TMI Blog2018 (12) TMI 1668X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of notice u/s. 148 on 16th January, 2013 which was served upon the assessee on 17.01.2013. In the case of Medapati Venkayamma vs. ITO [ 2017 (9) TMI 809 - ITAT VISAKHAPATNAM] we consider that the assessing officer has issued notice u/s 148 for reassessment during the pendency of assessment proceedings initiated by issuing of notice u/s 142(1) therefore, the assessment made u/s. 143(3) r.w.s. 147 was bad in law and cannot be sustained. Accordingly, assessment made u/s. 143(3) r.w.s. 147 by issuing of notice u/s. 148 is quashed. Since the assessment made u/s. 143(3) r.w.s. 147 has been quashed, therefore, there is no need to adjudicate the other grounds of the assessee on merit. - ITA No. 1280/Ahd/2016 Assessment Year 2011-12 - - - Dated:- 20-12-2018 - Shri Amarjit Singh, Accountant Member And Ms. Madhumita Roy, Judicial Member Revenue by: Shri Srinivas T. Bidari, D.R. Assessee by: Shri Ramesh Malpani, A.R. ORDER Amarjit Singh, This assessee s appeal for A.Y. 2011-12, arises from order of the CIT(A)- II, Surat dated 14-03-2016, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. During the course of appellate proceedings before ITAT, the assessee vide letter dated 26th March, 2018 has also applied for admitting additional ground of appeal which is reproduced as under:- (7) That on the facts and circumstances of the case as well as in law on the subject, the initiation of the proceedings u/s 147/148 of the Act in this case by issuing the notice u/s 148 on 16/01/2013 and consequent assessment order passed u/s 143(3) r.w.s. 147 of the Act are wrong, invalid and bad-in-law ab inito because the assessment proceeding initiated u/s 142(1) of the Act by Id. AO on 01/12/2011 was already pending on the date of issuance of notice u/s 148 of the Act and was not completed and consequently, as per settled law, the whole of the proceeding u/s 147/148 of the Act initiated during the pendency of the assessment proceedings u/s 142(1) r.w.s 143/144 of the Act is wrong, invalid and bad in law. Appellant prays for quashing the same. 4. However, During the course of appellate proceedings before us, ld. departmental representative has objected to the additional ground of appeal filed by the assessee. The objection of the ld. departmental representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alasi Anr. v. The State of Guiarat Ors., 2007 (5) SCALE 357] A person who has a grievance against a State, a forum must be provided for redressal thereof. [See Hatton and Others Vs. United Kingdom 15 BHRC 259. For reference see also Zee Telefilms Ltd, v. Union of India, (2005) 4 SCC 649] The court's jurisdiction to determine the is between the parties, therefore, may be viewed from the human rights concept of access to justice. The same, however, would not mean that the court will have no jurisdiction to deny equitable relief when the complainant does not approach the court with a pair of clean hands but to what extent such relief should be denied is the question. It is trite law that so as to enable the court to refuse to exercise its discretionary jurisdiction suppression must be of material fact. What would be a material fact, suppression whereof would disentitle the appellant to obtain a discretionary relief, would depend upon the facts and circumstances of each case. Material fact would mean material for the purpose of determination of the logical corollary whereof would be that whether the same was material for grant or denial of the relief. If the fact suppr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to point out that the assessee while taking the additional grounds has to show as to why such grounds was not taken while filling the appeal before the Hon'ble ITAT. The additional ground can be admitted only under compelling circumstance and on showing that the facts and circumstance have been changed after filing of the original appeal. In this regard reliance is also placed on the following decision: 3.1. While admitting additional grounds, the Tribunal must first record the reason for admitting the groundsand cannot say that the reasons would be incorporated in its final order. Powers of the Tribunal referable to Rule 11 of Appellate Tribunal Rules are judicial in nature and carmot be exercised in an arbitrary manner at the pleasure of the Tribunal. Whether the permission should be given or not would depend basically on the facts of each case. That is why the reasons are necessary to be recorded. Reason is the soul of law - Maruti Udyog Ltd., V. ITAT (2000) 244 ITR 303 (Delhi). 