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Income Tax Appellate Tribunal, ‘B’ BENCH : CHENNAI
Before: SHRI D. KARUNAKARA RAO & SHRI CHALLA NAGENDRA PRASAD]
आदेश / O R D E R
PER D. KARUNAKARA RAO, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income-tax(A)(C)-II, Chennai, dated 31.1.2014 for the assessment year 2003-04.
ITA No.1110/14 :- 2 -:
The assessee, engaged in trading and processing of marine products, filed its return of income for the assessment year 2003-04 declaring a total loss of ` 81,88,803/-. The assessment was completed at a total income of ` 32,33,200/-. This assessment was made u/s 143(3) r.w.s 147 of the Income-tax Act, 1961. The Assessing Officer recorded the reasons for reopening the assessment. The said reasons are placed at page 1 of the paper book filed by the assessee.
Bringing our attention to the reasons, the ld. Counsel submitted that assessment was reopened for two reasons – (i) for taxing a sum of ` 12,82,130/- being the commission receipts; and (ii) for invoking the provisions of section 43B in respect of an amount of ` 3,56,160/- being the sales tax payable. In the re-assessment, the Assessing Officer did not make any addition with regard to the first issue. However, the Assessing Officer disallowed a sum of ` 3,56,160/- while making the re-assessment. The Assessing Officer also made other additions in the re-assessment which are not mentioned in the said reasons. It was submitted that the re-assessment order was challenged before the CIT(A), who granted relief in respect of the said addition of ` 3,56,160/-. Further, bringing our attention to page 7 of the paper book, the ld. Counsel submitted that after due verification and compliance of the order of the CIT(A), a modification order dated
ITA No.1110/14 :- 3 -:
12.5.2015 was passed giving effect to the order of the CIT(A). The said addition of ` 3,56,160/- was deleted by the Assessing Officer.
Thus, this addition constitutes an unsustainable addition made in the re-assessment. Further, the ld. Counsel for the assessee submitted that the sum of ` 3,56,160/- is finally deleted and the Revenue has not filed any appeal before the Tribunal on this addition of ` 3,56,160/-.
Narrating the above facts and development, the ld. Counsel 3. submitted that the present re-assessment is null and void as the Assessing Officer failed to make any sustainable addition in the re- assessment as per reasons for which, the assessment was reopened.
The addition made u/s 43B remained unsustainable and, therefore, the other additions made by the Assessing Officer in the re-assessment are not valid. To support the same, the ld. Counsel brought our attention to the judgment of Hon'ble Bombay High Court in the case of CIT vs Jet Airways (India) Ltd [2011] 331 ITR 236 and Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd vs CIT [2011] 336 ITR 136, for the proposition that assessment should be validly reopened for brining concealed income to tax. When the reasons on which re-assessment proceedings were initiated, were not found prima facie valid, the assumption of jurisdiction u/s 148 r.w.s 147 becomes
ITA No.1110/14 :- 4 -: invalid and consequently, the re-assessment order passed in pursuance thereto also becomes invalid. In the present case, as the Assessing Officer failed to make any valid additions based on the reasons recorded, the other additions, may be sustainable ones, made by the Assessing Officer are unsustainable as the reopening is not valid. For this proposition, the ld. Counsel also brought our attention to the decision of Co-ordinate Bench in the case of ITO vs Shri A.T.
Krishnakumar in I.T.A.No. 2021/Mds/2011 dated 31.5.2012, where relief was granted for the assessee underlining on the judgment in the case of Jet Airways (India) Ltd. (supra).
After hearing the ld. Departmental Representative for the 4. Revenue and perusing the judgment in the case of Jet Airways (India) Ltd (supra) and decision of Co-ordinate Bench in the case of Shri A.T.
Krishnakumar (supra), we find that the ratio of the said decisions are applicable to the facts of the present case. Accordingly, Ground Nos. 2 to 5 raised by the assessee are allowed. The other grounds, being general in nature and related to the merits of the additions, are not adjudicated in this order considering our decision on the legal issue relating to validity of the re-assessment. Accordingly, Ground Nos. 2 to 5 are allowed. However, Ground Nos. 1 and 6 to 12 are dismissed as being academic.
ITA No.1110/14 :- 5 -: In the result, the appeal filed by the assessee is partly 5. allowed. Order pronounced in open court on 25th of May, 2015, at Chennai.