HCL Infosystems Ltd vs State Of Uttar Pradesh And Others

Saumitra Dayal Singh, J

Heard Sri Nishant Mishra along with Sri Tanmay Sadh, learned counsel for the petitioner and Sri C.B. Tripathi, learned special counsel for the respondents.

The present petition has been filed with a prayer to quash of three show cause notices, all dated 1.3.2017, issued by the Deputy Commissioner Commercial Tax, Sector-II, Noida (hereinafter referred to as the 'Assessing Authority') to the petitioner in assessment proceedings for A.Y. 2004-05 (Central); 2005-06 (U.P. & Central); and 2006-07 (Central). The principal ground of challenge raised is that the said notices are in the teeth of the findings recorded the Commercial Tax Tribunal, Bench-I, (division bench), Noida dated 16.10.2015 in Appeal Nos. 261 of 2011 (A.Y. 2004-05 Central); 291 of 2011 (A.Y. 2005-06 U.P.); 262 of 2011 (A.Y. 2005-06 Central) and; 263 of 2011 (A.Y. 2006-07 Central).

According to the petitioner, the Tribunal had decided the issue, on merits, in favour of the petitioner and had thereafter remanded the matter to the Assessing Authority on a limited question: whether the petitioner was entitled to benefit of certain statutory forms that it had filed before the first appellate authority. It is thus submitted that the Assessing Authority had no jurisdiction to look beyond that order of the Tribunal or to examine any other or further issue in the proceedings thus remanded to it.

Briefly, there existed a company namely M/s HCL Infosystems Ltd. (hereinafter referred to as the ''former company') which was a wholly owned subsidiary of the petitioner that is an existing company. With effect from 1.4.2007, the former company amalgamated with the petitioner company. The present dispute pertains to the business of the former company, prior to its amalgamation with the petitioner company.

During the A.Y. 2004-05, 2005-06 and 2006-07, the former company engaged in trading in electronic goods, photocopier, cellular phone etc. It also performed interstate sales to various institutions. Those institutions claimed entitlement to concessional rate of tax on purchases made by them against Forms-D issued under the Central Sales Tax Act, 1956 (hereinafter referred to as the ''Central Act').

In the regular assessment proceedings for the A.Y. 2004-05 (Central) the assessing authority of the former company categorically accepted the books of accounts of the petitioner. However, he rejected the claim of concessional rate of tax made against Forms-D on the ground and reasoning that the institutions with whom such inter-state sales had been performed did not qualify as Government. Further, tax at the full rate was imposed on certain other transactions with respect to which the petitioner could not submit the statutory Forms-C, D and F during those assessment proceedings. Consequently, the assessment order was passed on 9.2.2009.

For the A.Y. 2005-06 (U.P. & Central) the assessment were completed by the assessing authority of the former company on 24.02.2009. In those assessment proceedings, the books of accounts of the former company were rejected. The turnover of sales was consequently enhanced on estimate basis. Also, benefit of Forms-D issued to the former company by certain institutions to whom the petitioner had made sales against such forms was denied on the ground and reasoning that they did not qualify as Government departments. Further, as in A.Y. 2004-05 (Central), the petitioner was deprived benefit of the concessional rate of tax in absence of certain Forms- C, D and F being submitted during the course of the assessment proceeding.

For the A.Y 2006-07 (Central), the assessment order was passed on 23.03.2009 on the same lines as it was done for the assessment order for the A.Y 2005-06.

The petitioner challenged the aforesaid three assessment orders in first appeals. During the pendency of the appeals, the petitioner filed additional Forms-C :- 1 in number for A.Y. 2004-05; 132 in number for the A.Y 2005-06 and; 91 in number for the A.Y 2006-07. Similarly, during the pendency of those appeals the petitioner filed additional Forms-D :- 5 in number for the A.Y 2004-05; 51 in number for the A.Y 2005-06 and; 11 for the A.Y 2006-07. Also, during the pendency of those appeals, the petitioner filed additional Forms-F :- 9 in number for the A.Y 2004-05; 18 in number for the A.Y 2005-06 and; 1 in number for the A.Y 2006-07. On such additional evidence being filed (by the petitioner), the first appellate authority called for a report from the Assessing Authority of the former company.

Though, no objection was raised by that assessing authority, in his remand report to such additional evidence filed, the first appellate authority rejected the appeals filed by the petitioner for the A.Ys. 2004-05 and 2006-07 by his separate orders dated 09.02.2011. Also, the first appellate authority rejected the petitioner's appeal for the A.Y. 2005-06 vide his order dated 11.2.2011.

