OMM DHANA LAXMI JEWELLERS,ANGUL vs. PCIT, INCOME TAX

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.249/CTK/2024 Assessment Year : 2013-14 M/s. Omm Dhanalaxmi Vs. Pr. CIT, Bhubaneswar-1. Jewellers, Bazar Chowk, Main Road, Angul-759122 PAN/GIR No.AAGFD 8791 D (Appellant) .. ( Respondent) Assessee by : Shri P.K.Mishra, Adv Revenue by : Shri Sanjay Kumar, CIT DR Date of Hearing : 23/9/2024 Date of Pronouncement : 23/9/2024 O R D E R Per Bench This is an appeal filed by the assessee against the order passed by the ld Pr.CIT, Bhubaneswar-1 u/s.263 of the Act dated 30.3.2024 for the Assessment Year 2013-14.

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2) That the Ld. Pr. CIT, Bhubaneswar has erred in law by invoking section 263 on the order passed u/s 147 which itself was without jurisdiction and not legally sustainable. Hence the order passed u/s 263 is bad in law and needs to be annulled. 3) That the order of the Ld. Pr. CIT, Bhubaneswar being not proper in the eye of law hence be quashed and the appellant be given such relief or reliefs as prayed for.” 4) That the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds. 3. Brief facts of the case are that the original assessment was completed u/s.143(3) of the Act on 28.3.2016 wherein, additions on two scores were made, firstly towards under-valuation of closing stock of Rs. 30,21,627/- and secondly unexplained cash credit of Rs 83,00,000/- and interest thereon of Rs 2,29,831-. In first appeal the Ld CIT(A) has deleted the addition made on account of undervaluation of closing stock, however, sustained other additions of unexplained cash credits and interest thereon. In further appeal by the assessee before the ITAT, the Tribunal vide its order date 1.10.2019 in ITA No.153/CTK/2018, has deleted the addition of Rs.57,00,000/- representing the loans taken from three entities i.e. M/s Juhi Vanijia Pvt. Ltd of Rs. 20,00,000/-, Apex Accounting Services Pvt. Ltd of Rs 17,00,000/- & M/s Goodshine Vyapaar Pvt Ltd. Of Rs 20,00,000/-. Further set aside the issue of the remaining unexplained cash credits of Rs. 26,00,000/- and interest thereon with the direction to examine further in the matter. Thereafter before giving effect to the Order of the ITAT, the Assessing officer proceeded with reopening of the assessment by issuance

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of notice u/s 148 dated 05.03.2020. The reasons for the same as provided by the AO vide letter dated 15.07.2020 reads as under:- “ On analysis of the information received from the DDIT(Inv.), Unit-1 (3). Kolkata, it is found that the assessee- firm M/s Dhanalaxmi Jewellers had received unsecured loan of Rs. 20,00,055/- from M/s Goodshine Vyapaar Pvt Ltd., which is a Paper/Shell company o Mukesh Banka Group during the F.Y 2012-13 relevant A.Y 2013-14. M/s Goodshine Vyapaar Pvt Ltd., 23B, N S Road , Kolkata 700001 is a Paper/Shell company o Mukesh Banka which was found to be non-existent as per enquiry made by Inspector of Income Tax and working for the purpose of providing accommodation entries in the nature of bogus unsecured loans. As M/s. Goodshine Vyapaar Pvt. Ltd, is a paper/shell company which was found to be non-existent and working for the purpose of providing accommodation entries in the nature of bogus unsecured loans, the documents provided by the assessee- firm during the assessment proceedings is not genuine. In view of the above, I have reason to believe that income chargeable to tax has escaped assessment within the meaning of section 147 for the reason for failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. The total quantum income escaped is prima facie calculated at Rs.20,00,000/-“ 4. After that the reassessment order was passed on 29.09.2021 by making addition of Rs. 20,40,000 that is unsecured loan and commission for obtaining such loan from M/s Goodshine Vyapaar Pvt. Ltd. Before completing the reassessment proceedings, AO has passed an order u/s 254 22.06.2021 giving effect to the order of ITAT in ITA NO 153/CTK/2018 dated 1.10.2019 and the income of the assessee was finally assessed as Rs. 34,710/- i.e. the income declared by the assessee in its return of income. It

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is also a fact on record that no separate order was passed in compliance to the directions given by the Tribunal in respect of verification the unsecured loans of Rs. 26,00,000/- and interest paid thereon.

