SHANTI DEALERS PVT. LTD,HOWRAH vs. PCIT-5,, KOLKATA

At the outset, the Ld. AR of the assessee, Shri Miraj D. Shah, has drawn our attention to the legal issue that has been raised by the assessee which is challenging the action of the Ld. PCIT to have passed the impugned order dated 30.06.2020 wherein he was pleased to cancel the order passed by the A.O u/s 147/143(3) dated 15.12.2017 and thereafter, directed the A.O to examine certain issues de novo, when the fact was that the reassessment order dated 15.12.2017 was annulled by the Ld. Commissioner of Income- Tax (Appeal) (CIT(A)-5) by order dated 04.12.2018. Therefore, according to the Ld. AR, when the reassessment order dated 15.12.2017 passed by AO u/s 147/143(3) of the Act was itself annulled meaning that the reassessment order dated 15.12.2017 is non-est in the eyes of law and therefore, the Ld. PCIT could not have interfered in an order which is Assessment Year: 2010-11 Shanti Dealers Pvt. Ltd “NULL” in the eyes of law; and for buttressing this argument, the Ld. AR drew our attention to the re-assessment order which was passed u/s 147/143(3) of the Act dated 15.12.2017 wherein the issue on which the Ld. PCIT has found fault with i.e. in respect of the bogus entry accommodation of Rs.72,00,000/- from paper entity M/s Rashika Vinimay Pvt. Ltd. has been considered and on which the addition of Rs.5,76,000/- was made by the A.O. Aggrieved by the action of the A.O dated 15.12.2017, the assessee had challenged before the Ld. CIT(A)-5, the merit of the addition as well as legal issue of reopening the assessment u/s 147 of the Act. Thereafter, the Ld. CIT(A)-5 by his appellate order dated 04.12.2018 had allowed the appeal of the assessee on both counts i.e. on the legal issue of reopening as well as on merits and, therefore, in the eyes of law there is no assessment order u/s. 143(3)/147 dated 15.12.2017 is existing which the Ld. PCIT has interdicted by passing the impugned order. In the light of the aforesaid facts, the Ld. AR submitted that the Ld. PCIT erred in invoking revisional jurisdiction u/s 263 of the Act and the impugned order dated 30.06.2020 is bad in law and therefore, he prayed that the order of the Ld PCIT to be quashed.

Per contra, the Ld. CIT-DR supported the decision of the Ld. PCIT, however, could not controvert the fact that the Ld. CIT(A)-5 has annulled the action of the A.O dated 15.12.2017 to reopen the assessment u/s 147 of the Act vide appellate order dated 04.12.2018.

We have heard both the parties and perused the records. We note that the A.O had reopened the assessment of the assessee by issuing notice u/s 148 of the Act dated 31.03.2017 and thereafter, observed in the reassessment order dated 15.12.2017 that he was in possession of an information from the ADIT(Inv.) Unit-6, Kolkata regarding bogus entry accommodation of Rs.72,00,000/- from paper entity M/s Rashika Vinimay Pvt. Ltd. and thereafter the AO rejected the books of accounts u/s 145(3) of the Act and estimated the net profit at 8% and made an addition of Rs.5,76,000/-. On appeal preferred by the assessee before the Ld. CIT(A), the assessee challenged the action of the A.O on the legal issue of reopening the assessment as well as on merits; and the Ld. CIT(A)-5 has Assessment Year: 2010-11 Shanti Dealers Pvt. Ltd allowed the appeal of the assessee on both counts by order dated 04.12.2018. By the said action of the Ld. CIT(A)-5, allowing the appeal of the assessee on merits as well as on the legal issue of reopening the assessment, the very reopening of the assessment itself becomes non-est in the eyes of law and consequently A.O’s reassessment order dated 15.12.2017 passed u/s 147/143(3) becomes null/non-est in the eyes of law. Therefore, the Ld. PCIT erred in interfering with the non-est order of the A.O dated 15.12.2017. Before we part, we also note that the fact of the Ld. CIT(A) allowing the appeal of the assessee on legal issue and on merits was brought to the notice of the Ld. PCIT which fact is discernible from the perusal of the page-4 of the impugned order, however the Ld PCIT has ignored this crucial fact and therefore, for the reasons cited supra, we are inclined to allow the appeal of the assessee and quash the impugned order of the Ld. PCIT-5 dated 30.06.2020.

In the result, the appeal of the assessee is allowed.