IN INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HON BLE JUDICIAL MEMBER ITA Nos. 169 & 170/PAN/2016 (Asst. Year : 2009-10) ACIT, Circle-2(1), 1) Shri Ajit R. Phatarpekar, Panaji Goa. Vs. 601-602, 6th Floor, Gera Emporium, Patto, Panaji Goa. PAN No. AFJPP 5786 N 2) Smt. Neelam A. Phatarpekar, 601-602, 6th Floor, Gera Emporium, Patto, Panaji Goa. PAN No. AFJPP 5785 R (Appellant) (Respondent) Assessee by : Shri Sandeep Bhandari CA. Department By : Shri Ramesh S. Mutagar - DR Date of hearing : 14/09/2016. Date of pronouncement : 14/09/2016. ORDER PER GEORGE MATHAN, JUDICIAL MEMBER These are appeals filed by Revenue against separate orders of Commissioner of Income Tax (Appeals), Panaji-1 in appeal Nos. 88 & 89/CIT(A)PNJ-1/15-16, both dated 01/06/2016 for Assessment Year 2009-10, in case of Shri Ajit R. Phatarpekar and his wife Smt. Neelam A. Phatarpekar. 2. Shri Ramesh S. Mutagar, Departmental Representative represented on behalf of Revenue and Shri Sandeep Bhandari, CA represented on behalf of assessees. 2 ITA No. 169 & 170/PAN/2016 3. It was submitted by Departmental Representative that originally assessment had been completed under section 143(3) on 29/12/2011. Subsequently, Commissioner of Income Tax, Panaji passed order under section 263 dated 07/02/2014, wherein Commissioner of Income Tax has specified that assessee has violated provisions of section 40(a)(ia) of Act. Assessing Officer had given effect to order of Commissioner of Income Tax passed under section 263 vide order dated 17/03/2015. It was submission that in view of decision of Coordinate Bench of this Tribunal in case of Smt. Sunita Ajit Patil in ITA No. 190/PAN/2015 dated 28/06/2016, assessee could not have filed appeal to Commissioner of Income Tax (Appeals) against said assessment order dated 17/03/2015 giving effect to order under section 263 of Act. It was submission that order of Commissioner of Income Tax (Appeals) itself was without jurisdiction and was consequently liable to be set aside. He specifically drew our attention at ground No.4 of Revenue s appeal. 4. In reply, Authorized Representative of assessee submitted that Assessing Officer has passed assessment order and against said assessment order, assessee has right to file appeal. It was submission that order of Commissioner of Income Tax (Appeals) was liable to be upheld. 5. We have considered rival submissions. perusal of decision of Coordinate Bench of this Tribunal in case of Smt.Sunita Ajit Patil (supra) shows that Tribunal has held as follows:- 6. We have considered submissions of both sides. perusal of order passed under section 263 by Commissioner of Income Tax, Belgaum, dated 23/03/2010 clearly shows that in para 5.7 at page No. 10 of said order, Commissioner of Income Tax has directed Assessing Officer to 3 ITA No. 169 & 170/PAN/2016 bring to tax amounts of 3 Lac and 2,50,000/-, being gifts received by assessee from her father and sister, as unexplained cash credits by modifying original assessment. In para 6.3 at page No. 12, Commissioner of Income Tax has directed Assessing Officer to modify original assessment after obtaining source of addition to fixed assets etc. and if no evidence is furnished, entire investment is to be added to total income of assessee in accordance with provisions of law. This representing addition made under section 69, representing investment in thread dies. In para 7.2 at page No. 13, Commissioner of Income Tax has directed Assessing Officer to modify original assessment by bring to tax bank interest, not offered to tax by assessee. In para 4.5 at page No.6, Commissioner of Income Tax has directed Assessing Officer to modify original assessment made by disallowing entire job work charges paid to two sister concerns under section 40(a)(ia) of Act and in para 8, Commissioner of Income Tax has specifically held that original assessment order passed by Assessing Officer was erroneous and prejudicial to interest of Revenue and accordingly, Assessing Officer is directed to modify original assessment in light of above discussions . Thus, these are clear directions given by Commissioner of Income Tax to Assessing Officer. In short, Commissioner of Income Tax after invoking powers under section 263, has done investigation and has completed assessment, in order passed under section 263 as is expected to be done while passing order under section 263. Assessing Officer in his order dated 15/12/2012 has only given effect to order passed under section 263. Here, it would be worthwhile to extract provisions of section 263(1), which reads as under:- 263. (1) [Principal Commissioner or] Commissioner may call for and examine record of any proceeding under this Act, and if he considers that any order passed therein by Assessing Officer is erroneous in so far as it is prejudicial to interests of revenue, he may, after giving assessee opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as circumstances of case justify, including order enhancing or modifying assessment, or cancelling assessment and directing fresh assessment. 