High Court · 2012

'l'hrough : Dr. ILakcsh Gupta, Ms. l{ani Kiyala and Ms. Ayushi Parcck, Advocatcs. CORAM: I ION' I} I,F] M R.. .I I.JS'f I(I t.] S. IIAV IN D IIA I}IIAl' I toN' Iil,lt Mlt. .ILJSl'lCli ll.v. FlASwAll ()rtl)ltr{ 05.09.2012 'I'hc l{cvcnuc is aggricvcd by thc ordcl datcd 22.07.2011 of thc Incomc'fax 1. Appcllatc 'l'ribunal (fl'A'l). 'I'hc cluestion of law urgcd is rvhctl'rcr thc 'I'ribunal fcll into crror irl holcling that the prinoiplc of consistcncy prccludcd thc Assossing Officcr (AO) from cxct'cising his powcrs tlnclcr Scction 148 of thc Income'fax Act. 'l'he Asscsscc had claimccl ccrtain arnount as dcplcciatiou on "gooclwill" which 2. r.vas originally acocptcd. On 11.06.200tt, notioc was issucd unclcr Scotion 14[i to thc Asscsscc to disallow thc clcprcciation claitncd undcr tltc hcad clf "gcloclwill", t<l thc cxtcnt of Rs.2.77 clot'cs. Aggricvocl, thc Asscsscc approachcd thc Cfl' (A) Lrnsttcccssfully and latcr. appcalcrl to thc'Ii'ibunal. l'he 'fribunal acceptcd thc argumcuts ttllcl noticing that in thc prcvious an<l succccding ycars, similar noticcs had bccn issucd nudcr Scction 148, bnt coulcl lot bc procccclocl ernd orclcrs rvcrc madc undcr Scotion 152 (2) clropping thc procccdings. I'hc 'fribunal rcasoned inter alia as follows: .......In ow' opinion, the lay, ort fhis issuc is v,ell .scltlecl and princiltle of consi.gtettcy fu61's lo bc maintained by lhc rettcnue...."" "

3. Lcarncd counscl fol thc l{cvcnuc contcucled that thc .iudgmcnt in lludhctsoumi :;1tr-(tng t,. CIT'193 ffR :i2l (SC) cannot bc rcad to circumscribc thc jurisdiotion of autlxrr.itics unclcr thc Tnc<lmc 'l'zrx Act; 1hc principlc of consistcncy, if strctchcd to its logical cxtcni would bring about anomalous rcsults far cxcecding what was within thc contcmplntion of the judgmcnt. Lcamed counscl for thc Asscsscc submittcd that thc cogrsc of acticln rvhich rcsultccl in dropping of procccditrgs initiatccl nnclcr Scction l4[l unclcr iclentical ciroumslanccs for thc sanrc issuc (dcprcciatiou on "goodwill") ought to Signature Not Verified Digitally Signed By:AMULYA havc becn taken irlo considcration and werc matcrial lol clcciding whilc assuming jurisdiction for the year in qucstion. IJc strongly lclicd upon thc dccision in hladltctsoctnil Sctt5upg (sttprtt) ancl thc ordcl of thc Asscssing Ofhccr (AO) undcl Scction I52(a) of thc Act. 'l'hc Tribunal, as is cviclcnt fi'om its ordcr, cspccially, r'cading of pala 15, wcnt by 4. thc rulilg rn \lctclhctsocrnti Sutsang (sultra). I'hc 'I'ribunal aokuowlcclgcd that in thc Incomc 'l'ax law thcrc is no application of principlc of rcs iutlicata. Yct, following llcttlhctsoanti Sntscutg (sultrct), it was hcld that thc rcopctling of ptocccclings in thc circumstanccs of this cztsc \4'as unwarrantcd. 'Ihis (lourt noticcs thc reasoncd ruling in K"ishak Rhut'ctli Cttoperulivc I'tcl. t'. 5. Depzttlt CIT l'[L 20512010 whcre cven while considcring thc luling in ]ladhasoatni Scttsung (supra), the Court deviatcd frorn that rulc. In Krisltuk llharuli Cooperatit,e Lld. (supru), this Courl observed as follows: "lS. It is noy,nccess(try to lake ttp thc sthmission tlrul. flrc T'ribunul ert.etl in dcparling.li'om the "consistenclt" rulc.'l'his is basctl on tlte .facl. thut ./itr' t.he periocl of about 15 years, the inconrc lax uulhorities harl tuccclttetl lhe ctssesse's subnissions antl permitted unnuul unnrlizctlion d' thc inifiut lcct,te consit{crution, as udttunce rent. T'he usse:;se ha'e reliecl on lhc "copsislcncy" r'ttle enunciutecl in llqdhusu<trti ,sttlsctttg (ntpt'u). T'he Strytrcnte Cour"t observed, in lhat case that: ' "...u,here u .fi,mdamenlul uspecl permeuling lhrough the tliflbrenl (tssessnrcnl yeut has bcen.founc{ us a./act one wuy ot- the <tther ctntl purl.ies huve ullotyecl thal positiott ltt be sttslained by not chullenging the order, it wrtultl not he ot aII ctltproltriute to allott, the position lo be chungecl in ct ntbsecptent yetu". 