The petitioner carried the matter in appeal to the Tribunal. The Tribunal decided the appeals filed by the petitioner by its order dated 16.10.2015. According to the petitioner, the Tribunal held the petitioner entitled to claim the concessional rate of tax on the basis of additional evidence led before the first appellate authority. Second, the Tribunal held it entitled to claim benefit of Forms-D submitted by it during the course of assessment proceedings with respect to sales made to certain institutions. Third, the Tribunal allowed the petitioner's appeals on the ground of rejection of books of accounts of the petitioner, for the A.Y 2005-06 (U.P. & Central) and A.Y. 2006-07 (Central).

Thus, according to the petitioner, its appeals were allowed on the legal ground of availability of exemption against Forms-D and also admissibility of additional Forms-D filed during pendency of the first appeal. In this regard, learned counsel for the petitioner submits that the Tribunal categorically held the petitioner entitled to claim the eligibility to exemption against Forms-D (issued by certain institutions) [following the judgment of this Court in M/s. G.S.C. Toughened Glass Pvt. Limited Vs. Commissioner Trade Tax, U.P., Lucknow reported in 2009 NTN (41) 1 (Alld)], as also admissibility in evidence of other Forms submitted by petitioner during the course of appeal proceeding.

The findings recorded by the Assessing Authority in all the three assessment years rejecting the benefits of such Forms-D to the petitioner was thus reversed. On the consequential aspect of quantification of the exemption, the matter was remitted to the Assessing Authority to re-determine the quantification in accordance with the findings recorded by the Tribunal after verifying all the Forms in question.

As to the rejection of books of accounts, it has been submitted that the Tribunal held that the books of accounts of the petitioner be accepted for the A.Y. 2005-06 and A.Y. 2006-07. In so far as the A.Y. 2004-05 is concerned, the books of the petitioner stood accepted by the assessing authority itself. Thus, according to learned counsel for the petitioner, the books of accounts for all the three years stood accepted.

It is undisputed that the revenue did not challenge the aforesaid order of the Tribunal dated 16.10.2015 and it had thus attained finality.

In this factual background the impugned notices issued in the proceedings taken up in remand under the order dated 16.10.2015 passed by the Tribunal, have been questioned in this writ petition. The first notice under challenge in the present proceeding pertains to the A.Y. 2004-05, dated 01.03.2017.

The first issue that gives rise to the present petition arises from point nos. 1 to 9 in the notice. The assessing authority has questioned the entitlement to concessional rate of tax claimed by the petitioner on nine sale transactions with various persons all of whom are alleged to be non-Government entities, not entitled to issue Form D. According to the assessing authority since those sales had not been made to the Central or a State Government, therefore, the petitioner was not entitled to claim benefit of Form D issued to it by the purchaser.

Second point raised in the said notice requires the petitioner to produce its balance sheet. According to the learned counsel for the petitioner, it has bearing on the acceptance and or rejection of the books of accounts of the petitioner

With respect to the first issue, learned counsel for the petitioner contends that the said issue stands covered and decided in favour of the petitioner upon a categorical finding recorded by the Tribunal in its order dated 16.10.2015 that had attained finality. Since the department allowed the aforesaid order of the Tribunal to attain finality, it is no longer open to the assessing authority to re-examine it any further as it is not open to the Assessing Authority to go beyond the finding recorded by the Tribunal.

With respect to second issue raised in the aforesaid notice, it has been submitted that it was relevant only for the purpose of acceptance or rejection of the books of accounts of the petitioner. The books of accounts of the petitioner having been accepted by the assessing authority in the original assessment and the Tribunal having remanded the case on a limited issue as noted above, the assessing authority could not now open an inquiry to examine the books of accounts of the applicant. Hence, he could not call upon the petitioner to produce its books of accounts.

With respect to the second notice dated 1.3.2017, issued for the A.Y. 2005-06, the petitioner appears to be first aggrieved because the assessing authority examined the issue of acceptance/rejection of books of accounts in the original assessment proceedings. Upon explanation being furnished by the applicant, he had thereafter rejected the books of accounts of the petitioner. That issue was settled in favour of the petitioner, by the Tribunal that accepted the books of accounts of the petitioner by order dated 16.10.2015 which has attained finality.

