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TMI Blog2023 (8) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 or requisition u/s 132A however, observed that the completed/unabated assessments can be re-opened by the AO in exercise of powers u/s 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. Once the AO rightly or wrongly assumed jurisdiction in framing the assessment order u/s 143(3) r.w.s. 147 of the Act, in view of the fact that once the assessment order is subject matter of the further appeal, reassessment cannot be framed on the same issue on issuing notice u/s 148 as the original assessment gets merged with the order of the Higher Appellate Authority. Ratio laid down in the case of Krishna Developers Co. [ 2017 (8) TMI 241 - GUJARAT HIGH COURT] and Abhisar Buildwell P.Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] which are having effect of binding precedent, therefore by relying on the ration laid on in the case of Krishna Developers Co. and Principal Commissioner Vs. Abhisar Buildwell P. Ltd (Supra), we find no merits in the Ground No. 1 to 4 of the C.O. X X X X Extracts X X X X X X X X Extracts X X X X ..... and Marketing (P) Ltd. (7) (a) The order of the CIT(Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." C. O. No. 404/DEL/2015 & C. O. No. 404/DEL/2015 : 3. The assessee in both the cross objections has raised the following common grounds of appeal :- "1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing impugned reassessment order and that too without assuming jurisdiction as per law and without complying the mandatory conditions of section 147 to 151 of the Act. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in framing impugned reassessment order u/s 147/143(3) is beyond jurisdiction, bad in law and against the facts and circumstances of the case. 3. In any view of the matter and in any case, impugned assessment order could not have been passed under the law, more so when original assessment was annulled. 4. That the cross objector craves the leave to add, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 at a total income of Rs. 16,65,61,153/- as against returned income of Rs. 11,722/-. Aggrieved by the above order, the assessee filed revision application u/s 264 of the Income Tax Act, 1961 before CIT, (Central)-ll, New Delhi. The assessee challenged assumption of jurisdiction u/s 153C on the grounds, that the satisfaction arrived by the A.O. is not based on documents found and seized from the premises of other person in whom action u/s 132 is initiated. The CIT, (Central) - II, New Delhi annulled the assessment order on the ground of incorrect assumption of jurisdiction u/s 153C. However, the Ld. CIT (Central)-ll, has not adjudicated the ground on which the additions were made. Though, the assessee challenged the additions but no submissions were filed before the LD. CIT (Central)-ll, New Delhi as to why additions be deleted. In view of the fact, whereas no submission is made by the assessee in respect of the merits on which additions were made, it clearly shows that the assessee had nothing to say on these grounds. However after perusal of the assessment records of the case following issues are found- A) Expenditure of Rs. 9,37,690/- is required to be disallowed (excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted the income of the Assessee at Rs. 30,95,89,154/- as against returned income of Rs. 11,772/-. 8. Aggrieved by the assessment order dated 02/03/2015 for the A.Y 2009- 10, the assessee preferred an appeal before the CIT(A). The CIT(A) vide order dated 28/09/2015 deleted the entire addition made by the A.O. 9. Similarly, in the case of A.Y 2010-11, the A.O. by way of assessment order dated 02/03/2015 passed u/s 147/143(3) of the Act disallowed the claim of loss of Rs. 1,01,33,791/- and made addition of Rs. 9,86,97,514/- on account of unexplained bank deposits. The assessee filed appeal before the CIT(A) and in the Appeal filed by the assessee, vide order dated 28/09/2015 the CIT(A) deleted the entire addition. 10. Aggrieved by the order of the CIT(A) dated 28/09/2015 deleting of the entire addition for A.Y 2009-10 and 2010-11, the revenue preferred the appeals in ITA No. 6219/2015 A.Y (2009-10) and ITA No. 6220/Del/2015 (A.Y 2010-11). The assessee filed Co No. 404 /Del/2015 (A.Y 2009-10) and C.O No.405/Del/2015 (A.Y 2010-11) by challenging the reassessment order on the ground that framing of reassessment order is without assuming jurisdiction and without complying the mandator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and therefore has not decided the issues/additions on merit. Once the assessment has been annulled on technical grounds without going into the merits of the case, the order does not survive in the eye of the law and therefore there was no original assessment made in this case. Therefore there is no embargo to the Department to initiate proceedings under section 147/148 of the Act. The Ld. DR submitted that the said issue have been settled by Gujarat High Court in the case of Krishna Developers & Co. vs. DCIT in Special Civil Application No. 8352 of 2017 and the said judgment of the Hon'ble Jurisdictional High Court has been affirmed by Hon'ble Supreme Court of India reported in [2018] 91 taxmann.com 306 (SC). Thus, the Ld. DR submitted that the C.O. filed by the Assessee is devoid of merit. 