DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -1(1), GUNTUR vs. ANDHRA PRADESH STATE HOUSING CORPORATION LIMITED, VIJAYAWADA
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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
Per Shri Duvvuru RL Reddy, Judicial Member :
This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No. ITBA/NFAC/S/250/2023-24/1053721554(1) dated 14.06.2023, arising out of order passed u/s 143(3) r.w.s.147 of the Income Tax Act, 1961 (in short ‘Act’) dated 23.03.2015 for the Assessment Year (A.Y.) 2008-09. 2 I.T.A. No.217/Viz/2023, A.Y.2008-09 Andhra Pradesh State Housing Corporation Ltd.,Vijayawada
Brief facts of the case are that the assessee, a limited company and Govt. of Andhra Pradesh undertaking, engaged in the construction of low cost housing for the eligible beneficiaries belonging to the weaker section of the society, filed it’s return of income for the A.Y.2008-09 on 29.09.2008, declaring a loss of Rs.113,56,33,110/-. The assessment was completed u/s 143(3) of the Act on 28.12.2010 by determining the taxable income at Nil after setting off of previous years losses amounting to Rs.39,28,82,453/-. Subsequently, it was noticed that the annual accounts of the assessee for the financial year 2007-08, relevant to the A.Y.2008-09, furnished along with the return of income were “Provisional” and further noticed that the assessee had debited expenditure amounting to Rs.13,41,40,709/- in the Income & Expenditure A/c under different heads and had not deducted the TDS on such expenditure. As the assessee failed to deduct TDS on certain expenditure liable for deduction, the AO held that substantial amount of income chargeable to tax has escaped assessment and the case was reopened by issuing notice u/s 148 of the Act. The AO disallowed entire amount of Rs.13,41,40,709/- u/s 40(a)(ia) of the Act. The AO further held that, as no valid return was filed by the assessee u/s 139(1) of the 3 I.T.A. No.217/Viz/2023, A.Y.2008-09 Andhra Pradesh State Housing Corporation Ltd.,Vijayawada
Act for the A.Y.2008-09, the assessee is not eligible to carry forward the above loss as per the provisions of section 139(3) r.w.s.80 of the Act.
Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) allowed the appeal of the assessee.
Aggrieved by the order of the Ld.CIT(A), the revenue preferred appeal before the Tribunal, by raising the following grounds of appeal :
The order of the Ld.Commissioner of Income Tax (Appeals), NFAC, Delhi is erroneous both in law and on facts of the case.
The Ld.CIT(A) erred in stating that the notices u/s 154 & u/s 148 of the Act were issued “on identical grounds”.
Whether the Ld.CIT(A) is correct in law and facts of the case, in quashing and setting aside the proceedings u/s 147 of the Act when reasons recorded for initiating proceedings u/s 148 are not identical with the reasons recorded for initiating proceedings u/s 154 of the Act.
Any other ground that may be urged at the time of hearing.
It was the submission of the Ld.DR that the Ld.CIT(A), relying on the decision of Hon’ble Supreme Court in the case of M/s SM Overseas Pvt. Ltd. Vs. CIT in Civil Appeal Nos.3612-3613 of 2012 dt.07.12.2022, allowed the appeal of the assessee, holding that the proceedings u/s 147 / 148 are not valid, since at the time of issuance of notice for reopening of assessment, proceedings u/s 154 of the Act are still pending before the AO. The Ld.DR further submitted that the decision is distinguishable,
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since in the present case on hand, notice for reopening was issued on three issues, whereas, proceedings u/s 154 are pending with regard to only one issue. Therefore, the Ld.CIT(A) is not justified in allowing the appeal of the assessee. Hence, the order passed by the Ld.CIT(A) be set aside and the matter needs to be remitted back to the file of the Ld.CIT(A) to dispose of the case on merits.
On the other hand, the Ld.AR submitted that when proceedings are pending u/s 154 of the Act before the AO without disposing the 154 petition, issuance of notice u/s 147 / 148 of the Act is bad in law and the Hon’ble Apex Court had categorically held that the notice u/s 147 / 148 of the Act is invalid, if the proceedings u/s 154 of the Act are pending before the AO. He further submitted that the Ld.CIT(A) relied on the decision of the Hon’ble Supreme Court in the case of M/s SM Overseas Pvt Ltd. Vs. CIT in Civil Appeal Nos.3612-3613 of 2012 dt.07.12.2022 and held that issuance of notice u/s 147/148 is bad in law. Therefore, pleaded that the order passed by the Ld.CIT(A) be upheld and the appeal of the revenue be dismissed.
We have heard both the parties and perused the material available on record. It is undisputed fact that the proceedings u/s 154 of the Act
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are pending before the AO, but without disposing the petition filed u/s 154, the Ld.AO issued notice u/s 147/148 for reopening of the assessment. On this aspect, the Ld.AR relied on the decision in the case of M/s SM Overseas Pvt Ltd. Vs. CIT (supra), wherein, it was held that “Having heard learned counsel appearing on behalf of the respective parties and having gone through the impugned judgement and order passed by the High Court, we are of the opinion that the High Court has committed serious error in observing and holding that the notice under Section 154 was invalid as the same was beyond the period of limitation as prescribed / provided under section 154(7) of the Act. It is required to be noted that the proceedings under section 154 of the Act were not the subject matter before the High Court. Nothing was on record that, 3 in fact, the notice under Section 154 of the Act was withdrawn on the ground that the same was beyond the period of limitation prescribed under section 154(7) of the Act. In the absence of any specific order of withdrawal of the proceedings under section 154 of the Act, the proceedings initiated under Section 154 of the Act can be said to have been pending. In that view of the matter, during the pendency of the proceedings under Section 154 of the Act, it was not permissible on the part of the Revenue to initiate the proceedings under Section 147/148 of the Act pending the proceedings under Section 154 of the Act. The High Curt has erred in presuming and observing that the proceedings under Section 154 were invalid because the same were beyond the period of limitation.
In view of the above and to for the reasons stated above, the impugned judgement and order passed by the High Court is unsustainable and the same deserves to be quashed and set aside. The impugned judgement and order passed the High Court is hereby quashed and set aside. The order passed by the ITAT is hereby restored.”
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The Ld.CIT(A) relied on the same ratio and passed the order. Therefore, without disposing of the rectification petition, the issuance of notice is not proper on the part of the AO. Therefore, we do not find any merit in the arguments of the Ld.DR on the reasons for reopening on three aspects, but 154 petition is pending only on one issue. We are unable to appreciate the argument of the Ld.DR, since the above referred decision of the Hon’ble Supreme Court clearly establishes that once the petition is pending u/s 154 of the Act, the AO is precluded to issue of notice u/s 147/148 of the Act. Therefore, we do not find any infirmity in the order passed by the Ld.CIT(A) and dismiss the grounds raised by the revenue.
In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 28th February,2024. (एस बालाकृष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 28.02.2024 L.Rama, SPS
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आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. रधजस्व/The Revenue – The Deputy Commissioner of Income Tax, Circle- 1(1), Guntur 2. ननधधाऩरती/ The Assessee– M/s Andhra Pradesh State Housing orporation Ltd.,Plot No.11 & 12, Nirman Bhavan, Near APIIC Colony, Autonagar, Vijayawada
The Principal Commissioner of Income Tax,Vijayawada 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam
