TaxTMI 
TaxTMI 
2024 (11) TMI 310
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....arrating the facts, as they appear in the appeal in ITA no.349/Nag./2024, for assessment year 2016-17, the decision of which will apply mutatis mutandis to the appeal for the assessment year 2017-18 as well subject to modification in factual matrix giving rise to the periphery of dispute. ITA no.349/Nag./2024 Assessment Year - 2016-17 3. The assessee has raised following grounds:- "1. Whether on the facts and circumstances, the learned Pr.CIT has erred in concluding that assessment order passed by learned AO u/s 147 r.w.s 144B dated 29.03.2022 is erroneous and prejudicial to the interests of the revenue and in setting aside the assessment order with a direction to the learned AO to conduct enquiry and examination. 2. Whether on the facts and circumstances, the learned Pr.CIT erred in assuming jurisdiction under section 263 of the Act on issues which were never the subject-matter of the assessment in a proceeding initiated under section 147 of the Act. 3. Whether where jurisdiction under section 263 was sought to be exercised with reference to issues which were not subject of reopening of assessment, period of limitation provided in section 263(2)....
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....d that the Assessing Officer had examined the issues in line with the reasons recorded and thereafter accepted the return of income filed by the assessee. Subsequently, the learned Commissioner exercising his powers conferred under section 263 of the Act revised the assessment on some other issues, which were not part of the reasons recorded. The learned Counsel further submitted that once the Assessing Officer post re-opening the assessment did not make any addition in respect of issues as per reasons recorded then he is precluded from making additions in respect of any other issues. In support of the arguments advanced by the learned Counsel, reliance was placed on the judgment of the Hon'ble Bombay High Court in CIT v/s Jet Airways Ltd. [2010] 195 Taxmann 177 (Bom.). It was contended by the learned Counsel that the learned Commissioner also cannot revise the assessment on other issues and cannot do something which the Assessing Officer cannot do so. The learned Counsel for the assessee further contented that the time limit for initiating show cause notice under section 263 of the Act would run from the date of intimation order dated 07/06/2018, which was passed under section 143....
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....sessee has also filed a gist of submissions which are reproduced below:- "1. Enquiry made by the learned AO 1.1 During assessment proceedings pursuant to reopening of assessment u/s 148/147, the learned AO had issued show cause notice u/s 142(1) dated 10/12/2021 alongwith questionnaire (Copy of notice is enclosed at Pages 68- 71 of Factual Paperbook (Additional). 1.2 The assessee had filed its written submission on 01/03/2022 alongwith necessary documentary evidences (Refer Pages 1-67 of Factual Paperbook (Additional). 1.3 Therefore, the assessee submits that, enquiry was made in line with reasons recorded and the learned AO had taken a possible view on the issues involved. Thus, learned AO being satisfied with the written submission and documents filed, finalised the assessment by accepting the returned income. Hence, the order cannot be termed as erroneous and prejudicial to the interests of revenue, for lack of enquiry. 2. No minimal enquiry carried out by learned CIT before forming a view that the impugned order was erroneous and prejudicial to the interests of the Revenue. 2.1 The assessee submits that, it had file....
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.... the assessee submits that, work-in- progress amounting to Rs. 15,64,07,053 consist of following amount: Sr. no. Particulars Amount (Rs. ) Documentary Evidences 1. Purchase cost of land 12,52,00,000 Copy of Development agreement executed on 31/08/2015, is enclosed as Factual Paper Book pages 8-22 2. Stamp Duty & registration charges 76,97,777 3. Advocate Fees 15,000 Copy of Invoice is enclosed as Factual Paper Book Page-23 4. NMC building construction development fees 2,29,04,812 Copy of bank statement extract is enclosed as Factual Paper Book Page-28 5. Maharashtra State Welfare Board 5,89,464 Copy of receipt is enclosed as Factual Paper Book Page-24 6. Total 15,64,07,053 3.3 In view of above, it is evident that, valuation of cost of free construction to the owner as per ready reckoner as mentioned in the agreement of Rs. 2,81,33,000/- is not included in work-in-progress amounting to Rs. 15,64,07,053. Therefore, said expenditure has not been included in WIP of project and as such WIP to extent of Rs. 2,81,33,000/- is not required to be reduced. Issue: Disallowance u/s 40(a)(ia....
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....procedure as per law. Reliance is placed on following judicial precedents: * CIT v. Jet Airways Ltd. [2010] 195 Taxmann 177 (Bombay) High Court of Bombay (Refer Pages 14 to 28 of legal paperbook) * CIT v. Usha Maritn Ventures Ltd. [2023] 150 Taxmann.com 491(Calcutta) * High Court of Calcutta (Refer Pages 39 to 40 of legal paperbook) Aishwarya Rai Bachchan v. PCIT [2022] 135 taxmann.com 335 (Mumbai Trib.) (Refer Pages 78 to 83 of legal paperbook) 4.2 Thus, once the learned AO cannot reassess any other issue without recording corresponding reasons & issuing separate 148 notice, the learned CIT also cannot revise the assessment on other issues. The learned CIT cannot do something which the learned AO cannot do. 5. Ground of Appeal No.3 Whether where jurisdiction under section 263 was sought to be exercised with reference to issues which were not subject of reopening of assessment, period of limitation provided in section 263(2) would commence from date of order of assessment u/s 143(1) and not from date on which order of reassessment u/s 147 had been passed. 5.1 Chronology of events Sr. no. Particulars Amount (Rs.....
