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TMI Blog2022 (7) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 18.12.2013 being revised and set aside in no way can be said to be issues rendering the assessment order to be erroneous - the issues raked up and proposed by the ld PCIT in the order passed u/s 263 of the Act were not such which could render the assessment as erroneous. The main purpose of exercising the revisionary jurisdiction u/s 263 of the Act was non examination of current liabilities Rs. 55,10,278/-, withdrawals of Rs. 33,09,490/- against debit capital balance and not charging of service tax to the profit and loss account nor showing it as payable in balance sheet. We observe from the audited balance sheet that substantial part of the current liability is coming from the preceding year and non examination of the same could render the assessment as erroneous is not understandable. Similarly the withdrawals against negative capital balance can render the assessment as erroneous is also beyond our understanding. Lastly the non charging of service tax and not showing in the balance sheet can influence the correctness of the order. In our considered opinion these issues are not such which can render the assessment erroneous. Similarly what prejudice is caused to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, the ld Counsel took us through the affidavit filed, medical certificates and other records. The Ld. Counsel of the assessee has submitted that the delay in filing the appeal may kindly be condoned so that appeal of the assessee could be heard on merit. In defense of his arguments, the ld. Counsel of the assessee relied on the following decisions: i) M/s Midas Compounds vs. ACIT in ITA No. 288/Coch/2017 for AY 2006-07 dated 25.06.2018 ii) Concord of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi Ors. Reported in [1979] 118 ITR 507 (SC) iii) Mercedes Benze Education Academy vs. ITO in ITA No. 745/Pun/2015 v) Vijay Visin Meghani vs. DCIT (2017) 398 ITR 250 (Bom) vi) CIT vs. KSP Shanmugavel Nadai Ors. (153 ITR 596 ) (Madras- High Court) vii) Orbit Dealmark Pvt. Ltd. vs. ITO in ITA No. 513/Kol/2020 for AY 2012-13 dated 22.04.2022 wherein the Co-ordinate Bench has condoned the delay of 1535 days for the reason that the assessee was suffering from lungs infection and diabetic and other oldage ailments and assessee was not advised properly by the legal consultant who was claimed to have forgotten to file the appeal and lockdown due to outbreak of Covid-19 and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee finds support from various decisions as cited before us a few of which are discussed hereinafter. In the case of Collector Land Acquisition vs. MST Katji ors. (supra) the Hon ble Apex Court has laid down following principles: i) Ordinarily a litigant does not stand to benefit by lodging an appeal in late ii) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this when delay in condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties, iii) Every day s delay must be explained does not mean that a pedantic approach should be made, why not every hour s delay, every second s delay? The doctrine must be applied in a rational; common sense and pragmatic manner, iv) When substantial justice and technical consideration are pitted against each other; the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay in fact he runs a serious risk, v) There is no presumption that delay is occasioned deliberately or on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer, appears to be erroneous and prejudicial to the interest of revenue, since, the Assessing Officer has failed to make complete and full enquires and also passed the order without considering examining the facts, information on record, as discussed herein under:- I) On perusal of the balance sheet submitted by you as on 31-03-2009 it is observed that a current liability of Rs. 53,10,278 has been shown for which no enquiry was conducted by the AO to examine the genuineness of these liabilities. Further, huge withdrawal of Rs. 33,09,490 was made from your negative capital balance. You are asked to provide the details .of current liabilities alongwith detail address of parties,-their ledger, register,' cash book and other relevant document. You are further asked to submit the details of drawing account of Rs. 3309490 for the A. Y. 2009-10 (ii) On perusal of profit loss account and balance sheet, it evident that neither you have debited service tax in profit loss account nor it has been shown as payable in balance sheet. You are asked to produce the service tax ledger and details of challans paid in support of service tax payment. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation ii) Disallowance of studio hire charges iii) Disallowance of interest paid on unsecured loans iv) Disallowance of car hire charges, conveyance depreciation. The Ld. Counsel for the assessee submitted that the issues as have been raised by the Ld. PCIT in the show cause notice issued u/s 263 of the Act and finally as mentioned in the revisionary order were not the subject matter of the reassessment proceedings which culminated in framing of assessment u/s 143(3) read with 147 of the Act as stated above. Therefore, setting aside the assessment framed u/s 143(3) read with 147 of the Act dated 18.12.2013 is bad in law and against the provisions of Act. The Ld. A.R submitted that in the reassessment proceedings the AO has no occasion to examine the issues in respect of current liabilities of Rs. 53,10,278/- as shown the balance sheet as on 31.03.2009 and withdrawal of Rs. 33,09,490/- which according to the Ld. PCIT was made against the negative capital balance and similarly the AO has no occasion to examine as to why the service tax was not charged to the profit and loss account and also not shown in the balance sheet. The Ld. A.R. submitted that the scope of powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Bom.). The Ld. Counsel for the assessee submitted that in both these decisions, the Hon ble Courts have held that the two years period of limitation shall run from the end of financial year in which the original assessment was framed and not from the end of financial year in which the reassessment was framed when the issue on which the assessment was revised was not subject matter of reassessment proceedings. The Ld. A.R. therefore submitted that the order of Ld. PCIT is barred by limitation and may kindly be quashed. Taking the alternative plea, the ld Counsel for the invocation of jurisdiction u/s 263 of the Act, the assessment order has to erroneous as well as prejudicial to the interest of the revenue. The ld Counsel argued that these are the twin conditions which have to be satisfied concurrently and simultaneously. The ld counsel contended that when only one of the two condition is satisfied, the jurisdiction is not available to the ld. PCIT . the ld AR contended that ld. PCIT has failed to demonstrate as to how the reassessment order is erroneous and prejudicial to the interest of the revenue due to non examination of the issues as proposed in the order passed u/s 263 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue at hand we would like to dwell into the powers of the AO in the original assessment proceedings as well as the reassessment proceedings. In the original assessment proceedings, the AO has vast powers whereas in the reassessment proceedings the powers are limited though the AO has the power to assess any other item of income which is not subject matter of the reasons u/s 148(2) of the Act which comes to notice during the course of assessment proceedings but subject to the condition that the addition is made in respect of escaped income as recorded in the reasons u/s 148(2) of the Act. We note that there is no assessment order under section 143(3) and the returned income as per ITR was accepted under summary assessment s as the return was processed u/s 143(1) of the Act . In the reopened assessment under section 147 read with section 148 of the Act as finalized vide order dated 18.12.2013, the issues as raised by the ld PCIT in the order passed u/s 263 of the Act were neither subject matter of reasons recorded u/s 148(2) of the Act nor did the AO came across such items during reassessment proceedings. 12. Considering the facts of the case vis-a-vis the and the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with reference to an issue which is covered by the original order of assessment under section 143(3) of the Act and which does not form the subject matter of the reassessment, the limitation must necessarily begin to run from the date of order passed under section 143(3) by observing and holding as under:- Held, dismissing the appeal, that neither in the first reassessment nor in the second reassessment was any issue raised or decided in respect of the deductions under section 36(1)(vii), (viia) and the foreign exchange rate difference. The order of the Commissioner under section 263(2) had not been passed with reference to any issue which had been decided either in the order of the first reassessment or in the order of second reassessment but sought to revise issues decided in the first order of assessment passed under section 143(3) on March 10, 1999, which continued to hold the field as regards the three issues in question. The order dated March 10, 1999, did not merge with the orders of reassessment in respect of issues which did not form the subject matter of the reassessment. Consequently, Explanation 3 to section 147 would not alter that position. Explanation 3 only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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