GULAB BADGUJAR (HUF),THANE vs. COMMISSIONER OF INCOME-TAX (CENTRAL),

आदेश / ORDER PER ANIL CHATURVEDI, AM :

These two appeals filed by assessee are emanating out of separate 1. orders of Commissioner of Income Tax (Central), Nagpur, both dated 19.03.2015 under section 263 of the Act for the assessment years 2006- 07 & 2011-12, respectively.

ITA Nos.798 & 799/PUN/2015

2006-07 reads as under :

“1. On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals) – 1, Mumbai erred in invoking provisions u/s 263 of the Act, on the issue which was decided by the Assessing Officer and therefore such addition which is merely based on change of opinion is bad in law and void ab initio. 2. On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals) – 1, Mumbai erred in holding that the assessment order passed u/s 143(3) r.w.s. 147 on 14.02.2014 is erroneous and prejudicial to the interest of the revenue.”

Subsequently, assessee filed the additional ground which reads as 3.1

under :

“On the facts and in the circumstances of the case and in law, Learned CIT(Central), Nagpur, erred in passing order u/s 263, for considering the revision of order passed u/s 143(3) r.w.s. 147, dt.14.02.2014, for Asst. Year 2006-07, especially in view of the fact that the impugned proceedings were initiated post search enquiries in case of Suyojit Group, and necessary explanations were offered before DDI(Inv), in connection with documents seized during the search action and necessary inquiries are already made.

2011-12.

in both the assessment years lacks jurisdiction and therefore are bad in

law. He submitted that the basis on which assessments were reopened

were looked into by AO in the re-assessment proceedings and the

additions were made. In such a situation, exercise of revisionary

proceedings are not permissible as reopening was on specific grounds and

for this proposition, he relied on various decisions. He therefore

submitted that the orders of Commissioner of Income Tax be set aside.

ITA Nos.798 & 799/PUN/2015

Ld.D.R. on the other hand, supported the order of Commissioner of

Income Tax.

record. Briefly, in the facts of the case, assessee has furnished the

original return of income on 16.08.2010. Search under section 132 of the

Act was carried out on Suyojit Group of cases on 17.09.2010. During

the course of search, certain documents were found and seized.

Thereafter, elaborate enquiries were made and the seized documents were

confronted and statement of Shri Gulab Maharu Badgujar was recorded

on 16.10.2010. Before the DDIT., Investigation, the transaction was

explained vide letter dt.09.11.2010. Post the search and the enquiries

made, no notice under section 153C of the Act or Sec.148 of the Act were

issued to the assessee; but notice under section 153C of the Act was

issued to several other parties. Thereafter, notice under section 148 of

the Act was issued to the assessee on specific reasons. The AO passed

order under section 143(3) r.w.s. 147 of the Act vide order dated

14.02.2014. The assessment was re-opened for specific reasons and

addition on account of the said reasons was made in the hands of

assessee which is not disputed. Thereafter, the Commissioner of Income

Tax exercised his jurisdiction under section 263 of the Act and issued

show cause notice to the assessee. The Commissioner of Income Tax

refers to part of a transaction between assessee and Shri Anant Keshav

Rajegaonkar, whose residential premises was also searched under section

132 of the Act as part of Suyojit Group of cases on 17.09.2010. It may be

pointed herein itself, that the basis of the initiation of the 263 proceedings

is a document found during the search which reflects a transaction

ITA Nos.798 & 799/PUN/2015

totaling to Rs.2.98 crore spread over a period of five years. The years to

which it relates are as under :

A.Y. Amount (Lakh)

2006-07 19.00

2007-08 127.00

2008-09 45.00

2009-10 40.00

2011-12 67.00

TOTAL 298.00

opened under section 263 of the Act i.e., for A.Y. 2006-07 and 2011-12.

Admittedly, the assessment proceedings for A.Y. 2007-08 wherein there is

a transaction of Rs.127 crore has been accepted and no action under

section 263 of the Act has been initiated. It may also be clarified herein

that the other side transactions in the hands of Anant Keshav

Rajegaonkar were also looked into by the Revenue authorities and we are

not concerned with the fate of the additions in his hands.

by the Commissioner of Income Tax under section 263 of the Act against

the order passed under section 143(3) r.w.s. 147 of the Act, wherein the

assessment proceedings were re-opened on specific reasons recorded for

re-opening. We have already referred to the additions made on the

aforesaid reasons in the hands of assessee in the Para above. Once, the

re-assessment proceedings are initiated on a specific issue and the

addition is made in the hands of the assessee then the Commissioner of

ITA Nos.798 & 799/PUN/2015

Income Tax is precluded from exercise of jurisdiction under section 263 of

the Act on a ground which is not covered by the reasons during the re-

opening of the assessment since the time for completing the assessment

u/s 143(3) of the Act had expired. Hence, we find no merit in the

exercise of revisionary power by the Commissioner of Income Tax under

section 263 of the Act in the present facts and circumstances.

High Court in the case of M/s. Ashoka Buildcon Limited Vs. ACIT

reported in (2010) 191 Taxmann 29 wherein also the question was of

revisionary proceedings initiated under section 263 of the Act against the

assessment made which was re-opened under section 147 of the Act. The

Hon’ble Bombay High Court noted that the re-assessment proceedings

were in relation to a particular grounds and subsequent thereto of

passing of the re-assessment and exercise of jurisdiction under section

263 of the Act with reference to the issues, which did not form subject of

re-opening of assessment cannot be exercised.

