By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi
Chartered Accountants
Section 253 r.w.s. 147 — When the disposal of a particular ground is not on merit, the matter cannot be said to have achieved finality — Issue of jurisdiction goes to the very root of proceedings and can be agitated any time.
Facts:
The original assessment was completed on 30-3- 2004, determining the total income at Rs.9,16,870 after allowing deduction u/s.80HHC. Gross bank interest was treated as income from other sources. The assessee filed an appeal against the same to the CIT(A) who dismissed the assessee’s appeal vide order dated 3-12-2004.
The assessee then appealed to the Tribunal. The matter was remanded back to the file of AO. Pursuant to this, the Assessing Officer passed the second assessment order.
In the course of second round, it was contended before the AO that the time limit for issue of notice u/s.143(2) was available to the AO during the first round and thus the AO could not resort to reopening u/s.147. The AO held that the issue of reassessment was raised in the first appeal and the same was rejected by the CIT(A) by observing that no material was brought on record. Further the AO observed that the present assessment was only to give effect to the Tribunal’s order and so the question as to the validity was out of the purview.
There was a difference of opinion between the members. The Accountant Member was of the opinion that the question of jurisdiction goes to the root of the matter and can be raised at any point of time. The Judicial Member was of the view that the assessee did not challenge the validity of reassessment before the CIT(A) or Tribunal. The issue of jurisdiction had thus obtained finality.
On reference to the third Member, the following was held:
Held:
1. The CIT(A) order rejecting the assessee’s ground on reassessment has not discussed any argument on merits of the matter. The assessee can, at best be said to be not to have pressed the ground. But the disposal was never on merit.
2. This issue was never raised before the Tribunal in the first round of litigation. Hence, the Tribunal did not have any opportunity to decide on this matter. Finality cannot be conferred to such an order in a manner that in the second round doors of justice are closed. In the opinion of the third Member, the matter had not reached any finality. The jurisdiction to the authorities cannot be conferred by acceptance or negligence of the parties to the dispute. To shut doors at the threshold on the grounds of technicalities is not within the spirit of the Apex Court’s decision in the case of Improvement Trust.
3. The action of the Assessing Officer in reassessing u/s.147 when time limit for issue of notice u/s.143(2) was available is impermissible in the light of the decision of CIT v. Qatalys Software Technologies Ltd., (308 ITR 249) (Mad).
4. The matter had not reached finality and therefore it was open to the assessee to take up the issue in the second round of litigation.
