Loading judgment…
No AI summary yet for this case.
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, dated 09.01.2024, in DIN & Order No.ITBA/REV/F/REV5/2023-24/1059533627(1) for the assessment year 2015-2016. 2. The assessee has challenged the order passed u/s.263 of the Act by ld. Pr.CIT, Sambalpur on the strength of following grounds of appeal:-
1. For that, the impugned suo-motu revision order dated 09.01.2024 passed u/s.263 of the Income Tax Act, 1961, by the Principal Commissioner of Income Tax, Sambalpur is without jurisdiction and without the authority of law, in absence of fulfillment of basic conditions, as such, the impugned revision order passed, being not sustainable in the eye of law needs to be quashed in the interest of justice.
2. For that, when the very initiation of reassessment proceeding for any previous Assessment years after grant of 12A registration is not permissible, the reassessment order so passed is invalid, as such, the impugned initiation of revision proceeding ujs.263 of the Act on the basis of a invalid order is 2 ab-initio Void, as such, the same being not sustainable in the eye of law, needs to be quashed in the interest of justice.
3. For that when by way of evidences and explanations the Assessee explained that there is no difference in balance sheet, the learned Principal CIT has committed gross error of law, in ignoring the evidence and explanation of the Assessee and by enhancing the Assessment order by making addition of Rs.1,95,32,396.00 and Rs.54,50,000.00 by applying section 69 of the Act, as such, the revision order passed and consequential additions made therein, being not sustainable in the eye of law is liable to be quashed in the interest of justice.
4. For that, the learned Principal CIT, Sarnbalpur has committed gross error of law as well as of fact in initiating and completing the revision proceeding, ignoring the objections and explanations along with evidences submitted by the Assessee and by taking a different opinion on same set of facts, without having any corroborative evidence, as such, the revision order, being passed on presumption, assumption and on the basis of a third party report is not sustainable in the eye of law, hence, needs to be quashed in the interest of justice.
5. For that, the learned Principal CIT, Sambalpur has committed gross error of law, while enhancing the income assessed ujs.147 r.w.s. 144B of the Act, by treating Rs.2,49,82,396.00 as unexplained income ujs.69 of the Act, as such, the impugned revision order passed ujs.263 of the Act, being not sustainable in the eye of law, needs to be quashed in the interest of justice.
6. For that section 69 of the Act has no application under the facts and in the circumstances of the case, as such the captioned revision order passed ujs.263 of the Act by the learned PClT, Sambalpur, being wrong and without the authority of law is liable to be quashed in the interest of justice.
7. For that, the learned Principal ClT, Sambalpur has Committed gross error of . as well as of fact by applying Explanation (2) to section 263 of the Act to initiate the revision proceeding, particularly when, Said explanation has no application to the facts and Circumstances of the present case.
8. For that, in the present case, these issues Were repeatedly and thoroughly examined by the A.O. as Well as by the NFAC, Verification Unit, as such, the initiation of revision proceeding on the ground that the Assessing Officer has failed to carry out inquiries as warranted' by the facts and Circumstances of the case and reassessment has been completed without examining aIl aspects, being wrong and Contrary to the facts on record is not sustainable in the eye of law, hence needs to be quashed in the interest of justice.
3 9. For that, the Appellant craves leave of this Hon'ble Tribunal to urge other grounds of appeal
, if any, at the time of hearing in the interest of justice.
3. Brief facts of the case are that the assessment in this case was reopened vide notice issued u/s.148 of the Act dated 30.03.2021 and consequently the order was passed on 20.03.2022, wherein the income declared by the assessee was accepted. Thereafter the ld. Pr.CIT, Sambalpur initiated the proceedings u/s.263 of the Act by issue of notice dated 08.05.2023 and after considering the submissions of the assessee, held that the order passed by the AO u/s.147 r.w.s.144B of the Act is erroneous as well as prejudicial to the interest of revenue and the income has been directed to be enhanced by Rs.2,49,82,396/- and also directed to initiate the penalty proceedings u/s.271(1)(c) of the Act.
