TMI Blog2018 (9) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance made by the Assessing Officer. - ITA Nos. 811 & 812/Lkw/2017 - - - Dated:- 24-8-2018 - Shri T. S. Kapoor, Accountant Member And Shri Partha Sarathi Chaudhury, Judicial Member Appellant by : Shri Ashish Jaiswal, Advocate Respondent by : Shri R. K. Vishwakarma, DR ORDER Per T. S. Kapoor, A. M. These are two appeals filed by the assessee against the separate orders of CIT(A) both dated 18/08/2017. These appeals were heard together and therefore, for the sake of convenience, a common and consolidated order is being passed. 2. The grounds of appeal taken by the assessee in I.T.A. No.811 812/Lkw/2017 are reproduced below: 1 THAT THE ASSESSING OFFICER HAS ERRED IN REOPENING THE ASSESSMENT BASED UPON THE DIRECTION OF LEARNED CIT (APPEALS) IN THE ASSESSMENT YEAR 2004-05. 2 THAT THE ASSESSING OFFICER HAS ERRED IN REOPENING THE ASSESSMENT PROCEEDING BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT WHICH IS BARRED BY LIMITATION. 3 THAT THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF ₹ 1,56,660.00 UNDER SECTION 68 OF THE ACT MADE BY ASSESSING OFFICER. 4 THAT THE LEAREND CIT (APPEALS) HAS ERRED IN NOT PROVIDING PRO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. 4. The Learned D. R. on the other hand submitted that the Assessing Officer had taken the action, on the basis of a direction by Learned CIT(A) and within one year of the direction the assessment was reopened. 5. Arguing the appeal in ITA No.812/Lkw/2017, the Learned A.R. submitted that the Assessing Officer has made ad-hoc disallowance equivalent 30% of sale promotion expenses, which is arbitrary and quite high, specifically, keeping in view, the fact that assessee had submitted books of account and had provided bills and vouchers. It was submitted that the Assessing Officer without pointing out any mistake in any vouchers or bills and without rejecting books of account has made ad-hoc disallowance, which was not warranted. The Learned A.R. further submitted that the expenses incurred during the year consideration were lower as compared to preceding year and therefore, the Assessing Officer should not have made the disallowance. 6. The Learned D.R. on the other hand heavily placed reliance on the order of the authorities below and submitted that before Ld. CIT(A) assessee had not submitted any books of account or vouchers despite specific direction. 7. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. In this case, according to the Ld. counsel, the order of the Tribunal was passed on 31.05.2010. The period of limitation for completing the assessment oil the reassessment is two years from the end of the assessment year in which the income was first assessable. The income was first assessable in the assessment year 2001-02. Therefore, at the best, the assessment order can be passed on or before 31.03.2005. The Assessing Officer passed the initial assessment order, after reopening under Section 147 of the Act, on 30.03.2006. The assessment was reopened for the second time under Section 150 of the Act, consequent to the order of this Tribunal for assessment years 2003-04 and 2004-05 dated 30.05.2010. Referring to the judgment of the Apex Court in CIT v. Greenworld Corporation [2009] 314 ITR 81/181 Taxman 111, the Ld. Counsel submitted that no notice under Section 148 should be issued since four years have elapsed from the end of the relevant assessment year. At the best, Assessing Officer can issue notice under Section 148 within a period of six years in case the income assessable to tax exceeded ₹ 1 lakh or more. ln this case, even the six-year period expired on 31.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of the property to the builder on the same day. Therefore, this Tribunal found that the capital gain cannot be taxed in the assessment years 2003-04 and 2004-05 since the transfer, took placed in the assessment year 2001-02. On the basis of this observation, the Assessing Officer reopened the assessment under Section 150(1) r.w.s. 147 of the Act. Therefore, according to the Ld. D.R., there was a clear observation by this Tribunal that capital gain r as to be assessed in the assessment year 2001-02. Referring to the order of the CIT (Appeals), the Ld. D.R. pointed out that the CIT (Appeals), by placing reliance on the judgment of Karnataka High Courting. CIT v. Spences Hotel (P.) Ltd. [2007] 289 ITR 145/160 Taxman 360. found that notice issued for assessment year 1976-77 on 17.11.1998, on the basis of the finding of the Tribunal for the assessment year 1980-81, was found to be in order. The Ld. D.R. submitted that the CIT (Appeals) also referred to the judgment of Andhra Pradesh High Court in B.A.R. Abdul Rakman Saheb v. 7TO|[1975] 100 ITR 541 and submitted that sub-section (3) of Section 153 wipes the limitation provided in Section 153(1) and 153(2) of the Act. Referrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or recomputation could not have been made at the time the order which was the subject-matter of me appeal, reference or revision, as the case may be, was made by reason assessment, reassessment or recomputation may be taken. 