ITAT Bangalore: Second Order Giving Effect Under Section 143(3) r.w.s. 254 Held Non-Est in Law
Background and Context
The Income Tax Appellate Tribunal, Bangalore Bench, in the case of ITO Vs Hagamilaldak Gouthamchand, dealt with an important jurisdictional issue: whether the Assessing Officer (AO) is empowered to pass two separate assessment orders under Section 143(3) read with Section 254 for the same assessment year pursuant to directions of the Tribunal.
The dispute arose in ITA Nos.2087 & 2088/Bang/2024 relating to AY 2006-07 and AY 2007-08, where the revenue challenged the orders of the CIT(A)/NFAC dated 18.01.2024, passed under Section 250 of the Income Tax Act 1961. The CIT(A) had held that the second Order Giving Effect (OGE) passed by the AO to the earlier ITAT order was invalid and without jurisdiction, and had therefore quashed it.
The Tribunal examined:
- Whether two OGEs under
Section 143(3)r.w.s.Section 254can coexist for the same assessment year - Whether the second order dated 29.12.2018 effectively amounted to an impermissible review of the earlier OGE dated 12.05.2017
- The impact of statutory time limits under
Section 153
Ultimately, ITAT Bangalore upheld the CIT(A)’s view that the second OGE was non-est in law and dismissed the revenue’s appeals.
Procedural History
Initial Assessment and First Round of Appeals
The assessee, engaged in real estate activities as well as pawn broking, was originally assessed under
Section 143read withSection 147for the relevant years.In the original reassessment, the AO made various additions to the assessee’s income.
The assessee challenged these additions before the CIT(A), who granted partial relief.
Dissatisfied, the assessee approached the ITAT Bangalore, which, in a combined order dated 23.03.2017 in:
- ITA No.902/Bang/2013 for AY 2006-07
- ITA No.1627/Bang/2013 for AY 2005-06
- ITA No.1099/Bang/2014 for AY 2007-08
remanded specific issues back to the AO.
The Tribunal set aside certain additions and directed the AO to re‑examine facts and grant appropriate relief after giving the assessee an opportunity to furnish evidence. The key additions remanded for fresh consideration included:
- Rs. 6,27,197/- towards alleged income from real estate business
- Rs. 1,72,96,580/- as income taxable under
Section 2(24)(iv) - Rs. 85,50,000/- treated as unaccounted bank deposits
First Order Giving Effect – OGE dated 12.05.2017
Pursuant to the ITAT’s order dated 23.03.2017, the ITO, Ward-2(2), Mysuru passed an Order Giving Effect on 12.05.2017. Key consequences of this OGE were:
- Implementation of ITAT’s directions and quantification of relief
- Reduction of assessed tax liability and determination of tax refund in favour of the assessee
- Direction by the AO to the Tax Recovery Officer (TRO) to remove restraints and vacate attachments on the assessee’s immovable properties
- The TRO, acting on the AO’s instructions, issued directions to relevant authorities to lift all attachments
At this stage, the assessment process flowing from the Tribunal’s remand stood concluded, both in terms of tax computation and enforcement measures.
Second Round of Proceedings by AO
Fresh Notices Despite Concluded OGE
Despite the above finality, after about nine months, the AO commenced a fresh round of proceedings:
- On 20.02.2018, the AO issued a notice under
Section 142(1), seeking further details from the assessee for the same assessment years already dealt with in the OGE dated 12.05.2017. - Multiple further communications were issued up to 26.12.2018, calling for additional information and explanations.
The assessee co-operated and furnished the requisitioned documents and submissions. However, the assessee made it clear that such participation was “Without Prejudice” to all legal rights and contentions, including the right to question the very jurisdiction of the AO to reopen matters after a valid OGE had been passed.