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.... Intimation order u/s 143(1) dated 07/06/2018 - - 2. Due date for passing order u/s 263 31/03/2021 3. Date of passing order u/s 263 29/03/2024 (beyond limitation period Reliance is placed on following judicial precedents: * CIT v. Lark Chemicals Ltd. [2015] Taxmann.com 446 (Bombay) High Court of Bombay (Refer Pages 1 to 6 of legal paperbook) * CIT v. ICICI Bank Ltd. [2012] 19 Taxmann.com 142 (Bombay) High Court of Bombay (Refer Pages 7 to 13 of legal paperbook) * M/s Jainsons Agrochem Industries v. PCIT Writ petition no. 2136/2024 High Court of Rajasthan at Jodhpur (Refer Pages 29 to 38 of legal paperbook) * Indira Industries v. PCIT [2018] 95 Taxmann.com 103 (Madras) High Court of Madras. (Refer Pages 41 to 46 of legal paperbook) * Indira Industries v. PCIT [2018] 95 Taxmann.com 292 (Madras) High Court of Madras. (Refer Pages 47 to 51 of legal paperbook) * CIT v. Bharti Airtel Ltd. [2013] 37 Taxmann.com 218 (Delhi) High Court of Delhi (Refer Pages 52 to 53 of legal paperbook) * CIT v. Industrial Development Bank of India Ltd. [2023] 152 Taxmann.com 591 (SC) Supreme Court of India (Refer P....
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....ded is exhibited at Page-1 to 3 of the Paper Book and the relevant extract is reproduced:- "REASONS FOR REOPENING OF ASSESSMENT IN THE CASE OF M/s Latitude Infraventures (AAEFL9303P) FOR THE A.Y. 2016-17 U/s 147 OF THE INCOME TAX ACT, 1961. The assessee has filed its return of income for the A.Y. 2016-17 disclosing the total income at Rs. Nil/-. In this case, as per the information received from ITO (Exemption)-1, Nagpur, it was informed that the assessee has entered into development agreement with M/s. Sou Sumatibai Pandurang Deo Memorial Charitable Trust and has made payment of Rs. 15,33,33,000/-, the source of payment is not explained viz a viz income shown in the ITR for previous years. Therefore, income for A.Y. 2016-17 has escaped assessment. In the view of the above, I have reasons to believe that the income to the tune of Rs. 15,33,33,000/- has escaped the assessment for A.Y. 2016-17." 10. Further, the issues on which the order was revised by the learned Commissioner as per the impugned order passed under section 263 is reproduced as under:- "7 Accordingly, I hereby set aside the assessment u/s 147 read with section 144 read with secti....
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.... Officer has to assess or reassess income ('such income') which escaped assessment and which was basis of formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during course of proceedings Held, yes Whether, however, if after issuing a notice under section 148, he accepts contention of assessee and holds that income, for which he had initially formed a reason to believe that it had escaped assessment, has, as a matter of fact, not escaped assessment, it is not open to him to independently assess some other income; if he intends to do so, a fresh notice under section 148 would be necessary, legality of which would be tested in event of a challenge by assessee - Held, yes CIT v. Usha Maritn Ventures Ltd. [2023] 150 Taxmann.com 491(Calcutta) High Court of Calcutta, wherein it has been held s under: "4. The short issue involved in the instant case is whether the Commissioner of Income-tax (Appeals) [CIT(A)] could have assumed jurisdiction under section 263 of the Act on an issue which was never the subject-matter of the assessment in a proceeding initiated under section....
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....e to issues which were not subject of reopening of assessment, period of limitation provided in section 263(2) would commence from date of order of assessment u/s 143(1) and not from date on which order of reassessment u/s 147 had been passed. 4. Whether on the facts and circumstances, the learned CIT erred in neither making any enquiry on his own nor considering merits of case but simply directed the learned AO to make proper enquiry and further verification thereby, rendering the order passed u/s 263 bad in law which deserves to be set aside. 5. Whether on the facts and circumstances, the learned CIT erred in not appreciating that, Explanation 2 to section 263 cannot be said to have overridden the law as interpreted by the Hon'ble Courts, according to which the Pr.CIT has to conduct an enquiry and verification to establish and show that the assessment order is wholly unsustainable in law. 6. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off." 16. After haring both the parties and on a perusal of the material available on record, we find ....
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....e appropriate provisions of Sec 145 of the Act and the relevant Accounting Standards prescribed for accounting of the business of construction carried out by the assessee. (ii) whether payment of Rs. 25,00,000/- to Shriniwas Buildicon Pvt. Ltd is a deductible business expenditure as per the provisions of the Income-tax Act, 1961. (iii) verification regarding disallowance u/s 40a(ia) of the Act, as discussed above." 18. The issues sought to be revised under section 263, are different than issues on which assessment proceedings under section 147, were re-opened. We find that the very premise assumed by learned PCIT does not hold good and thus, when the foundation itself collapses the super-structure falls. We find that in the present facts and circumstances, the legal maxim 'sublatofundamentocaditopus' is applicable, meaning thereby - 'a foundation being removed, the superstructure falls'. Once the basis of a proceeding is gone, the action taken thereon would fall to the ground. If initial action is not in consonance with law, all subsequent proceedings would fail as illegality strikes at the root. ReferKalabharati Advertising v/s Hemant ....