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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI MANISH AGARWAL
O R D E R Per Bench : This is an appeal filed by the assessee against the order of the ld. Pr.CIT, Sambalpur passed u/s.263 of the Act, dated 18.12.2023 for the assessment year 2013-2014.
Brief facts of the case are that the assessment in this case was completed u/s.143(3) of the Act on 31.12.2015. Thereafter the case was reopened by issue of notice u/s.148 of the Act dated 31.03.2021 and the reassessment order was passed u/s.147 r.w.s.144B of the Act on 28.03.2022. Thereafter the ld. Pr.CIT, Sambalpur found the said order erroneous as well as prejudicial to the interest of revenue and revised the said order wherein he has enhanced the income of the assessee by Rs.4,02,90,000/- on account of addition u/s.68 of the Act. Against the said order, the assessee is in present appeal before us.
3. In grounds of appeal, the assessee has taken as many as 10 grounds of appeal, which are relating to the legality of the order passed u/s.263 of the Act as well as challenging the issue on merits of the addition directed to be made by the ld. Pr.CIT. During the course of hearing, ld. AR of the assessee contended that the basis of the impugned order u/s.263 of the Act is the order passed u/s.147 of the Act dated 28.03.2022. Since the reassessment order is void ab initio as the notice issued u/s.148 of the Act was barred by limitation, therefore, all the consequential proceedings including proceedings u/s.263 of the Act are invalid. For this, ld. AR drew our attention to the paper book page 7, which is print out of assessee's income tax portal where it is appearing that notice u/s.148 of the Act was issued on 1st April, 2021, on the contrary, in the reassessment order, the AO has noted that the notice u/s.148 of the Act was issued on 31.03.2021. The ld. AR submitted that even if it is presumed that the notice u/s.148 of the Act was issued on 31.03.2021, it is barred by limitation as limitation for issue of notice u/s.148 of the Act for impugned year i.e. A.Y.2013-2014 expired on 31.03.2020 and the notice issued thereafter is not valid. Otherwise also, if the notice is treated as issued on 01.04.2021 as is evident from the income tax portal of the assessee, the same is also invalid as no procedure as laid down u/s.148A of the Act was carried out before issue of the notice u/s.148 of the Act, which has been inserted in the statute from 01.04.2021, therefore, ld. AR submitted that the order passed u/s.147/144B of the Act dtd. 28.03.2021 is invalid and, therefore, the consequential proceedings including the present proceedings carried out u/s.263 of the Act are also void ab initio and, therefore, the said order deserves to be quashed.
4. On merits of the issue, the ld. AR submitted that the case was reopened for the reason that " the assessee has made cash deposit of Rs.4,02,90,000/- using the bank accounts of Shri Mukesh Sharma and Shri Paras Sharma, the source of which required to be explained." During the course of reassessment proceedings, the AO vide notice u/s.142(1) of the Act dated 17.11.2021 has specifically asked about the details of bank account of Shri Mukesh Sharma and Shri Paras Sharma coupled with their relationship with the assessee and other details were also sought from the assessee. In compliance the assessee has filed the entire details as called for and after considering the said details, the AO passed the order u/s.147 of the Act at total income of Rs.9,05,900/-. The ld. Pr.CIT in its order at para 4 has also referred the reason for which the case has been reopened and after considering the submissions of the assessee and the statements of Shri Mukesh Sharma and Shri Paras Sharma recorded by the Investigation wing, Raipur, has enhanced the assessed income by making the addition of Rs.4,02,90,000/- being the amount deposited in their bank accounts as unexplained credits of the assessee. He further submitted during the course of assessment proceedings when the AO has applied his mind on the details filed which contained the bank statements and books of accounts of the assessee, wherein the deposits as made by these two persons have been claimed as the receipts of the assessee since these two persons are agents of the assessee and had deposited the said cash out of the sale proceeds of goods on behalf of the assessee. Ld. AR further submitted that the assessee has filed all the necessary details including necessary declaration required under erstwhile CST Act and has also brought to the notice of the ld. Pr.CIT that reassessment in the case of Shri Mukesh Sharma and Shri Paras Sharma were also completed based on the information from their bank accounts wherein no additions have been made on this account. He further submitted that once the AO has duly applied his mind on the details and the reached to a conclusion, the observation of the ld. pr.CIT that the AO has not examined the details is devoid of merits and the action of the ld. Pr.CIT in enhancing the assessment order deserves to be held bad on merits also.
5. Per Contra, ld. CIT-DR relied upon the orders of the ld. Pr.CIT and submitted that the AO has not considered the enquiry carried out by the Investigation Wing, Rourkela in the case of Shri Mukesh Sharma and Shri Paras Sharma, wherein they have admitted that the accounts opened in their names are operated by the assessee and all the cash and RTGS transactions were carried on by the assessee only. He, thus, supported the order of the ld. Pr.CIT and requested for confirming the same wherein the ld. Pr.CIT has enhanced the income of the assessee by a sum of Rs.4,02,90,000/-.
