TMI Blog2022 (6) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... o reckon the limitation and accordingly passing the order on 21.03.2021 u/s. 263(2) of the Act is clearly barred by limitation which is beyond two years. Therefore, we set aside the order passed by the Ld. PCIT in question. Accordingly, we decide this issue in favour of the assessee against the revenue. - I.T.A. No. 884/Mum/2021 - - - Dated:- 26-4-2022 - SHRI AMARJIT SINGH , JM AND SHRI S. RIFAUR RAHMAN , AM For the Appellant : Arati Aggarwal For the Respondents : T. Shankar , Sr. AR ORDER Per Amarjit Singh , JM The assessee has filed the present appeal against the order dated 27.03.2021 passed by the Principal Commissioner of Income Tax-17, Mumbai [hereinafter referred to as the PCIT ] relevant to the A.Y. 2010-11 in which the Principal Commissioner of Income Tax-17 has invoked the provisions u/s. 263 of the I.T. Act, 1961. 2. The assessee has raised the following grounds of appeal:- 1. That in the facts and circumstances of the case and in law, the Ld. Principal CIT has erred in passing the impugned order u/s. 263 without affording reasonable opportunity of hearing and in complete violation of the principles of natural justice, hence, the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by limitation in view of the provision u/s. 263(2) of the Act. In the instant case, the assessment was completed on 21.03.2013 u/s. 143(3) of the Act assessing the total income to the tune of Rs. 2,11,60,540/-. It is stated that the subsequent survey u/s. 133A was conducted by Investigation Wing and the case was re-assessed u/s. 143(3) r.w.s. 147 of the Act dated 22.12.2017. It is also argued that the passing order on 27.03.2021, is clearly barred by limitation in the provision u/s. 263(2) of the Act. In support of this contention, the Ld. Representative of the assessee has placed reliance upon the decision Hon'ble Bombay High Court in the case of Ashoka Buildcon Ltd. Vs. ACIT and Western India Turf Club Vs. PCIT-8. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. The factual position is not in dispute. The original assessment was completed on 21.03.2021 u/s. 143(3) of the Act. However, the case of the assessee was again reopened and the assessment u/s. 143(3) r.w.s. 147 of the Act was completed 22.12.2017. No doubt, original assessment order is liable to be considered to reckon the limitation and accordingly passing the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted, if at all any enquiry into the issues raised by learned PCIT was required, it had to be done at the time of the original assessment proceedings and not during the reassessment proceedings. Thus, he submitted, there being no error in the assessment order passed under section 143(3) r.w.s. 147 of the Act, proceeding under section 263 of the Act would not lie. He submitted, since the learned PCIT could not have revised original assessment order passed under section 143(3) of the Act due to bar of limitation, she has proceeded to revise the reassessment order. Thus, he submitted, the impugned order of learned PCIT is barred by limitation as provided under section 263(2) of the Act. In support of such contention, learned counsel relied upon the following decisions:- 1. CIT Vs. Alagendran Finance Ltd., [2007] 293 ITR 1 (SC). 2. Ashoka Buildcon Ltd. Vs. ACIT, [2010] 325 ITR 574 (Bom.) 3. CIT Vs. ICICI Bank Ltd., [2012] 343 ITR 74 (Bom.) 4. Indira Industries Vs. PCIT, [2018] 95 TAXMANN.COM 103 (Mad.) 5. CIT Vs. Lark Chemicals Ltd., [2014] 368 ITR 655 (Bom.) 6. CIT Vs. Bharti Airtel Ltd., [2013] 37 taxmann.com 218 (Del.) 7. CIT Vs. Shriram Engg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of assessing the amount of Rs. 2,00,50,000/-. That being the case, it is necessary to examine whether the assessing officer in the re-assessment proceedings could have gone into the aspects raised by learned PCIT. 9. A reading of section 147 of the Act makes it clear that the assessing officer, in course of proceedings under the said provision can not only assess/reassess the escaped income based on which the assessment was reopened, but can also assess any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under the aforesaid provision. Explanation 3 to section 147 of the Act further clarifies the substantive provision by saying that the assessing office, in course of proceedings under the said provision can not only assess/re-assess the escaped income based on which the assessment was reopened, but can also assess any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under the aforesaid provision, notwithstanding that such issue does not form part of reasons recorded for reopening of assessment. Thus, on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration before this Court in Commissioner of Income Tax v. Sun Engineering Works P. Ltd. [198 ITR 297]. Therein the assessee raised a contention that once jurisdiction under Section 147 of the Act is invoked, the whole assessment proceeding became reopened, which was negatived by the court opining: Section 147, which is subject to Section 148, divides cases of income escaping assessment into two clauses i.e. viz. (a) those due to the non- submission of return of income or non-disclosure of true and full facts and (b) other instances. Explanation (1) defines as to what constitutes escape of assessment. In order to invoke jurisdiction under Section 147(a) of the Act, the ITO must have reason to believe that some income chargeable to tax of an assessee has escaped assessment by reason of the omission or failure on the part of the assessee either to make a return under Section 139 for the relevant assessment year or to disclose fully and truly material facts necessary for the assessment for that year. Both the conditions must exist before an ITO can proceed to exercise jurisdiction under Section 147(a) of the Act. Under Section 147(b) the Incometax Officer also has the jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n liable to pay tax a notice containing all or any of the requirements which may be included in a notice under section 22(2) and may proceed to assess or reassess such income, profits or gains. It is, therefore, manifest that once assessment is reopened by issuing a notice under sub-section (2) of section 22, the previous underassessment is set aside and the whole assessment proceedings start afresh. When once valid proceedings are started under section 34(1)(b), the Income-tax Officer had not only the jurisdiction, but it was his duty to levy tax on the entire income that had escaped assessment during that year. 10. There may not be any doubt or dispute that once an order of assessment is reopened, the previous underassessment will be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject matter of reassessment is distinct and different, the entire proceeding of assessment would be deemed to have been reopened. 