TaxTMI 
TaxTMI 
2016 (7) TMI 1418
X X X X Extracts X X X X
X X X X Extracts X X X X
.... erred in not considering the fact that notice issued u/s 148 being issued after lapse of four years from assessment year while the original assessment was completed u/s 143(3) notice being invalid, no issue arising out of such notice can be considered under assessment order under appeal. 3. Appellant pray that order as passed by Ld. Assessing Officer be cancelled. 4. Appellant crave your honour's leave to add, alter or amend any ground of appeal at the time of hearing or before." 2. Apart from that, the assessee has taken the following additional legal grounds of appeal:- "1. No incremental material being found during the course of search; there was no abetment of assessment order originally passed u/s 143(2) dtd. 28.2.05; hence order passed u/s. 153A r. w. sec. 143(3) dtd. 22.12.09 is without jurisdiction. Hence, order passed by Ld. CIT u/s. 263 dtd.2.11.10 is without jurisdiction. The consequential order passed u/s. 1433) r. w. Sec. 263 dtd. 30.12.11 is bad in law and void. 2. Appellant pray that order passed u/s. 143(3) r. w. Sec. 263 dtd. 30.12.11 be cancelled. 3. The brief facts of the case as derived from the order of the learned CIT (A) are as under:- T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing Officer passed the order u/s. 143(3) r. w. s. 153A on 22-12-2009 assessing the total income at Rs. 2,67,38,960/- after allowing the deduction u/s. 80HHC of Rs. 9,27,588/- and u/s. 80IB of Rs. 1,18,24,950/-. The Ld. CIT (A) vide order dated 06-12-2010 partly allowed the appeal of the assessee. 4. Thereafter, Ld. CIT, Central-III, Mumbai examined the records and found that the Assessing Officer should have considered the issues which were arising in the re-assessment proceedings but he failed to consider these issues in the order passed u/s. 153A of the I. T. Act, 1961. For this reason, the ld. CIT was of the opinion that the order passed by the Assessing Officer u/s. 153A of the I. T. Act, 1961 was erroneous and prejudicial to the interest of the Revenue. After considering the submissions of the assessee, Ld. CIT observed as follows in para 3 of his order u/s. 263 of the Act dated 02-11-2010:- "I have considered the facts of the case. From the perusal of the facts it is seen that Assessing Officer has issued notice under Section 148 of the Income-tax Act to the assessee on 11-10-2007. From the reasons recorded by the Assessing Officer at the time of issue of notice, it is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d down by the Hon'ble Supreme Court in the case of Liberty India 317 ITR 218 and apply the same to the facts of the case. Giving effect to the directions issued by ld. CIT u/s. 263 of the I. T. Act, 1961, the Assessing Officer proceeded to pass the fresh assessment order. During these proceedings, the ld. AR of the assessee raised objections that the original very reassessment proceedings initiated by notice under section 148 dated 14.02.2007 were bad in law being without jurisdiction, hence, is to be treated as non-est, therefore the original assessment proceedings will be deemed to be completed and not pending on the date of search. He therefore, pleaded that his objections as to the validity of the reopening of the assessment be considered and decided. The assessing officer, however dismissed the objections of the assessee and passed the fresh assessment order dated 30.12.2011 recomputing the deduction u/s. 80IB at Rs. 31,10,554/- excluding the deduction earlier allowed on the DEPB receipts. 6. Being aggrieved by the said order of the AO, the assessee preferred appeal before the learned CIT(A) and reiterated its submissions as were made before the AO and requested for cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is, therefore, correct. The ground of appeal filed by the assessee is dismissed. 7. Being aggrieved by the above order of the learned CIT(A), the assessee has come in appeal before us. 8. We have heard the rival submissions and have also gone through the records. The ld. AR for the assessee submitted before us that while giving effect to the order of the learned CIT passed u/s 263 of the Act, the AO had failed to consider the objections of the assessee regarding validity of the reopening of the assessment proceedings u/s 147 of the Act. The submission of the assessee was that it was not the original assessment proceedings which were abated but only the reopened assessment proceedings. If, the AO had to consider and make the additions which were the subject matter of consideration in the reopened assessment proceedings, the AO was also legally duty bound to consider the objections of the assessee in relation to the very validity of the initiation of such reassessment proceedings u/s 147 of the Act. In case, the said reopened assessment proceedings were held to be invalid, then the AO was precluded from going into the merits and in such circumstances, such proceedings being voi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Bombay High Court in the case of All Cargo Global Logistics (supra) the additions made by the AO were not sustainable. The Ld. AR has further contended that since the very reopening of the assessment u/s 147 of the Act was invalid hence, the order passed by the learned CIT u/s 263 of the Act was also illegal and further that the order passed by the AO in complying with the directions given by the learned CIT(A) was also invalid. The original assessment proceedings for the year under consideration had thus, already attained finality. He has further submitted that even otherwise in the first round of the assessment proceedings carried out u/s 153A of the Act, the AO had not considered any issue relating to the allowance or disallowance of deduction u/s 80IB and hence, there was no reason for the assessee to agitate the validity of the abated proceedings u/s 147 of the Act. However, since the learned CIT had directed while passing revision order u/s 263 of the Act to consider the assessment relating to the proceedings u/s 147 of the Act, under circumstances the assessee was also entitled to raise the question of the very