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Income Tax Appellate Tribunal, AHMEDABAD ‘B’ BENCH, AHMEDABAD
Per Pramod Kumar, AM:
By way of this appeal, the Assessing Officer appellant has challenged
correctness of the order dated 15.09.2015 passed by the learned CIT(A), in the matter
of reopened assessment under section 115WE(3) read with section 115W of the
Income Tax Act, 1961, for the assessment year 2008-09
Grievance raised by the appellant is as follows :-
“That the ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.90,00,000/- made by AO on account of issue of sweat equity shares at a discount of Rs.90/- per share within the meaning of provisions of section 115WB(1)(d) of the Act without taking account of the fact that notice u/s.115WE(1) of the Act has issued on 01.03.2014 and the assessment order u/s.115WE(3) r.w.s. 115WG was passed by AO on 28.03.2014 as per stipulated time allowed u/s.153(1B) of the Act.
ITA No.3300/Ahd/2015 Assessment year: 2008-09 Page 2 of 4 On the fact and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above since the assessee has failed to disclose his true income/book profit. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored to the above extent.”
To adjudicate on this appeal only a few material facts need to be taken note of. It is a case of reopened assessment and the notice under section 115WH(1) was issued on 24.05.2012 and served on the assessee by speed post. Thereafter, notice under section 115WE(2) was issued on 08.07.2013 and a notice under section 115WE(1) was issued on 01.03.2014. The assessment was finalized on 28.03.2014. In appeal before the learned CIT(A), the assessee contended that order passed by the ld. CIT(A) is time barred inasmuch as, in terms of the provisions of section 153(1B) the assessment or reassessment under section 115WG has to be necessarily concluded within nine months from the end of the financial year in which the notice under section 115WH was served. The ld. CIT(A) upheld the plea of the assessee and quashed the impugned reassessment order. While doing so, the ld. CIT(A) has observed as follows :-
“7. I have carefully considered the reassessment order passed by the A.O. and the facts of the case and the submissions of the appellant. Since the legal ground raised challenging the reassessment order under section 115WG as barred by limitation goes to the root of the matter and being purely a legal ground for which the relevant facts are on record of the assessment order, the same is admitted and adjudicated considering the judgments relied upon by the appellant. 8. I find that the notice under section 115WH(1) for making reassessment of fringe benefit was issued on 24.05.2012 as stated in Para 2 of the assessment order passed by the AO. The same was served by speed post on the appellant on 30.05.2015. The appellant filed return in response to the said notice on 28.06.2012 by ACK receipt No.2782806120 16250. Thus, it is clear that the notice was served in the financial year 2012-13, which ended on 31st March, 2013. The limitation period for passing an order of reassessment of fringe benefits is prescribed in section 153(1B) which reads as under: “153(1B). No order of assessment or reassessment shall be made under section 115WG after the expiry of nine months from the end of the financial year in which the notice under section 115WH was served.” In view of above clear provisions, the reassessment order u/s.115WG was required to be passed on or before 31st December 2013 (within nine months from 31st March 2013). However, the reassessment order is passed on 28.03.2014 which is beyond the period of limitation.
ITA No.3300/Ahd/2015 Assessment year: 2008-09 Page 3 of 4 9. in view of the above factual and legal position, I have no alternative but to hold that the reassessment order dated 28.03.2014 passed by the AO under section 115WE(3) read with section 115WG is barred by time as prescribed in section 153(1B) hence invalid, null and void and is therefore annulled. The ground regarding legality of order is thus allowed and the order dated 28.03.2014 is annulled. 10. Though the Ld. AR has argued on merits of the justification of reassessment and also on merits of the addition, as I have decided the legal ground by holding that the order passed beyond limitation period is not valid and null and void and is therefore annulled, I do not find it necessary to adjudicate the said grounds on merits as the same would be of no consequences and will be liable to be ignored being only academic as per settled judicial principles. 11. in the result, the appeal is allowed.”
The Assessing Officer is aggrieved by the relief so granted by the ld. CIT(A) and is in appeal before us.
We have heard the rival submissions, perused the material on record and duly
considered facts of the case in the light of the applicable legal position.
We have noted that the ld. Departmental Representative does not dispute the fact that notice under section 115WH was issued to the assessee on 24.05.2012. This fact is set out at page no.1 of the Assessment Order as well. It is, therefore, reasonable to assume that the notice under section 115WH was served on the assessee within financial year ending 31.03.2013. Accordingly, there cannot also be any dispute that in terms of the clear provisions of section 153(1B), the assessment under section 115WG was required to be completed within nine months from the end of the financial year in which notice under section 115WH was served. That has not been done in the present case. Beyond any dispute or controversy the assessment was finalized on 28.03.2014 whereas the nine months period from the end of the financial year 2012-13 ended on 31.12.2013. Section 153(1B) as it stood at the relevant point of time clearly provides that “no order of assessment or reassessment shall be made under section 115WG after expiry of nine months from the end of the financial year in which notice under section 115WH was served”
ITA No.3300/Ahd/2015 Assessment year: 2008-09 Page 4 of 4 7. On these facts which are not controverted by the ld. Departmental Representative, we see no infirmity in the order of the ld. CIT(A) and we approve the same.
As observed in the ground of appeal that a notice under section 115WE(1) was issued, on 01.03.2014, neither any evidence of the same has been produced before us nor any case has been disputed that the first notice under section 115WE was issued on 24.05.2012. Nothing therefore turns on this observation on the grievance raised by the Assessing Officer.
In view of these discussions and bearing in mind entirety of the case, conclusion arrived at by the ld. CIT(A) is justified.
In the result, appeal is dismissed. Pronounced in the open Court on this 5th day 10 of January, 2018.
Sd/- Sd/- S S Godara Pramod Kumar (Judicial Member) (Accountant Member) Dated: 5th January, 2018. PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File
By order
Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad