Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, VICE- & SHRI G.MANJUNATHA
order of the Principal Commissioner of Income Tax (Central), Chennai-2 in Order No.ITBA/REV/F/REV5/2022- 23/1051392403(1) dated 27.03.2023. The assessment was framed by the Assessing Officer, National e-Assessment Centre, Delhi for the assessment year 2018-19 u/s.143(3) r.w.s.
143(3A) & 143(3B) of the Income Tax Act, 1961 (hereinafter the ‘Act’), vide order of dated 04.03.2021.
2. The only issue in this appeal of the assessee is as regards to order of the PCIT passed u/s.263 of the Act revising assessment framed by the Assessing Officer u/s.143(3) r.w.s.
143(3A) & 143(3B) of the Act. For this, the assessee has raised following four grounds:-
“1. The order of the learned PCIT is bad and erroneous in law.
2. The learned PCIT erred in not considering the detailed objections filed on 20/03/2023 in proper perspective. (Copy of the reply in Ack. No: 986242221200323 is attached herewith.) 3. The learned PCIT erred in not considering the material fact that order u/s. 148A(d) dated ' 29/07/2022 was passed holding that it was not a fit case for the issue of notice u/s. 148 and THAT THE SAID ORDER WAS PASSED WITH THE PRIOR APPROVAL OF THE PCIT, CENTRAL- 2, CHENNAI. (Copy is attached.) 4. The learned PCIT erred in directing the Assessing Officer to assess the income without considering the scope and effect of the substitution made by the Finance Act, 2022 with effect from 01/04/2022 in Section 263(1).”
Brief facts are that the assessee is proprietor of M/s.Vijayasree Constructions and engaged in real estate business and construction business. The assessee for the relevant assessment year 2018-19 filed e-return of income on 23.10.2018 declaring total income at Rs.93,21,650/-. The assessee’s case was selected for complete scrutiny assessment through CASS for the reason that “real estate business with high closing stock” and accordingly, notice u/s.143(2) of the Act dated 22.09.2019 was issued and duly served on the assessee. During this period, survey u/s.133A of the Act was conducted at the business premises of the assessee on 30.01.2019 and incriminating materials in the form of loose sheets, books and accounts in the form of note books and books of account maintained in tally software and backup of the same was impounded by the department vide Ann.VG/VSC/ED/Imp. dt 31.01.2019. The Assessing Officer issued notice u/s.142(1) of the Act dated 18.12.2020 and asked certain details and the assessee filed complete details of contract receipts of assessee i.e.Rs.12,33,47,318/- and the Assessing Officer after considering “High closing stock” and also going through books of account, valuation of inventories expenses framed assessment vide order dated 04.03.2021 through Faceless assessment i.e., National e-Assessment Centre, New Delhi.
Subsequently, the PCIT.,(Central), Chennai-2, issued notice u/s.263 of the Act for revision of assessment order framed u/s.143(3) of the Act dated 04.03.2021. The PCIT., in his show-cause notice noted that as a result of survey conducted by the Income-tax Department u/s.133A of the Act on 30.01.2019, following findings are there:-
“1.Sale of UDS on land at cost price: Against the provisions of Section 45(2) of the IT Act, assessee was in the habit of showing profit by selling the UDS at cost price. Discrepancy to the tune of Rs.1,85,710/- was pointed and the assessee has admitted it as his undisclosed income.
Difference in Work in Progress: There is a difference amount of Rs.1,70,88,298/- between the submission made by the assessee during post survey operations and the amount declared in the ROI filed by the assessee.
3. Sundry creditors: Genuineness of the sundry creditors for an amount of Rs.1,80,73,717/- was not proved by the assessee and later it was admitted that these amounts are no longer payable and offered the same as unexplained credits.”
The PCIT noted in view of the above that the assessee filed letter dated 01.02.2019 before the DCIT., Circle-1, Salem offering additional income on the following:-
“1. lncome - Provisions of section 45(2) Rs. 1,85,710/- 2. Additional valuation due to difference in work in progress Rs. 1,70,88,298/- 3. Additional income offered under sundry creditors: Rs. 1,80,73,717/-.”
According to the PCIT, findings and admissions by the assessee on the basis of survey conducted u/s.133A of the Act, the Assessing Officer of National e- Faceless Assessment Centre has omitted to consider above issues and completed scrutiny assessment u/s.143(3) of the Act vide order dated 04.03.2021 for the relevant assessment year 2018-19 without considering the above and hence, the assessment order is erroneous and pre-judicial to the interests of Revenue. Hence, he proposed to revise the assessment order passed u/s.143(3) of the Act and therefore, issued show-cause notice.
