TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1287
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....Smt. Snehlata Agarwal Snehill And (Vice-Versa) And DCIT, Central Circle-01, Jaipur Versus Priya Dewan Aakash Ganga, Sikar And (Vice-Versa) And DCIT, Central Circle-01, Jaipur Versus Sh. Subhash Chandra Banka Aakarshan And (Vice-Versa) And DCIT, Central Circle-01, Jaipur Versus Smt. Usha Banka Aakarshan And (Vice-Versa) And DCIT, Central Circle-01, Jaipur Versus Vipul Banka Industrial Area, Neem Ka Thana, Sikar And (Vice-Versa) And DCIT, Central Circle-01, Jaipur Versus Trilok Dewan Neem Ka Thana, Sikar And (Vice-Versa) And DCIT, Central Circle-01, Jaipur Versus Smt. Sarita Dewan And (Vice-Versa) Dr. S. Seethalakshmi, Jm And Shri Rathod Kamlesh Jayantbhai For The Assessee : Sh. Rajeev Sogani, CA & Sh. Rohan Sogani, CA For The Revenue : Smt. Runi Pal, CIT (Th. VC) ORDER PER BENCH: The present bunch of appeals were filed by the revenue and cross objections to those appeals so filed by the revenue were preferred by the assessee. Since the issue raised by the revenue and that of the assessee are similar in all the assessee, we have heard these bunch together with the consent of parties. 2. As agreed by the parties the lead case of revenue is considered in ITA no. 301/JP/2025 a....
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.... Source during the year under consideration. Consequent to search action, notice u/s. 153A of the Act was issued to the assessee on 04-03-2021 which was duly served. In response to a notice issued u/s 153A, the assessee furnished Return of Income on 24-03-2021 declaring total income of Rs. 31,63,250/-. Earlier the assessee had filed his regular return u/s 139 of the Act on 14-10-2016 declaring total income of Rs. 31,63,250/-, Hence, there is no additional income disclosed by the assessee in the Return of Income filed u/s 153A of the Act. Thereafter notice u/s 143(2) of Act was issued on 25-06-2021 which was duly served. Further notice u/s 142(1) of the Act was issued on 11-08-2021 and certain details/explanations were called for. In response to these notices, the assessee submitted requisite details/explanation, which have been examined. 6. While search and seizure action u/s. 132 of the Act 1961 in the case of various persons of Dewan Group, various bunch of documents and loose papers related to shares were found and seized. These documents/loose papers were seized from the residence of Shri Raj Kumar Agarwal, Snehil, Venus Colony, Shahpura Road, Neem Ka Thana, Sikar as per Anne....
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....or 10000 shares of 'ANAX COM TRADE LIMITED' for the value of Rs. 1,00,000/- and was allowed. That the purchase was made through cheque no. 16042 issued on 1.10.2012 and the same amount has been deducted from the bank account on 17.10.2012 when the shares were allotted to the assessee. The fact that share of ANAX COM was split into ten shares each, therefore, the assessee had 100000 shares. Eventually 'ANAX COM' amalgamated into Yamini Investments and the assessee was allotted 80000 shares of Yamini Yamini Investments'. That merger process was approved by Hon'ble Bombay High Court vide order dated 9.05.2014. This fact confirms that the company is not bogus and the investment of the assessee in the company was genuine. The assessee sold the above referred shares through SEBI registered broker, B. Lodha Securities Ltd., vide their bill no. V78/BB095 dt. 13.08.2015, bill no. V78/BB096 dt. 14.08.2015, bill no. V78/BB097 dt. 17.08.2015, bill no. V78/BB100 dt. 20.08.2015, bill no. V78/BB109 dt. 02.09.2015, and bill no. V78/BB110 dt. 03.09.2015. Copies of bills were placed on record. Based on the facts, evidence and considering the fact the assessee hold the shares ....
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....report. The contentions/submissions of the appellant are being discussed and decided as under:- The brief facts of the case on the issue as per the assessment order that a Search and Seizure operation under section 132(1) of the Income Tax Act, 1961 was carried out on 13.06.2019 at the various premises of Dewan Group. Assessment in the case of assessee was completed u/s 153A of the I.T. Act, 1961 on 21.09.2021 and from the perusal of the assessment order it is seen that the following additions have been made:- (i) Addition on account of bogus Long Term Capital Gain claimed by the assessee of Rs. 40,15,061.29/- (ii) Addition on account of commission expenses of Rs. 2,05,753/- for obtaining accommodation entry @ 5% of Sale consideration In the appeal in this ground the appellant has challenged the addition on the technical ground that regarding the addition made in the assessment order no incriminating material was unearthed during the course of search and seizure action on the appellant i.e. the addition has been made without the basis / source of incriminating material unearthed from the search action of the appellant. The appellant has contended that the assessee, for ....
