ITO vs M/S. Airwave International Pvt. Ltd.

The captioned appeals have been filed by the Assessee against the consolidated order of the Commissioner of Income Tax (Appeals)-I, Noida (‘CIT(A)’ in short) dated 31.12.2018 arising from the assessment orders of even date 29.12.2017 passed by the Assessing Officer under Section 147/143(3) of the Income Tax Act, 1961 (the Act) concerning AYs 2013-14, 2014-15.

The grounds of appeal raised by the Revenue read as under:

ITA No.1364/Del/2020 (Assessment Year 2014-15)

Whether in facts and circumstances of the case, the CIT(A) was correct and justified in passing an order without jurisdiction irrespective of the facts that the order was in favour of the Revenue.

Whether in facts and circumstances of the case, the CIT(A) was correct in uploading his order in ITBA, after he was compulsorily retired by the Govt, of India and he has become functus officio.

Whether in facts and circumstances of the case, can the revenue being a state, be a beneficiary of an order passed without jurisdiction by an appellate commissioner as it is absolutely immaterial that ultimately the case was decided in favour of the Revenue by the appellate commissioner albeit without jurisdiction.

The order of the CIT(A) Noida, being nullity in the Law, may be set aside for fresh adjudication Ld. CIT(A)-1, Delhi

The appellant craves leave, modify, add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal.”

It is a peculiar case where the Revenue has sought to impugn the order of the CIT(A) which has been adjudicated against the assessee and in favour of the Revenue.

The peculiar facts in the instant case as brought out on record on behalf of the Revenue are reproduced hereunder:

Statement of Facts

Based upon the information received from the O/o The Addl. DIT (Inv.), Noida pursuant to a survey operation undertaken by that office in the premises of M/s Airwave Group on 28/01/2016 under the provisions of section 132A of the I.T. Act, 1961, assumed jurisdiction u/s 147 of the I.T. Act, 1961 and issued notice u/s 148 to M/s Airwave International Pvt. Ltd.. Assessment orders were passed on 29/12/2017 for both the assessment years i.e. A.Y. 2013-14 and A.Y. 2014-15 computing the taxable income of the assessee company at Rs. 10,73,08,060/- for A.Y. 2013-14 against the returned income of Rs. 16,69,210/- and Rs. 14,86,82,550/- for A.Y. 2014-15 against returned income of Rs. 1,16,85,650/-.

Being aggrieved with the assessment orders, the assessee went in appeal before the CIT(A) and filed two appeals against the assessment orders for the A.Y. 2013-14 (appeal no. 321/2017- 18/Noida) and A.Y. 2014-15 (appeal no. 320/2017-18/Noida). The CIT(A)-01, Noida in its combined order dated 31.12.2018 for both the appeals, dismissed the appeal filed by the assessee company and confirmed the assessment orders made by the Ld. AO.

An FIR was lodged against Shri S.K. Srivastav, former CIT(A), Noida-1 .& 2 (now compulsory retired u/s 56J) and filed a charge sheet alleging that appeal orders passed by in 104 cases by the then CIT(A), Noida in December, 2018 were actually passed/dispatched/uploaded after the date of his compulsory retirement. Out of those 104 cases, two cases belong to the assessee company (M/s Airwave International Pvt. Ltd., PAN: AAKCA5743R) for A.Y. 2013-14 and 2014-15. in this regard, legal opinion was sought from the Standing Counsel after taking necessary approval of Pr. CIT-01, New Delhi dated 26/06/2020 through Addl. CIT, Range-02, New Delhi.

Shri Zoheb Hossain, Standing Counsel vide his E-mail dated 30/06/2020 has given his consent/legal opinion with regard to filing of appeal. The contents of legal opinion provided by the Standing Counsel are as under:-

"For the sake of consistency and uniformity in the stand adopted by Revenue in similar cases, appeal will have to be filed on the following grounds

1 . Because, the then CIT(A)-Noida had been compulsorily retired by the Government of India with effect from 11.06.2019 and accordingly, he had become functus officio w.e.f. 11.06.2019. Accordingly, any discharge of function by an officer who has become functus officio is a nullity in law and without jurisdiction.

In this regard, reliance is placed on the decision of the Hon'ble High Court of Karnataka in the case of Rudragouda v. The University of Agricultural Sciences and Ors., Writ Petition No. 31734/2016 (S-RES), wherein it was held that: -

"The petitioner/officer after his retirement becomes functus officio. No officer can continue to discharge his functions subsequent to his retirement and more particularly, to take action against the subordinate officer or to seek such direction from this Court." (emphasis added)

It is to be noted that the term functus officio has been defined to mean the following: -

Black's Law Dictionary (Sixth Edition Page 673) gives its meaning as follows: Having fulfilled the function, discharged the office, or accomplished the purpose, and therefore, of no further force or authority.

