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TMI Blog2022 (3) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of reassessment order dated 31.12.2018, we note that the issue of payment of bogus commission was not the subject matter of reassessment proceedings. Therefore, the period of limitation has to run from the date of assessment as framed under section 143(3) dated 31.03.2016. In view of this, we incline to hold that the revisionary jurisdiction exercised by the Ld. PCIT is hopelessly barred by limitation. The appeal of the assessee is allowed. - I.T.A. Nos. 22 & 23/PAT/2021 - - - Dated:- 9-3-2022 - Rajpal Yadav, Vice President And Rajesh Kumar, Member (A) For the Appellant : A.K. Rastogi, Sr. Advocate For the Respondents : Sanjay Mukherjee, CIT (D.R.) ORDER Per Rajesh Kumar , Accountant Member These two appeals by the assessee are filed against the orders passed by the Ld. Principal Commissioner of Income Tax, Patna-1 dated 24.03.2021 (hereinafter called as PCIT) for the assessment years 2012-13 and 2014-15. 2. The assessee has challenged the revisionary jurisdiction exercised by the Ld. PCIT under section 263 of the Act. The ground taken by the assessee First of all, we would like to adjudicate the legal issue raised by the assessee. The legal grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial to the interest of the Revenue within the meaning under section 263 of the Income Tax Act on the ground that the assessment has been framed without making inquiries and verification of bogus commission paid to M/s. Reynolds Petro Chems Limited amounting to ₹ 1,05,33,882/-. Accordingly, the Ld. PCIT issued show-cause notice under section 263 of the Act dated 15.01.2021 as to why the assessment framed under section 143(3) read with section 147 of the Act dated 31.12.2018 should not be revised as being erroneous in so far as prejudicial to the interest of the Revenue, which was replied by the assessee which is extracted in para 4 of the revisionary order passed under section 263 of the Act. Finally the Ld. PCIT noted that the assessee has paid commission of ₹ 1,05,33,842/- on account of sales services provided by M/s. Reynolds Petro Chems Limited, which on the basis of information available on record showed that the said commission is not genuine and a sham/arranged transaction. While passing the order, the Ld. PCIT referred to the survey operation conducted on M/s. Reynolds Petro Chems Limited by the Investigation Wing, Mumbai on 16.04.2015 and also the statement r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reassessment proceeding was initiated for limited issue and during the course of re-assessment proceedings, the Assessing Officer did not come across any other income, which has escaped or any other allowance which has been claimed wrongly by the assessee, therefore, the reassessment proceeding was framed as stated above. The Ld. counsel for the assessee Mr. Ajoy Kumar Rastogi vehemently argued that the revisionary jurisdiction cannot be exercised in respect of the reassessment order framed under section 143(3) read with section 147 dated 31.12.2018 over an issue which is not subject matter of reassessment but it could have been exercised only with respect to the original assessment framed under section 143(3) vide order dated 31.03.2016. The Ld. counsel argued that the issue of payment of bogus commission could be examined by the Assessing Officer during the course of original assessment proceeding and, therefore, if at all the order is erroneous in so far as prejudicial to the interest of the Revenue, that is only original assessment order dated 31.03.2016. The Ld. Sr. Counsel submitted Before the Bench that in view of this fact, the period of limitation of two years has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment was reopened by the Assessing Officer under section 147 read with section 148 of the Act on 12.01.2018 after recording the reasons to believe under section 148(2) of the Act that income has escaped assessment due to incorrect allowance of deduction under section 35(2AB) amounting to ₹ 71.43 crores and not in respect of the commission payments. The reassessment proceeding concluded and culminated vide order dated 31.12.2018 passed under section 143(3) read with section 147 of the Act. It is undisputed that the assessee has made the payment of commission of ₹ 1,05,33,882/- to M/s. Reynolds Petro Chems Limited in lieu of sales services rendered by the said party. It is pertinent to state that the survey under section 133 of the Act was conducted on M/s. Reynolds Petro Chems Limited on 16.04.2015 and during the course of survey, the key person Mr. Jagdish Chandra Somani, who was managing the affairs of the said recipient company, admitted that the commission paid was not genuine and was a sham transaction. The DDIT (Inv.), Unit 3(3), Mumbai vide his report dated 11.04.2016 communicated the fact to the Assessing Officer that the assessee has paid bogus commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the period of limitation has to run from the date of order of assessment and not from the date of order of reassessment, where the item/issue in respect of which order is revised under section 263 of the Act by the Ld. PCIT is not the subject matter of reassessment proceedings. The facts before the Hon'ble Apex Court were that, the Ld. PCIT had sought to revise the part of the order of assessment, which related the lease equalisation fund. The reassessment proceeding was initiated and culminated under section 143(3) read with section 147 of the Act in which the issue of lease equalisation fund was not the subject matter and the Hon'ble Court has, therefore, held that doctrine of merger did not apply in the case of this nature and the period of limitation commences from the date of original assessment and not from the date of reassessment since the latter had not anything to do to lease equalisation fund and this was not a case where subject matter of assessment and subject matter of re-assessment were same. The Hon'ble Apex Court while passing the order has relied on the decision of Coordinate Bench in the case of CIT vs. Arbuda Mills (1998) 231 ITR 50 (SC). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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