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Facts
The Revenue appealed against the Ld. CIT(A)'s order deleting an addition of Rs. 12,93,50,749/- made by the AO. The AO had made the addition on account of unexplained investment in penny stock. Subsequently, the Ld. PCIT set aside the AO's assessment order under Section 263 of the Act due to lack of requisite enquiries.
Held
The Tribunal held that since the assessment order itself was set aside by the Ld. PCIT, the appeal filed by the Revenue against the Ld. CIT(A)'s order, which was passed subsequent to the PCIT's order, had become infructuous.
Key Issues
Whether an appeal by the Revenue is rendered infructuous if the assessment order on which it is based has been set aside by the Ld. PCIT under Section 263 of the Act.
Sections Cited
143(3), 147, 68, 132(4), 263(1)
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Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
This appeal by the revenue is directed against order dated 30/05/2023 passed by the Ld. Commissioner of Income-tax (Appeals)-National faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds:
(i) “On the facts and the circumstances of the case and in law, Ld. CIT(A) On the facts and the circumstances of the case and in law, Ld. CIT(A) On the facts and the circumstances of the case and in law, Ld. CIT(A) is right in deleting the addition of Rs. is right in deleting the addition of Rs. 12,93,50,749/- made by the made by the A.O. on account of unexplained investment made in the penny stock A.O. on account of unexplained investment made in the penny stock A.O. on account of unexplained investment made in the penny stock company M/s. Luminaire Technologies Lid" company M/s. Luminaire Technologies Lid" (ii) "On the facts and the circumstances of the case, Ld.CIT(A) is right in "On the facts and the circumstances of the case, Ld.CIT(A) is right in "On the facts and the circumstances of the case, Ld.CIT(A) is right in deleting the addition of Rs. 12,93,50,749/ deleting the addition of Rs. 12,93,50,749/- without appreciating the ut appreciating the fact that the sale consideration of Rs. 12,93,50,749/ fact that the sale consideration of Rs. 12,93,50,749/- derived from the derived from the sale of shares of company M/s. Luminaire Technologies Ltd. are sale of shares of company M/s. Luminaire Technologies Ltd. are sale of shares of company M/s. Luminaire Technologies Ltd. are bogus and exemption claimed on such LTCG should not be allowed to bogus and exemption claimed on such LTCG should not be allowed to bogus and exemption claimed on such LTCG should not be allowed to the assesse". (iii) "On the facts and "On the facts and the circumstances of the case, Ld.CIT(A) is right in the circumstances of the case, Ld.CIT(A) is right in deleting the addition of Rs. 12,93,50,749/ deleting the addition of Rs. 12,93,50,749/- without appreciating the without appreciating the fact that the addition was made on account of undisclosed income on fact that the addition was made on account of undisclosed income on fact that the addition was made on account of undisclosed income on the basis of the statement recorded ws132(4) of the accommodation the basis of the statement recorded ws132(4) of the accommodation the basis of the statement recorded ws132(4) of the accommodation entry provider, which is an evidence as per Section 132(4) of the entry provider, which is an evidence as per Section 132(4) of the entry provider, which is an evidence as per Section 132(4) of the Income-Tax Act." (iv) "The appellant craves leave to ame "The appellant craves leave to amend or alter any ground or add a or alter any ground or add a new ground."
The brief facts of the case brief facts of the case are that an assessment under are that an assessment under Section 143(3) read with Section Section 143(3) read with Section 147 of the Income Tax Act, Income Tax Act, 1961 (hereinafter referred to as (hereinafter referred to as "the Act") was completed on ) was completed on Assessing Officer (AO) made an 22.12.2017, wherein the , wherein the Assessing Officer (AO) addition under addition under Section 68 of the Act, attributing the of the Act, attributing the transactions of accommodation entries allegedly provided by accommodation entries allegedly provided by the assessee.
Upon appeal, the Upon appeal, the Learned Commissioner of Income Tax Learned Commissioner of Income Tax observed that the assessee had opted for (Appeals) [Ld. CIT(A)] (Appeals) [Ld. CIT(A)] observed that the assessee had opted for the Income Declaration Scheme (IDS), 2016 Income Declaration Scheme (IDS), 2016 and had declared and had declared , upon which due taxes commission income at the rate of 1% commission income at the rate of 1%, upon which due taxes were paid. Consequently, the d. Consequently, the Ld. CIT(A) directed the AO Ld. CIT(A) directed the AO to verify the assessee’s claim and grant appropriate relief. verify the assessee’s claim and grant appropriate relief. verify the assessee’s claim and grant appropriate relief. Aggrieved by the said order, the Revenue has preferred the Aggrieved by the said order, the Revenue has preferred the Aggrieved by the said order, the Revenue has preferred the present appeal, raising the grounds as reproduced above. , raising the grounds as reproduced above. , raising the grounds as reproduced above.