validity of initiation of such proceedings u/s 147 of the Act a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....whether the plea that reopening of the assessment u/s 147 of the Act was invalid and bad in law, can be looked into the consequential assessment proceedings carried out as per the directions of the learned CIT in the order passed u/s 263 of the Act; 2. Whether the assessee is estopped from taking the plea of the validity of initiation of the reopening of the assessment u/s 147 of the Act because of the fact that the assessee had not challenged before the higher Court the vires of the order of the learned CIT passed u/s 263 of the Act vide which he directed the AO to consider the issues involved in reassessment proceedings which stood abated and pass fresh order u/s 153A. 3. If the initiation of the reopening of the assessment u/s 147 is held to be illegal or nullity in the eyes of law, then, whether the AO still could take into consideration the information relating to the issues which were the subject matter such proceedings u/s 147 and make additions in that respect during the fresh assessment proceedings u/s 153A of the Act in the absence of any incriminating material found in the search action. 4. Whether the AO was justified in making the addition in respect of DEPB r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... had no legal existence in the eyes of law. In this regard, it has been further explained by the Id. counsel that the original assessment was framed u/s 143(3) upon an erstwhile company, viz. M/s 'Westpoint Leisureparks Pvt Ltd' (hereinafter called WLPL), which had already got amalgamated into another company namely M/s 'Westlife Development Ltd' (hereinafter called WDL) and therefore, on the date of framing of the assessment order, WLPL was not in existence. It was further submitted that this fact was brought to the knowledge of the Assessing Officer; despite that, the Assessing Officer framed the assessment upon a non-existing entity. It was submitted by him that framing of an assessment upon a company which has already been amalgamated by way of an order of the High Court is nullity in the eyes of law and in support of his arguments he placed reliance upon the following judgments: 1. Judgment of Delhi High Court in the case of Spice Infotainment Ltd. Vs. Commissioner of Service Tax in ITA 475 & 476 of 2011, dated 03.08.2011 2. CIT v. Dimension Apparels P. Ltd. [370 ITR 288 (Del)] 3. I. K. Agencies P. Ltd. v CIT [347 ITR 664 (Cal)] ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt order during the appellate proceedings pertaining to examination of validity of order passed u/s 263? 2. Whether the impugned assessment order passed u/s 143(3) dated 24-10-2013 was valid in the eyes of law or a nullity as has been claimed by the assessee? 3. If the impugned assessment order passed u/s 143(3) was illegal or nullity in the eyes of law, then, whether the CIT had a valid jurisdiction to pass the impugned order u/s 263 to revise the non est assessment order? In our considered view, since these issues are jurisdictional issues and go to the root of the matter, therefore before dealing with any other issue, we shall first deal with all above three issues one by one, as under: 8. Challenging the jurisdictional defects of assessment order for assailing the jurisdictional validity of the revision order passed u/s 263: The first issue that arises for our consideration is - whether the assessee can challenge the jurisdictional validity of order passed u/s 143(3) in the appellate proceedings taken up for challenging the order passed u/s 263? If we analyse the nature of both of these proceedings, which are under consideration before us, we find tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ollateral (subsequent) proceedings have been initiated on a valid legal platform or not and for examining the validity of assumption of jurisdiction to initiate the collateral proceedings. If it is not so allowed, then, it may so happen that though order passed in the original proceedings was illegal and thus order passed in the subsequent proceedings in turn would also be illegal, but in absence of a remedy to contest the same, it may give rise to an 'enforceable' tax liability without authority of law. Therefore, the Courts have taken this view that jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings also. This issue is not res integra. This issue has been decided in many judgments by various courts, and some of them have been discussed by us in followings paragraphs. 8.2. In a matter that came up before Hon'ble Supreme Court in the case of Kiran Singh & Ors. v. Chaman Paswan & Ors., [1955] 1 5CR 117 the facts were that the appellant in that case had undervalued the suit at Rs. 2,950 and laid it in the court of the Subordinate Judge, Monghyr for recovery of possession of the suit lands and mesne profit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erefore, it does not operate as a res judicata. The Courts below have committed grave error of law in holding that the decree in the suit operated as res judicata and the appellant cannot raise the same point once again at the execution." 8.4. Similar view has been taken by Hon'ble Supreme Court by following aforesaid judgments recently in the case of Indian Bank vs Manual Govindji Khona reported in 2015 (3) SCC 712. Further, similar view was emphasized by Hon'ble Bombay High Court (GOA Bench) in the case of Mavany Brothers vs CIT (Tax Appeal No 8 of 2007) in its order dt 17th April, 2015 wherein it was held that an issue of jurisdiction can be raised at any time even in appeal or execution. 