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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: Shri A. T. Varkey, JM & Shri Rajesh Kumar, AM]
ORDER
Per Shri A. T. Varkey, JM:
This is an appeal preferred by the assessee against the order of the Ld. Pr. CIT-1, Kolkata dated 30.03.2021 passed u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2011-12.
At the outset, it is noticed that this appeal of assessee is time barred by 143 days and assessee has filed condonation petition explaining the cause of the delay. The main cause of the delay according to assessee was due to the Covid-19 pandemic and relying on the decision of the Hon’ble Supreme Court suo moto in Misc. Application N. 665/2021 in SMW(C) No. 3/2020 extending the limitation in filing cases by order passed under Article 141 of the Constitution of India dated 27.04.2021, we are inclined to condone the delay and admit the appeal for hearing.
The main grievance of the assessee is against the action of the Ld. Pr. CIT in exercising his revisional jurisdiction without satisfying the condition precedent as prescribed u/s. 263 of the Act i.e. without validly holding that the order of the AO is erroneous as well as prejudicial to the interest of the revenue.
Brief facts of the case are that the assessee had filed return of income showing total income of Rs.46,59,570/-. Thereafter, the AO issued notice u/s 148 of the Act based on M/s. Bhagyaraaj Vyapaar Pvt. Ltd. , AY: 2011-12 the reason that he received information from Investigation Wing that the assessee has received accommodation entry to the tune of Rs. 50 Lakhs. Thereafter, the AO reopened the assessment of the assessee and in the re-assessment proceedings even though the information from the DDIT (Inv.) was that assessee had received to the tune of Rs.50 lacs as accommodation entries from different entities which escaped assessment, the AO after enquiry has made an addition of Rs. 25 lacs. Thereafter, the AO again reopened the assessment of the assessee on the same reasons recorded [based on the information that Rs. 50 lacs has escaped assessment as per the DDIT (Inv)] and vide notice dated 31.03.2018 directed the assessee to file the return and then after hearing the assessee was pleased not to make any addition vide order dated 22.06.2018. This order of the AO dated 22.06.2018 u/s. 143/147 of the Act (hereinafter referred to as the “Second re-assessment order) has been interdicted by the impugned order of the Ld. Pr. CIT dated 30.03.2021 u/s. 263 of the Act. Against this action of the Ld. Pr. CIT the assessee is before us raising the legal issue of jurisdiction of Ld. PCIT to pass the impugned order.
We have heard rival submissions and gone through the facts and circumstances of the case. At the outset, it has been brought to our notice by the Ld. AR that the Ld. Pr.CIT has admitted the following facts in the impugned order which is reproduced as under:
“On examination of the assessment records in the case of M/s Bhajyaraaj Vyapar Pvt. Ltd. PAN: AABCB4516G, AY 2011-12 it has been observed that in this case credible information was available that the assessee under consideration had obtained accommodation entries to the tune of Rs. 50,00,000/- from different entities during FY 2010-11 and the case was reopened for scrutiny by issuing notice u/s 148 of the I.T.Act, 1961. Subsequently, order u/s 147/143(3) was passed on 29.01.2016 wherein an addition of Rs. 25,00,000/- was made by the Assessing Officer instead of the purported entry of Rs. 50,00,000/-. Thereafter the case was again reopened by issuing notice u/s 148 on 31.03.2018 on the same issue of escapement of income to the tune of Rs. 50,00,000/-. Order u/s 143(3)/147 was passed by the Assessing officer on 22.06.2018 accepting the total income assessed u/s 147/143(3) dated 29.01.2016, meaning thereby restricting the addition once again to Rs. 25,00,000/- only.”
From a perusal of the aforesaid facts as noted by the Ld. PCIT itself, it is clear that the second reopening was made by the AO based on the same reasons recorded for reopening the assessment of assessee for the first time (i.e. Rs. 50 lacs has escaped assessment); and since the AO in the first round has reopened the assessment of assessee and enquired about
M/s. Bhagyaraaj Vyapaar Pvt. Ltd. , AY: 2011-12 escapement of Rs.50 lacs which was supposed to have escaped assessment and finally has made addition of only Rs.25 lacs, the necessary corollary is that AO has accepted/satisfied with the balance of Rs. 25 lakhs out of Rs. 50 Lakhs which was supposed to have escaped assessment for which the AO reopened the assessment in the first round. Thereafter when the second AO reopened on the same issue (i.e. again on the issue of escapement of Rs. 50 Lakhs) which was the precise reason for reopening the assessment in the first round, and the AO in the second round rightly have not made any addition because it is trite law that the second AO in the second round cannot sit in review in respect of the action of AO in the first round on the same issue i.e. AO order dated 29.01.2016 passed u/s. 147/143(3) of the Act on the same set of facts. Therefore, the action of the AO dated 22.06.2018 not to make any addition is valid in law and, therefore, the Ld. Pr. CIT by the impugned order could not have held the AO’s order dated 22.06.2018 (second reassessment order) to be erroneous as well as prejudicial to the interest of the revenue because the order of AO (dated 22.06.2018) is in line with well settled principle of law that AO does not enjoy the power of review. Therefore, assessee succeeds in the legal challenge raised before us.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 18th February, 2022.