In this regard the fact allegation appears to be that the petitioner had disclosed closing stock for A.Y. 2005-06 at Rs. 245.44 crores while it disclosed opening stock for A.Y. 2006-07 at Rs. 47.09 crores only. According to the assessing authority the opening stock disclosed by the petitioner for A.Y. 2005-06 was Rs. 187.55 crores whereas the purchases during the year were Rs. 1035.07 crores. Thus, the total stock available to the petitioner in the year in question would have been Rs. 1222.62 crores. Therefore, in view of the disclosed sales, the closing stock in the year in question should have been Rs. 181.11 crores and not Rs. 245.44 crores or 47.09 crores.

According to learned counsel for the petitioner, the books of accounts of the petitioner had been rejected by the assessing authority in the original assessment order. That issue was agitated upto the Tribunal and thereafter the books of accounts of the petitioner were accepted. The order of the Tribunal has attained finality. Since the Tribunal had only remanded the matter to the assessing authority on the limited issue, to give benefit of the additional evidence led by the petitioner, it is submitted that it is not open to the assessing authority to revisit the issue of acceptance/rejection of books of accounts and or closing stock of the petitioner. In that circumstance the other point raised in the notice requiring the petitioner to submit its balance sheet has also been objected to on same grounds as noted above with respect to A.Y. 2004-05.

Another objection has been raised to the aforesaid notice in so far as it seeks to question the claim of concessional rate of tax claimed by the petitioner against From-D issued by certain Schools, Colleges, Universities and Panchayats. First, it is stated that no reference has been made to any particular statutory form or transaction in respect whereto the notice has been issued by the assessing authority. Then it is also submitted that as in the A.Y. 2004-05, this issue had attained finality in the order of the Tribunal dated 16.10.2015 and it is no longer open to the assessing authority to re examine the same.

With respect to the notice issued for the A.Y. 2006-07 the first objection raised is to the query raised as to the closing stock. The notice states, while the petitioner had disclosed the closing stock Rs. 35.11 crores, but the petitioner i.e. the former company had merged with the petitioner company, in that year. A clarification has been sought whether upon merger the petitioner company had paid tax on the sale of closing stock of the former company. If the answer would be affirmative, then evidence of such tax payment has also been required to be produced. It has also been proposed that in absence of any evidence it may be assumed that the company had sold the said stock out of its books.

Learned counsel for the petitioner submits that the said issue falls wholly outside the scope of the proceedings in remand. A wholly new issue has been raised in the said notice. It was not permissible for the assessing authority to raise such issue when the proceeding had been remanded to it under an order of limited remand.

The second issue raised in the notice dated 1.3.2017 for the A.Y. 2006-07 is with respect to the various Form nos. XXXI; O.C. tickets; Form no. 49 and; Forms-C & F issued to the former company. Utilization details of those forms etc. and return of the unutilized forms etc. to the assessing authority has been sought. A presumption has also been raised that the goods received against stock transfer had been sold by performing concealed sales.

Learned counsel for the petitioner submits, the aforesaid issue again is a new/fresh issue that has not been required or permitted to be gone into in the proceedings remanded to the assessing authority. It was not an issue in the appeal before the Tribunal. Therefore, neither the Tribunal applied its mind to it nor it issued any direction in that regard. Consequently, the assessing authority could not open that open ended issue as if the entire assessment order had been set aside and a de-novo assessment had been directed.

The third and fourth issue raised in the aforesaid notices are the same as issue nos. 2 and 3 raised in the notice for the A.Y. 2005-06 with respect to lack of entitlement of the petitioner to claim concessional rate of tax on Forms-D against sales made to Schools, Colleges, Universities and Panchayats and for production of its audited balance sheet. The notice issued on these issues has been opposed similarly, as the notice issued for the A.Y. 2004-05 and 2005-06, noted above.

Thus submission advanced by the learned counsel for the petitioner to question the impugned notices is in two parts. First, it has been submitted, the issue pertaining to eligibility to exemption claimed by the petitioner on the strength of Forms-D issued by the educational institutions etc. had been decided in favour of the petitioner by the Tribunal by order dated 16.10.2015. Also, other Forms-C, D & F having been submitted during pendency of the appeals having been admitted in additional evidence, the Assessing Authority was only required to make verification of the same and grant the proportionate benefit. That order having attained finality, the Assessing Authority could only compute the quantum of exemption that may be available on such statutory Forms as may have been filed by the petitioner, upto or during pendency of the appeals. However, the issue of eligibility to exemption on Forms-D stood decided in favour of the assessee.

As to the other points sought to be raised by means of impugned notices being with respect to the production of balance sheet, examination of facts relevant to determine whether the books of accounts of the assessee may be accepted and; all other issues noted above are such as had not been permitted or required to be gone into in the proceedings in remand. Therefore, the same may not be permitted to be examined.