We have heard the rival submissions. From the perusal of the record, it is seen as per the AO that the notice u/s.148 of the Act has been issued on 31.03.2021 i.e. in the Financial Year 2020-2021 which is beyond the period of six years from the end of assessment year sought to be reopened and, thus, is barred by limitation. Even otherwise, from the perusal of the assessee's income tax portal, we find that the said notice was served on the assessee on 1st April, 2021 i.e. in subsequent financial year where the provisions of Section 148A of the Act came into force according to which no notice u/s.148 of the Act could be issued without passing of the order u/s.148A (d) of the Act. This being so, in our considered opinion, the reassessment order passed u/s.147 r.w.s.144B of the Act, dated 28.03.2022 is barred by limitation. In this regard, the coordinate bench of the Tribunal in the case of Manas Ranjan Pattanayak, passed in order dated 08.07.2024, while dealing with the issue of limitation under identical circumstances by following the order of the Hon'ble Jurisdictional High Court in the case has held as under :- It was submitted by ld AR that the assessment year involved in this appeal is 2013-14. It was the submission that the notice u/s 148 of the Act It was the submission that notice u/s.148 was time barred. For this proposition, ld AR has placed before us, the copies of the orders of Hon’ble Jurisdictional High Court in the case of Bhagirathi Barik vs. Pr. CIT, Bhubaneswar in W.P.(C) No.7504 of 2024 order dated 3.4.2024 as also the decision in the case of Nutan Bhusan Jena vs Pr. CIT in W.P.(C) No.11181 of 2022 order dated 6.5.2022, wherein, the Hon’ble Jurisdictional High Court of Orissa had following the decision of Hon’ble Supreme Court in the case of Union of India vs Ashish Agarwal, 444 ITR 1(SC) has held as follows: “This matter is taken up by hybrid mode.
2. The Opposite Parties-Department referred to section 3(1) of the taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and the fact that the petitioner has an alternative remedy of assailing the order of the assessment and order of the appellate authority.
As regards the first issue, the judgment of the Supreme Court in Union of India vs. Ashish Agarwal, 444 ITR 1(SC) is a complete answer. This has been taken note of by this Court in its order dated 6 th May, 2022 in W.P.(C) No.11181 of 2022 (Nutan Bhusan Jena vs The pr. CIT, Bhubaneswar-1 4. Considering that, the assessment year is 2013-14 and the impugned notice under section 148 of the Income tax Act, 1961 was issued on 28th March, 2021 for the reasons stated in the aforementioned order in Nutan Bhusana Jena (supra) as well as an earlier order of this Court dated 24th January, 2022 in W.P.(C) No.20919 of 2021 and batch (M/s. Ambika Iron and Steel pvt Ltd. Vs Pr. CIT) and the order of the Supreme Court of India in Union of India vs. Ashish Agarwal (supra) the impugned notice and all the proceedings and orders consequent thereto are hereby quashed.”
Ld AR has also relied upon the decision of Hon’ble Jurisdictional High Court of Orissa in the case of Poonam Agrrawal vs ITO in W.P.(C)No.22678 of 2022, wherein, the Hon’ble Jurisdictional High Court has quashed the notice issued u/s.148 of the Act and consequential proceedings and orders holding the same as being time barred. 5. In reply, ld Sr DR vehemently supported the order of the Assessing Officer and ld CIT(A). It was the submission that the period of extention on account COVID-2019 may also be considered. 6. We have considered the rival submissions. As it is noticed that the issue in the present case is squarely covered by the decisions of the Hon’ble Jurisdictional High Court of Orissa in the above mentioned cases, respectfully following the said decisions of Hon’ble Jurisdictional High Court, it is held that the notice issued u/s.148 is time barred and consequential proceedings and orders stand quashed. 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 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 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 revisonary 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.
However, under s. 263 the learned Commissioner cannot revise a non est order in the eye of law. Since the assessment order was 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 some 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 some was legal, which went to the root of the matter.
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.
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. 16. After considering the facts and also looking to our observation made herein above, that the order passed u/s.147 r.w.s144B of the Act is invalid and also following the decisions of the coordinate benches of the Tribunal in the cases cited supra, we are of the view that the legality of order passed u/s.143(3) of the Act can be taken up in the appellate proceedings challenging the order u/s.263 of the Act. Under these circumstances, the present proceedings which were emerged out of the order passed u/s.147 of the Act which is already held as invalid, is without jurisdiction and is hereby quashed. Thus, grounds Nos.1 & 2 taken by the assessee on legal issue are allowed. 8. As in the present case also, the reassessment order dated 28.03.2022 is barred by limitation, consequent proceedings u/s.263 of the Act are also invalid in view of the judgments cited supra, accordingly, we are of the view that the impugned order passed by the ld. Pr.CIT, Sambalpur, dated 28.12.2023 u/s.263 of the Act has no legs to stand and, therefore, is hereby quashed. 9. On Merits of the issue, it is seen that the AO has made enquiries during the course of assessment proceedings and in response to which the assessee has submitted the detailed reply which is filed in the paper book pages 19 to 71 containing the details of the transactions, bank statement of the assessee, audit report and the commission agency