TaxTMI 
TaxTMI 
2022 (10) TMI 1215
X X X X Extracts X X X X
X X X X Extracts X X X X
....legal and bad in law and is liable to be quashed. 2. That on the facts and circumstances of the case and in law, the impugned order passed by the PCIT is illegal and bad in law, being barred by limitation prescribed under section 263(2) of the Act. 3. That on the facts and circumstances of the case and in law. the impugned order passed by the PCIT seeking to revise the reassessment order dated 30.12.2018 passed under section 147/143(3) of the Act, is without jurisdiction, illegal and bad in law. 4. That on the facts and circumstances of the case and in law, the impugned order passed under section 263 of the Act, without appreciating that the twin conditions of that section viz., reassessment order being erroneous as well as prejudicial to the interests of the Revenue, were not satisfied, and hence is illegal and bad in law. 5. That on the facts and circumstances of the case, the impugned order passed by the PCIT without affording reasonable opportunity of being heard to the Appellant in violation of principles of natural justice, is illegal and bad in law. 6. That on the facts and circumstances of the case and in law, the PCIT erred in holding that reassessment order....
X X X X Extracts X X X X
X X X X Extracts X X X X
....perational until May 30, 2021. It was submitted by the Ld. AR that as the lockdown restrictions were eased and it came to the knowledge of the assessee that the registry of Income-Tax Appellate Tribunal, Raipur had started functioning, therefore, the appeal was filed on 10.06.2021. The Ld. AR submitted that the Hon'ble Supreme Court on March 08, 2021 vide its suo-motto order had initially excluded the period from March 15, 2020 till March 14, 2021 for calculating the period of limitation. It was submitted by him that the Hon'ble Supreme Court had thereafter vide its order dated April,27, 2021 restored its earlier order dated March 08, 2021, and it was provided that the period of limitation w.e.f. March 15, 2020 would stand extended till further order. The Ld. AR submitted that in view of the second Covid-19 wave in India, the Hon'ble Apex Court had pursuant to its aforesaid orders directed that the period of limitation as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further order. The Ld. AR submitted that considering the extended period of limitation no delay was involved....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch. 5. The Pr. CIT after framing of the reassessment by the A.O vide his order passed u/s.143(3) r.w.s 147, dated 30.12.2018 called for the record of the assessee company. On a perusal of the record, it was observed by the Pr. CIT that the assessee company had during the year under consideration received share capital and share premium, as under: Date of issue Name of the Allottees Nature of Transactions Share capital issued in the form of Equity/ CCS/Preferences shares (No.) Face value (Rs.) Security premium per share(Rs.) Amount (Rs.) 20/11/2011 SFI Parcel Services Pvt. Ltd. Allotment of equity shares Equity-2095628 10/- 790/- 1,67,70,68,220/- 20/11/2011 Gupta Coalfield & Washeries Ltd. Allotment of equity shares Equity-99404 10/- 790/- 7,95,50,039/- Total 1,75,66,18,259/- The Pr. CIT observed that the assessee company by issuing equity shares of a face value of Rs.10/- per share at a premium of Rs.790/- each had during the year raised a fund of Rs.176 crore. The Pr. CIT was of the view that there were no economic/financial reasons which would justify raising of huge share premium by the assessee which w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ter dated 16.01.2014 submitted with the AO the confirmations, copies of the bank statements and returns of income of the shareholders to whom shares were allotted during the year under consideration. It was the claim of the assessee that as the A.O after vetting the details that were filed with him in support of the identity and creditworthiness of the share applicants, as well as the genuineness of the transactions, had accepted the same, thus, the possible and a plausible view so arrived at by him could not be dislodged u/s 263 of the Act. The assessee referring to the "reasons to believe" on the basis of which its case was reopened vide notice issued u/s.148 of the Act, dated 28.03.2018, submitted before the Pr. CIT that its concluded assessment was in itself reopened for the purpose of verifying the authenticity of the transactions of raising of share capital and share premium during the year under consideration. The assessee in order to buttress its aforesaid contention took support of Question No. 7 of a query letter dated 26.09.2018, wherein it was specifically called upon by the AO to furnish details a/w. justification with respect to the share capital that was issued to M/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t u/s.143(3), dated 06.03.2014, and also in the course of the reassessment proceedings that had culminated vide an order passed u/ss.143(3)/147, dated 30.12.2018, therefore, it was incorrect on his part to allege that the same was passed without making proper enquiries. It was the claim of the assessee that as it had justified both