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TMI Blog2020 (8) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... e the ld. AO in the original assessment proceedings. In the instant case, that statutory condition has not been complied with by the ld. AO. Hence we deem it fit to quash the entire re-assessment proceedings as void ab initio. We hold that the assumption of jurisdiction in the instant case by reopening the case by the ld. AO is not sustainable in law. Accordingly, the cross objection preferred by the assessee in this regard are allowed. Since, re-assessment framed by the ld. AO is quashed, the adjudication of the various arguments made by the Counsels from both the sides on merits of case in the appeal of the revenue becomes academic. - ITA No.69/Mum/2019, C.O.No.23/Mum/2020 (Arising Out of ITA No.69/Mum/2019) - - - Dated:- 27-7-2020 - Shri C.N. Prasad, JM And Shri M. Balaganesh, AM For the Assessee : Shri Rushabh Mehta, CA For the Respondent : Shri R. Manjunatha Swamy, CIT DR ORDER PER M. BALAGANESH (A.M): This appeal in ITA No.69/Mum/2019 and Cross Objection No.23/Mum/2020 for A.Y.2008-09 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-49, Mumbai in appeal No. CIT(A)-49/IT-446/2016-17 dated 16/10/2018 (ld. CIT(A) in short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,50,00,000/- from M/s. Capetown mercantile P. Ltd., M/s. Fasttone Trading Co. Pvt. Ltd., M/s. JPK Trading, M/s. Oswal Trading P. Ltd., M/s. New Planet Trading Co. Ltd., in the FY2007-08 (AY 2008-09). It is noticed that the M/s. Capetown Mercantile P. Ltd., M/s. Fasttone Trading Co. Pvt. Ltd. M/s. JPK Trading, M/s. Oswal Trading P. Ltd., M/s. New Planet Trading Co. Ltd. are companies operated by Shri Praveen Jain. Therefore, I have reason to believe that income chargeable to tax amounting to ₹ 13,50,00,000/- has escaped assessment for A.Y.2008-09 within the meaning of Section 147 of the Income Tax Act, 1961 and the assessment for A.Y.2008-09 needs to reopened by issue of notice u/s.148 of the Income Tax Act, 1961 3.1. We find that the notice u/s.148 of the Act dated 26/03/2015 was issued in this case beyond the period of four years from the end of the relevant assessment year. Hence, the applicability of proviso to Section 147 of the Act would come into operation in the instant case. In the re-assessment, the ld. AO added the sum of ₹ 13.50 Crores on account of unsecured loans received from 5 corporate borrowers as unexplained cash credit u/s.68 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-corporate borrowers names from whom unsecured loans to the tune of ₹ 1,45,37,334/- were received by the assessee , by stating that confirmations were not filed from these parties. Since, sufficient time was given to the assessee for filing necessary documents, the ld. AO had proceeded to complete the assessment by adding the said sum of ₹ 1,45,37,334/- as unexplained cash credit on account of unsecured loans. Further in para 7 of his assessment order dated 30/12/2010, the ld. AO listed out the deficiencies appeared in 14 confirmations received from non-corporate borrowers to the tune of ₹ 57,65,000/- and since the said deficiencies were not sorted out by the assessee, he proceeded to add the sum of ₹ 57,65,000/- as unexplained cash credit u/s.68 of the Act. In effect, we find that the ld. AO on verification of the entire documents relating to unsecured loans received from both corporate borrowers as well as non-corporate borrowers had finally decided to make addition of ₹ 2,02,92,334/- as unexplained cash credit u/s.68 of the Act in the original assessment framed u/s 143(3) of the Act on 30/12/2010. Hence, it could be safely concluded and inferred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3.4. We also find that the Hon ble Jurisdictional High Court in the case of Sound Casting Pvt. Ltd., vs. DCIT reported in 250 CTR 119 had held as under:- 2A. The reopening of the assessment has admittedly taken place beyond a period of four years from the end of the relevant Assessment Year. There is no allegation in the reasons which have been disclosed to the assessee that there was any failure on his part to fully and truly disclose material facts necessary for assessment for that assessment year. Hence, we find merit in the contention that the jurisdictional condition for reopening the assessment beyond a period of four years has not been fulfilled. Even during the course of hearing, it has not been the submission of the Revenue that there was any suppression of material facts on the part of the Petitioner. 3. That apart, the reasons on the basis of which the assessment is sought to be reopened are similar to those which came up for consideration recently before a Division Bench of this Court on March 14, 2012 in Shriram Foundry Ltd. vs. Deputy Commissioner of Income Tax, Circle 2 Ors. (Writ Petition No.10957 of 2011). In that case, the reasons which were dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration that the Assessing Officer came to the conclusion that the melting loss was found to be on a higher side. The decision of the Tribunal in the case of Saroj Castings, which has been adverted to in the order of the Assessing Officer dated 9 December 2011, was rendered on 30 May 2008. The Assessing Officer could not have reopened the assessment on the basis of this subsequent decision of the Tribunal unless the jurisdictional requirements in the proviso to Section 147 were fulfilled. Moreover, the order of the Tribunal in Saroj Castings, a copy of which has been produced on record by the counsel for the assessee, does not indicate that any general principle of law was laid down in that case by the Tribunal. All that the Tribunal held there was that the Commissioner (Appeals) had properly worked out the reasonable wastage percentage as 5.5% as against 6.6% shown by the assessee in that case. As a matter of fact, the order of the Tribunal would also indicate that it was only the Revenue which was in appeal against the determination made by the Commissioner (Appeals) which was not challenged by the assessee. Hence, looked at from every perspective, it is evident that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of recording the reasons by the ld. AO is that he should have fresh tangible material without any change of opinion , to enable him to have a live link to form a belief that income of the assessee had escaped assessment and if the reopening is made beyond a period of four years from the end of the relevant assessment year then, it is the incumbent duty on the part of the ld. AO to duly record the fact in the reasons recorded itself that there was a clear failure on the part of the assessee to make full and true disclosure on the facts that are necessary and material for the purpose of assessment before the ld. AO in the original assessment proceedings. In the instant case, that statutory condition has not been complied with by the ld. AO. Hence we deem it fit to quash the entire re-assessment proceedings as void ab initio. We hold that the assumption of jurisdiction in the instant case by reopening the case by the ld. AO is not sustainable in law. Accordingly, the cross objection preferred by the assessee in this regard are allowed. 3.6. Since, re-assessment framed by the ld. AO is quashed, the adjudication of the various arguments made by the Counsels from both the sides on mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdictional High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the ruled so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any extraordinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the due procedure . The term force majeure has been defined in Black‟s Law Dictionary, as an event or effect that can be neither anticipated nor controlled‟ When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10.In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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