Court Remands Case Back to Tribunal Due to Conflicting Orders

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Case Name:

Gurdaspur Improvement Trust vs Commissioner of Income Tax and Another (High Court of Punjab and Harayana)

ITA No. 237 of 2015 (O&M)

Key Takeaways

- The High Court found conflicting orders from the ITAT for the same assessment year.

- The court could not determine if the earlier order was recalled before the second order was issued.

- Both conflicting orders were set aside, and the case was remanded back to the Tribunal for a fresh decision.

- The Tribunal must provide an opportunity for both parties to be heard in the new proceedings.

Issue

Did the ITAT err in issuing a second order without recalling the first, leading to conflicting decisions for the same assessment year?

Facts

- The appellant, Gurdaspur Improvement Trust, filed its income tax return for the assessment year 2006-07, declaring nil income.

- The Assessing Officer assessed the income at ₹46,30,435.

- The appellant appealed to the Commissioner of Income Tax (Appeals), who partly allowed the appeal, granting exemption under Section 11 (of Income Tax Act, 1961).

- The revenue appealed to the ITAT, which upheld the assessment order.

- Conflicting orders were issued by the ITAT on 9.10.2012 and 23.1.2014 for the same case.

Arguments

- Appellant (Gurdaspur Improvement Trust):

Argued that the ITAT's conflicting orders were unjust and that the Tribunal did not follow proper procedure.

- Respondent (Commissioner of Income Tax):

Argued in favor of the assessment order and the Tribunal's decision.

Key Legal Precedents

- The case references the procedural requirements under the Income Tax Act, particularly concerning the recall of orders and the granting of exemptions under Sections 11 (of Income Tax Act, 1961) and 12A (of Income Tax Act, 1961).

Judgement

The High Court set aside both the impugned orders dated 9.10.2012 and 23.1.2014. The case was remanded back to the Tribunal to decide afresh, ensuring that both parties are given an opportunity to be heard.

FAQs

Q1: Why were the orders set aside?

A1: The High Court found that it was unclear whether the earlier order was recalled before the second order was issued, leading to conflicting decisions.

Q2: What happens next?

A2: The case is remanded back to the Tribunal for a fresh decision, with both parties given an opportunity to be heard.

Q3: What was the main issue in the case?

A3: The main issue was the conflicting orders issued by the ITAT for the same assessment year without clear procedural adherence.

Q4: What sections of the Income Tax Act were relevant?

A4: Sections 11, 12A, and 12AA of the Income Tax Act were relevant to the exemptions and procedural aspects of the case.

1. Delay in refiling the appeal is condoned.

2. This order shall dispose of two appeals bearing ITA No. 237 of 2015 and 59 of 2013 as both the appeals arise out of one and same ITA No. 461(Asr)/2011 for the assessment year 2006-07 wherein in one case the said appeal has been dismissed whereas in other case the same has been allowed. ITA No. 59 of 2013 has been filed by the revenue and ITA No. 237 of 2015 has been filed by the assessee. For brevity, the facts are being extracted from ITA No. 237 of 2015.

3. This appeal has been filed by the assessee under Section 260A (of Income Tax Act, 1961) (in short “the Act”) against the order dated 23.1.2014 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No. 461(Asr)/2011 for the assessment year 2006-07 claiming the following substantial questions of law:-

(i) Whether in facts and circumstances of the case, after the grant of registration under section 12A (of Income Tax Act, 1961) can the assessing officer go into the objects and hold them to be non- charitable? If know, whether the ld. tribunal was justified to hold that the activities done by the appellant trust does not qualify for exemption?

(ii) Whether in facts and circumstances of the case, the impugned orders are liable to be set aside that on one hand it is observed that the case laws relied by the CIT were relating to the granting registration under section 12A (of Income Tax Act, 1961) and not relating to the exemption provided under section 11 (of Income Tax Act, 1961) and 12 (of Income Tax Act, 1961) and on the other hand the Ld. ITAThas itself heavily placed reliance on the judgment of PUDA Vs. CIT which was relating to the grant of registration under Section 12A (of Income Tax Act, 1961) making it contradictory?

(iii) Whether in facts and circumstances of the case, the assessing officer was justified in assessing the appellant as local authority despite of the fact the appellant was granted registration under section 12AA (of Income Tax Act, 1961)?

(iv) Whether in fact and circumstances of the case, the action of the authorities below, the impugned orders Annexure A-1 to A-3 are legally sustainable in the eyes of law?

4. Put shortly, the few facts necessary for disposal of the present appeal as mentioned therein may be noticed. The appellant filed its return of income on 23.7.2007 for the assessment year 2006-07 declaring nil income in the status of a Trust. The said return was processed under Section 143(1) (of Income Tax Act, 1961). The Assessing Officer vide order dated 29.12.2008 (Annexure A-1) framed the assessment at 46,30,435/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), Amritsar [hereinafter referred to as “the CIT(A)”]. The CIT(A), Amritsar vide order dated 22.6.2011 (Annexure A-2) partly allowed the appeal by granting exemption of Section 11 (of Income Tax Act, 1961). Being dissatisfied with the order, Annexure A-2, the revenue filed the appeal before the Tribunal, who vide order dated 23.1.2014 (Annexure A-3) allowed the appeal by upholding the assessment order dated 29.12.2008 (Annexure A-1). Hence, the present appeal by the assessee.

5. We have heard learned counsel for the parties.

6. Both the appeals one by the assessee and the other by the revenue have been filed against the two conflicting orders dated 9.10.2012 (Annexure A-3 in ITA No. 59 of 2013) and dated 23.1.2014 (Annexure A-3 in ITA No.237 of 2015) passed by the Tribunal in one and the same case, i.e. ITA No. 461(Asr)/2011 for the assessment year 2006-07 between the same parties.

6. It was not discernible whether before passing the order dated 23.1.2014, earlier order dated 9.10.2012 was recalled. Learned counsel for the parties are also unable to show that the order passed by the Tribunal on 9.10.2012 was ever recalled. In the absence of the said material, we are surprised to see how the second order came to be passed. Moreover, earlier the case was decided in favour of the assessee and secondly the converse view has been taken. In such circumstances, it would be appropriate to remand the matter back to the Tribunal.

7. In view of the above, both the impugned orders dated 9.10.2012 (Annexure A-3) in ITA No. 59 of 2013 and dated 23.1.2014 (Annexure A-3) in ITA No.237 of 2015 are set aside and the matter is remanded back to the Tribunal to decide afresh, in accordance with law after affording an opportunity of hearing to both the parties.

(AJAY KUMAR MITTAL)

JUDGE

September 7, 2015 (RAMENDRA JAIN)

gbs JUDGE