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report of the investigation wing, Kolkata prepared in the case of Shri Mukesh Banka group. Since the issue of unsecured loan from M/s Goodshine Vyapaar Pvt. Ltd. was examined at length during the course of assessment proceeding completed u/s 143(3), thus initiating the reassessment proceedings by again alleging the said loan as bogus loan is nothing but an attempt to revisit of the settled issue and is mere change of opinion. This was done more particularly when the Tribunal has already deleted the said addition and such order attained finality. For this ld. AR placed reliance on the followings: 1. Kidderpore Holding Ltd. Vs. ITO (2024) 161 taxmann.com 768 (Bombay) 2. Yogeshbhai R Dhanak V. ACIT (2014) 41 taxmann.com 183

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tribunal. Therefore, the revision, if any, could be made against the order of the AO passed u/s 254 of the Act dt. 22.06.2021 and not against the order passed u/s 147 rws 144B of the Act, dt. 29.09.2021. However, the Pr. CIT held the reassessment order dt. 29.09.2021 as erroneous and prejudicial to the interest of revenue, which is incorrect. Ld. AR also submits that no further order was passed by AO in compliance to the directions of the ITAT thus the said proceedings are barred by limitations. He, therefore prayed for cancellation of the order u/s 263 of the act on this score also.

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loans of Rs. 26,00,000/- which was not done in the order passed u/s 147 of the Act. Therefore, Ld. PCIT has rightly held the order passed u/s 147 of the Act was erroneous as well as prejudicial to the interest of the revenue. He accordingly, prayed for the confirmation of the order passed us/ 263 of the Act.

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Juhi Vanijia Pvt. Ltd., Apex Accounting Services Pvt. Ltd. and M/s Goodshine Vyapaar Pvt. Ltd. amounting to (Rs.20,00,000 + 17,00,000 + 20,00,000) = Rs. 57,00,000/- is not sustainable and we delete the same. 21. Now, with regard to the eight lenders from whom the assessee has received loan, as noted by the AO in the assessment order, we would like to reproduce the details income disclosed by the following lenders in their respective returns as noted by the AO in its order read as under :- (i) Indar Chandra Maheswari: Asst. Years 2013-14 2012-13 2011-12 2010-11 2009-10 Basic 2,00,000 1,80,000 1,60,000 1,60,000 1,50,000 Exemption Returned 4,04,110 2,90,760 1,98,070 1,79,230 1,56,500 income (ii) Kaushalaya Maheswari : Asst. Years 2013-14 2012-13 2011-12 2010-11 2009-10 Basic 2,00,000 1,80,000 1,60,000 1,60,000 1,50,000 Exemption Returned 3,25,880 1,95,600 1,99,400 1,93,300 Not filed income (iii) Priyanka Mundhra : Asst. Years 2013-14 2012-13 2011-12 2010-11 2009-10 Basic 2,00,000 1,80,000 1,60,000 1,60,000 1,50,000 Exemption Returned 4,94,900 3,28,230 2,43,120 2,05,970 1,82,500 income (iv) Ranian Kumar Sahu : Asst. Years 2013-14 2012-13 2011-12 2010-11 2009-10 Basic 2,00,000 1,80,000 1,60,000 1,60,000 1,50,000 Exemption Returned 2,86,150 1,83,530 1,82,720 1,70,230 Not filed income (v) Shankar Prasad Maheswary Asst. Years 2013-14 2012-13 2011-12 2010-11 2009-10

