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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’, NEW DELHI
Before: SH. I.C. SUDHIR & SH. O.P. KANT
ORDER PER O.P. KANT, A.M.: This appeal by the Revenue is directed against order dated 06/12/2013 of Ld. Commissioner of Income-tax (Appeals)-XVII, Laxmi Nagar, Delhi, (in short ‘the CIT-A’) for assessment year 2005-06, raising following grounds: i. On the facts & in the circumstances of the case, the learned CIT(A) has erred in holding that the proceedings u/s. 148 have been initiated validity and proper procedure has not been followed. ii. On the facts & in the circumstances of the case, the learned CIT(A) has erred in deleting the addition of Rs.97,70,312/- based on her earlier order u/s 154 on the Income Tax Act, 1961. iii. The appellant craves to the allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal.
The facts in brief of the case are that assessment under section 143 (3) of the income tax Act, 1961 (in short ‘the Act’) was completed on 28/12/2007 at a loss of Rs.24,92,030/-. Subsequently, the Assessing Officer issued notice under section 148 of the Act on 30/03/2012 and completed assessment under section 144/147 of the Act on 28/02/2013.The assessment order reads as under: “From the assessment records, it has been perused that on 22.03.2011 an order u/s 154 has been passed giving effect to the difference of Rs.97,70,312/- on account of receipts as per TDS certificates and income was computed accordingly at Rs.72,78,282/- . No further action is required to be taken and income is assessed at Rs.72,78,282/-. Penalty proceedings for furnishing inaccurate particulars u/s 271(1)(c) and for non-compliance u/s 271(1)(b) are initiated.”
2.1 The Ld. CIT-A held the proceedings under section 148 of the Act as not validly initiated and the addition made by the AO was also deleted on merit. 2.2 Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above.
The Ld. Senior DR supporting the ground submitted that proceedings under section 148 of the Act are validly initiated by the Assessing Officer. He further submitted that the Ld. CIT-A was not justified in deleting the addition of Rs.97,70,312/- following her own order while deleting the addition made by the AO under section 154 of the Act.
The Ld. counsel of the assessee, on the other hand, relying on the order of the Ld. CIT-A submitted that the Assessing Officer has not followed the procedure laid down while reopening the assessment under section 147 of the Act. He further submitted that the addition in dispute of Rs.97,70,312/- was earlier made by the Assessing Officer in order passed under section 154 of the Act. The said addition under section 154 of the Act has been deleted by the Ld. CIT-A and the appeal filed against the said order of the Ld. CIT-A has also been dismissed by the Tribunal. In view of the above facts, he is submitted that the order of the Ld. CIT-A, might be sustained.
We have heard the rival submission and perused the relevant material on record. As regards the ground No. 1 of the appeal, we find that the Ld. CIT-A has recorded that procedure for proceeding under section 148 of the Act as has not been followed by the Assessing Officer and no details has been given about the reasons for reopening. He further recorded that no details have been given about the basis of the computation of the income. 6.1 Before us, the Ld. Senior DR failed to controvert above facts and produce any reasons recorded by the Assessing Officer. The recording of reasons to believe that income has escaped assessment, is the first primary requirement for initiating proceedings under section 147 of the Act. In absence of which, the proceeding under section 147 of the Act cannot be held as validly initiated. Accordingly, we uphold the finding of the Ld. Commissioner of Income-tax (Appeals) on the issue in dispute.
As regard to ground No. 2 of the appeal, is concerned we find that the after completion of the assessment under section 143 of the Act, the Assessing Officer issued notice under section 154 of the Act for making addition of Rs.97,70,312/- on account of the receipt as reflected in TDS certificates. The said action of the Assessing Officer, was held by the Ld. CIT-A as beyond the purview of rectification. The Ld. CIT-A while deciding the appeal of the assessee against the order under section 154 of the Act passed by the Assessing Officer, also decided the issue on merit and held that TDS was deducted on the gross receipt, whereas income has been shown by the assessee on net basis and, therefore, he deleted the additions on merit as well as on the ground that the issue could not have been rectified under section 154 of the Act. The Assessing Officer, then reopened the assessment under section 147 of the Act by way of issuing notice under section 148 of the Act and made the same addition in the order under section 147 dated 28/02/2013. The said order of the Assessing Officer has been held invalid by the Ld. CIT- A and the addition has also been deleted on merit following her own earlier order. Further, an appeal filed by the Revenue against the said order of the Ld. CIT-A has also been dismissed by the Tribunal on the ground that any issue of the debatable nature cannot be made subject matter of rectification. 7.1 In our considered opinion, once the invalidity of the reassessment proceedings has been upheld by us, the addition in dispute made by the Assessing Officer no longer can sustain and thus we are not adjudicating upon the merit of the addition. The ground of the appeal is accordingly dismissed.
Ground No. 3 of the appeal, being general in nature we are not required to adjudicate upon.
In the result, appeal of the Revenue is dismissed.
The decision is pronounced in the open court on 13th April, 2017.