[2015] 54 taxmann.com 382 (Lucknow - Trib.)
IN THE ITAT LUCKNOW BENCH 'B'
Raibareilly District Co-operative Bank Ltd.
v.
Director of Income-tax (I&CI), Lucknow*
SUNIL KUMAR YADAV, JUDICIAL MEMBER
AND A. K. GARODIA, ACCOUNTANT MEMBER
AND A. K. GARODIA, ACCOUNTANT MEMBER
IT APPEAL NO.699 (LKW) OF 2013
[ASSESSMENT YEAR 2012-13]
[ASSESSMENT YEAR 2012-13]
JANUARY 16, 2015
Section
271FA, read with sections 253(1) and 246A of the Income-tax Act, 1961 -
Penalty - For failure to furnish annual information return (Order u/s
271FA) - Assessment year 2012-13 - Whether appeal against an order of
Director of Income-tax
passed under section 271FA is to be filed before
Tribunal who is higher in rank to Director of Income-tax and not before
Commissioner (Appeals) who is equivalent in rank with Director of
Income-tax - Held, yes [Paras 14 & 15][In favour of assessee]
FACTS
| ■ | An appeal was initially disposed of by Tribunal but later on a miscellaneous application was filed by revenue with the submission that this appeal could not have been disposed of by the Tribunal, as the Tribunal has no jurisdiction to entertain an appeal filed against the order passed by the Director of Income-tax under section 271FA as it can only be filed before the Commissioner (Appeals). | |
| ■ | Finding force in the contention of the revenue, the order of the Tribunal was recalled and the appeal was re-fixed for fresh hearing. | |
| ■ | In response, the assessee filed an appeal by contending that the Director of Income-tax is equal in rank of the Commissioner (Appeals), therefore, the appeal against the order of the Director of Income-tax could not be filed before the Commissioner (Appeals). | |
| ■ | On appeal: |
HELD
| ■ | The appellate jurisdiction always lies with the forum who is higher in rank than the forum whose order is under challenge; meaning thereby the appellate court or jurisdiction can examine the order of the inferior court and not of the court or authority who is equivalent in rank. [Para 13] | |
| ■ | In the instant case, undeniably the order under section 271FA was passed by the Director of Income-tax who is equivalent in rank with the Commissioner (Appeals). Therefore, the order of the Director of Income-tax cannot be challenged or assailed by filing an appeal before an Officer,i.e., the Commissioner (Appeals), who is equivalent in rank with the Director of Income-tax. The appeal can only be filed before a higher forum than the forum whose order is to be challenged and the higher forum is only Tribunal and before it the order of the Director of Income-tax can only be challenged by filing an appeal. [Para 14] | |
| ■ | The provisions of section 253(1) in which the order of the Assessing Officer, which has been passed with the approval of the Commissioner pursuant to the Dispute Resolution Panel comprising of the Commissioner can only be challenged before the Tribunal by filing an appeal. In the light of these facts, when the order of the Assessing Officer passed with the approval of the Commissioner can only be challenged before the Tribunal, then how the order of the Director of Income-tax who is equivalent in rank with the Commissioner (Appeals) can be challenged before the Commissioner (Appeals). The only forum where this order of the Director of Income-tax can be challenged is the Tribunal which is higher in rank to the Director of Income-tax. [Para 15] | |
| ■ | With these observations, the appeal by the assessee has been rightly filed before the Tribunal and the Tribunal is competent to adjudicate the appeal on merit. Accordingly, the preliminary objection of the revenue with regard to the maintainability of the appeal before the Tribunal is rejected. Accordingly, the registry is directed to fix this appeal for hearing on merit. [Para 17] |
CASE REVIEW
Hardoi District Co-operative Bank v. DIT [IT Appeal No. 719 (LKW) of 2013] (para 16)distinguished.
CASES REFERRED TO
Hardoi District Co-operative Bank v. DIT [IT Appeal No. 719 (LKW) of 2013] (para 2).