We have considered the We have considered the rival submissions and perused the and perused the relevant material on record relevant material on record. The learned counsel for the learned counsel for the assessee brought to our attention that subsequent to the brought to our attention that subsequent to the brought to our attention that subsequent to the impugned assessment order dated 22.12.2017 impugned assessment order dated 22.12.2017 impugned assessment order dated 22.12.2017, the Learned Principal Commissioner of Income Tax (Ld. PCIT) Principal Commissioner of Income Tax (Ld. PCIT) Principal Commissioner of Income Tax (Ld. PCIT), having jurisdiction over the case, risdiction over the case, called for the records called for the records and, after providing an opportunity of being heard to the assessee opportunity of being heard to the assessee, set opportunity of being heard to the assessee aside the impugned the impugned assessment order under under Section 263 of the Act on 24.02.2021 24.02.2021, with a direction to pass a , with a direction to pass a fresh assessment order assessment order. This fact has not been disputed by the ld fact has not been disputed by the ld DR.
The relevant findings of the The relevant findings of the Ld. PCIT are reproduced as under: are reproduced as under:
"Under the circumstances delineated above, the action of "Under the circumstances delineated above, the action of Under the circumstances delineated above, the action of the Assessing Officer with regard to the identification of the Assessing Officer with regard to the identification of the Assessing Officer with regard to the identification of the component of 'Entry Operator Charges' and its the component of 'Entry Operator Charges' and its the component of 'Entry Operator Charges' and its taxation, without conducting the requisite enquiries, has to taxation, without conducting the requisite enquiries, has to taxation, without conducting the requisite enquiries, has to be regarded as erroneous in s be regarded as erroneous in so far as it is prejudicial to the o far as it is prejudicial to the interests of the revenue, within the meaning of Section 263 interests of the revenue, within the meaning of Section 263 interests of the revenue, within the meaning of Section 263 of the Act. Accordingly, the assessment order dated of the Act. Accordingly, the assessment order dated of the Act. Accordingly, the assessment order dated 22.12.2017 passed by the AO under Section 143(3) of the 22.12.2017 passed by the AO under Section 143(3) of the 22.12.2017 passed by the AO under Section 143(3) of the Act is set aside as per the provisions of Explanation 2 to Act is set aside as per the provisions of Explanation Act is set aside as per the provisions of Explanation Section 263(1) of the Act. The Assessing Officer is directed Section 263(1) of the Act. The Assessing Officer is directed Section 263(1) of the Act. The Assessing Officer is directed to conduct the requisite enquiries to arrive at a correct to conduct the requisite enquiries to arrive at a correct to conduct the requisite enquiries to arrive at a correct conclusion as per law and frame a conclusion as per law and frame a de novo assessment de novo assessment order, keeping in mind the observations made in the , keeping in mind the observations made in the , keeping in mind the observations made in the foregoing foregoing paragraphs. paragraphs. Needl Needless ess to to add, add, adequate adequate opportunity of being heard shall be afforded to the opportunity of being heard shall be afforded to the opportunity of being heard shall be afforded to the assessee to file details and furnish its explanation. assessee to file details and furnish its explanation." assessee to file details and furnish its explanation."
The impugned order of the Ld. CIT(A) impugned order of the Ld. CIT(A) was passed was passed subsequent to the order of the Ld. PCIT under Section 263 of the Act to the order of the Ld. PCIT under Section 263 of the Act to the order of the Ld. PCIT under Section 263 of the Act. However, the Ld. CIT(A) failed to take into consideration Ld. CIT(A) failed to take into consideration Ld. CIT(A) failed to take into consideration the fact that the impugned assessment order had already been set impugned assessment order had already been set impugned assessment order had already been set aside by the Ld. PCIT. Since the assessment order itself by the Ld. PCIT. Since the assessment order itself by the Ld. PCIT. Since the assessment order itself no longer survives, any appellate proceedings arising from it are , any appellate proceedings arising from it are , any appellate proceedings arising from it are rendered infructuous infructuous.
Accordingly, the present Accordingly, the present appeal filed by the Revenue appeal filed by the Revenue is dismissed as infructuous dismissed as infructuous.
In the result, appeal of the revenue is dismissed. In the result, appeal of the revenue is dismissed. In the result, appeal of the revenue is dismissed.
Order pronounced in the open Court on nced in the open Court on 20/03 /03/2025.