Income Tax Appellate Tribunal - Kolkata
Acit, Circle - 5(2), Kolkata , Kolkata vs M/S. East India Bearing Company Pvt. ... on 9 August, 2019
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Assessment year: 2010-2011
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IN THE INCOME TAX APPELLATE TRIBUNAL,
KOLKATA 'B' BENCH, KOLKATA
Before Shri P.M. Jagtap, Vice-President (KZ) &
Shri S.S. Viswanethra Ravi, Judicial Member
I.T .A. No. 842/KOL/2018
Assessment Year: 2010-2011
Assistant Commissioner of Income Tax,.... ................................Appellant
Circle-5(2 ), Kolkata,
Aayakar Bhawan, 8 t h Floor,
P-7, Chowringhee Square,
Kolkata-700 069
-Vs.-
M/s. Eas t India Bearing Company Pvt. Li mited,........................Respondent
40, Strand Ro ad,
Model House, 1 s t Flo or,
Room No. 13, GPO No. 249,
Kolkata-700 001
[PAN: AAACE5844K]
&
C.O. No. 52/KOL/2018
(arising out of I.T.A. No. 842/KOL/2018)
Assessment Year: 2010-2011
M/s. Eas t India Bearing Company Pvt. Li mited,........................Cross Objec tor
40, Strand Ro ad,
Model House, 1 s t Flo or,
Room No. 13, GPO No. 249,
Kolkata-700 001
[PAN: AAACE5844K]
-Vs.-
Assistant Commissioner of Income Tax,.... .....................................Respondent
Circle-5(2 ), Kolkata,
Aayakar Bhawan, 8 t h Floor,
P-7, Chowringhee Square,
Kolkata-700 069
Appearances by:
Shri A.K. Nayak. CIT, D.R. , for the Department
Shri S.M. Surana, Advocate, for the Assessee
Date of concluding th e hearing : Ju ly 02, 2019
Date of pronouncing the order : Au gust 09, 2019
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Assessment year: 2010-2011
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O R D E R
Per Shri P.M. Jagtap, Vice-President (KZ):-
This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-2, Kolkata dated 07.02.2018 and the same is being disposed of along with the Cross Objection filed by the assessee being C.O. No. 52/KOL/2018.
2. The assessee in the present case is a Company, which is engaged in the business of trading of Ball Bearings. The return of income for the year under consideration was originally filed by it electronically on 12.10.2010 declaring total income of Rs.1,30,45,430/-. In the assessment completed under section 143(3) vide an order dated 17.01.2013, the total income of the assessee was determined by the Assessing Officer at Rs.1,38,92,878/-. The said assessment was subsequently reopened by the Assessing Officer and assessment under section 143(3)/ 147 was completed by him vide order dated 27.03.2015. The said assessment, however, was cancelled by the ld. CIT(Appeals) vide an order dated 26.12.2016 by treating the same as bad-in-law. Thereafter the assessment was again reopened by the Assessing Officer and a notice under section 148 was issued by him to the assessee on 31.03.2017 after recording the reasons. According to the Assessing Officer, the assessee, however, did not file any return in response to the said notice issued under section 148 electronically under digital signature as prescribed in Rule 12 of the Income Tax Rules, 1962. Keeping in view this non-compliance, the request of the assessee to provide the reasons recorded for reopening the assessment was not acceded to by the Assessing Officer. There was also no compliance on the part of the assessee to the notices issued by the Assessing Officer under section 142(1) of the Act. The Assessing Officer, therefore, proceeded to complete the assessment to the best of his I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 3 of 23 judgment on the basis of material available on record and in the assessment so completed under section 144/147 vide an order dated 26.09.2017, he determined the total income of the assessee at Rs.12,79,82,550/- after making additions of Rs.25,792/- and Rs.11,40,63,880/- on account of alleged bogus purchases and under- valuation of stock respectively.
3. Against the order passed by the Assessing Officer under section 144/147, an appeal was filed by the assessee before the ld. CIT(Appeals) challenging the validity of the said assessment as well as disputing the additions made therein on merit. After considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) found merit in the contentions raised on behalf of the assessee challenging the validity of the assessment made by the Assessing Officer under section 144/147 on various grounds for the following reasons given in his impugned order:-
From pages 12 to 14:-
"I have considered the submissions of the authorized represent ative of th e appellant as well as the assessment order framed in the light of the material s avail able on record before the assessing officer during the assessment proceedings.
The AO has st ated t hat the appellat e company did not file return of income in prescribed manner as asked by the AO as per letter dat ed 20 .04.2017.
The AR of the appell ant h as submitted th at the asse ssment completed u/s 147/144/143(3) is bad in l aw since no notice u/s 143(2) was issued in spite of the fact that the return of income was duly filed in response to notice u/s 147 by filing a letter to treat the return originally, filed as return in response to notice u/s. 147. The order of the AO passed u/s 143(3)/147 on 27.3.2015 was cancelled by the CIT (A) on 26.12.2016 in appeal No. 924/CIT(A)-2/15-16 on the ground that notice u/s. 143(2) was not issued within the time allowed a fresh notice u/s. 14 8 was served on the assessee by the AO on 31.3.2017 through e-mail . The assessee immediately o n receipt of notice on 3 1.03.2017 itself complied with th e same and filed a l etter requesting the AO to treat the o riginal return filed u/s. 139 as return in response to the notice U/S I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 4 of 23 148 issued on 3l.l2.20 17. The AO h ave been insisting on filing of the fresh e ret urn. However, it was duly informed to the AO that the rust ret urn and even the second return was filed in the prescribed format through email as per rule 12 of the IT rules. It was also info rmed to the AO th at t he assessee's letter to treat the o riginal return filed u/s 139 as ret urn u/s 148 is sufficient compliance of the notice u/s 148. Sectio n 148 itself prescribes th at all the provisions of sectio n 139 shall apply and accordingl y the return filed originally u/s 139 was specifically request ed to be treated as return file d in response to notice u/s 148.
The issue under consideration is that wh ether the letter as filed by the appellat e is sufficient compliance of notice u/s 148 relating to filing the return of income.
