Bench Clerk. Thereupon, the Departmental Representative met the Honourable Presiding Officer of the Bench which heard the matter in chambers and requested him to take the written submissions on record. The Departmental representative came to know that the order has already been pronounced and therefore the written submission of the D.R. could not be taken on record.

1 1. Thereafter the letter contains the following allegations against the members:

a) The Bench has passed the order in undue hurry.

b) The order of the Tribunal without considering the submissions of the Department is unjustified.

c)On 2.3.20 10, the Bench did not fix any time limit within which the written submisisons were to be filed by the Department. The Bench should have therefore waited for the written submissions of the Department.

12. Thereafter it has been stated in the letter that the D.R. is constrained to send the letter by post as the same was not accepted by the Bench clerk. The Bench should consider the written submissions of the Department before passing the order and if the order had already been passed then the same should be recalled and the matter readjudicated.
13. The contents of the letter dated 25.3.2010 are almost identical with additional references to the merits of the case of the Revenue. The allegations in this letter are that

a) The order of the Tribunal is an ex-parte order.

b) The Tribunal in allowing the Assessee/ respondent to speak first in the appeal filed by the Revenue and raise a new issue and by doing so has acted against the norms in appellate proceeding

c) The Tribunal has acted against natural justice and against legal precedents ever heard-of.

d) The Tribunal cannot and should not pass ex-parte judgment.

14. The Counsel for the Assessee submitted as follows 9

a) The submission/ letters addressed by the CIT(DR) to the Hon’ble Bench cannot be regarded as a Miscellaneous application for rectification of a mistake apparent from he record as contemplated under section 254(2) of the Act, as no mistake has been pointed out in the said submission/letters which could be regarded as apparent from the record;

b) The Assessee had raised issue of non-service of notice u/s. 143(2) of the Act within the prescribed time in appeal before the Commissioner of Income-tax (Appeals) who had dismissed the ground stating that this issue could not be raised before him as it had not been raised before the AO in the course of assessment proceedings. Further, before the Tribunal this issue was raised by the Assessee in the course of the hearing on 12.05.2009, 29.06.2009, 18.8.2009 and 20.10.2009 ie. on 4 occasions before the date of final hearing on 02.03.2010. On those occasions the hearing was adjourned for the Revenue to obtain appropriate instructions from the AO as to the date of service of the notice under section 143(2).

c) The CIT (DR) has claimed that the date of 15.10.2000 as the date of issue of notice under section 143(2) of the Act by referring to para 5 on page 3 of the assessment order. The dated 15.10.2000 mentioned as date of sewice of notice u/s. 143(2) of the Act in the order of assessment is clearly a case of typographical error and the actual date of issue of said notice is 15.10.2001. In this regard the Assessee’s Counsel had produced the original notice before the Tribunal in the course of hearing. This fact has also been confirmed by the AO by his letter dated 25.06.2009 addressed to the CIT(DR) reproduced in para 9 at page 4 of the Tribunal’s order. It was also pointed out that apart from alleging that this issue was raised by the assessee in appeal and at later stage, the CIT(DR) in his submission dated 19.03.10 has also not been able to positively show that any notice had been issued by the AO under section 143(2) before 31.0 7.2001.

d) The plea of the D.R. that copies of the two decisions of the Bombay High Court in B.R. Bamasi v. CIT 83 ITR 223 and CIT v. Gilbert and Barker Manufacturing Co., USA 111 ITR 529 were not handed over by the Assessee’s Counsel to him cannot be considered as a genuine grievance. Decisions referred to in the course of hearing are reproduced in Income Tax Reports and it is not a rule that photocopies of the reported decisions relied upon by a party need to be filed before the Bench and a copy also handed over to the other side and, hence, this grievance has no basis in law.

e) With regard to the plea of the D.R. that the written submissions filed by the assessee on 04.03.2010 were received by him from his Office on 09.03.2010, thereby justifying his action of filing his written submissions only on 23.03.2010, it was submitted that the requirement of filing written submissions by the Revenue was not subject to the filing of such submissions by the assessee as is sought to be made out by the DR in his letters. In fact, the Assessee had fully argued its case in the course of hearing on 02.03.2010. There was nothing in the arguments which required any explanation by way of written submissions. However, since the Revenue sought liberty to file written submission in the matter the Honourable Bench also directed the Assessee to do the same. In the written submissions filed by the Assessee it has only summarised the submissions made before the Tribunal in the course of hearing on 02.03.2010. There is no new point raised by the Assessee in the said written submissions. Therefore the DR cannot be heard to say that h could not have prepared his written submissions till he Assessee had filed theirs.

