TaxTMI 
TaxTMI 
2021 (10) TMI 912
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..... CIT is wrong and uncalled for. 2. For that the Ld. Pro CIT having not examined the records of the appellant and proceeded to issue notice u/s 263 upon the proposal of the A.O. there is nothing on record to justify the impugned proceedings which required formation of opinion by the Pr. Commissioner of Income Tax that the assessment framed was erroneous and/or prejudicial to the interest of revenue. 3. For that the source relating to the receipts of share subscription having been fully explained by the appellant supported by direct evidences and there being no adverse finding thereupon the Ld. Pr. CIT having rightly accepted the source in the hands of the appellant but without there being any valid reason erred in directing the A.O. to make addition @ 0.25% of the amount involved as the income of the appellant as entry operator. 4. For that the Ld. Pr. CIT ought to have dropped the proceedings initiated u/s 263 as there was no finding of the assessment framed being erroneous and prejudicial so as to assume jurisdiction u/s 263. 5. For that the Ld. Pr. CIT though discussed all relevant facts and the Law applicable thereon ought not to have held the appellant as an entry oper....
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....that there was non-compliance from the part of the assessee. So he issued notice u/s 133(6) notice to UCO Bank in respect of two bank accounts and acknowledges to have received KYC of those accounts on 17.11.2017. The AO thereafter acknowledges that on 18.09.2017 assessee's AR was present before him and produced the details requisitioned by him in the notice and in the re-assessment proceeding he also challenged the veracity of the claim of the Department on the issue of issuance and service of notice upon the assessee i.e. service of notice u/s 148 of the Act and other notices were challenged. According to the Ld. A.R, the AO in the assessment order accepts the fact that in the month of December, 2017 the Ld. AR of the assessee had submitted some more documents to justify the share premium and shares worth Rs. 8.23 cr. issued to the share subscribers. Thereafter according to Ld. A.R, the AO records that due to the paucity of time, he could not conduct intensive verification and therefore, the AO accepted the returned income submitted by the assessee by order dated 29.12.2017, which action/order of the AO, the Ld. A.R. contends to be a nullity/bad in eyes of law for want of jurisdi....
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....t the AO's omission not to have enquired into and levied taxes on the money routed to the assessee in the form of share capital and premium has been an erroneous action/omission on the part of the AO; and moreover, he pointed out that the Ld. PCIT has held the assessee company to be provider of accommodation entry and therefore has directed the AO to assess the income only of commission at the rate of 0.25% as held by Hon'ble Calcutta High Court in this case of M/s Safeco Projects Pvt. Ltd. dated 07.03.2019 which is a reasonable order of Ld PCIT. So according Ld. CIT D.R., the Ld. Pr. CIT rightly interfered in the order of AO by exercising his revisional jurisdiction and passed a reasonable order to bring to tax only the commission income of 0.25% which impugned action does not require our interference. 6. In his rejoinder, the Ld. AR submitted that the assessee did not challenge the action of reopening and order passed by the AO dated 29.12.2017 because the AO accepted the return of income filed by the assessee and since the AO did not make any addition/adverse view against the share capital/premium issued by the assessee there was no grievance against the action of AO. So, the a....
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....ed the rival submissions. It is well settled Law that since reassessment proceedings are invalid and bad in law, therefore, such proceedings could not be revised under section 263 of the I.T. Act. It is also well settled Law that validity of the re-assessment proceedings are to be judged on the basis of the reasons recorded for reopening of the assessment." He further placed reliance upon the following judgments: - " M/s Westlife Development Ltd. vs. PCIT in ITA No. 688/Mum/2016 dated24.06.2016 (ITAT, Mumbai) - Krishna Kumar Saraf vs. CIT in ITA No. 4562/Del/2011 dated 24.09.2015 (ITAT, Delhi) - M/s Classic Flour & Food Processing (P) Ltd. vs. CIT in ITA No. 764 to 766/Kol/2014 dated 05.04.2017 (ITAT, Kolkata)" In the light of the aforesaid averments, and other decisions discussed infra, the Ld AR wants us to adjudicate this legal issue. 7. Having heard both parties, the first aspect which needs to be examined is as to whether the assessee is entitled to challenge the validity of initiation of proceedings by AO u/s 147 of the Act in the present appeal in which he has challenged the validity of order passed by Ld PCIT u/s 263 of the Act. The Ld. Counsel for the assessee submitt....