The AO has relied on Rule 12 of the IT rules and what was required was that the return was to be filed electronically. It was stat ed to the AO in all the letters filed that the original return was filed elect ronically and th e said return should be treat ed as return in response to notice u/s 148. The pro visions of section 148 also says th at all the provisions of sectio n 139 shall apply, Therefo re, the requirement of Rule 12 was fulfilled. It is reiterat ed that the o riginal return was also fil ed electronically wh ich is not in dispute.
The letter to t reat the original ret urn as return in response to the notice u/s 148 has to be treat ed as compliance of the notice u/s. 148 and has to be treated as return filed in response to notice u/s. 148. In this connection, the AR of the appellate pl aced his reliance on the judgement s of the Tiwari Kanhaiya Lal & ors 154 ITR 109 (Rajasthan High Court), Anand Kumar Sharma 198 ITR 121 (Allahabad High Court ), Kiran N agji 300 ITR (AT) 286 Mumbai Bench and Shri Jai Shiv Shank ar Traders Pvt . Ltd. 383 IT R 448 Del hi. Therefore, when the return was filed, the AO should have issued notice U/s, 143(2) before 30th Sept, 2017. However, no such notice was at all issued as is evident fro m the assessment order itself.
I agree with the AA of the appellat e that the, appellate immediately, on receipt of notice on 31.03.2017 itself complied with the same and filed a letter requesting the AO to treat the original ret urn filed u/s 139 as return in respo nse to the notice u/s 148 issued on 31.03.2017. The AO hav e been insist ing on filing of the fresh e-ret urn. H owever, it was duly informed to the AO t hat the first ret urn and even th e seco nd return in response to the earlier notice u/s 148 was filed in the prescribed fo rmat thorough e mail as per rule 12 of the IT rules. It was also info rmed to the AO th at t he assessee's letter to treat the o riginal return filed u/s 139 as ret urn u/s 148 is I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 5 of 23 sufficient compliance of the notice u/s 148. Sectio n 148 itself prescribes th at all the provisions of sectio n 139 shall apply and accordingl y the return filed originally u/s 139 was specifically requested to be treated as return, filed in response to notice u/s 148.
The Judgement as referred by th e AR of the appellate are being discussed below:-
The Allahabad High Court in the case of Anand Kumar Sh arma repo rted under 1992 Tax Pub(DT) 0608 (All. HC): (1992) 198 ITR 0121 has held that The sold grievance raised on beh alf of the petitioner is th at, aft er service of the notice under section 148 for the asst. Yrs. 1986-87 and 1987-88 and th e pet itioner informing the assessing authority th at the return filed originally may be treat ed as a return filed in compliance with the notice u/s 148 for the said two assessment years and the assessing aut hority has refused to disclose the reaso ns for taking action under sect ion 148. The assessing authority is directed to disclose the reasons fo r taking action under section 148 for the said assessment years to the petitio ner within two weeks.
The Delhi High Court in the case of Jai Shiv Shank ar Traders Pvt. Ltd. 2015 Tax Pub (DT_ 4975 (Del -HC): (2016) 067 (I) ITCL 0050: (202 16) 383 ITR 0448: (2016) 282 CTR 0435: (2016) 129 DTR 0063 has held that ....The narration of fact s as noted above by the Court makes it clear that no notice under section 143(2) of the Act was issued to the assessee aft er 16 .12.2010, the date on which the assessee informed the AO th at the return originally filed should be t reated as a ret urn filed pursuant to the notice under section 148. The legal position regarding section 29 2BB has al ready been made explicit in the decisions of the Allahabad High Court. That pro visio n would apply insofar as failure of service of notice was concerned and not with regard to failure to issue notice. In other words, the failure of the AO in reassessment proceedings, to issue notice under section 143(2), prio r to finalising the reassessment order, could not be condoned by referring to section 292 BB. The resultant position was that as far as th e present case was co ncerned, t he failure by the AO t o issue a notice to the assessee under sect ion 143(2) subsequent to 16.12.2 010 when the assessee made a I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 6 of 23 statement befo re the AO to the effect that the original ret urn filed should be treated as a ret urn filed pursuant to a notice under section 148 of the Act, was fat al to the order of reassessment . Consequently, there was no legal infirmity in the impugned order of the ITAT. No substant ial question of l aw arose. The appeal was dismissed.
In th is case the issue in so far as the filing of ret urn in response to notice u/s 148 by filing o f letter h ave been accept ed. As far as t he requirement of issue of notice within due time is later decided by the Supreme C ourt in Hotel Blue Moon that notice u/s 143(2) has to be issued in time.
Therefo re, when the return was filed by filing the letter to treat the original ret urn as ret urn in response to the notice u/s 148, the AO should have issued notice U/s. 143(2) before 30th September, 2017. However, no such notice was at all issued as is evident from the assessment o rder it self. In this connection the o rder of undersigned passed in th e earlier reassessment proceedings is cit ed wherein undersigned has relied o n a number o f judgement s to conclude that if notice u/s 143(2) is not issued, the assessment is bad in law" .