Principally, it has been submitted that the order dated 16.10.2015 was an order of limited remand passed by the Tribunal and, therefore, it was not open to the Assessing Authority to raise any new, fresh or other issue. Reliance has been placed on various decisions of the Supreme Court and this Court in support of the submissions so advanced. First reliance has been placed on the decision of the constitution bench of the Supreme Court in the case of Bhopal Sugar Industries Versus Income Tax Officer, Bhopal, [AIR 1961 SC 182]. In the original assessment proceedings under the Income Tax Act, in the A.Y. 1951-52, the Assessing Officer computed a loss on agricultural income and, therefore, did not allow any deduction to be made of the agricultural income. The assessee carried the matter in appeal. The first appeal authority determined the agricultural income of the assessee at Rs. 29,360/- and allowed the same to be deducted from the total income of the assessee. The matter was further carried in appeal to the Tribunal. The Tribunal remanded the matter to the income tax officer to ascertain the average transport charges (per mound), from the sugarcane purchase centre to the factories and to add to it - on a specified value of sugarcane to work out the market value of the sugarcane grown by the assessee on its own farms for the purpose of re-determining / computing the correct quantum of agricultural income. That order of the Tribunal attained finality. While giving effect to the order of the Tribunal, the income tax authority opined that the total amount of Rs. 59,116/- had been debited by the assessee towards transportation expenses in the agricultural produce account and if that were added to the value of sugarcane, the total cost of agricultural produce would be Rs. 9,28,431/-. Since that the Appellate Assistant Commissioner had already taken full value of the sugarcane at Rs. 10,07,132/- and excess allowances had already been made to the assessee, which did not require any change.

In such circumstances, the Supreme Court observed that:

"By that order the respondent virtually refused to carry out the directions which a superior Tribunal had given to him in exercise of its effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of courts. If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior tribunal, yet held that no manifest injustice resulted from such refusal."

Then reliance has been placed on another decision of the Supreme Court in the case of Union of India Vs. Kamlakshmi Finance Co. Ltd., 1991 (55) ELT 433 SC, wherein it was held as below:

"The position now, therefore, is that,if any order passed by an Assistant Collector or Collector is adverse to the interests of the Revenue, the immediately higher administrative authority has the power to have the matter satisfactorily resolved by taking up the issue to the Appellate Collector or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer.He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under Section 35E (1) or (2) to keep the interests of the department alive."

In that case, a notice was issued demanding duty alleged to have been short levied. That demand was confirmed by the Collector upon challenge raised by the assessee before the Tribunal that the charges that were paid for printing cylinders were included upon the value of pouches and other such goods. Therefore, with respect to the further contentions raised that the cost of cylinders were amortized or that duty chargeable on finished goods during substantial part of disputed period was nil, had not raised before adjudicating authority. After making such observations, the Tribunal remanded the case to the adjudicating authority to decide those two issues. In the remanded proceedings, the Commissioner observed in view of the order passed by the Tribunal on an application for rectification of mistake, the question of amortization was not to be considered in remand. The other claim of exemption of duty was also negated on the reasoning that principal conditions for claiming exemption in further appeal to the Tribunal were not fulfilled.

It was submitted on behalf of the assessee that the Commissioner should have taken into account that the plea of costing have been amortized. The Tribunal in its earlier decision is clear specific as to the terms of remand and re-decision to be made by the adjudicating authority was only after deciding two specific aspects as to the correct rate of duty, if any charged, the correct amount of differential duty, if any, payable and the correct amount of penalty. It did not allow for any further submissions to arise in the appeal. In such circumstances, it was submitted on behalf of the assessee that the earlier orders of remand made by the Tribunal was one of open remand and not a limited one.

The Supreme Court negated the contention advanced by that assessee after relying on its earlier decision in the case of Mohan Lal Vs. Anandi Bai and others, (1971) 1 SCC 813, wherein it was observed as under:

