TMI Blog2021 (6) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act on 29/08/2018, is bad in law. On merits, we find that the Assessing Officer has issued notice u/s 133(6) of the Act to NMCE and that NMCE has confirmed all the transactions. The assessee has filed voluminous evidence and confirmations. These evidences, were not controverted by the Assessing Officer. - Decided in favour of assessee. - ITA No. 1622/Kol/2019 (Assessment Year: 2011-12) - - - Dated:- 24-2-2021 - Sri J. Sudhakar Reddy, Hon ble Accountant Member And Sri Aby T. Varkey, Hon ble Judicial Member Shri Miraj D. Shah, A/R, Advocate, appeared on behalf of the assessee. Shri Dhrubajyoti Ray, JCIT, D/R, appearing on behalf of the Revenue. ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals)-10, Kolkata, (hereinafter the ld. CIT(A) ), passed u/s. 250 of the Income Tax Act, 1961 (the Act ), dt. 30/05/2019, for the Assessment Year 2011-12. 2. The assessee is a HUF and is in the business of commodity transaction and other sources. He filed its return of income originally u/s 139 of the Act. Notice for reopening of this assessment was issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that all the judgments on this issue were considered and applied in this case by the Kolkata Bench of the ITAT. 5. On merits, he submitted that, the assessee has conducted all the transactions in question on the NMCE platform. He pointed out that the Assessing Officer had written to the authorities in NMCE by issuing notice u/s 133(6) of the Act and that the NMCE had confirmed all the transactions. Thus, he submits that the Assessing Officer has no material whatsoever to come to the conclusion that loss in question cannot be allowed. He filed a paper book containing copies of contract notes from 1) M/s. Prognosis Commodities Pvt. Ltd., 2) M/s. Bhootnath Commodities Pvt. Ltd., and 3) M/s. Goenka Capital Market Services Ltd. of ledger accounts, bills etc., and submitted that this is a case where the Assessing Officer has not conducted any enquiry on his own or verified the evidences/documents filed and has only relied on general observations made by the Investigation Wing of the Department and made the disallowance. He prayed for relief. 6. The ld. D/R, on the other hand, submitted that it is true that no addition was made by the Assessing Officer on the profit earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this rule is Reopening 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 of the AO should be erroneous as well as prejudicial to the revenue. Unless the condition precedent is not satisfied, the AO or the CIT can exercise their reopening jurisdiction or revisional jurisdiction respectively. The legislative history in respect to the reopening u/s. 147 of the Act, is that the Parliament by Direct Tax Laws (Amendment) Act 1987 w.e.f. 01.04.1989 had substituted for reason to believe escapement of income to 'for reasons to be recorded by him in writing, is of the opinion'' which gave unbridled subjective satisfaction to the AO was later substituted back to 'r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 to usurp the jurisdiction to reopen and reassess the escaped income as contemplated u/s. 147 of the Act. We note that in the present case in hand notice u/s. 148 for reopening was issued on 17.02.2015 and the reasons recorded for reopening the assessment was that the assessee has suppressed the actual production of iron ore to the tune of 8,78,079 MT valued at ₹ 1,79,41,61,259/- thereby escapement of income happened and for which precise reason recorded AO invoked the reopening jurisdiction after the assessment was framed u/s. 153A/143(3) of the Act on 28.04.2014 (supra). However, we note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking 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 (I) Ltd. (supra) have discussed all the case laws on the issue and considered various Hon'ble High courts decisions. However, we note that the Hon'ble Punjab Haryana High court in Majinder Singh Kang (supra) has not delved into the ratio decidendi laid by the Hon'ble Bombay High Court decision in Jet Airways (I) ltd. (supra). The Hon'ble Punjab Haryana High court in the case of CIT Vs. Mehak Finvest (P) Ltd. (supra) has followed the Division bench order in Majinder Sing Kang (supra) since it was binding on the same High Court and taking into consideration that the SLP against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eassessment 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 of the Ld. CIT(A) is upheld. Since we have decided the legal issue, the merits of the case have become academic in nature and needs no adjudication. (Emphasis ours) 9. Applying the propositions of law laid down by the Hon ble Jurisdictional High Court, to the facts of this case, we have to necessarily hold that the Assessing Officer cannot make additions on issues which had not formed the basis of reopening of assessment, when no additions has been made in the assessment order passed u/s 147 r.w.s. 143(3) of the Act on the issue, based on which the reasons were recorded and assessment r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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