Accordingly, it is submitted that once the then CIT(A)-Noida has been discharged from his office i.e., with effect from 11.06.2019, any order prima facie passed by him or acted upon by him after the date of his compulsory retirement is without jurisdiction.

Because a vigilance inspection for the work carried out by Sh. Sanjay Kumar Srivastava IRS (Retd.),who was posted to as CIT(A)-1 Noida with the additional charge ofCIT(A)-2 Noida, prior to his compulsory retirement w.e.f 11.06.2019 was conducted on 19.06.2019 by the Vigilance Team of Income Tax (Vigilance), which revealed that orders purpoted to have been passed by Sh. Srivastava in the month of December, 2018 were prima-facie passed in the month of June, 2019. All these orders liable to have been uploaded on the ITBA system were uploaded between 11th June to 13th June, 2019, i.e. after his demitting the office. There are also indications of falsification of records to allude towards dispatch of these orders on 7th June, 2019, whereas they were dispatched on 14th June, 2019 It was further revealed that 104 orders were claimed to be passed by Sh. S.K. Srivastava during December, 2018, however, many of them were uploaded to the central server using his RSA token only after his retirement.

Because, it is immaterial whether an order passed without jurisdiction is in favour of revenue or against it. Such an order is contrary to the administration of the Income Tax Act and it pollutes the streams of justice. Therefore, revenue would be an aggrieved party if a Commissioner of Income Tax (Appeals) passes an order without jurisdiction and it is in the interest of the revenue as well as tax administration to ensure that orders are passed by the correct legal authority under the Act.

Because the revenue being 'State' cannot be a beneficiary of an order passed without jurisdiction by an Appellate Commissioner and therefore it is absolutely immaterial that ultimately the case was decided in favour of the revenue by the Appellate Commissioner albeit without jurisdiction."

In view of the above and considering the facts and circumstances of the case, the order of Ld. CIT(A), Noida cannot be acceptable on merits. In the interest of revenue as well as tax administration to ensure that orders are passed by the correct legal authority under the Act, appeal before the Hon'ble ITAT are required to be filed on the following grounds of appeal as mentioned above.

The case of the assessee company alongwith the assessment folders was transferred to Circle- 2(1), New Delhi in June 2019, which has again been transferred to Ward-2(1), New Delhi on 30.06.2020 considering the current jurisdiction of the assessee company. It is to mention here that the appeal was not filed by the department in this case as the assessee's appeal was dismissed and hence, time limit for filing of appeal has been expired. However, considering the facts of the case which came up recently and also considering the legal opinion sought from the Standing Counsel, filing of further appeal is necessary.

(Manoj Kumar) Income Tax Officer, Ward-2(1), New Delhi.

From the factual submission made on behalf of the assessee, it is noticed that the Revenue seeks to allege that the first appellate order has been passed by the CIT(A) although against the assessee is without jurisdiction. It is contended that the Income Tax Department being ‘State’ cannot be beneficiary of an order passed without jurisdiction and it is absolutely immaterial that ultimately the case has been decided adverse to the assessee. It was pointed out on behalf of the Revenue that the action of the CIT(A) in the circumstances as narrated cannot be endorsed regardless of whether it operates in favour of the Revenue or against it.

We find force in such plea without any reservation. The order passed without jurisdiction is a nullity and thus amenable to appellate jurisdiction of Tribunal to seek remedy on such fundamental defects. This apart, we notice that the date of order of the CIT(A) is of 31.12.2018 whereas the first appellate order was communicated to the Revenue after a gap of more than five months on 12.06.2019. Ostensibly, the impugned order has not been communicated promptly, i.e., 15 days as per guidelines issued in this regard by CBDT. The CIT(A) is expected to follow the guiding principles in letter and spirit as provided in CBDT Instructions No.20/2003 dated 23.12.2003 which was reiterated vide CBDT letter F.No. 279/Misc.53/2003 ITJ dated 19.6.2015. Another communication F. No. DGIT (vig) / HQ / SF / Appeals /2017-18/9959 dated 8.3.2018 was yet again issued by CBDT to give impetus for timely dispatch of orders passed by CIT(A) to shun any suspicion about back dating and mala fide intent. We thus find traction in the claim of the Revenue for remitting the matter back to the CIT(A) for fresh adjudication on the ground that the impugned order has been passed by the extant CIT(A) without jurisdiction.

Both appeals have similar grievance and therefore both the appeals of the Revenue are decided on same terms. Both the appeals are thus restored to the file of the CIT(A). The respective appeals before the CIT(A) by the assessee are thus revived for fresh adjudication in accordance with law.

In the result, both the appeals of the Revenue are allowed exparte.