3.2. As held by the Madras High Court in 40 ITR 377, the Tribunal has no power to enlarge the scope of the appeal before it by permitting to urge new \ grounds which would have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Alladin (1993) 204 ITR 166,203 (AP) the court held that the jurisdiction of the Tribunal is necessarily restricted to the subject matter of the dispute before the first appellate authority and the tribunal cannot allow the assessee or the Dept to dispute new terms or entertain new claims for decision for the first time. 3.10. In Indian Steel Wire Products Ltd, Vs, CIT (1994) 208 ITR 740,747(Cal) the court held that the Tribunal can decide only issues which were the subject matter of appeal before the first appellate authority.An additional plea which altogether changes the complexion of the case as. originally brought before the first appellate authority and the Tribunal in second appeal cannot be permitted to be raised at the stage of hearing of the Tribunal appeal. 3.11. In the case of Ugar Sugar Works Ltd. Vs, CIT (1983)141 ITR 326,334 (Bom) the court held that the assessee once having accepted the finding of the AO by not having appealed against the same to the first appellate authority the assessee's grievance, if any, against the sand finding of the AO cannot form the subject matter of an appeal before the Tribunal so as to give it jurisdiction in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional ground of appeal has been admitted Vide interim order dated 12th Nov, 2018 ITAT has admitted the additional ground filed by the assessee. Relevant part of the finding of ITAT is reproduced as under:- 12-11-2018 Present : Shri Prasantji Singh, CIT-DR Shri Rameshkumar Malpani, AR Assessee moved an application pleading therein that it be permitted to raise additional grounds of appeal. It is contended in the application that in this case, Directorate of Revenue Intelligence ( DRI ) conducted a search. Consequent upon the search, the AO had issued notice under section 142(1) on 1.12.2011 directing the assessee to file his return of income by 9.12.2011. In response to this notice, the assessee contended that his books of accounts and records were seized by the DRI, and therefore, practically not possible to file his return. He would do so as and when copies of books of accounts and other records would be provided by the DRI. The Id.AO thereafter did not pursue proceedings consequent upon the issue of notice under section 142(1), but issued a notice under section 148 on 16.1.2013. By way of present application, it is submitted that the AO cannot is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in permitting the assessee to raise the following ground of appeal: 7. That on the facts and circumstances of the case as well as in law on the subject, the initiation of the proceedings u/s.147/148 of the Act in this case by issuing the notice u/s.148 on 16/01/2013 and consequent assessment order passed under section 143(3) r.w.s. 147 of the Act are wrong, invalid and bad in law ab initio because the assessment proceedings initiated u/s.l42(l) of the Act by Id.AO on 01/12/2011 was already pending on the date of issuance of notice u/s.148 of the Act and was not completed and consequently, as per settled law, the whole of the proceedings u/s.147/148 of the Act initiated during the pendency of the assessment proceedings u/s.142(1) r.w.s. 143/144 of the Act is wrong, invalid and bad in law. Appellant prays for quashing the same. 5. The case now stands listed for 19th November, 2018 for remaining arguments. Meanwhile, the Id. ClT-DR will call for report, if so desire. Copy of this order be given to both the parties. Sd/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Description Ann-exure Total Quantity imported (in kgs.) Declared Assessable Value (in Rs.) Redetermined Assessable Value (in Rs.) Suppressed Value (in Rs.) Differential duty payable (in Rs.) Seized consignments at various CFS at JNPT, Nhava A 162468.00 9361072 18067663 8706591 2337606 Seized consignments at Kirn A/1 22040.00 1249365 2148908 899543 244835 Past consignments already cleared B 2366179.70 141554566 263122216 121567650 33070945 Total 2550687.70 152165003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of price. The differential amount over and above the trade value were transmitted by you to the overseas supplier through illegal channels. It was found that you have presented manipulated import documents before the Custom authorities at Nhava Seva Port at the time of import of