4. In ground No.1 & 2, the assessee has challenged the jurisdiction of the ld. Pr.CIT in passing the order u/s.263 of the Act on the premise that the reassessment order so passed was invalid, therefore, the Pr.CIT has no jurisdiction to initiate reviosnary proceedings u/s.263 of the Act. Ld. AR submitted that in the present case, the assessee has filed the application in the Form 10A seeking registration u/s.12AA of the Act on 14.02.2020 before the ld.CIT(E) and it had given registration/s.12AA of the Act vide order dated 29.06.2020 w.e.f. AY.2020-2021. The necessary copy of the registration as granted is reproduced as under :-
4 5 , 6 5. Ld. AR further drew our attention to the notice issued u/s.148 of the Act by the ITO, Ward-1, Baripada for the impugned assessment year which was issued on 30th March,2021. The said notice is reproduced hereunder :-
7 6. The ld. AR submitted that the notice for reassessment was issued after the registration u/s.12AA of the Act granted by the ld.Pr.CIT(E) and in terms of the provision of sub-section (2) of Section 12A of the Act, no action u/s.147 of the Act shall be taken in case of any trust or institution for any assessment year preceding the assessment year in which the application has been made and subsequently the registration has been granted, for the sole reason that such trust or institution is not registered u/s.12 of the Act. In the present case, from the perusal of para 2 of reassessment order it is seen that the proceedings u/s.148 of the Act has been initiated solely for the reason that the assessee has not been granted the registration till 17.03.2020 and it had not filed any return of income, therefore, notice u/s.148 of the Act was issued. He, therefore, contended that in terms of Third proviso to Section 12A(2) of the Act, as the registration has been granted to assessee vide orders dated 29.06.2020, for any preceding assessment year no action shall be taken u/s.147 of the Act only for non-registration. Since in the instant case notice u/s.148 of the Act was issued on 31.03.2021, i.e. after the date of granting of registration the same is invalid and consequent proceedings and reassessment order passed u/s.147 r.w.s.144B of the Act dated 20.03.2022 is void ab initio. Once the assessment order being the original proceedings from which the impugned proceedings u/s.263 of the Act emanate is invalid, any subsequent proceedings including 263 proceedings are without jurisdiction, therefore, he prayed for cancellation of the order passed by the ld. Pr.CIT u/s.263 of the Act as without 8 jurisdiction. For this, he relied upon the order of the coordinate bench of ITAT Mumbai Tribunal in the case of Westlife Development Ltd., reported in [2016] 49 ITR (T) 406 (Mumbai) and in the case of Aishwarya Rai Bachchan, passed in order dated 25.02.2022 and also the decision of ITAT Ahmedabad Bench of the Tribunal in the case of Shri Jignesh Lilachand Shah, passed in ITA No.149/Ahd/2021, vide order dated 21.03.2023.
Per Contra, ld.CIT-DR vehemently supported the order of the ld. Pr.CIT and stated that the order passed u/s.147 r.w.s.144B of the Act has been challenged by the assessee separately where validity of the assessment is challenged, therefore, at this stage, the issue of legality of order passed u/s.147 of the Act cannot be challenged. He further submitted that the ld. Pr.CIT had proper jurisdiction to pass the revision order in the instant case. However, he failed to bring any judicial pronouncement to support this argument.
