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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI BHAGIRATH MAL BIYANI
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
These two appeals have been filed by the assessee against two separate Orders dated 27.07.2017 passed by the CIT(A)-12, Ahmedabad & 10.10.2017 passed by the CIT(A)-2, Vadodara respectively for the Assessment Years 2008-09.
The assessee has raised the following grounds of appeal : Assessment Year 2008-09
144/Ahd/2018 Assessment Years: 2008-09 Page 2 of 6 “1. The Ld. C.I.T. (appeals) has grievously erred in law and on facts in upholding reassessment proceedings which were submitted to be bad in law, void ab initio and without jurisdiction.
2. The Ld. C.I.T. (appeals) has grievously erred in law and on facts in confirming the order passed u/s. 147 r.w.s. 143(3) on 30/03/2014 determining income at Rs.11,88,67,821/- submitted to be bad in law and on facts in as much as that the additions made as per the earlier scrutiny order has been simply repeated and the said order stand declared as invalid in the appeal proceedings including decision of Gujarat High Court.
The assessment order now passed is submitted to be bad in law and on facts in as much as that as per reasons recorded income alleged to have escaped was only Rs.25,000/- and there was no material for making addition of income amounting to Rs.11,88,03,442/- as assessed earlier.
The addition of Rs.11,88,03,442/- as detailed below is submitted to bad in law and on facts in as much as that it is verbatim reproduction of earlier scrutiny order which has been held to be invalid.
a) Addition as per Para “D" of the order 5,60,00,000 b) Addition as per Para “E” of the order 5,30,15,750 c) Addition as per Para “F” of the order 5,00,000 d) Addition as per Para “G” of the order 60,00,000 e) Addition as per Para “H” of the order 5,00,000 f) Addition as per Para “I" of the order 27,87,692.
The order passed is also bad in law and on facts as no reasonable opportunity was accorded to the appellant to explain the impugned additions violating principles of natural justice.
On the facts no re-assessment and such additions ought to have been made.
7. The learned CIT(appeals) has erred in law and on facts in confirming the relying on explanation 3 to section 147 without properly appreciating the ratios of decisions mentioned in Para 4.6 and 4.7 of his order and confirming the reassessment order following the earlier assessment dated 30/12/2010.
8. He has erred in holding that the case of the assessee is not covered by the third proviso to section 147.
9. On the facts no interest u/s. 234A, 234B, 234C and 234D ought to have been levied without furnishing I.T.N.S. to the assessee.
On the facts the returned income ought to have been accepted.”
144/Ahd/2018 Assessment Years: 2008-09 Page 3 of 6 for Assessment Year 2008-09
The Ld. CIT (Appeals) has erred in law and on facts in upholding the levy of penalty u/s.271(1)(c) of Rs.4,03,92,400/- on the income assessed by the assessing officer vide order dated 30.03.2014 inasmuch as that the earlier order has been held invalid by the ITAT and the same order has been again passed on 30.03.2014 render the penalty proceedings invalid, bad in law and void abinitio.
2. Without prejudice to the above, the penalty notice being defective, no penalty ought to have been levied, as per the decision of Karnataka High Court against which SLP dismissed by the Supreme Court.
3. On facts of the appellant and when the earlier assessment order has been declared invalid by ITAT and by Gujarat High Court, no penalty u/s. 271(1)(c) ought to have been levied by reviving the invalid order.”