impugned goods. The DRI has recorded your statement during the course of search. Your books of accounts and other incriminated documents were impounded from your business premises. After investigation, the impounded material, the DRI had issued a show cause notice vide DRI F No.DRI/AZU/INV-24/2010 dated 7.2.2011. As per the abstracts given by the DRI, it was found that during F.Y.2010-11, you have undervalued the import of polyester films to the tune of ₹ 13,11,73,783/-. This amount of ₹ 13,11,73,783/- was transmitted by you to the Overseas supplier through illegal channel and the same has not been recorded in your regular books of accounts. During the course of assessment proceedings also, you have not given any explanation or filed any ROI regarding your business activities. Therefore, it is presumed that amount of ₹ 13,11,73,783/- has been paid to the overseas supplier is out of bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmit as Under 1) Sir, you have mentioned that during the course of search of DRI at my premises on 10/08/2010 it was found that I had imported the goods by resorting to undervaluation of price and transmitted the differential (undervalued) amount to the overseas supplier through illegal channels. It is further mentioned by your honour that as per the show cause notice (SON) issued by the DRI the amount of such undervaluation was ₹ 13,11,73,783/-. Your honour has asked me to show cause as to why the above sum should not be added as unexplained expenditure u/s 69C of the Act In this context I humbly beg to submit that no incriminating material was found by the DRI at my place in their search. There was no finding of any such undervaluation at my place. Whole of the case of DRI is based on the incriminating materials found at the place of and emails of Mr. Jayesh Mamrawala of M/s. Joule International who was engaged in the business of imports. Investigations carried out by the DRI also pertained to Mr. Jayesh Mamrawala. Nothing wrong done by me was found. These facts are very much evident from the SON of the DRI. Thus, whole of the case of DRI is based on the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce of payment of differential purchase amount.stands explained. Hence, even if a view is taken that the above mentioned undervaluation or any part thereof pertained to me then also the source of the same is explained i.e. corresponding differential sales realization and therefore this cannot be said to be unexplained expenditure. At the most this can be said to be the case of unaccounted turnover of purchases and sales during the year. Such purchases cannot be said to be unexplained expenditure as the source of the same is unaccounted turnover. Thus, there is no case of unexplained expenditure. At the most this can be said to be case of unaccounted turnover. My contention in this Para is without prejudice to my main contention in Para '1' herein above that nothing wrong was done by me. 3) In the show cause, your honour had estimated sales and net profit of my proprietorship concern. While estimating the sales, your honour has included the undervaluation of purchases (imports) of ₹ 13,11,73,783/~ as per SCN of DRI. In this context I re-iterate my submission in Para 1 herein above and pray that the same must not be included while estimating my sale. As regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal ground of appeal that assessment order u/s. 143(3) r.w.s. 147 of the act was wrong, invalid and bad in law because the assessment proceedings initiated u/s. 142(1) of the act on 1st December, 2011 was already pending on the date of issuance of notice u/s. 148 of the act . He has vehemently contended that the whole of the proceedings u/s. 147/148 initiated during the pendency of the assessment proceedings u/s. 142(1) r.w.s. 143/144 of the act was wrong, invalid and bad in law therefore the same should be quashed. On the other hand, ld. departmental representative placed reliance on the order of ld. CIT (A). Ld. counsel has also placed reliance on the following decisions:- (i) ITA No. 713/Ahd/2011 dated 25-11-2014 M/s. Drona Jiger Enterprises P. Ltd. vs. ITO (ITAT Ahmedabad Benches, Ahmedabad) (ii) ITA No. 252/Vizag/2013 dated 18-08-2017 Medapati Venkayamma vs. ITO (ITAT Vishakhapatnam Benches, Vishakhapatnam ) (iii) (2017) 79 taxmann.com 337 (Gujarat) dated 19th July, 2016 CIT-IV vs. Babulal K. Daga 10. We have heard both the sides and perused the material on record carefully. At the outset, we are considering the additional ground filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . For ready reference, we extract relevant provisions of section 142(1) and 144 of I.T. Act. Section 142(1) reads as under : Inquiry before assessment. 