10. In view of Section 150(2) the provisions of sub-section (1) of Section 150 of the Act is not applicable in respect of1 the assessment year in which the assessment, reassessment or re-computation could not have been made at the time the order, which was subject matter of the appeal, was passed by reason of any other provisions limiting the tune within which the action for reassessment or re-computation should be taken. In the case before us, Section 149 of the Act provides maximum of six years from the end of the relevant assessment year, in case the income chargeable to tax exceeds ₹ 1 lakh. The relevant assessment year is 2001-02 and the six years period from the end of the relevant assessment year expired on 31.03.2008, Therefore, the limitation for reopening under Section 147 of the Act expired on 31.03.2008 when the Tribunal passed the order on 31.05.2010. Therefore, this Tribunal is of the considered opinion that the Assessing Officer canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its application to assessments sought to be reopened on the basis of orders under the Income-tax Act and other assessments proposed to be reopened on the basis of orders under any other law. The interpretation, which creates such unjust and discriminatory situation, las to be avoided. We do not find that sub-section (2) of section 150 has that result. Sub- section (2) intends to insulate all proceedings of assessments, which have attained finality due to the then existing bar of limitation. To achieve the desired result it was not necessary to make any amendment in sub-section (2) corresponding to sub- section (1), as is the Reasoning adopted by the High Court. Sub-section (2) aims at putting an embargo on reopening assessments, which have attained finality on the expiry of the prescribed period of limitation. Sub-section (2) hi putting such embargo refers to the whole of sub-section (1) meaning thereby to insulate all assessments, which have become final and may have beer, found liable to reassessments or recomputation either on the basis of orders in proceedings under the Act or orders 9f courts passed under any other law. The High Court, therefore, was in error in not read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments in the respective accounting years added. The assessee challenged the action of the Assessing Officer on the ground that the notice issued on 20.03.1969 for reopening Assessments for assessment years 1957-58 and 1958-59 were time barred and bad in law. The Andhra Pradesh High Court found that Explanation 2 to Section 153 of the Act provides for taking steps under Section 147 to assess lie income of another year without any limitation prescribed by Section 149 as regards the issue of notice under Section 148 of the Act. The Andhra Pradesh High Court had also 10 occasion to consider the subsequent judgment of Apex Court in KM Sharma (supra). 14. We have also gone through the judgment of Allahabad High Court in Ashwani Dhingra v. Chief CIT [2005] 276 ITR 98 [2004] 141 Taxman 651. In the case before Allahabad High Court, the assessee land was acquired by the Government of Punjab on 20.08.1973 under the Land Acquisition Act, 1984. The compensation was awarded on 12.09.1990 and 29.05.1993 by the orders of Punjab Haryana High Court. Interest was also paid on 21.08.2001 from the date of taking over the possession of the land. Subsequently, the assessee shifted to Noida in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, this Tribunal is of the considered opinion that the judgment of Allahabad High Court in Ashwani Dhingra (supra), the judgment of Karnataka High Court in Spences Hotel (P.) Ltd. (supra) and the judgment of Andhra Pradesh High Court in B.A.R. Abdul Rahman Saheb (supra) would not be applicable to the facts of the case. 17. We have also carefully gone through the judgment of the Apex Court in Greenworld Corpn. (supra). After referring to Section 150 of the Act, the Apex Court observed that if no proceedings before the authority or if the (assessment year hi question is not a subject matter which would fall for consideration, Section 150 of the Act will have no application. In fact, the Apex Court has observed as follows at para 60 to 67 of its judgment:-- '60. The aforementioned provision although appears to be of a very wide amplitude, but would not in terms of sections 147 and 148 of the Act can a proceeding can be initiated only within the period of limitation prescribed therefore as contained in section 149 of the Act. 61. Section 150(1) of the Act is an exception to the aforementioned provision. It brings within its ambit only such cases where reopening