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....essment order that these documents were found from the search and seizure action on the appellant. In response to the contention of the appellant that no incriminating material was unearthed during the course of search and seizure action, a letter was issued to the learned AO requesting, on the addition made in the assessment order, for the copy of the incriminating material unearthed during the course of search and seizure action of the appellant. The learned AO has provided the copies of documents. In the remand report whereby the incriminating material seized from the search on appellant have been provided these above referred documents are not forming part of annexed documents. The Id. AO has provided the documents of Exhibit No.-16 (Party A-3) (i) Copy of transaction statement maintained with Stock Holding Corporation of India Page No.1 to 15 (ii) Copy of bills issued by B. Lodha Securities Ltd Page No. 16 to 18 (iii) Copy of Contract Note cum bill issued by M/s Vishal Vijay Shah Page No. 19 to 20 (iv) Copy of bills issued by B. Lodha Securities Ltd Page No.21 (v) Copy of bill issued by Artline Vinimay Pvt. Ltd. Page No.22 (vi) Copy of bills issued by B. Lodha Securities Ltd....
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....having been unearthed in the nature of new information during the course of search and seizure action of the appellant as the documents are in the nature of already on record of the relevant authorities and supporting's of disclosed transactions. These documents pertain to the "form" of the transaction. The addition has been made by arriving at the "substance" of the transaction arrived at on the basis of material other than the material unearthed from the search action on the appellant. In the assessment order, with respect to the second addition, the addition has been made with respect to the commission for obtaining accommodation entry and such addition is consequential in nature and is based on the same material on which the primary addition has been made and which has been discussed in the earlier paragraphs. Thus this addition is also found to be have been made without the basis of with the incriminating material from the search action of the appellant. On the date of Search i.e. 13.06.2019, the assessment for the year under appeal was not pending as there is no reference in this regard neither in the assessment order nor in the submission of the appellant; also in remand....
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....ents under section 153-C of the Act are rightly set aside by the High Court. However, Shri N Venkataraman, leamed ASG appearing on behalf of the Revenue, taking the clue from some of the observations made by this Court in the recent decision in the case of Pr. CIT v. AbhisarBuildwell (P) Ltd. [2023] 149 taxmann.com 399 (SC), more particularly, paragraphs 11 and 13, has prayed to observe that the Revenue may be permitted to initiate re-assessment proceedings under section 147/148 of the Act as in the aforesaid decision, the powers of the re-assessment of the Revenue even in case of the block assessment under section 153-A of the Act have been saved. .................... 3. However, so far as the prayer made on behalf of the Revenue to permit them to initiate the reassessment proceedings is concerned, it is observed that it will be open for the Revenue to initiate the re-assessment proceedings in accordance with law and if it is permissible under the law. In para 11 of the order in case of Principal Commissioner of Income-tax, Central-3 v AbhisarBuildwell (P.) Ltd. (Supra), the Hon'ble Supreme Court inter-alia has held as under:- "11. However, in case during the search no....
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....e case of Pr.CIT (Central-3) v/s AbhisarBuildwell Pvt. Ltd. (Civil Appeal No. 6580 of 2021)-Instruction regarding". The learned assessing officer is directed to implement the law and ratio of the judgement of Abhisar Buildwell (supra) and the said Instruction No. 1 of 2023 dated 23-08-2023 and section 150 of the Act, in the case of the appellant appropriately as per the facts of the case and as per above findings. Accordingly this ground of appeal is adjudicated in above terms. For statistical purposes this ground is hereby treated as allowed. 6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In the earlier part of this order it has already been held that the additions done by the learned assessing officer in the assessment order is not sustainable on the technical ground that the addition is not based on any incriminating material unearthed during the search and seizure action on the appellant. Since the additions do not survive on technical ground, t....
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....61 ("the Act") on 14.10.2016, declaring a total income of Rs. 31,63,250. II. A search operation under Section 132 of the Act was conducted on 13.06.2019 in the case of Dewan Group. As the assessee is associated with the Dewan Group, a simultaneous search was also carried out at his premises. However, no incriminating material of any nature was found or seized during the course of the search. III. Subsequently, the ld. Assessing Officer (AO) issued a notice under Section 153A of the Act on 04.03.2021, in response to which the assessee once again filed his return of income declaring Rs. 31,63,250. The assessment was completed under Section 153A vide order dated 21.09.2021, determining the total income at Rs. 73,84,060. This resulted in an addition of Rs. 42,20,814, which included: a. Disallowance of long-term capital gains exemption of Rs. 40,15,061.29 by treating the sale of listed equity shares as a bogus transaction; and b. Addition of Rs. 2,05,753 (being 5% of Rs. 40,15,061.29) towards alleged undisclosed expenditure under Section 69C on account of commission purportedly paid to obtain such capital gains. IV. Aggrieved by the assessment order, the assessee preferred an ....