the transactions of receipt of share capital and share premium by furnishing the requisite details/documents as were called for by the A.O in the course of the reassessment proceedings, viz. copies of returns of income, confirmation of accounts, bank statements and audited balance sheets of the share subscribers, viz. M/s. SFI Parcel Services Pvt. Ltd. and M/s. Gupta Coalfield & Washeries Limited and had also explained at length the source of their respective investments, therefore, it could by no means be held that the order passed by the AO u/s.143(3) r.w.s 147, dated 30.12.2018 was without making proper enquiries and due application of mind. 6. The Pr. CIT was however not inclined to accept the explanation of the assessee. The Pr. CIT was of the view that considering the fact that the financial strength of the investor companies was not such that cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rther observed by the Pr. CIT that though the assessee company during the year under consideration had made a cash deposit of Rs. 60 lac in its bank account no. 164010200012546 with Axis bank, Branch: Bilaspur, which, inter alia, was a reason for reopening of its case, however, the AO despite himself not being convinced about the source of the said cash deposit which was not commensurate with the assessee's returned income had summarily accepted the same without carrying out any further verification. The Pr. CIT on the basis of his aforesaid observations was of the view that the failure of the AO to carry out necessary enquiry and verifications had rendered the reassessment order passed by him as erroneous in so far it was prejudicial to the interest of the revenue under section 263 of the Act. Accordingly, the Pr. CIT after drawing support from certain judicial pronouncements and triggering the "Explanation 2" to Section 263 of the Act held the order passed by the A.O u/s.143(3) r.w.s.147, dated 30.12.2018 as erroneous in so far it was prejudicial to the interest of the revenue, and set-aside the assessment order to his file, with a direction to adjudicate the same afresh after ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t were brought to the notice of the Pr. CIT during the course of proceedings before him. It was submitted by him that now when the A.O had framed the impugned assessment after due application of mind and carrying out necessary verifications on the issue in question, i.e., receipt of share capital and share premium by the assessee company and had arrived at a possible and plausible view, therefore, the Pr. CIT could not have sought for substitution of his view as against that arrived at by the A.O in the garb of proceedings u/s.263 of the Act. The ld. A.R in order to fortify his contention that detailed submissions as regards receipt of share capital and share premium from the aforementioned share applicants, viz. M/s SFI Parcel Services Pvt. Ltd. and M/s Gupta Coalfield & Washeries Ltd. were furnished in the course of the reassessment proceedings took us through the submissions dated 26.09.2018 and 15.10.2018 that were filed with the A.O in response to notice(s) u/s.142(1) a/w. query letters that were issued by him, Page 108 to 157 of APB. Our attention was also drawn by the Ld. AR towards the copy of the bank account of M/s SFI Parcel Services Pvt. Ltd. wherein the amount of Rs.16....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he complete details of the source from where the payments made by M/s Gupta Coalfield & Washeries Ltd. to the assessee company were made from were reflected. The Ld. AR had also taken us through the copy of the Income-tax return of the aforesaid investor company disclosing an income of Rs.24.96 crore (approx.), Page 61 of APB. It was submitted by the Ld. AR that all the aforesaid documents substantiating the identity and creditworthiness of the share applicant, as well as the genuineness of the transactions were furnished in the course of the original assessment proceedings. The Ld. AR also took us through the copy of account of M/s Gupta Coalfield & Washeries Ltd. as was reflected in the books of account of the assessee company during the year under consideration i.e. A.Y. 2011- 12, Page 111 of APB. Our attention was also drawn towards the financials of the aforesaid investor company, viz. M/s. Gupta Coalfield & Washeries Ltd., Page 125 to 144 of APB. The Ld. A.R submitted that all the aforesaid documents were filed by the assessee in the course of the assessment proceedings with the A.O. 11. Apropos the observation of the Pr. CIT that the assessee company had deposited an amount....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xercising his revisional jurisdiction u/s.263(1) of the Act had without undertaking any enquiry by himself had sent back the entire matter to the file of the A.O for fresh assessment, therefore, the Tribunal had on the said count itself set-aside the order passed by the CIT u/s.263 of the Act, which order on further appeal by the revenue was upheld by the Hon'ble High Court. The Ld. AR in support of his aforesaid contention had also relied on the judgments of the Hon'ble High Court of Delhi in the case of Pr. CIT-6, New Delhi Vs. Modicare Limited, ITA No.759/2016, dated 14.09.2017 and Income-Tax Officer Vs. D.G Housing Projects Ltd. (2012) 343 ITR 329 (Del). The Ld. A.R submitted that as the Pr. CIT in the present case had failed to examine the issue in question, i.e., receipt of amount by the assessee company towards share capital and share premium and had summarily restored the matter to the file of the A.O, therefore, the order so passed by him could not be sustained and was liable to be struck down on the said count itself. 