M/S. KHAITAN WINDING WIRE PVT. LTD., ,KOLKATA vs. ACIT, CIRCLE - 4(1) , KOLKATA

Per Shri Satbeer Singh Godara, Judicial Member:-

Heard both the learned parties. Case file perused. 2. The assessee’s sole substantive plea during the course of hearing is that the impugned regular re-assessment allegedly framed on 31- 03-2016 itself deserves to be quashed since it was served only on 18-08-2016 i.e after 140 days. Learned Counsel invited our 1 AY 2009-10 Assessment Year: 2009-2010 M/s. Khaitan Winding Wire Pvt. Limited attention to the CIT(A)’s discussion regarding the instant legal issue as follows:-

4. Grounds No. 1 is in respect of the limitation u/s 147. The appellant has contended that the impugned order u/s 147/143(3) dt. 31.3.2016 was served only on 18:8.2016 i.e. by delay of 140 s 0 buttress its contention, the appellant has also submitted that the demand created by the impugned order was not uploaded on the website of the Department till 18.8.2016. Hence, the order having not been served within reasonable time, the order is bad in law. The appellant has merely taken the plea that the order has been served on 18.8.20.16 and the same has been supported by the uploading of the demand on such date or subsequent date. The uploading of the demand on the web site cannot be a criteria to prove that the demand has been created on such date and neither there was any legal requirement of such uploading during such period. Hence merely because the demand has been uploaded [as contended by the assesse, without any proof the same even) has no legal sanctity since such uploading is for the convenience of the assesse only and can happen even on subsequent dates. Hence, this ground of the appellant is rejected.”

3. The Revenue’s case on the other hand is that the assessee’s foregoing legal argument carries no merit since the impugned re- assessment had indeed been framed on 31-03-2016. We note in this backdrop of pleadings that the tribunal’s coordinate bench decision in ACIT Vs. Sunil Agarwal dt. 28-02-2019 has decided the very issue of an assessment is validly beyond the stipulated limitation period as under:- 2. We come to Revenue's appeal ITA No.l194/Ko1/2017. Its sole substantive grounds pleads that the CIT(A) has erred in law and on facts in holding the assessment in issue to be framed beyond the stipulated limitation period vide detailed discussion:

Assessment Year: 2009-2010 M/s. Khaitan Winding Wire Pvt. Limited "2. Aggrieved by the assessment order passed by the Assessing Officer, the appellant had preferred this appeal with the following grounds of appeal.

I, That the impugned assessment order dated 3// 03/2014 passed by the Ld. DCIT and served on the appellant on 28/04/2014 is lime barred, illegal and void ab initio.

3. That on facts and circumstances of the case, the Id. ACIT erred in law in making additions of an aggregate sum of Rs. 73,05,000/ - on account of alleged unexplained cash credits appearing in the hooks of accounts.

4. That the Ld. DCIT erred in disallowing the sum of Rs.8, 78,694/-- on account of interest paid by the assessee on unsecured" loans borrowed by the appellant and used for the purpose of his business.

5. That without prejudice, the Id. DCIT erred in adding the sum of Rs.73,05,000/- on account of unexplained cash credit without considering [he peak credit of unsecured loans.

6. That the Ld. DCIT erred in not allowing deduction of Rs.2,83, 789/- claimed by the appellant against net profit from the proprietary business m/s Agarwal Steel Industries on account of interest paid on loans borrowed for the purpose of business.

Assessment Year: 2009-2010 M/s. Khaitan Winding Wire Pvt. Limited 9. That the appellant craves leave 10 add, alter or withdraw any ground or grounds of appeal at or before the hearing of the appeal.

3. Before going into the merits of the case it is important to deal with ground of appeal no I, wherein it has been mentioned that assessment order was served on 28104/2014. According to assessee, order was passed after 3110312014 and the order has got time barred and it is illegal. In support of his proposition, appellant has cited the following judgments/decisions.

I. Slate ofAndhra Pradesh vs. M Ramakrishtaiah & Co.- 93 STC 40; (SC). 2. ('IT vs. Shri Narayani Chandrika Trust 212 ITR 456 (Ker)

As assessee had leveled serious allegation that assessment order u/s. 143(3) was not passed within the lime limit of 3//03/2014, it was important to look into this issue. Accordingly, AO was requested to intimate the date of service of the assessment order. In his report dated 20/02/20/7 ACIT,Cir-50(I) informed that tear off acknowledgement slip was not available in the 4 AY 2009-10 Assessment Year: 2009-2010 M/s. Khaitan Winding Wire Pvt. Limited assessment records. It was also intimated that assessment order in this case was passed by DCIT- Central Cir- 4(3) (erstwhile DCIT; Central, Cir-XXVII, Kolkata). Accordingly, letter was sent to DCI1; Or-4(3) in this regard. DCIT Central Cir-4(3), vide his feller 22/02/2017, informed that assessment order was not dispatched by post and proof of service, if any, would be in the-assessment records. After receipt of this report another feller was sent to ACIT, Cir-50(1) intimate the date of uploading of computation on ITD, in respect of assessment order. In response, ACI1; Cirr-50(l), vide his letter dt. 09/03/2017, informed that computation/assessment order was not uploaded on ITD.