J.J. Mehrotra, FCA for the Appellant. Y.P. Srivastava, D.R. for the Respondent.
ORDER
Sunil Kumar Yadav, Judicial Member -
This appeal is preferred by the assessee against the order of the ld.
Director of Income Tax (I&CI), Lucknow passed under section 271FA of
the Income-tax Act, 1961 (hereinafter called in short "the Act").
2. This
appeal was initially disposed of vide order dated 7.1.2014, but later
on an M.A. was filed by the Revenue with the submission that this appeal
could not have been disposed of by the Tribunal, as the Tribunal has no
jurisdiction to entertain an appeal filed against the order passed by
the Director of Income-tax under section 271FA of the Act. The Revenue
has also placed reliance upon the order of the Tribunal in the case of Hardoi District Co-operative Bank v. DIT [IT
Appeal. No. 719 (LKW) of 2013] whereby it has been held that the appeal
against an order passed under section 271FA of the Act can only be
filed before the ld. CIT(A) and the Tribunal has no jurisdiction to
entertain the same. Finding force in the contention of the Revenue, the
order of the Tribunal dated 7.1.2014 was recalled and the appeal was
re-fixed for fresh hearing.
3. During
the course of hearing, the ld. D.R. has raised a serious objection with
regard to the maintainability of the appeal, with the submission that
the appeal filed against the order passed under Chapter XXI are to be
filed before the ld. CIT(A) as per section 246A(1)(q) of the Act. The
ld. D.R. has also invited our attention to the provisions of section 253
of the Act with the submission that the penalty levied under section
271FA of the Act did not find place in section 253(1) of the Act.
Therefore, the Tribunal has no jurisdiction to entertain the appeal
against an order passed under section 271FA of the Act and the appeal
against the order of the Director of Income-tax is to be heard by the
ld. CIT(A).
4. The
ld. counsel for the assessee has also invited our attention to the
literature on "appellate jurisdiction" obtained from the internet with
the submission that in appellate jurisdiction the superior court has to
hear appeals of causes which have been tried in inferior courts. He has
further contended that the appellate jurisdiction refers the power of a
higher court to review and revise a lower court's decision. The
appellate jurisdiction is the power of a court to review decisions and
change outcomes of decisions of lower courts. He has further invited our
attention to the definition given in the Black's Law Dictionary,
according to which the appellate jurisdiction was defined as the power
of a court to review and revise a lower court's decision.
5. The
ld. counsel for the assessee has further contended that the Director of
Income-tax is equal in rank of the Commissioner of Income-tax
(Appeals), therefore, the appeal against the order of the Director of
Income-tax cannot be filed before the Commissioner of Income-tax
(Appeals). It can only be filed before a forum which is senior in rank
to the Director of Income-tax and that forum is only Income Tax
Appellate Tribunal (ITAT). The ld. counsel for the assessee has further
invited our attention to clause (2) of the provisions of section 253(1)
of the Act with the submission that where an order is passed by the
Assessing Officer with the approval of the Principal Commissioner or
Commissioner (Appeals). An appeal against the said order can only be
filed before the Tribunal and not before the ld. CIT(A). Here is the
case where the order was even passed by the Director of Income-tax, who
is equal in rank of the Commissioner of Income-tax (Appeals). Therefore,
the appellate jurisdiction against the said order lies with the ITAT
and not with the Commissioner of Income-tax (Appeals).
6. Having
given a thoughtful consideration to the rival submissions and from a
perusal of record, we find that undisputedly the Director of Income-tax,
who has passed an order under section 271FA of the Act is equal in rank
with the Commissioner of Income-tax (Appeals). Therefore, question
arises whether appeal against an order of the Director of Income-tax
passed under section 271FA of the Act is to be filed before the ld.
CIT(A), who is equal in rank of the Director of Income-tax or ITAT, a
forum which is higher in rank to the Director of Income-tax?