14. We have heard the parties perused the material available on record. In the instant case, the Assessing Officer completed the proceedings u/s 153C on 23.12.2011, the assessee filed a petition u/s 264 of the Act before the CIT. The Ld. CIT allowed the petition filed by the Assessee u/s 264 of the Act and held that the assessment proceedings u/s 153C of the Act as invalid since it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice under section 143(2) of the Act was issued on 23.9.2013 and dispatched for service on 24.9.2013. The position which is concluded by virtue of the order of the Appellate Commissioner is such notice was not served on the assessee before 30.9.2013. The assessee raised such contention before the Assessing Officer and also participated in the assessment. The Assessing Officer rejected the ground of non service of notice and taxed the proceeds out of sale of land as the business income. In the appeal, CIT (Appeals) held that the assessment was invalid since it was carried out without notice under section 143(2) of the Act. In that view of the matter, CIT (Appeals) did not examine the assessee's contention regarding the additions made by the Assessing Officer. This order of the CIT (Appeals) has become final. After this order was passed, the Assessing Officer issued the impugned notice for reopening which was done within a period of four years from the end of relevant assessment year. 13. In light of such facts, we need to test the assessee's contentions. Regarding the nature of income having been scrutinised in the original assessment, we cannot accept the stand of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Commissioner (Appeals). First was with respect to the validity of the assessment framed by the Assessing Officer without service of notice and second was with respect to merits of additions made by him in such order of assessment. The Commissioner (Appeals) confined his comments only to first of his contentions and declared that the assessment was invalid since it was framed without service of notice. In that view of the matter, he refused to comment on the assessee's contention on merits of the additions. Essentially, therefore, the order of Commissioner (Appeals) dealt with only one part of the assessee's appeal and refused to enter into the other part. The order of Commissioner, therefore, was confined to the ground of invalidity of assessment per-se and not on the merits of the additions made. The reopening is based on the belief of the Assessing Officer that the sale proceeds should be taxed as the business income and not as capital gain. This subject matter was not a part of the order of the Commissioner (Appeals). The Commissioner (Appeals) having entertained only part of the assessee's appeal, the principle of merger as flowing from the proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the counsel for the assessee that the Assessing Officer could not have issued notice of reopening to bypass or circumvent the statutory period for issuance of notice under section 143(2) of the Act. The argument was that power of reopening the assessment cannot be exercised to overcome the situation where scrutiny assessment is not possible, for want of service of notice under section 143(2) of the Act within the statutory time period. As is well-known section 143 of the act pertains to assessment. Subsection (1) of section 143 provides the manner in which the Assessing Officer would process a return filed by the assessee. Sub-section(2) of section 143 provides that where a return has been filed and the Assessing Officer considered it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax, he shall serve on the assessee a notice requiring him on the specified date to attend his office or to produce or cause to be produced any evidence on which the assessee may rely in support of the return. This notice under subsection(2) of section 143 of the Act before a scrutiny assessment can be undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In the present case, facts are peculiar. It is not as if the Assessing Officer after noticing certain discrepancies in the return of the assessee, slept over his right to undertake the scrutiny assessment. The scrutiny assessment was initiated by issuance of notice under section 143(2) of the Act on 23.9.2013. It was also dispatched for service to the assessee on 24.9.2013 by Speed Post on the last known address. The Commissioner (Appeals) however, held that there was no proof of service of notice and since section 143(2) requires service of notice, the assessment was framed without complying with the mandatory requirements. 21. We may refer to some of the decisions on the point. In case of A G Group Corpn. (supra), the Court noticed that at one point the Revenue had reopened the assessment of the assessee. However, such assessment failed on the ground that the reasons were not recorded by the Assessing Officer for issuing such a notice. On the same ground, the Revenue issued fresh notice of reopening which was challenged before the High Court. The High Court held that when the earlier order stood annulled on the ground of lack of fulfillment of the basic requirement under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. A.R relied on the orders of the Coordinate Bench of the Tribunals wherein the Tribunal has taken a view that, once the AO rightly or wrongly assumed jurisdiction in framing the assessment order u/s 143(3) r.w.s. 147 of the Act, in view of the fact that once the assessment order is subject matter of the further appeal, reassessment cannot be framed on the same issue on issuing notice u/s 148 as the original assessment gets merged with the order of the Higher Appellate Authority. In my opinion, the ratio laid down by the Hon'ble Supreme Court in