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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA, AM & SHRI PAVAN KUMAR GADALE, JM
PER SHRI A.K. GARODIA, AM: Both these appeals are filed by the assessee and out of the same, one appeal is directed against the order of learned CIT (A) III, Bengaluru dated 27.08.2014 for A. Y. 2005 – 06 and the second appeal is directed against the order of PCIT – 7 Bengaluru
ITA Nos.1492/B/2014 & 735/B/2015 Page 2 of 9 dated 27.03.2015 for the same assessment year. Both these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.
First, we take up the appeal in ITA No. 1492/Bang/014. In this appeal, the assessee has raised as many as 12 Grounds of appeal but as per Ground Nos. 2 & 3, the grievances of the assessee is this that learned CIT (A) was not justified in dismissing the appeal as un admitted because he did not condone the delay of 282 days in filing the appeal before him.
In course of hearing, it is submitted by the learned AR of the assessee that as noted by the CIT (A) in Para 2, page 3 of his order, the assessee has submitted the explanation about delay in filing of appeal before him. It was pointed out that it was submitted by the assessee that it was under bonafide belief that the appeal filed in respect of the earlier assessment order dated 23.06.2008 u/s 147 rws 143 (3) before CIT (A) Delhi would be applicable even to order passed u/s 153C on 29.12.2009 but when another order u/s 147 rws 143 (3) was passed on 11.03.2013, for the same assessment year, the AR of the assessee who was filing an appeal against the said order passed in 2013 advised the assessee that an appeal be filed against the order passed u/s 153C rws 143 (3) on 29.12.2009 and thereafter the appeal was filed before CIT (A) on 08.11.2013 with a request to condone delay of 282 days. He submitted that this is the finding of CIT (A) that the delay is of 1708 days and he did not condone the delay. He submitted that even this delay of 178 days should be condoned in the interest of justice and he placed reliance on the Judgment of Hon’ble apex court rendered in the case of Collector, Land Acquisition vs. MST. Katiji & Ors. as reported in 167 ITR 471. Learned DR of the revenue supported the impugned order of CIT (A).
We have considered the rival submissions. In the facts of the present case and in the interest of justice and by respectfully following the Judgment of Hon’ble apex court rendered in the case
ITA Nos.1492/B/2014 & 735/B/2015 Page 3 of 9 of Collector, Land Acquisition vs. MST. Katiji & Ors. (Supra), we feel it proper to condone this delay in filing the appeal before CIT (A) because this was held by Hon’ble apex court in this case that normally, the delay should be condoned. Para 4 of this judgment is reproduced hereinbelow for ready reference:-
“4. And such a liberal approach is adopted on principle as it is realized that: 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay ? The doctrine must be applied in a rational common sense and pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. 6. It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.”
Respectfully following the Judgment of Hon’ble apex court, we condone the delay in filing the appeal before CIT (A) and restore the matter back to his file for a decision on merit after providing adequate opportunity of being heard to both sides. In view of this decision, no adjudication on merit is called for at the present stage and we make no comment on merit.
In the result, this appeal in ITA No. 1492/Bang/2014 is allowed for statistical purposes.
ITA Nos.1492/B/2014 & 735/B/2015 Page 4 of 9 7. Now, we take up the second appeal. In this appeal, the assessee has raised as many as 10 grounds but the only effective grievance is this that the impugned order passed by the learned PCIT is without jurisdiction.
Various arguments were made by the learned AR of the assessee but his main argument was this that the impugned order passed by PCIT u/s 263 is without jurisdiction because the subject matter of revision was already in appeal before CIT (A). In this regard, it was submitted that it is noted by PCIT in Para 9 of the impugned order that notice u/s 263 was issued on 19.09.2014 and in Para 8, it is noted that the AO had not considered the issue regarding accommodation entries of Rs. 65 Lacs provided by Shri Aseem Kumar Gupta. He submitted that on pages 47 to 49 of the paper book is the copy of request for approval u/s 151 dated 28.03.2012 for reopening the assessment u/s 147 and this is for alleged accommodation entries of Rs. 65 Lacs from Sri Aseem Kumar Gupta as noted on page 47. Copy of reasons recorded by the AO for reopening on 28.03.2012 is available on page 46 of the paper book and as per the same, the allegation about income escaping assessment is this that there are accommodation entries of Rs. 65 Lacs from Sri Aseem Kumar Gupta. He submitted that the assessment order u/s 143 (3) r.w.s. 147 was passed on 11.03.2013 and its copy is available on pages 37 to 42 of the paper book and an addition of Rs. 10 Lacs was made and against this assessment order, the assessee filed an appeal before CIT (A) on 19.03.2013 in Appeal No. 171/CIT (A) – 7/2014 - 15 and this appeal was pending before CIT (A) when notice u/s 263 was issued by PCIT as on 23.09.2014, copy available on page 67 of the paper book because the order of CIT (A) in this Appeal No. 171/CIT (A) – 7/2014 - 15 is dated 04.10.2019 and he submitted a copy of this order of CIT (A). Our attention was drawn to Para 5.4 of this order of CIT (A) and it was pointed out that in this Para, learned CIT (A) has reproduced the reasons recorded by the AO for reopening and such reasons talk of allegation about accommodation entry of Rs. 65 lacs which is the dispute in the proceedings u/s 63. He also
ITA Nos.1492/B/2014 & 735/B/2015 Page 5 of 9 pointed out that in the last line of this para, name of Sri Aseem Kumar Gupta and accommodation entry of Rs. 65 lacs were also noted in the context of reopening of assessment. He placed reliance on the Judgment of Hon’ble Madras High Court rendered in the case of CWT vs. Sampathmal Chordia, 256 ITR 440 and submitted that this was held in this case that revisional jurisdiction cannot be exercised in a manner which would result in depriving the appellate authority of the power to examine the correctness of the order under appeal when an appeal has been filed and was pending. Learned DR of the revenue supported the impugned order passed by PCIT u/s 263.
