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Facts
The revenue appealed against the CIT(A)'s order which quashed the assessment order. The CIT(A) had held that the notice issued u/s 148 was barred by limitation as per the amended Section 149, referencing the Apex Court's decision in Ashish Agarwal. The assessee had filed a cross-objection challenging the additions made by the AO.
Held
The Tribunal held that the CIT(A)'s order was to be set aside. The matter was restored to the CIT(A) to decide the appeal afresh, considering the assessee's contention regarding offering profits at maximum marginal rate and to adjudicate on merits. The appeal and cross-objection were treated as allowed for statistical purposes.
Key Issues
Whether the reassessment notice issued u/s 148 was valid considering the amendments to Section 149 and the Supreme Court's decision in Ashish Agarwal. Whether the additions made by the AO were sustainable, especially concerning commodity trading transactions and warehousing charges.
Sections Cited
147, 144B, 14A, 149, 148, 151, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SRI SANJAY GARG & SHRI SANJAY AWASTHI
Vs. Tezas Trading Company Pvt. Ltd. .............. Respondent CTS 626/29, Nr. Tanishq Showroom, Next to Raval Tower, Sundervan Complex, Village Oshiwara, Andheri West, Andheri, Mumbai, Maharashtra-400053. (PAN: AACCT0807B) & C.O. No. 46/Kol/2024 In I.T.A. No.:1505/KOL/2024 Assessment Year: 2013-14 Tezas Trading Company Pvt. Ltd. ……….. Cross Objector Vs. JCIT, (IN-SITU), Circle-4(1), Kolkata ……… Respondent Appearances: Assessee represented by: Shri Siddharth Agarwal, Advocate Revenue represented by: Shri Subhendu Datta, CIT, DR Date of concluding the hearing : 12.12.2024 Date of pronouncing the order : 22.01.2025 ORDER
Per Sanjay Garg, Judicial Member:
The captioned appeal has been preferred by the revenue and the Cross Objection preferred by the assessee against the order dated 05.03.2024 of the Ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as Ld. ‘CIT(A)’] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for Assessment Year (AY) 2013-14.
I.T.A. No.: 1505/KOL/2024 & CO 46/Kol/2024 Tezas Trading Co. Pvt. Ltd., AY : 2013-14 2. The appeal of the revenue is time barred by 67 days. Separate application for condonation of delay has been filed. Considering the averments made in the application and the shortness of the delay, the delay in filing the present appeal is hereby condoned.
The Assessing Officer in this appeal had made the impugned additions in an assessment carried out u/s. 147 r.w.s. 144B of the Act vide order dated 26.05.2023 to the tune of Rs.22,00,15,923/- by treating the commodity trading transactions done by the assessee as bogus and thereby made the addition of entire purchases and sales shown by the assessee in commodity transactions. Further, the Assessing Officer added a sum of Rs.2,560/- u/s. 14A of the Act and further disallowed a sum of Rs.9,72,508/- claimed by the assessee as warehousing charges and thereby assessing the total income of the assessee at Rs.23,05,51,531/- as against the returned income of Rs.95,60,540/-. Being aggrieved by the said additions, the assessee preferred appeal before the Ld. CIT(A).
The Ld. CIT(A), however, quashed the impugned assessment order observing that as per the amended section 149 as applicable w.e.f. 01.04.2021 read with 1st proviso thereto, notice u/s. 148 of the Act for AY 2021-22 and earlier years (in the present case for AY 2013-14) could not be validly issued if the same is issued beyond the time limit as specified in the provisions prior to the amendment brought by Finance Act, 2021. He, therefore, held that as per the unamended provision, no notice u/s. 148 of the act could have been issued after 31.03.2020 for AY 2014-15 and since the notice in this case u/s. 148 has been issued on 27.07.2022, the said notice was barred by limitation as per the provisions of section 149 of the Act as amended and also in the light of the decision of the Hon’ble Supreme Court in the case of Asish Agarwal, Civil Appeal No. 3005 of 2022 vide order dated 04.05.2022.
Being Aggrieved by the said order of the Ld. CIT(A), the revenue has preferred the present appeal with the following grounds of appeal :
Page 2 of 6 I.T.A. No.: 1505/KOL/2024 & CO 46/Kol/2024 Tezas Trading Co. Pvt. Ltd., AY : 2013-14 “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law held the notice u/s 148 of the IT Act by not considering the judgement of the Hon’ble Apex Court in the case of Ashish Agarwal (supra) wherein the Hon'ble Apex Court clearly stated that the Revenue cannot be made remediless and the object and purpose of reassessment proceeding can not be frustrated.
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law held notice u/s 148 of the IT Act by not appreciating the CBDT Instruction No. 01/2022, dated 11/05/2022 containing guidelines for implementation of the directions of the judgment of the Hon'ble Apex Court in the case of Ashish Agarwal (supra) which revived the notices earlier quashed by the various High Courts by converting the notices under section 148(o1d) to notice under section 148A of the new provision.