"Lastly, counsel urged that now that the suit has been remanded to the trial Court for reconsidering the plea of res-judicata the appellant should have been given an opportunity to amend the written statement so as to include pleadings in respect of the fraudulent nature and antedating of the gift deed Ext. P-3. These questions having been decided by the High Court could not appropriately be made the subject-matter of a fresh trial. Further, as pointed out by the High Court, any suit on such pleas is already time-barred and it would be unfair to the plaintiff-respondents to allow these pleas to be raised by amendment of the written statement at this late stage. In the order, the High Court has stated that the judgments and decrees and findings of both the lower courts were being set aside and the case was being remanded to the trial Court for a fresh decision on merits with advertence to the remarks in the judgment of the High Court. It was argued by learned Counsel that, in making this order, the High Court has set aside all findings recorded on all issues by the trial Court and the first appellate Court. This is not a correct interpretation of the order. Obviously, in directing that findings of both courts are set aside, the High Court was referring to the. points which the High Court considered and on which the High Court differed from the lower courts. Findings on other issues, which the High Court was not called upon to consider, cannot be deemed to be set aside by this order. Similarly, in permitting amendments, the High Court has given liberty to the present appellant to amend his written statement by setting out all the requisite particulars and details of his plea of res judicata, and has added that the trial Court may also consider his prayer for allowing any other amendments. On the face of it, those other amendments, which could be allowed, must relate to this very plea of res judicata. It cannot be interpreted as giving liberty to the appellant to raise any new pleas altogether which were not raised at the initial stage. The other amendments have to be those which are consequential to the amendment in respect of the plea of res judicata."

Consequently, the petition to that extent was dismissed.

Reference has been made to another decision of the Supreme Court in the case of K.P. Dwivedi Vs. State of U.P. and others, (2003) 12 SCC 572. However, it may be noted at the outset that in that case, while making the order of remand, the High Court had itself observed "no other controversy shall be allowed to be raised here after before the prescribed authority or before the appellate authority." Therefore, the principle laid down upon such specific restraint having been placed in the order of remand, the ratio of that case is distinguishable.

Also, reliance has been placed on the decision of the Delhi High Court in the case of Ritz Theatre Vs. Income Tax Officer, 2010 SCC OnLine Del 2882. In that decision, relying on the Supreme Court decisions in the case of K.P. Dwivedi Vs. State of U.P. (supra); Paper Products Ltd. Vs. Commissioner of Central Excise, Mumbai, (2007) 7 SCC 352 and Mohan Lal Vs. Anandi Bai (supra), it was held as under:

"We have quoted in extenso only to highlight that an order passed by the superior court has to be understood in a proper perspective and when the appellate court directs a remand with a direction to consider a particular plea, a new plea cannot be raised.

In view of the aforesaid enunciation of law, the CIT(A) could not have ventured to address itself with regard to service of notice as if the matter was in the realm of total open remand. In fact, such reopening of issue was totally unwarranted."

In sum and substance, it has thus been submitted that the order passed by the Tribunal was one of limited remand by which the Assessing Authority was only required to examine whether the Forms-D being relied upon by the petitioner were valid. The question of eligibility to exemption on the basis of such forms (if found valid), was no longer an issue left open by the Tribunal. The department having not challenged the order of the Tribunal, the Assessing Officer could not have enlarged the controversy either by opening up new or other issues that had not been permitted by the Tribunal or to re-agitate the issue of eligibility to exemption on the strength of Forms-D issued by certain educational institutions etc., that according to the Assessing Officer were non-government entities.

Shri C.B. Tripathi, learned Special Counsel for the State respondents has submitted, under Section 10(5) of the Act, the Tribunal had ample powers to either confirm, acknowledge or vary the order under the appeal or to set aside the order and direct the assessee or the Appellate Authority etc. to pass a fresh order after such further enquiry, if any, as may be specified or order the amount of tax, if any, or penalty etc. to be refunded. These powers were similar to those as were existing under Section 9(3) of the U.P. Sales Tax Act, 1948. Reliance has been placed on the full bench decision of this Court in the case of M/s Ram Dayal Harbilas Vs. Commissioner of Sales Tax, 1979 UPTC 999. In that case, following question had been referred to the full bench:

"Whether the order of assessment is set aside by the Appellate or Revising Authority which remands the case to the assessing authority with certain directions for making afresh assessment, has the assessing authority subject to carrying out such directions the same power as it had originally in making the assessment under Section 9 of the U.P. Sales Tax Act?"

It was held that as soon as the assessment order is set aside and the Assessing Authority directed to pass a fresh assessment order, the fresh assessment has to be made first after holding such enquiry as may be directed by the Appellate Authority. However, the section does not contemplate any direction to be given by the Appellate Authority as to the extent to which an assessment is to be made on remand or to limit the power of the Assessing Authority to make the assessment in accordance with law. The Assessing Authority may though remain bound with the findings, if any, recorded by the Appellate Authority but he would have the power to make such enquiry as he may like and to take notice and, therefore, a material that may come to his knowledge before making the assessment order and that the Assessing Authority would be able to reconsider the findings, if any, recorded by the Appellate Authority on the basis of the additional material coming to his knowledge. Consequently, the Assessing Authority would have, subject to carrying out the directions given by the Appellate Authority, the same power as it originally had to make the assessment.