f) With regard to the complaint of the DR that in the course of hearing on 02.03.2010 no arguments were allowed by the Honourable Bench on merits in respect of the grounds of appeal raised by the Revenue which was the subject matter of appeal, it was submitted that since the Tribunal had heard both the parties on the preliminary issue which challenged the very validity of the assessment framed there was no need to hear the Revenue on the merits of the additions/ dis allowances as the same would be academic and of no consequence.

g) It was also submitted that the DR has also erred in observing that the Tribunal could not have decided the issue without consulting the assessment records or obtaining written submissions from the department. In this regard it was pointed out that the letter dated 25.06.2009 from the AO to the DR to the effect that the only notice issued under section 143(2) was dated 15.10.2001 proves beyond doubt that nofurtherfactual verification was required in the matter.

15. At the time of hearing of the M.A. the Lr.D.R. Mr.Songate, reiterated the stand of the Revenue as reflected in the letters of the D.R. referred to earlier. After the hearing of the matter, the ld. D.R., Shri Ajit Kumar Sinha, filed the following letter dated 05-07-2010 which is extracted below for ready reference:

“From,

Dated….5/7/10.

Ajit Kumar Sinha

CIT (DR), ‘C’ Bench,

ITAT, Mumba

To,

The Hon’ble Members

‘G’ Bench

Income Tax Appellate Tribunal

Mumbai

Sirs,

Sub: Written submissions in the case of

Simoni Gems, in ITA(SS) 747/m/03

Case heard on 02/03/2010-MA

240/M/ 10- Regarding.

Your kind reference is invited to my letters dated 24/04/2010 and 25/04/2010 through which I had requested the Honourable Bench to consider the written submissions prepared by me on behalf of the Department, while adjudicating the Department’s appeal in above IT (SS) 747/M/03. The Hon’ble Bench has been very kind to consider my request as it has been converted into an MA.

2. In this regard it is humbly clarified that, on my part, there never was any intention to hurt the sentiments of Honourable Members while making the said request. The only purpose was to make a strong request to the Honourable Bench so that the written submissions are considered by the Bench. In this process, however, I have caused inadvertent hurt to the sentiments of Hon’ble Members; I hereby apologise for the same. I may also add that I hereby withdraw any such statements contained in the above two letters which may have caused the said hurt to the Honourable Members.

Yours faithfully,

Sd/-

(Ajit Kumar Sinha)

CIT (D), ‘C’ Bench

Income-tax Appellate Tribunal Mumbai”

