TMI Blog2020 (9) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... reassess his further action of a new fact finding in the absence of any item specified in the reasons recorded which is the foundation on which he reopens when no longer subsists, the AO's action is hit being 'Quarum non-judice' and, therefore, the impugned addition is non-est in the eyes of law and so it has to necessarily go. Therefore, the appeal of the Revenue is devoid of any merits - Decided in favour of assessee. - I.T.A. No. 2143/Kol/2019 I.T.A. No. 2144/Kol/2019 - - - Dated:- 14-8-2020 - SHRI P. M. JAGTAP , HON'BLE VICE PRESIDENT ( KZ ) And SHRI S. S. GODARA , HON'BLE JUDICIAL MEMBER Shri Ram Bilash Meena , CIT , DR appearing on behalf of the Revenue Nilima Joshi , FCA appearing on behalf of the Assessee ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) These two appeals are preferred by the Revenue against a common order dated 24.07.2019 passed by the Ld. CIT(A) - 21, Kolkata in the case of Shri Harsh Vardhan Neotia and Smt. Madhu Neotia and the same have been heard together and are being disposed of by a single consolidated order. 2. Both the assessees in the present case are individuals who filed their returns of income for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O on the basis of information received by him regarding the bank accounts allegedly maintained by both the assessees with HSBC Bank, Switzerland, but finally no addition was made by him to the total income of the assessees on the said issue in the assessments completed u/s 147/143(3) of the Act wherein additions were made on altogether different issues such as capital gain etc. which did not form the basis of reopening of assessments. It was contended that since no addition was made by the AO to the total income of the assessees on the issue which had formed the basis of reopening, it was not permissible for him to make additions on other issues which were not the basis of the reopening of assessments. Reliance in support of this contention was placed on behalf of the assessees on the decision of Hon'ble Rajasthan High Court in the case of Shri Ram Singh 306 ITR 346 and the decision of Hon'ble Punjab Haryana High Court in the case of Atlas Cycle Industries 180 ITR 319. The assessee also relied on the decision of Kolkata Bench of ITAT in the case of Dipti Mehta vs ITO (ITA No. 2032/Kol/2018 dated 01.03.2019) to contend that this legal position propounded in the various jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 122 123/Kol/2017 wherein a similar issue was involved and the same was decided by the Tribunal in favour of the assessee after taking into consideration various judicial pronouncements including the decision of Hon'ble Calcutta High Court in the case of M/s. Infinity Infotech Parks Ltd. vide paragraph No. 9 to 11 of its order which read as under: 9. It should be kept in mind that the concept of assessment is governed by the time barring rule and the assessee acquires a right as to the finality of proceedings. Queitus of the completed assessment is the Fundamental Rule and exception to this rule is Re-opening of assessment by AO under section 147 or exercise of Revisional jurisdiction by CIT under section 263 of the Act. Therefore, the Parliament in its wisdom has provided safeguards for exercise of the reopening of assessment jurisdiction to AO; and revisional jurisdiction of CIT by providing condition precedent which is sine qua non for assumption/usurpation of jurisdiction. In the case of reopening of assessment, the reason to believe escapement of income is the jurisdictional fact and law (mixed question of fact and law) and for revisional jurisdiction the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason recorded, when the fact is that the precise basis (issue) recorded in reasons to believe escapement of income has disappeared or dropped. For that it has to be seen as to whether the AO on the basis of whatever material before him, [which he had indicated in his reasons recorded ] the AO had reasons warrant holding a belief that income chargeable to tax has escaped assessment. It is important to remember that the reasons recorded by AO to reopen has to be evaluated on a stand-alone basis and no addition/extrapolation can be made or assumed, while adjudicating the legal issue of AO's usurpation of jurisdiction u/s. 147 of the Act. Moreover, the Parliament has given power to AO to reopen the assessment, if the condition precedent as discussed above is satisfied, and not otherwise. It has to be kept in mind that the jurisdictional fact and law is the 'income' which according to AO, escaped assessment, which he has to spell out while recording reasons for reopening u/s. 147 of the Act. This income which has escaped assessment and which according to him, constituted the basis/foundation for reopening is precisely the jurisdictional fact and law which empowered him t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on an issue which he did not refer at all in the reasons recorded to justify re-opening. The Explanation (3) to Sec. 147 of the Act, will come to the aid of the AO/department only when the AO has successfully usurped/assumed the reopening jurisdiction on the strength of the reasons recorded by him to re-open the assessment. So without successfully satisfying the condition precedent to reopen i.e. reason to believe escapement of income, which can be discerned from reading of the reasons recorded by the AO that too on a stand alone basis, the AO cannot proceed to make any other additions without making any additions on the facts specifically stated in the reasons recorded for which he decided to reopen. We would like to make it clear that in this case when the AO realized that the reason for re-opening i.e, suppression of iron ore production is non-existing, then the AO should have first dropped this reassessment; and thereafter ought to have recorded reasons indicating escapement of income on account of misuse of client code modification and issued fresh notice u/s 148 of the Act and initiated reassessment for the same. We note that the Hon'ble Bombay High Court in Jet Airways ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pening conveyed to the assessee vide letter dated 19.03.2015 no addition in respect of this can be made without making any addition in respect to the item shown to have been escaped assessment in the reasons recorded by ibid letter dated 19.03.2015. During reassessment when the AO finds that the item on the basis of which he reopened does not survive, then the reasons recorded to reopen loses its significance and the fall out is that the AO's jurisdiction to reassess is without jurisdiction and therefore is illegal and fragile in the eyes of law; and thereafter he should have dropped the reassessment proceeding there only as discussed supra. Therefore, after having no jurisdiction to reassess his further action of a new fact finding in the absence of any item specified in the reasons recorded which is the foundation on which he reopens when no longer subsists, the AO's action is hit being 'Quarum non-judice' and, therefore, the impugned addition is non-est in the eyes of law and so it has to necessarily go. Therefore, the appeal of the Revenue is devoid of any merits and, we find that the legal issue has been rightly decided in favour of the assessee and the action ..... X X X X Extracts X X X X X X X X Extracts X X X X
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