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Income Tax Appellate Tribunal, KOLKATA-PATNA ‘e-COURT’, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Dr. Manish Borad
Per Rajpal Yadav, Vice-President (KZ):- The present group of six appeals are directed at the instance of assessee in three assessment years, namely 2008-09, 2009-10 and 2010-11. The first group, i.e. 121 & 122/PAT/2017 are the appeals filed against the orders of ld. Principal Commissioner of Income Tax (Central), Patna dated 2nd June, 2017 passed under section 263 of the Income Tax Act in these assessment years respectively, whereas the other group of appeals i.e. ITA Nos. 225, 226 & 227/PAT/2023 are against the orders of ld. Commissioner of Income Tax (Appeals), Patna-3 dated 22nd May, 2023. These orders have been emerged out from the proceedings of assessment orders in pursuance to 263 orders of the ld. Commissioner.
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited Therefore, we first take first group of appeals, i.e. ITA Nos. 120, 121 & 122/PAT/2017 for A.Ys. 2008-09 to 2010-11.
Before adverting to the facts emerging out from the record, we deem it appropriate to take note the details submitted by the ld. D.R. during the course of hearing. These details are complied in a tabular form, which exhibits the events taken place for the assessment of these three assessment years. Such details read as under:- Chronology of events in the case of Kerns Services Pvt Ltd in appeals filed against the order of PCIT u/sec 263 for A/Ys 2008-09,2009-10,2010-11 in ITA120-122 /PAT/2017 A/Y 2008-09 and 2009-10 EVENT DATE REMARKS Search in Modi group and consequent Survey on 20-03-2009 assessee Issue of order u/sec 127 transferring the case 11-10-2010 from Patna to Ranchi as part of Centralisation of Modi Group Notice u/sec 153C by assessing officer of Ranchi 20-10-2010 18854/2010 and 9742/2010 Writ challenging the transfer of jurisdiction as well as issue of notice before Patna High Court 26-11-2010 No return filed by assessee, AO at Ranchi issued notice u/sec 142(1)
Stay granted by High Court 29-11-2010 Second survey at the premises of the assessee 25-07 2013 Director Sri Mohan Kumar Khandelwal admitted of bogus entries to inflate expenses and generated black money to have been routed
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited back in the form of share capital/ premium in A/Y 2010-11 and as unsecured loan in A/Y 2011-12. Amount determined at Rs 3,56,50,000/- 30-09 2013 Fresh transfer order passed u/sec 127(2) jurisdiction transferred from Ranchi back to Patna First application before Settlement Commission 09-03-2015 18-03-2015 PCIT received order on 06-04-2015 Settlement Application rejected as withdrawn by assessee being defective Writ dismissed as withdrawn by assessee 23-03-2015 Court authorized to continue proceedings as was left in Ranchi as per sec 129 read with sec 153(4) Explanation l(ii)
Second application before the Commission 25-03-2015 Application rejected by Commission 07-04 2015 Commission found there was short payment of interests. Thus application was rejected. PCIT received order on 09- 04-2015 28-05-2015 Letter issued by AO to submit return in pursuance of earlier notice u/sec 153C Assessee asked to treat its return filed u/sec 28-01-2016 Despite offering additional income in 139(1) to be treated against the notice u/sec 153C Settlement application, the Returned income was not changed Notice u/sec 143(2) issued 28-01-2016 Order passed u/sec 153C read with sec 15-02-2016 AO accepted returned income and no 153A/143(3) addition was made. No reference of Settlement application is there in the order or in the notesheet of recorded proceedings Show cause for revision u/sec 263 20-04-2017 Order u/sec 263 02-06-2017 Appeal filed before ITAT against order u/sec 263 10-11-2017
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited Notice u/sec 142(1) 15-05-2018 Order passed giving effect to revision order u/sec 263 29-06-2018 29-08-2018 Appeal filed before CIT(A) by assessee against give _ effect order DATE REMARKS EVENT 13-03-2013 Addition made after rejection of books and estimating NP @6% for Order passed u/sec 143(3) a sum of Rs 46,42,699/- 25-07-2013 Director Sri Mohan Kumar Khandelwal admitted of bogus entries to inflate expenses and generated black money to have been routed back in the form of share capital/ premium in A/Y 2010-11 and as unsecured loan in A/Y 2011-12. Amount determined at Rs Second survey at the premises of the assessee 3,56,50,000/- 02 03-2015 Proposal for reopening approved by Range Head 02-03-2015 Notice u/sec 148 issued 09-03-2015 f First application before Settlement Commission 18-03 2015 PCIT received order on 06-04- Settlement Application rejected as withdrawn by 2015, however,, no copy is kept in assessee being defective AO's folder 23-03-2015 Court authorized to continue proceedings as was left in Ranchi as per sec 129 read with sec 153(4) Writ dismissed as withdrawn by assessee Explanation 1(H) 25-03-2015 Second application before the Commission 07-04-2015 Commission found there was short payment of interests. Thus application was rejected. PCIT Application rejected by Commission received order on 09- 04-2015,