14. The Ld. A.R adverting to the validity of the jurisdiction that was assumed by the Pr. CIT u/s. 263 of the Act for revising the order passed by the A.O ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial facts necessary for its assessment for the year under consideration i.e A.Y 2011-12 had drawn our attention to the copy of the "reasons to believe" on the basis of which the concluded assessment of the assessee company was reopened u/s.147 of the Act, Page 81 to 83 of APB. The Ld. A.R submitted that as the case of the assessee did not satisfy either of the two conditions carved out in the "1st proviso" of Sec. 147 of the Act, therefore, the A.O had traversed beyond the scope of his jurisdiction and had wrongly reopened its concluded assessment on the basis of an invalid notice issued u/s.148, dated 14.03.2018 i.e. much beyond the prescribed period of four years from the end of the relevant assessment year i.e. A.Y. 2011-12 that had expired way back as on 31.03.2016. 15. The Ld. A.R on the basis of his aforesaid contentions submitted, that now when the order of the A.O u/s.143(3) r.w.s 147, dated 30.12.2018 was passed without valid assumption of jurisdiction and thus, was in itself devoid and bereft of any force of law, therefore, the same could not have been revised by the Pr. CIT u/s. 263 of the Act. On being specifically queried by the bench that now when the order passed u/....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the aforesaid order of the tribunal in Westlife Development Ltd. (supra) had thereafter been upheld by the Hon'ble High Court of Bombay vide its order passed in ITA No.1168/2017, dated 28.09.2021, thus, the finding of the tribunal on the issue in hand had attained finality. In sum and substance, it was the claim of the Ld. AR that the aforesaid view taken by the Tribunal in the case of Westlife Development Ltd. (supra) having been accepted by the department had attained finality. The Ld. AR in support of his contention that when the assessment order is itself null and void, then, the Commissioner of Income-Tax could not exercise his revisional jurisdiction u/s. 263 of the Act had also relied on the order of the ITAT, Allahabad in the case of Hari Mohan Das Tandon (HUF) Vs. Pr. CIT (2018) 91 taxmann.com.199 (Allahabad-Trib). The Ld. AR had also on the aforesaid proposition drawn support from the order of the ITAT, Delhi in the case of Krishan Kumar Saraf Vs. Commissioner of Income Tax, Hissar, ITA No.4562/Del/2011 dated 24.09.2015. The Ld. A.R submitted that now when the order passed by the A.O u/s. 143(3) r.w.s 147, dated 30.12.2018 was in itself non-est for want of valid assumpti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Ld. AR that as there was absence of satisfaction of either of the aforesaid two conditions in the case of the present assessee, for the reason that there was neither any failure on the part of the assessee to make a return of income under Section 139 or in response to notice issued under Sub-section (1) of Section 142 or Section 148; nor was there any failure on its part to disclose fully and truly all material facts necessary for its assessment for the year under consideration, therefore, the A.O had wrongly assumed jurisdiction and after expiry of four years from the end of the assessment year reopened its concluded assessment u/s.147 of the Act. The Ld. A.R in support of his aforesaid contention had also relied on the order of the ITAT, Mumbai in the case of Aishwarya Rai Bachchan Vs. Pr. CIT-8, ITA No.754/Mum/2021, dated 25.02.2022. 17. In sum and substance it was submitted by the Ld. AR, viz. (i). that as the concluded assessment of the assessee company that was earlier framed u/s.143(3), dated 06.03.2014 was reopened after expiry of four years from the end of the relevant assessment year i.e AY 2011-12 despite there being no failure on its part to make a return of incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utting the aforesaid contentions of the department the ld. A.R took us through the copy of the bank account of the aforesaid investor, viz M/s. SFI Parcel Services Pvt. Ltd, Page 156 of APB. The ld. A.R submitted that the copy of the bank account of M/s SFI Parcel Services Pvt. Ltd. clearly revealed the complete details of investment made with the assessee company and the same was accepted by the A.O only after carrying out necessary verifications to his satisfaction. 