IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 28TH SEPTEMBER 2010 / 6TH ASWINA 1932 WP(C).No. 17738 of 2010(N) --------------------------------------- PETITIONER: ------------------- JOSE KURUVINAKUNNEL, HOTEL MAYURA, POOVARANI, PALA. BY ADV. SRI.RAMESH CHERIAN JOHN. RESPONDENTS: ------------------------ 1. THE INCOME TAX OFFICER, WARD-2, KOTTAYAM. 2. THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH,COCHIN. R1 & R2 BY SRI.JOSE JOSEPH, S.C,INCOME TAX. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 04/08/2010, THE COURT ON 28/09/2010 DELIVERED THE FOLLOWING: prv. P.R. RAMACHANDRA MENON, J. .............................................................................. W.P.(C) No. 17738 OF 2010 ......................................................................... Dated this the 28th September, 2010 J U D G M E N T The petitioner is challenging Exts.P9 order passed by the second respondent Income Tax Appellate Tribunal, Ext P10 concurring order dated the same day, passed by the Accountant Member and also Ext.P14 order dismissing Exts.P11 to P13 applications for 'rectification of the errors' filed under Section 254(2) of the Income Tax Act. 2. The sequence of events is as follows: The petitioner is an assessee on the files of the first respondent . Assessment was completed in respect of the assessment years 1996-97 to 2000- 01, which however was sought to be re-opened by the assessing authority for the reasons recorded, stated as identical for all the years as borne by Exts. P1 and P2 produced in respect of the assessment years 1996-97 and 1998-99. The original assessment for the year 1996-97 was a scrutiny assessment W.P.(C) No. 17738 OF 2010 2 under Section 143(3) of the Act and for the subsequent years, the assessment was completed by way of summary assessment under Section 143(l) (a) of the Act. Re-opening of the assessments in respect of the above different years was subjected to challenge by filing appeals before the second respondent, wherein Ext.P3 common order was passed by the Tribunal on 08.12.2006 holding that there was absolutely no reason for re-opening the assessment for the year 1996-97. Accordingly, the assessment re-opened in respect of the said year was set aside, observing that the assessing officer had proceeded, taking shelter under Section 14 of the Act, for making a rowing and fishing enquiry. In respect of the assessment year 1997-98, the Tribunal observed in paragraph No.15 of Ext.P3 order that the reasons stated by the assessing officer were the same as given to the assessment year 1996-97. It was further observed by the second respondent that formation of the belief should be based on some definite, concrete and reliable materials and thus came to the finding that in respect of the assessment year 1997-98, it was only vague and hence W.P.(C) No. 17738 OF 2010 3 interference was made in respect of the said year as well . 3. However with regard to the remaining years, it was observed by the Tribunal that the there was lack of materials to decide the issue and accordingly, the matter was remanded to the Commissioner of Income Tax (Appeals) with a specific direction to consider the matters separately, as specifically observed in paragraph 19. Pursuant to Ext.P3 order passed by the Tribunal, the matter was re-considered by the Commissioner of Income Tax who passed Ext. P4 order observing that the reasons recorded by the assessing officer in respect of the assessment year 1998-99 were the same as in respect of the assessment years 1996-97 and 1997-98. After referring to the facts and figures in respect of the different assessment years and also taking note of the specific direction contained in the remand order passed by the Tribunal vide Ext. P3, it was held by the Commissioner that initiation of the proceedings under Section 148 for the assessment years 1998-99 to 2000-2001 was not valid and accordingly, the appeals preferred by the petitioner were allowed. W.P.(C) No. 17738 OF 2010 4 4. Met with the situation, the Revenue preferred appeals (Exts.P5 to P7) before the second respondent. After hearing the matter, the Second respondent passed Ext. P9 order remanding the matter to the Commissioner for considering the case on merits, after arriving at a finding that there were valid reasons for re-opening of the assessment by the assessing officer. The Judicial Member relied on the law declared by the Apex Court in ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd [291 ITR 500 (SC), while the Accountant Member wrote a concurring order as borne by Ext.P10, however observing in paragraph 2 that there was no direct application of the decision rendered in 291 ITR 500 (cited supra). But it was made clear that the matter had to be considered by the appellate authority on merits, as ordered by the Judicial Member, observing that the reasons recorded by the Assessing officer for re-opening of the assessment satisfied the conditions laid down under Section 147 of the Act. Contending that the said verdict passed by the Tribunal was very much contrary to the verdict already passed by the Tribunal as borne by Ext. P3 and that it was not correct W.P.(C) No. 17738 OF 2010 5 or proper to have taken a different view, being a Co-ordinate Bench, the assessee preferred Exts.P11 to P13 applications for rectification, stating that there was error apparent on the face of the records. The said petitions were considered by the second respondent and they were dismissed as per Ext. P14 order, holding that there was no mistake apparent on the face of the records, so as to invoke the power under Section 254(2) of the Income Tax Act, which in turn is under challenge in this Writ Petition. 