11. In Sun Engineering Works P. Ltd. (supra) also, V. Jaganmohan Rao (supra) was noticed stating: The principle laid down by this Court in Jaganmohan Rao's case, therefore, is only to the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings It was furthermore held: As a result of the aforesaid discussion, we find that in proceedings under Section 147 of the Act, the Income Tax Officer may bring to charge items of income which had escaped assessment other than or in addition to that item or items which have led to the issuance of notice under Section 148 and where reassessment is made under Section 147 in respect of income which has escaped tax, the Income Tax Officer's jurisdiction is confined to only such income which has escaped tax or has been under-assessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to reagitate questions which had been decided in the original assessment proceedings. It is only the underassessment which is set aside and not the entire assessment when reassessment proceedings are initiated. The Income Tax Officer cannot make an order of reassessment inconsistent with the original order of assessment in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 ITR 297, is in relation to that which has escaped assessment, and does not extend to reopening the entire assessment for the purpose of redoing the same de novo. An assessee cannot agitate in any such reassessment proceedings matters forming part of the original assessment which are not required to be dealt with for the purpose of levying tax on that which had escaped tax earlier. Cases of underassessment are also treated as instances of escaped assessment. The order of reassessment is one which deals with the assessment already made in respect of items which are not required to be reopened, as also matters which are required to be dealt with in order to bring what had escaped in the earlier order of assessment, to assessment. An assessee who has failed to file an appeal against the original order of assessment cannot utilise the reassessment proceedings as an occasion for seeking revision or review of what had been assessed earlier. He may only question the extent of the reassessment in so far as the escaped assessment is concerned. The Revenue is similarly bound The same principle was reiterated by a Division Bench of the Calcutta High Court in Commissioner of Income-Tax v. Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of reassessment was passed only one issue namely, the claim under Section 72A, when the Commissioner as a Revisional Authority under Section 263 seeks to exercise his jurisdiction on matters which did not form the subject of the order of reassessment, the period of limitation would begin to run from the original order of assessment. This submission which has been urged on behalf of the assessee would have to be accepted in view of the judgment of the Supreme Court in Commissioner of Income Tax V/s. Alagendran Finance Ltd. The issue which arose before the Supreme Court was whether, for the purpose of computing the period of limitation envisaged under sub-section (1) of Section 263, the date of the order of assessment or of the order of reassessment is to be taken into consideration. In that case, the assessee filed its return for assessment years 1994-95, 1995-96 and 1996-97 and the assessments were completed on 27 February 1997, 12 May 1997 and 30 March 1998. In the orders of assessment, the return of the assessee under the head of Lease Equalisation Fund were accepted. Proceedings for reassessment were initiated by the Assessing Officer and orders of reassessment were passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to certain 2 (1992) 198 I.T.R. 297 specified grounds and, subsequent to the passing of the order of reassessment, the jurisdiction under Section 263 is sought to be exercised with reference to issues which do not form the subject of the reopening of the assessment or the order of reassessment, the period of limitation provided for in sub-section (2) of Section 263 would commence from the date of the order of assessment and not from the date on which the order reopening the reassessment has been passed. 9) Section 147 empowers the Assessing Officer, if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year to assess or reassess the said income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the Section. Explanation 3 which has been inserted by the Finance Act (No. 2) of 2009 with retrospective effect from 1 April, 1989 provides that for the purpose of assessment or reassessment under the Section, the Assessing Officer may assess or reassess the income in respect of any issue which has escaped assessment and such issue com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The order of assessment cannot be regarded as being subsumed within the order of reassessment in respect of those items which do not form part of the order of reassessment. Where a reassessment has been made pursuant to a notice under Section 148, the order of reassessment prevails in respect of those items which form part of reassessment. On items which do not form part of the reassessment, the original assessment continues to hold the field. When the Assessing Officer reopens an assessment on a particular issue, it is open to him to make a reassessment on that issue as well as in respect of other issues which subsequently come to his notice during the course of the proceedings under Section 147. The submission of the Revenue is that by not passing an order of reassessment in respect of other independent issues, the order of the Assessing Officer can be construed to be erroneous and to be prejudicial to the interest of the Revenue within the meaning of Section 263. The submission cannot be accepted in the facts of the present case. The substantive part of Section 147 as well as Explanation 3 enables the Assessing Officer to assess or reassess income chargeable to tax which he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court noted that the subject matter of the original assessment and the order of reassessment was not the same. The facts of the present case are similar to those in Alagendran Finance which must, therefore, apply. 12) For these reasons, we are of the view that the exercise of the revisional jurisdiction under Section 263 is barred by limitation. We clarify that this would not preclude the Revenue from taking recourse to any other remedy that maybe available in law. 12. The other decisions cited by learned counsel for the assessee also propound similar legal principle. Thus, in our view, the original assessment order 15 ITA 640/Mum/2021 having been passed on 06-02-2014, the impugned order passed under section 263 of the Act is barred by limitation in view of section 263(2) of the Act. At this stage, we consider it our duty to deal with the submissions of learned departmental representative that the assessee did not represent its case before learned PCIT and did not raise the issue of limitation. On perusal of records, it is seen that learned PCIT issued the show cause notice under section 263 of the Act on 08-03-2021 and passed the impugned order on 19-03-2021 with undue ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
