GEL Infrastructure Private Limited , Secunderabad V. Income Tax Officer, Ward-2(2), Hyderabad

ITA 247/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1721 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Period of limitation; Retrospective amendment; Time period of passing order; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 247/HYD/2019 ASSESSMENT YEAR: 2009-10 M/S.GEL INFRASTRUCTURE PVT. LIMITED, SECUNDERABAD [PAN: AABCG6985E] VS INCOME TAX OFFICER, WARD-2(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P.MURALI MOHANA RAO, AR FOR REVENUE : SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING : 22-02-2021 DATE OF PRONOUNCEMENT : 02-07-2021 O R D E R PER S.S.GODARA, J.M. : THIS ASSESSEES APPEAL FOR AY.2009-10 ARISES FROM TH E CIT(A)-1, GUNTURS ORDER DATED 20-11-2018 PASSED IN CASE NO.0035/2015-16, IN PROCEEDINGS U/S.143(3) R.W.S.14 7 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE FIRST AND FOREMOST ISSUE THAT ARISES FOR OUR A PT ADJUDICATION IN THE INSTANT LIS IS THAT OF VALIDITY OF THE IMPUGNED RE-OPENING. THIS ASSESSEE IS ADMITTEDLY A C OMPANY ENGAGED IN THE REAL ESTATE BUSINESS. A PERUSAL OF THE ASSESSMENT NOTINGS SUGGESTS THAT THE ASSESSING OFFICE R HAD RECORDED HIS SOLE RE-OPENING REASONS ON 21-06-2013 THAT AS ITA NO. 247/HYD/2019 :- 2 -: PER THE INFORMATION PROVIDED BY THE DIT(INT), HYDERABAD , THE ASSESSEE HAS MADE TRANSACTIONS IN SELLING OF PROPERTIE S DURING THE FY.2008-09 RELEVANT TO THE AY.2009-10. AS VERIFIED , THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE AY.200 9-10. HENCE, I HAVE REASONS TO BELIEVE THAT INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147. ISSUE NOTICE U/S.148 OF THE I.T.ACT. 3. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER THERE AFTER FRAMED HIS RE-ASSESSMENT IN ISSUE DT.27-03-2015 MAKI NG TWIN ADDITION OF UN-EXPLAINED INVESTMENT IN PURCHASE OF LAN D OF RS.1,04,20,000/- AND PROFIT ON SALE OF LAND OF RS.9, 98,080/-; RESPECTIVELY. THE CIT(A) HAS AFFIRMED THE SAME. 4. WE NOTICE FROM A PERUSAL OF THE CASE FILE THAT THE FO REST DEPARTMENT OF THE GOVERNMENT OF ANDHRA PRADESH THROUGH TH E DFO, HYDERABAD HAD CANCELLED THE ASSESSEES SALE DEE D ITSELF ON 20-11-2008 FOR THE REASON THAT THE LAND IN QUESTIO N WAS GOVERNMENT/RESERVE FOREST LAND. THIS IN OUR CONSIDERE D OPINION, SUFFICIENTLY TAKES CARE OF THE ASSESSING OFF ICERS SOLE RE-OPENING REASON ALLEGING ESCAPEMENT OF INCOME WITH THE ASSESSEES TAXABLE INCOME DERIVED FROM SALE OF PROPE RTIES DURING FY.2008-09. NO OTHER SALE DEED OTHER THAN THAT CANCELLED HEREINABOVE HAS BEEN EXECUTED AT THE ASSESSE ES BEHEST. THE ASSESSING OFFICERS CORRESPONDING SOLE RE-OPENING REASON DOES NOT SURVIVE ANYMORE THEREFORE. WE OBSERVE IN VIEW OF ALL THE PRECEDING FACTS THAT THE ASSESSEE COULD NOT HA VE BEEN