These appeals are filed by the revenue under Section 260-A of the Income Tax Act, 1961 (the ‘Act’ for short) assailing the common order dated 04.07.2014 passed by the Income Tax Appellate Tribunal (ITAT for short), Bangalore Bench “C”, Bangalore relating to the assessment year 2007-08, in appeal proceedings No.ITA No.135/Bang/2013 and C.O.No.66/Bang/2014.
2. The facts in brief:
The assessee is a trust constituted under the Major Port Trust Act, 1963. The assessee being a Government undertaking carrying on commercial activities is one of the major port trust enjoying the benefits of provisions of sub-section 20 of Section 10 of the Act since its inception. The assessee applied for registration under Section 12A of the Act on 27.03.2006. The Commissioner of Income Tax (CIT) denied registration to the assessee. On appeal before the ITAT, ITAT directed the CIT to grant registration under Section 12AA to the assessee with effect from 01.04.2003. The order passed by the Tribunal was given effect to by the authorities and registration under Section 12AA was granted to the assessee on 27.07.2009. Originally the assessment order under Section 143(3) of the Act was passed on 27.12.2009. On revision filed by the assessee under Section 264 of the Act, the revision was allowed on 27.09.2010 by the CIT and the matter was remanded to the Assessing Officer. The Assessing Officer vide order dated 27.05.2011 has given effect to the order passed by the CIT under Section 264 of the Act. However, the original order passed under Section 143(3) of the Act dated 27.12.2009 was revised by the CIT under Section 263 of the Act by order dated 22.03.2012.
3. This order of the CIT passed under Section 263 of the Act was challenged by the assessee for the assessment year 2007- 08 before the ITAT. The revenue has filed cross objections against the order passed under Section 263 of the Act for the relevant assessment year. The Tribunal after considering the rival submissions made by the parties, set-aside the order passed by the CIT under Section 263 of the Act as well as the cross objections filed by the revenue.
4. Being aggrieved by the said judgment of the Tribunal, revenue is in appeal raising the following substantial questions of law:
1. “Whether Hon’ble Tribunal was right in law in holding that the assessment order passed on 29.12.2009 has got merged with the order dated:27.05.2011 when the latter order was only giving effect to the order passed by CIT under Section 264 and it modified the previous order to that extent only and hence the original assessment order cannot be said to have lost its identity?”
2. “Whether Hon’ble Tribunal was right in law in quashing the order of the Commissioner of Income Tax under Section 263 of the Act which is as per law as the provisions of Section 14A are applicable to the total income under the Income tax Act and the fact whether the income of the assessee is computed as per Section 11 or not is of no relevance?”.
5. Heard the learned counsel appearing for the parties and perused the material on record.
6. Learned counsel Sri Jeevan J Neeralgi appearing for the revenue contends that the CIT had the power under Section 263 of the Act to revise the assessment order passed on 27.12.2009, the order passed on 27.05.2011 being an order giving effect to the order passed by the CIT under Section 264 of the Act. The Tribunal under a misconception held that the assessment order passed on 29.12.2009 has got merged with the order dated 27.05.2011. It is further contended by the learned counsel that cross objections filed by the revenue under Section 253(4) of the Act was wrongly rejected by the Tribunal as not maintainable, contrary to Section 253(4) of the Act. Accordingly, he seeks to answer the question of law in favour of the revenue and against the assessee.
7. Per contra, learned counsel Sri A Shankar appearing for the assessee justifies the order passed by the ITAT and would contend that the order passed by the Assessing Officer on 27.12.2009 under Section 143(3) of the Act do not exist subsequent to the order dated 27.09.2010 passed by the CIT under Section 264 of the Act which has been given effect to by the Assessing Officer vide order dated 27.05.2011. The said order dated 27.12.2009 which no longer subsists, was revised by the CIT under Section 263 of the Act. As such, invoking of suo-moto revision powers by the CIT under Section 263 of the Act is not justifiable as rightly considered by the Tribunal, the same cannot be found fault with. It is further submitted that cross objections filed by the revenue is not maintainable in terms of Section 253(4) of the Act. Thus, the ITAT rejected the cross objections filed by the revenue which does not call for any interference by this Court.
8. We have given careful consideration to the rival submissions advanced by the learned counsel for the parties. The undisputed facts are that the assessment order under Section 143(3) of the Act was passéd by the Assessing Officer on 27.12.2009, subsequent to the registration under Section 12AA of the Act, granted to the assessee on 27.07.2009 with effect from 01.04.2003. The revision filed by the assessee under Section 264 of the Act was allowed accepting the claim of the assessee and the matter was remanded to the Assessing Officer to compute the income of the assessee in terms of the order of revision under Section 264 of the Act. The said order was given effect to by the Assessing Officer vide order dated 27.05.2011. Thus, it is clear that the order dated 27.12.2009 passed by the Assessing Officer is no longer in existence. CIT exercising the powers under Section 263 of the Act revised the non-existing order dated 27.12.2009, the Tribunal having considered this factual position arrived at a conclusion that CIT had no jurisdiction to revise the order which was not in existence. The order passed by the CIT, revising the non-existing order is void ab-initio and is a nullity in the eye of law. As such, the Tribunal setting aside the said void order passed under Section 263 of the Act, cannot be found fault with.
9. It is pertinent to note that the computation of the income of the assessee has been done in accordance with Chapter III of the Act, the second question of law arises on the points urged in the cross-objection filed by the revenue before the Tribunal, which has been rejected.
10. Section 253(4) of the Act contemplates that the Assessing Officer or the assessee can file the cross objections before the ITAT only in an appeal against the order of:
(i) the Deputy Commissioner -Appeals
(ii) the Commissioner of Appeals
(iii) the Assessing Officer preferring an appeal in pursuance of the directions of the Dispute Resolution Pannel.
In the present case, the revenue has filed cross objections under Section 253(4) of the Act raising the points involved in second question of law now raised, in an appeal preferred by the assesee against the order of the revisional authority exercising the powers under Section 263 of the Act. No such cross objections are maintainable in an appeal filed against the order of revision in terms of Section 253(4) of the Act. Given the circumstances, the Tribunal rejecting the cross objections filed by the revenue as not maintainable is justifiable.
11. For the foregoing reasons, the substantial questions of law raised by the revenue are answered in favour of the assessee and against the revenue. In the result, the appeals stand dismissed.