WESTERN STEEL AGENCY,AHMEDABAD vs. ITO, WARD-6(1)(1), AHMEDABAD

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ITA 383/AHD/2019Status: DisposedITAT Ahmedabad29 July 2022AY 2011-123 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that once a validation certificate was issued for the IDS declaration, the reassessment order and the CIT(A)'s order lacked merit. The late payment of the installment was effectively condoned by the subsequent validation.

What were the facts?

The assessee declared income under the Income Declaration Scheme (IDS) 2016, but the third installment of tax was paid late. The tax authorities initially treated the declaration as invalid and initiated reassessment proceedings. Subsequently, a validation certificate was issued for the IDS declaration.

What were the issues?

Whether the reassessment proceedings initiated due to late payment of IDS tax installment are valid when a subsequent validation certificate is issued. The validity of the tax authorities' action in treating the IDS declaration as invalid despite a later validation.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC-2” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA&

For Appellant: Shri S. N. Divatia, A.R
For Respondent: Ms. Leena Lal, Sr. DR
Hearing: 01.07.2022Pronounced: 29.07.2022

The instant appeal filed by the assessee is directed against the order dated 24.01.2019 passed by the Commissioner of Income Tax (Appeals)-6, Ahmedabad arising out of the order dated 31.07.2018 passed by the ITO, Ward-6(1)(1), Ahmedabad under Section 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2011-12.

2.

The assessee a partnership firm engaged in the business of steel filed its return of income on 13.09.2011 declaring total income at Rs. 6,91,750/-.

3.

The case was selected for scrutiny and finalized under Section 143(3) on 28.03.2014 determining total income of Rs. 7,28,910/-. Subsequently, pursuant to scheme “Income Declaration Scheme (IDS in short), 2016” the assessee filed declaration on 27.09.2016 declaring income of Rs. 30,00,000/- for A.Y. 2011-12. The assessee duly paid the First and Second installment of Western Steel Agency vs. ITO Asst.Year –2011-12 - 2 - Rs. 3,37,500/- each within the due date of payment. However, though, the third installment of Rs. 6,75,000/- was to be paid by 08.12.2017 the same was paid on 30.09.2017. Thus, the PCIT issued notice proposing to treat the said declaration as invalid. The reply filed by the assessee in this regard was considered and rejected by the said PCIT.

4.

Proceeding under Section 147 by issuance of notice under Section 148 dated 30.03.2018 was initiated against the assessee. The Ld. AO provided the copy of the reasons recorded to the assessee on 23.04.2018 whereupon the fact of application for condonation of delay for payment of taxes in IDS 2016 to the CBDT was brought to the notice of the Ld. AO. The assessee was issued notice under Section 142(1) r.w.s. 147 of the Act directing to explain the undisputed income of Rs. 30,00,000/- on account of its unaccounted ‘Business Cash’ pertaining for the year under consideration.

5.

Considering the reply of the assessee the Ld. AO completed the re- assessment under Section 148 on 31.07.2018 declaring Rs. 30,00,000/- as undisclosed fixed income and raised total demand of Rs. 17,90,030/- without allowing credit for the taxes paid under IDS 2016 which was, in turn, confirmed by the First Appellate Authority. Hence, the instant appeal before us.

6.

We have heard the rival submissions made by the respective parties, and we have also perused the relevant materials available on record.

7.

It is evident on record that by and under a letter dated 30.12.2019 followed by a further letter dated 03.06.2021 the assessee has applied for issuance of validation certificate since it has made the third and final

Western Steel Agency vs. ITO Asst.Year –2011-12 - 3 - installment in accordance with the valid Notification being No. S.O. 4455(E) dated 13.12.2019. Finally Notification dated 13.12.2019 the declaration filed by the assessee under IDS-2016 declaring undisclosed income of Rs. 30,00,000/- has been treated as valid and the order passed by the Pr. CIT- 6/Ahd/Tech/IDS-2016/WSA/2017-18 dated 30.01.2018 has been treated to be withdrawn by the Office of the Pr. CIT-6, Ahmedabad on 22.02.2022.

8.

Once the certificate of validation has been issued by the Pr. CIT-6, Ahmedabad we do not find any merit in the order passed by the Ld. CIT(A) impugned before us. The said is, thus, quashed. Hence, the appeal is preferred by the assessee is, thus, allowed.

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