From Pages 20 to 23 :
"I have considered the submissions of the authorized represent ative of th e appellant as well as the assessment order framed in the light of the material s avail able on record before the assessing officer during the assessment proceedings, The AR of the appell ate has submitted that the AO erred in initiat ing proceedings u/s. 148 when such proceedings u/s. 147 were initiated earlier, same additions were made in the assessment which was completed u/s 1 43(3)/147 but was quash ed since notice u/s 143(2) was not issued and served as per law and therefore, actio n u/s 147 on the same additions was bad in law t reat ing the additions made as inco me escaped assessment since th e same very additions were were the subject matter of the earlier assessment proceedings. The original ret urn in this case was filed on 1 2.10.2010 and the first assessment was completed u/s 143(3 ) vide order dated 17.01.2013. The AO reopened the assessment u/s 147 by recording the reasons as mentioned earlier and issued notice u/s 148 against wh ich the assessee fil ed the return on 07.11.2013. No notice u/s 143(2) was issued with in the prescribed time and t herefo re the ret urn filed in response to notice u/s 148 was legally accepted u/s 143(1). However, the AO issued notice u/s 143(2) after much del ay on 9.1 .2015. The I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 7 of 23 AO also completed t he assessment u/s 1 43(3) wherein the addit ion on account of the purch ase from Darsh an Sales Corporation and valuation of closing stock was in disput e. The assessee disput ed bot h the additio n made before the CIT (A) on merits as well as on t he issue that the return filed u/s 148 was duly accepted u/s 1 43( 1) since no notice u/s 143(2) was issued within the time allowed. Th e assessee disputed both the addit ions is evident from the o rder of C IT(A). The C IT(A) quash ed th e assessment since no notice u/s 143(2) was issued within st atuto ry time. The CIT (A) also observed th at he is not deciding on the merit s since the appeal was allowed on legal ground. However, the written submissio ns filed befo re the AO contained full explanat ion that th e addit ion was not maintainable on merits, which is apparent from th e written submissio ns quoted in the appellate order. The department did not file any appeal before the ITAT but the AO issued notice u/s 147. The reasons for issue of notice u/s 148 were not supplied to the assessee but the same are quote d in the assessment order as under:
"Info rmation received ftom DDlT (lnv) Mumbai regardi ng bogus purchase made with Mrs. Darshan Sales Corpn amounting to Rs.25,792/- to Hawala and further Reve nue Audit objection fo r t he same assessment year i.e. 10·11 was raised against the o rder u/s. 143(3) dat ed 17.1. 2013 with regard to under valuation of stock shown in books of accounts of the assessee company for F,Y. 2009-10 relating to A Y. 2010-11 amo unting t o Rs.11,40,63,880/-"
It is apparent that th e assessment was reopened on the same grounds which were the subject matt er of th e earlier assessment order which was quashed by the CIT(A). The reopening of the assessment on th e same issue which was subject matter of the earlier assessment which was disputed before the CIT (A) and was cancelled in th e earlier appeal is bad in l aw. Wh en th e said assessment o rder on appeal was quash ed as non-est, t he ret urn was accept ed u/s 143(1), the issue was known to the AO and further any disputed finding in that order and for that matter unproved and dispute d findings cannot give rise to t he reaso ns th at any income h as escaped assessment .
The AR of the appellate also placed his reliance on the judgements of Smt. Anchi Devi v. C IT (P&H-HC): (2008) 218 CTR 0011: (2008) 005 DTR 0311, CIT -vs,- Air C raft Radio Corporation (P&H HC): (2007) 292 ITR 0064, Sang Fast ners P. Ltd. IT AT 'E' Bench, Mumbai lin ITA No . 6 871/Mum/2008, ITA No. 5639/Mum/2010 for A.Y. 2000-01 and in the case of Manoo Lal Kedarnath vs. Unio n of India 114 ITR 884 (All) and CIT -vs.- V.R. Durgamba 223 ITR 96 (Mad.).
I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 8 of 23 The P&H High Court in the case of Air Craft Radio Corpo rat ion reported 2007 tax Pub (DT) 0909 (P&H-HC): (2007) 292 ITR 0064 has held that on the basis of some complaints of tax evasion, AO issued not ice under sect ion 148 in a vague manner without reco rding his own sat isfaction o nly on the basis of those complaints. Aft er dissatisfied with assessee's repl y the AO made reassessment order on 31.7 .1976. The first appell ate authority allowed assessee' s appeal and set aside (annulled) order of reassessment. The AO once again on set of facts initiat ed reopening proceedings and completed reassessment order assessing income at same figure which was done by him in his earlier order dated 31.07.1976. The first appellat e authority once again annulled the reassessment order. The Tribunal confirmed t he said order. Held: Rightly so . The AO was h aving no jurisdiction to reassess the income on same set of facts and figures in his second reassessment order once again after annul ment of first reassessment order b y the appellate authorit y.
The Madras High Court in the case of V.R. Durgamba 1998 Tax Pub(DT) 0648 (Mad-HC_: (1998) 233 IT R 0096: (1998) 098 Taxman 0336 has h eld that o nce a proceeding in respect of an item other than the one ment ioned in the notice under section 148 of the Income Tax Act and had been taken into consideration and th e same is subsequently not upheld in appeal, the proceeding in respect of the same item afresh under section 147(a) cannot be reso rted to. Therefore, the Tribunal was right in holding that the Inco me Tax Officer had not validly assumed jurisdictio n under section 147(a) of the Act.
The P&H High court in the case of Smt . Anchi Devi 2008 Tax Pub(DT) 1828 (P&H-HC) : (1008) 218 CTR 0011 : (2008) 005 DTR 0311 has held that Reassessment-Validit y-Earlie r reassessment was held to be time-barred-First assessment completed under section 143 (3) read with section 147 was set aside by the T ribunal as time-barred under section 153(2). AO reopened the assessment proceedings again by serving a fresh notice under section 148. On appeal before Commissioner (Appeals), assessee submitted that the issuance of fresh notice under sect ion 148 was not justified as on the same issue. Assessment h ad al ready been reopened and assessment had been co mpleted under section 143(3). Commissioner (Appeals), however, upheld the reopening of the assessment. Held: Not justified AO could not be allowed to initiate fresh proceedings on identical facts as the first assessment proceeding h ad failed to result in a valid assessment due to lapse on the part of t he inco me t ax authority.
I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 9 of 23 The AO had no fresh material befo re him. A perusal of the reasons reco rded by him fo r reo pening the assessment proceedings shows th at the same reasons have been reco rded which were st ated in the earlier notice served under sectio n 148 on the basis of which the assessment was made on 14-2- 2003 and which was quashed being barred by limit ation. Thus, from the facts itself, it is cryst al clear that though the present proceedings were initiated by th e AO wit hin the prescribed period of limitat ion; yet, it was clear t hat the same were initiat ed only to circumvent the earlier o rder of the T ribunal vide which the assessment dated 14-2-2003 was held to be time-barred. Thus, th e AO cannot be allowed to initiate fresh proceedings on identical facts as the first assessment proceedings h ad failed to result in a valid assessment due to lapse on the part of t he Income tax autho rity [Para 18).