3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) NFAC has erred in law held the notice u/s 148 of the IT Act by not considering the judgment of the Hon'ble Supreme Court of India 04th May 2022 (2022) SCC Online SC 543) in the case of Union of India-Vs-Ashish Agarwal (supra) which has adjudicated on the validity of the issue reassessment notice issued by AO during the period beginning on lst April, 2021 and ending with 30th June, 2021 within the time extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 and various notifications there under? 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) NFAC has erred in law held the notice u/s 148 of the I T Act by not appreciating the CBDT Instruction No. 01/2022 issued from F. No. 279/Misc/M-51/2022-ITJ dated 11/05/2022 as the guidelines to the implement judgment of the Hon'ble Supreme Court of India 04th May, 2022 (2022) SCC Online SC 543) in the case of Union of India-Vs-Ashish Agarwal by exercising of its power under Article 142 of the Constitution of India? 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) NFAC has. erred in law held by not holding that this extended notice was issued by the Assessing officer under the provision of section 148 of the Income Tax Act,1961 following the prescribed under various sections pertaining to re-assessment namely section 147 to 151, as they existed prior to their amendment by the Finance Act, 2021 which was substituted with new Section 147 to 151 of Income Tax Act 1961.
6. Whether on' the facts and in the circumstances of the case and in law, the Ld. CIT(A) NFAC has erred in law held the order under section 148A(d) of Income Tax Act, 1961 dated 24th July, 2022 and all subsequent proceedings by not considering the notice as extended to re-assessment notice issued under old law shall be deemed to be the show cause issued under Clause(b) of Section 148A of the new Law? 7. The appellant craves to make addition, alternation and modification of ground or grounds during the course of hearing of the appeal.”
Whereas, in the Cross Objection, the assessee has taken the following grounds:
Page 3 of 6. I.T.A. No.: 1505/KOL/2024 & CO 46/Kol/2024 Tezas Trading Co. Pvt. Ltd., AY : 2013-14 “a) For that on the facts arid in the circumstances of the case, the Ld. CIT(A) grossly erred in not adjudicating the grounds raised by the assessee in connection with the addition made by the AO to the tune of Rs.22,00,15,923/- , being commodity trading transactions entered into through M/s Anand Rathi Commodities Ltd. by way of alleged client code modification by wrongly invoking the provisions of sec. 68 of the Income Tax Act. (b) For that on the facts and in the circumstances of the case, the Ld. CIT(A) ought to have considered that entire transaction in question with regard to commodity trading is duly recorded in the books of account and profit arising out of those transactions were duly offered for taxation. (c) For that on the facts and in the circumstances of the case, the Ld. CIT(A) ought to have considered that the A.O. wrongly invoked the provisions of sec. 68 in a case where the identity of the broker as well as the genuineness of the transactions are equivocally established. (d) For that the Ld. CIT(A) ought to have considered that the entire addition of Rs.22,00,15,923/- was made by the A.O. by wrongly adding up the purchase and sale value in connection with commodity trading entered into through M/s Anand Rathi Commodities Ltd. by way of alleged client code modification, which is against the provisions of Income Tax Act, 1961.
2. For that the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in not adjudicating the grounds raised by the assessee in connection with the addition made by the AO to the tune of Rs.2,560/- u/s. 14A of the Act.
3. For that on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in not adjudicating the grounds raised by the assessee in connection with the disallowance of warehousing charges of Rs.9,72,508/- made by the AO.
4. For that the appellant craves leave to add, alter or delete all or any of the grounds of appeal.”
7. At the outset, the Ld. Counsel for the assessee has conceded that in view of the subsequent decision of the Hon’ble Supreme Court in the case of Union of India Vs. Rajeev Bansal (2024) 167 taxman.com70 (SC) dated 03.01.2024, the dismissal of the appeal by the Ld. CIT(A) on the aforesaid technical ground was no more valid as the Hon’ble Supreme Court held that the extension/relaxation of time limits under “The Taxation and Other Laws (Relaxation and Amendment of certain Provisions) Act, 2020 (in short, “TOLA” will also apply for issue of assessment notices would also apply under the new regime. However, the Ld. Counsel has submitted that the Ld. CIT(A) has not decided any of the issues/grounds of appeal on merits. The Ld. Counsel for the assessee has submitted, if the impugned order of the Ld. CIT(A) is to be set aside, then under such circumstances, the other Page 4 of 6. I.T.A. No.: 1505/KOL/2024 & CO 46/Kol/2024 Tezas Trading Co. Pvt. Ltd., AY : 2013-14 issues raised by the assessee vide legal as well as on merits are required to be decided by him. The Ld. Counsel in this respect has invited our attention to the Cross Objections as reproduced above and has submitted that the matter be restored to the file of the Ld. CIT(A) for deciding the appeal of the assessee afresh on legal as well as on factual grounds taken by the assessee. The Ld. Counsel has further submitted that even in this case, the Assessing Officer had added the entire purchase and sales in respect of the derivative transactions carried out by the assessee, however, only the profit element could have been added by the Assessing Officer. He has further submitted that even otherwise, the assessee has offered the said profits for taxation at maximum marginal rates and, therefore, no other addition could have been made by the Assessing Officer as it would amount to subjecting the same income to double taxation.
8. Considering the above submissions, the impugned order of the Ld. CIT(A) is set aside. The matter is restored to the file of the Ld. CIT(A) with a direction to examine the contentions of the assessee that the assessee has already offered the entire profits at maximum marginal rate and, therefore, no other tax on the said amount is warranted. If such contention of the assessee is found to be correct, then the additions made by the Assessing Officer will not be sustainable. The Ld. CIT(A) is also directed to adjudicate the appeal on merits both on legal as well as on factual ground, if so, pressed by the assessee. With the above observation, the appeal of the revenue as well as the Cross Objection of the assessee are treated as allowed for statistical purposes.
In the result, both, the appeal of revenue as well as the cross objection of the assessee, are treated as allowed for statistical purposes.