DONGARAI CONSTRUCTION COMPANY,SANGLI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, SANGLI, SANGLI

ORDER PER SATBEER SINGH GODARA, J.M. :

This assessee’s appeal arises against the National Faceless Appeal Centre [in short “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/2022-23/1050545458(1), dated 09.03.2023, involving proceedings u/s. 147 r.w.s. 144 of the Income Tax Act, 1961 (in short “the Act”).

Heard both the parties. Case file perused.

2 I.T.A.No.457/PUN./2023 1. “On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals), National Faceless Appeal Centre (NFAC) erred in dismissing the appeal of the appellant wherein the appellant had contested the very validity of reopening of the case u/s. 147 of the I.T. Act,1961 and issuing of notice u/s.148 of the said Act by the Assessing Officer holding that there was income which had escaped assessment in the case of the appellant ignoring and without appreciating the facts that the business of appellant had been closed on 31/10/2009 due to taking over of the appellant’s concern Dongarai Construction Company (PAN : AABFD 3012G) by Dongarai Infrastructure Private Limited (PAN: AAFCP1473J) and hence there was no question of having any income of the appellant during the A.Y.2011-12 which could be said as escaped assessment. The appellate order therefore so passed confirming the re-opening of assessment by the Assessing Officer as valid being arbitrary, illegal and bad in law be set aside/quashed.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals), National Faceless Appeal Centre (NFAC) erred in dismissing the appeal of the appellant wherein the appellant had contested the very validity of reopening of the case u/s. 147 of the I.T. Act,1961 and issuing of notice u/s.148 of the said Act and consequential 3 I.T.A.No.457/PUN./2023 passing of the ex-parte assessment order u/s. 144 r.w.s.147 of the Act dated 14/12/2018 by the Assessing Officer without quashing/setting aside the assessment order as appealed for ignoring and without appreciating the submission of the appellant made with documentary evidences that on closure of the business of the appellant on 31/10/2009 due to merger of the appellant’s proprietary concern Dongarai Construction Company with the Company Dongarai Infrastructure Private Limited all the assets and liabilities of the appellant had been taken over by the said company w.e.f. 01/11/2019 and hence there was no income in the case of the appellant and any income attributable to the appellant pertaining for the year for appellant’s business or any other source had been considered in the case of the said company and therefore as there was no income of the appellant for the year under consideration (i.e. A.Y. 2011-12) and no income in the case of the case of the appellant had escaped assessment, the ex-parte re-assessment order passed u/s.144 r.w.s.147 of the Act by the Ld. Assessing Officer should have been quashed by the Ld. CIT(A) instead of dismissing the appeal of the appellant in this regard. The appellate order therefore so passed confirming the re-opening of assessment and the re-assessment order passed by the 4 I.T.A.No.457/PUN./2023 Assessing Officer as valid being arbitrary, illegal and bad in law be set - aside/quashed.

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals), National Faceless Appeal Centre (NFAC) erred in dismissing the appeal of the appellant wherein the appellant had contested the very validity of reopening of the case u/s. 147 of the I.T. Act,1961 and issuing of notice u/s.148 of the said Act and consequential passing of the ex-parte assessment order u/s. 144 r.w.s.147 of the Act dated 14/12/2018 by the Assessing Officer ignoring and without appreciating the facts that due to merger of the appellant’s proprietary concern Dongarai Construction Company with the Company Dongarai Infrastructure Private Limited from 01/11/2009 there was no income of the appellant and any income which had been attributed to the appellant due to issue of Form No. 26AS in the name of the appellant had been already considered in the computation of income and return of income filed by the company and therefore no such income for A.Y.2011-12 could be assessed by the Assessing Officer in the case of the appellant by passing any re-assessment order u/s.144 r.w.s. 147 of the Act, as allegedly done by the Assessing Officer. The appellate order therefore so passed confirming the re-opening of assessment and the re-assessment order passed by the 5 I.T.A.No.457/PUN./2023 Assessing Officer as valid being arbitrary, illegal and bad in law be set aside/quashed.

4. On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals), National Faceless Appeal Centre (NFAC) erred in confirming the addition of Rs.64,95,415/- on the basis of computation of business income at Rs.61,99,120/- and also income from other sources of Rs.2,96,205/- in the ex-parte assessment order passed u/s.144 r.w.s. 147 of the I.T.Act,i96i dated 14/12/2018 by the Ld. Assessing Officer ignoring and without appreciating the submission and contention made/raised both before the Assessing Officer and the Ld. CIT(A) along with documentary evidences about the closure of the business of the appellant on 31/10/2009 and taking over the entire business with its assets and liabilities, income and expenditure by the Company Dongarai Infrastructure Private Limited from 01/11/2009 and therefore when there was no income of the appellant for- the year under consideration (i.e.A.Y.2011-12) the addition made by the Ld. Assessing Officer totalling to Rs.64,95,415/- in the re- assessment order passed ex-parte u/s.144 r.w.s. 147 of the Act dated 14/12/2018 should have been deleted by the Ld: CIT(A). The appellate order so passed by the Ld. CIT(A) confirming the addition of Rs.64,95,415/- made by 6 I.T.A.No.457/PUN./2023 the Ld. Assessing Officer being arbitrary, illegal and bad in law be deleted. 5. The appellant craves leave to add, alter, amend, withdraw or substitute any ground or grounds of appeal or to add any new ground or grounds of appeal on or before the hearing.”

7 I.T.A.No.457/PUN./2023 5. The Revenue has strongly supported the impugned addition in light of the CIT(A)'s detailed discussion affirming the assessment findings reading as under :

8 I.T.A.No.457/PUN./2023

9 I.T.A.No.457/PUN./2023 7. This assessee’s appeal is partly allowed for statistical purposes.

Order pronounced in the open Court on 19.06.2023.