TaxTMI 
TaxTMI 
2025 (3) TMI 291
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.... 4. Ld. PCIT has erred in initiating and passing an order u/s 263 without application of mind and just to regularize the legality of order passed u/s 154 by the AO. 5. Ld. PCIT has erred in passing order u/s 263 brushing aside our explanations that the order passed neither erroneous not prejudice to the interest of revenue. 6. The assessee reaves to add, amend or delete any ground of appeal." Thereafter, during the hearing vide application under Rule 11 ITAT Rules, additional legal grounds were taken which reads as under: "1. That impugned revision order passed u/s 263 of 1961 Act by PCTT Faridabad is non est and nullity because it is founded on underlying assessment order passed u/s 147/1448 which itself is nullity and totally invalid and is passed without authority of law. 1.1 That impugned revision order u/s 263 is nullity and void ab initio because underlying assessment u/s 147/144B is based on invalid foundation reopening action u/s 147/148 as evident from admitted and undisputed facts of the case (namely there is no valid "reasons to believe u/s 148(2)) 1.2 That impugned revision order u/s 263 is nullity and void ab initio b....
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....of Rs. 1,66,070/- and income from the sale of share at Rs. 32,97,066/- was claimed as exempted u/s 10(38) of the Act. The return was processed u/s 143(1), thereafter, the case is reopened by way of issue of notice u/s 148 on 28/03/2021 and after obtaining various details from the assessee and careful consideration of the same, the Assessing Officer has accepted the income declared by assessee vide order dated 28/03/2022 passed u/s 147 r.w.s 144B of the Act. Thereafter, the PCIT found the order so passed is erroneous in so far as prejudicial to the interest of Revenue and show cause notice was issued on 28/02/2024 to explain as to why the order passed u/s 144 r.w.s 144 of the Act should not be set aside and fresh assessment be directed. After considering the submissions of the assessee, the Ld. PCIT is of the opinion that the order passed u/s 147 r.w.s 144B on 28/03/2022 is erroneous in so far as the prejudicial to the interest of Revenue and by setting aside the same order, directed the AO to pass a fresh assessment and re-compute the assessee's income after making enquiries with respect to the issue of long term of capital gain of Rs. 32,79,066/- received in the form of accommodat....
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.... u/s 143(3) of the Act and there was no occasion with the AO to examine the issue of long term capital gain claimed by the assessee as exempt u/s 10(38). She further argued that the assessee has filed ITR-2 wherein details of such long term capital gain are not available with respect to every transaction. 6. Ld. CIT-DR further argued that the Assessing Officer has disposed off the objections raised by the assessee with respect to the validity of the initiation of the re-assessment proceedings by way of speaking order, and, therefore, the directions as provided by the Hon'ble Supreme Court in the case of GKN Driveshafts India Ltd. vs. ITO (2002) 125 taxman. con 936 (SC) were complied with by the AO. It is further submitted by the Ld. CIT-DR that in absence of the precise details and further there is a link between the information that long terms capital gain of Rs. 32.79,066/- declared by the assessee and claimed exempt u/s 10(38) of the Act is bogus, therefore, there is live nexus between the information available and the satisfaction recorded and, accordingly, Ld. CIT-DR submit that the case of the assessee was rightly reopened and prayed accordingly. 7. We have heard the ri....
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....oubt that after passing of the original assessment order, the primary (i.e., original proceedings) had come to an end and attained finality and, therefore, outcome of the same cannot be disturbed, and therefore, the original assessment order framed to conclude the primary proceedings had also attained finality and it also cannot be disturbed at the instance of the assessee, except as permitted under the law and by following the due process of law. Under these circumstances, it can be said that effect of the original assessment order can not be erased or modified subsequently. In other words, whatever tax liability had been determined in the original assessment order that had 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 IT Act ? It has been vehemently argued before us that the subsequent proceedings (i.e. col....
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....t : "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." 8.3. This judgment was subsequently followed by Hon'ble Supreme Court in the landmark case of Sushil Kumar Mehta vs. Gobind Ram Bohra, (1990) 1 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 quest ion 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 u....
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....e it did not exist, nor can the lack of jurisdiction be waived. 8.6. These judgments were subsequently noticed by Hon'ble Gujarat High Court in the case of P.V. Doshi vs. CIT (1978) 113 ITR 22 (Guj). This case arose under the IT Act with reference to the provisions of s. 147 dealing with re-assessment. The facts were that the assessment was sought to be reopened under s. 147 and notice under s. 148 was issued. Validity of reopening was not challenged upto Tribunal and additions were challenged on merits only. The Tribunal restored the matter to the AO with some directions to reexamine the issue on merits. When the matter came back to the AO the assessee specifically raised the point of jurisdiction to reopen the assessment, 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 appea....
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....ion and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could never have any finality or conclusiveness. If the original order is without jurisdiction, it would be only a nullity confirmed in further appeals". In this view of the matter, Hon'ble High Court finally answered the reference in favour of the assessee. 8.7. It is further noted that many of these judgments were discussed and followed by the Co-ordinate Bench of the Tribunal in the case of Indian Farmers Fertilizers Co-operative Ltd. vs. Jt. CIT (2007) 107 TTJ (Del) 98 : (2007) 105 ITD 33 (Del), wherein a similar issue had arisen. In this case, the issue raised before the bench was whether 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 under 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....
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....more excruciating fact that needs to be addressed in the instant case is that the learned Principal CIT herein is only seeking to revise the order passed by the learned AO under s. 143(3) r/w s. 147 of the Act dt. 12th Dec., 2018. In the said reassessment proceedings, the learned AO had not even made any addition despite the fact that he had reason to believe that income of Rs. 11,55,330 had escaped assessment in the hands of the assessee which was sought to be taxed under s. 56 of the Act as per the reasons recorded. Hence, when the very basis of reasons recorded by the learned AO was ultimately not added by the learned AO in the reassessment proceedings, then the primary reason to believe that income of the assessee had escaped assessment fails and such re-assessment cannot be treated as a valid order in the eyes of law. The same is to be declared as void ab initio. Reliance in this regard was rightly placed on the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Jet Airways (I) Ltd. (2011) 239 CTR (Bom) 183 : (2011) 52 DTR (Bom) 71 : (2011) 331 ITR 236 (Bom). When an assessment framed by the learned AO is unsustainable in the eyes of law, the said invalid....
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....sessment order from which the said proceedings emerged out was nonest, can be challenged in appellate proceedings against u/s. 263 of the Act. Thus, respectfully following the above decisions of the coordinate benches of the Tribunal, we are of the considered view that in the present appellate proceedings against the order of the ld. Pr. CIT u/s. 263 of the Act, the validity of the order passed u/s. 147/143(3) of the Act can be examined. 8. Now, coming to the issue of validity of reopening u/s 148 of the Act. The reasons recorded before the reopening the assessment are as under: "Subject: Furnishing of reasons for reopening-as requested-reg. Information in this case is available with the AO from credible sources and based on the same the Assessing officer had reason to believe that income chargeable to tax to the tune of Rs. 32,79,066/- had escaped assessment for the A.Y.2013-14 which is given as under: "The assessee Shobhit Goel HUF is one of the beneficiary who had obtained bogus accommodation entry in the form of penny stock of M/s Indian Infotech & software Limited (INDINFO) during the financial year 2012-13. Upon analysis of the findings ....
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....roceedings. It is further noticed by us that some of the judgments relied upon by the learned counsel have already 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 learned Departmental Representative that the proceedings under s. 263 are for the benefit of revenue and not for assessee. 18. However, under s. 263 the learned Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice under 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 some 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 some was leg....