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....279/Misc./M-54/2023-ITJ on the subject "Implementation of the judgment of the Hon'ble Supreme Court in the case of Pr.CIT (Central-3) v/s AbhisarBuildwell Pvt. Ltd. (Civil Appeal No. 6580 of 2021)-Instruction regarding". The learned assessing officer is directed to implement the law and ratio of the judgement of AbhisarBuildwell (supra) and the said Instruction No. 1 of 2023 dated 23-08-2023 and section 150 of the Act, in the case of the appellant appropriately as per the facts of the case and as per above findings. Accordingly this ground of appeal is adjudicated in above terms. For statistical purposes this ground is hereby treated as allowed" [Emphasis Supplied] 1.2. The assessee respectfully submits that while the ld. CIT(A) correctly deleted the impugned addition under Section 153A (due to lack of incriminating material), however, the ld. CIT(A) gravely erred in issuing direction to initiate reassessment proceedings under Section 147/148, invoking Section 150 and relying on CBDT Instruction No. 1/2023, exceeding his statutory appellate jurisdiction under Sections 250/251 of the Act and accordingly, these directions are legally non-est and ought to be expunged/ quashed. ....
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....s 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved." * Hon'ble Supreme Court in the case of DCIT v. U.K. Paints (Overseas) Ltd. (supra) (CLC 30-31) vide judgment dated 25.04.2023 dismissed the SLP in light of judgment in the case of Abhisar Buildwell and held as under: "However, so far as the prayer made on behalf of the Revenue to permit them to initiate the reassessment proceedings is concerned, it is observed that it will be open for the revenue to initiate the reassessment proceedings in accordance with law and if permissible under the law." 2.2.ii. It is crucial to highlight that the observations made by the Hon'ble Supreme Court in the landmark decisions of PCIT v. Abhisar Buildwell Pvt. Ltd. (supra) and DCIT v. U.K. Paints (Overseas) Ltd. (supra), recognizing the possibility for Assessing Officers to initiate reassessment proceedings under Sections 147/148 in cases where additions under Section 153A/153C were struck down for absence of incriminating material, were expressly qualified by the Hon'ble Apex Court. 2.2.iii. The Court clearly and explicitly emphasized t....
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....pulated in section 147-151 of the Act as is in force now." 2.3.ii. The Hon'ble Supreme Court vide its order dated 12.05.2023 titled as PCIT v. Abhisar Buildwell Pvt. Ltd. [2023] 294 Taxman 70 (SC) (CLC 32-34) dismissed the Revenue's Misc. Application by observing as under: "2. Having gone through the averments made in the application and the prayers, we are of the opinion that the prayers sought can be said to be in the form of review which requires detail consideration at length looking into the importance of the matter. Therefore, the present application in the form of clarification is not entertained and we relegate the Revenue to file an appropriate review application for the relief sought in the present application and as and when such review application is filed the same can be heard in the open court. 3. In view of the above and without further entering into the merits of the application and/or expressing anything on merits on the prayers sought in the present application, the present application is not entertained and we relegate the Revenue to file an appropriate review application seeking the reliefs which are sought in the present application and as and when such ....
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....IT(A). 2.4.iv. The Instruction cannot substitute the independent statutory preconditions under Sections 147/148 read with Section 149, which provides the timelines for issuance of notice of reopening. Provision of such section must be satisfied by the ld. AO at any given point of time, when the jurisdiction is assumed for reopening a particular assessment year. 2.5. OBSERVATIONS OF THE HON'BLE SUPREME COURT DO NOT CONSTITUTE A "FINDINGS / DIRECTION" 2.5.i. It is respectfully submitted that the Hon'ble Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd. (Supra) (CLC 01-29) and DCIT v. U.K. Paints (Overseas) Ltd. (Supra) (CLC 30-31) did not provide any specific finding / direction, as was wrongly interpreted by ld. CBDT in the Instruction and thereafter taken cognizance by the ld. CIT(A) in the present case. 2.5.ii. These rulings clarify the permissible legal framework under which reassessment proceedings may be initiated by the Assessing Officer, subject to fulfilment of statutory conditions under Sections 147/148 read with Section 150. 2.5.iii. At no point, do these judgments direct or authorize any appellate authority, including the ld. CIT(A), to issue a specific direc....