20. We shall first deal with the claim of the Ld. AR that as the impugned order of reassessment passed by the A.O u/s.143 (3) r.w.s 147, dated 30.12.2018 was in itself invalid and non-est, therefore, the Pr. CIT could not have validly assumed jurisdiction and revised the same vide his order passed u/s. 263 of the Act, dated 27.03.2021. Before proceeding any further we deem it fit to cull out the "reasons to believe" which had formed the very basis for reopening of the assessee's concluded assessment u/s.147 of the Act, as under: "Reasons recorded u/s.148(2) of the I.T Act for A.Y.2016-17 Name of the assessee : Maruti Clean coal & Power Limited, Raipur PAN &n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A.Y.2011-12. 4. Details of investment by Pineridge Investment Ltd. In ACB (India) Ltd. :- (a) In the year 2005-06 [on 03/03/2006), 597409 equity shares were allotted to Pineridge investment Ltd. total valued Rs.200,01,25,332/- @ Rs.10/-(face value) + Rs.3348/- (premium) per share. (b) In the year 2007-08 [0n 09/04/2007] 173990 equity shares were purchase from secondary market by Pinerdge Investment Ld. total valued Rs.64,23,86,600/- @ Rs.3694/- ( face value + premium) per share. (c) Further, in the year 2007-08 [0n 14/03/2008], 298705 equity shares were allotted to Pineridge investment Ltd. against part conversion of warrants @Rs.675/- per warrant and Rs.4023/- per share which includes premium also) total valued Rs.120,16,90,215/-. (d) In the year 2007-08 [on 31/03/2008] 21400280 equity shares were allotted to Pineridge Investment Ltd. by way of bonus share in the ratio 1: 20. (e) In the year 2008-09 (on 30/03/2009) 3369388 equity shares were allotted to Pineridge Investment Ltd. total valued Rs.53,23,63,304/- @158/- per share. (f) In the year 2010-11 [on 15/09/2010] 25839682 equity shares were allotted to Pineridge Investment Ltd. by way of bonus share in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(total deposit of Rs.60,00,000/- ) which was deposited against Pan AACCM8217A during the F.Y.2010-11 relevant to A.Y.2011-12. This is in the name of Maruti Explochem Pvt. Ltd. and the same has been later changed into Maruti Clean Coal & power Ltd. This is mentioned against FIU A/C No.164010200012546 maintained that Axis Bank, Bilaspur. Interest of Rs.2737/- on refund amount for the A.Y.2009-10 was receipt against the PAN on 03-03-2011. Although, the assessee has filed his return of income for the said assessment year on 30.09.2011 declaring total income at Rs Nil, the said cash transactions valued Rs.10,00,000/- and above is not commensurate with its income returned for the relevant A.Y.2011-12 and also in the Old PAN of the assessee. Therefore, I am satisfied and have formed an honest belief that the above transaction/income of cash deposit of Rs.60,00,000/- and other related transactions as appearing in Para 1 to 5 above have escaped assessment. The case of the assessee falls under the explanation (2)(c) of Section 147 of the I.T Act, 1961. Therefore, I have reason to believe that income of Rs.10,00,000/- and above chargeable to tax has escaped assessment for F.Y.2010-11 relev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....u/s.147 of the Act after expiry of four years from the end of the relevant assessment year, then, it would be necessary that the twin conditions contemplated in the statutory provision are satisfied, viz. (i). the AO must have reason to believe that income chargeable to tax has escaped assessment; AND (ii). he must also have a reason to believe that such escapement had occurred by reason of failure on the part of the assessee for either of the two conditions, viz. (a). to make a return of income under Section 139 or in response to notice issued under sub-section (1) of Section 142 or Section 148; or (b). to disclose fully and truly all material facts necessary for his assessment for that purpose. 22. Coming back to the two conditions carved out in the "1st proviso" to Sec. 147 of the Act, as it is neither the case of the department nor a fact discernible from the record that the income of the assessee chargeable to tax had escaped assessment for the reason that there was any failure on its part to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148, therefore, the first condition contemplated in the "1st proviso" t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. As noticed by us at length hereinabove at Para No(s) 5.1, 9 & 10, now when the assessee company had disclosed fully and truly all the material facts as regards the aforesaid issue, i.e., receipt of share capital and share premium from the aforementioned subscriber companies as was necessary for its assessment for the year under consideration i.e AY 2011-12, therefore, it could by no means be held to be in default for the purpose of bringing it within the sweep of "1st proviso" of Section 147 of the Act. (B). Cash deposit : Rs. 60 lac We shall now deal with the observation of the A.O that the assessee company had made a cash deposit of Rs.60 lacs in its bank a/c No.164010200012546 with Axis Bank, Branch: Bilaspur, which, inter alia, was one of the reason to reopen its concluded assessment. On a perusal of the record it transpires that the assessee while objecting to the reasons forming the basis for reopening of its case, vide its letter that was filed with the A.O on 06.11.2018, Page 84 to 91 of APB, had clearly stated that during the year under consideration only a cash deposit of Rs.3.40 lacs made in its bank account. Also the assessee vide its letter dated 24.12.2013 that