It is apparent from the reco rd th at th e assessment was reopened on the same two grounds which were the sub ject matter of the earlier assessment order which was quash ed by the CIT(A). In view of the above judgments, and in view of the fact that the assessment was again reo pened only for those two issues which were the subject matter of earlier assessment , the reassessment now made is liable to be quash ed. In view of t he above judgments, and in view of th e fact that the assessment was again reo pened only for those two issues which were the subject matter of earlier reassessment , the fresh reassessment on the same gro unds now made is liable to be quashed. This ground of appeal is allowed".
From pages 30 to 39 :
"I have considered the submissions of the authorized represent ative of th e appellant as well as the assessment order framed in the light of the material s avail able on record before the assessing officer during the assessment proceedings. The AR of the appellat e has submitted th at on the facts and circumstances of the case, th e proceedings u/s. 147 were not in accordance with law and accordingl y the assessment is void-ab-initio an is illegal to be decl ared as null and void. The assessment has been reopened u/s 147 after expiry of 4 years. The earlier two assessments were completed u/s 143(3). However, it appears fro m the assessment o rder now passed that nowhere in the reasons recorded the AO was satisfied that income has escaped assessment for failure on the part of the assessee to disclose fully and trul y all material facts necessary for assessment In fact, there was no fail ure on the part of the assessee to disclose fully and trul y all material facts necessary for assessment. The purch ase of goods from Darsh an Sale Corporation was part of th e first assessment order since the sale price of the said. bearings was duly added I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 10 of 23 as income is recorded. Furth ermore, in the letters and replies filed by the asessee in the course of t hese reassessment proceedings, it was categorically st ated that in the earlier proceedings, the fact s of which were full y reco rded in the order of ClT(A), it was apparent from th e o rder of CIT (A) that the assessee filed the details of purchase of Dharshan Sales Corpn along with the copy of the purchase bills of 8 pcs of bearing, the copy of' bills and the copy of bank statement showing the payment made th rough Kotak Mahindra Bank . The assessee also submitted the co rresponding detail s of sales of the same very bearing to Reliance lndus at Rs. 32 ,381/- and also submitted th at t he sale of the said bearings, was possible only because the assessee purchase the bills from Dh arshan Sales Corpn, Therefore, all the facts were en reco rd, There was no escapement of income in respect of purchase fro m Darshan sales Corporation.
Further, it is also clear fro m the reasons recorded that the AO has simply relied on the information from DGIT , Inv. Mumbai only and h as not recorded for his own satisfaction Simply relying o n the info rmation from Inv. Wing without examining the issue himself and then reo pened the assessment is bad in law. The AO has not applied his mind to the issue. If the AO has simpl y relied on the informat ion from DG IT without applying his mind reopening of the assessment is bad in law. It was on reco rd that the purchase fro m Darshan Sales Corpn was not bogus for wh ich evidence was available on record as well as in the order of CIT(A) wherein th e entire issue was expl ained with regard to the purchase and correspo nding sale as also the additio n made in the original assessment u/s, 143(3) on account of sales to M.s Reliance Indus of the same material which was purchased fro m Darshan Sales Corpn Therefo re, as on the date Le. 31.3.2017 if there was pro per applicat ion of mind assessment co uld not h ave been reo pened.
Simil arl y, Audit objection by the Audit Part y cannot be a ground fo r reopening of the assessment u/s 148. It is apparent from the assessment order itself that it was revenue audit which raise the objection that there was under valuation of closing stock. Neither in the reaso ns recorded nor even in the assessment order any factual mistak e have been recorded o r pointed out to show that there was in fact under valuation of closing stock. Simpl y because there was o pinio n of the audit party, it cannot be a ground to reopen the assessment u/s 147. The basis fo r alleged under valuation have not been spelt out anywh ere in the reasons o r in the order it self.
Moreover, the info rmation from Investigation cannot along be the reaso n for reopening of the assessment and the AO has to appl y his own mind. No such applicat4ion of mind is I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 11 of 23 visible in the reasons recorded. The AR pl aced his reliance on various judgments as mentio ned abo ve in h is submissions. The reopening of the assessment after four years from the end of the assessment year is bad in law.
I find th at it is evident .fo rm the reasons recorded that there is no whisper th at t he income h ad escaped assessment for failure on the part of the assessee to discl ose fully and trul y all material facts necessary for assessment . When there is no case th at there was failure on the part of the assessee to disclose all mat erial facts necessary for assessment which is not whispered in the reasons reco rded and for arguments sake even in th e reassessment o rder th e proceedings initiat ed u/s 147 is bad in l aw in view of various decisions cited above.
Further, it is also clear fro m the reasons recorded that the AO has simply relied on the information from DGlT Inv. Mumbai only and has not . recorded fo r his own satisfaction. Simply relying o n the info rmation from Inv. Wing without examining the issue himself and then reo pened the assessment is bad in law. The AO has not applied his mind to the issue. If the AO has simpl y relied on the informat ion from DG IT without applying his mind reopening of the assessment is bad in law. It was on reco rd that the purchase fro m Darshan Sales Corpn was not bogus for wh ich evidence was available on record as well as in the order of CIT(A) wherein th e entire issue was expl ained with regard to the purchase and correspo nding sale as al so the additio n made in th e original assessment u/s 143(3) on account of sales to M/s. Reliance Indus of the same material which was purch ased from Darshan Sales Corpn. Therefo re as on the date i.e, 31.3.2017 if there was pro per applicat ion of mind assessment could not have been reopened. Simil arl y', Audit objection by the Audit party cannot be a ground for reo pening of the assessment u/s. 148. It is apparent from the assessment order it self that it was Revenue Audit which raised the objection that there was under
valuation of closing stock. Neither in the reasons recorded nor even in the assessment order any fact ual mist ake h ave been recorded or pointed out to show that there was in fact under valuation of closing stock. Simpl y because there was o pinion of the audit party it cannot be a gro und to reopen th e assessment u/s 148. The basis for alleged under valuation has not been spelt out anywhere in th e reaso ns o r in the order itself. Moreover the informatio n fro m Investigation cannot alone be the reaso n for reopening of th e assessment with regard to the first issue and the AO h as to apply h is own mind. No such application of mind is visible in the reasons reco rded.
