PARVATI STEEL RE ROLLING MILLS PRIVATE LIMITED,MUMBAI vs. ACIT, CC-2, AURANGABAD, AURANGABAD

Before the Ld. CIT(A) the assessee apart from challenging the addition on merit, challenged the validity of the re-assessment proceedings. So far as the validity of re-assessment proceedings are concerned, the Ld. CIT(A) upheld the same in absence of any submission before him.

So far as the merit of the case is concerned, the assessee filed detailed written submission and it was argued that the cash deposits amounting to Rs.2,23,20,800/- was on account of sale of scrap and therefore, only a percentage of profit may be estimated. It was argued that in such type of scrap sale, the profit rate varies from 3% to 7%.

So far as the addition of Rs.60,01,813/- is concerned, it was submitted that the said amount was received from Dilipkumar Gokulprasad Agrawal who had paid the same as deposits.

However, the Ld. CIT(A) was not satisfied with the arguments advanced by the assessee and dismissed the appeal filed by the assessee.

Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds: 1. That the ld. C.I.T. (Appeals), Pune-12 has erred in upholding the validity of reassessment proceeding initiated by ld. AO on issue of time-barred notice u/s.148 dated 31-03-2021 which reopening notice legally in any event ought to have been issued on or before 30-03-2021. In view of the same appellant prays that impugned notice u/s.148 being invalid and time-barred notice and consequent reassessment order passed u/s.144 on 28-03-2022 also being illegal and without jurisdiction order therefore, may be quashed and set aside.

The Ld. Counsel for the assessee at the outset while challenging the validity of re-assessment proceedings submitted that the Assessing Officer has issued the notice u/s 148 of the Act on 31.03.2021 for the assessment year 2013-14 and the limitation period for the impugned assessment year ends on 31.03.2020. He submitted that TOLA extending the date after 31.03.2021 is not applicable to the facts of the present case. Referring to the decision of the Hon‟ble Bombay High Court in the case of New India Assurance Company Ltd. vs. The Asst. Commissioner of Income Tax, Circle reported in (2024) 158 taxmann.com 367 (Bom) [2024 (1) TMI 803] and the decision of the Mumbai Bench of the Tribunal in the case of DCIT vs. Amcor Flexibles India Pvt. Ltd. vide order dated 06.09.2024, he submitted that under identical circumstances the re-assessment notices issued for assessment year 2013-14 have been quashed. He accordingly submitted that such re-assessment proceedings initiated by issue of notice u/s 148 of the Act on 31.03.2021 being barred by limitation, has to be quashed.

So far as the merit of the case is concerned, the Ld. Counsel for the assessee referred to the balance sheet for the preceding assessment year and submitted that as per the balance sheet the assessee is holding certain raw material and finished goods which were sold during the impugned assessment year as scrap and the cash so generated from sale of such scrap has been deposited into the bank account. He accordingly submitted that instead of taxing the entire amount, only a percentage of profit embedded in the said scrap should be brought to tax.

So far as an amount of Rs.60,01,813/- is concerned, he submitted that the Assessing Officer has made the addition on the basis of TCS statement without properly appreciating the facts of the case. He accordingly submitted that the assessment order be quashed. In his alternate contention, he submitted that a certain percentage should be adopted instead of bringing the entire amount of Rs.2,23,20,800/- and Rs.60,01,813/- to tax.

The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A). He submitted that the assessee did not file any return in response to notice u/s 148 of the Act nor filed any details in response to notice u/s 142(1) of the Act. Before the Ld. CIT(A) the assessee did not make any submission with regard to the validity of re-assessment proceedings. Similarly, the assessee did not furnish any evidence to substantiate that the cash so deposited in the bank account is out of sale of scrap. Further, the assessee did not file any details in respect of amount of Rs.60,01,813/- which is now claimed as deposit received from Dilipkumar Gokulprasad Agrawal . He accordingly submitted that the appeal filed by the assessee should be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case had not filed its return of income. Based on the data available with the department that the assessee had made certain financial transactions but failed to file its return of income, the Assessing Officer reopened the assessment by recording reasons after obtaining prior approval of the competent authority and accordingly notice u/s 148 of the Act was issued on 31.03.2021. It is the submission of the Ld. Counsel for the assessee that the assessment year being assessment year 2013-14 the notice issued on 31.03.2021 is barred by limitation since the 6 year limitation period ends on 31.03.2020 and the TOLA has extended the date after 31.03.2021 and not on 31.03.2020. It is also his submission that in view of the decision of the Hon‟ble Bombay High Court in the case of New India Assurance Company Ltd. Vs. ACIT (supra), notification of the CBDT vide No.20/2021, dated 31.03.2021 and the decision of the Mumbai Bench of the Tribunal in the case of DCIT vs. Amcor Flexibles India Pvt. Ltd. (supra), the notice issued u/s 148 of the Act on 31.03.2021 for assessment year 2013-14 being barred by limitation, the entire re-assessment proceedings have to be quashed.