w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... even otherwise reveals that the A.O had at no stage ever stated that the concluded assessment of the assessee was being reopened after the expiry of a period of four years from the end of the relevant assessment year i.e. A.Y.2011-12, for the reason of failure on its part to disclose fully and truly all material facts necessary for its assessment for the said year. As observed by the Hon'ble High Court of Delhi in the case of Haryana Acrylic Manufacturing Company (supra), in a case where the assessee in the course of the original assessment proceeding had supplied all the relevant details and the A.O had also in the assessment order specifically mentioned about the details, and if in the reasons supplied to the assessee there was no allegation that it had failed to disclose fully and truly all material facts necessary for assessment and because of its failure there had been escapement of income chargeable to tax, then, reopening of its assessment after expiry of four years from the end of the relevant assessment year would be vitiated as being without jurisdiction. For the sake of clarity the observations of the Hon'ble High Court are culled out as under: "Examining the proviso ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to section 147. If this condition is not satisfied, the bar would operate and no action under section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in Wel Intertrade (P.) Ltd.'s we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singhania that, in the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing Officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our viewpoint, we hold that the notice dated 29-3-2004 under section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vant assessment year i.e. A.Y 2011-12 the concluded assessment of the assessee that was earlier framed vide order u/s.143(3), dated 06.03.2014 clearly militates against the "1stproviso" to section 147 of the Act. 26. Now, we shall deal with the second limb of the issue involved in the case before us, i.e., as to whether or not the assessee is well within its right to assail the validity of order passed by the A.O u/ss.143(3) r.w.s 147, dated 30.12.2018 for the very first time in the course of the appellate proceedings originating from the order passed by the Pr. CIT u/s.263 of the Act. The Ld. A.R claims that as the order passed by the Pr. CIT u/s. 263 of the Act is in the nature of a collateral proceeding, therefore, the assessee remains well within its right to challenge in the course of the appellate proceedings emanating from such order the invalidity/illegality of the order passed in the primary proceeding, i.e., the order passed by the A.O u/s.143(3) r.w.s.147, dated 30.12.2018. 27. We have given a thoughtful consideration to the aforesaid claim of the assessee and find substance in the same. Concluded assessment of the assessee for AY 2011-12 that was earlier framed under ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an order passed in the primary proceedings can be challenged in the course of the collateral proceedings finds support from the order of a coordinate bench of the Tribunal i.e ITAT, Mumbai in the case of Westlife Development Ltd. Vs. Pr. CIT-5, Mumbai (2017) 88 taxmann.com 439 (Mumbai). It was, inter alia, observed by the tribunal that an assessee can challenge the validity of an order passed u/s.263 of the Act on the ground that the impugned assessment order was non-est. Indulgence of the tribunal in the said case was sought by the assessee for adjudicating the following issues (as culled out from the order): "1. Whether the assessee can challenge the validity of an assessment 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?" (emphasis supplied ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....already become final and that cannot be sought to be disturbed by the assessee. But, the issue that arises here is that if the original assessment order is illegal in terms of its jurisdiction or if the same is null & void in the eyes of law on any jurisdictional grounds, then, whether it can give rise to initiation of further proceedings and whether such subsequent proceedings would be valid under the law as contained in Income Tax Act? It has been vehemently argued before us that the subsequent proceedings (i.e. collateral proceedings) derive strength only from the order passed in the original proceedings (i.e. primary proceedings). Thus, if order passed in the original proceedings is itself illegal, then that cannot give rise to valid revision proceedings. Therefore, as per law, the validity of the order passed in the primary (original) proceedings should be allowed to be examined even at the subsequent stages, only for the limited purpose of examining whether the collateral (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, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... SCC 193, wherein an issue arose whether a decree can be challenged at the stage of execution and whether a decree which remained uncontested operates as res-judicata qua the parties affected by it. Hon'ble apex court, taking support from aforesaid judgment, observed as