We have perused the material available on the record and considered the rival submissions. At the outset, the issue raised by the ld. AR is with regard to validity of the reassessment order passed u/s.147 r.w.s.144B of the Act, dated 20.03.2022 from which the present revisonary proceedings u/s.263 of the Act originates. It is true that before us assessee has challenged the order passed by the ld. Pr.CIT u/s.263 of the Act, however, since the assessee has raised the issue of validity of reassessment order, we first answer the question as to whether such legality of the assessment framed could be examined in appellate 9 proceedings challenging the order passed u/s.263 of the Act or not. In this regard, during the course of hearing, the ld.AR of the assessee has placed reliance on the decision of the coordinate bench of Mumbai Tribunal in the case of Westlife Development Ltd. (supra), wherein it has been held that during the course of appellate proceedings against the order passed u/s.263 of the Act, the validity of the assessment order from which such proceedings have been originated could be examined. The relevant observations as made in the above decision of the Tribunal are as under :- 8. Challenging the jurisdictional defects of assessment order for assailing the jurisdictional validity of the revision order passed under s. 263 : The first issue that arises for our consideration is - whether the assessee can challenge the jurisdictional validity of order passed under s. 143(3) in the appellate proceedings taken up for challenging the order passed under s. 263 ? If we analyse the nature of both of these proceedings, which are under consideration before us, we find that the original assessment proceedings can be classified in a way as 'primary proceedings'. These are, in effect, basic/foundational proceedings and akin to a platform upon which any subsequent proceedings connected therewith can rest upon. The proceedings initiated under s. 263 seeking to revise the original assessment order is off shoot of the primary proceedings and therefore, these may be termed as 'collateral proceedings' in the legal framework. The issue that arises here is whether any illegality/invalidity in the order passed in the 'primary proceedings' can be set up in the 'collateral proceedings' and if yes, then of what nature ? 8.1. We have analysed this issue carefully. There is no doubt that after passing of the original assessment order, the primary (i.e., original proceedings) had come to an end and attained finality and, therefore, outcome of the same cannot be disturbed, and therefore, the original assessment order framed to conclude the primary proceedings had also attained finality and it also cannot be disturbed at the instance of the assessee, except as permitted under the law and by following the due process of law. Under these circumstances, it can be said that effect of the original assessment order can not be erased or modified subsequently. In other words, whatever tax liability had been determined in the original 10 assessment order that had already become final and that cannot be sought to be disturbed by the assessee. But, the issue that arises here is that if the original assessment order is illegal in terms of its jurisdiction or if the same is null & void in the eyes of law on any jurisdictional grounds, then, whether it can give rise to initiation of further proceedings and whether such subsequent proceedings would be valid under the law as contained in IT Act ? It has been vehemently argued before us that the subsequent proceedings (i.e. collateral proceedings) derive strength only from the order passed in the original proceedings (i.e. primary proceedings). Thus, if order passed in the original proceedings is itself illegal, then that cannot give rise to valid revision proceedings. Therefore, as per law, the validity of the order passed in the primary (original) proceedings should be allowed to be examined even at the subsequent stages, only for the limited purpose of examining whether the collateral (subsequent) proceedings have been initiated on a valid legal platform or not and for examining the validity of assumption of jurisdiction to initiate the collateral proceedings. If it is not so allowed, then, it may so happen that though order passed in the original proceedings was illegal and thus order passed in the subsequent proceedings in turn would also be illegal, but in absence of a remedy to contest the same, it may give rise to an 'enforceable' tax liability without authority of law. Therefore, the Courts have taken this view that jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings also. This issue is not res integra. This issue has been decided in many judgments by various courts, and some of them have been discussed by us in followings paragraphs. 8.2. In a matter that came up before Hon'ble Supreme Court in the case of Kiran Singh & Ors. vs. Chaman Paswan & Ors. [1955] 1 5CR 117 the facts were that the appellant in that case had undervalued the suit at Rs. 2,950 and laid it in the Court of the Subordinate Judge, Monghyr for recovery of possession of the suit lands and mesne profits. The suit was dismissed and on appeal it was confirmed. In the second appeal in the High Court the Registry raised the objection as to valuation under s.
