JUDGMENT
D.A. Mehta, J.
1. This appeal is preferred by the assessee against the order dated May 1, 2003, made by the Income-tax Appellate Tribunal. SMC Bench, Ahmedabad, in I. T. A. No. 580/Ahd/2000. The appellant has proposed the following two questions stated to be substantial questions of law arising out of the aforesaid order of the Tribunal :
“(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in not sending the matter back to the Commissioner of Income-tax (Appeals) to decide the issues on merits when in fact the Commissioner of Income-tax (Appeals) order did not deal with the grounds on merits but allowed the assessee’s appeal on a preliminary point ?
(ii) Whether, on the facts and in the circumstances of the case the Tribunal was right in law in upholding the validity of the assessment order when the order sent to the assessee was not signed by the Assessing Officer ?”
2. At the outset Mr. Manish J. Shah, the learned advocate for the appellant, states that he does not press question No. 2 as proposed and restricts his submissions in relation to question No. 1 only.
3. Heard Mr. M. J. Shah, the learned advocate for the appellant, and Mrs. M. M. Bhatt, learned standing counsel appearing on behalf of the respondent-Revenue.
Admit :
4. The following substantial question of law arises for consideration :
“Whether, on the facts and in the circumstances of the case, the Tribunal having reversed the order of the Commissioner of Income-tax (Appeals) on preliminary point, was the Tribunal not required to restore the matter to the file of the Commissioner of Income-tax (Appeals) for deciding other grounds on merits, which had not been decided by the Commissioner of Income-tax (Appeals) in the first round ?”
5. By consent of the learned advocates for the parties, the matter is taken up for final disposal.
6. The assessment year is 1994-95 and the relevant accounting period is the financial year ended on March 31, 1994. In the assessment framed on February 16, 1995, the Assessing Officer made additions on account of bad debts of Rs. 70,025 and on account of disallowance of interest payment of Rs. 6,580. The assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals) challenging both the issues.
7. When the matter came up for hearing before the Commissioner of Income-tax (Appeals), the appellant raised a preliminary objection in the following terms :
“The assessment order passed under Section 143(3) of the Income-tax Act, 1961, and served to your appellant is not signed by the learned Assessing Officer. In the opinion of your appellant, assessment order served without signature of initial Assessing Officer is null and void in view of what is held in the following cases :
(a) Kalyan kumar Ray v. CIT SLP Civil No. 11270 of 1991 dated August 6, 1991 [1991] 191 ITR 634 (SC) ;
(b) Smt. Kilasho Devi Burman v. CIT [1996] 219 ITR 214 (SC) ;
(c) Sushil Chandra Ghose v. ITO [1959] 35 ITR 379 (Cal) ; and
(d) S. Mubarik Shah Naqshbandi v. CIT [1977] 110 ITR 217 (J&K).”
8. The Commissioner of Income-tax (Appeals) accepted the said preliminary objection and held that “I find that the assessment order is not signed by the Assessing Officer and, therefore, such assessment order is nonexistent in the eyes of law. The order passed under Section 143(3) which is unsigned is, therefore, cancelled”. In this view of the matter the original grounds of appeal which challenged the two additions were not dealt with by the Commissioner of Income-tax (Appeals).
9. The Revenue carried the matter in appeal before the Tribunal challenging the finding of the Commissioner of Income-tax (Appeals) that the assessment order was not signed by the Assessing Officer. The Tribunal passed the impugned order on May 1, 2003, after recording absence on the part of the respondent-assessee and on the basis of a photo copy of the assessment order filed along with the appeal papers, the Tribunal found at the first instance that the Commissioner of Income-tax (Appeals) did not appear to be justified in striking down the assessment order in its entirety; in the same breath the Tribunal records that when the matter was heard on March 27, 2003, the assessee’s counsel had sought 2 to 3 days time to ascertain the facts and then appear. Accordingly, the case was adjourned to March 31, 2003. The Tribunal records that on the said subsequent day neither the assessee’s counsel appeared nor any evidence to controvert the aforesaid factual aspect was furnished. Therefore, the Tribunal found that there was a valid assessment order which bore the signature of the Assessing Officer at two different places, one at the end of the assessment order and one after the office note below the assessment order. In these circumstances, the Departmental appeal came to be allowed and the order of the Assessing Officer was restored.
