HIGH COURT OF BOMBAY

WRIT PETITION NO. 343 OF 2012

DR. D.Y. CHANDRACHUD AND A.A. SAYED, JJ.

Percy J. Pardiwala and Atul K. Jasani for the Petitioner.
Tejveer Singh for the Respondent.

1. Rule, by consent returnable forthwith. With the consent of the Counsel and at their request, the petition is taken up for hearing and final disposal.

2. This petition relates to the Assessment Year 2001-02. On 31 October 2001 the assessee filed a return of income returning a loss of Rs.16.82 crores which included a loss from share transactions of Rs.13.63 crores (including delivery based loss of Rs.2.67 crores and non-delivery based loss of Rs.10.95 crores). On 30 March 2004 an order of assessment was passed under section 143(3) determining a total loss of Rs.3.13 crores after disallowing inter alia the loss from the share transactions. The Commissioner of Income-tax (Appeals) upheld the disallowance of loss from share transactions by an order dated 8 November 2007. The order of the Appellate Authority was carried in appeal to the Tribunal. The Tribunal by its judgement dated 17 February 2010 set aside the order of the Commissioner of Income-tax (Appeals) and restored the assessment proceedings back to the Assessing Officer for a fresh examination. The order of the Tribunal was on the following basis:-

"6. Considering the voluminous details filed before us supporting the assessee's claim and on perusal of the orders of the A.O. and the CIT(A), we are of the opinion that the A.O. has disallowed the clams (sic) on certain general principles about the Ketan Parekh group cases and observations of the JPC and SEBI without examining the individual details of the assessee company for the impugned year. In view of this, we are of the opinion that the matter requires re-examination by the A.O. It is also noticed that in the case of Sai Mangal Investrade Ltd. relied upon by the CIT(A) in the order, the Coordinate Bench vide order dated 25.11.2009 has accepted that the transactions are genuine and the loss claimed pertains to valuation of stock at cost or net realisable value and accordingly the grounds of the assessee were allowed. In view of this finding of fact in another group concern, we are of the opinion that the A.O. should examine the nature of the transaction undertaken by the assessee without getting affected/persuaded by the observations of the SEBI and JPC, unless they are applicable to the facts in assessee case. It is also brought to our notice that there was special audit conducted of assessee's transactions and the report was not placed on record. The A.O. is directed to consider the issues afresh in the light of the facts on record and needless to say that the assessee should be given opportunity before deciding the issues. For this purpose the orders of the A.O. and CIT(A) on this issue are set aside and the assessment is restored back to the A.O. to consider it afresh after examining the facts and according to the law."

3. Following the order of the Tribunal, the Assessing Officer passed an order on 27 December 2010 under section 254 of the Income-tax Act, 1961 giving effect to the order of the Tribunal. The Assessing Officer re-computed the total loss as follows:-

4. Subsequently, another order was passed by the Assessing Officer on 27 December 2011 purporting to be under section 143(3) read with section 254 computing the income of the assessee as follows:-

5. The submission which has been urged on behalf of the Petitioner is that once the Assessing Officer had given effect to the order of the Tribunal by passing an order dated 27 December 2010, another Assessing Officer had no jurisdiction to re-compute the loss and to pass a fresh order as he did on 27 December 2011. The learned Counsel submitted that the order dated 27 December 2010 giving effect to the order of the Tribunal could have been corrected by following one of the three remedies, viz., (i) the correction of an error apparent under section 154; (ii) re-opening the assessment under section 147; on (iii) the Commissioner revising the assessment under section 263. Neither of these remedies has been exercised. Hence, it is urged that the impugned order of assessment dated 27 December 2011 is completely without jurisdiction. On the other hand, on behalf of the Revenue, the leaned Counsel urged that the impugned order dated 27 December 2011 can be challenged in appeal before the CIT(A).

6. The Tribunal by its order dated 17 December 2010 restored the proceedings back to the Assessing Officer. The Assessing Officer gave effect to the order of the Tribunal by passing an order dated 27 December 2010 which states that it has been made under section 254. The Assessing Officer re-computed the loss at Rs.16.82 crores. In this view of the matter, once the Assessing Officer had given effect to the order of the Tribunal, his successor in office had no jurisdiction to pass a fresh order dated 27 December 2011. The impugned order dated 27 December 2011 in fact reflects an awareness of the Assessing Officer of the earlier order which was passed in order to give effect to the order of the Tribunal. The Assessing Officer in the table which has been extracted earlier has in his computation commenced with a total income as computed in the order of the Assessing Officer dated 27 December 2010 (viz., a loss of Rs.16.82 crores). The Assessing Officer has not purported to exercise the jurisdiction under section 154. Once effect was given to the order of the Tribunal by the passing of an order under section 254 on 27 December 2010, that order could have been modified or set aside only by following a procedure which is known to the Income-tax Act, 1961. What the Assessing Officer has done by the impugned order is to conduct a substantive review of the earlier order dated 27 December 2010 which was clearly impermissible. Since the order dated 27 December 2011 is clearly without jurisdiction, we see no reason or justification to relegate the Petitioner to the remedy of an appeal. Since the order has been passed without jurisdiction, it is well-settled that recourse can be taken to the jurisdiction under Article 226 of the Constitution.