Subsequent Litigation- Assessing Officer not to take benefit of it while framing orders
A question arose recently whether a final order of an Assessing Officer can be challenged in view of any judgment that has been passed later on.
The Delhi High Court in the case of The Commissioner of Income Tax vs. M/s. Kultar Exports, ITA 26 of 2014 passed the judgment on 23.05.2014 in favor of the revenue and against the assessee stating that an assessee should succeed or fail in his own proceedings. It was held that the finality of the proceedings of the own case of an assesee cannot be ignored only because in the case of another assessee a similar point has been decided in favor of the assessee later on.
Brief facts of the case:
The Revenue, in the appeal filed under Section 260A of the Income Tax Act before the Delhi High Court challenged the order of the Income Tax Appellate Tribunal on the ground that it was wrong in allowing the assessee to file appeal later on against the orders of the Assessing Officer based on a judgment of the Gujarat High Court which has been passed later on after the AO passed the final order wherein the provision of law was held unconstitutional.
The assessee filed return claiming a deduction as per Section 80HHC of the Income tax Act. According to the Taxation (Amendment) Act, 2005, a modification was introduced in the working of deductions.
Section 80HHC provides deductions to exporters relating to the profits gained from export of goods or products. Section 80HHC (3) deals with the manner of computing of the profits which are deductible. The proviso which was introduced by retrospective amendment required the profits where the export turnover is more than Rs. 10 crores to be increased by an amount up to 90% of the sum. As per this amendment, the AO concluded the reassessment for three assessment years.
The amendment was challenged after passing of the order by the AO. The Gujarat High Court in a case on 02.07.2012 held that the retrospective nature of the amendment was unconstitutional and the amendment was declared to be valid only if it was applied prospectively.
The assessee appealed against the orders of the AO before the CIT, but the same was dismissed on ground of delay. On second appeal, the ITAT condoned the delay on the ground of sufficient and reasonable cause and passed judgment in favor of the assessee by relying on the decision of the Gujarat High Court. The Revenue approached this Court challenging the order of the ITAT.
Arguments of the Revenue:
The Revenue contended that the ITAT was wrong in holding that the amendment was only prospective as the legislature can rightly impose tax by virtue of laws applicable both retrospectively and prospectively, and a deduction cannot be allowed as a matter of right to assessees and the same can be rejected by the legislature. It was urged that having accepted the reassessment orders, the assessee cannot disturb the final assessment order merely on the ground of some judgment which has been delivered much later.
View of the Delhi High Court:
The High Court relied upon the judgment of the Hon’ble Apex Court in case of Tilokchand Motichand & Ors. vs. H.B. Munshi & Another wherein it was held that a decision cannot be challenged after a number of years just for the reason that another person has got a favorable decision which is contrary to the decision of the assessee’s case.
The case of Mafatlal Industries Ltd. v. Union of India, (1997) was also referred wherein it was held that an assessee must succeed or fail in his own case and the final orders of his own case cannot be ignored only because in a subsequent case a similar issue has been decided in favor of the assessee.
The bench consisting of Hon’ble Mr. Justice S. Ravindra Bhat and Hon’ble Mr. Justice Vibhu Bakhru allowed the appeal filed by the Revenue.