7. We
have carefully examined the relevant provisions of section 253(1) of
the Act, in which different orders were classified under different
clauses, against which an appeal can be filed before the Tribunal. As
per clause (a) of section 253(1) of the Act, the order passed by a
Deputy Commissioner (Appeals) or a Commissioner (Appeals) can be
challenged before the ITAT by filing an appeal. As per clause (b) of
section 253(1) of the Act, the order passed by an Assessing Officer
after the 30th day of June, 1995, but before the 1st day of January,
1997 are to be filed before the Tribunal and as per clause (c) of
section 253(1) of the Act, an order passed by a Principal Commissioner,
Commissioner and Principal Chief Commissioner or Principal
Director-General or Director-General or Principal Director or Director,
under section 272A of the Act can be challenged before the Tribunal by
filing an appeal. Rather, as per clauses (d) and (e) of section 253(1)
of the Act, if the Assessing Officer passed an order with the approval
of the Principal commissioner or Commissioner or pursuant to the
directions of the Dispute Resolution Panel, which comprises of the
Officers in the rank of Commissioner can only be challenged before the
Tribunal. Though there is no specific reference of the order passed
under section 271FA of the Act by the Director of Income-tax in section
253(1) of the Act for the purpose of filing an appeal against the said
order, but an analogy drawn from the reading of section 253(1) of the
Act is that the order passed by the Commissioners of Income-tax or an
Officer who is equal in rank can only be challenged before the Tribunal,
which is higher in rank. For the sake of reference, we extract section
253(1) as under:—
"253. (1) Any assessee aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order—
| (a) | An order passed by a Deputy Commissioner (Appeals) before the 1st day of October, 1998 or, as the case may be, a Commissioner (Appeals) under section 154 section 250, section 271, section 271A or section 272A; or | |
| (a) | an order passed by an Assessing Officer under clause (c) of s. 158BC, in respect of search initiated under section 132 of books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997; or | |
| (ba) | an order passed by an Assessing Officer under sub-section (1) of section 115VZC; or | |
| (c) | an order passed by a "Principal Commissioner or Commissioner under section 12AA or under clause (vz) of sub-section (5) of section 80G or under section 263 or under section 271 or under section 272A or an order passed by him under section 154 amending his order under section 263 or an order passed by a Principal Chief Commissioner or Chief Commissioner or a Principal Director General or Director General or a Director or Director under section 272A; or | |
| (d) | an order passed by an Assessing Officer under sub-section (3) of section 143 or section 147 or section 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order; | |
| (e) | an order passed by an Assessing Officer under sub-section (3) of section 143 or section 147 or section 153A or section 153C with the approval of the [Principal Commissioner or] Commissioner as referred to in sub-section (12) of section 144BA or an order passed under section 154 or section 155 respect of such order." |
8. We
have also carefully examined the provisions of section 246A of the Act,
which deals with the orders against which appeal is to be filed before
the Commissioner (Appeals) and as per clause (q) of sub-section (1) of
section 246A, the appeal against an order imposing penalty under Chapter
XXI is to be filed before the ld. CIT(A) and under Chapter XXI most of
the penalties are levied by the Assessing Officer or Officers who is
junior in rank to the ld. CIT(A). But penalty levied under section 271FA
of the Act is to be levied by the Director of Income-tax. Though this
section falls under chapter XXI and as per section 246A(1)(q) of the
Act, the order passed under Chapter XXI can only be challenged before
the ld. CIT(A), but while introducing the provisions for imposing
penalty under section 271FA of the Act by the Director of Income-tax,
the Legislature might not have taken into account the fact that the
order of the Director of Income-tax who is equivalent in rank with the
ld. CIT(A), cannot be challenged before the ld. CIT(A). As per
definition of appellate jurisdiction, the appeals are to be filed before
a forum which is higher in rank than the forum which passed the order.