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....he words relied upon are "section limiting the time", "any person", "in consequence of or to give effect to any finding or direction". Pointing out that before the amendment the word "sub section" was in the proviso but it was replaced by the expression "section", it is contended that this particular amendment will be otiose if it is confined to the assessment year under appeal, for it is said that under no circumstances the Income tax Officer would have to initiate proceedings for the said year pursuant to an order made by an Appellate Assistant Commissioner. This contention is obviously untenable. The Appellate Assistant Commissioner or the Appellate Tribunal may set aside the notice itself for one reason or other and in that event the Income-tax Officer may have to initiate the proceedings once again in which case Section 34(1) will be attracted. The expression "finding or direction", the argument proceeds, is wide enough to take in at any rate a finding that is necessary to dispose of the appeal or directions which Appellate Assistant Commissioners have in practice been issuing in respect of assessments of the years other than those before them in appeal. What does the expres....
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....h were incidental to it. With respect, this interpretation also is inconsistent with the well-known meaning of that expression in the legal terminology. Indeed, learned counsel for the respondent himself will not go so far, for he concedes that the expression "finding" cannot be any incidental finding, but says that it must be a conclusion on a material question necessary for the disposal of the appeal, though it need not necessarily conclude the appeal. This concession does not materially differ from the definition we have given, but the difference lies in the application of that definition to the finding given in the present case. A "finding", therefore, can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner may hold, on the evidence, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the dis....
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.... while courts may, where legally permissible, consider condonation of delay, they are not entitled to expand or enlarge a period of limitation as statutorily prescribed." [Emphasis Supplied] 2.5.viii. Accordingly, observation made by the Hon'ble Supreme Court in the case of PCIT v. Abhisar Buildwell Pvt. Ltd. (supra) and DCIT v. U.K. Paints (Overseas) Ltd. (supra) cannot possibly be read or construed as a carte blanche enabling the Income Tax Department to overcome and override the restrictions that otherwise provided in Section 149 of the Act. In every case, the ld. AO must satisfy the jurisdictional preconditions, which remain subject to judicial scrutiny. The Hon'ble Supreme Court merely observed that reassessment may be initiated in accordance with the law. 2.5.ix. Hon'ble Delhi High Court in ARN Infrastructures India Ltd. v. ACIT [2024] 469 ITR 333 (Delhi) (CLC 65-110) under identical facts has held that the Hon'ble Supreme Court's decision in Abhisar Buildwell (supra) does not grant the Revenue an unrestrained right to reassess. While search assessments being annulled does not preclude reassessment, any such action must comply with statutory provisions, particularly ....
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....s 147 and 148 of the Act. 52. The respondents despite the clear enunciation of the legal position with respect to search assessments in terms of our judgements in Kabul Chawla (supra), RRJ Securities (supra) and a host of others that followed neither chose to initiate any remedial action nor did they adopt a course correction. Nothing fettered the right of the respondents to commence reassessment if they were of the opinion that, notwithstanding absence of incriminating material, escapement of income had occurred. It was open for the respondents to establish that an action for reassessment was warranted independently and irrespective of no adverse material having been found in the course of a search. We thus find ourselves unable to hold in their favour. Consequently, and for all the aforesaid reasons, we find ourselves unable to sustain the reassessment action." 2.5.x. This judgment's ratio has been explicitly reiterated and followed by the Delhi High Court in subsequent judgments, notably: * Naveen Narang HUF v. ACIT, W.P.(C) 5055/2025, dt 22.05.2025. * Mansi Narang v. ACIT, W.P.(C) 3678/2025, dt.15.05.2025. * Meera Gupta v. ACIT, W.P.(C) 5780 & 5781/2025, dt 02.05.....
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....fferent year or under a different provision. 2.6.iii. The appellate jurisdiction is thus limited to the assessment year in question and matters arising from the assessment order. By directing the ld. AO to commence reassessment proceedings (whether for the same year under a different section, or for any other year), the CIT(A) ventured beyond the scope of the appeal and beyond his powers vested under Section 251. 2.6.iv. The jurisdiction and powers of the CIT(A) are explicitly defined and strictly governed by the provisions of Section 251 of the Act. Historically, prior to the year 2001, the CIT(A) possessed powers to set aside an assessment and remit the matter back to the Assessing Officer in certain specified cases. However, with effect from 01.06.2001, the legislature explicitly removed these powers of set-aside from the CIT(A), mandating that appellate authorities adjudicate matters conclusively without remitting them back for fresh consideration. Significantly, a partial restoration of the set-aside power was introduced again vide Finance Act (No.2),2024 w.e.f. 01.10.2024, but strictly limited to cases where assessments are made by the AO under Section 144 (i.e. only limi....