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited however, no copy is kept in AO's folder 15-05-2015 Letter issued by AO to submit return in pursuance of earlier notice u/sec 148 22-05 2015 Despite offering additional income Assessee asked to treat its return filed u/sec in Settlement application, the 139(1) to be treated against the notice u/sec 148 Returned income was not changed 25-05-2015 Notice u/sec 143(2) issued 27-01-2016 AO accepted returned income and no addition was made. No reference of Settlement application is there in the order or in the Order passed u/sec 147 read with sec 143(3) notesheet of recorded proceedings 20-04-2017 Show cause for revision u/sec 263 02-06-2017 Order u/sec 263 10-11-2017 Appeal filed before ITAT against order u/sec 263 15-05-2018 Notice u/sec 142(1) 29-06 2018 Order passed giving effect to revision order u/sec 263 30-08-2018 * Appeal filed before CIT(A) by assessee against give effect order
We further find that the impugned orders are verbatim same except variation in the quantum and they are very brief. Therefore, for the facility of reference, we take note of the assessment order for A.Y. 2008-09 as well as the order of the ld. Commissioner passed under section 263.
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited
The solitary grievance of the assessee in all these three years is that ld. Pr. CIT has erred in taking cognizance under section 263 of the Income Tax Act and thereby setting aside the assessment orders passed under section 153C read with section 153A/143(3) of the Income Tax Act.
Ld. Counsel for the assessee while impugning the order of ld. Pr. Commissioner submitted that show-cause notices issued by the ld. Commissioner are available on pages no. 7 to 12 of the paper book. He took us with all
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited these three show-cause notices and submitted that the basic reason for invoking the revisional powers under section 263 of the Income Tax Act by the ld. CIT was that ld. Assessing Officer has submitted before him that the assessee has not submitted copy of settlement of income filed before the Settlement Commission nor details of head-wise disclosure of income to the ld. Assessing Officer. In other words, ld. Commissioner was of the view that there is a variation from the returned income, vis-à- vis additional income disclosed before the Settlement Commissioner and assessee should have submitted the details of additional income filed before the ld. STC. The ld. Assessing Officer should have taken cognizance of such income and should have made the additions. He submitted that as per section 245C, sub-section (4), an assessee is required to intimate the Assessing Officer in the prescribed manner of having made such application to the Commission. The ld. Counsel for the assessee took us through this clause and submitted that details were submitted in Form No. 34BA, which is meant for this purpose. Therefore, it is incorrect at the end of the ld. CIT to rely upon the information of ld. Assessing Officer/ACIT, Central Circle-2 for forming the belief that intimation was not given. It is mandatory for the assessee to give such intimation and it was submitted. He drew our attention
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited towards copy of such intimation filed before us, which reads as under:- INTIMATION TO THE ASSESSING OFFICER OF For 34BA HAVING MADE AN APPLICATION TO THE SETTLEMENT COMMISSION KOLKATA BENCH (See section 245C of the Income Tax Act, 1961 and rule 44C of the Income Tax Rules, 1962) PART-A PERSONAL INFORMATION Name KEMS Services Pvt. Ltd. PAN AACCK2214M Flat/Door/Block No. 76B,1B Name of Maurya Lok Complex Premises/Building/Village Road /Street/Post Office Dak Bunglow Road Area/Locality Dak Bunglow Road Town/City/District Patna State Pin Code 800001 E-Mail Address STD Code and Phone Number ( )
Status (tick) (i) Individual (ii) Hindu undivided family (iii) Company (iv) Firm (v) Cooperative Society (vi) Local Authority (vii) Association of persons Body of Individuals not covered by (v) or (vi)
PART-B ASSESSMENT JURISDICTION AND FILING STATUS (1. Designation of Assessing Officer (Ward/Circle): ACIT, Central Circle-2, Patna (2. The Commissioner having jurisdiction over the applicant: CIT- Central, Patna (3. Assessment year(s) in connection with which the application for settlement is made and the date of filing the return A.Y. Date 2003-04 16.09.2003 2004-05 31.10.2004 2005-06 29.10.2005
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited 2006-07 27.11.2006 2007-08 31.12.2007 2008-09 30.11.2008 2009-10 29.09.2009 2010-11 28.09.2010 2011-12 30.09.2011 2012-13 26.09.2012 2013-14 17.12.2013 2014-15 29.11.2014
I, Mohan Kumar Khandelwal, son of D.P. Khandelwal, do hereby certify that I have made today an application in Form No. 34B under sub-section (1) of section 245C of the Income tax Act with abovementioned particulars to the Settlement Commission at Additional Bench, Kolkata by post/by hand (delete whichever is not applicable) vide Receipt No. 944 dated 25.03.2015 (write receipt no. in the case application has been made by hand) in my capacity as Director (write your designation)
For KEMS SERVICES PVT. LTD. Sd/- Managing Director Place: Patna Date : 25.03.2015
Then ld. Assessing Officer has gone through the available material and thereafter passed the assessment order on 15.02.2016. The ld. Counsel for the assessee further appraised us the scope of section 263 and as to how such powers are to be exercised. He drew our attention towards following case laws:- (i) Commissioner of Income Tax -vs.- Mukul Kumar (2009) 4 PLIR Page 417;
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited (ii) Commissioner of Income Tax -vs.- Shantilal Agarwalla (1983) 142 ITR 778 (Patna); (iii) Commissioner of Income Tax -vs.- Gabriel India Limited (203 ITR 108 (Bom.).