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Basic 2,00,000 1,80,000 1,60,000 1,60,000 1,50,000 Exemption Returned 3,20,140 1,91,910 1,73,800 1,63,800 Not filed income (vi) Gopal Mundra f HUFj : Asst. Years 2013-14 2012-13 2011-12 2010-11 2009-10 Basic 2,00,000 1,80,000 1,60,000 1,60,000 1,50,000 Exemption Returned 4,70,670 2,81,650 1,80,040 1,67,790 1,63,710 income (vii) Ramanand Maheswary: Asst Years 2013-14 2012-13 2011-12 2010-11 2009-10 Basic 2,00,000 1,80,000 1,60,000 1,60,000 1,50,000 Exemption Returned 3,82,820 2,57,630 2,46,400 2,49,400 Not filed income

(viii) Saroj Devi Maheswari , C/o M/s Bhutnath Store, Angul-759122- loan amount of Rs.1,00,000/-. In case of this assessee, there is no previous year's return mentioned by the AO in the assessment order. From the above, we find that the AO has taken into consideration of earlier years return of the lenders, as noted above, however, on perusal of the assessment order, the AO has asked the assessee to provide cash flow statement of the above lenders, which has not been furnished by the assessee till the first appellate stage. We observe that the lenders have deposited cash into their respective bank accounts before advancing loan to the assessee. In the interest of justice, we restore the issue only for the limited purpose and direct the AO to verify and examine the cash availability in the hands of the respective lenders from legitimate business sources. The assessee is directed to cooperate with the AO for above examination and verification. Needless to say that reasonable opportunity of being heard be given to the assessee.”

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“Section 147, read with section 158BC of the Income tax Act, 1961- income escaping assessment-Non disclosure of primary facts (Matter relating to b lock assessment)- Assessment Year 1999-2000-Whether reopening of assessment in relation to a matter which is subject matter of block assessment is evidently without jurisdiction-Held, yes –In course of block assessment, Assessing Officer made certain addition in respect of undisclosed investment made in gold ornaments –In appellate proceedings, Commissioner (Appeals) accepted assessee’s explanation that said ornaments were received from customers for remaking –Accordingly, addition made by AO was deleted –Tribunal upheld order of Commissioner (Appeals)- For relevant year, Assessing officer sought to initiate reassessment proceedings in respect of aforesaid addition –Whether since issue relating to investment in gold ornaments had been treated as subject matter of block assessment and examined on merits by appellate authorities,

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reopening of assessment under section 147 on very same ground was without jurisdiction –Held, year –Whether, therefore impugned reassessment proceedings deserved to be quashed-Held, yes(para 15 ) in favour of the assessee.” 13. Similar issue was also considered by the Hon’ble Bombay High Court in the case of Kidderpore Holdings Ltd. Vs. Income Tax Officer (2024) 161 taxmann.com 768 (Bombay) wherein the Hon’ble High Court has held as under: “Where AO issued reopening notice on ground that issues involved in relevant assessment year were also subject matter for other assessment years which were still pending before Tribunal and as case was getting time barred, assessment was to be reopened to safeguard interest of revenue, since Tribunal had decided issue in other assessment years against revenue, entire basis for reopening had collapsed and, thus, reassessment notice was to be quashed.”