142. (1) For the purpose of making an assessment under this Act, the 82[Assessing] Officer may serve on any person who has made a return 83[under section 115WD or section 139 84[or in whose case the time allowed under sub-section (1) of section 139] for furnishing the return has expired] a notice requiring him, on a date to be therein specified,-- [(i) where such person has not made a return 86[within the time allowed under sub-section (1) of section 139] 87[or before the end of the relevant assessment year], to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner88 and setting forth such other particulars as may be prescribed, or :] Notice u/s 142(1) is issued in case of non filer calling for the return of income. In the instant case, the AO has issued the notice calling for return of income. Section 144 Best judgment assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of I.T.Act and reopening of the assessment. 5.3. The procedure for reassessment is also enshrined in section 147, 148 and 143 of I.T.Act. Where the assessee is having taxable income but not filed the return of income, the assessing officer is empowered to issue notice u/s 148 after recording the reasons. Similarly, where the assessee has furnished return of income, but the assessing officer has a reason to believe that income chargeable to tax has escaped assessment, after recording the reasons, the assessing officer has to take action u/s 148 and issue notice u/s 148. In both the instances, notice u/s 148 is issued calling for the return of income from the assessee within a specified period. For ready reference, we extract the relevant provisions of I.T.Act. [Issue of notice where income has escaped assessment. 148. 62[(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve63 on the assessee a notice requiring him to furnish within such period, 64[* * *] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s u/s 143(3)/144 should be completed within the period of limitation allowed to the assessing officer i.e 31.03.2011 and the assessing officer allowed to get the assessment barred by limitation and passed the assessment order u/s 143 on 29.12.2011 which was barred by limitation. Therefore, the assessment passed u/s 143(3) on 29.12.2011 barred by limitation and the same is annulled. 5.5. The assessing officer issued notice u/s 148 for reassessment, during the pendency of assessment proceedings by issue of notice u/s 148 which is bad in law and cannot be sustained as per the detailed discussion made in the earlier paragraphs of this order. Accordingly, the notice issued u/s 148 is quashed. We consider that on identical issue vide the above cited order of the ITAT Visakhapatnam Bench, the notice u/s. 148 was quashed. In the case of the assessee, it is noticed that the assessee has not filed return of income therefore the assessing officer issued a notice u/s. 142(1) of the act on 01-12-2011 asking the assessee to file the return of income on or before 09-12-2011. The copy of the aforesaid notice issued u/s. 142(1) is reproduced as under:- NOTICE UNDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income for assessment year 2011-12. It is observed that when the assessment proceedings are already initiated by issuing of notice u/s. 142(1) and called for the return of income, no notice u/s. 148 is to be issued and the assessment is required to be completed within the time limit allowed u/s. 143(3) or 144. In this case, the assessment year involved is assessment year 2011-12 and the time limit for completion of assessment already initiated by issuing of notice u/s. 142(1) is 31-03-2014, therefore, issuing of notice u/s. 148 of the act during the pendency of assessment proceedings on 16-01-2013 is bad in law and invalid. The existence of this fact is very clearly demonstrated from the findings of the assessing officer mentioned in his order passed u/s. 143(3) r.w.s 147 of the act on 27th March, that a notice u/s. 142(1) of the act was issued to the assessee on 1st December, 2011 and asked the assessee to file return of income for the assessment year 2011-12 by 9th December, 2011 and in response to the notice u/s. 142(2) of the act the assessee has not filed return of income therefore the assessing officer should have completed the assessment on or before 31st March, 2014 ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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