The aforesaid interpretation was made by the full bench of this Court on the reasoning that the Appellate Authority under the Sales Tax Act did not have the power to limit the scope and ambit of the re-assessment proceedings and the power of the Assessing Authority to make an assessment order under Section 7 of that Act while setting aside any order of assessment and making a direction of remand for the purpose of passing a fresh assessment order.

The full bench also distinguished the scope of the jurisdiction of the Appellate Authority from that of the revisional court. It observed that insofar as the revisional court is concerned, wide powers had been given to the Revising Authority that may not have been available to the Appeal Authority and that in exercise of such powers, the revising authority could remand a case to the Assessing Authority to pass a fresh assessment order in accordance with the direction given by it. While doing so, the revising authority could inhibit the scope and ambit of the proceedings in remand. However, such power was not found existing with the Appeal Authority. Referring to the powers given to the Assessing Authority, it was observed , once the assessment is set aside in the appeal and the case is sent back to the Assessing Authority to pass a fresh assessment order, the original proceedings under Section 7 of the Sales Tax Act get revived. Consequently, the Assessing Authority passes a fresh assessment order in the original proceedings under Section 7 of that Act and the earlier assessment order does not survive. Ultimately, the full bench answered the question as under:

"Where an order of assessment is set aside by the Appellate Authority which remands the case to the assessing authority with certain directions for making a fresh assessment, the assessing authority has subject to carrying out such directions, the same power as it originally had in making the assessment under Section 7 of the U. P. Sales Tax Act. But where the order of assessment is set aside by a revisional authority under Section 10 of the Sales Tax Act, the jurisdiction of the Sales Tax Officer to make the assessment can be circumscribed by the specific directions given by the Revisional Authority in that regard. If under the remand order made by the Revising Authority the jurisdiction of the Sales Tax Officer to make the assessment has been limited, the Sales Tax Officer will have the jurisdiction to make the assessment only to the extent to which he has been permitted to do so under the orders of the Revising Authority."

Then reliance has been placed on another division bench decision of this Court in Smt. Prabha Rani Agrawal Vs. Income Tax Officer (2013) 351 ITR 275(Allahabad) wherein relying on the full bench decision in the case of M/s Ram Dayal Harbilas (supra), the division bench has held as under:

"From the aforesaid decisions, it follows that (i) a question relating to jurisdiction which goes to the root of the matter can always be raised at any stage, be in appeal or revision, (ii) initiation of proceedings under section 147 of the Act and/or service of notice are all questions relating to assumption of jurisdiction to assess escaped income, (iii) if an issue has not been decided in appeal and the matter has simply been remanded, the same can be raised again notwithstanding with the fact that no further appeal has been preferred, (iv) in the reassessment proceedings, relief in respect of item which was not originally claimed cannot be claimed again as the reassessment proceedings are for the benefit of the Revenue, and (v) relief can only be claimed in respect of the escaped income."

Reliance has also been placed on another decision of this Court in the case of Modi Industries Ltd. Vs. Commissioner of Sales Tax, (1980) 45 STC 423(All), wherein a learned single Judge of this Court again followed the full bench decision in the case of M/s Ram Dayal Harbilas (supra) and held that once the proceedings are remanded by the Appeal Authority, the entire material is at large. To the same effect, reliance has been placed on another single judge decision of this Court's case of Asian Paints (India Ltd.) Vs. C.C.T., 2017 NTN (Volume 64) 55, where a question arose whether the assessee could file fresh Forms-F at the stage of assessment proceedings in remand. The learned single Judge following the decision of the case in M/s Ram Dayal Harbilas (supra) opined that the entire assessment proceedings being open such a course was permissible. Then reliance has been placed on the division bench decision in Catalysts Vs. State of U.P. and others, 2014 NTN (Volume 55) 360, the Assessing Officer had treated enzymes as unclassified items and taxed the same @ 10% during A.Y. 2006-07. Upon an appeal, the same was allowed and the assessment order was set-aside. Further the matter was remitted to the Assessing Officer to pass fresh assessment order. During pendency of such proceedings, reassessment notice was issued to the assessee which became the subject matter of challenge in the aforesaid case. Relying on the full bench decision in the case of M/s Ram Dayal Harbilas (supra), the division bench opined once the original assessment proceedings became open as a consequence of the order of the assessment, no reassessment proceedings could have been initiated. At the same time, it cannot be said that any turnover had escaped assessment when the original assessment proceedings were still lying open as a consequence of the order of remand.

