Braganza Constructions (P) Ltd. vs The Commissioner of Income Tax, The Dy. Commissioner of Income Tax (Inv.), Asst. Commissioner of Income Tax (Inv.) and Tax Recovery Officer, Range-2

S.C. Dharmadhikari, J.—The matter was part-heard on 25.7.2008 and we passed an order on the said date regarding a statement of the Revenue in para 12 of the affidavit-in-reply filed on 22nd November, 2002 and brought to our notice on that date.

In the light of the contents thereof, we had indicated to the learned Counsel appearing for the Revenue to take instructions as to whether the assessment for the year 2002-03 is complete and whether any benefit is given to the petitioner towards payment of the land cost/development charges. The instructions were directed to be obtained in the light of stand which was taken in the affidavit-in-reply then filed on record.

Time was granted to take instructions and file an affidavit and accordingly, an affidavit has been filed by the Revenue of Shri Neil Philip, Asst. Commissioner of Income Tax, Circle-2(1), Panaji. The deponent of this affidavit is the Assessing Officer, according to the learned Counsel appearing for the Revenue.

In paras 4 and 5 of this affidavit, it has been stated thus:

I say that the Chartered Accountant''s Association since the year 1/4/2003, has laid down new parameters of accountancy whereby the previous practice of "project completion method" (completed contract method), is done away with and are following "percentage completion method" since 1/4/2003. I say that under the "percentage completion method" the revenue and expenses is taken into account based on stage of completion of the project.

I say that since the assessment was provisionally accepted the question of scrutinizing the documents does not arise as the time to make scrutiny assessment u/s 143(3) is also over. It is also submitted that this is not a case of income escaping assessment and therefore, reopening of assessment u/s 147 r/w 148 also does not arise.

In the light of the affidavit filed on 30th July, 2008 and more particularly the above reproduced statements of the deponent, it is apparent to us that the revision petition which was placed before the Commissioner of Income Tax wherein the Petitioner invoked the jurisdiction u/s 264 of the Income Tax Act, 1961 needs to be decided afresh. The Revision Petition was filed sometime in the year 2002. The said Revision Petition was placed before the Commissioner of Income Tax, Panaji who, by the impugned order, was pleased to dismiss the same not only on the ground of limitation, but on merits as well.

Both sides have addressed us on merits of the controversy as well. In our view, considering the further affidavit filed and the statements therein, the revision petition will have to be reheard by the concerned Revisional Authority, afresh and he must pass necessary orders in accordance with law. For that purpose, the order under challenge will have to be quashed and set aside and the matter restored to his file for decision afresh. This suggestion was given by us in the light of the further developments.

After the matter was heard for sometime, both sides did not oppose this course of action. In the light of the further affidavit and the development subsequent to this petition, in our view, the order passed by the Commissioner of Income Tax dated 3.9.02 (Annexure P-1) will have to be quashed and set aside. It is, accordingly, quashed and set aside. Revision Application No. 5/CIT/PNJ/2002-03 which is instituted by the petitioner is restored to the file of the said Authority for decision, afresh, on merits and in accordance with law.

It is clarified that the revision will be heard on merits in the light of the stand taken by the Authority, so also the arguments, which, essentially project the merits. Therefore, the revision application, on remand, should not be dismissed on the ground of limitation. Both sides would have opportunity to place their respective contentions. The Revisional Authority must decide the revision application without being influenced by his earlier orders and observations, so also he must apply his mind to the contents of the affidavit which has been filed in this Court on 30th July, 2008. He must take into consideration paras (4) and (5) of the affidavit, as reproduced above, and all consequences flowing therefrom. All contentions in that behalf are kept open.

The writ petition is allowed to the above extent. Rule made absolute accordingly. However, since matter is in respect of an old assessment year and the writ petition is of the year 2002, interest of justice would be sub served if the Revisional Authority decides the matter as expeditiously as possible and within a period of 3 months from today.

It is brought to our notice by Shri Kakodkar that the Demand Notice, pursuant to the assessment years which were under challenge before the Revisional Authority, is sought to be enforced by coercive measures, and, therefore, the petitioner paid a substantial amount and secured the balance by a Bank Guarantee which is still in force. It is in this light that we have directed expeditious disposal of the revision application and the Commissioner must abide by the directions in that behalf. Both sides will co-operate with the Commissioner in disposal of the proceedings within the stipulated period. However, interest of justice would be subserved if, without prejudice to the rights and contentions of the petitioner, it is directed that the Bank Guarantee shall remain alive for a period of 3 months from today.