We do not find any merit in the arguments advanced by the Ld. Counsel for the assessee challenging the validity of reopening of assessment. It is an admitted fact that the notice u/s 148 of the Act was issued by the Assessing Officer on 31.03.2021.

We find the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (2024) 167 taxmann.com 70 (SC) has observed as under: 19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID-19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income Tax Act; b. Section 149 of the new regime provides three crucial benefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re- assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re- assessment for previous assessment years; c. The relaxations provided under Section 3(1) of TOLA apply “notwithstanding anything contained in the specified Act.” Section 3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 149 of the Income Tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income Tax Act, PART C including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:

Similarly, at para 46 of the order the Hon'ble Supreme Court has observed as under:

Finally, the Hon'ble Supreme Court at para 114 of the order has observed as under: “G. Conclusions 114. In view of the above discussion, we conclude that: a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021;

A perusal of the above clearly shows that the Assessing Officer has time upto 30.06.2021 and since the notice is dated 31.03.2021, therefore, the same is in order and therefore, the reopening of assessment is held to be valid in law.

So far as the decision of the Mumbai Bench of the Tribunal in the case of DCIT vs. Amcor Flexibles India Pvt. Ltd. (supra) is concerned, in that case the notice u/s 148 of the Act for the assessment year 2013-14 was issued on 20.04.2021 i.e. after 31.03.2021, in response to which the assessee challenged the re-opening of assessment by filing its objections vide letter dated 09.06.2021 stating that the mandatory procedure under the new section 148A of the Act was not followed and hence notice is bad in law. Similarly in the case of New India Assurance Company Ltd. (supra) the notice was issued u/s 148 for the assessment year 2013-14 on 28.07.2022 for which the Hon‟ble Bombay High Court quashed the re-assessment proceedings. Herein, in the instant case the notice u/s 148 of the Act for the assessment year 2013-14 was issued on 31.03.2021. Therefore, the above 2 decisions relied on by the Ld. Counsel for the assessee are distinguishable and not applicable to the facts of the present case. The various other decisions relied on by the Ld. Counsel for the assessee are also distinguishable and are not applicable to the facts of the present case especially when the assessee has neither filed any return in response to notice u/s 148 of the Act nor objected to the issue of such notice before the Assessing Officer and the notice u/s 148 issued under the old provisions is within the extended period under TOLA. In view of the above discussion and respectfully following the decision of the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), we hold that the issue of notice u/s 148 of the Act on 31.03.2021 for the assessment year 2013-14 is in order. The ground raised by the assessee on this issue is accordingly dismissed.

So far as the addition on merit is concerned, it is an admitted fact that the cash to the tune of Rs.2,23,20,800/- has been deposited in the bank account on various dates. Similarly, the TCS statement shows a transaction of Rs.60,01,813/- during the year under consideration. Thus, the total amount so deposited into the bank account and credited to bank account comes to Rs.2,83,22,613/-. It is also an admitted fact that neither the assessee filed any return in response to the notice u/s 148 of the Act nor filed any response in response to the notice issued u/s 142(1) of the Act. We find before the Ld. CIT(A) the assessee has submitted that the amounts so deposited into the bank account are out of sale of scrap. However, in absence of any details furnished by the assessee, the Ld. CIT(A) dismissed the grounds raised before him. It is an admitted fact that no books of account were produced before the Assessing Officer. At the same time, it is also an admitted fact that the assessee thereafter has not filed any return of income till date and the business of the assessee is closed as stated by the Ld. Counsel for the assessee.

Further, the assessee has also received interest of Rs.3,86,810/- on which TDS of Rs.38,681/- has been deducted which should be brought to tax separately as income from other sources. We, therefore, direct the Assessing Officer to determine the business income of Rs.22,65,810/- and interest income of Rs.3,86,810/- and do the necessary computation of income. The grounds raised on this issue are accordingly partly allowed.

In the result, the appeal filed by the assessee is partly allowed.