Shri Vishal Dilip Rai L/h of Late Shri Bhagwandas Navalnath Rai, Valsad V. Pr. Commissioner of Income Tax , Valsad

ITA 218/SRT/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 2570 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-12-2021
• Assessment Year: 2007-2008
• Appeal Filed On: 25-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Revision of order; Assessment record; Condonation of delay
• Section: 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No.218/SRT/2018 (AY 2007-08) (Hearing in Virtual Court) Shri Vishal Dilip Rai L/h of Late Shri Bhagwandas Navalnath Rai, Rai Niwas, Bholanagar, 1 st Gate, Atul, Valsad. PAN: ADAPR 4350 D Vs The Principal Commissioner of Income Tax, Valsad. Appellant Respondent Assessee by Shri Rajesh Upadhyay – AR Revenue by Shri H.P.Meena – CIT(DR) Date of hearing 22/12/2021 Date of pronouncement 24/12/2021 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of ld.Principal Commissioner of Income Tax, Valsad dated 24.07.2017 for the Assessment Year 2007-08. The assessee raised the following grounds of appeal: “[1] Lr. Principle CIT, Valsad has erred in law and on facts to pass order u/s 263and thereby directed the A.O. to make fresh assessment only on the ground that A.O.’s order u/s 143[3] r.w.s 147 is without making any inquiries. [2] Lr. Principle CIT, Valsad has erred in law and on facts to revise appellant’s assessment u/s 263 overlooking the settled position of law that even reopening of Assessment made by the A.O. u/s 147 is not sustainable in law consequently, A.O.’s order u/s 143[3] is not legal. [3] Principle CIT, Valsad has erred in law and on facts to invoke provisions of Section 263 of the Act in appellant’s case without appreciating and evaluating assessment record which shows that each issue for which revision is made was properly inquired and seen by the A.O. during the course of assessment proceedings. Therefore there is no need to revise such assessment.” ITA No.218//SRT/2018 (AY 2007-08) Shri Vishal Dilip Rai L/h of Late Shri Bhagwandas Navalnath Rai 2 2. Perusal of record shows that the appeal is filed after 239 days of prescribed period of limitation. The applicant / appellant has filed application for condonation of delay in filing the appeal before the Tribunal. The application is supported by affidavit of applicant / appellant. The ld Authorised representative (AR) of the assessee submits that appellant is the Grandson of assessee Bhagwandas N.Rai. Bhagwandas N. Rai (assessee) passed away on 14.12.2016 in a railway accident at Umarsad Pardi Railway Station of District Valsad. The father of applicant / appellant died before the death of his Grandfather. Due to untimely death of assessee, the applicant / appellant was disturbed emotionally and psychologically and due to lack of knowledge have not appointed any tax consultant to defend the legal proceedings initiated under section 263 of the Act. On receiving the order of ld. P CIT, the applicant has not initiated any legal course as not tax demand was received. . Pursuant to order under section 263 of the Act, assessment order was served upon the assessee with demand notice. The applicant handed over the same to one Advocate and Notary Shri Gitaben N.Patel but no legal action was initiated by said Advocate. Thereafter, the assessee approached one CA in Vapi, who advice the assessee to file appeal before the Tribunal. However, he was unable to file before the Tribunal and returned back the necessary papers to applicant him. Thereafter, the assessee consulted Shri Rajesh Upadhyay, who used to take care of tax matters of ITA No.218//SRT/2018 (AY 2007-08) Shri Vishal Dilip Rai L/h of Late Shri Bhagwandas Navalnath Rai 3 diseased assessee. The new Authorised Representative (AR) immediately paid the necessary charges for filing appeal and immediately the appeal was filed on 26.03.2018. The ld.AR submits that there was no intentional delay in filing the appeal before the Tribunal. The assessee would not get any benefit in filing appeal belatedly, rather there is a chance of losing the appeal. The ld.AR for the assessee submits that there is a sufficient cause as explained hereinabove and the delay may be condoned and matter may be decided on merit. 3. On the other hand, the ld. CIT-DR for the Revenue submits that the contents of application for condonation of delay are not based on true facts. The diseased assessee was represented by the present ld.AR of applicant in the re-assessment proceedings, which is the subject matter of revision under section 263 of the Act, was challenged by the ld.AR before the Tribunal. The diseased assessee was represented by ld.AR of the assessee during the assessment as well as in the appeals. The ld. CIT-DR submits that in para 2.6 of the assessment order, the attendance of ld.AR of the assessee is duly recorded. 4. In the rejoinder submission, the ld.AR of the assessee submits that the assessee used to represent the diseased assessee, however, in the proceedings under section 263 of the Act, the diseased assessee was not represented by him. The legal heirs of diseased assessee attended the proceedings before the ld. PCIT. In ITA No.218//SRT/2018 (AY 2007-08) Shri Vishal Dilip Rai L/h of Late Shri Bhagwandas Navalnath Rai 4 fact, the legal heirs were not in touch with the assessee prior to handing over the order of ld. PCIT in the month of March 2018. 