7. perusal of said provisions clearly shows that Principal Commissioner (or) Commissioner....... pass such order thereon as circumstances of case justify, including order enhancing or modifying assessment, or cancelling assessment and directing fresh assessment. words 4 ITA No. 169 & 170/PAN/2016 pass such order thereon as circumstances of case justify shows that it is order under section 263 which has to be looked into to find out as to what is intention of Commissioner. In present case, clearly there is no intention on part of Commissioner to cancel assessment and direct fresh assessment, but it is clear one where original assessment has been modified by him. Once Principal Commissioner/Commissioner passes order under section 263 cancelling amendment and directing fresh assessment, then Assessing Officer gives effect to such order under section 153(2A) which also prescribes time limit, in case Principal Commissioner/ Commissioner has directed fresh assessment. This is because words used in section 153(2A) is order of fresh assessment in pursuance to order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling assessment . Thus, if there is cancellation of assessment under section 263 and direction for fresh assessment, then in view of provisions of section 153(1) read with section 153(2A), Assessing Officer has to do fresh assessment as per directions given in order under section 263. If there is no cancellation of assessment, but it is only modification of assessment, then Assessing Officer only gives effect to order of Commissioner under section 263 and such order giving effect to order under section 263 does not take colour of order under section 143(3) or 144 and it remains order under section 263 and it is only for purpose of computation of total income and raising of demand that Assessing Officer does in order giving effect to order under section 263. Appealable orders before Commissioner of Income Tax (Appeals) is very specific insofar as it is order of assessment under section 143(3) or 144 where assessee objects to amount of income assessed or to amount of tax determined, which is appealable before Commissioner of Income Tax (Appeals). perusal of provisions of section 253 provides for appeal against order under section 263 to appellate Tribunal. Thus, it can be noticed that order under section 263 can be one where there is enhancement or modification of assessment and one where there is cancelling of assessment and directing of fresh assessment. When it is issue of enhancing or modifying assessment order, then Assessing Officer only gives effect to order under section 263 by re-computing total income / total tax liability and such orders where Assessing Officer has given effect by only re-computing as per order of Commissioner of Income Tax under section 263 is not appealable before Commissioner of Income Tax (Appeals). In case where Commissioner of Income Tax has by invoking his powers under section 263 has cancelled assessment and 5 ITA No. 169 & 170/PAN/2016 has directed fresh assessment, he would have to give specific directions in regard to methodology of fresh assessment. failure on this part by Commissioner of Income Tax would render order under section 263 unsustainable. This view gets support from decision of Hon ble Bombay High Court in case of Gabriel India Ltd. (203 ITR 108) (Bom.) If entire assessment has not been cancelled and only part of assessment order is tinkered with by Commissioner of Income Tax under section 263, it falls under category of enhancing or modifying assessment. enhancing or modifying assessment having been by Commissioner of Income Tax, Assessing Officer is precluded from applying his opinion to such enhancement or modification and consequently order giving effect by Assessing Officer in respect of such enhancement or modification cannot be challenged in appeal before Commissioner of Income Tax (Appeals), insofar as it would in effect be challenge before Commissioner of Income Tax (Appeals) in respect of order passed under section 263 by Commissioner of Income Tax. 8. In short, shorn of all frills order giving effect to order passed under section 263 by Commissioner of Income Tax is not appealable order before Commissioner of Income Tax (Appeals) or appellate Tribunal insofar as when Commissioner of Income Tax invokes his powers under section 263 he is invoking his coterminous powers of Assessing Officer and is doing assessment in shoes of Assessing Officer after examining or causing inquiry to be conducted as provided in provisions of section 263. 9. In present case, admittedly, order under section 263 has only modified assessment. assessment order has not been cancelled nor any fresh assessment directed by Commissioner of Income Tax under section 263. This being so, entertainment of appeal by Commissioner of Income Tax (Appeals) itself is erroneous and without jurisdiction. Be that as it may, no appeal against order giving effect to order passed by Commissioner of Income Tax under section 263 by Assessing Officer is maintainable before Commissioner of Income Tax (Appeals) nor before appellate Tribunal also as this appeal is not against order passed under section 263 by Commissioner of Income Tax. In these circumstances, appeal filed by assessee stands dismissed as not maintainable. 6 ITA No. 169 & 170/PAN/2016 6. perusal of said decision clearly shows that Tribunal has held that appeal is not maintainable against order passed by Assessing Officer giving effect to order passed under section 263 by Commissioner of Income Tax. This being so, respectfully following decision of Coordinate Bench of this Tribunal in case of Smt. Sunita Ajit Patil (supra), order passed by Commissioner of Income Tax (Appeals) stands set aside and that of Assessing Officer is restored. 7. In result, both appeals filed by Revenue stand allowed. Order Pronounced in Court at close of hearing on Wednesday, 14th day of September, 2016 at Goa. Sd/- sd/- (N.S.SAINI) (GEORGE MATHAN) Accountant Member Judicial Member Dated : 14th September, 2016. vr/- Copy to: 1. T h e Assessee. a) Shri Ajit R. Phatarpekar, 601-602, 6th Floor, Gera Emporium, Patto, Panaji Goa. b) Smt. Neelam A. Phatarpekar, 601-602, 6th Floor, Gera Emporium, Patto, Panaji Goa. [ 2. Revenue . ACIT, Circle-2(1), Panaji Goa 3. CI T , Panaji. 4. CIT (A) , Panaji - 1, Goa . 5. D.R. 6. Guard file . By order Assistant Registrar I.T.A.T., Panaji ACIT, Circle-2(1), Panaji Goa v. Ajit R. Phatarpekar