The ld. Counsel for the assessee in his next proposition submitted that assessments in these assessment years for A.Ys. 2008-09 and 2009-2010 have been framed under section 153C. This section contemplates that if during the course of search, some incriminating material was found pertaining to other person than the searched person, the ld. Assessing Officer of the searched person would record his satisfaction that material exhibiting escapement of income qua person other than the searched person was found. Hence, action against such person is required to be taken. The ld. Assessing Officer of the searched person would transmit that material to the ld. Assessing Officer of the other person. The ld. Assessing Officer of such other person would again record his satisfaction for initiating action under section 153C and thereafter assessment is to be framed. He further observed that as per the judgment of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Limited [(2023) 454 ITR 212 (SC)], the addition in an assessment under section 153A is to be ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited made only on the basis of seized material found during the course of search. This very principle is applicable on the assessments to be framed under section 153C of the Income Tax Act. Additional income disclosed by the assessee before the Settlement Commission would not become per se seized material for using in an assessment under section 153C of the Income Tax Act. Therefore, ld. Assessing Officer has rightly assessed the income of the assessee in the absence of any incriminating material. The ld. Commissioner has erred in taking action under section 263 of the Income Tax Act. For buttressing his contention, he further relied upon the judgement of the ITAT, Mumbai in the case of Anantnadh Constructions and Farms (P) Ltd. -vs.- DCIT, Central Circle-7(3), Mumbai (2017) 83 taxmann.com 164 (Mumbai-Trib.); ITAT, Jaipur in the case of Mrs. Renu Sehgal -vs.- DCIT, Central Circle-3, Jaipur (ITA No. 708 & 709/JP/2018, copy has been placed on the record. He also placed on record copy of the order of ITAT in the case of Late Shri Sawarmal Hisaria (through L/H Shri Sandeep Hisaria) -vs.- DCIT, Circle-2(4), Mumbai in ITA No. 274/Mum./2021. On the strength of all these decisions, he contended that no action under section 263 was required to be made by the ld. CIT.
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited 8. On the other hand, ld. D.R. contended that ld. Assessing Officer failed to take cognizance of the details disclosed in the Settlement Commission and, therefore, his order has rightly been treated as suffering from error, which has caused prejudice to the interest of the revenue.
We have duly considered the rival contentions and gone through the record carefully. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act, deserves to be taken against the assessee or not, it is pertinent to take note of this section. It reads as under:- “263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being 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,-
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited (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 Officer 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 by the Commissioner;
(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal.
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.
(3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.”
A bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of 17
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show-cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the 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
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited 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 correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted.
(iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous.
(iv) If the order is passed without application of mind, such order will fall under the category of erroneous order.
(v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law.
(vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO.
(vii) The AO exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion.
(viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction.
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited
(ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard.
In the light of above, we have examined the record. Sub-section 4 of section 245C reads as under:- Application for settlement of cases Section 245C: (1)x x x x x x x x x (2) xxxxxxxxxxxxxxx (3)x x x x x x x x x x (4) An assessee shall, on the date on which he makes an application under sub-section (1) to the Settlement Commission, also intimate the Assessing Officer in the prescribed manner of having made such application to the said Commission”.
According to the ld. Counsel for the assessee, this information was given to the ld. Assessing Officer in Form No. 34BA on 25.03.2015.