11. The value of the appeal was fixed at Rs. 9,980. A contention then was raised by the plaintiff in the High Court that on account of the valuation fixed by the High Court the appeal against the decree of the Court of the Subordinate Judge did not lie to the District Court, but to the High Court and on that account the decree of the District Court was a nullity. Alternatively, it was contended that it caused prejudice to the appellant. In considering that contention at p. 121, a four Judge Bench of Hon'ble Supreme Court speaking through Vankatarama Ayyar, J. held that : "It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or 11 territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties." 8.3. This judgment was subsequently followed by Hon'ble Supreme Court in the landmark case of Sushil Kumar Mehta vs. Gobind Ram Bohra, (1990) 1 SCC 193, wherein an issue arose whether a decree can be challenged at the stage of execution and whether a decree which remained uncontested operates as res-judicata qua the parties affected by it. Hon'ble apex court , taking support from aforesaid judgment, observed as under : "In the light of this position in law the quest ion for determination is whether the impugned decree of the Civil Court can be assailed by the appellant in execution. It is already held that it is the Controller under the Act that has exclusive jurisdiction to order ejectment of a tenant from a building in the urban area leased out by the landlord. Thereby the Civil Court inherently lacks jurisdiction to entertain the suit and pass a decree of ejectment. Therefore, though the decree was passed and the jurisdiction of the Court was gone into in issue Nos. 4 and 5 at the ex-parte trial, the decree there-under is a nullity, and does not bind the appellant. Therefore, it does not operate as a res judicata. The Courts below have committed grave error of law in holding that the decree in the suit operated as res judicata and the appellant cannot raise the same point once again at the execution." 8.4. Similar view has been taken by Hon'ble Supreme Court by following aforesaid judgments recently in the case of Indian Bank vs. Manual Govindji Khona reported in 2015 (3) SCC 712. Further, similar view was emphasized by Hon'ble Bombay High Court (GOA Bench) in the case of Mavany Brothers vs. CIT (Tax Appeal No. 8 of 2007) [reportedat (2015) 120 DTR (Bom) 286—Ed.] in its order dt. 17th April, 2015 wherein it was held that an issue of jurisdiction can be raised at any time even in appeal or execution. 8.5. The aforesaid principles, enunciated by the Apex Court in the case of Kiran Singh & Ors. vs. Chaman Paswan & Ors, supra were reiterated by the apex Court in the cases of Superintendent of Taxes vs. Onkarmal Nathmal Trust (AIR 1975 SC 2065) and Dasa Muni Reddy vs. Appa Rao (AIR 1974 SC 2089). In the first of these decisions it was pointed out that revenue statutes protect the public on the one hand and confer power upon the State on the other, and the fetter on the jurisdiction is one meant to protect the public on the broader ground of public policy and, therefore, jurisdiction to assess or reassess a person can never be waived or created by consent . This decision shows that the basic principle recognized in Kiran Singh (supra) is applicable even to revenue statutes such as the IT Act. Dasa Muni Reddy (supra) is a judgment where the principle of 'coram non judice' was applied to rent control law. It was held that neither the rule of estoppel nor the principle of res ludicata can confer the Court jurisdiction where none exists. Here also the principle that was put into operation was that jurisdiction cannot be 12 conferred by consent or agreement where it did not exist, nor can the lack of jurisdiction be waived. 8.6. These judgments were subsequently noticed by Hon'ble Gujarat High Court in the case of P.V. Doshi vs. CIT (1978) 113 ITR 22 (Guj). This case arose under the IT Act with reference to the provisions of s. 147 dealing with re-assessment. The facts were that the assessment was sought to be reopened under s. 147 and notice under s. 148 was issued. Validity of reopening was not challenged upto Tribunal and additions were challenged on merits only. The Tribunal restored the matter to the AO with some directions to re- examine the issue on merits. When the matter came back to the AO the assessee specifically raised the point of jurisdiction to reopen the assessment, contending that the notice of reopening was prompted by a mere change of opinion. The AO rejected plea of the assessee but the AAC accepted this ground and also held the reassessment to be bad in law on jurisdictional ground. Against the order of the AAC the Revenue went in appeal before the Tribunal and specifically raised the plea that the question of jurisdiction to reopen the assessment having been expressly given up by the assessee in the appeal against the reassessment order in the first round, the assessee was debarred from raising that point again before the AAC and the AAC was equally wrong in permitting the assessee to raise that point which had become final in the first round and in adjudicating upon the same. The plea of the Revenue impressed the Tribunal which took the view that after its earlier order in the first round of