9. We
have been carried through the literature on appellate jurisdiction
available on internet and the definition given in the law dictionary,
The Law Lexicon; Stroud's Judicial Dictionary of Words and Phrases and
Black's Law Dictionary and everywhere it has been defined that the
appellate jurisdiction is a power of the court to review the decision
and change the outcome of decision of the lower courts. The judicial
hierarchy is also explained and it has been stated that the appellate
jurisdiction is a power of a court to review decisions and change
outcomes of decisions of lower courts. It was further defined that the
appellate jurisdiction is the jurisdiction which a superior court has to
hear appeals of causes which have been tried in inferior courts. The
definition of Appellate Jurisdiction Law & Legal Definition as per
definitions.uslegal.com, the appellate jurisdiction refers to the power
of a higher court to review and change the decisions of the lower
courts. The Appellate Jurisdiction was also defined as the power of the
court to hear appeals from lower court which includes the power to
reverse or modify the lower court's decision.
10. In
the Dictionary of The Law Lexicon, the appellate jurisdictional was
defined as the cognizance which a superior court takes of a case removed
to it, by appeal or otherwise from the decision of an inferior court.
It was further defined that the appellate jurisdiction Exvt termini
implies a resort from an inferior Tribunal of justice to a superior, for
the purpose of revising the judgments of the inferior Tribunal. It
further says that the appellate jurisdiction, strictly speaking, is
exercised by revising the action of the inferior court, or remanding the
cause for the rendition of the proper judgment.
11. In
Black's Law Dictionary, the appellate jurisdiction is defined as the
power of a court to review and revise a lower court's decision.
12. As
per Stroud's Judicial Dictionary, Appellate Court refers to the
function that the court is performing rather than to its status in the
hierarchy of courts.
13. Having
carefully examined the definition of appellate jurisdiction explained
by various Dictionaries and the authorities, we find that the appellate
jurisdiction always lies with the forum who is higher in rank than the
forum whose order is under challenge; meaning thereby the appellate
court or jurisdiction can examine the order of the inferior court and
not of the court or authority who is equivalent in rank.
14. In
the instant case, undeniably the order under section 271FA of the Act
was passed by the Director of Income-tax who is equivalent in rank with
the ld. CIT(A). Therefore, the order of the Director of Income-tax
cannot be challenged or assailed by filing an appeal before an Officer
i.e. the ld. CIT(A), who is equivalent in rank with the Director of
Income-tax. The appeal can only be filed before a higher forum than the
forum whose order is to be challenged and the higher forum is only ITAT
and before it the order of the Director of Income-tax can only be
challenged by filing an appeal.
15. We
have also carefully examined the provisions of section 253(1) of the
Act, in which the order of the Assessing Officer, which has been passed
with the approval of the Commissioner of Income-tax pursuant to the
Dispute Resolution Panel comprising of the Commissioner of Income-tax,
can only be challenged before the ITAT by filing an appeal. In the light
of these facts, when the order of the Assessing Officer passed with the
approval of the Commissioner of Income-tax can only be challenged
before the Tribunal, then how the order of the Director of Income-tax
who is equivalent in rank with the ld. CIT(A) can be challenged before
the ld. CIT(A). The only forum where this order of the Director of
Income-tax can be challenged is the ITAT which is higher in rank to the
Director of Income-tax.
16. So far as the view taken in other appeal, styled as Hardoi District Co-perative Bank (supra)
is concerned, we find that while adjudicating the impugned issue in
that appeal, the argument with regard to the appellate jurisdiction was
not advanced and relying upon the provisions of section 246A(1) of the
Act, the issue was adjudicated. Now, during the course of hearing of
this appeal, the arguments were advanced with respect to the definition
of appellate jurisdiction and provisions of section 253(1) of the Act.
Therefore, we have decided to re-appreciate the arguments advanced by
the parties in the light of the aforesaid provisions.
17. With
these observations, we are of the view that the appeal by the assessee
has been rightly filed before the Tribunal and the Tribunal is competent
to adjudicate the appeal on merit. Accordingly we reject the
preliminary objection of the Revenue with regard to the maintainability
of the appeal before the Tribunal. Accordingly we direct the Registry to
fix this appeal for hearing on merit on 10.2.2015.
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