TaxTMI 
TaxTMI 
2018 (9) TMI 1541
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....y filed the return of income for the assessment year 2008-09 on 26/09/2008, declaring a total income of Rs. 16,81,42,890/-. 3. On 05/11/2009, there was a search and seizure operations under section 132(1) of the Act, in NKG group of companies and the assessee's case was taken up for scrutiny under section 153-A of the Act. Assessee filed the return of income on 14/09/2010 declaring the income at Rs. 21,26,39,300/-. Learned Assessing officer, however, assessed the income of the assessee at Rs. 22,87,10,229/- and the assessee accepted the same by not filing any appeal. Subsequently, there was another search and seizure operations under section 132(1) of the Act on 23/08/2012 in NKG group of companies and again the case of the assessee was taken up for scrutiny under section 153-A of the Act. Assessee filed the return of income on 1/7/2014 declaring an income of Rs. 22,87,10,229/-. 4. Learned Assessing Officer, during the assessment proceedings, called for the detailed information and considering the same, passed the assessment order dated 31/03/2016 wherein he had taken the gross profit margin on sales turnover at the rate of 9%. Inasmuch as the assessee's margin was belo....
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....tra, it is the argument of the Ld. DR that the assessee had accepted the assessment order without preferring any appeal and, therefore, the assessee is precluded from taking such a plea for the first time before the Tribunal. Basing on the assessment order, the Ld. DR submitted that the assessee filed application before the Income Tax Settlement Commission for the assessment years 2007-08 to 2013-14 on 18/02/2015 offering additional income. The application was admitted by the settlement commission vide its order under section 245-D(1) of the Act dated 26/02/2015. By order dated 09/04/2015, the Settlement Commission declared the application invalid as the assessee failed to make full and true disclosure. Basing on this factual matrix, Ld. DR submitted that the limitation period got extended till 31/03/2016 in view of the provisions of the 2nd proviso to Explanation to section 153 of the Act. 9. We have gone through the record carefully in the light of the submissions made on either side. In view of the rival contentions on the aspect of limitation, as stated above, the contention between the parties is that in case of search, whether the provisions of section 153 or section 153-B....
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.... order under sub-section (1) of section 245D is received by the Principal Commissioner or Commissioner under subsection (2) of that section; or xxx xxx xxx xxx xxx xxx shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in clause (a) or clause (b) of this sub-section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: 11. A reading of section 153 makes it clear that, no order of assessment shall be made under section 143 or section 144 at the time after the expiry of two years from the end of the assessment year in which the income was first assessable, and many provisos are provided to the section; whereas section 153- B starts with the expression that "notwithstanding anything contained in section 153", and states that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year falling within si....
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....order of the learned settlement commission on 09/04/2015, the order should have been passed by 07/06/2015. It is, therefore, clear that the orders passed on 31/03/2006 is not clearly within the period of limitation prescribed under section 153-B of the Act. 15. Basing on this, the Ld. AR submits that the assessment order in this case is barred by limitation and is non-est in the eye of law. Taking forward this argument and placing reliance on the decision of the Hon'ble Apex Court reported in Kiran Singh & Ors. V. Chaman Paswan & Ors. [1955] 1 SCR 117, Ld. AR submitted that the learned Principal Commissioner of Income Tax cannot assume jurisdiction under section 263 of the Act to revise the assessment order, which is non-est in the eye of law, being barred by limitation. 16. In Kiran Singh & Ors. V. Chaman Paswan & Ors. [1955] 1 SCR 117 Hon'ble Apex Court held that " It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisd....
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....he case of CIT Vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in relation to non service of notice could be raised for the first time before the Tribunal as the same was legal, which went to the root of the matter. 19. While exercising powers u/s 263 Id. Commissioner cannot revise an assessment order which is non est 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. " 19. We are, therefore, convinced with this argument of the Ld. AR and hold that the assessment order is barred by limitation, the assessee can challenge the validity of the same during this appellate proceedings relating to the examination of the validity of the order passed ....