We have considered the rival submissions and find that the AO has issued notice for reopening u/s 148 on 29.03.2012 as per copy available on page 29 of the paper book. Reasons recorded by the AO on 28.03.2012 are available on page 46 of the paper book and in these reasons, the allegation is the same as in Notice u/s 263 that the assessee company has taken accommodation entries of Rs. 65 lacs from Sri Aseem Kumar Gupta. Assessment order u/s u/s 143 (3) r.w.s. 147 was passed on 11.03.2013 and its copy is available on pages 37 to 42 of the paper book and an addition of Rs. 10 Lacs was made and against this assessment order, the assessee filed an appeal before CIT (A) on 19.03.2013 in Appeal No. 171/CIT (A) – 7/2014 - 15 and this appeal was pending before CIT (A) when notice u/s 263 was issued by PCIT as on 23.09.2014, copy available on page 67 of the paper book because the order of CIT (A) is dated 04.10.2019. We reproduce paras 5.4 to 5.7 of this order of CIT (A) to examine this aspect as to whether this issue in respect of the alleged accommodation entry of Rs. 65 lacs from Sri Aseem Kumar Gupta was under his consideration or not. These paras are as under: -
“5.4 The appellant has submitted as regards reasons recorded by the DCIT, Bellary as under: “It can be seen from the recorded reasons that the learned assessing officer states that as per the
ITA Nos.1492/B/2014 & 735/B/2015 Page 6 of 9 intimation received from ITO, Ward 9(1), New Delhi, M/s. SLR Steels Ltd now known as M/s. V.S.L. Steels Ltd has taken accommodation entries of Rs.65 lakh from Mr. Aseem Kumar Gupta. The learned assessing officer goes on further to say that he has reasons to believe that on account of the said accommodation entries income of the assessee to the extent of Rs.65 lakh has escaped assessment. But as is seen from the order u/s 143(3) r.w.s 147 of the Act dated 11.03.2015, the learned assessing officer has added a sum of Rs. 10 lakhs being the alleged accommodation entries received from Kohinoor Oil Mills Ltd., and Pure Milks and Foods Ltd. Therefore, it is clear that the learned assessing officer has not recorded any reasons at all in respect of the aforesaid amount of Rs.10 lakh. The reasons recorded are not in accordance with law, and the consequent reassessment is bad in law”. Thus, the appellant has contended that the AO has made addition of Rs. 10 lakhs on the basis of reasons recorded by the ITO Ward 7(4), New Delhi where as no addition has been made on the basis of the reason recorded by DCIT, Bellary to the effect that Rs.65 lakhs has escaped assessment being accommodation entry taken by the assessee from one Shri Aseem Kumar Gupta. 5.5 A perusal of the assessment order dated 11-03- 2013 makes it clear that the AO has based the entire order on the reasons recorded by the ITO, Ward-7(4), New Delhi. The AO mentions in the order that the date of notice u/s 148 was 28-03-2012 which is the notice issued by the ITO, Ward-7(4), New Delhi, whereas the notice u/s 148 has been issued by DCIT, Bellary on 29-03-2012 only. Para 5 and 5.1 of the assessment order mentions the details of accommodation entries which is the basis of reason recorded and addition in the assessment order as under:-
“5 The case has been reopened as a result of investigation carried out by investigation wing, New Delhi in which it was found that the assessee company has received accommodation entries from the parties as under:-
ITA Nos.1492/B/2014 & 735/B/2015 Page 7 of 9 a. Rs.5,00,000/- from Kohinoor Oil Mills Ltd on 16-08- 2004 vide instrument No.139875 through SBI, Wazirpur Industrial Estate Branch, Delhi. b. Rs.5,00,000/- from Puri Milk and Food Ltd on 16-08- 2004 vide instrument No.139820 through SBI, Wazirpur Industrial Estate Branch, Delhi. c. Rs.5,00,000/- from Kohinoor Oil Mills Ltd on 16-08- 2004 vide instrument No.139875 through SBI, Wazirpur Industrial Estate Branch, Delhi. 