8.5. The aforesaid principles, enunciated by the Apex Court in the case of Kiran Singh & Ors. v. Chaman Paswan & Ors, supra were reiterated by the Apex Court in the cases of Superintendent of Taxes vs Onkarmal Nathmal Trust (AIR 1975 SC 2065) and Dasa Muni Reddy v. Appa Rao (AIR 1974 SC 2089). In the first of these decisions it was pointed out that revenue statutes protect the public on the one hand and confer power upon the State on the other, and the fetter on the jurisdiction i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....risdiction which was given up before the AAC and not agitated further and that in the remand proceedings what was open before the Assessing Officer was only the question whether the addition was justified on merits and the point regarding the jurisdictional aspect was not open before the Assessing Officer. According to the Tribunal, the assessee having raised the point in the first round and having given it up could not revive it in the second round of proceedings where the issue was limited to the merits of the additions. In this view, the Tribunal accepted the Revenues plea. The assessee thereafter carried order of the Tribunal in reference before the Gujarat High Court. The High Court after considering various judgments of the Supreme Court on the point of jurisdiction to reopen the assessment and also after specifically discussing the judgment of the Supreme Court in Onkarmal Nathmal Trust (supra) and Dasa Muni Reddy (supra) held that the Tribunal was in error in holding that the question of jurisdiction became final when it passed the earlier remand order. It was held that neither the question of res judicata nor the rule of estoppel could be invoked where the jurisdiction of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was filed by the assessee before the Tribunal against the levy of penalty. In the appeal challenging the penalty order, the assessee challenged the validity of block assessment order which had determined the tax liability of the assessee on the basis of which penalty was levied subsequently. The revenue objected with respect to the ground of the assessee raising jurisdictional issues of assessment proceedings in the appeal against the penalty order. After analysing the legal position, as clarified by Hon'ble Gujrat High Court in the case of P.V. Doshi, supra and Hon'ble Bombay High Court in the case of Jainaravan Babulal vs CIT. 170 ITR 399, the bench held as that if the block assessment itself is without jurisdiction then there is no question of levy of any penalty u/s. 158BFA(2) and therefore it is open to the assessee to set up the question of validity of the assessment in the appeal against the levy of penalty. 8.9. We also derive support from another judgement of Hon'ble Bombay High Court in the case of Inventors Industrial Corporation Ltd vs CIT 194 ITR 548 (Bombay) wherein it was held that assessee was entitled to challenge the jurisdiction of the AO to initi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the eye of law because it would prejudice the right of assessee which has accrued in favour of assessee on account of its income being determined. If Id. Commissioner revises such an assessment order, then it would imply extending/ granting fresh limitation for passing fresh assessment order. It is settled law that by the action of the authorities the limitation cannot be extended, because the provisions of limitation are provided in the same. 20. In view of above discussion, ground no.3 is allowed and revision order passed u/s 263 is quashed." 10.2. It is further noticed by us that similar view has been taken by Chandigarh Bench of the Tribunal in the case of Steel Strips Ltd (supra). 11. Thus, after taking into account all the facts and circumstances of the case, we find that in this case, the original assessment order passed u/s 143(3) dt 24-10-2013 was null & void in the eyes of law as the same was passed upon a non-existing entity and, therefore, the Ld. CIT could not have assumed jurisdiction under the law to make revision of a non est order and, therefore, the impugned order passed u/s 263 by the Ld.CIT is also nullity in the eyes of law and therefore the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction unless the conditions precedent are fulfilled and it would be a void order or a nullity. The above decision of the Hon'ble Gujrat High Court has also been followed by the co-ordinate bench of the Tribunal in the case of "Indian Farmers Fertilizers Co-operative Ltd vs KIT" ( Supra) as discussed above. Even, the Tribunal in the case or Dhiraj Suri (supra) in an appeal against the penalty order has held that if the assessment order was without jurisdiction, there was no question of levy of penalty, therefore, it was open to the assessee to set up the question of validity of the assessment in the appeal against levy of penalty. The Hon'ble Bombay High Court in the case of investors Industrial Corporation (supra) has held that the assessee was entitled to challenge the jurisdiction of the AO to initiate reopening of assessment proceedings before the CIT (A) in the second round of proceedings even though it has not raised the same before earlier proceedings before the AO or in the earlier appeal. 13. In the light of various case laws as cited above, the proposition that is coming out is that the jurisdiction or the legality of the proceedings can be agitated in a subsequen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ings, the AO cannot raise or take into consideration the issue for the purpose of addition during the assessment proceedings u/s 153A which has already been concluded or decided in the original assessment proceedings and that addition cannot be made on any other issue if no incriminating material is found during search action. The AO cannot disturb the assessment order or reassessment order which has attained finality, unless the material gathered in the course of proceedings u/s 153A of the Act establishes that relief granted under the final assessment/reassessment was contrary to the fact unearthed during the course of 153A proceedings. Reliance can be placed in this respect on the decision of the Hon'ble Bombay High Court in the case of All Cargo Global Logistics (supra) and Continental Warehousing Corporation (supra). Identical view has been taken by the jurisdictional Hon'ble Bombay High Court in the case of CIT Vs. Murli Agro Products Ltd. ITA No.36 of 2009 decided vide order dated 29-10-2010. 15. Now, coming to the facts of the case, we find that the AO could have made the addition in the proceedings u/s 147 of the Act in relation to the DEPB receipts if the said reassess....