Then, reliance has been placed on another decision of J.K. Cotton Spinning & Weaving Mills Co. Ltd. Vs. Commissioner of Income Tax U.P., (1963) 471 ITR 906(All), wherein considering the similar power given to the Appellate Assistant Commissioner under the Income Tax Act to either confirm, reduce or set-aside the assessment directing the Income Tax Officer to make a fresh assessment, it was held as below:

"When an Income-tax Officer makes a fresh assessment in compliance with the Appellate Assistant Commissioners directions, he is of course bound by the directions, but, subject to them, he has the same powers as he had originally when making an assessment under Section 23. The reassessment is nothing but a second assessment in substitution of the assessment made previously and set aside by the Appellate Assistant Commissioner on appeal. There are no restrictions at all on the powers of the Income-tax Officer when he proceeds to reassess the income; subject to the directions given in the Appellate Assistant Commissioners order, he has to proceed as if he were making an assessment under Section 23 at the time when he proceeds to reassess. He is not bound or restricted by anything that had happened either when he made the original assessment or when the appeal was heard by the Appellate Assistant Commissioner; he is governed only by the findings of the Appellate Assistant Commissioner. He is not bound by his own findings arrived at in the original assessment; they do not operate as res judicata and undoubtedly have not the force of an order. The findings arrived at by the Appellate Assistant Commissioner and the directions given by him are binding on him, not as res judicata, but as orders to which he is subject. He is free to take into consideration any relevant material that came into existence for the first time after the original assessment order was made by him. Consequently, the Income-tax Officer in the instant case was competent, when reassessing the income of the assessee, to consider the orders passed by him under Section 23A and to treat the assessee as having derived larger income from the dividends than that shown by it in its returns and accepted as correct in the original assessment orders. He was free to take into account the materials which existed on the date of the reassessment and was not confined to those materials which existed on the date of the original assessment orders. His finding arrived at in the original assessment proceedings that the income from the dividends shown in the return was correct might have been correct but fell with the assessment order itself and was neither operative nor binding in the reassessment proceeding. By the time he came to reassess the assessee he had the Section 23A orders before him under which the assessee was deemed to have received larger income from the dividends."

Therefore, it has been submitted by Shri C.B. Tripathi, learned Special Counsel for State respondents that though the Assessing Authority may remain bound by the order of remand passed by the Tribunal, however, there is no limitation on his powers to consider any other or further material. He has ample powers to examine the book of accounts of the assessee as also to raise such queries as may now arise since the original assessment order passed by him no longer exists, the same having been set aside.

In sum and substance, the submission advanced by Shri C.B. Tripathi, learned Special Counsel for the State respondents appears to be that the Tribunal did not have any power to make an order of limited remand or to make an order so as to limit the scope of proceeding to be conducted by the Assessing Authority in compliance of the order passed by the Tribunal.

Having heard learned counsel for the parties and having gone through the record of the writ petition, it cannot be denied that the Tribunal, by its order dated 16.10.2015, recorded specific findings as to eligibility to exemption in favour of the petitioner/assessee, on the strength of Forms-D submitted by it during the course of assessment proceedings (as also the appellate proceedings), insofar as that eligibility was found existing despite the fact that the persons issuing the same were not the State Government or the Central Government. Second, the Tribunal recorded a specific finding as to admissibility of additional evidence led before it in the shape of certain statutory Forms-C, D and F. Third, the Tribunal did not approve the grounds for rejection of books of accounts of the assessee, as had found favour with the Assessing Authority and the first Appellate Authority with respect to A.Y. 2005-06 (U.P. & Central) and A.Y. 2006-07 (Central). Insofar as the books of accounts of the assessee had been accepted during the A.Y. 2004-05 (Central), that issue did not arise for consideration before the Tribunal.

By the impugned notices, the Assessing Authority, after the remand made by the Tribunal, is seeking to question the eligibility to exemption on Forms-D (as discussed above); grant of exemption on Forms C, D and F that were accepted by the Tribunal by way of additional evidence and; question the acceptance of the books of accounts of the assessee on certain grounds about which it is not clear if they are the same as were considered by the Assessing Authority while making the original assessment orders for the A.Y. 2005-06 (U.P. & Central) and A.Y. 2006-07 (Central).

