TMI Blog2022 (8) TMI 1354X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28.12.2018 was not valid. Therefore, we are compelled to hold that the initiation of reassessment proceedings in the present case was not valid as the mandatory requirement of section 147 of the Act has not been satisfied. We, therefore, hold that since the reassessment order dated 28.12.2018 was not valid, consequently, the subsequent revisionary order passed by PCIT u/s 263 is also held to be invalid and, thus, the same is quashed. Since, in the earlier part of this order we have quashed the revisionary order of the ld.PCIT u/s 263 of the Act by allowing the legal ground of the assessee, therefore, other grounds of the assessee challenging the revisionary order u/s 263 of the Act have become academic and infructuous. Therefore, the same are not being adjudicated upon. Appeal of assessee allowed. - ITA No. 72/CTK/2021, 73/CTK/2021, 74/CTK/2021, 75/CTK/2021 - - - Dated:- 18-8-2022 - SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER For the Assessee : Shri S.M. Surana, AR For the Revenue : Shri M.K. Gautam, CIT, DR ORDER PER C.M. GARG, JM: These appeals have been filed by the assessees against the order of the Principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Ld AO in the course of assessment proceedings as well as before the Ld PCIT in the course of proceedings u/s 263. 8. For that the Ld PCIT had no power to make the enhancement himself by directing the AO to make addition on the facts and in the circumstances of the case. 3. We have heard the rival arguments made by both the sides and perused the material placed on the record including the paper book filed by the assessee spread over 43 pages and another case law paper book spread over 89 pages. The ld. Counsel for the assessee submitted that the ld.PCIT has erred in invoking the provisions of section 263 of the Act on the reassessment order made by the AO. He further submitted that when the reopening itself was invalid having been reopened only on the information from the Investigation Wing without any tangible material, the order subjected to revision was void ab initio and, thus, the same cannot be revised u/s 263 of the Act. He further submitted that the ld. PCIT has also erred in invoking the provisions of section 263 on the reassessment order made by the AO u/s 143(3) r.w. section 147 of the Act dated 28.12.2018 when the reassessment proceedings itself were inval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring reassessment proceedings, admitted and accepted the impugned amount as short-term capital gain in the revised return of income in response to notice u/s 148 and paid tax thereon. Therefore, the case laws relied on by the ld. Counsel of the assessee are not applicable in the present case. The ld. CIT-DR also submitted that the original reassessment order, which was revised by the ld.PCIT is not invalid and void ab initio and, thus, no challenge can be made to the validity of such order which has attained finality in absence of any appeal by the assessee before the ld.CIT(A). 5. The ld.CIT-DR, drawing our attention to the assessee s paper book page 13, submitted that this is only an entry of the order sheet and in the last line of the said order sheet the proposal was submitted to competent authority/JCIT for approval u/s 151, therefore, the allegations made by the assessee challenging the validity of such order is not maintainable in this appeal. The ld. CIT-DR in all fairness, admitted that the copies available at pages 4-9 of the assessee s paper book are reasons recorded by the AO and the order sheet entry at page 13 cannot be treated as reasons recorded by the AO for ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge to the first appellate authority, i.e., to the CIT(A). The summary of the rejoinder of the ld. Counsel for the assessee is that since the assessee was not aggrieved by the reassessment order, therefore, no appeal was filed before the ld.CIT(A), but, when such reassessment order was revised by the ld.PCIT by invoking the provisions of section 263, then, the assessee is very well entitled to challenge the validity of such reassessment order which was revised in the appeal filed against the revisionary order. 8. From a careful reading of the order of the ITAT, Kolkata Bench in the case of M/s Classic Flour Food Processing Pvt. Ltd. (supra), we observe that similar legal issue was placed before the ITAT Kolkata Bench and the issue was adjudicated in favour of the assessee, with the following observations and findings:- 9. On question no. 1 and 3 which is relevant to the present case the Hon ble Mumbai bench of the Tribunal has taken the view that when the original assessment proceedings are null and void in the eyes of law for want of proper assumption of jurisdiction then such validity can be challenged even in collateral proceedings. The Mumbai bench took the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT Vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in relation to non service of notice could be raised for the first time before the Tribunal as the same was legal, which went to the root of the matter. 19. While exercising powers u/s 263 Id. Commissioner cannot revise an assessment order which is non est in the eye of law because it would prejudice the right of assessee which has accrued in favour of assessee on account of its income being determined. If Id. Commissioner revises such an assessment order, then it would imply extending/ granting fresh limitation for passing fresh assessment order. It is settled law that by the action of the authorities the limitation cannot be extended. Because the provisions of limitation are provided in the same. 20. In view of above discussion ground no.3 is allowed and revision order passed u/s 263 is quashed. 11. The learned DR relied on the order of the CIT(A). We have considered the rival submissions. We are of the view that the validity of the order u/s 147 of the Act depends upon the AO assuming jurisdiction to make an order of assessment u/s 147 of the Act after fulfilling the conditions laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o such tangible material; and there was no approval as per the mandate of section 151 of the Act and that the copy of the reasons recorded by the AO was different from the copy of the reasons supplied to the assessee. 11. First of all, in view of the orders of ITAT, Kolkata Bench in the case of M/s Classic Flour Food Processing Pvt. Ltd. (supra) and Concord Infra Projects Pvt. Ltd. (supra) as relied on by the ld. Counsel for the assessee, we hold that the validity of initiation of reassessment proceedings u/s 147 of the Act and reassessment order passed u/s 143(3) r.w. section 147 of the Act can be challenged by the assessee in the collateral proceedings u/s 263 of the Act and also in the appeal filed against the revisionary order u/s 263 of the Act. Therefore, we proceed to adjudicate the challenge to the validity of initiation of proceedings and reassessment order u/s 143(3) r.w. section 147 of the Act dated 18.12.2018. 