BARIK BISWAS,BASIRHAT vs. ACIT, KOLKATA

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ITA 526/KOL/2024Status: DisposedITAT Kolkata02 April 2025AY 2013-1411 pages
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What did the Tribunal hold?

The Tribunal held that the additional ground raised by the assessee, challenging the validity of the assessment framed under Section 144/263 due to an invalid revisionary order under Section 263, was a purely legal issue. All necessary facts were on record, and no further verification was required. The Tribunal admitted the additional ground, relying on Supreme Court decisions in Jute Corporation of India Ltd. and National Thermal Power Co. Ltd., and the Calcutta High Court decision in PCIT vs. Britannia Industries Ltd. The Tribunal found that the revisionary order under Section 263 was indeed bad in law as it sought to revise issues not forming the basis of the original reassessment under Section 147. The Tribunal quashed the assessment order dated 20.12.2018 passed under Section 144/263, citing the Supreme Court's dismissal of the SLP in PCIT Vs. Bulbul Agrawal, which upheld the principle that the validity of an order can be challenged in collateral proceedings. Consequently, the appeals for AY 2008-09 to 2013-14 were allowed on this legal issue. For AY 2015-16 and 2016-17, concerning Section 40A(3) additions for coal, bricks, labour, and carriage inward, the Tribunal restored the issues to the AO for fresh examination, as the lower authorities had not gone into the depth of the evidence. For AY 2020-21, the appeal was also restored to the AO for de novo decision due to non-response from the assessee.

What were the facts?

The assessee, Barik Biswas, filed appeals against orders of the National Faceless Appeal Centre, Delhi, for assessment years 2008-09 to 2013-14, 2015-16, 2016-17, and 2020-21. For AY 2008-09 to 2013-14, the core issue involved an assessment framed under Section 144/263 of the Income-tax Act, 1961, following a revisionary order under Section 263. The original assessment under Section 143(3)/147 was for AY 2008-09, initiated due to cash deposits, and accepted the returned income. Subsequently, the Principal CIT initiated revision under Section 263, citing failure to examine cash purchases and Section 40A(3) violations. The revisionary order directed a fresh assessment. The Assessing Officer (AO) then made an addition of ₹1,25,32,915/- under Section 40A(3) for coal and brick purchases. The CIT(A) confirmed this addition. For other assessment years, the appeals dealt with additions made under Section 40A(3) for coal, bricks, labour charges, and carriage inward, and unexplained cash credit under Section 68.

What were the issues?

1. Whether the assessment framed under Section 144/263 of the Income-tax Act, 1961, is bad in law because the revisionary order passed under Section 263 of the Act was itself invalid and a nullity? (Question of law) Assessee's contentions: The assessee argued that the revisionary order under Section 263 was invalid because the issues raised therein (cash purchases and Section 40A(3) violations) were not part of the original reassessment proceedings under Section 147, nor had they come to the AO's notice during reassessment. Therefore, the Principal CIT could not validly revise the assessment. The assessee relied on the Supreme Court's decision in PCIT Vs. Bulbul Agrawal and a co-ordinate bench decision in Binay Kumar Jindal and Ors. The assessee also contended that the validity of the revisionary order could be challenged in collateral proceedings. Revenue's contentions: The Revenue argued that the legal issue was being raised for the first time before the Tribunal and it would be unfair to admit it. However, it requested the matter be restored to the lower authorities for decision.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 147,Section 148,Section 40A(3),Section 144,Section 68

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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri S.M. Surana, Adv &
For Respondent: Shri Subhendu Datta &
Hearing: 11.02.2025Pronounced: 02.04.2025
1.

These are appeals preferred by the assessee against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 12.01.2024, 16.01.2024,14.03.2024 and , 24.02.2024 for the AY 2008-09 to 2013-14, 2015-16, 2016-17 & 2020-21.

2.

The facts and circumstances in to 526/KOL/2024, are factually identical, hence, for the sake of convenience, we first take and decide the issue.

1. For that the assessment in pursuance of the order u/s 263 of the Act is bad in law in view of the fact that the order passed u/s 263 of the Act revising and setting aside the order u/s 143(3)/ 147 itself was bad in law.

4.

The ld. Counsel at the outset submitted that the legal issue raised goes to the root of the matter and could not be taken earlier due to inadvertence. The ld. Counsel for the assessee further submitted that all the facts qua the said ground are available on record and no further verification of facts is required to be made from many quarters whatsoever. The ld. Counsel for the assessee therefore submitted that the same may be admitted for adjudication for relying on the decisions of Hon'ble Apex Court in the case of Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 , ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal).

5.

The ld. DR on the other hand submitted that the assessee has not taken this legal issue before either of the authorities below and this ground is being raised for the first time before this forum, therefore, at this stage it would be unfair to admit the same for adjudication. However, requested the bench to restore the same to either of the authorities below so that the same could be decided.

A.Y.2015-16 015. The only issue raised in various grounds of appeal is against the confirmation of addition by ld. CIT (A) of ₹1,07,37,641/- in respect of violation of Section 40A(3) of the Act for purchase of coal and bricks and ₹1,90,55,783/- u/s 40A(3) of the Act in respect of labour charges.

16. It was claimed before us that the ld. AO has wrongly made the addition by mis-appreciating the facts on record as the single payment was not exceeding ₹20,000/- in respect of purchase of coal as well as purchase of bricks for which the assessee placed before us the copies of Bricks purchase and Coal purchase during the year. We find that 19. We note that the ld. AO has made an addition in respect of disallowance of expenses and royalty u/s 40A(3) of the Act and unexplained cash credit u/s 68 of the Act when the assessee did not respond to the various notices issued. Similarly, the appeal was dismissed by the ld. CIT (A), when the assessee failed to explain the delay of 48 days in filing the appeal before the ld. CIT (A). In our opinion, the end of justice would be well served if the appeal is restored back to the file of the ld. AO to examine and deciding the issue denovo after taking into account the evidences and contention of the assessee. Accordingly we restore the appeal to the file of the AO with a direction to decide the same de-novo after allowing a reasonable opportunity to the assessee.

20.

In the result, the appeals of the assessee in to 526/Kol/2024 for A.Y.2008-09 to 2013-14 are allowed while appeals Order pronounced in the open court on 02.04.2025.

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