The following judgments are cit ed in support of the proposit ion:-
I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 12 of 23 The Allahabad High Court in the case of Pradesh iya Indust rial & Invest ment Corpn o f U.P. Ltd. 2011 Tax Pub(DT) 0086 (All.- HC): (2010) 034(I) ITCL 0160: (2011) 332 ITR 0324: (2010) 230 CTR 0167: (2010) 035 DTR 0267 has held that Reassessment -Full and true disclosures-Notice after expiry of four years-Where th ere was full and true disclosure of all material facts during the original assessment and i n the return filed by assessee and on the basis of those facts and applicat ion of mind by the AO, deduct ion under sect ion 36(1)(viii) was allowed. notice fo r reopening issued after four years questioning th e deduct ion as wrongly allowed. on the same fact s was not valid as co mplete frets were already submitted. There was no failure of the assessee to disclose full and t rue facts fo r allowability of deduct ion under section 36(1)(viii).
Admitt edly, notice under section 148 was issued aft er th e expiry of four years. The notice under th e pro viso of section 147 can be issued aft er the expiry of four years only in case where inco me chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to make a return under section 139 or in respo nse to a notice issued under sub-section (1 ) of section 142 or section 148 or to disclose fully and t ruly all material fact s necessary fo r his assessment for that assessment year. From the perusal of the reason recorded it is apparent that no case has bee n made out that the assessee had failed to disclose fully 'and truly all material facts necessary for his assessment and no observatio n h as been made in this regard.
The Madras High Court in the case of Fenner (India) Ltd 2000 TaxPub(DT) 0453 (Mad- HC) : (2000) 241 ITR 0672 :
(1999)155 CTR 0165 : (1999) 107 TAXMAN 0,053 has held that where assessment was reopened under section 147, after expiry of four years from the end of relevant assessment year, assessing officer must prove that assessee has not disclosed full material facts in relatio n to escaped income so as to give legality to the notice issued under section 1.j8. The duty of an assessee is limit ed to fully and truly disclo se all the material facts. If the details pl aced by the assessee before the assessing officer was in conformit y with the requirements of all applicable l aws and known accounting principles and materials detail s had been exhibited before the assessing officer, it is for the assessing officer to reach such conclusions as he considered was warranted fro m such dat a and any failure o n his part to do so cannot be regarded as assessee's failure to furnish the material fact s truly and fully. Any lack of compreh ension on the part of the assessing officer in underst anding the details placed before him cannot confer a just ification fo r reo pening th e assessment, long aft er the I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 13 of 23 period of four years h ad expired. On the facts of this case, it is clear th at the escapement of inco me if any on this account is not on account of any failure on the assessee's part to disclose the material facts fully and truly. The no tice issued by the assessing officer in exercise of his power under section 147, therefo re, cannot be sustained.
The Gujarat High in the case of G arden Silk Mills Ltd. 1996 Tax Pub(DT) 1170 (GupHC) : (1996) 222 IT~QQ27 : (1996) 135 CTR 0409 : (1997) 092 TAXMAN 0022 has held that the notice was issued after four years when there was no failure on the part of the assessee to disclose mat erial facts nec essary for assessment . The notice of reassessment was not valid and was liable to be quashed.
The Gujarat High Co urt in th e case of Garden Silk Mills Lt d. 1996 Tax Pub(DT ) 1170 (Guj-HC): (1996) 222 ITR 0027:
(1996) 135 CTR 0409: (1997) 092 Taxman 0022 has held that the notice was issued after four years when there was no failure on the part o f the assessee to disclose mat erial facts necessary fo r assessment. The notice of reassessment was not valid and was liable to be quashed; Wh ere an assessment under sub-section (3 ) of section 143 has been made for the relevant assessment year, notice u/s 148 issued after expiry of four years from th e end of the relevant assessment year quash ed because there was no mat erial on record that income chargeable to t ax escaped assessment fo r such assessment year by reason of the failure on the part of the assessee to disclose fully and t ruly all material fact s necessary fo r his assessment for that assessment year.
The Delhi High Court in the case of Glo bal Signal Cables (India) (P.) Ltd 2014 Tax Pub(DT) 4178 (Del-HC) : (2015) 061 (I) ITCL 0120 : (2014) 368 ITR 06 09 has held that Reassessment -Full and t rue disclosure Absence of new material on information=At) reopened assessment under section 148 on the ground th at assessee h ad granted interest free loan, therefo re, propo rtionat e disallowance on account of interest and financial charges out of total interest and financial charges debited in Profit and Loss Account should have been made resulting in under assessment of income:
Assessee challenged reopening of assessment on the ground that reopening was initiat ed o n the basis of review o r re- appreciat ion of the same mat erial and no fresh mate rial of any so rt had come in the possession of th e depart me nt as also there had been no failure on the part of the assessee in disclosing fully and truly all material fact s. Held: The fact s of the present case were squarel y covered by the decision in Swarovski India Pvt . Ltd. v. Dy. C IT WP. (C) 190912013 decided 011 8-8-2014, wherein the notice under sectio n 148 I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 14 of 23 was quashed for being issued after the expiry of 4 years from the relevant assessment year wherein there was no specific mentio n of which material facts were not disclosed by the assessee in the course of Its original assessment proceedings under sectio n 143(3;
In the present case a/so, there exist no gro unds for reopening the assessment aft er the expiry of 4 years, from th e relevant assessment years as t he notice was based on re-appreciation of the same material on record. Revenue had not- specifically indicated-as-to which material fact s were not disclosed by the assessee in the course of the assessment proceedings under the said Act .