The assessee before the PCIT submitted his reply vide letter dated 20.03.2023 primarily objecting to the revision by considering that that order u/s.148A(d) of the Act was passed by the DCIT., Circle-1, Salem dated 29.07.2022 on the issues raised by the PCIT and relevant order is enclosed in assessee’s appeal typeset at page 31 to 35. But, the PCIT was not convinced and he noted that order passed by Faceless Assessing Officer is not in compliance with the CBDT Board’s order in F.No.187/3/2020-ITA-I dated 18.09.2020 and passed revision order to examine the issues raised in this revision order by directing in para 9 & 10 as under:-
“9. On careful consideration of the facts on record and detailed reasons supra, I am satisfied that the order u/s.143(3) dated 04/03/2021 passed by the assessing officer for the AY 2018-19 is erroneous and prejudicial to the interest of the revenue, to the extent that the order omitted to consider the evidences, and failed to consider additional income admitted by the assesse based on evidences impounded during the survey the following issues were not examined (i) Income by applying provisions of section 45(2) of Rs. 1,85,710/-, (ii) Additional income offered under work in progress of Rs. 1,70,88,298/- and (iii) Additional income offered under Sundry creditors of Rs.1,80,73,717/-. 10. Accordingly, in exercise of powers conferred u/s.263(1) of the Act, it is held that the impugned order is erroneous and Prejudicial to revenue and direct the Assessing officer to assess the income, inter-alia, the issues emanating from the survey, impounded material and statements recorded during the survey.”
Aggrieved, the assessee came in appeal before the Tribunal.
We have heard rival contentions and gone through facts and circumstances of the case. The learned counsel for the assessee before us drew our attention to the order passed u/s.148A(d) of the Act dated 29.07.2022, whereby entire issued raised in revision proceedings were considered and dropped. He referred to the order, which reads as under:-
“Dated 29/07/2022 Subject: Proceedings u/s.148A(d) in consequence to Hon’ble SC order dated 04.04.2022 – Order ORDER UNDER SECTION 148A(d) OF THE INCOME TAX ACT, 1961 The assessee is an individual and is engaged in the business of construction and sale of apartments in the name and style of M/s Vijaysree Constructions in Salem.
A Survey operation u/s 133A was conducted in the business premises of the assessee on 30.01.2019. During the course of survey proceedings, it was noticed that the assessee had acquired immovable properties and on these, had constructed and sold residential apartments. The issues were identified during the course of survey for AY's 2015-16 to 2019-20 and scrutiny assessment were completed by the DCIT, Circle 1(1), Salem for the A.Y's 2015-16 to 2017-18 and for the A.Y 2019-20 was completed by the DCIT, Central Circle, Salem.
AY 2018-19, the following issues were identified,
S.No. Issues related to Amounts involved(Rs.) 1. profit on sale of UDS (undivided 1,85,810 share) Section 45(2) 2. Work in progress 1,70,88,298 3 Sundry Creditors 1,80,717
Later, the assessee filed a letter before the DCIT, Circle-1, Salem dated 01.02.2019, and admitted the above mentioned additional incomes in addition to the regular income of the assessee for the financial year 2017-18 relevant to the Assessment Year 2018-19. Subsequently the case of the assessee was selected for Complete Scrutiny through CASS upon the reason "Real estate Business with high closing stock" and notice u/s 143(2) issued on 22.09.2019 by ACIT (e-verification) NeFAC. Later, this case was notified to Central Circle, Salem vide Notification No. 05/202021 Dated 20.10.2020 of .the Pr. CIT-1, Coimbatore and the PAN was migrated to DCIT, Central Circle, Salem only on 23.04.2021. Transfer of record from ACIT, Circle-1, Salem happened only on 05.03.2021 before which the assessment was completed by the NeAC, Delhi on 04.03.2024. Based on the survey report the case was selected for scrutiny for AY 2018-19 and notice u/s 148 of the IT Act, 1961 was issued after obtaining necessary approval from Addl.CIT, the Central Range, Coimbatore on 29.06.2021. In connection with the notices issued u/s.148 between 01/04/2021 to 30/06/2021 (extended assessment Notice u/s 148), in the above referred decision dated 04.05.2022 Hon'ble Supreme Court has given directions.
The Hon'ble Supreme Court of India, vide it's judgment dated 04.05.2022 (2022 sec Online SC 543), in the case of Union of India v. Ashish Agarwal has adjudicated on the validity of the issue of reassessment notices issued by the Assessing Officers during the period beginning on 1st April, 2021 and ending with 30th June, 2021, within the time extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act,2020 (TOLA) and various notifications issued there under (these reassessment notices hereinafter referred to as "extended reassessment notices").