proceedings the matter attained finality with regard to the point of jurisdiction which was given up before the AAC and not agitated further and that in the remand proceedings what was open before the AO was only the question whether the addition was justified on merits and the point regarding the jurisdictional aspect was not open before the AO. According to the Tribunal, the assessee having raised the point in the first round and having given it up could not revive it in the second round of proceedings where the issue was limited to the merits of the additions. In this view, the Tribunal accepted the Revenues plea. The assessee thereafter carried order of the Tribunal in reference before the Gujarat High Court. The High Court after considering various judgments of the Supreme Court on the point of jurisdiction to reopen the assessment and also after specifically discussing the judgment of the Supreme Court in Onkarmal Nathmal Trust (supra) and Dasa Muni Reddy (supra) held that the Tribunal was in error in holding that the question of jurisdiction became final when it passed the earlier remand order. It was held that neither the question of res judicata nor the rule of estoppel could be invoked where the jurisdiction of an authority was under challenge. According to Hon'ble Gujarat High Court, the rule of res judicata cannot be invoked where the question involved is the competence of the Court to assume jurisdiction, either pecuniary or territorial or over the subject-matter of the dispute. Hon'ble High Court further held that since neither consent nor waiver can confer jurisdiction upon the AO where it did not exist, no importance could be attached to the 13 fact that the assessee, in the first round of proceedings, expressly gave up the plea against the erroneous assumption of jurisdiction by the assessing authority. According to the Hon'ble Court, the "finality or conclusiveness could only arise in respect of orders which are competent orders with jurisdiction and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could never have any finality or conclusiveness. If the original order is without jurisdiction, it would be only a nullity confirmed in further appeals". In this view of the matter, Hon'ble High Court finally answered the reference in favour of the assessee. 8.7. It is further noted that many of these judgments were discussed and followed by the Co-ordinate Bench of the Tribunal in the case of Indian Farmers Fertilizers Co-operative Ltd. vs. Jt. CIT (2007) 107 TTJ (Del) 98 : (2007) 105 ITD 33 (Del), wherein a similar issue had arisen. In this case, the issue raised before the bench was whether it is open to the assessee, not having appealed against the reassessment order, to set up or canvass its correctness in collateral proceedings taken for rectification thereof under s.
The bench minutely analysed law in this regard and applying the principle of 'coram non judice' and following aforesaid judgments of the supreme court, it was held that if an assessee seeks to challenge the reassessment proceedings as being without jurisdiction, when action for rectification is sought to be taken on the assumption of the validity of the reassessment order, then the assessee has to step in and protect its interests and the liberty to quest ion even the validity of the reassessment proceedings ought to be given to it......." (emphasis, italicised in print, supplied). 8.8. Similar view was taken in another decision of the Tribunal in the case of Dhiraj Suri vs. Addl. CIT (2006) 99 TTJ (Del) 525 : (2006) 98 ITD 87 (Del). In the said case, appeal was filed by the assessee before the Tribunal against the levy of penalty. In the appeal challenging the penalty order, the assessee challenged the validity of block assessment order which had determined the tax liability of the assessee on the basis of which penalty was levied subsequently. The revenue objected with respect to the ground of the assessee raising jurisdictional issues of assessment proceedings in the appeal against the penalty order . After analysing the legal position, as clarified by Hon'ble Gujrat High Court in the case of P.V. Doshi, supra and Hon'ble Bombay High Court in the case of Jainaravan Babulal vs. CIT (1988) 69 CTR (Bom) 201 : (1988) 170 ITR 399 (Bom) the bench held as that if the block assessment itself is without jurisdiction then there is no question of levy of any penalty under s. 158BFA(2) and therefore it is open to the assessee to set up the question of validity of the assessment in the appeal against the levy of penalty. 8.9. We also derive support from another judgement of Hon'ble Bombay High Court in the case of Inventors Industrial Corporation 14 Ltd vs. CIT (1991) 96 CTR (Bom) 206 : (1992) 194 ITR 548 (Bom) wherein it was held that assessee was entitled to challenge the jurisdiction of the AO to initiate re-assessment proceedings before the CIT(A) in the second round of proceedings, even though he had not raised it in earlier proceedings before the AO or in the earlier appeal. 8.10. Thus, on the basis of aforesaid discussion we can safely hold that as per law, the assessee should be permitted to challenge the validity of order passed under s. 263 on the ground that the impugned assessment order was non est and we hold accordingly.