The Bombay High C ourt in th e case of Grindwell No rton Ltd.2004 TaxPub(DT) 11 S.1 (Born-HC) : (2 004) 267 ITR 0673 : (2004) 186 CTR 0530 : (2004) 138 TAXMAN 0033 has held that Nowhere in the reasons reco rded by th e assessing officer, it is stat ed that there is failure, on the part of the assessee to disclose material fact s in the return filed by the assessee. It is not in dispute that in the present case, reopening of the assessment is beyond the period of four years from the end of the relevant assessment year, therefo re, notice issued under section 148 beyond four years relevant assessment year was barred by limitatio n. In the case in hand it is not in dispute that the assessment year involved is 1996-97. The last date of the said assessment year was 31-3-1997 and from that date if four years are count ed, the period of four years expired on 1.3.2001. The notice issued on dated 5 -11-2002 and received by the assessee on 7.11.2012. Under these circumst ances, the notice is clearly beyond th e period of four year, b y the assessing officer nowhere state that there was fail ure on th e part of the assessee to disclose fully and truly all material facts necessary for th e assessment of that assessment year. It is needless to mention that the reasons are require d to be read as they were recorded by the assessing Officer. No substit ution o r deletion is permissible. No addit ions can be made to those reasons. No inference can be allowed to be drawn based on reasons not reco rded. It is for the assessing officer to reach to t he conclusion as to whether th ere was failure on the part of the assesese to discl ose fully and trul y all material facts necessary fo r the assessment for the concerned assessment year. It is fo r the assessing officer to from his o pinion. It is for him to put his opinion on record in black and white. The reaso ns recorded sh ould be clear and unambiguous and sho uld not suffer fro m any vaguenes s. The reasons recorded must disclose his mind. Reaso ns are the manifest ation of mind of the assessing officer. The reasons recorded sho uld be self expl anatory and should not keep the assessee guessing fo r the reasons. Reasons pro vide llink between conclusion and evidence. The reasons recorded must I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 15 of 23 be based on evidence. The assessing officer. in the event of challenge to the reasons, must be able t o justify the same based on mat erial available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and t ruly necessary fo r assessment of that 'assessment year, so as la establish vital link between the reasons and evidence. That vital link is the safeguard against arbit rary reopening o d the concluded assessment. The reaso ns recorded by the assessing officer cannot be supplement ed by filing affidavit o r making oral submission, otherwise, the reasons which were l acking in the mat erial part iculars would get supplemented, by the time the matt er reach es to the Court, on the st rength of affidavit or oral submissions advanced. Having recorded finding th at th e impugned notice itself is beyond the period of four years from the end of th e assessment year 19 96-97 and does not comply with the requirements of proviso to section 147, the assessi ng officer had no jurisdict ion to reopen the assessment proceedings which were concluded on the basis of assessment under section 143(3). On this short count alone, t he impugned notice is liable to be quashed and set aside .
The Calcutta High C ourt in the case of Jay Shree Te a & Indust ries Ltd 2000 Tax Pub(DT) 0369 (Cal-HC) : (2000) 245 ITR 0567 : (2001) 165 CTR 0193 : (1999) 106 T AXMAN 0508 has hel d th at Aft er co mpletio n of th e assessment , the assessing officer had issued notice under section 148 read with section 147, to t he petitio ner, asking the petitio ner th at its inco me had escaped as deduction under section 32AB(5) allowed more th an th e amount permissible under sect ion 32AB of the Act. The pet it ioner h as ch allenged this notice o n the ground th at the notice has been issued aft er fo ur y ears fro m the end of the relevant assessment year. T herefo re, befo re the issue of notice, the Income Tax Officer sho uld sati sfy wheth er any income has escaped and that the assessee h as failed to disclose fully and truly all mat erial fact s necessary fo r the assessment Sust ainable. In circumst ances of case, there is hardly any case of escapement of income and Secondl y, depart ment has failed to prove th at assessee h as failed to disclose fully and t ruly all material facts required for assessment of its income, therefore, no tice issued aft er 4 years from completion of assessment is quashed.
Before issue of notice under section 148, if he wants to issue notice after 4 years from the assessment years, the Income Tax Officer h as to satisfy himself th at there was an escapement of inco me to tax in the assessment o rder and secondly, th at the assessee has failed to disclose fully and truly all material facts fo r assessment of his inco me. Admitt edly, the notice under sect ion 148 has been i ssued after I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 16 of 23 expiry of 4 years from the end of the relevant assessment years. If one looks into the assessment order as well as the chart produced by bo th the counsels, there is hardl y any case of escapement of inco me. Secondly, th e depart ment h as failed to prove th at the assessee has failed to disclose fully and truly all mat erial facts required for assessment of its inco me. Assuming but not accepting that there is some mistake in calculation eith er on the part of the assessee or on the part of the Inco me T ax Officer th at does not mean that the assessee has not disclosed full y and truly the mat erial facts regarding his income. If so me calculation mist ake has been committed for the purpose of deduction under a part icular sectio n that can be rectified, under sect ion 154 of the Act, but on that ground no notice under section 148 can be issued. Wh en the notice it4self is bad in law, there is no reason to carry on with the futile exercise of completion of reassessment proceedings. Therefo re, on both the counts there is no case or justificatio n to issue the notice u/s 148, particularly when the Income Tax Officer cannot assume jurisdiction to issue notice under section 148 as per th e provisions of th e Act and the facts of this case.
While the proceedings under sectio n 143(2) had culminated into an order under section 143(3), the issuance of the notice under sect ion 148 after a period of jour years requ ires that there ought to be a failure to disclose fully and trul y all material facts. This is the settled principl e as held in Oracle India (supra), BDR Builders &: Developers (P) Ltd. v. AC IT 2017 SCC Online Del hi 9425 (hereafter BDR Buil ders) , and Unitech Ltd. v. Delhi 2017 SCCc Online Del hi 9408 which are all recent judgments of this Court .
The AO in the order also has simply mentio ned that the assessment was reopened simply on the basis of information received from Invest ing Wing Mumbai and on the basis of audit objection and has also made addition only because a particul ar figure of underval uation was suggested by the audit party. No calculation or basis of such addition o r any factual mistak e is po inted out. Simply on the basis of audit objection without any positive finding assessment c annot be reopened.
The issue of bogus Purchase has al ready been discussed by the AO while passing the first order dat ed 11.01.2013 and added back the amount of Rs.136,197/- st ating that on verification of ITS details it h as been found th at the assessee has received sale consideratio n of Rs.136197/- fro m Reliance Indust ries Limited which has not been found to be credit ed in the P/L account and made addition accordingl y. Th e CIT(A} ·6 vide his order dated 30.08.20 13 has confirmed th e addition st ating I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 17 of 23 that no explanatio n has been offered in respect of sale consideration of Rs.1,36,971/- and acco rdingly the addition of Rs.1 ,36,197/- is confirmed, The AO while framing. the second assessment o rder dated 27.03.2015 has again made an addit ion of Rs. 25,1 92 on account of bogus purch ase from Darsh an Sales Co rpo ration.