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.... rightfully found it was not (for want of incriminating material) and deleted it. At that point, ld. CIT(A)'s authority ended. Ld. CIT(A) should have simply allowed the appeal on that issue. By proceeding to direct the AO to consider re-opening under Section 147, the ld. CIT(A) acted ultra vires. This extraneous direction was not part of adjudicating the appeal but an attempt to influence future proceedings, which is beyond the scope of Section 250. 2.6.x. The power to issue directions in the manner exercised by the ld. CIT(A) in the present case is clearly unwarranted and impermissible under the scheme of Act. If such power to issue binding directions for reassessment proceedings under Sections 147/148 read with Section 150 were to be vested in the hands of the CIT(A), it would lead to a situation where, irrespective of statutory time limits prescribed under Section 149, the ld. AO could indefinitely reopen completed assessments. 2.6.xi. In other words, any jurisdictional error committed by an AO in issuing a notice under a wrong section or due to incorrect invocation of powers could not be subsequently rectified through a direction from the ld. CIT(A) at any future point in t....
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....it and substituted his judgment for that of the ld. AO with respect to the necessity of reopening. This is not permitted. 2.7.iv. In the present case, the ld. CIT(A)'s action is akin to an improper suo-motu revision of the assessment order - effectively advising the AO on how to "fix" a perceived lapse (the addition not made under the correct procedure) by starting a new proceeding. This encroaches on the statutory scheme. If the Revenue believed that income had escaped assessment because the addition was knocked out on technical grounds, the proper course was for the AO/Department to independently evaluate the conditions of Section 147 and act if legally permissible. 2.7.v. The ld. CIT(A) stepping in to dictate this course compromises the AO's independent satisfaction and creates a procedural irregularity. The ld. AO might feel bound and even compelled by the appellate order to issue a notice, even if his own reason to believe is marginal - thus the CIT(A) direction could prejudge or bias a matter that the law leaves to the AO's jurisdiction. 2.7.vi. In sum, the CIT(A) cannot don the mantle (to take role) of the ld. AO. His powers are appellate (judicial), not investigative ....
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....sued by the ld. CIT(A) to initiate reassessment proceedings under Section 147/148 of the Act-by invoking Section 150 and relying on CBDT Instruction No. 1/2023- is ex-facie without jurisdiction, contrary to binding judicial precedent, and violative of the appellate framework under Sections 250/251 of the Act. 4. It is therefore humbly prayed that this Hon'ble Tribunal, in exercise of its plenary powers under Section 254, be pleased to expunge/quash the said direction from the appellate order dated 31.12.2024, and thereby uphold the relief granted to the assessee without permitting any overreach or illegal consequence to flow from an otherwise just appellate decision. 11. To support the contention so raised in the written submission reliance was placed on the following decisions: S. No. Particulars Page No. 1. Copy of the order of Hon'ble Supreme Court in the case of PCIT v. Abhisar Buildwell Pvt. Ltd., (2023) 454 ITR 212 (SC) 1-29 2. Copy of the order of Hon'ble Supreme Court in the case of DCIT v. U.K. Paints (Overseas) Ltd., (2023) 454 ITR 441 (SC) 30-31 3. Copy of the Rejection Order dated 12.05.2023 in Miscellaneous Application No. 680 of 2023 filed by Rev....
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.... account of commission expenses of Rs. 2,05,753/- for obtaining accommodation entry @ 5% of Sale consideration The assessee challenged that action of the ld. AO making the above addition which is already declared in the original return of income which was based on the set of facts has already been considered. The assessee contended that the addition made while making the assessment has no reference to any incriminating material unearthed while search and seizure action on the appellant and therefore, the addition has been made without the basis / source of incriminating material unearthed from the search action. The bench noted that the assessee has supported the transaction by stating that there was no ban in purchasing & selling shares of 'Anax.com' / 'Yamini Investments' at the time when the assessee entered in purchases & sales transactions. The assessee submitted that on 1.10.2012, the assessee applied for 10000 shares of 'ANAX COM TRADE LIMITED' for the value of Rs. 1,00,000/- and was allowed. That the purchase was made through cheque no. 16042 issued on 1.10.2012 and the same amount has been debited to his bank account on 17.10.2012 when the shares ....