10. The assessee-appellant moved a miscellaneous application in which it was stated that on the date of hearing, i.e., March 27, 2003, the Tribunal directed the assessee’s counsel to obtain instructions in the matter in the light of the transfer application which was on the file of the Tribunal and adjourned the matter to March 31, 2003. It is averred in the miscellaneous application that the application was by some other firm having the same name, i.e., M/s. Sheth Construction Co., and in the application a request was made to transfer the file to the Rajkot Bench of the Tribunal. When counsel, after going through the application, submitted that the said application pertains to some other assessee, the Tribunal called upon counsel to tender an application signed by the partners of the assessee-firm that the said application had not been moved by the assessee-firm, and that the hearing on the merits of the matter would take place only after receipt of such application. It is further stated in the miscellaneous application that between March 27, 2003 to April 2, 2003, as the partners of the assessee-firm were out of station, the application as directed by the Tribunal could not be prepared and submitted. Hence, counsel did not appear on March 31, 2003. In these circumstances, a prayer was made to recall the order of the Tribunal as the same was against the principles of natural justice.
11. The Tribunal, for the reasons stated in its order dated January 5, 2004, rejected the miscellaneous application by referring to what was recorded by it in its earlier order of May 1, 2003.
12. Mr. Manish J. Shah has, in the backdrop of the aforesaid facts, made a fervent plea to restore the matter to the Tribunal so as to enable the Tribunal to decide on the merits, the controversy between the parties. Mr. Shah submitted that the assessee was seeking an opportunity of being heard on the two issues which were not decided by the appellate authorities.
13. Mrs. M. M. Bhatt, learned standing counsel appearing on behalf of the respondent-Revenue, supported the order of the Tribunal and submitted that when the Department had filed an appeal before the Tribunal it was incumbent upon the assessee to have raised a cross-objection challenging ” the decision of the Commissioner of Income-tax (Appeals) to the extent the Commissioner of Income-tax (Appeals) had failed to decide the original grounds of appeal. That the assessee having failed to do so, no second innings should be granted to the assessee.
14. The facts narrated hereinbefore are eloquent and need no repetition. It is apparent that the appellant-assessee had at no stage given up its right of appeal which is available under the statute. In fact the appellant had challenged the addition and disallowance made by the Assessing Officer on the merits before the Commissioner of Income-tax (Appeals). However, the Commissioner of Income-tax (Appeals) having entertained the additional ground regarding validity of the assessment order and upheld the same holding the assessment order to be non-existent in the eyes of law, there was no occasion for the assessee to file any cross-objection in the Revenue’s appeal before the Tribunal. The fact that the assessee had succeeded in entirety cannot be lost sight of and in the circumstances to expect the assessee to prefer cross-objection, may be an ideal situation, but if the said cross-objection was not preferred by the assessee, no fault can be found in the conduct of the assessee so as to disentitle the assessee from obtaining the decision on the merits.
15. Once the Tribunal had come to the conclusion that the assessment order had been signed by the Assessing Officer and is valid in the eyes of law, while reversing the order of the Commissioner of Income-tax (Appeals) on this count it was incumbent upon the Tribunal to restore the matter to the file of the Commissioner of Income-tax (Appeals). Possibly, the Tribunal lost sight of this fact due to absence of counsel of the assessee and the misunderstanding on behalf of counsel of the assessee in relation to the facts narrated in the miscellaneous application. Be that as it may.
16. In the light of the circumstances and facts which have come on record, it is apparent that for the purposes of adjudication on the merits of the controversy the matter requires to be restored to the file of the Commissioner of Income-tax (Appeals), as the Tribunal would also have to adopt the same course of action if the matter is restored to the file of the Tribunal. In the circumstances, without disturbing the finding recorded by the Tribunal as to the validity of the assessment order, the matter is restored to the file of the Commissioner of Income-tax (Appeals) so as to enable the Commissioner of Income-tax (Appeals) to decide the merits of the original grounds of appeal raised by the assessee before him.
17. Accordingly, the question is answered and it is held that the Tribunal ought to have restored the matter to the file of the Commissioner of Income-tax (Appeals) after having decided the preliminary issue against the assessee.
18. The appeal is allowed. There shall be no order as to costs.