As regards to Purchase made fro m Darsh an Sales of Rs.25 ,792/- and sale to Reliance Indust ries for Rs.1 ,36,197/-, the AR of the appellate during th e second appellat e proceedings submitted as under which is very much mentio ned in the second appell ate order dated 3 .1.2017. The same is reproduced as under: -
Ground No.3 on merit sw relates to the addition of Rs.25,792/- as bogus purchase, In its course of hearing the AO asked the assessee to explain th e issue of purchase of the bearings from Darsh an Sales recorded in the reasons fo r reopening of th e assessment . The assesese produced th e books and stock register to show th at the assessee purch ased materi als from Darsh an Sales Corporation, the payment was made by account payee cheque and also sales tax/VAT on th e same was paid by the assessee as demanded by the sales tax department. The assessee also produced th e stock register to show that the purchase was made o n 19.3.2010 which purchase was of 8 pcs of bearing no. NA 3 070NRB for Rs.25 ,792/- from th e said Darsh an Sales Co rporation. This particular mat erial was immediately sold on 22.3.2010 to M/s. Reliance Indus. Lt d. The purchase and sale were both duly incorpo ration in the books of accounts. Th e sale price was Rs.3 2,387/-. It was also submitted that the to tal amount of net sal e to M/s. Reliance Indust ries was of Rs.1 ,36,197 inclusive of the sale of Rs.32 ,387/- and the sold gross sale amo unt was also added by the AO in the original assessment as undisclosed income. Therefo re, firstly the purchase was evidences by correspo nding sales and secondl y the gro ss sale it self out of the purchase was added as income in the original assessment , therefo re the additio n of Rs 25,792/- was not justified. Th e AO, however, wanted the assessee to produce Darshan Sales and it was for that reason that the assessee expressed it s inabilit y to explain the transact ions due to unavoidable circumst ances. (Letter dated 19.01.2015 at tached).
It is clear from the above that these facts about Purchase from Darsh an Sale were very much available on reco rds and considered by the AO. The second appellate order as mentio ned above was also available before the AO at th e time of framing the third assessment o rder. It is clear from the I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 18 of 23 above, there is no new material befo re the AO for reopening the case for th ird assessment.
As regards to reaso n for reo pening of the case, the AO in his third assessment order at page 4 of the o rder has mentioned as under:-
Info rmation received from DG IT(Inv.) Mumbai regarding bogus purchase made with M/s. Darsh an Sales Co rpo ratio n amounting to Rs.2 5,792/- through Howala and further revenue audit objection for same AY i.e. 2010-11 was raised against the o rder u/s 143(3) dated 17.1.20 13 with regard to Under val uation of stock shown in the books of account of the assessee company for FY 2009-10 relating to AY 2010-11 amounting to Rs.11 ,40,63,880/-.
As regards to under valuation of stock, t he AO in his third order h as mentioned at page 4 of the order as under:
The assessee as noncompliance on the above said facts. Acco rdingly, th e transaction of the assessee with M/s. Darshan Sal es Corporation amounting to Rs.25 ,792/- and revenue audit objection for the same assessment year 2010-11 was raised against the order u/s 143(3) dated 17 .2.2013 with regards to under val uation of stock shown in the books of account of the assessee company for FY 2 009-10 relating to AY 2010-11 amounting to Rs.11 ,40,63,880/- is added back to the total income of the assessee.
It is clear from the above th at one of th e reasons for reopening of the case was on the basis of revenue audit objection. In this regard, the reliance is placed on the case of the Supreme Court o f India in the case o f Indian & Eastern Newspaper Societ y 11 9 ITR 996 (SC) h as hel d as under:
The expression 'information' is an indispensable ingredient which must exist befo re invoking section 147(b). The information means instruction or knowledge co ncerning (a) facts or particulars or by law. By its inherent nature, a fact has concrete existence. It influences the determination of an issue by the mere circumst ance of its relevance. It requires no further authority t o make it significant it s quintessential value lies in its definit ive vitalit y. Th e controversy centres around the point whether the inst ructio n or knowl edge as to law is circumscribed by any limitat ion. When one speaks of law, one originally speak s of norms or guiding principles having legal effect and legal I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 19 of 23 consequences. To po ssess legal significance for that purpose, it must be enacted o r decl ared by competent authority. The legal sanction vivifying its impart s to it s fo rce and validity and binding nature. Law may be statuto ry law or judge made law. In every case, th erefo re, to be law it must be a creatio n by a formal source either legislative o r judicial authorit y. A stat ement by a person or body not competent to create or define t he law cannot be regarded as law, The suggested interpret ation of enacted legislation and the elaboration of legal principles in t ext books and journals do not enjoy the stat us of l aw. They are merely opinions and, at best, evidence in regard to the stat e of the law and in themselves possess no binding effect as l aw. What is cont emplated under section 147(6) is "information" as to t he law creat ed by a fo rmal source to is law which, because it issues from a co mpetent legisl at ure or a competent judicial or quasi-judicial authority, influences the course of the assessment and decides anyo ne or more of these matters which determine th e assessee's t ax liabilit y.
2. Whether it is the internal audit party of the inco me-t ax Department or an audit part y of the Comptroller and Audito r General, they perfo rm essentially administrative or executive functions and canno t be attributed the power of judicial supervisio n over th e quasi-judicial acts of income-tax authorities. The Inco me-t ax Act does not contemplate such power in any internal audit organisat ion of the Inco me-t ax Department; it reco gnises power in those autho ritie s only which are specifical ly authorised to exercise adjudicato ry junctions The Comptroller and Auditor-General's (Duties, Powers &Condition) Act does not also envisage such a power.
