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TMI Blog2017 (9) TMI 1683X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. - D.B. Income Tax Appeal No. 642/2011 - - - Dated:- 4-9-2017 - Mr. K.S. Jhaveri And Mr. Inderjeet Singh JJ. For the Appellant(s) : Mrs. Parinitoo Jain with Ms. Shiva Goyal For the Respondent(s) : Mr. P.K. Kasliwal JUDGMENT 1. By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has allowed the appeal of the assessee and dismissed the appeal of the department and further modified the order of the CIT(A) which was party allowed the appeal of the assessee. 2. This court while admitting the appeal on 27.9.2012 framed following substantial question of law:- 1. Whether the tribunal was legally justified in reversing the finding of CIT(A) and annulling the reassessment u/s 147 which was done on the basis of material found during the course of survey and not on the basis of annulled assessment u/s 143(3)? 2. Whether the tribunal was legally justified in annulling the reassessment done u/s 147 when the return of income filed by the assessee reassumes the same status after the annulled assessment u/s 143(3) as if on which no assessment has been carried out? 3. The facts of the case are that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied to the firm. Assessee firm sought extension of time for getting its account audited from the nominated CA several times. 3.4 Assessee was granted extension of time upto 23.9.04. But he could not get its account audited from the nominated CA till the last date. The nominated CA vide his letter dt. 22.9.04 appeared of the facts of the case that in circumstances under which he could not conduct the audit u/s 142(2A). The letter of the special auditor indicates that the firm did not provide him any information/books of accounts/documents/vouchers of expenses and other relevant papers which are necessary for conducting special audit. The income of the assessee was determined ₹ 3,56,78,146/- against declared income of ₹ 65,172/- vide order dt. 23.11.04. 4. Counsel for the appellant has taken us to the order of CIT(A) in which it has been observed as under:- In the first ground of appeal the appellant has claimed that the assessment under reference has been passed without jurisdiction, therefore, same is liable to be quashed. During the appellate proceedings the AR of the appellant at the outset challenged the jurisdiction of the AO with regard to asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of notice is valid. It is pertinent to mention here that the assessee firm itself accepting this type of clerical mistake in may TDS certificates issued from various departments in various years to assessee firm in those certificates name of Sh. Rameshwar Prasad Sharma. All these certificates are accepted by the firm and claiming benefit of tax from various departments including Income Tax Department on the basis of these certificates which were issued only in the name of Sh. Rameshwar Prasad Sharma and the department is also giving due credit to the assessee on the basis of such TDS certificates enclosed by the assessee with the return of income, despite the fact that they are not in the name of firm but in the name of Sh. Rameshwar Prasad Sharma. Thus departments is ignoring such technical lapse appearing in TDS certificates and assessee has never raised any objection as to why he is given undue benefits when he does not deserves for the same. Thus the assessee firm as well as various departments are ignoring this type of clerical mistake and accepting all these certificates as of firm (M/s. Rameshwar Prasad Sharma Contractor) instead of individual Sh. Rameshwar Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.3 However CIT(A) vide Annexure-5, while considering the case of the assessee observed as under: 5.4 The AO is, however, free to resort to Section 147 of the Act to bring the escaped income, if any to tax. 4.4 After taking into consideration the factual position and other material on record, the CIT(A) partly allowed the appeal and holding as under:- On the above issue the ld. AR has submitted that the provisions of Sec.234D is applicable to cases where the refund has been made in excess u/s 143(1)(a) or No refund is due in regular assessment. Regular assessment includes first time assessment u/s 147 also (vide explanation to Sec.234D) w.e.f. 1.6.03 , the ld. AR also submitted that the imposition of interest being substantive law, interest u/s 234D cannot be charged in respect of assessment years prior to coming into force of these provisions i.e. w.e.f. 1.6.03, hence it is not applicable to A.Y. 2001-02 and relied upon the decision in the case of M/s. Agarwal Marbles Industries Ltd. Vs. ACIT (2007) 37 TAX WORLD 25 (ITAT-Jaipur Bench). The ld. AR also submitted that the interest under Sec.234B is to be calculated with reference to the total tax demand minus tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cash credit in the name of Anil Sukiriti Geeta added u/s 68 79,000/- Addition of deposit in the name of Sh. Gopal Pandit u/s 69 15,82,700/- Addition of deposit in the name of Sh. Pradeep Sirohl u/s 69 2,40,000/- Addition of advance in the name of Rameshwar Prasad Sharma u/s 69 45,000/- Addition of advance in the name of Sh. Harendra Sharma u/s 69 45,000/- Undisclosed investment in purchase of Motorcycle 36,000/- Disallowed made u/s 40A(3) 34,31,324/- Addition of advance in the name of Sh. Satish Baroli 4,12,000/- Addition of advance in the name of Sh. Mukesh Contractor 5,26,000/- Remuneration of partners 2,14,551/- Deemed rental income 60,000/- Rent received of JCB 87,000 Toal 3,56,91,266/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,63,03,574/- In response to notice u/s 148, the assessee submitted reply on 25.7.05 and stated that return filed on 31.10.2001 under Sec.139(1) may kindly be treated as filed in response to notice u/s 148 and also demanded a copy of reasons recorded. The same was replied on 29.7.2005. Subsequently notice u/s 143(2) as well as questionnaire was issued to the assessee. In response to the same, the detailed reply was filed before the AO and it was submitted that assessment completed originally has been quashed and no appeal has been filed against that order by the department. It was further submitted that now issuing notice u/s 148 for reassessment of income is not valid and accordingly it was submitted that the notice issued u/s 148 is ultra vires and illegal. Reliance was placed on various case laws before AO i.e. in case of CIT vs. Mrs. Ratanbai N.K. Dubhash, 230 ITR 495 (Bom.). In this judgment it has been held that the assessment was not set aside as the same was annulled and in case of annulled assessment the order passed originally u/s 143(3) becomes non est. It was also submitted that the assessment cannot be reopened u/s 147/1048 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and this action of the ld. CIT(A) has been accepted by the department as no second appeal has been preferred against the order of ld. CIT(A). Now taking a recourse of reopening of the assessment cannot be permitted either in the eyes of law or in the facts of the present case. Language of provisions of Section 147 which provides:- If the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to provisions of Section 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. It has been further provided that no assessment completed u/s 143(3) can be reopened after expiry of four years from the end of the relevant assessment year unless any such income has escaped assessment by reason of failure on the part of the assessee to make a return u/s 139(1). It is further provided that AO may assess or reassess such income other than inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that these cases are also distinguishable. 25. In view of the above facts and circumstances and in view of the direct decision of Mumbai Bench of the Tribunal in the case of Babu Lal Lath (supra), we hold that reassessment completed was ab initio void and liable to be annulled. Accordingly the same is annulled. 6. We have heard both the sides. 7. Before proceeding with the matter, it will not be out of place to mention that the judgment which sought to be relied upon by the tribunal in the case of Babulal Lath (supra) has not been diluted by any other court. 8. Apart from that tribunal while considering the matter has given reason in para no.23-24, after taking into consideration, the Supreme Court decision in Raymond Woolen Mills Ltd. Vs. ITO, 236 ITR 34 (SC), Claggat Brachi Co. Ltd. Vs. CIT 177 ITR 409 (SC) and Kalyan Mavji Co. Vs. CIT 102 ITR 287 (SC) which was relied upon by the Mumbai Tribunal in Babulal Lath (supra). 9. In that view of the matter, we are of the considered opinion the tribunal has rightly held that the matter of re-assessment u/s 147 was done on the basis of material found during survey subsequent to assessment on 18.3.03. Therefore, we ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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