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....Paswan & Ors. [1955] 1 SCR 117 wherein the Hon'ble Supreme Court observed as follows :- " 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 jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties." 9. The Mumbai bench of this Tribunal made a reference to another decision of the Hon'ble Supreme Court in the case of Sushil Kumar Mehta vs Gobind Ram Bohra, (1990) 1 SCC 193 and the decisions in the case of Indian Bank vs Manilal Govindji Khona (2015) 3 SCC 712. The Mumbai bench also held that if order of assessment passed u/s 147 of the Act was nullity in the eyes of law then that order cannot be revised by invoking powers u/s 263 of the Act by CIT. The Mumbai Bench has in this regard placed reliance on the decision of Delhi bench of the Tribunal in the ca....
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....t assessment year has escaped assessment. If this essential condition is not satisfied by the AO before initiating assuming jurisdiction u/s 147 of the Act then in such an event it cannot be said the AO has validly assumed jurisdiction u/s 147 of the Act. As discussed even if for any reason, the assessee had not challenged the validity of proceedings u/s 147 of the Act by filing appeal against the order framed u/s.147 of the Act, it can be challenged in the appeal against an order passed by the Ld. PCIT u/s 263 of the Act revising the invalid order u/s 147 of the Act. As noted this issue has been analysed by the Mumbai Bench of the Tribunal in the case of M/s. Westlife Development Ltd. (supra) wherein the Tribunal has equated the reopening assessment u/s 147 to primary proceedings and the subsequent proceedings by Ld. PCIT u/s 263 passed to be collateral proceedings. In this order the Tribunal has taken note of several ratio's of the Hon'ble Supreme Court wherein the Hon'ble Supreme Court held that if the primary proceedings are non-est in law or void on the ground of lack of jurisdiction, then the validity of such proceedings can be challenged even in an appeal arising out of coll....
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.... and then issue notice u/s. 148 of the Act and not before that. Let us look at the settled position of law on this issue. 11. As noted (supra) the Parliament has given power to AO to reopen the assessment, if the condition precedent as discussed above are satisfied, and not otherwise. It should be kept in mind that the concept of assessment is governed by the time-barring rule and the assessee acquires a right as to the finality of proceedings. Queitus of the completed assessment is the Fundamental Rule and exception to this rule is Re-opening of assessment by AO under section 147 or exercise of Revisional jurisdiction by CIT under section 263 of the Act. Therefore, the Parliament in its wisdom has provided safeguards for exercise of the reopening of assessment jurisdiction to AO; and revisional jurisdiction of CIT by providing condition precedent which is sine qua non for assumption/usurpation of jurisdiction. In the case of reopening of assessment, the reason to believe escapement of income is the jurisdictional fact and law (mixed question of fact and law) and for revisional jurisdiction the order of the AO should be erroneous as well as prejudicial to the revenue. Unless the c....
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....443/- and the case was processed accordingly, subsequently the case was selected for scrutiny u/s 147 on the basis of an information received from the authentic source that M/s Miracle Commodities Pvt Ltd there is frequent high value deposit in their bank accounts and immediate transfer to some third party account. During the course of further investigation it is found that large value of amount has been routed to M/s Concord Infra Projects Pvt. Ltd. From further detailed investigation and analysis of data/information it is revealed that during the FY:2009-10 corresponding to A Y :2010-11, M/s Concord Infra Projects Pvt Ltd has allotted shares @ Rs. 10 per share at high premium to as many as 16 Kolkata based companies amounting to Rs. 8,34,00,000/-. The fund so raised was invested in the shares of Kolkata based companies at very high premium which does not commensurate with the financial position of the company in which such investment was made. Subsequently there was change in the Directors of M/s Concord Infra Projects Pvt Ltd. It clearly shows that the company has been sold claimed as to real beneficiaries who channelized their unaccounted income and converted bogus investme....