As to the principle to be applied, there is no doubt inasmuch as the Full Bench decision of this Court in M/s. Ram Dayal Harbilas Vs. Commissioner of Sales Tax (supra) is categorical. Also, the law laid down by the Full Bench has held the field for almost 40 years. The language of the statute, insofar as it is relevant for decision of the present controversy is, by and large, the same. No material difference has arisen as to allow for any fruitful discussion in that regard. The ratio of the Full Bench is categorical and clear being - while carrying out the directions issued by a higher Appellate Authority, the original/Assessing Authority has the same powers as it originally had while making the assessment that was carried in appeal.

That being the principle, generally, upon remand being made by a higher Appellate Authority, all questions and issues would become open to be decided afresh or de novo. Therefore, in the first place, it has to be assumed that upon the order of the Tribunal dated 16.10.2015 being passed and the matter being remitted to the Assessing Authority, all issues, as have been raised in the impugned notices, could be raised. The fact that the Assessing Authority raised those issues in the impugned notices, may therefore, not suffer from any inherent lack of jurisdiction.

However, one logical and permissible exception exists to the above ratio drawn by the Full Bench. The exception being that the Assessing Authority may not be permitted to reopen or re-examine any issue that may have been specifically dealt with and decided by the Tribunal or the higher Appellate Authority and which order may have attained finality. That exception is necessary to be drawn being consistent with the other settled principle - of judicial discipline to be maintained by all judicial and quasi-judicial authorities as well.

A finding recorded by the higher Appellate Authority or Court, that is otherwise binding on a lower authority, cannot be permitted to be disobeyed by the former. This principle is also deducible from the ratio of the Full Bench decision noted above, inasmuch as the Full Bench itself held that the Assessing Authority shall have the same power as it originally had in making the assessment, so however that, that power shall remain subject to carrying out the directions issued by the higher Appellate Authority.

Once the power of the original/Assessing Authority was held to be subject to the directions of the higher Appellate Authority, clearly, the Assessing Authority is restrained from acting contrary to the directions issued by the higher Appellate Authority. Once the directions issued in the order of remand are binding on the Assessing Authority, the specific findings recorded by the higher Appellate Authority on specific issues have to be held binding on the Assessing Authority, as well.

Therefore, in the facts of the present case, the Assessing Authority would remain bound by the finding of the Tribunal on the issue of eligibility to exemption available to the assessee on Forms-D issued by such purchasing dealers/institutions, on the reasoning they may not be the Central Government or a State Government. That finding having attained finality, no contrary conclusion is permissible to be drawn. Similarly, the Assessing Authority is bound to consider the claim of exemption/concession made by the assessee on the strength of Forms-C, D and F etc., that were submitted by the assessee before the Tribunal by way of additional evidence, at that evidence was admitted by the Tribunal. The Assessing Authority cannot be permitted to ignore that evidence or to refuse to verify the claim of exemption/concession made on the strength of such evidence. Also, the Assessing Authority cannot rake up the same grounds to doubt the correctness of the books of accounts of the assessee for A.Y. 2005-06 (U.P. & Central) and 2006-07 (Central), as had found favour with that authority in the first innings of the assessment proceedings and which had been specifically disapproved by the Tribunal. It is so because these issues were squarely dealt with and decided by the Tribunal in its order dated 16.10.2015, arising from the first original assessment orders for A.Y. 2004-05 (Central), A.Y. 2005-06 (U.P. & Central) and A.Y. 2006-07 (Central) and that order has long attained finality.

However, besides the above issues on which the Assessing Authority would remain bound by the findings and directions of the Tribunal contained in its order dated 16.10.2015, it would remain open to the Assessing Authority to raise such other and fresh questions and issues as may be found existing and relevant in the context of the fresh assessment orders to be passed upon the remand made by the Tribunal. In this context, with respect to the issue of rejection of books of accounts, if any issue had not been raised or examined in the first leg of assessment proceedings, the same may remain open to the Assessing Authority to be considered and decided after the remand order. At present, it cannot be said that the issues raised in the impugned notices are such as had been raised earlier and that had been decided by the Tribunal. No definite conclusion can be drawn in that regard. Therefore, that issue is left open to be raised by the assessee which may be dealt with and decided strictly in accordance with law laid down by the Full Bench of this Court in M/s. Ram Dayal Harbilas Vs. Commissioner of Sales Tax (supra).

For the reasons noted above, the impugned notices cannot be quashed in entirety. However, subject to the observations made above, the assessment proceedings may be completed and concluded as expeditiously as possible, strictly in accordance with law. The writ petition is accordingly disposed of. There shall be no order as to costs.