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....cord also reveals that ld. AO in the assessment order, not proved that the evidence that has been relied upon were forged nor contrary to the ITR already filed. Going further in the search revenue did not place on record to suggest taking of accommodation entry or bogus capital gains and thereby the evidence on it. In the assessment order also these documents have not formed the basis of reasoning of arriving at the finding that the LTCG is bogus based on the evidence found in search. Such conclusion has been arrived at based on other material as discussed in the order of the ld. AO. Be that it may the bench also noted that the case of the assessee was subjected to the assessment pursuant to search and the notice u/s. 153A of the Act was issued to the assessee. Thus, as it is settled that in the proceeding-initiated u/s. 153A addition can only be made qua incriminating material. The bench noted that the document which are placed on record cannot be considered as incriminating and there is no other material placed on record having the nature of incriminating documents which were unearthed during the course of search and seizure action. Thus, these documents which were already avail....
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....nder section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/ment....
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....nsidering that set of facts and following the judicial precedence we do not find any infirmity in the finding of the ld. CIT(A) in directing the ld. AO to delete the addition of Rs. 40,15,061/- made by the Assessing Officer disallowing the exemption of Long-Term Capital Gains on account of unexplained credits u/s 68 of the Act based on these observations ground no. 1 raised by the revenue is dismissed. Since we have confirmed the action of the ld. CIT(A) in directing the deletion of addition vide ground no. 1 the ground no. 2 being consequential to ground no. 1 the addition of alleged commission is also rightly directed to be deleted by the ld. CIT(A) and therefore, ground no. 2 raised by the revenue also failed based on that observation. In the result the appeal filed by the revenue in ITA No. 301/JP/2025 stands dismissed. 13. Now coming to the cross objection filed by the assessee against the appeal filed by the revenue. As the appeal of the assessee was allowed by the ld. CIT(A) on technical ground but while allowing that appeal of the assessee on technical ground he directed the ld. AO to implement judgment of Hon'ble Supreme Court in the case of Abhisar Buildwell 2023 149 t....
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....e Act, in the case of the appellant appropriately as per the facts of the case and as per above findings. Accordingly this ground of appeal is adjudicated in above terms. For statistical purposes this ground is hereby treated as allowed" [Emphasis Supplied] Before us the ld. AR of the assessee submitted that the appeal of the assessee has decided considering the two landmark judgment of apex court in the case of Abhishar Buildwell and U. K. Paints. Thus, the issue before us is to be decided considering the following records placed on record: 1. Decision of the apex court in the case of Abhisar Buildwell & U. K. Paints. 2. Miscellaneous Application filed by Revenue before the apex court 3. CBDT's Instruction No. 1 of 2023 dated 23-08-2023 As is evident the cross objection of the assessee hinges on the provision of section 150, 251, Miscellaneous application filed by the revenue before the apex court and CBDT's instructions. The provision of section 150 deals as under : Provision for cases where assessment is in pursuance of an order on appeal, etc. 150. (1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for th....
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....ary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit.] (2) The 72[Joint Commissioner (Appeals) or the] Commissioner (Appeals) 72[, as the case may be,] shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation.-In disposing of an appeal, the 72[Joint Commissioner (Appeals) or the] Commissioner (Appeals), may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the 72[Joint Commissioner (Appeals) or the] Commissioner (Appeals) 72[, as the case may be,] by the appellant. The law is settled by the decision of the apex court in the case of Abhishar Buildwell and U. K. Paints and the revenue's Miscellaneous application was disposed off by observing as under 4.1.i. Against the judgment dated 24.04.2023 passed by the Hon'ble Supreme Court in Abhisar Buildwell Pvt. Ltd. (supra) the revenue filed Misc. Application before the Hon'ble Supreme Court on 26.0....
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.... entertained and we relegate the Revenue to file an appropriate review application seeking the reliefs which are sought in the present application and as and when such review application is filed the same be heard and decided and disposed of in the open court. At the cost of repetition, we observe that as we have not entered into the merits of the present application and we relegate the Revenue to file an appropriate review application, the review application be decided and disposed of in accordance with law and on its own merits." 4.1.iii. Following the dismissal of the Revenue's Miscellaneous Application in PCIT v. Abhisar Buildwell Pvt. Ltd. (supra), wherein the Hon'ble Supreme Court expressly relegated the Department to file a formal review petition-no such review was pursued. Instead, the CBDT issued Instruction No. 1/2023 dated 23.08.2023, which provided internal guidance to Assessing Officers regarding the course of action in cases where assessments under Section 153A/153C have failed due to lack of incriminating material. 4.1.iv. The instruction outlines procedural steps for invoking reassessment under Sections 147/148 read with Section 150. However, the nature, scope....