HELD TO HAVE DERIVED ANY TAXABLE INCOME ONCE THE SALE DEED ITSELF STOOD ANNULLED BY THE STATE GOVERNMENT. HON'BLE A PEX COURTS LANDMARK DECISION IN CHAINRUP SAMPATRAM VS. CIT ITA NO. 247/HYD/2019 :- 3 -: (1953) [24 ITR 481] (SC) HELD LONG BACK THAT WHILE ANTICIPATED LOSS IS THUS TAKEN INTO ACCOUNT, ANTICIPATED PROFIT .. IS NOT BROUGHT INTO THE ACCOUNT, AS NO PRUDENT TRADER WOUL D CARE TO SHOW INCREASED PROFITS BEFORE ITS REALISATION AS PER THE CONSERVATIVE SPECTRUM OF ACCOUNTING. WE THEREFORE HO LD THAT THE ASSESSING OFFICERS RE-OPENING REASONING ITSELF DOES NOT HOLD GROUND IN LIGHT OF ALL THESE FACTS AND CIRCUMSTANC ES. 5. THE REVENUE VEHEMENTLY CONTENDED AT THIS STAGE THAT THE INSTANT ISSUE AS TO WHETHER THE ASSESSING OFFICER TO TAKE UP OTHER ISSUE(S) THAN THOSE SPECIFIED IN THE RE-OPENING IS NO MORE RES JUDICATA AS PER SECTION 147, EXPLANATION-3 INSERTED BY THE FINANCE ACT (2) 2009 WITH RETROSPECTIVE EFFECT FROM 01-04-1989. 6. WE HAVE HEARD RIVAL CONTENTIONS REGARDING THE INS TANT LATTER ASPECT PERTAINING TO THE LEGALITY OF THE IMPUGNED R E- ASSESSMENT OPENING. WE FIND NO SUBSTANCE IN THE REVEN UES STAND AS PER TRIBUNALS CO-ORDINATE BENCHS DECISION I N JOGINDER SINGH VS. ITO, ITA NO.222/ASR/2014, DT.11-0 6-2015: 2. WE CONSIDER IT APPROPRIATE TO HEAR THIS APPEAL, UNDER PROVISO TO RULE 11 OF THE APPELLATE TRIBUNAL RULES 1963, ON TH E FOLLOWING GROUND: WHEN ADDITION MADE BY THE ASSESSING OFFICER, ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE AND ON THE BAS IS OF REASONS RECORDED FOR REOPENING THE ASSESSMENT, ARE DELETED, THE CIT(A) OUGHT ALSO TO HAVE HELD, AS A COROLLARY TO THIS ACTION AND ON THE PECULIAR FACTS OF THIS CASE, THAT REASSE SSMENT ITSELF WAS UNSUSTAINABLE IN LAW. 3. THE PARTIES WERE ACCORDINGLY, PUT TO NOTICE THOU GH, IN THE LIGHT OF THE ISSUES RAISED DURING THE YEAR, THIS GROUND WAS SLIGHTLY MODIFIED DURING THE COURSE HEARING. THE REGISTRY WAS ALSO DIRECTED TO FIND OUT WHETHER THERE IS ANY CROSS APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE CIT (A). WE ARE INFORMED THAT NO CROSS APPEAL IS FILED AGAINST THIS ORDER. LEARNED ITA NO. 247/HYD/2019 :- 4 -: DEPARTMENTAL REPRESENTATIVE DID NOT OBJECT TO OUR R EFRAMING THE GROUND OF APPEAL BUT SUBMITTED, BY WAY OF A WRITTEN NOTE DATED 5 TH JUNE 2014, THAT THE LEARNED CITA) COULD NOT DO SO IN VIEW OF THE JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MANJINDER SINGH KANG VS CIT REPORTED AT 344 ITR 358 . IT IS IN THIS BACKDROP THAT WE PROCEED TO DISPOSE OF THIS APPEAL ON THE ABOVE GROUND OF APPEAL. 