The DCIT, Central Circle-2(4), Ahmedabad V. Shri Hiralal Dayaram Thakkar, Ahmedabad

ITA 167/AHD/2021

AI Insights

This case involves an appeal by the Revenue against the order passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad, which was related to the assessment order for the year 2009-10. The primary contention was regarding the validity of the Revision order passed under section 263 of the Income Tax Act, 1961. The Tribunal referenced a previous decision where it was held that the Revision order was quashed due to the absence of incriminating material found during the search. Both parties agreed that the current Revision order had no basis following the Tribunal's earlier decision in a related case. Consequently, the Tribunal dismissed the Revenue's appeal, affirming that the Revision order was a nullity in law.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114221 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-02-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 23-06-2021
• Other Referred Cases: Pr.CIT Vs. Saumya Construction P. Ltd., Jayaben Ratilal Sorathia vs. Commissioner of Wealth-tax, CIT Vs. Murli Agro Products Ltd., N.K. Roadways P.Ltd. v. Income-tax Officer (OSD), Sirpur Paper Mill Ltd. -Vs- Commissioner of Wealth-tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 132; 143(3); 80HHC; 153A; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member DCIT, Central Circle- 2(4), Ahmedabad (Appellant) Vs Shri Hiralal Dayaram Thakkar, B/12, Shreejibapa Complex, Vasna, Ahmedabad- 380007 PAN: AANPT3721E (Respondent) Assessee Represented : Shri Nishit B Jasur, A.R. Revenue Represented : Shri A.P. Singh, CIT Date of hearing : 07-02-2023 Date of pronouncement : 10-02-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against the Appellate order dated 09.04.2021 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad as against the Assessment order passed under section 143(3) r.w.s. 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2009-10. ITA No. 167/Ahd/2021 Assessment Year 2009-10 I.T.A No. 167/Ahd/2021 A.Y. 2009-10 Page No DCIT vs. Shri Hiralal Dayaram Thakkar 2 2. At the outset, it has been agreed by both the parties that the Revision order dated 28.03.2018 passed by the Ld. PCIT (Central), Ahmedabad for the Assessment Year 2009-10 was quashed by this Tribunal in ITA Nos. 1072 & 1073/Ahd/2018 vide order dated 07.07.2022. Thus the present giving effect order has no legs to stand, therefore liable to be dismissed in limine. Ld. Counsel for the assessee placed a copy of the above decision for our perusal. 3. We have perused the materials on record as well as the decision of the Co-ordinate Bench of this Tribunal wherein it has been held as follows: 8.1. We have given our thoughtful consideration to the facts of the case; perused material available on record and the Paper Book filed by the assessee. It is not disputed that in the Asst. Year 2009-10, assessment was completed under section 143(3) read with section 153A of the Act which was subject matter of appeal before the ld.CIT(A). After verifying the details, the ld.CIT(A) deleted additions made by the AO on the ground that no seized material was found during the course of search relating to the assessee. This issue is no more res integra as the Hon’ble jurisdictional High Court in the case of Pr.CIT Vs. Saumya Construction P. Ltd., 81 taxmann.com 292 (Guj) has held as follows: “18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. I.T.A No. 167/Ahd/2021 A.Y. 2009-10 Page No DCIT vs. Shri Hiralal Dayaram Thakkar 3 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 8.2. Respectfully following the above judgment of the jurisdictional High Court, we find that assessment order dated 30.3.2016 passed u/s.153A is confined only to the Returned Income, in other words, original assessment order is reiterated. As against this assessment order, the ld.Pr.CIT could not initiate revision proceedings under section 263 of the Act on the ground that order passed by the AO is erroneous and prejudicial to the interest of the Revenue since the basic assessment itself is invalid in law. This view is supported by Hon’ble Bombay High Court in the case of CIT Vs. Murli Agro Products Ltd., 49 taxmann.com 172 (Bom). The relevant paras of the judgment read as follows: “12. Once it is held that the assessment finalized on 29.12.2000 has attained finality, then the deduction allowed under section 80 HHC of the Income-tax Act as well as the loss computed under the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143(3) of the IT. Act could not have disturbed the assessment/ reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. 