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.... by reason of the reference to the said provisions the powers and jurisdiction conferred on the respective authorities, tribunals or courts referred to therein were enlarged or modified by a reference in the proviso or that the proviso could be read or construed as amending those sections conferring on those bodies wider or different powers or jurisdiction. Learned counsel for the department expressly disclaimed any such submission. Therefore, the scope of the proviso cannot ordinarily exceed the scope of the jurisdiction conferred on an authority under the said provisions." We also take note that the apex court has dealt with the provision of section 150 i.e. Provision for cases where assessment is in pursuance of an order on appeal and section 149 i.e. Time limit for notices undersection 148 of the Act. While dealing with that provision the apex court in the case of K. M. Sharma Vs. Income Tax Officer [122 Taxmann 426 (SC) ] while dealing with the judgment of the land revenue case and thereby the reopening of the case has in detailed analysis the provision for cases where assessment is in pursuance of an order of an appeal and time limit. The relevant finding is reproduced in fu....
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..... 6. The appellant, in the High Court, assailed the notices issued under section 148 for reassessment for the assessment years 1968-69 to 1971-72 and for the year 1982-83 on the ground that the proposed reassessment for those assessment years had already become barred by time under section 149 of the Act, for which in the relevant periods maximum period of four years or seven years limitation was prescribed depending upon the quantum of liability towards tax. 7. The High Court by the impugned judgment accepted the contention of the department that the provisions of section 150(1) of the Act, as amended with effect from 1-4-1989, could be resorted to for reassessment to levy tax on the increased amount of interest earned by the appellant in the relevant assessment years. It was held that bar of limitation prescribed under section 149 of the Act was not attracted by virtue of the provisions of section 150(1) because notices for such reassessments are based on the awards passed in the land acquisition proceedings by the Court of the Additional District Judge on a reference under section 18 of the Land Acquisition Act. Upholding the validity of the assessment proceedings initiated ....
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....0 would not be available to the department where the period of limitation for such assessment or reassessment has expired at the time it is proposed to be reopened. In sub-section (1) of section 150, by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989, the words 'or by a Court in any proceeding under any other law' were inserted which are shown in bracket with underline in the section reproduced above. 10. The main question that has been raised on behalf of the learned counsels appearing for the parties is whether the provisions of sub-section (1) of section 150 as amended can be availed for reopening assessments, which have attained finality and could not be reopened due to bar of limitation, that was attracted at the relevant time to the proposed reassessment proceedings under the provisions of section 149. 11. The submission made on behalf of the appellant is that neither the provisions of sub-section (1) nor sub-section (2) can be read as giving more than intended operation to the said provision. The provisions, it is argued, do not permit the authorities to reopen assessments, which have become final and reassessment of which had become barred by....
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....reliance has been placed on the provisions contained in sub-section (2) of section 150. It is submitted that the provision contained in sub-section (2) of section 150 is in the nature of clarification or Explanation to sub-section (1). Sub-section (2) makes it clear that the embargo of period of limitation lifted under sub-section (1) for proposed reassessments based on order in proceedings under appeal, reference or revision, as the case may be, would not apply to assessments which have attained finality due to bar of limitation applicable at the relevant time. 16. The High Court rejected the above contention of the assessee on the ground that on the amendment introduced with effect from 1-4-1989 in sub-section (1), which enables reopening of assessment based on any order of 'Court in any proceedings in any law', there is no corresponding amendment made in subsection (2) of section 150 to bar reassessment based on order of court passed in any proceedings in any law in cases where prescribed period of limitation for reassessment had already expired. 17. We do not find that the above reasoning of the High Court is sound. The plain language of sub-section (2) of section 1....
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....eration of the bar of limitation under section 149. 19. This Court took similar view in the case of S.S. Gadgil (supra) in somewhat comparable situation arising from the retrospective operation given to section 34(1) of the Indian Income-tax Act, 1922 as amended with retrospective effect from 1-4-1956 by the Finance Act, 1956. In the case of S.S. Gadgil (supra) admittedly under clause (iii) of the proviso to section 34(I), as it then stood, a notice of assessment or reassessment could not be issued against a person deemed to be an agent of a non-resident under section 43, after the expiry of one year from the end of the year of assessment. The section was amended by section 18 of the Finance Act, 1956, extending this period of limitation to two years from the end of the assessment year. The amendment was given retrospective effect from 1-4-1956. On 12-3-1957, the ITO issued a notice calling upon the assessee to show cause as to why, in respect of the assessment year 1954-55, the assessee should not be treated as an agent under section 43 in respect of certain non-residents. The case of the assessee, inter alia, was that the proposed action was barred by limitation as right to com....