3. First we take up Assessment Year 2008- 09. The assessee is engaged in the business of share investment and speculation. The assessee filed original return of income on 30.09.2008 declaring total income of Rs.31,879/-. The return filed was processed under section 143(1) of the Income Tax Act, 1961 on 24.12.2009. The case was selected for scrutiny and assessment was completed by the Assessing Officer on 30.12.2010 determining total income at Rs.11,88,45,321/-. However, against the order under Section 143(3) of the Act, the assessee preferred appeal before the CITIA). The CIT(A) vide order dated 28.01.2011 deleted the addition stating that notice under Section 143(2) was not served within statutory period of limitation under the provision of Section 143(2) i.e. on or before 30.09.2009,. Meanwhile, during the course of assessment proceedings in A.Y. for 2008-09 in the case of Chartered Motors Pvt. Ltd. (CMPL) completed on 30.12.2011 and Chartered Speed Pvt. Ltd. (CSPL) completed on 30.12.2011. It was found that CMPL has received share application money from the assessee company which was found to be not genuine and fictitious. On the basis of these facts and after duly recording reasons for re-opening, notice under Section 148 of the Act dated 17.07.2012 was issued and served upon the assessee. The reasons recorded were also provided to the assessee vide letter dated 26.12.2012 in response to notice under section 148 the assessee vide letter dated 07-08.2012 requested to treat return filed under Section 139(1) as return filed in compliance to notice issued under Section 148 of the Act. During the course of personal hearing, the assessee was asked to explain the sources of fund invested in Chartered Motors Pvt. Ltd. and 144/Ahd/2018 Assessment Years: 2008-09 Page 4 of 6 Chartered Speed Pvt. Ltd. as share capital of Rs.50,00,000/- and Rs.15,00,000/- respectively. The assessee filed its reply/submissions. The Assessing Officer thereafter vide order dated 30.03.2014 has reproduced the earlier assessment order dated 30.12.2010 made the addition of Rs.11,88,03,442/- on various heads as well as Rs.32,500/- as commission income.
4. Being aggrieved by the assessment order dated 30.03.2014, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. A.R. submitted that the very fact of original assessment order dated 30.12.2010 was quashed and the same reasoning given in the said order dated 30.12.2010 cannot be taken up while disallowing the claims in reopening proceedings. Ld. A.R. further submitted that there is no separate finding given by the Assessing Officer in respect of the reopening. The Ld. A.R. further submitted that the observation of the CIT(A) that the explanation 3 to section 147 and many other provisions of the Act becomes meaningless if the contentions of the assessee were accepted. Therefore, the Ld. A.R. submitted that the Assessing Officer was not at all proper in disallowing the claim as well as making the additions on various accounts without giving plausible explanation/reasons in the Assessment Order which is passed under Section 147 of the Act. The Ld. A.R. relied upon the decisions of the Hon’ble Apex Court in the case of Rajinder Nath vs. CIT, 120 ITR 2014, the decision of Hon’ble Gujarat High Court in the case of Pr. CIT Vs Nexus Software Limited (Tax Appeal No.240 of 2017).
6. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). The Ld. D.R. submitted that the order dated 30.12.2010 becomes nonest and, therefore, the contention of the assessee that the same reason will not be applicable while reopening needs to be looked into. The fact that the reasons/findings given in order dated 30.12.2010 was proper and justified. It is only the technical aspect which has made the said order void ab initio. As the Assessing Officer while reopening the assessment under section 147 though reproduced the order under Section 143(1), the reasoning should be taken as independent reasoning in the fresh assessment order. The Ld. D.R. further submitted that the CIT(A) was right in holding that the assessee is not covered by the 3rd proviso to section 147 which precludes the income involving maters which are the subject matter of any appeal because the original assessment under Section 143(3) was quashed by the CIT(A)
144/Ahd/2018 Assessment Years: 2008-09 Page 5 of 6 and the set aside which was upheld by the Tribunal as well as High Court on account of invalid notice under Section 143(2) and not on merit.
We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that though reopening is done in assessee’s case, the Assessing Officer has not given its separate finding on each aspect but simply relied upon the order under Section 143(2) of the Act. After going through the said reproduction of the order dated 30.12.2010 in the reopening assessment order it can be seen that there is no separate finding given in respect of the sale of shares which were purchased in a particular quantity in earlier years and which were sold by the assessee during the year under consideration. Merely reproducing the chart and case laws and the explanations will not suffice. The Assessing Officer has to give the reasoning as to what basis made the transaction not acceptable by the Revenue. Therefore, the contention of the Ld. A.R. that there is no separate finding sustains and hence assessment order does not survive. These facts were totally ignored by the CIT(A) and hence the CIT(A) was incorrect in confirming the Assessment Order under Section 147 read with Section 143(3) of the Act. Thus, is allowed.
As regards which is related to penalty under Section 271(1)(c), the same is consequential and since there is a finding given by us hereinabove related to the quantum which was held in favour of the assessee, the penalty does not sustain. Therefore, ITA No.144/Ahd./2018 is also allowed.
In the result, both the appeals filed by the assessee are allowed.
Order pronounced in the open Court on this 6th day of April, 2022.