Buildcon Limited (supra) at Para 8 held as under :

“8. Where an assessment has been reopened under Section 147 in relation to a particular ground or in relation to certain specified grounds and, subsequent to the passing of the order of reassessment, the jurisdiction under Section 263 is sought to be exercised with reference to issues which do not form the subject of the reopening of the assessment or the order of reassessment, the period of limitation provided for in sub-section (2) of Section 263 would commence from the date of the order of assessment and not from the date on which the order reopening the reassessment has been passed.

ITA Nos.798 & 799/PUN/2015

The Hon’ble Bombay High Court at Para 10 further held that

“10…………….

Where a reassessment has been made pursuant to a notice under Section 148, the order of reassessment prevails in respect of those items which form part of reassessment. On items which do not form part of the reassessment, the original assessment continues to hold the field. When the Assessing Officer reopens an assessment on a particular issue, it is open to him to make a reassessment on that issue as well as in respect of other issues which subsequently come to his notice during the course of the proceedings under Section 147. The submission of the Revenue is that by not passing an order of reassessment in respect of other independent issues, the order of the Assessing Officer can be construed to be erroneous and to be prejudicial to the interest of the Revenue within the meaning of Section 263. The submission cannot be accepted in the facts of the present case. The substantive part of Section 147 as well as Explanation 3 enables the Assessing Officer to assess or reassess income chargeable to tax which he has reason to believe had escaped assessment and other income which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section. There is nothing on the record of the present case to indicate that there was any other income which had come to the notice of the Assessing Officer as having escaped assessment in the course of the proceedings under Section 147 and when he passed the order of reassessment. The Commissioner, when he exercised his jurisdiction under Section 263, in the facts of the present case, was under a bar of limitation since limitation would begin to run from the date on which the original order of assessment was passed. We must however clarify that the bar of limitation in this case arises because the revisional jurisdiction under Section 263 is sought to be exercised in respect of issues which did not form the subject matter of the reassessment proceedings under Section 143(3) read with 147. In respect of those issues, limitation would commence with reference to the original order of assessment. If the exercise of the revisional jurisdiction under Section 263 was to be in respect of issues which formed the subject matter of the reassessment, after the original assessment was reopened, the commencement of limitation would be with reference to the order of reassessment. The present case does not fall in that category.”

Taking strength from the order of Hon’ble Bombay High Court in Ashoka

Buildcon Limited (supra), we hold that the order of revision passed in the

present case, on issues which did not form subject of re-opening of the

assessment or order of reassessment, cannot be upheld. Therefore the

revisionary proceedings exercised by the Commissioner of Income Tax is

not correct. Hence, the said order of Commissioner of Income Tax is set

aside.

ITA Nos.798 & 799/PUN/2015

Income Tax had issued the show cause notice for A.Y. 2006-07 against

the assessment order passed under section 143(3) r.w.s. 147 of the Act

dt.14.02.2014 assessing the taxable income at Rs.60,25,970/-. However,

in the final para i.e., Para 6, the Commissioner of Income Tax was of the

considered opinion that the order passed under section 143(3) of the Act

dt.28.03.2013 is erroneous and prejudicial to the interest of Revenue.

The final finding of the Commissioner of Income Tax is contrary to the

facts as the assessment order which was in question was passed under

section 143(3) r.w.s. 147 of the Act dt.14.02.2014; but the Commissioner

of Income Tax in the final analysis held that an order passed under

section 143(3) of the Act dt.28.03.2013 to be erroneous and prejudicial to

the interest of Revenue where no such order under section 143(3) of the

Act has been passed by any of the authorities for A.Y. 2006-07, hence,

the finding of the Commissioner of Income Tax suffers from infirmity and

on this account also the exercise of jurisdiction by the Commissioner of

Income Tax cannot stand.

exercise of revisionary jurisdiction by the Commissioner of Income Tax

under section 263 of the Act, the reason for exercise of the said

jurisdiction by the Commissioner of Income Tax is again at the same

document which was found from the residential premises of Shri Anant

Keshav Rajegaonkar wherein the transaction totaling to Rs.2.98 crore is

mentioned. It may be pointed out that the said transaction relates to

number of years and we have already referred to the details in the paras

above. The first year was A.Y. 2006-07 wherein the amount mentioned

on the document was Rs.19 lakh. We have already held the exercise of

ITA Nos.798 & 799/PUN/2015

jurisdiction by the Commissioner of Income Tax under section 263 of the

Act to be not in accordance with the law in the paras above.

noted is Rs.127 lakh, the assessment for this year was completed under

section 143(3) of the Act but no proceedings u/s 263 of the Act have been

initiated against the assessee. Similarly, for A.Ys. 2008-09 and 2009-10

wherein the transactions noted were Rs.45 lakh and Rs.40 lakh,

respectively, though the assessment has been completed in the hands of

the assessee but no proceedings u/s 263 of the Act have been completed.

In the captioned assessment year i.e., A.Y. 2011-12, the amount noted in

the seized document is Rs.67 lakh and is the basis for exercise of

revisionary power by the Commissioner of Income Tax against the

assessee. Once the transaction has been accepted in the earlier years

and the transaction emanate from the same seized document, then the

Revenue authorities cannot take different stand in different years. We

therefore find no merit in the exercise of jurisdiction under section 263 of

the Act against the assessee by the Commissioner of Income Tax under

section 263 of the Act in A.Y. 2011-12. Hence, the said order passed

under section 263 of the Act is set aside.

Order pronounced on 3rd day of May, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 3rd May, 2019. Yamini

ITA Nos.798 & 799/PUN/2015

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(Central), Nagpur. 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” / DR, ITAT, “A” Pune; गाड� फाईल / Guard file. 5

आदेशानुसार/ BY ORDER

// True Copy //

// True Copy व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.