Assessee is very forcefully saying that the assessment order was served on 28/04/20J4 and n has been passed after 31/03/1214. On the other hand A. 0 is not able to submit any proof to counter the allegalion of the assessee, Under the circumstances, 1 do not have any option hullo accept assessee 's submissions in this regard.

I have also perused the assessment records and I am separately communicating my observations to Pr. CIT- 17, in this matter. In view of the facts narrated above and the case laws cited by assessee, if is held that order passed by the A.O was barred by limitation as if appears to have been passed after 31/03/2014, Hence, assessment u/s 143(3) dated 31/03/2014 is quashed. As the assessment order is quashed, merits of the case have not been looked into.

3. Learned Senior Departmental Representative vehemently contends during the course of hearing that the CIT(A) has erred in law and on facts in quashing the impugned assessment to have framed beyond the limitation period prescribed. He quotes hon 'ble jurisdictional high court's decision in CIT' vs. Subrata Roy; [2014] Assessment Year: 2009-2010 M/s. Khaitan Winding Wire Pvt. Limited 45 taxmann.com 5/3 (Calcutta) holding that assessment within limitation period cannot be doubted merely because the consequential demand and notice was served after 47 days of the statutory period of limitation. We find no merit in Revenue's instant arguments. The facts remains the CIT(A) made tremendous efforts by way of various correspondence(s) to get all the relevant material on record as to whether the impugned assessment had been framed within the statutory time limit up to 31.03.2014 or not. It has come on record that the assessing authority had also failed to indicate any material on record that the relevant computation had been uploaded even on the department's portal. We therefore hold that the CIT(A) has rightly quashed impugned assessment not framed within the time limitation prescribed. Hon'ble jurisdictional high court's decision CIT vs. Subrata Roy; /2014/ 45 taxmann.com 513 (Calcutta} involves a case where the Revenue had filed sufficient proof before their lordships that the Assessing Officer had framed the assessment in issue within the time period prescribed as against the facts of the instant case. Hon'ble Kerala high court's judgment in CIT vs. Sree Narayan Cltandrika Trust; (/995) 212 IT!? 456(Kerala) in similar facts holds as follows:

“ We shall now deal with the other references and applications under Section 256(2) which have been heard along with these references. the questions referred for the year 1978-79 are similar, except that one further question has been referred at the instance of the assessee. namely, "whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the order of the Commissioner of Income-tax passed under Section 263 is not barred hy limitation". We shall deal with this question which arises in Income-tax References Nos. 81 and 82 of 1986 relating to this year.

The Income-tax Officer made an order of assessment on January 12, 1981, holding that income accruing, 10 the assessee-trust fr0111 the firms of which it was a partner 6 AY 2009-10 Assessment Year: 2009-2010 M/s. Khaitan Winding Wire Pvt. Limited was exempt under Section 10(22A), as income accruing 10 the hospital, deviating from the stand taken by him earlier. the Commissioner of Income-lax took up the matter in revision on January 11, 1983 and set aside the order of assessment. The revisional order was passed on January 11, 1983. and communicated within a period of six days thereafter. The question was whether the exercise of the revisional power was barred by lime. The Tribunal held otherwise and sustained the order. It is in these circumstances that the additional question has been referred.

Sub-section (2)of Section 263 as it stood at the relevant time, prescribed that no order shall he made under Sub- section (I) of the section after the expiry of two years from the date of the order sought to be revised. The Tribunal was of the view that the Commissioner had passed his order within the lime prescribed, though it was communicated later.

The question as to when an order can be slated to have been made was the subject of consider 01 ion by this court in Government Wood Workshop v. State of Kerala [1988] 69 STC 62 ; [1987] 1 KLT 804 in which this court stated, after relying on various decisions of the Supreme Court culminating in B.J Shelat v. State of Gujarat, AIR 1978 SC 1109, as follows (at page 69) :

The order of any authority cannot be said to be passed unless it is in some way pronounced or published or the party effected has the means of knowing it. It is not enough if the order is made, signed, and kept in the file, because such order may be liable to change at the hands of the authority who may modify it, or even destroy it, before it is made known, based on subsequent information, thinking or change of opinion. To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein. this should be done within the prescribed period, though the actual service of the order may he beyond that period Assessment Year: 2009-2010 M/s. Khaitan Winding Wire Pvt. Limited 37. The Tribunal has not referred 10 this decision though it is relevant. We feel that the matter has not been considered by the Tribunal in the manner in which it should have been, particularly after advertence to the aforesaid decision. We, therefore, decline to answer the additional question referred at the instance of the assessee in Income-tax References Nos. 81 and 82 of 1986.

5. We adopt foregoing reasoning mutatis mutandis and hold the impugned re-assessment is not sustainable since it was framed beyond the stipulated time limit period. The same is quashed, therefore, the other issues on merits are rendered infructuous

6. This assessee’s appeal is allowed in above terms. Order pronounced in the Court on 05-02-2020