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....1968-69 to 1971-72 and 1981-82 are hereby quashed. The appeal stands allowed with costs. The above view is also get support by a decision of Nagpur Bench of this ITAT in the case of M B Traders Vs. ACIT [ 132 TTJ 490 ] wherein the coordinate bench held that ; 9. After an in-depth study of the entire case record, on a patient hearing of both the sides and after reading the case law cited at length, our observations and findings on the matter are as follows. Before giving our observation and finding, it has been deemed proper to quote ss. 150 and 151 as it is, as under : "150. (1) Notwithstanding anything contained in s. 149 the notice under s. 148 may be issued at any time of the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. (2) The provisions of sub-s. (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of wh....
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....igher authorities and that of the appellate authorities must be acted upon by the AO with utter satisfaction. Taking initiation of reassessment proceeding without satisfaction of the AO, simply on the basis of the blanket direction, will not justify the action of initiation of reopening proceeding. In this particular case as has been rightly pointed out by the learned Authorised Representative from p. 13 of the paper book filed, the AO has simply acted upon, i.e., initiated reopening proceeding on the basis of the direction of the CIT(A) and has totally ignored his part of the job i.e., his satisfaction, as is evident from p. 13 of the paper book filed by the learned counsel which is quoted below for better appraisal of facts : "Assessee filed the return of income of Rs. 39,720 on 25th Jan, 1993. Assessment under s. 143(3) was completed on a total income of Rs. 15,55,579 on 29th March, 1996 making addition of Rs. 15,15,859. The order under s. 143(3) was contested before CIT(A) who cancelled the order of the AO and directed as under : 'It is held that assessment proceedings are bad in law and hence cancelled. The AO should take remedial action under s. 147 or any other pro....
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.... so. Section 149 prescribes the time limit for the notice. The time limit in a case not falling under clause (ii) of sub-section (1) of section 149, with which we are not concerned, shall be eight years from the end of the relevant assessment year. In cases falling under clause (b) of section 147, however, the time limit for the notice is four years from the end of the relevant assessment year. Clause (a) of section 147 of the Act of 1961 corresponds to clause (a) of sub-section (1) of section 34 of the Act of 1922. The language of clause (a) of section 147 read with sections 148 and 149 of the Act of 1961 as also the corresponding provisions of the Act of 1922 makes it plain that two conditions have to be satisfied before the Income-tax Officer acquires jurisdiction to issue notice under section 148 in respect of an assessment beyond the period of four years but within a period of eight years from the end of the relevant year, viz., (i) the Income-tax Officer must have reason to believe that income chargeable to tax has escaped assessment, and (ii) he must have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assesse....
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....r otherwise, the assessing authority has to draw inference as regards certain other facts; and ultimately from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable: See Calcutta Discount Co. v. Income-tax Officer [1961] 41 ITR 191, 201 (SC). As further observed in that case: "Does the duty, however, extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative, Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else-far less the assessee-to tell the assessing authority what inferences, whether of facts or law, should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences-whether of facts or l....
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.... upon the written down value of the various capital assets as obtaining in the records of the department. This stand has not been controverted. When an Income-tax Officer relies upon his own records for determining the amount of depreciation and makes a mistake in doing so, we fail to understand as to how responsibility for that mistake can be ascribed to an omission or failure on the part of the assessee. It also cannot be disputed that initial depreciation in respect of items of capital assets in the shape of new machinery, plant and building installed or erected after the 31st day of March, 1945, and before the 1st day of April, 1956, is normally claimed and allowed. It seems that the Income-tax Officer in working the figures of depreciation for certain items of capital assets lost sight of the fact that the aggregate of the depreciation, including the initial depreciation, allowed under different heads could not exceed the original cost to the assessee of those items of capital assets. The appellant cannot be held liable because of this remissness on the part of the Income-tax Officer in not applying the law contained in clause (c) of the proviso to section 10(2)(vi) of the Act....
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....t the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. So far as the income-tax assessment orders are concerned, they cannot be reopened on the score of income escaping assessment under section 147 of the Act of 1961 after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. As already mentioned, this cannot be said in the present case. The appeal is consequently allowed, the judgment of the High Court is set aside and the impugned notices are quashed." Thus, what is not permitted directly cannot be permitted indirectly and therefore, the ld. CIT(A) cannot broaden the scope of the appeal decision to "advise" or "compel" another round of litigation again and again and as held by the apex court that we have to bear in mind that the policy of law....