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited 12. We have taken cognizance of such submission, which also contains a Certificate. The settlement petition was also filed on the same date. Thus, it is incorrect at the end of the ld. CIT to assume that information was not given to the ld. Assessing Officer. A perusal of the order of ld. CIT would indicate that he simply put reliance on the fact that information in Form 34BA was not given. The ld. Commissioner further observed that this factum has been brought to his notice by the ld. AO/ACIT. It is not discernible whether he himself has examined the record or not before issuing the notice under section 263.
It is further observed that the assessment years are 2008-09 and 2009-10 (we will deal with A.Y. 2010-11 separately). The original returns in these years were filed on 30.11.2008 and 20.09.2009 under section 139(1) of the Income Tax Act. Before initiation of action under section 153C, the time limit issue notice under section 143(2) was expired. Thus as per the judgment of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Limited [(2023) 454 ITR 212 (SC)], the scope of assessment under section 153C would be confined to only the material found during the course of search at the premises of Modi Project Limited, Ranchi. Neither the ld. Assessing Officer has made any reference to the seized material nor ld.
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited Commissioner in the proceeding under section 263. The details disclosed in the Settlement Petition is only an estimated figure, which was being disclosed by the assessee but it will not be construed as evidence found during the course of search upon Modi Project Limited. The assessee could not pay the interest and, therefore, Settlement Petition was rejected. But that material would not become a gospel truth for assessing the assessee with the additional income disclosed by it. Such additional income would have absolved the assessee from levy of penalty/prosecution. It was under those circumstances, the information disclosed in that petition could be used for initiating the inquiry but it could not be considered as gospel truth for making the addition, more particularly, in an assessment order passed under section 153C of the Income Tax Act. The judgments relied upon by the ld. Counsel for the assessee, i.e. ITAT, Jaipur Bench in ITA No. 708 & 709/JP/2018 in the case of Mrs. Renu Sehgal; ITAT, Mumbai Bench in the case of Anantnadh Constructions and Farms Pvt. Ltd. (2017) 83 taxmann.com 164 (Mum.-Trib.) are also on the same line. The information which has been considered, as was not submitted by the assessee, by the ld. Commissioner in the impugned order is incorrect assumption of fact. It was before the ld. Assessing Officer and ld. Assessing Officer
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited must have formed his opinion after considering all the aspects as well as evaluating the scope of section 153C. Therefore, the order passed by the ld. Commissioner in A.Y. 2008-09 and 2009-10 are not sustainable. They are quashed.
As far as A.Y. 2010-11 is concerned, it is a regular assessment passed under section 143(3) of the Income Tax Act. The assessee has submitted the information in Form No. 34BA as observed by us in earlier part of this order. The ld. Commissioner has only been harping upon, that this information was not disclosed by the assessee. Therefore, the very foundation of 263 proceeding is on wrong inception of facts at the end of the ld. Commissioner. There is no other fact or other circumstance considered by the ld. Commissioner. Therefore, there is no disparity on the factual aspect in this A.Y., vis-à-vis 2008-09. It is true that in an assessment under section 143(3), the information coming to the possession of the ld. Assessing Officer could be used. It is not necessary that such information should unearth during any search. Any information relating to income of an assessee, if came to the possession of the ld. Assessing Officer, then, he would always take cognizance of such information. It is pertinent to observe that ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited information disclosed before the Settlement Commission is an estimated income disclosed by the assessee, which may contain various aspects because that will absolve the assessee from all consequences of penalty, prosecution, etc. Considering the parity of circumstances with earlier two years as per the scope of 263 is concerned, we are of the view that this order of ld. CIT is also not sustainable because it is based on a wrong assumption of fact. We allow this appeal also and quash the order passed by the ld. Commissioner under section 263.
Now we take remaining group of appeals i.e. 226 & 227/PAT/2023. In these appeals, the issue is that original assessment orders were set aside by the ld. Commissioner in all these three years by exercising the powers under section 263. In pursuance of the orders of the ld. Commissioner, fresh assessment orders have been passed under section 153C/143(3)/153A read with section 263 in A.Ys. 2008-2009 and 2009-10 and 143(3) read with section 263 in A.Y. 2010-11. The orders of the ld. Commissioner are being quashed by us. Therefore, the very foundation of these assessment orders have been extinguished. These assessment orders are not sustainable. Therefore, the orders of the ld. CIT(Appeals)
ITA Nos. 120-122/PAT/2017 Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited & Assessment Years: 2008-2009 to 2010-2011 Kems Services Pvt. Limited as well as of ld. Assessing Officer in this second round of litigation are quashed.
In the result, all the appeals of the assessee are allowed. Order pronounced in the open Court on 22.03.2024.