o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the proviso takes in its the disposal of the appeal broad sweep any finding given by the appropriate authority necessary for or the revision, as the case may be, and to any direction given by the said authority to effectuate its finding and that the said finding or direction may be in respect of any year or any person. As (the phraseology used in the proviso is not clear or unambiguous, the question raised cannot be satisfactorily resolved without having a precise appreciation of a brief history of section 34 of the Act culminating in the enactment of the proviso in the present form. 63. This court noticed the development of law as also the fact that the decision of the Income-tax Officer given in a, particular year does not operate as resjudicata to opine (page 343): The lifting of the ban was only to give effect to the orders that may be made by the appellate, revisional or reviewing tribunal within the scope of its jurisdiction. If the intention was to remove the period of limitation in respect of any assessment against any person, the proviso would not have been added as a proviso to sub-section (3) of section 34, which deals with completion of an assessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han the assessee, is invalid as it infringes the provisions of article 14 of the Constitution. That, however, is a question apart. What we have to consider is t le legislative intent, and for ascertaining it, it is legitimate to look also at that part of the enactment which has been held to be invalid. 67. To the similar effect are the decisions of this court in N.Kt Sivalingam Chettiar v. CIT [19671 ITR 14 (SC). In the case before us, the Tribunal has not examined the records for the assessment year under consideration. Moreover, no (proceeding was before, the Tribunal for the year under consideration. Therefore, as held by the Apex Court, Section 150) of the Act is not applicable for the year under consideration. In other words!, the observation mad$ toy the Tribunal in the order dated 31,05.2010 cannot be considered either as finding or direction . 18. We find that the Andhra Pradesh High Court in CIT v. G. Viswanadham [1988] 172 ITR 401/38 Taxman 142 considered an identical issue and observed as follows at pages 408 409 of ITR:- A reading of these Explanations clearly shows that they merely illustrate and clarify the meaning of the words in consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 to asses it as the income of another year, without any limitation prescribed under section 149 as regard the issue of notice under section 148 or as to the completion of the assessment or reassessment prescribed by section 153. The Bench read subsection (2) of section 150 as providing that the provisions of sub-section (1) thereof will not apply to a case of assessment, reassessment or recomputation of income, if it related to an assessment year in respect of which assessment, reassessment, etc., could not have been made at the time when the order, which was the subject- matter of appeal, reference or revision, was made, by reason of the time limits fixed under section 153 for making the assessment, reassessment, etc. (vide paragraph 2 at page 545). It would immediately be seen that sub- section (2) of section 150 does not refer to section 153. It only refers to any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken . The word taken refers only to initiation of proceedings and not to completion. Similarly, at page 547, the Bench observed: the effect of section 150 and this sub-section (section 153(3)) read w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the provisions of Section 149 of the Act. Therefore, we accept the contentions of the Learned A.R. and following the above judicial precedent allow the appeal of the assessee. Accordingly, appeal in ITA No.811/Lkw/2017 is allowed. 10. As regards, appeal in ITA No.812/Lkw/2017, we find that the Assessing Officer has passed the order u/s 143(3) of the Act without rejection of books of account and assessee during the course of assessment proceeding has produced the books of account including bills and vouchers and this fact has been noted by the Assessing Officer in his order itself. He simply disallowed 30% of the expenses under the head sales promotion to safeguard the leakage of Revenue. In his order, he did not point out any infirmity or defect in the books of account or vouchers. The Learned CIT(A), on the other hand has held that the assessee did not produce books of account and vouchers for re-verification and re-estimation of the disallowance. The Learned CIT(A) could have examined the assessment record, wherein the assessee has filed complete details of vouchers to verify the genuineness of expenses and simply by holding that the assessee did not produce the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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