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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI SATBEER SINGH GODARA & SHRI GD PADMAHSHALI
ORDER PER SATBEER SINGH GODARA, J.M. :
This assessee’s appeal, for assessment year 2011-12, arises against the PCIT (Central), Nagpur’s order dated 28.12.2016, in proceedings u/sec.263 of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
It emerges at the outset that the assessee has raised her first and foremost legal argument that once the assessment herein dated 28.12.2016 framed u/sec.143(3) r.w.s. 153A of the Act itself is non-est since not based on any incriminating material found or seized during the course of 2 ITA.No.1123/PUN./2018 search dated 10.09.2014, the PCIT’s revision jurisdiction order in issue be also declared as null and void being in the nature of collateral proceedings. She quotes hon’ble apex court’s recent landmark decision in PCIT vs. Abhisar Buildwell P. Ltd., [2023] 149 taxmann.com 399 (SC) that an assessment u/sec.153A involving “unabated” instance has to be framed only on the basis of the corresponding seized material during the course of search. The assessee further invites our attention to the PCIT’s revision order [page-10] that there is no dispute about absence of the foregoing incriminating material even at the Revenue’s behest as well. Learned counsel accordingly submits that although the assessee is seeking to challenge validity of the impugned search assessment, her case is confined to correctness of the PCIT’s revision order before us only.
Learned CIT-DR on the other hand has vehemently argued that the assessee could not be allowed to raise the instant legal argument before us as this is neither the proper forum nor the PCIT’s proceedings could be held as collateral in nature. Mr. Kesari seeks to buttress the point that such a legal plea could not be allowed to be raised in appellate proceedings u/sec.253 r.w.s.254(1) of the Act before the tribunal.
We have given our thoughtful consideration to the vehement rival arguments. The assessee had admittedly filed
3 ITA.No.1123/PUN./2018 her original return on 30.09.2011 declaring total income at Rs.27,01,44,740/- followed by sec.143(3) assessment dated 03.02.2014. This followed the impugned search in R.C. Bafna group of cases on 10.09.2014 leading to initiation of sec.153A proceedings against her which finally culminated in the Assessing Officer’s corresponding assessment dated 28.12.2016. This is thus a clear-cut instance of an “unabated” assessment only as on the date of the search. We make it clear that all these facts duly emerged from the assessment in question dated 28.12.2016. That being the case, we could hardly have any hesitation going by hon’ble apex court’s landmark decision that once the Assessing Officer had not made any addition based on the alleged seized incriminating material, his assessment deserves to be declared as non-est only which also makes the PCIT’s revision directions as not sustainable in the eye of law going by “Sublato Fundamento Cadit Opus" principle i.e., when the foundation itself does not exists, the superstructure thereupon automatically falls. So far as the Revenue’s technical arguments that the assessee could not raise the instant legal plea before the tribunal, we note that the coordinate bench’s order in ITA.No.883 to 885/PUN./2016 dated 12.05.2022 in Mrs. Pushpa Bansal vs. PCIT has rejected the very stand as follows :
4 ITA.No.1123/PUN./2018 “5. We find no merit in the Revenue’s instant technical objections pleading estoppel as well as approbate and reprobate in the light of Hon’ble apex court’s landmark judgment in NTPC vs. CIT (1998) 229 ITR 383 (SC); as considered the tribunal’s Special Bench decision in the case of All Cargo Global Logistic Ltd. vs. DCIT (2012) 137 ITD 287 (Mum) (SB), that this tribunal can very well entertain a pure question of law going to route of the mater so as to determine the correct tax liability of an assessee provided all the relevant facts form part of the records. We make it clear that the assessee’s detailed paper book running into 150 pages has already placed on record the corresponding reopening reasons in all these three assessment years. We thus admit the assessee’s forgoing additional substantive ground in these circumstances.
