9911796707
TMI Blog2024 (11) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. Thus, no additions were made based on the reasons recorded. Assessing Officer was prohibited from making additions in respect of other issues which were not part of reasons recorded. Thus when no addition is made on account of grounds of re opening. There is no scope to make any other addition. Section 263 does not empower indirectly to circumvent the provision by directing to make an enquiry on some other independent issue. DR is incorrect to invoke Explanation 3 to section 149 of the Act. In view of the aforesaid discussions, we are of the considered opinion that the impugned order passed by the learned Commissioner is bad in law and is hereby quashed. Therefore, ground of appeal no.2, stands allowed. AY 2017 18 - We find that in the present facts and circumstances, the legal maxim 'sublatofundamentocaditopus' is applicable, meaning thereby 'a foundation being removed, the superstructure falls'. Once the basis of a proceeding is gone, the action taken thereon would fall to the ground. If initial action is not in consonance with law, all subsequent proceedings would fail as illegality strikes at the root. Thus, in the absence of valid foundation, exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject-matter of the assessment in a proceeding initiated under section 147 of the Act. 3. Whether where jurisdiction under section 263 was sought to be exercised with reference to issues which were not subject of reopening of assessment, period of limitation provided in section 263(2) would commence from date of order of assessment u/s 143(1) and not from date on which order of reassessment u/s 147 had been passed. 4. Whether on the facts and circumstances, the learned CIT erred in neither making any enquiry on his own nor considering merits of case but simply directed the learned AO to make proper enquiry and further verification thereby, rendering the order passed u/s 263 bad in law which deserves to be set aside. 5. Whether on the facts and circumstances, the learned CIT erred in not appreciating that, Explanation 2 to section 263 cannot be said to have overridden the law as interpreted by the Hon'ble Courts, according to which the Pr.CIT has to conduct an enquiry and verification to establish and show that the assessment order is wholly unsustainable in law. 6.6. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer cannot do so. The learned Counsel for the assessee further contented that the time limit for initiating show cause notice under section 263 of the Act would run from the date of intimation order dated 07/06/2018, which was passed under section 143(1) of the Act and not from the date of re assessment order passed under section 143(3) r/w section 147 of the Act. This is for the reason that, by issuing notice under section 263, the issues which were not subject matter of re-assessment proceedings, were sought to be revised and hence, the limitation period would run from intimation order passed under section 143(1) of the Act. The learned Counsel, in support of these arguments, placed reliance on the following judicial presidency. i) CIT v/s Alagendran Finance Ltd. [2007] 162 Taxmann.com 465 (SC); ii) CIT v/s Industrial Development Bank of India Ltd. [2023] 152 Taxmann.com 591 (SC); and iii) CIT v/s Lark Chemicals Ltd. [2015] Taxmann.com 446 (Bom.). 6. On merits, the learned counsel for the assessee further submitted that the learned Commissioner had factually erred in observing that the cost of free construction valuing to ₹ 2,81,33,000, was allegedly included in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mal enquiry carried out by learned CIT before forming a view that the impugned order was erroneous and prejudicial to the interests of the Revenue. 2.1 The assessee submits that, it had filed detailed written submissions before learned CIT from time to time (Refer Pages 6-28 of Factual Paperbook). The assessee had demonstrated before learned CIT that, alleged issues do not give rise to any prejudice or loss of Revenue to the Department. The assessee had made submission on merits of the case and submitted that, that the order passed by the learned AO cannot be termed as erroneous and prejudicial to the interests of the Revenue. 2.2 The assessee submits that, it was incumbent on the learned CIT to undertake minimal enquiry to come to a conclusion that, the order was erroneous and prejudicial to the interests of the Revenue. Failure to make such enquiry by learned CIT will render the revision order u/s 263 bad-in-law. Reliance is placed on following judicial precedents: PCIT v/s Mohak Real Estate Pvt Ltd (ITA No.730/2023) (Del.); PCIT v/s Earth Minerals Co. Ltd., 162 taxmann.com 273 (SC); PCIT v/s Earth Minerals Co. Ltd., 162 taxmann.com 272 (Orissa); and M/s. Earth Minerals Co. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act for non-deduction of TDS 3.4 The assessee submits that, it had deducted TDS at the rate of one percent amounting to Rs. 12,52,000/- on sale consideration of Rs. 12,52,00,000/-. The assessee has duly paid the TDS amount of Rs. 12,52,000. The assessee had duly issued TDS certificate in Form 16B to the deductee party (Copy is enclosed as Factual paper book page 26). Copy of Form 168 consist details of challan paid. The fact about TDS deposited is also reflected in Form 26AS of the assessee. Thus, the assessee submits that, TDS of Rs. 12,52,000 has been duly deposited with government and hence, disallowance under section 40a(ia) is not warranted. 3.5 Therefore, the issues sought to be revised by the learned CIT does not result into any prejudice to the Revenue. Therefore, the twin condition of order being erroneous and prejudicial to the interests of revenue is not satisfied. Reliance is placed on the decision of Hon'ble SC in the case of Malabar Industrial Co. Ltd v. CIT (243 ITR 83) (SC). 