5.1 The assessee was asked to explain why these amounts should not be added back u/s 68 of the Act. The assessee made a written submission on 07-02-2013. In the submission, it is pointed out that the entries at serial No.1 & 3 are repeated twice and hence only one entry is to be considered and not both. On verification, the assessee’s contention is found to be correct, therefore, only two entries are considered instead of three. Accordingly, the amount to be considered for examination is restricted to Rs.10 lakhs instead of Rs.15 lakhs.” Thus, the AO has proceeded to make an addition of Rs 10 lakhs as unexplained cash credit u/s 68 of the Act. 5.6 Thus, it is observed that though the AO, DCIT, Bellary before issue of notice u/s 148 has recorded reason of escapement of income of Rs 65 lakhs being .accommodation entries received by the assessee from Shri Aseem Kumar Gupta, the same has neither been discussed nor considered in the assessment order passed 141(3) r.w.s. 147 on 11-03-2011. It is observed that it is a settled position of law that if reopening is sustainable on one issue the assumption of jurisdiction u/s 147 in respect of the entire assessment is valid in law. But in this case assessment order has been passed without even any reference to the grounds recorded for reopening by the AO (DCIT, Bellary). In fact, as mentioned already, the assessment has been based on the reason recorded by the ITO, Ward-7(4), Ness Delhi which cannot be considered as a valid reason since the ITO, Ward-7(4). New Delhi had no jurisdiction over the assessee at the time of recording the reason and issuing notice u/s 148. The Hon'ble
ITA Nos.1492/B/2014 & 735/B/2015 Page 8 of 9 Gujarat High Court in the ease of Mohmed Juned Dadani 30 taxmann.com 1, after discussing the decisions of a number of HCs has held that when on ground on which the reopening of assessment was based. no addition was made by Assessing Officer in the order of assessment. he could not make additions on some other grounds which did not form part of reasons recorded by him. 5.7 In view of above, it is found that the notice issued by the IT0, Ward-7(4), New Delhi u/s 148 on 28-03-2012 is not valid as he had no jurisdiction over the assessee as on that date. But. the jurisdiction assumed by the DCIT, Bellary to reopen the case by issuing notice u/s 148 on 29-03-2012 alter recording of reasons and after due approval from the CIT is held to be valid and proper. However, the addition of Rs.10 lakhs u/s 68 made in the assessment order passed by the AO u/s 143(3) r.w.s 147 on 11-03-2013 cannot be held to be valid addition since the assessment order has been passed without even any reference to or consideration of the grounds recorded for reopening by the AO (DCIT, Bellary). Therefore, the addition of Rs 10 lakhs u/s 68 made in the assessment order passed by the AO for AY 2005-06 us 143(3) rws 147 on 11-03-2013 is held to be not sustainable.” 10. From these paras reproduced from the order of CIT (A), it comes out that for deciding about the validity of reopening of the assessment, this aspect was open before CIT (A) that reopening was made for the allegation of accommodation entry of Rs. 65 lacs from Sri Aseem Kumar Gupta although no addition of Rs. 65 lacs was made by the AO in the assessment order passed u/s 147 rws 143 (3) of I. T. Act on 11.03.2013 and that order was under challenge before CIT (A) in that appeal which was pending before CIT (A) when the notice was issued u/s 263 by PCIT and the impugned order was passed by him. In our considered opinion, under these facts, this Judgment of Hon’ble Madras High Court rendered in the case of CWT vs. Sampathmal Chordia (Supra) is applicable and respectfully following the same, we hold that learned PCIT had no jurisdiction u/s 263 in the facts of the
ITA Nos.1492/B/2014 & 735/B/2015 Page 9 of 9 present case and hence, we set aside the impugned order passed by PCIT u/s 263 of I. T. Act, 1961.
In the result, this appeal of the assessee is allowed.
In the combined result, the appeal in ITA No. 1492/Bang/014 is allowed for statistical purposes and the second appeal is allowed.
Order pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) Judicial Member Accountant Member
Bangalore, Dated, the 20th December, 2019. /MS/
Copy to: 1. Appellant 4. CIT (A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order
Assistant Registrar, Income Tax Appellate Tribunal, Bangalore.