19' on thcse reusonings in the ttbsence o'f-crnlt ntaterictl chctnge.ittsti/ying the Revenue to take a clffit'ent view o./-thc tnulter-and if there v'os not change it wcrs in :;ttpltttrt rtf the assesses-\t)e clo nol thittk the rptestiott shoultl hat'c been reoltenecl ctnc{ conlrtu.St lo ythat hucl bcen decic{ed by thc commissi)ner. of'htconrc-T',ctx in thc eat'licr proceetlittgs, tt di/fa'enl untl contrttdiclot'y slcrnd shrnlcl huvc I'teen tukcn- " T'his (.'out'l noticcs that there cunnot be a v,ide apltliculittrt o./'t.he nile of consistency. In llctdhu,yctomi ftself, thc Sutrtrente Oour'l acknowletlged that there is n() res judicata, as regards osscssmcnf orclcrs, uncl ct!;ses'rmcnl,s .for one ycar. may not bind the fficer for the nexl yeur'. T'his i,s cottsistenl vilh the view oJ'the Sutrtrcnrc Court that "tlrcrc is no such thittg as res jtulicctta in income-lctx ntullers" (Visheshtraru Sntgh v. ()ttnuni{;sionet' of Inconre ['crx AIR 1961 SC 1062). Similcrrly, erroneou.t or mistuken ttieu's ctrnnot.fetter the authorities inlo repeating them, b1t ultpliccttion ttf u rule sltch cts estoltpel, Jbr lhe reason lhut being an ecpitubl.c principle, it has to ltield lo the rnantlate of lcnt,. A clecpcr re/lection v'oulcl shott' fltaf blind ctclhet.cnce to lhe rule o.f consistency u,oulcl leucl to unontalous rcnilts, .frtr the reuson thcrt il tytnrld engcndet' the uneclttul uppliccrtiort tt/-ltttt's, and clircct the tax authorilies to culoltt varied intupretations, to st'ril i.ntlividual 1ssesses, nftjective to their conveniencc, - a resull al once clebililating ctntl clestructive o./'the nile of law. A previotts Divi";ion llench of this C)<turt, in Rohitctscnct Chancl v Conunissioner of Inconrc T'ax 2008 (306) IT'R 2a2@el) hacl held that the rule of consistency umnol hu ,t/'inflexible appliccttion. " 11 the prcsclt casc, thc obsclvations about anomalous conscqucllccs flowitrg as a 6. r.esult of bliqd adlrclcncc to lnlc of consistcncy is highlightcd. 'I'hc Asscsscc has bccn ablc to sncccssfully pcrsuaclc thc 'Iiibrural thal thc I'I'O could uot havc cxcroisccl its powcr at all u1<|cr Scction 148 in vicw of rvhat happcnccl in thc plcvious aurd succccding ycars, i1 thc liglrt of sirnilar. facts whcrc thal powcr r.vas invokccl. Oncc it is cstablishcd that tlrc pripciplc of rcs jtrdiccttu has no placc in thc I'l'Aot, thc clccision tn ]kttlhct:;octttti Stttsttng (sttpra) have to bc understood iri thc contcxt and givcn limitccl rncaniug. As rrotcd rn Krishctk Bhctrati Cooperufite Lttl. (stprct), it is urgccl that lhc clbservations will lcad to not one but rnultifarious strcams of laws opcrating irr lcspcct o[ diffclcnt Assessees. 'I'hat would hardly sub-serve the largcl publio intclcst. In view of the abovc disr:ussion, thc Coult is of tlro opinion that thc impugncd 7. ordcr. ca6ot bc sustainecl; it is accordingly sct-asiclc. All olhcr contcntions, including thosgwith lcgald to thc valiclity or othcrwisc, lcading to assumption ol jurisdiction by thc AO undcl Section 148 arc kept open. Thc appeal is allowccl in tho abovc tcnns. s. ITAVINI)I{A llIIAT, .I H""-t " If.V.IrlASWAll. .I sEl,TllMllllll 05, 20 1 2 'ajk'