13. In the present case, there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings which would show that the relief under Section 80HHC was erroneous. In such a case, the A.O. while passing the assessment order under Section 153A read with Section 143(3) could not have disturbed the assessment order finalised on 29.12.2000 relating to Section 80HHC deduction and I.T.A No. 167/Ahd/2021 A.Y. 2009-10 Page No DCIT vs. Shri Hiralal Dayaram Thakkar 4 consequently the C.I.T. could not have invoked jurisdiction under Section 263 of the Act.” 8.3. Respectfully following the Bombay High Court judgment, we hold that the Revision Order passed as against the invalid assessment order is nullity in law. 8.4. Furthermore, we observe that the Ld.DCIT vide his letter dated 9.3.2018 informed Pr.CIT to drop the proceedings based on the Tax Evasion Petition and categorically stated that ld.Audit Officer not even appreciated remarks in the report of DDIT(Inv) wherein he has mentioned that the AO may kindly derive his own satisfaction and draw his conclusion independently. This observation of DDIT(Inv) is sufficient to indicate that report given by him is not final and is subject to further investigation. But the ld.Audit Officer appears to have jumped into conclusion by substituting himself for the AO and has tried to suggest addition to the total income based on some conjectures and surmises. Further, as it can be seen from the order passed by the Inquiry Officer dated 21.6.2013 that there were no financial irregularities in “Swaminarayan Society”, and therefore the revision order passed by the Pr.CIT has no legs to stand. 8.5. Thus, we find that the ld.CIT has initiated Revision proceeding based on the Internal Audit Party report only, which is not maintainable in law following jurisdictional High Court in the case of N.K. Roadways P.Ltd. v. Income-tax Officer (OSD) reported in [2015] 63 taxmann.com 342 (Gujarat) wherein it was held that ‘where Assessing Officer had considered issue relating to taxability of interest in detail at the time of assessment, action of reopening solely at behest of audit party without any independent belief while recording reasons would surely make reassessment vulnerable’. Further it is settled Principle of law by the Three Judges Bench judgement of the Hon’ble Supreme Court in the case of Sirpur Paper Mill Ltd. -Vs- Commissioner of Wealth-tax reported in [1970] 77 ITR 6 (SC) that revision made by the Commissioner simply following direction of the Board, which may control exercise of power of officers of department in administrative matters, but not in quasi judicial matters. In case of judicial matters, the Commissioner should apply his mind and initiate proceedings in accordance with law and not merely carry out directions of the Board. Thus, any order passed pursuant to the directions of the Board is liable to be set aside as Commissioner has not applied his independent judgments in invoking revision proceedings. 8.5. Respectfully following the above judgments of jurisdictional High Court and judgment of Hon’ble Supreme Court cited (supra) we hold that revision order dated 28.03.2018 passed by the Pr.CIT [Central] for the asst. year 2009-10 is not in accordance with law and the same is hereby quashed. 8.6. We further found the Explanation (2)(a) to section 263(1) of the Act has been inserted w.e.f. 01-06-2015 only. The ld.Pr. CIT is legally not correct in invoking this provision and therefore the initiation of Revision Proceedings itself is invalid in law. For all the above reasons, we find that Revision Order passed by the Pr.CIT is not in accordance with law, and therefore, the same is hereby quashed. 4. Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal on the I.T.A No. 167/Ahd/2021 A.Y. 2009-10 Page No DCIT vs. Shri Hiralal Dayaram Thakkar 5 Revision order as discussed above has been set aside/stayed or overruled by the higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of case referred above nor has placed any contrary binding decision in its support. 4.1. Respectfully following the same, the present appeal filed by the Revenue is also become infructuous. Thus the appeal filed by the Revenue is here dismissed. 5. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 10-02-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 10/02/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद