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2001 DIGILAW 446 (RAJ)

Prakash Chitra v. Income Tax Officer

2001-03-19

RAJESH BALIA

body2001
Honble BALIA, J.–Heard learned counsel for the parties. (2). The petitioner challenges the continuance of the proceedings of assessment in pursuance of the order passed by the Commissioner of Income Tax under Sec. 263 of the Income Tax Act, 1961 on 20.02.1998 which order stood set aside by the Tribunal in appeal on 18.05.1998. (3). The assessee was assessed to his income for the assessment year 1993-94 by assessment order dated 28.6.1995. (4). The Commissioner in exercise of his powers under Sec. 263 initiated the proceedings and held that the assessment order to be erroneous and prejudicial to the interest of the revenue and accordingly set aside the same and directed the Income Tax Officer to make a fresh assessment. In pursuance of that order the Assessing Officer issued notice on 26.2.98. However, before any order could be made in pursuance of order of CIT on appeal by the petitioner the order of the Commissioner was set aside by the Tribunal by its order dated 18.05.1998 in ITA No. 106/JDPR/1998. A reference application preferred by the Commissioner of Income Tax under Sec. 256(1) was also rejected in September, 1998. An application to require the Tribunal to state the case and refer the proposed question of law to this Court u/S. 256(2) of the Act of 1961 is stated to be pending before this Court. (5). The assessee was served with another notice of proceedings with the assessment in pursuance of order of the Commissioner and issued fresh notices on 16.11.99 which is Annexure-6 which was replied to by the assessee pointing out that since order passed by the Commissioner u/S. 263 has been set aside, no proceedings could continue and the same may be dropped vide Annexure-7. (6). However, the Assessing Officer issued another notice on 3.02.2000 and communication dated 7.2.2000 showing his intention to continue with the proceedings and make assessment in pursuance of said order of CIT and the petitioner was informed that since application u/Sec. 256(2) has been made before the High Court and the Commissioner has not accepted he must participate in the assessment proceedings. (7). This led to filing of this writ petition. This Court by order dated 17.2.2000 issued notices and by way of interim order directed that I.T.O. shall not finalise the assessment. (7). This led to filing of this writ petition. This Court by order dated 17.2.2000 issued notices and by way of interim order directed that I.T.O. shall not finalise the assessment. However, this order was modified by order dated 27.03.2000 by directing the ITO to go on with the assessment but he will not give effect to it till next date of hearing. This order too does not appear to have been extended thereafter. (8). Learned counsel for the respondent urges that since the revenue has not accepted the order passed by the Tribunal and has filed the Reference Application u/S. 256(2). The Income Tax Officer was within his jurisdiction to proceed with the matter and complete the same within limitation prescribed u/S. 155(2A). (9). Having carefully considered the rival contentions, I am of the opinion that the contention of the respondent is not sustainable, because the Revenue has not accepted the order of the Tribunal, Assessing Officer is entitled to give effect to order which has been set aside by the Tribunal. The efficacy of the order does not depend on its acceptance or non-acceptance by litigating party but it depends on operating force of the order. Once the order of the Commissioner was set aside by the Tribunal the order of the Commissioner ceased to be operative. Unless the Tribunals order is set aside in appropriate proceedings and the order of the Commissioner is resurrected, the only operative order as with effect from the date of the Tribunals order was the order of the Tribunal and not the order of the Commissioner. It is not within the jurisdiction of Income Tax Officer to continue with the proceedings in pursuance of the order of the Commissioner by ignoring the order of Tribunal which binds same. There is no provision under the Income Tax Act which permits the I.T.O. to continue with the proceedings even if order of the ITO by the appellate or revisional order is set aside because Revenue has not accepted the order and matter is sub-justice. The proceedings, if any, during that period remains in suspended animus, unless order of the Superior Authority itself is suspended or stayed. Any other view will lead to chatotic position and breed administrative anarchism and persons will be continued to subject to orders non-existing by treating them to be operative. (10). The proceedings, if any, during that period remains in suspended animus, unless order of the Superior Authority itself is suspended or stayed. Any other view will lead to chatotic position and breed administrative anarchism and persons will be continued to subject to orders non-existing by treating them to be operative. (10). I am, therefore, of the opinion that the Assessing Officer cannot be permitted to continue with the proceedings in pursuance of an order which has ceased to exist in view of Tribunals order. (11). So far as reference to provisions of limitation u/S. 155(2A) is concerned suffice it to state that if it is accepted, as contended by Mr. Lodha, that notwithstanding setting aside the order of CIT, the order still remains operative and live and binds the Assessing Officer to give effect thereto within the period prescribed u/S. 155(2A), if the matter is sub-judice, then such limitation for making assessment in pursuance of order of CIT, then said period has already expired. However, I refrain from making any comments on the question of limitation for completing proceedings in case the Revenue becomes successful in the pending proceedings ultimately and the treatment of period during which the order of CIT remained in operative because of its setting aside. (12). Accordingly, this petition is allowed and the respondents are restrained from continuing with the proceedings in pursuance of order passed by the Commissioner u/S. 263 on 20.2.98.