We further wish to observe here that this tribunal various Co-ordinate benches decision M/s. Classic Flour and Food Processing Pvt. Ltd. Vs. DCIT in to 766/KOL/2014 (and other similar cases) order dated 05.04.2017 holds that an assessment is in the nature of primary and section 263 revision exercise amounts to collateral proceedings wherein the forming validity could very well be challenged to the extent of correctness of CIT’s revision action only. Learned co-ordinate bench taken note of (1955) 1 SCR 117 (SC) in Kiran Singh and 5 ITA.No.1123/PUN./2018 Others Vs. Chaman Paswan and Others holding that a decree passed by a court without jurisdiction is a nullity which could always be challenged in execution proceedings as well. The assessee further placed reliance on Deep Chand Kothari Vs. CIT 1988 171 ITR 381 (Raj.) that such basic principles of civil jurisprudence apply in tax proceedings. We hold in view of foregoing list of precedents that defect in primary proceedings strikes at the very authority in collateral exercise which is not curable by consent of the parties. We accordingly conclude that the assessee before us is very much entitled to challenge correctness of the primary proceedings to the limited extent of correctness of the instant section 263 revision actions only.
We now advert to the Assessing Officer identical reopening reasons forming subject matter of challenge in this additional substantive ground. Page No. 34 in assessee’s paper book contains the reopening reasons for AY 2006-07 as under :
“On verification of the records for A.Y. 2006-07 in case of the above mentioned assessee revealed that the assessee is in the business of transportation. The assessee has paid Rs.69,28,014/- as vehicle hire charges for her business but in clause 27 of 6 ITA.No.1123/PUN./2018 Form 3CD for the Tax Audit Report of the assessee, the C.A. certified that the assessee is not liable to deduct tax at source. The vehicle hire charges of Rs.69,28,014/- has been reflected as purchase in the P & L account of the assessee for the A.Y. 2006-07. The expenditure on payment for vehicle hire charges needs to be disallowed due to non deduction of TDS on the such payments by the assessee. Hence there is escapement of income to the tune of Rs.69,28,014/- for A.Y. 2006-07.”
There is hardly any dispute between the parties that the assessing authority had recorded similar reopening reasons in latter twin assessment years i.e. A.Ys. 2007-08 and 2008-09 as well which are very much compiled in the instant paper book. The sole difference is only qua assessee’s payments made.
We observe in light of above extracted re-opening reasons that the assessing authority had indeed failed to indicate as to under which provision of law in Chapter XVII of the Act the assessee was liable to deduct TDS on her impugned payments. The Revenue sought to highlight at this stage that the Pr.CIT has made it clear in the impugned revision directions that the assessee made contractual payments liable for TDS deduction u/s. 194C
7 ITA.No.1123/PUN./2018 of the Act. We find no merit in the Revenue’s instant arguments once it is clear that the assessing authority had not specified in the reopening reasons about applicability of the particular statutory provision requiring TDS deduction or for that even suggest that the assessee’s payments were in the nature of contractual expenses involving TDS deduction u/s. 194C of the Act or any other provision as the case may be. And further that there existed contractual relationship between payer-payees hereunder. We thus quote hon’ble jurisdictional high court’s landmark decision in Hindustan Unilever Ltd. Vs. R B Wadkar (2004) 268 ITR 332 (Bom) and the Assessing Officer’s reopening reasons have to be read on standalone basis without any external help thereby rejecting any scope of addition, deletion or substitution therein at a later stage even it is found that at some point of time that the same were very well justifiable. We adopt the very reasoning cause hereinabove to quash all these three reassessments herein framed in 28-03-2013 as non-nest. We order accordingly. We also invoke “sublato fundamento cadit opus” that once the foundation of reopening is removed, collateral proceedings u/s. 263 in issues also follows the section as having no legs to stand. The assessee’s foregoing identical additional substantive ground raised in all these three appeals succeeds thereby
8 ITA.No.1123/PUN./2018 rendering all other pleadings on merits as well as validity (regarding applicability of section 147 1st proviso in assessment years i.e. AYs 2006-07 and 2007-08) as infructuous. Ordered accordingly.
Theses assessee’s three appeals are allowed in above terms. A copy of the common order be placed in the respective case files.”
We adopt the above extracted detailed discussion mutatis mutandis to accept the assessee’s instant legal argument seeking to quash the PCIT’s impugned sec.263 revision directions subject to the rider that the same shall be confined to the extent of revision order under challenge before us only as all other consequences from the Assessing Officer’s assessment dated 28.12.2016 shall continue to flow. Ordered accordingly.
All other pleadings on merits stand rendered academic.
6. This assessee’s appeal is allowed in above terms.
Order pronounced in the open Court on 30.10.2023.