Further, the coordinate bench of Mumbai Tribunal in the case of Aishwarya Rai Bachchan (Supra), has held as under :- 4.1. One more excruciating fact that needs to be addressed in the instant case is that the learned Principal CIT herein is only seeking to revise the order passed by the learned AO under s. 143(3) r/w s. 147 of the Act dt. 12th Dec., 2018. In the said reassessment proceedings, the learned AO had not even made any addition despite the fact that he had reason to believe that income of Rs. 11,55,330 had escaped assessment in the hands of the assessee which was sought to be taxed under s. 56 of the Act as per the reasons recorded. Hence, when the very basis of reasons recorded by the learned AO was ultimately not added by the learned AO in the reassessment proceedings, then the primary reason to believe that income of the assessee had escaped assessment fails and such re-assessment cannot be treated as a valid order in the eyes of law. The same is to be declared as void ab initio. Reliance in this regard was rightly placed on the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. Jet Airways (I) Ltd. (2011) 239 CTR (Bom) 183 : (2011) 52 DTR (Bom) 71 : (2011) 331 ITR 236 (Bom). When an assessment framed by the learned AO is unsustainable in the eyes of law, the said invalid and illegal order cannot be subject matter of s. 263 proceedings. On this count also, the revision order passed by the learned Principal CIT under s. 263 of the Act deserves to be quashed.
The coordinate bench of Ahmedabad Tribunal in the case of Shri Jignesh Lilachand Shah (supra), had an occasion to deal this issue where the Tribunal in para 6 has observed as under :- 6. The next issue for consideration before us is that once it is held that the assessment order itself is null and void, can such assessment order be the subject matter of revision under section 263 of the Act. In our view, it is a well-settled principle of law that once the assessment order passed itself is null and void, the same cannot be the subject matter revision under section 263 of the Act.
15 In the case of Pioneer Distilleries Limited Vs Pr. CIT Pune) the ITAT held that revisionary jurisdiction cannot be exercised against Void order. In this case, the ITAT held that when the said order is void and did not stand in eyes of law, it cannot be held to be erroneous and prejudicial to the interest of revenue by the Commissioner. Again in the case of Westlife Development Ltd. v. PCIT vide order dated 24.06.2016 (ITAT Mumbai), the ITAT held that when an Assessment order passed under section 147 of the Act was illegal the CIT cannot invoke the jurisdiction under section 263 of the Act against such void or non-est order. In the case of Inder Kumar Bachani (HUF) v. ITO (2006) 101 TTJ 450 (ITAT Lucknow), the ITAT held that as the order of the Assessing Officer passed under section 147 / 143(3) was itself void, the order of PCIT passed under section 263 for quashing this order was without jurisdiction. In view of the above observations, we are of the considered view that since the assessment order passed by ITO Ward 3(3)(2), Ahmedabad itself was null and void, the same could not be the subject matter of revision under section 263 of the Act. In the result, we are Shri Jignesh Lilachand Shah vs. Pr. CIT allowing the appeal of the assessee on the ground of jurisdiction itself. We are accordingly not separately adjudicating into the merits of the case.