The Supreme Court of India by its above subject order has held that the extended reassessment notices issued under the old law shall be deemed to be the show cause notices issued under clause (b) of Section 148A of the new law and has directed the Assessing Officers to follow the procedure with respect to such notices. It has also held that all the defenses available to the assessee under section 149 of the new law and whatever rights are available to the Assessing Officers under the new law shall continue to be available.
In view of the order of the Hon'ble Supreme Court of India, the CBDT has clarified that the extended reassessment notice issued u/s.148 during the extended period between 01.04.2021 to 30.06.2021 is deemed to be Show Cause notice issued u/s.148(b) of the I.T. Act amended provisions vide Instruction No.01/2022 in F.No.279/Misc./M-51/2022-ITJ dt.11.05.2022. As per the directions of the Hon'ble Supreme Court, letter was issued to the assessee on 02.06.2022 for treating the Notice issued u/s.148 dated 29.06.2021 as Show cause notice in terms of section 148A(b). In response to the notice u/s 148A(b) of the IT Act, 1961 the assessee has filed reply by mail on 14.06.22 and stating that "the assessment order dt 04.03.2021, last Para in Page-5 of the order, very clearly dealt with the examination of all the documents and replies filed by the assessee and examination of all the evidences and your attention is invited to the last Para of the assessment order. wherein it was specifically mentioned as NO ADVERSE INFERENCE IS DRAWN. When such being the case, the Revenue, maybe in order to overcome the deficiency of not proceedings; under guise of reassessment proceedings. Besides, your office communication dt 01.06.22 has missed out the mandate prescribed in sec.149, as amended by the finance Act, 2021. Hence, no notice u/s 148 shall be issued on the alleged basis mentioned in your office communication cited above. It is also brought to your attention that your office communication cited above, since not as per sec. 148A(b), is not valid". The reply of the assessee is carefully considered and I am satisfied that it is not a fit case for issue of notice u/s.148 of the Income Tax Act.
This order is passed with the prior approval of the-Pr. Commissioner of Income Tax, Central-2, Chennai.
KANNAN GOPALAN CENTRAL CIRCLE SALEM (In case the document is digitally signed please refer Digital Signature at the bottom of the page)”
The learned counsel for the assessee stated that even the alleged violation of CBDT directions contained in order No.F.187/3/2020-ITA-I dated 18.09.2020. The learned counsel stated that assessment was taken up by the Assessing Officer and assessment order is dated 04.03.2021 and assessment taken up by the Faceless Assessing Officer by issuing notice u/s.143(2) dated 22.09.2019. Hence, the assessment was made by the Assessing Officer as assigned case in faceless assessment. The learned counsel for the assessee also relied on Special Bench decision i.e. Third Member case of ITAT., Indore Bench in the case of M/s. Dewas Silk Mills Vs. CIT (2005) 93 ITD 31 (Indore) (TM), wherein exactly identical dropping of proceedings under section 148 of the Act, the Tribunal has considered and held the revision order as bad in law, because while dropping reopening or reassessment proceedings u/s.147, the Assessing Officer has considered all the issues. We noted that above issue was considered by the Third Member of the Tribunal in the case of M/s. Dewas Silk Mills Vs. CIT (supra), wherein the Tribunal held in para 22 as under:-
“22. In the present case also, the Assessing Officer made inquiry and the assessee replied to each and every query of the Assessing Officer both in the original proceedings as well as in the re-assessment proceedings and arrived at a conclusion for re- opening proceedings and dropping the proceedings after the due consideration of reply and facts submitted by the assessee. Here also the CIT has not given any finding that the cash credits were not genuine and that interest paid by them was not allowable as deduction. In the facts and circumstances, in our opinion, CIT(A) was not justified in invoking provisions of section 263 for revising the order of dropping of reassessment proceedings under section 147 of the Act, of the Assessing Officer, which as aforesaid, were dropped by the Assessing Officer after due and proper inquiries. The order of the CIT(A) on merits, is therefore, not sustainable, and accordingly requires to be vacated.”
On the other hand, the learned CIT DR only relied on revision order and also asked the Bench to uphold revision order, because Assessing Officer will re-examine the issues afresh.
We noted that this issue has already been considered in detail by the Assessing Officer, while examining issues in the proceedings u/s.148A(d) of the Act and closed reopening proceedings or dropped reopening proceedings with the prior approval of the PCIT., Central-2, Chennai. This is also a fact that these seized documents and others were available with the Department at the time of framing of original assessment and the Assessing Officer, it is presumed that, might have gone through all the documents while framing assessment and he framed the assessment accordingly. Hence, we are of the view that the PCIT erred in revising the assessment and therefore, we quash the revision order passed by the PCIT u/s.263 of the Act.
This appeal of the assessee is allowed accordingly.