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“7. Once it is held that the reassessment order is invalid, any consequent proceedings passed on such invalid order are also void ab initio. The coordinate bench of the Tribunal in the case of SS Brahma Education Trust, passed in ITA No.107/CTK/2024, order dated 05.06.2024, under identical circumstances, where the assessment order was invalid, it was held that the consequent proceedings u/s.263 of the ITA No.50/CTK/2024 7 Act also does not survive. The relevant observations of the Tribunal made are as under:- 15. Since the order passed u/s.144 r.w.s.144B of the Act is an invalid order, any further proceedings originated from the said order cannot be held as valid proceedings which includes the revisionary proceedings initiated by the ld. Pr.CIT, Sambalpur u/s.263 of the Act. In this regard, we find support from the observations made by the ITAT Mumbai Bench of the Tribunal in the case of Westlife Development Ltd. (supra), in para 10.1 to 11, which reads as under :- 10.1. We have discussed in detail in earlier part of our order that an invalid order cannot give birth to legally valid proceedings. It is further noticed by us that some of the judgments relied upon by the learned counsel have already addressed this issue. This issue has also been decided by the co-ordinate bench (Delhi Bench of Tribunal) in the case of Krishna Kumar Saraf vs. CIT (supra). The relevant part of the order is reproduced below : "17. There is no quarrel with the proposition advanced by learned Departmental Representative that the proceedings under s. 263 are for the benefit of revenue and not for assessee. 18. However, under s. 263 the learned Commissioner cannot revise a non est order in the eye of law. Since the assessment order was

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passed in pursuance to the notice under s. 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of Hon'ble Madras High Court in the case of CIT vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in relation to non service of notice could be raised for the first time before the Tribunal as the same was legal, which went to the root of the matter. 19. While exercising powers under s. 263 learned Commissioner cannot revise an assessment order which is non est in the eye of law because it would prejudice the right of assessee which has accrued in favour of assessee on account of its income being determined. If learned CIT revises such an assessment order, then it would imply extending/granting fresh limitation for passing fresh assessment order. It is settled law that by the act ion of the authorities the limitation cannot be extended, because the provisions of limitation are provided in the same. 20. In view of above discussion, ground No. 3 is allowed and revision order passed under s. 263 is quashed." 10.2. It is further noticed by us that similar view has been taken by Chandigarh Bench of the Tribunal in the case of Steel Strips Ltd. (supra). 11. Thus, after taking into account all the facts and circumstances of the case, we find that in this case, the original assessment order passed under s. 143(3) dt 24th Oct., 2013 was null & void in the eyes of law as the same was passed upon a non-existing entity and, therefore, the learned CIT could not have assumed jurisdiction under the law to make revision of a non est order and, therefore, the impugned order passed under s. 263 by the learned CIT is also nullity in the eyes of law and therefore the same is hereby quashed.

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giving effect to the order of the Tribunal. Even if the argument of the ld. CIT DR is accepted that order dated 22.6.2021 is simply an interim order and no final order was passed after making proper verification in terms of the direction of the ITAT, in such event no order could be passed as on date as the proceedings stood barred by limitations. It is an admitted fact that no further order was passed and only order passed thereafter is the reassessment order dt. 29.09.2021 which cannot be said to be an order passed in compliance to the directions given by the Tribunal in ITA No. 153/CTK/2018 in first round of proceedings. It appears that the present order passed u/s 263 by ld. PCIT is an attempt to cover up the deficiency of not passing any speaking order in compliance to the direction given by the Tribunal. We are in full agreement with the ld.AR that the order which could be held as erroneous and prejudicial to the interest of revenue is the order passed u/s 254 dt. 22.06.2021 wherein the AO ought to have carried out necessary verification was directed by the Tribunal and not the order passed u/s 147 of the Act wherein para 5, the AO while computing the income, has taken income at Rs. 34,710/- as per order u/s 254 and after that made additions of Rs. 20,40,000/-. In view of these facts, we are of the considered opinion that the order passed u/s 254 dt. 22.06.2021 could only be held as erroneous and prejudicial to the interest of revenue and not the reassessment order dt. 29.09.2021 passed u/s 147 of the Act. Accordingly, the assessee succeeded on this score also.

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Sd/- sd/- (George Mathan) (Manish Agarwal) JUDICIAL MEMBER ACCOUNTANT MEMBER Cuttack; Dated 23/9/2024 B.K.Parida, SPS (OS) Copy of the Order forwarded to : 1. The Appellant : M/s. Omm Dhanalaxmi Jewellers, Bazar Chowk, Main Road, Angul- 759122 2. The respondent: Pr. CIT, Bhubaneswar-1.

By order

Sr.Pvt.Secretary ITAT, Cuttack

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