16. Shri Ajit Kumar Sinha had, however, not appeared before the Bench on any of the occasions when the matter was posted for hearing. Each time, when the matter came up for hearing, some other Departmental Representative appeared and stated that all the submissions and letters have to be considered by the Tribunal and appropriate orders passed. Hence, we are compelled to pass order on merits.
17. We have considered the rival submissions and perused the material on record. We have specifically considered the written submissions dt. 19.3.20 10 filed by the departmental representative alongwith the letter dated 24-03- 2010 and the letter dt.25-03-2010. We have also considered the detailed rejoinder given by the assessee dated 01-06-2010.
18. Before we proceed to deal with the petitions, we shall first bring out thefacts. This is necessary as the Departmental Representative Mr. Ajit Kumar Sinha has made frivolous assertions. The hearing of the case had taken place on 02-03-20 10. The learned Counsel for the Assessee made submissions on the issue of invalidity of assessment on the ground of non-service of notice u/s. 143(2) of the Act within the prescribed time. The ld. D.R. apart from making oral submissions also wanted to file written submissions. Both parties were given liberty to file written submissions on the preliminary issue only. At the request of the D.R., one week’s time was granted for filing written submissions. The assessee files written submissions dated 4.3.20 10 on 08- 03-20 10. The DR also received a copy of the said written submissions on 09- 03-20 10. He should have filed his written submissions by 9.3.20 10 or after receiving the submissions of the assessee, latest by 15/16-03-20 10. The Tribunal waited for one more week and only on 23-03-20 10 disposed of the appeal in the absence of receipt of any written submissions from the Revenue, as the file was self-contained and in the opinion of the bench, no further material was required to decide the prelimnary issue. The facts available on record amply demonstrate that notice u/s. 143(2) in this case was not issued within 12 months from the date of filing of the block return of income. This position is admitted in writing by the Assessing Officer. The correspondence between the D.R. and the AO is brought out in the impugned Tribunal order dated 23-03-2010. On this factual position, the statement of the D.R. in the last line of para 2 of petition dated 24-03-20 10 is contrary to facts. It is totally wrong to state that the Bench had not fixed any time limit for submission of written submissions. In fact, at para 6 on page 3 of the Tribunal order, the direction of the Bench that written submission should be filed within one week is recorded.
19. At para 3 of this petition, the D.R. has stated that the Bench had passed the order in undue hurry. More than 20 days had elapsed from the date of hearing and the Bench waited for about 3 weeks for the Department to file written submissions, though only one week was granted at the time of hearing. The learned CIT(A)/D.R. probably expects the Bench to enquire from him as to whether written submissions are ready and when the same will be filed and thereafter proceed to decide the appeal. The correspondence of the Assessing Officer was on the file and in the light of the judgement of the Honourable Supreme Court in the case of Hotel Blue Moon (supra), there was no other view possible than to uphold the plea of the Assessee. Still the Bench waited for written submission from the learned Departmental Representative / D.R. for a reasonable period. There was no undue hurry. Similarly, at para 4 of the letter, the assertion that no time limit was prescribed, is factually incorrect. The learned Departmental Representative should have refrained from making such frivolous and untrue statement. It is also incorrect on the part of the D.R. to state that the department had not been given any opportunity to present its arguments. In fact, the D.R. had verbally argued Revenue’s case and opposed the contention of the learned counsel for the assessee. It is therefore not correct on the part of the D.R. to allege that the Tribunal has passed an “ex-parte order”.
20. In the last para of the letter dated 24-03-20 10, the D.R. has alleged that he could not have prepared his submissions in respect of the issue raised by the assessee without knowing the issue and the corresponding arguments of the assessee. This is a false statement. The learned counsel for the assessee has argued his case by invoking Rule 27 of the ITAT Rules. The learned Departmental Representative cannot plead ignorance of the said Rules. It is unfortunate that the learned Departmental Representative claims ignorance of the issue raised by the Assessee, when the correspondence available in his file would clearly show that this issue was already raised by the Assessee on a number of earlier occasions when the matter came up before the Bench. Being a very important preliminary issue the tribunal was bound to consider it. The DR was very much present in Court and was aware of the stand of the Assessee and case laws relied upon by the ld. counsel for the Assessee. He had also opposed the contention on the date of hearing. Nothing prevented him from making his submissions within a reasonable time. The case laws cited were also read out in the Court by the Sr. Advocate during the course of hearing. Copies of reported decisions are not, as a matter of convention, given to the other side.

21. In the letter dated 25-03-20 10, which is in continuation of the letter dated 24-03-20 10, the DR states that the order of the Tribunal would be an ex parte order. The DR has not understood what is an ex parte order. When the learned Departmental Representative is heard and also given time to file written submissions, how can the order be an ex-parte. The D.R again refers to the time limit for giving written submissions as well as his view that the assessee has raised a new issue. Here, we find that the D.R. is misleading and making false statement before the Bench on the facts of the case. The assessee has been consistently raising this issue under Rule 27 in all the earlier hearings. As per the record before us, for the first time on 12-05- 2009 the assessee raised the issue before the Bench and thereafter on 29-06-2009, 18-08-2009 and 20-10-2009, the Asssessee had repeated the very same arguments. The Department sought time to answer this issue. This aspect is confirmed by the correspondence between the then D.R. and the AO. The Revenue had sought adjournments on those occasions for verifying records and also to meet the arguments and the Bench granted the adjournments. The present D.R., Shri Ajit Kumar Sinha, suppressed the correspondence between the D.R. and the AO on these aspects on all the earlier occasions and sought to mislead the Bench and obtain an order in favour of the Revenue by misrepresentation. It is unfair and unjust for any party appearing before the Bench, especially a responsible Sr. Govt. Officer, in trying to obtain an order of the Bench in such a manner by suppressing the correspondence between the DR and the AO, wherein the fact of non-service of notice u/s. 143(2), in accordance with the provisions of the Act, was admitted by the AO. When the fate of the appeal was staring at the face of the learned Departmental Representative, he should not have cast aspersions on the bench by making false representation. Till date the D.R. could not bring on record any material to show that notice u/s. 143(2) of the Act was served on the Assessee within the time contemplated under the Act.