3.6 The assessee had filed its written submission before the learned CIT from time to time. The learned CIT has acknowledged the submissions filed, but simply observed that, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recorded (Refer Pages 1 to 3 of factual paperbook) [Relevant Extract]: REASONS FOR REOPENING OF ASSESSMENT IN THE CASE OF M/s Latitude Infraventures (AAEFL9303P) FOR THE A.Y. 2016-17 U/s 147 OF THE INCOME TAX ACT, 1961. The assessee has filed its return of income for A.Y. 2016-17 disclosing the total income at Rs. Nil/- In this case, as per the information received from ITO(Exemption)-1, Nagpur it was informed that the assessee has entered into development agreement with M/s Sou Sumatibai Pandurang Deo Memorial Charitable Trust and has made payment of Rs. 15,33,33,000/-, the source of payment is not explained viz a viz income shown in the ITR for previous years. Therefore, income for A.Y. 2016-17 has escaped assessment. In the view of the above, I have reasons to believe that the income to the tune of Rs. 15,33,33,000/- has escaped the assessment for A.Y. 2016-17. 5.3 Issues on which assessment order is sought to be revised as per order passed by learned CIT u/s 263 [Relevant Extract] (Refer Pages 6 to 11 of Appeal Memo) 7 Accordingly, I hereby set aside the assessment u/s 147 read with section 144 read with section 144B of the Income-tax Act, 1961 dated 29.03.2022 passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Pages 84 to 91 of legal paperbook). 7. The learned Departmental Representative supported the impugned order passed under section 263 of the Act by the learned Commissioner. On legal grounds, he submitted that the order of the Hon ble Jurisdictional High Court in Jet Airways Ltd. (supra) has been challenged before the Hon ble Supreme Court along with connected matters and the same is pending for disposal. On merits of case, the learned D.R. could not point out any mistake and relied on the impugned order passed by the learned Commissioner. The learned D.R. submitted that once the case is re opened under section 147, it is open for the Assessing Officer to make additions in respect of all the issues and not restricted to the issues on which case was re opened. He relied upon Explanation 3 to section 147 of the Act prior to amendment w.e.f. 01/04/2021, which read as under: Explanation 3 For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to h his notice subsequently in the course of the proceedings under this section, notwithstanding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. 11. We find that the issues on which re assessment order was passed under section 143(3) r/w section 147 of the Act and the issues on which revision order passed under section 263 of the Act are entirely different. The assessee had filed Paper Books containing documents filed during re assessment proceedings under section 147 and revision proceedings under section 263. We also find that during the re assessment proceedings, a notice dated 10/12/2021 under section 142(1) was issued along with a questionnaire. The assessee furnished reply along adducing documentary evidences exhibited therewith which are placed at Page 1 to 67 of the Paper Book additional. Thus, we find merit in the submission of the learned Counsel for the assessee that the Assessing Officer had made the enquiry during re-assessment proceedings in line with the reasons recorded and after verification had accepted the returned income of the assessee. Thus, no additions were made based on the reasons recorded. Therefore, as per binding judicial precedents of Hon'ble High Courts, the Assessing Officer was prohibited from making additions in respect of other issues which were not part of reasons record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect legal position and, therefore, does not call for any interference. 12. The key takeaway is when no addition is made on account of grounds of re opening. There is no scope to make any other addition. Section 263 does not empower indirectly to circumvent the provision by directing to make an enquiry on some other independent issue. The learned D.R. is incorrect to invoke Explanation 3 to section 149 of the Act. In view of the aforesaid discussions, we are of the considered opinion that the impugned order passed by the learned Commissioner is bad in law and is hereby quashed. Therefore, ground of appeal no.2, stands allowed. 13. Since we have already decided ground of appeal no.2, on merit in favour of the assessee and against the Revenue, hence, all other contentions rendered academic in nature and not delved upon. Thus it is conclusively established that the order passed under section 263 of the Act is unsustainable on jurisdictional issue. 14. In the result, appeal filed by the assessee stands allowed. ITA no.350/Nag./2024 Assessment Year 2017 18 15. The assessee has raised following grounds: 1. Whether on the facts and circumstances, the learned Pr.CIT has erred in concludi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner and allow the ground no.2, raised by the assessee. Thus, the order under section 263 of the Act has got no legal legs to stand upon and hence quashed. 17. Since we have already decided ground of appeal no.2, on merit in favour of the assessee and against the Revenue, hence, all other contentions rendered academic in nature and not delved upon in details. Accordingly, submissions and arguments advanced about other aspects of section 263, is not reproduced for the sake of brevity. The reasons for re opening as manifested is extracted below: The assessee has filed its return of income for A.Y.2017-18 disclosing the total income at Rs. Nil/-. In this case, as per information received from ITO(Exemption)-1, Nagpur it was informed that assessee has entered into agreement to sale agreement with two parties for Rs. 1.5 crore and 2.6 Crore but on perusal of the ITR for A.Y.2017-18 it is found that above transaction has escaped assessment for . .2017-18. In view of the above, I have reason to believe that the income to the tune of Rs. 4.10 Crores (Approx) has escaped assessment for A.Y.2017-18. Vis a vis the grounds for revision is also adumbrated below: Accordingly, I hereby set as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
