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TMI Blog2024 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has filed an application. The application reads as under:- BEFORE THE INCOME TAX APPELLATE TRIBUNAL KOLKATA In the matter of: Vrinda Engineers (P) Ltd.... Appellant vs. PCIT, Central -1, Kolkata....Respondent In the matter of: An application for condonation of delay in filing appeal before the Hon'ble Tribunal against the 263 order of the Ld. PCIT, dated 28.03.2022 for A.Y: 2012-13. 1. That an assessment was completed u/s 143(3)/147 vide an order dated 30.09.2019 passed by DCIT, Central Circle-1 (1), Kolkata for A.Y 2012-13 wherein the AO assessed the income as per the returned income. 2. That meanwhile the Ld. PCIT initiated 263 proceedings and passed an order u/s 263 dated 28.03.2022 against the said assessment order 143(3)/147 considering the same as erroneous and prejudicial to the interest of Revenue. 3. That your petitioner approached its regular tax consultant to seek advice on receipt of order passed under section 263. He suggested your petitioner to participate in the subsequent assessment proceedings pursuant to the revision order u/s 263 and to pursue appellate remedy, if any adverse order is received in the said proceedings. Copy of letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer did not drop the assessment proceeding, then, challenged that order before the higher appellate forum and alongwith that the order of 263 could also be challenged. Due to this misunderstanding, the appeal was not filed. The ld. Counsel for the assessee prayed for condonation of delay and adjudication of the appeal on merit. 4. Ld. CIT(DR), on the other hand, contended that this appeal is time barred by more than 500 days. The assessee should be vigilant about prosecuting its income-tax litigation before appropriate forum and this ignorance of the procedure cannot be a ground to condone the delay. 5. With the assistance of the ld. Representatives, we have gone through the record carefully. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is al ways deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [A IR 1969 SC 575] and State of West Bengal V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was always vigilant and has been prosecuting the income tax litigation. He has participated the scrutiny assessment passed on 13.11.2014 under section 143(3) of the Income Tax Act in this A.Y. Thereafter he participated in the reassessment proceeding, which was framed on 07.12.2018. The assessee thereafter again participated the second reassessment order and thereafter ld. Commissioner exercised the powers under section 263. It could not challenge this impugned order before the Tribunal under an impression that outcome of 263 in the assessment order could be challenged simultaneously. In other words, the assessee was of the view that while challenging assessment passed under section 147 r.w.s. 263, the assessee could take the grounds on order passed u/s 263 could be challenged. We are of the view that it is a bonafide procedural misconception based on its regular Tax Consultant's advice and this parallel proceeding in same assessment year repeatedly may give rise of some confusion. By making an appeal time barred, assessee will not gain anything. It cannot adopt as a delaying strategy for litigating with the Department. Therefore, we condone the delay in filing the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,89,17,760/-. 2. A credible information has been received from the Deputy Commissioner of Income Tax, Unit, 2(4), Kolkata wherein it was mentioned that Shri Ashutosh Agarwal, Director of Rupali financial consultants Pvt. Ltd. maintained a current account no. G28003300227 with ICICI Dank, Howrah Branch. It was reported that on perusal of bank statement, it was observed that huge amount was deposited in the aforesaid accounts through chuque/RTGS from different companies and immediately transferred to various entitles/companies on the same day or next day. To verify the transactions, summons were issued u/s 131 of the Act, to M/s Rupali financial consultants Pvt. Ltd but the summons was returned back unserved with postal remarks 'not known' & 'Incomplete address'. Reportedly, after analysis of financial statement of M/s Rupali financial consultants Pvt. Ltd., it was found that the company has either low or nil turnover and very meagre profit after tax. In view of the above, it was inferred that bank account of M/s Rupali financial consultants Pvt. Ltd. was used for providing accommodation entries to beneficiary companies. It is also observed that fund was transferred to bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued a show-cause notice. The copy of the show-cause notice is placed at pages no. 22 & 23 of the paper book. Such notice reads as under:- OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-1, KOLKATA 3rd Floor, Aatakar Bhawan Poorva, 110, Shanti Pally, E.M. Bt-pass, Kolkata- No. PCIT(C)-1 /263/Vrinda Engineer (P) Ltd./2021-22/ Dated :03.03.2022 To The Principal Officer M/s. Vrinda Engineers (P) Ltd. 181/B, Chittaranjan Avnue, Kolkata-700007 Sir, Sub: Proceedings under section 263 of the Income Tax Act,1961 for the assessment year 2012-13.. .matter regarding. The assessment proceedings for the assessment year 2012-13 in the case of your company was completed under section 147/143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") vide order dated 30.09.2019 determining total income at Rs. 1,59,17,180/-. 