22. At para-3 of the letter dated 25.3.2010, statements have been made by the DR Shri Ajit Kumar Sinha by not referring to the conclusive correspondence between he D.R.’s office and the AO. He falsely claims that the department has in no way accepted that notice under section 143(2) was not issued within the prescribed time limit and that there is a typographical mistake in the assessment order. Unnecessary and insinuating comments are made on the Bench that decision cannot be made without consultation of records. High sounding statements such as “It is also against any of the legal precedents ever heard of’ etc. were made. This only shows the lack of understanding of the learned Departmental Representative and his attitude not to bring a truth before the Bench.

23. With regard to the statement of the D.R. that the Bench allowed the respondent to speak first, though it is the Revenue’s appeal, we do not find anything wrong with such procedure. The counsel for the Assessee raised a preliminary objection at the start of the hearing by invoking Rule 27 of the ITAT Rules and when the issue so raised goes to the very jurisdiction of the AO to make assessment, the same has to be gone into at the outset. When such issues are raised, the Bench is duty bound to hear the same and it is unfortunate that the D.R. does not understand such basic practice in proceedings before Tribunal. The jurisdictional issue have to be addressed first and then only merits. The learned Departmental Representative wants the bench to hear him on merits, though from the record, it is obvious that the assessment is bad in law as the Assessing Officer did not follow the mandate laid down in Sec. 143(2) of the Act.
24. We now deal with the written submissions dated 19.3.20 10 filed along with the letter dated 24.3.2010 wherein the D.R. has again suppressed facts and attempted to mislead the Bench.
25. The D.R. in para-2 of his written submission again sought to submit that plea with regard to the validity of the order of assessment on the ground that the notice u/s. 143(2) was issued beyond the period of one year from the end of the month in which the return of income was filed by the Assessee, was a new plea raised by the Assessee for the first time before the Tribunal only in May, 2009. We have already seen that this allegation is absolutely false. In the appeal filed before CIT(A) against the order of assessment, the Assessee raised ground No.1 and 2, which reads as follows:

“(1) The Assessing Officer erred in passing the impugned order dated 31.01.2002 under Section 158BC of the Act and in determining the total undisclosed income for the block period at Rs.4,71,57,325/-. He ought to have accepted the block return filed by the Appellant without making any adjustments thereto.

(2) The Assessing Officer failed to appreciate that he had no jurisdiction to pass the impugned assessment order as a valid notice comply with the conditions of Sec.158BC of the Act had not been issued to the Appellant. He failed to appreciate that non-compliance with the statutory requirements in issuing the said notice had resulted in the assessment proceedings being null and void.”

26. In para-3 of the order of the CIT(A), the above grounds of appeal have been dealt with by him as follows:

“3. The appellant has contended that the A.O. erred in passing the assessment order consequent upon the procedure initiated by the issue of an invalid notice, resulting the assessment being ab initio void. The appellant has referred to two Allahabad Tribunal’s cases in support of the contentions. It is claimed that the notice u/s. 158BC issued to the appellant did not indicate the status of the assesse and the assessment year falling the block period. It is further claimed that the notice u/s. 143(2) was received by the appellant beyond the period of one year from the date of filing the return, and hence the impugned assessment order is barred by limitation. The appellant has submitted a detailed discussion on the grounds for coming to such a conclusion.

4. I have carefully studied the contention of the appellant and the facts as emerging from the records. It is admitted that the appellant did not raise these objections throughout the course of assessment proceedings before the A.O. and complied with all notices and consequent procedures voluntarily. That being so, the present ground of appeal becomes of the nature of a mere after thought and, whatever be the merit of the contentions, deserves to be rejected for that reason alone. It was held by the jurisdictional Bombay High Court in the case of Rameshchandra & Company Vs. CIT (168 ITR 375) that where additions are made on the basis of the assesses own admission, they cannot be questioned in appeal. By analogy, where the appellant has voluntarily complied with provisions and procedures of the Act without any protest, he loses the right to take up the issue in appeal. Accordingly, this ground of appeal fails and is dismissed.”