5. The respondents have filed a statement seeking to sustain the course and procedure pursued by the Department as well as the second respondent/Tribunal, contending that there was no mistake to be rectified invoking the power under Section 254 (2) of the Income Tax Act and that no interference is warranted in the Writ Petition . It is further stated that, as observed by the Judicial Member of the Tribunal in Ext.P9, the decision rendered by the Apex Court in 291 ITR 500 was not available when Ext. P3 order was passed by the Tribunal earlier or when Ext. P4 order was passed by the appellate authority W.P.(C) No. 17738 OF 2010 6 pursuant to the remand and it was in the said circumstance, that the matter was considered afresh in the appeals preferred by the Revenue passing Exts.P9/P10 orders. It is also contended in the statement that Ext.P3 order passed by the Tribunal in respect of the assessment years 1996-97 and 1997-98 is not correct or sustainable in view of the law declared by the Apex Court in 291 ITR 500. It is also contended that 'rectification petitions' by way of Exts. P11 to P13 filed by the petitioner virtually amount to Review of Exts.P9/P10 orders passed by the Tribunal; and that there is no such power of review for the Tribunal, as made clear by the Apex Court in Assistant Commissioner of Income-Tax vs. Saurashtra Kutch Stock Exchange Ltd ( [2008] 305 ITR 227 (SC)). 6. The petitioner has filed a reply affidavit in response to the statement filed by the Department, re-iterating the contentions raised in the Writ Petition. The learned Counsel for the petitioner submits that the Tribunal, having taken a view already, vide Ext.P3, in respect of the assessment years 1996-97 and 1997-98 and further since the reasons stated for re- W.P.(C) No. 17738 OF 2010 7 opening the assessment in respect of the subsequent years having been declared as the same, on appreciation of the factual position by the Commissioner, it was no more open for the Tribunal to have taken a deviation and to have arrived at a different finding as per Exts. P9/P10, than the one already arrived at vide Ext.P3, which according to the petitioner is not in conformity with the settled principles of law declared vide CIT vs. Travancore Titanium Products Ltd.(Ker.)_(2003) 183 CTR (Ker.) 473. (at page 478). 7. Coming to the merits of the case, whether there is mistake apparent on the face of the records, so as to have invoked the power of rectification under Section 254(2) of the IT Act, it remains a fact that the Tribunal considered the matter/reasons for reopening the assessment and held in respect of the assessment order for 1996-97 and 1997-98 that the materials were not sufficient so as to have pursued such an exercise and accordingly, the assessment was set aside and relief was extended to the petitioner. But in respect of the subsequent years, it was observed in para 19 of Ext. P3, that W.P.(C) No. 17738 OF 2010 8 there was no material before the Tribunal to have analysed the factual position in respect of the said assessment years ; more so since the appellate authority had relied on the previous assessment years, as the basis to have pursued similar action in respect of the subsequent years and it was in the said circumstance, that the Commissioner of Appeals was directed to re-consider the matter with specific reference to the reasons in respect of the said subsequent years as well and to pass appropriate orders (thus explaining the scope of remand in Ext.P3). 8. As mentioned above, pursuant to Ext. P3, the matter was considered by the Commissioner of Appeals and observed that the reasons were the same . The course pursued, as ordered by the Tribunal in respect of the assessment years of 1996-97 and 1997-98, was hence ordered to be pursued in respect of subsequent years as well. Accordingly, the appeals preferred by the petitioner/assessee in respect of the years 1998-99 to 2000-01 were also allowed; which in turn were subjected to challenge by the Revenue, by filing Exts.P5 to P7 W.P.(C) No. 17738 OF 2010 9 Appeals before the second respondent. It was during the pendency of the proceedings before the Appellate Tribunal, that the Apex Court passed the verdict as reported in 291 ITR 500, based on which, Ext. P9 order was passed, upholding the reasons stated by the assessing officer to reopen the assessment and thus remanding the matter after allowing the appeals preferred by the respondents for fresh consideration of merits by the Commissioner of Appeals. In Ext.P10 order, though the Accountant Member of the Tribunal has observed that the decision rendered by the Apex Court in 291 ITR 500, as such, is not applicable to the case in hand, a proper reasoning has been given sustaining the reopening of the assessment, concurring with the directions given in Ext. P9 and remanding the matter to be considered on merits. 9. In short, when Ext.P3 order was passed by the Tribunal, the remand in respect of the assessment years/orders for 1998-99 to 2000-01 was for 'want of necessary materials', but for which, the Tribunal would have passed similar orders as in the assessment years 1996-97 and 1997-98. This being the W.P.(C) No. 17738 OF 2010 10 position, it cannot be said that the Tribunal has taken a 'U' turn, showing some or other inconsistency with regard to the earlier order (Ext.P3), while passing Ext. P9/P10 or that the matter ought to have been referred to a 'larger Bench' for consideration. There is no mistake or error apparent on the face of the records and as such, the prayer sought for vide Exts. P11 to P13 is quite wrong and misconceived, which has been rightly declined in Ext.P14. If at all the petitioner is aggrieved of the order passed by the Tribunal vide Exts.P9/P10 in any manner, the remedy of the petitioner can only be by way of further appeals to be preferred before this Court, invoking the power under Section 260A of the Income Tax Act. This Court finds it difficult to accept the preposition mooted by the petitioner. The Writ Petition fails and the same is dismissed accordingly. P.R. RAMACHANDRA MENON, JUDGE. lk