On careful reading of the observations made by the coordinate benches of the Tribunal in the above cases, we are of the view that the validity of order passed u/s.263 of the Act on the ground that the assessment order from which the said proceedings emerged out was nonest can be challenged in appellate proceedings against u/s.263 of the Act. Thus, respectfully following the above decisions of the coordinate benches of the Tribunal, we are of the considered view that in the present appellate proceedings against the order of the ld.Pr.CIT u/s.263 of the Act, the validity of the order passed u/s.144 of the Act can be examined and based on the conclusion, the proceedings u/s.263 of the Act could be held as without jurisdiction.
As observed above, in the present case, the assessee has filed an application for registration u/s.12A of the Act by filing Form 10A on 14.02.2020 and it had been granted registration on 29.06.2020. The 16 reassessment proceedings for the impugned assessment year were initiated by issue of notice dated 30.03.2021 and the assessment order u/s.147 r,w,s,144B was passed on 20.03.2022. From the perusal of series of events, it is seen that when the notice u/s.148 of the Act was issued, the assessee was granted registration u/s.12AA of the Act w.e.f. A.Y.2020-2021. As per third proviso to sub-section 2 to Section 12A of the Act, which is inserted w.e.f. 1.6.2020, no proceedings u/s.147 could be initiated only for non-registration of such trust if the application has already been made when the notice was issued. Since the said proviso is inserted w.e.f. 1.6.2020 and notice u/s.148 of the Act was issued on 30.03.2021, the same is applicable in the present case. The relevant provisions of Section 12A(2) of the Act are reproduced hereunder :- Conditions for applicability of sections 11 and 12. 12A. (1) xxxxxxx (2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made: [Provided that the provisions of sections 11 and 12 shall apply to a trust or institution, where the application is made under— (a) sub-clause (i) of clause (ac) of sub-section (1), from the assessment year from which such trust or institution was earlier granted registration; (b) sub-clause (iii) of clause (ac) of sub-section (1), from the first of the assessment year for which it was provisionally registered: Provided further that where registration has been granted to the trust or institution under section 12AA [or section 12AB ], then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year:
17 [Provided also] that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under [section 12AA or section 12AB ].]
The coordinate bench of ITAT Kolkata in the case of Sree Sree Ramkrishna Samity, in to 1685/Kol/2012, vide order dated 09.10.2015, has held in para 6.7 as under :- 6.7. We hold that the registration of trust under section 12A of the Act once done is a fait accompli and the AO cannot thereafter make further probe into the objects of the trust. Reliance in this regard is placed on the decision of the Hon’ble Apex Court rendered in the case of ACIT vs Surat City Gymkhana reported in (2008) 300 ITR 214 (SC). Drawing analogy from this judgement, the logical inference could be that as long as the objects were charitable in nature in the earlier years and in the year in which registration u/s 12AA was granted, the existence of trust for charitable purposes in the earlier years cannot be doubted with. Even otherwise, no adverse findings were given by the revenue with regard to the existence of the assessee society for charitable purposes in the assessment years under appeal.
Since the facts of the case of the assessee are similar to the facts of Sree Sree Ramkrishna Samity (supra), which has also linked to the fact that the case of the assessee is reopened solely for the reason that it has not got registered u/s.12A of the Act for the impugned assessment year, therefore, by following the decision of the coordinate bench of the Tribunal in the case of Sree Sree Ramkrishna Samity, cited supra, we are of the view that the proceedings initiated u/s.147 of the Act against the assessee society are illegal and bad in law and consequently the order passed u/s.147 r.w.s.144B of the Act is invalid.
18 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.
18. 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."
19 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.
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.
Since the order of the ld.Pr.CIT passed u/s.263 of the Act has been quashed on the legal issue, the other grounds taken on merits become infructuous, accordingly, the same are not adjudicated upon.
In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 05/06/2024. (GEORGE MATHAN) (MANISH AGARWAL) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 05/06/2024 Prakash Kumar Mishra, Sr.P.S.