5. We have considered the submission of both the parties and perused the application for condonation of delay and the contents of affidavit filed in support thereof. We have also seen the contents of the revision order passed under section 263 of the Act. We find that the revision proceedings were attended by legal heirs and ultimately revision order was passed on 24.03.2017. There is no dispute that assessee died on 14.12.2016 and place of death as mentioned in the death certificate is Pardi Railway Station. We further find that revision proceedings were initially initiated by issuing show cause notice under section 263 of the Act on 25.11.2016 for fixing date of hearing on 06.02.2017. Before the date of hearing, the assessee died on 24.12.2016. The legal heirs of deceased assessee attended the proceedings on -06.02.2017 and intimated that the assessee died on 24.12.2016. This fact is duly recorded in para 7 of revision order under section 263 of the Act. Perusal of revision order further reveals that no further submission was filed by legal heirs and the ld. PCIT passed the order on the basis of material available before him. 6. Now, again turning to the submission of ld.AR of the assessee that due to lack of knowledge, the assessee could not file appeal before Tribunal in time, though he contacted one advocate and CA, but ultimately, the appeal was filed by ITA No.218//SRT/2018 (AY 2007-08) Shri Vishal Dilip Rai L/h of Late Shri Bhagwandas Navalnath Rai 5 present AR of applicant. The objection of ld.CIT-DR for the revenue is that assessee was represented in re-assessment order as well as in the appeal filed before the Tribunal against the re-assessment order in ITA No.1863/AHD/2016. However, facts remains the same that during the revision proceedings the case of appellant remained unrepresented, thus, we find merit in submission in the ld.AR of the assessee that legal representative/applicant / appellant was not in his touch with the present learned AR of the applicant and that appeal was not filed in time and the same was filed in time immediately when the applicant/legal heir of the assessee approached the present Authorised Representative. Therefore, considering the facts and circumstances of the case that the assessee died in a railway accident and that the delay in filing the appeal was not intentional, rather the applicant will not get any benefit in filing the appeal belatedly. Thus, keeping in view, the principle that when technical consideration are pitted against the cause of substantial justice, the cause of substantial justice must prevail, hence, the delay in filing appeal is condoned. 7. On merit, the ld.AR of the assessee submits that appellant has raised three substantial grounds of appeal, however he is not pressing Ground No.1 and 3. Considering the contention of ld.AR of the assessee the Ground No.1 and 3 are dismissed as not pressed. ITA No.218//SRT/2018 (AY 2007-08) Shri Vishal Dilip Rai L/h of Late Shri Bhagwandas Navalnath Rai 6 8. Ground No.2 relates to validity of order under section 263 of the Act, on the ground that assessment order under section 147 of the Act was not sustainable in law. The ld.AR of the assessee submits that assessment was re-opened under section 147 of the Act on the allegation that assessee has not filed return of income for the A.Y. 2007-08 and that certain investment/transaction remained unexplained. The assessee filed his return of income on 22.03.2008. in response to the notice under section 148 dated 29.03.2014, the assessee filed reply dated 15.05.2014 stated that the return filed on 22.03.2008 may be treated as return in response to the said notice. The re-assessment completed on 27.03.2015 by making various additions on account of unexplained investment in SBI Mutual Fund. 9. On further appeal, the re-opening as well as addition was upheld by the ld.CIT(A), however, on further appeal before the Tribunal, the re-assessment order dated 27.03.2015 was quashed. The ld.AR submits that once the re- assessment order is quashed, subsequent order passed pursuant thereto would become void ab-initio. To support his submission, the ld.AR of the assessee relied upon the decision of Hon’ble Delhi High Court in CIT vs. Escorts Farms Pvt. Ltd., [1989] 180 ITR 280 Delhi, decision of Tribunal in ACIT vs Reliance Money Infrastructure Ltd., in ITA No.2300/Mum/2019 dated 18.03.2021, DCIT vs. Goldman Sachs (India) Pvt. Ltd., in ITA No.498/Mum/2019 dated ITA No.218//SRT/2018 (AY 2007-08) Shri Vishal Dilip Rai L/h of Late Shri Bhagwandas Navalnath Rai 7 28.02.2020 and the decision in Khushi Commotrade Trade Pvt. Ltd. vs. PCIT in ITA No.462/Kol/2021 dated 11.05.2021. 10. On the other hand, the ld. CIT-DR for the Revenue supported the order of ld. Pr. CIT. The ld. CIT-DR for the revenue submits that assessment and revision proceedings are separate and independent. The Tribunal has set-aside the assessment order only. When ld. Pr. CIT passed the order, the assessment order was not quashed/set-aside by the Tribunal. The ld. CIT- DR for the revenue submits that he fully supports the order of ld. Pr. CIT. 11. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities. We find that the case of the assessee reopened under section 147 of the Act and the assessment order was passed on 27.03.2015. The assessee challenged the validity of the re-assessment order before the Tribunal vide ITA No. 1863/Ahd/2016. We further find that our predecessor vide order dated 26.09.2018 in ITA No. 1863/AHD/2016 quashed the assessment order. During the hearing the ld AR for the assessee vehemently argued that once the assessment order is quashed all subsequent order passed pursuant thereto would become void ab-initio. 12. The Hon’ble Delhi High Court in CIT Vs Escort Farms Limited (1989) (180 ITR 280 Delhi) held that if the assessment order was barred by time, all further proceedings pursuant thereto would be infructuous. Considering the legal view ITA No.218//SRT/2018 (AY 2007-08) Shri Vishal Dilip Rai L/h of Late Shri Bhagwandas Navalnath Rai 8 taken by Hon’ble Delhi High Court that once the assessment order in invalid all subsequent action pursuant thereto would be void ab initio. Therefore, we find merit in the submissions of the ld AR of the assessee that once the assessment order is quashed all subsequent order passed pursuant thereto would become void ab-initio. Similar view was taken by the coordinate bench of Kolkata Tribunal in Khushi Commotrade Pvt Limited Vs PCIT in ITA No. 462/Kol/ 2020. Hence, ground No. 2 raised by the appellant is allowed. 13. In the result, the appeal of the assessee is allowed. Order announced on 24 December, 2021 in open court and the result was also placed on the notice board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat Dated: 24/12/2021 /SGR* Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order / / TRUE COPY / / Sr. Pvt. Secretary, ITAT, Surat