12. So far as the challenge to the notice u/s 148 of the Act and reassessment order dated 28.12.2018 on the ground that no approval or sanction was obtained by the AO before issuance of notice u/s 148 of the Act is concerned, from the order sheet dated 26. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 within the meaning of section 147. Therefore, the second contention of the assessee is also dismissed. 14. Now, we turn to the third contention of the ld. Counsel that the copy of the reasons recorded by the AO on 26.03.2018 in the order sheet and copy of the reasons supplied to the assessee are different and there is no date in the copy of the reasons supplied to the assessee by the Department which clearly show that the AO has not supplied the actual reasons recorded by him in the order sheet to the assessee. Therefore, in view of the order of the ITAT, Kolkata in the case of Jansampark Advertising Marketing Pvt. Ltd. (supra), the validity of initiation of reassessment proceedings u/s 147 of the Act and consequent reassessment order is not sustainable. 15. We are not in agreement with the contention of the ld.CIT-DR that the AO has only made order sheet entry on 26.03.2018 copy of the actual reasons recorded by him was supplied to the assessee which is available at pages 4-9 of the assessee s paper book. Therefore, it cannot be alleged that the reasons recorded by the AO are different from the copy of the reasons supplied to the assessee because the reasons recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osing few arrows out of that is not expected from a revenue officer. It also against the fair play rule of reassessment proceedings. In Haryana Acrylic Manufacturing Co V Commissioner of Income tax 308 ITR 38 [ Delhi] the identical issue arose. As per para no 4 following reasons were given to the assessee:- 4. The Assistant Commissioner of Income-tax supplied the reasons for initiating the proceedings under section 148 of the said Act dated March 29, 2004, sometime in September, 2004. The reasons which were supplied to the petitioner in September, 2004 were as under : M/s. Haryana Acrylic Mfg. Co. Pvt. Ltd. Assessment year 1998-99 Reasons for initiating the proceedings under section 148 of the Income-tax Act. Return of income in this case was filed on November 30, 1998 declaring nil income. Assessment under section 143(3) was completed at nil income on March 7, 2001. It has come to the notice that the assessee-company has taken accommodation entries from one of the companies of Sh. Sanjay Rastogi, i.e., Hallmark Helathcare Limited, vide cheque No. 201845 dated October 17, 1997, amounting to Rs.5,00,000 during the year www.taxguru.inwww.taxguru.in 7 relevant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the respondents, were not the true reasons. Consequently, the entire proceedings leading up to the passing of the impugned order dated March 2, 2005, have to be set aside. 29. The Honourable High Court responded to the above anomaly where the reasons given to the assessee are altogether different then the reasons given to the higher authorities when the order of the assessing officer is challenged, as under:- 30. The matter, however, does not end here. We have mentioned above that the stand taken by the respondents in their counter-affidavit before this court is that the actual reasons recorded are those recorded in the Form for recording reasons, a copy of which has been filed as annexure A to the said counter-affidavit. It was urged on behalf of the respondents that the reasons for the belief that income has escaped assessment at serial No. 11 of the said form clearly carries the allegation that there was failure on the part of the assessee to disclose fully and truly all material facts relating to accommodation entries . This being the case, it was submitted, the bar of taking action within four years would not apply and, consequently, the notice under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable time. On receipt of the reasons, the noticee is entitled to file objections to the issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. These are specific directions given by the Supreme Court in all cases where notices under section 148 of the said Act are issued. Surely, the Assessing Officer could not have construed these specific directions to be a mere empty formalities or dead letters? There is a strong logic and purpose behind the directions issued by the Supreme Court and that is to prevent highhandedness on the part of Assessing Officers and to temper any action contemplated under section 147 of the said Act by reason and substance. In fact, even section 148(2) stipulates that the Assessing Officer shall, before issuing any notice under the said section, record his reasons for doing so. The Supreme Court has only carried forward this mandatory requirement by directing that the reasons which are recorded be communicated to the assessee within a reasonable period of time so that at that stage itself the assessee may point out any objections that he may have with regard to the initiation of action under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this aspect, as held by the Hon ble High Court in the case of Haryana Acrylic Manufacturing Co. v. Commissioner of Income Tax 308 ITR 38 [ Delhi] is that the requirement of recording the reasons, communicating the same to the assessee, enabling the assessee to file objections and the requirement of passing a speaking order are all designed to ensure that the Assessing Officer does not reopen assessments which have been finalized on his mere whim or fancy and that he does so only on the basis of lawful reasons, and since these steps are also designed to ensure complete transparency and adherence to the principles of natural justice, any deviation from these directions would entail the nullifying of the proceedings. 11. Admittedly in the case on hand, the reasons supplied to the assessee are not the same and verbatim. In view of this settled position of law and respectfully following the line of decision in Haryana Acrylic Manufacturing Co V Commissioner of Income tax 308 ITR 38 [ Delhi] by the higher forum referred to in the decision of the coordinate Bench of this Tribunal in the case of Wimco Seedlings (supra), we find it difficult to sustain the validity of the reopening of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