under: "In the light of this position in law the question for determination is whether the impugned decree of the Civil Court can be assailed by the appellant in execution. It is already held that it is the Controller under the Act that has exclusive jurisdiction to order ejectment of a tenant from a building in the urban area leased out by the landlord. Thereby the Civil Court inherently lacks jurisdiction to entertain the suit and pass a decree of ejectment. Therefore, though the decree was passed and the jurisdiction of the Court was gone into in issue Nos. 4 and 5 at the ex-parte trial, the decree there-under is a nullity, and does not bind the appellant. Therefore, 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 v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent, contending that the notice of reopening was prompted by a mere change of opinion. The AO rejected plea of the assessee but the AAC accepted this ground and also held the reassessment to be bad in law on jurisdictional ground. Against the order of the AAC the Revenue went in appeal before the Tribunal and specifically raised the plea that the question of jurisdiction to reopen the assessment having been expressly given up by the assessee in the appeal against the reassessment order in the first round, the assessee was debarred from raising that point again before the AAC and the AAC was equally wrong in permitting the assessee to raise that point which had become final in the first round and in adjudicating upon the same. The plea of the Revenue impressed the Tribunal which took the view that after its earlier order in the first round of proceedings the matter attained finality with regard to the point of jurisdiction 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 op....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther it is open to the assessee, not having appealed against the reassessment order, to set up or canvass its correctness in collateral proceedings taken for rectification thereof u/s 154. The bench minutely analysed law in this regard and applying the principle of 'coram non judice' and following aforesaid judgments of the supreme court, it was held that if an assessee seeks to challenge the reassessment proceedings as being without jurisdiction, when action for rectification is sought to be taken on the assumption of the validity of the reassessment order, then the assessee has to step in and protect its interests and the liberty to question even the validity of the reassessment proceedings ought to be given to it......." (emphasis supplied). 8.8 Similar view was taken in another decision of the Tribunal in the case of Dhiraj Suri vs ACIT 98 ITD 87 (Del). In the said case, appeal 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 re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... addressed this issue. This issue has also been decided by the co-ordinate bench (Delhi Bench of Tribunal) in the case of Krishna Kumar Saraf vs CIT (supra). The relevant part of the order is reproduced below: "17. There is no quarrel with the proposition advanced by Id. DR that the proceedings u/s 263 are for the benefit of revenue and not for assessee. 18. However, u/s 263 the Id. Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice U/S 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of Hon'ble Madras High Court in the 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 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der: "10.4 The Learned Counsel for the Assessee also argued that since the assessment is framed on the basis of the revised return filed on 1stJuly, 2013 and according to Ld. CIT it was a non est return, if assessment is framed on non est return, the assessment itself would be mill and void and could not be subject matter of jurisdiction under section 263 of the I.T. Act. In support of his contention, he relied upon the decision of the ITAT, Mumbai Bench in the case of Westlife Development Ltd. (supra) in which original assessment order was held to be null and void in the eye of Law as same was passed upon non-existing entity. Therefore, it was held that Ld. CIT could not have assumed jurisdiction under the Law to make revision of a non est order. Therefore, impugned order passed under section 263 by the CIT was also held invalid in the eye of Law and therefore, the same was quashed. The A.O in this case has framed the assessment on the basis of revised return filed on 1st July, 2013 and taken the income from the same for computing the total income of assessee. It is also case of the Revenue that even the A.O. did not mention original return of income in the assessment order, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the assessee's plea. 17. There is no quarrel with the proposition advanced by ld. DR that the proceedings u/s 263 are for the benefit of revenue and not for assessee. 18. However, u/s 263 the ld. Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice u/s 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of Hon'ble Madras High Court in the 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 ld. 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 ld. Commissioner revises such an assessment order, then it....