27. In the light of the above order of the CIT(A), it is not open to the D.R. to submit that the issue sought to be raised by the Assessee was a new issue. In para-2.4.3 & 2.4.4 of the written submission, the D.R. has submitted that the ground regarding validity of the order of assessment on the ground that the notice u/s. 143(2) was issued beyond the period of one year from the end of the month in which the return of income was filed by the Assessee was not raised by the Assessee before CIT(A). In our opinion, Ground No.1 raised by the Assessee before CIT(A) was broad enough to encompass the objection regarding validity of the order of assessment on the ground that the notice u/s. 143(2) was issued beyond the period of one year from the end of the month in which the return of income was filed by the Assessee. Even assuming that there was no specific ground raised by the Assessee in this regard, the powers of the CIT(A) in disposing of the appeal before him are not restricted to the grounds raised by the Assessee before him. Explanation to sec.251 of the Act is clear in this regard and it reads as follows:”Explanation.–In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.”

28. The CIT(A) has considered the issue and has held against the Assessee. It cannot therefore be said that the issue in question was a new issue raised by the Assessee for the first time before Tribunal. It is also clear from the order of the CIT(A) that he had also not disputed the fact that the notice u/s. 143(2) was issued beyond the period of one year from the end of the month in which the return of income was filed by the Assessee. The CIT(A) had only proceed to decide the issue against the Assessee by applying the principle of acquiescence because he has observed “whatever be the merits of the contentions”.

29. The allegations made in the written submissions in para 2.4.5, 2.4.6 and 2.4.7 are absolutely baseless allegations. The D.R. still wants to say that notice u/s. 143(2) of the Act was issued within the period of 12 months from the end of the month in which the return of income was filed when the AO in his letter addressed to the D.R. has stated that nothing is on his record to show that the notice u/s. 143(2) of the Act was served within the period required in law and that the date mentioned in the order of Assessment as date of service of notice u/s. 143(2) of the Act is incorrect. For the reasons given in the earlier paragraphs the questions sought to be raised by the D.R. in para 2.4.8 and the further submissions in para 2.4.9 are without any merit.
30. The submissions made in para 2.5 of the written submission are absolutely without any merit. The sum and substance of the argument raised in that paragraph is that a new plea cannot be raised for the first time before the Tribunal unless facts necessary for adjudication of such new plea are already on record. We are of the view that the question whether notice u/s. 143(2) of the Act was served within a period of 12 months from the end of the month in which the return of income was filed by the Assessee is a matter of record. In fact, the AO himself has admitted that such notice was not served within the time allowed in law. The issue, again at the cost of repetition, is not a new issue as presumed by the D.R. as the issue has been examined and adjudicated by the CIT(A). It is therefore futile on the part of the D.R. to make submissions on erroneous presumptions and assumptions.

31. The D.R., in our humble opinion, was unable to understand the judgment of the Hon’ble Bombay High Court in the case of B.R. Bamasi v. CIT (83 ITR 233). When the Hon’ble Court in its order clearly states that, the assessee’s counsel can raise an oral argument, the D.R. wrongly harped on the point that no written grounds have been taken by the assessee under Rule 27. As per the Hon’ble Jurisdictional High Court, no written application is required to be filed when rule 21 is involved. In this case, a specific argument on the issue of validity of assessment was raised before the CIT(A) by way of ground no. 1 & 2 and the ld. CIT(A) at pages 3 & 4 of his order dealt with the issue and dismissed the grounds of the assessee. This very ground of jurisdiction was raised before the Tribunal by the assessee’s counsel by invoking Rule 27 verbally. The ld. D.R., on the one hand, states that the issue was first raised in May 2009 by the assessee and on the other hand, contradicts himself and states that it is a new issue raised for the first time, for which he has no notice. This shows that the written submissions are factually misleading and that the facts have been suppressed. This is deplorable. The issue was very much there before the learned CIT(A) and the learned CIT(A) adjudicated the same and the revenue had sufficient notice on the issue before the Tribunal.

32. Coming to the decision in the case of Manji Dana (60 ITR 582) (SC) relied upon by the D.R., we find that the facts are entirely different and it is not a case of invoking Rule 27. In that case, the assessee had neither raised the issue before the AAC nor before the Tribunal. It was only in the course of arguments before the Tribunal that a ground was taken. It was an assessee’s appeal and the facts were not on record. In such circumstances, the Court held that the issue raised did necessitate enquiry into facts which had not been investigated. Similarly, in the case of Ramesh Chandra & Co.[35 Taxman 153(Bom)/ 168 ITR 375], it is an assessee’s appeal wherein an additional ground had been taken and the Court held that it was a case where the assessee claimed that the statement had been wrongly recorded and the assessee made the statement under a mistaken belief on fact and law. No such circumstances exist in the present case. In the case on hand, a plea had been taken before the CIT(A) on the issue of jurisdiction and the ld. CIT(A) had dealt with the same. Under these circumstances, both these decisions do not come to the rescue of the Revenue. In fact, they only dealt with a situation where an additional ground had been raised in an assessee’s appeal.