2. On examination of the relevant records, it is noticed that a survey under section 133A of the Act was conducted against your company on 01.03.2017 & 02.03.2017 by the Investigation Wing, Kolkata. In course of the survey operation, statement of Sri Jitendra Kumar Saraogi, one of the directors of your company was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of four years from the end of the relevant assessment year. The assessments have already been framed u/s 143(3) and under section 147 read with section 143(3). According to him, the interdiction provided in the 1st proviso would prohibit the ld. Assessing Officer to reopen an assessment, where assessment has been framed under section 143(3) of the Income Tax Act, and four years have expired from end of A.Y. In other words, ld. Assessing Officer will be precluded to take action under section 147 after expiry of four years from the end of A.Y., unless the assessee failed to declare its income fully and truly. The basic condition is that ld. Assessing Officer has to pinpoint the failure of the assessee in disclosing the details of its income fully and truly, which has attributed to escapement of assessment qua those incomes. A perusal of the show-cause notice issued under section 148, nowhere ld. Assessing Officer has alleged this aspect. He only made reference to Explanation 2C(i) of the Income Tax Act, but it is to be appreciated that in this case, not only scrutiny assessment has been passed but thereafter assessment was reopened and no adverse view was taken by the ld. Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also escaped, then, unless addition on Point (A) is being made, no addition is to be made qua Point (B). In this case, once addition of the sum received from M/s. Rupali Financial Consultants (P) Ltd. was not made by the ld. Assessing Officer in reassessment order that means no other item of loan or any other issue could be further enquired. For buttressing his proposition, he relied upon three decisions, namely - (i) Hon'ble Bombay High Court in the case of CIT -vs.- Jet Airways reported in 331 ITR 236, (ii) Hon'ble Delhi High Court in the case of Ranbuxy Laboratories reported in 336 ITR page 136 and (iii) Hon'ble Gujarat High Court in the case of Md. Juned reported in 353 ITR page 172. All these three Hon'ble High Courts are unanimous on the point that expression in section 147 would be construed in a way that if addition on a point for which assessment is being reopened is not made, then, no other addition would be made. The ld. Counsel for the assessee further contended that the ld. Commissioner in this impugned order did not doubt the veracity of acceptance of loan amounting to Rs. 15,00,000/- from M/s. Rupali Financial Consultants (P) Limited by the ld. Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income Tax Off icer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) "record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. Assessing Officer was of the view that DDIT(Investigation) has transmitted the information showing that in lieu of certain commission, these companies have taken entries of loan from various shell companies. Now the date of this information is not discernable in the reasons recorded by the ld. Assessing Officer on second occasion, whereas the first reassessment order was passed on 07.12.2018. This reassessment order also talks about DDIT (Information) based upon the search upon the Mundra Group. Therefore, the reasons are totally vague about the source of information. What is the exact information and when it was transmitted to the ld. Assessing Officer and if it relates to before the earlier two assessment orders, i.e. scrutiny assessment as well the first reopening, then, where is the fault of the assessee. A perusal of the reasons further indicates that ld. Assessing Officer has not made out any case within the proviso attached to section 147 of the Income Tax Act. In other words, ld. Assessing Officer has not highlighted which information or details was not declared by the assessee fully and truly in its accounts. Therefore, we are of the view that this reopening is not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding M/s. Rupali Financial Consultants (P) Ltd. and outstanding unsecured loan increased from Rs. 7,14,62,118/- as on 31.03.2011 to Rs. 13,86,26,978/- as on 31.03.2012. The AO having reopened the case on the issue of unsecured loan had the obligation to examine the genuineness of all the unsecured loans shown to have been received by your company during the financial year 2011-12". The above observation of the ld. Commissioner would reflect that he was taking note of the fact only from the accounts of the assessee. Thus such aspect should have been examined at the first step when scrutiny assessment was made. It cannot be put off for waiting reopening of assessment in 2019 so that exercise under section 263 would be carried out in 2022. This aspect has been examined by the Hon'ble Supreme Court in the case of CIT -vs.- Alagendran Finance Limited reported in 293 ITR 1 (SC). The brief facts in that case are that the assessee i.e. Alagendran Finance Limited was incorporated under the Indian Companies Act. It filed its returns for A.Ys 1994-95, 1995-96 and 1996-97 on 23.11.1994, 27.11.1995 and 26.11.1997 respectively. The ld. Assessing Officer has passed the assessment order in all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emplated that no order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which orders sought to be revised, was passed. The original error crept in the assessment order dated 31.11.2014. The two years from end of March, 2015 ought to be calculated. Therefore, the third fold of contention is fully covered by the decision of the Hon'ble Supreme Court and this 263 notice is not sustainable. Taking into consideration all these three fold of contentions raised by the assessee, we are of the view that the impugned order passed under section 263 is not sustainable. 28. Now we take ITA No. 1232/KOL/2023. This appeal is directed against the order of ld. Commissioner of Income Tax (Appeals), Kolkata-20 dated 22nd September, 2023. The foundation of this appellate proceeding is an assessment order, which has been passed in consequence of 263 order. Once the very 263 order has been quashed, then, the foundation to pass the impugned assessment order dated 29.12.2022 under section 263 read with sections 147 and 143(3) is not sustainable. The assessment order would be without jurisdiction and accordingly we allow this appeal also by quashing b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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