the case of Krishna Developers & Co. (supra) and Principal Commissioner Vs. Abhisar Buildwell P.Ltd (Supra), which are having effect of binding precedent, therefore by relying on the ration laid on in the case of Krishna Developers & Co. and Principal Commissioner Vs. Abhisar Buildwell P. Ltd (Supra), we find no merits in the Ground No. 1 to 4 of the C.O. Accordingly, Ground No. 1 to 4 of the C.O. No. 404/Del/2015 And 405/Del/2105 are is dismissed. In the result C.O. No. 404/Del/2015 & 405/Del/2015 are dismissed. ITA No. 6219/Del/2015 (A.Y 2009-10) 19. Now we take up the appeal filed by the Revenue which are against deletion of addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g considered the receipt of the assessee company and for assessee's failure to establish the genuineness of the creditors the entire amount is treated as unexplained deposits of the assessee company and will be added as income of the company. This addition of Rs. 16,45,11,241/- will cover the increase shown under head issued subscribed and paid-up capital amounting to Rs. 6,48,170/- and Rs. 1,87,91,930/- i.e. total addition on this issue Rs. 14,50,66,141/-. 8. Satisfaction is hereby recorded that assessee has concealed the particulars of income. Penalty proceedings u/s 271(1)(c) read with section 274 are hereby initiated separately. 9. After discussion total income of the company is computed as under:- 1 Income as per return Rs. Rs. 11,772/- Add:- (i) Unexplained share capital Rs. 14,50,66,141/- (ii) Unexplained bank deposit as discussed above Rs. 16,45,11,241/- Total Rs. 30,95,89,154/- 20. In the Appeal filed by the assessee the addition made by the A.O. has been deleted wherein the ld. CIT(A) has observed as under:- "13. As it is evident from the above submissions that the Assessing Officer has not considered the financial statements and has erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Incomes Tax Vs. M/s Jansampark Advertising Land Marketing (P) Ltd. therefore, submitted that the order of the CIT(A) is liable to be set aside. 22. Per contra, the Ld. Assessee's Representative relied on the order of the CIT(A) and submitted that the assessee has substantially proved the creditworthiness of the parties from which investment/deposits were made, the CIT(A) after analyzing the documents on record rightly deleted the additions made by the A.O. which requires no interference at the hands of the Tribunal. 23. We have heard both the parties and perused the material available on record. The Ground No. 1 to 6 raised by the Revenue are inter related i.e. with regard to sustaining the addition of Rs. 14,50,141/- towards share application money and sum of Rs. 16,45,11,241/- towards unexplained deposit. However, we find that there was calculation mistake committed by the A.O. in respect of share capital and share premium the A.O. mentioned in the assessment order that share capital was Rs. 6,48,170/- and share premium was Rs. 1,87,96,930/- but while calculating the same, of the above two figures as Rs. 14,50,66,141/- instead of Rs. 1,94,45,100/-. The Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as unexplained claim of loss. Further, on perusal of the bank reconciliation statement for year under consideration it is seen that there has been credit of Rs. 9.86.99,282/- But as per the statement account of the assessee received from bank shows the credit of Rs. 9,86,97,514/- during the year under consideration. The difference in the bank account itself shows that the accounts prepared by the company are not correct and cannot be relied upon Moreover, assessee's failure to produce any books of account also leads the adverse inference. Therefore, they entire sum of Rs. 9,86,97,514/- is treated as unexplained especially in view of the fact that the name of depositors shown by the assessee are not the working companies and no evidence, whatsoever has been adduced by the company to prove their existence and credit worthiness. This addition of Rs. 9,86,97,514/- will also cover the addition warranted on account of unexplained cash deposits. Satisfaction is hereby recorded that assessee has concealed the particulars of income. Penalty proceedings u/s 271(1)(c) read with section 274 are hereby initiated separately. 7. After discussion total income of the company is compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eously made the addition. During the submissions, the Assessee has submitted that; there was no loss showing in the profit and loss account of the assessee. I have also consdiderd the facts, and I find that the Ld. A.O. has just copy pasted the order passed u/s 153C and made the additions. 10.1. Hence, I allow the above ground of appeal and hereby delete the addition of Rs. 10,01,33,791/- so made." . . . "Finding 12. I have considered the facts of the case, written submissions of the appellant and the findings of the Assessing Officer. I find that the appellant had filed complete details of credit and debit entries of its bank account and also the details of loans paid and interest earned there from giving the name of the party, principal amount of loan, interest earned thereon during the year, tax deducted at source on the interest income, net interest due / received and the balance interest receivable. On perusal of the details of credit entries filed by the appellant during the course of assessment proceedings, I find that clear narration was given against the credit entries. If the Assessing Officer had any doubt about the credit entries, he could have asked for fur ..... 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