33. Further, on going through the detailed written submissions and thereafter the petition made by the ld. D.R., we are of the opinion that the ld. D.R. has not bothered to read the order of the Tribunal. The least an officer is expected to do before filing a miscellaneous petition, is that the order of the Tribunal has to be read. The various statements made in the petition are totally against and contrary to the observations and conclusions in the order. When the ld. Sr. counsel states that he is relying on Rule 27 for the limited purpose of dismissal of the Revenue’s appeal and not seeking any further relief in view of the observations of the jurisdictional High Court in the case of B.R. Bamasi (supra), the D.R. was unable to understand this submission and goes on to write that the acceptance of the argument of the Sr. counsel would result in cancellation of the assessment itself and the return of income filed by the assessee will become nullity. This submission is contrary to the order of the Tribunal where it is held that the order of the Assessing Officer as confirmed by the learned CIT(A), stands and the only effect of invoking Rule 27, is the dismissal of the Revenue appeal. The assessee, in fact, got no further relief. When it is not even the argument of the assesse’s counsel, we do not know from where the D.R. gathered such an impression. It is unfortunate that such untrue statements are made in these written submissions.

34. Nowhere in the written submissions nor in the petitions dated 24-03- 2010 and 25-03-20 10, the D.R. asserts that the notice u/s. 143(2) was served within the time limit provided in the proviso to sec. 143(2). This is the position till date. On the contrary, the facts brought out in the Tribunal order clearly bring out the admission of the AO that the notice u/s. 143(2) was not served within the time limit of 12 months. We do not understand as to what the learned Departmental Representative wanted to achieve by such submissions.

35. We are of the view that the conduct of the learned CIT(A) in addressing correspondence to the Honourable Members in respect of an appeal which has been heard and under consideration for passing orders is improper. It is an attempt to interfere with the due course of any judicial proceeding and tends to interfere with or obstructs or tends to obstruct the administration of justice and as such would be “Criminal contempt” within the meaning of the Contempt of Courts Act, 1971. The allegations made in the letters dated 23.3.2010 and 24.3.2010 are serious enough to warrant an action seeking protection of the Honourable High Court in exercise of its powers to punish for contempt of the sub-ordinate Courts and Tribunals. In our opinion, there cannot be a fitter case for imposition of exemplary costs on the learned Departmental Representative, who in our view, is responsible for such a M.A. and for wasting the time of the Tribunal by raising frivolous arguments and making blatantly false submissions. The cost should have to be recovered from the salary of the delinquent employee, who is responsible for such actions and entry made in his service record on the adverse comments made against the D.R. by the Tribunal. We however refrain from doing so in the hope that such indiscretion would not be repeated in future and also in view of the letter of apology filed by the D.R. We find no merits in the case sought to be pleaded by the D.R. and therefore dismiss the miscellaneous applications. As we have decided the issue of limitation and jurisdiction, we do not deal with the submissions made on merits as it would be an academic exercise.

36. In the result, the misc. application by the Revenue stands dismissed.

Order pronounced on the 30th day of August 2011.

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0 responses to “‘False and frivolous, submissions by CIT (DR) before ITAT constitute ‘criminal contemp’ and justify recovery of costs from salary”

  1. MK Gupta says:

    In my opinion, the CBDT must immediately challenge this order as the ITAT cannot assume the powers of a court to invoke the Contampt of Courts Act. This will set very pernicious precedent. One must not forget the duty of the CIT(DR) who has to work for safeguarding revenue’s interst. This incident in the context of Anna Hazare-Jan Lokpal debate is very suggestive. I hope the concerned agencies will not ignore the matter in the light of the Lokpal-Jan Lokpal acrimony and unanimity.

  2. C.Jyoti says:

    It reminds one of a similar action taken by the Chennai Bench long ago. But, the question is, whether the ITAT is within its jurisdiction to invoke the provisions of the Contempt of Cort’s Act.

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