Neither stat ute supports the conclusion t hat an audit party can pronounce on t he law, and that such pronouncement amounts to "info rmation" within the meaning of section 147(b), In every case, the ITO must det ermine fo r himself what is the effect and consequent of the law mentioned in the audit note and wheth er in consequence of the law which h as now come to his notice, he can reasonably believe th at inco me has escaped assessment. The basis of his belief must be the law of which he has now become aware. The opinio n rendered by the audit part y in regard to the law cannot for the purpose of such belief, add to or colour the significance of such law. The true evaluation of the law in its bearing on the assessment must be made directly and solel y by the ITO.
I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 20 of 23
3. In the inst ant case, the ITO had, when he made the original assessment , considered the provisions of sections 9 and 10, Any different view taken by him afterwards on the applicatio n of those, provisions would amount to a change of o pinion on material already considered by him. An error discovered on a reconsiderat ion of the same material does not empower the ITO to reopen the assessment under section 147(b), Plainly, th e st atuto ry provision envisages that the ITO must have informatio n in his possession, and t hen. in consequence of such informatio n, he must have reason to believe that income h as escaped assessment . The realisation th at inco me has escaped assessment is covered by th e words reason to believe, and it follows from th e 'information' received by the ITO. The informat ion is not the realisatio n, the info rmation gives birth to the real isation.
4. Therefo re, wh ether considered on the basis that the nature and sco pe o f the functions of the internal audit organisation of the Income Tax Depart ment are co-ext ensive with that of receipt audit o r on the basis of the pro visio ns specifying det ailing it s functions in the Internal Audit Manual, the opinion of an internal audit party of the Income Tax Department on a point of law cannot be regarded as 'informatio n' within t he meaning of section 147(b).
In view of the above, it is clear th at there was no new material befo re the AO for making third assessment o rder in the matter. The both the reasons are already avail able befo re the AO while framing the second assessment order which has already annulled as mentio ned abo ve. Keeping in view of the above, the reopening is therefore, bad in law and cancelled. This ground of appeal is allowed" .
4. For the reasons given above, the ld. CIT(Appeals) held the reopening of assessment by the Assessing Officer as bad-in-law on three separate counts and cancelled the assessment made by the Assessing Officer under section 144/147 in pursuance thereof by treating the same as invalid. Consequent to his decision on the preliminary issue cancelling the assessment made by the Assessing Officer under section 144/147 by holding the same to be invalid, the ld. CIT(Appeals) did not decide the other issues raised by the assessee in its appeal challenging the additions made by the Assessing Officer in the said assessment on merit. Aggrieved I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 21 of 23 by the order of the ld. CIT(Appeals), the Revenue has filed its appeal before the Tribunal while the assessee has also filed its Cross Objection raising their respective grounds as under:-
Ground in Revenue's appeal:-
"Ld. C IT(A) has erred in not considering t he provision of Rule 12 of the I.T. Rules, as per which it is mandato ry to submit ret urn of income electronically in respo nse to notice under sectio n 1 48".
Grounds in assessee's Cross Objection:
"(1) For th at the ld. CIT(A) should have considered the entire set of submissions made with regard to the initiat ion of proceedings u/s 147 which were not initiat ed in acco rdance with l aw.
(2) For th at the ld. CIT(A) should have held that even on merit s the additio n was not called fo r.
5. We have heard the arguments of both the sides and also perused the various relevant materials available on record. The only contention raised by the ld. D.R. in support of the ground raised by the Revenue in its appeal is that there was no compliance on the part of the assessee to the notice issued by the Assessing Officer under section 148 on 31.03.2017 and there was not even any request made by the assessee in writing to treat the return of income originally filed as the return filed in response to notice issued under section 148. However, as pointed out by the ld. Counsel for the assessee from page no. 1 of the assessment order, a petition dated 01.04.2017 was filed by the assessee, which was receive d by the Office of the Assessing Officer through post on 05.04.2017 making a request to the Assessing Officer to treat the return already filed under section 139 as the return submitted in response to notice under section
148. The notice under section 148 dated 31.03.2017 thus was duly complied with by the assessee and this compliance was in accordance with law as held by the ld. CIT(Appeals) after discussing all the facts of the case and the relevant provisions of the law. The ld. D.R. in this regard has not raised any material contention to rebut or controvert the findings I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 22 of 23 or reasons given by the ld. CIT(Appeals) to decide this issue in favour of the assessee. Moreover, it is observed that the reopening of assessment by the Assessing Officer was held to be bad-in-law by the ld. CIT(Appeals) on as many as three separate counts and the Revenue having challenged the same only on one count and not on other two counts, this appeal of the Revenue has become only academic. Keeping in view all these facts and circumstances of the case, we find no merit in the appeal of the Revenue and dismiss the same.
6. As a result of our decision rendered above dismissing the appeal of the Revenue and upholding the impugned order of the ld. CIT(Appeals) cancelling the assessment made by the Assessing Officer under section 144/148 by treating the same as invalid, the issues raised by the assessee-company in its Cross Objection have become infructuous. We accordingly dismiss the Cross Objection filed by the assessee as infructuous.
7. In the result, the appeal of the Revenue and the Cross Objection of the assessee both are dismissed.
Order pronounced in the open Court on August 09, 2019.
Sd/- Sd/-
(S.S. Viswanethra Ravi) (P.M. Jagtap)
Judicial Member Vice-President (KZ)
Kolkata, the 9 t h day of August, 2019
Copies to : (1) Assistant Commissioner of Income Tax,
Circle-5(2 ), Kolkata,
Aayakar Bhawan, 8 t h Floor, P-7, C howringhee Square, Kolkata-700 069 (2) M/s. Eas t India Bearing Company Pvt. Li mited, 40, Strand Ro ad, Model House, 1 s t Flo or, Room No. 13, GPO No. 249, Kolkata-700 001 (3) Commissioner of Income Tax (Appeals)-2, Kolkata, I . T. A . N o 8 4 2 / KO L / 2 0 1 8 Assessment year: 2010-2011 & C . O. N o. 5 2 / KO L / 2 0 1 8 ( i n I TA N o. 8 4 2 / KO L / 2 0 1 8 ) A s s e s s m e n t Ye a r : 2 0 1 0 - 2 0 1 1 Page 23 of 23 (4) Commissio ner of Income Tax- , (5) The Depart ment al Represent ative
6) Guard File By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.