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....deeming an order passed by the Assessing Officer to be erroneous insofar as it is prejudicial to the interests of revenue if any of the conditions mentioned therein obtains in the case of the order under examination. Then the Learned Commissioner of income tax referred to clause (d) of explanation two of the section 263 (1) of the Act which says that for the purposes of this section it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous insofar as it is prejudicial to the interests of the revenue, if, in the opinion of the Prl. Commission or Commissioner, "the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdiction of High Court or Supreme Court in the case of the assessee or any other person". 24. According to the learned principal Commissioner of income tax the Hon'ble Apex Court in SLP (C) CC No. 769 of 2017, by order dated 16/01/2017 approved the decision of the Hon'ble Gujarat High Court in the case of NK industries vs. DCIT where it was held that, where the entire purchases shown on the basis of fictitious invoices have been debated in the trading account, sinc....
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....eing laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. Under Article 136 of the Constitution the Supreme Court may reverse, modify or affirm the judgment-decree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal. The doctrine of merger can therefore be applied to the former and not to the latter. iv) An order refusing special leave to appeal may be a non- speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed. v) If the order refusing leave to appeal is a speaking order, i.e. gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court withi....
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.... Court cannot be reversed or modified at the SLP stage obviously that order cannot also be affirmed at the SLP stage, we find it difficult to hold that the dismissal of the SLP preferred by the assessee against the orders of the Hon'ble Gujarat High Court in NK Proteins Ltd vs. DCIT (supra) render the assessment order erroneous insofar as it is prejudicial to the interest of revenue, taking the case covered by clause (d) of Explanation 2 to section 263 (1) of the Act. On this score, we are unable to endorse the view of the learned Principal Commissioner of Income Tax. 29. Now we shall refer to the propriety of the exercise of jurisdiction under section 263 of the Act by the learned Principal Commissioner of Income Tax. It is the contention of the Ld. AR that it is not a case of lack of enquiry or inadequate inquiry conducted by the Learned Assessing Officer before passing the assessment order. According to him Learned Prl. Commissioner of Income Tax also does not dispute the correctness of the enquiry conducted by the Learned Assessing Officer or the conclusions reached by him pursuant to such enquiry. 30. With reference to the plausibility of the view taken by the Ld. Assess....
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....e on a decision reported in BSES Rajdhani Power Ltd vs. PCIT (2017) 399 ITR 228 (Delhi) and Rajmandir Estates Private Limited vs. PCIT (2016) 386 ITR 162 (Calcutta) for the principle that the non-consideration of larger claim of depreciation and consideration of only part of it by the Learned Assessing Officer, who did not go into the question with respect to the whole amount, was an error that could be corrected under section 263 and the Learned Principal Commissioner of Income Tax has power to consider all aspects which were subject matter of Assessing Officer's order, if, in his opinion, they were erroneous, despite assessee's appeal on that or some other aspect. The other decisions relied upon by Ld. DR are not applicable to the facts of the case inasmuch as in all such cases the record speaks that there was a finding as to the Learned Assessing Officer failing to carry out adequate enquiry. 33. Ld. DR further placed reliance on the decision reported in CIT vs. La Medica (2001) 250 ITR 575 for the principle that once it was accepted that supplies were not made by the said supplier to whom payments are alleged to have been made, question of purchases having been made from som....
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....r. He did so, after rejecting the books of accounts. By such calculation the Learned Assessing Officer reached the additional income to be added at Rs. 5,36,53,777/-. 36. Now as rightly submitted by Ld. AR, there is nothing placed on record to show that in the line of business of the assessee who is in the business of work of civil construction and execution of infrastructure sector projects, the profit rate is something approximately 94%. We are conscious of the fact that in civil contracts of construction and execution of infrastructure sector projects the profit rate cannot be 94%, inasmuch as law acknowledges the fact, under section 44-AD as it stood prior to the amendment by Finance Act, 2009 that in the case of an assessee engaged in the business of civil construction, a sum equal to 8% of the gross receipt shall be deemed to be the profits and gains of such business chargeable to tax. In such a situation, we find strength in the argument of Ld. AR that being conscious of this fact of the profitability of the business of work of civil construction and execution of infrastructure sector projects, Learned Assessing Officer proceeded to estimate the gross profit of the assess....