4. TO ADJUDICATE ON THE ABOVE GROUND OF APPEAL, ONL Y A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THIS IS A CASE OF R EOPENED ASSESSMENT. AS FOR THE REASONS FOR WHICH THE ASSESSMENT WAS REO PENED IS EVIDENT FROM THE FOLLOWING OBSERVATIONS AT PAGES 1-2 OF THE ASSESSMENT ORDER: AN INFORMATION WAS GATHERED BY THE DEPARTMENT THAT THE ASSESSEE ALONGWIH SH. NARINDER SINGH, MRS. ASPINDER KAUR, SH . JASWINDER SINGH, SMT. NIRMAL KAUR, SM. MOHINDER KAUR, SH. SUR INDER MOHAN SINGH AND SH. JIWAN SINGH WERE RUNNING A FIRM UNDER THE NAME AND STYLE OF M/S. CITY PLAZA, JALANDHAR WHEREIN THEY WE RE DEALING IN REAL ESTATE BUSINESS. VIDE DISSOLUTION DEED DATED 05.03. 2003, OLD FIRM WAS DISSOLVED AND SH. JOGINDER SINGH ALONG WITH SMT . MOHINER KAUR, SH. SURINDER MOHAN SINGH AND SH. JIWAN SINGH CONTIN UED THE BUSINESS AND TOOK OVER THE FIRM. AS PER SAID DISSOL UTION DEED, THESE CONTINUING PARTNERS PAID THE FOLLOWING AMOUNTS, THR OUGH POST DATED CHEQUES TO THE OUTGOING PARTNERS : CHEQUE NO. DATED AMOUNT DRAWN ON 225073 10.03.2005 23,57,000 PNB CIVIL LINES 225074 20.03.2005 23,57,000 PNB CIVIL LINES 225075 31.03.2005 23,57,000 PNB CIVIL LINES FURTHER, THE CONTINUING PARTNERS ALSO SETTLED THE L OAN ACCOUNT WITH THE CITIZEN URBAN CO-OPERATIVE BANK LIMITED, JALANDHAR WHEREIN REPAYMENT OF LOAN OF RS.40,90,630/- AND INTEREST OF RS.40,92,568/- WAS MADE DURING THE FINANCIAL YEAR 2004-05. IT WAS SEEN THAT THE PAYMENT MADE AS ABOVE WAS MUCH MORE THAN THE INCOME DECLARED BY THE ASSESSEE. THEREFORE, MY PREDECESSOR AFTER RE CORDING THE REASONS AND AFTER OBTAINING NECESSARY PERMISSION FR OM THE THEN ADDL. CIT, RANGE III, JALANDHAR REOPENED THE ASSESSMENT I N THIS CASE BY ISSUE OF NOTICE U/S. 148 OF I.T. ACT ON 29.3.2012, WHICH WAS SERVED ON THE ASSESSEE ON 29.03.2012. IN RESPONSE TO THIS NOTICE, THE ASSESSEE HIMSELF ATTENDED BEFORE MY PREDECESSOR ON 24.4.2012 AND FILED A LETTER ALONG WITH A COPY OF THE RETURN OF H IS INCOME. IT WAS FURTHER STATED BY THE ASSESSEE BEFORE THE THEN AO T HAT HIS RETURN ALREADY FILED ON 11.1.2006 MAY BE TREATED TO HAVE B EEN FILED IN RESPONSE TO NOTICE U/S.148. 5. IN THE ASSESSMENT FRAMED AS A RESULT OF THE REAS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER DID MAKE ADDITIO NS IN RESPECT OF THE REASONS FOR WHICH ASSESSMENT WAS REOPENED. THE MATTER ITA NO. 247/HYD/2019 :- 5 -: TRAVELLED IN APPEAL BEFORE THE CIT(A) AND ONE OF TH E CONTENTIONS OF THE ASSESSEE WAS THAT ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE, THE JURISDICTION UNDER SECTION 147/148 HAS BEEN WRO NGLY INVOKED BY THE ITO. IN THE SUBMISSIONS MADE BY THE ASSESSEE, WHICH HAVE BEEN EXTENSIVELY REPRODUCED BY THE CIT(A), IT WAS INTER ALIA SUBMITTED BY THE ASSESSEE THAT, NONE OF THE ABOVE ALLEGATIONS ( I.E. REASONS FOR REOPENING THE REASSESSMENT) HAD ANY SOUND BASIS TO REACH A SATISFACTION (THAT INCOME HAS ESCAPED ASSESSMENT) M ANDATED UNDER SECTION 148. THESE SUBMISSIONS, HOWEVER, DID NOT F IND FAVOUR WITH THE LEARNED CIT(A) WHO UPHELD REOPENING OF THE ASSE SSMENT BY OBSERVING AS FOLLOWS: 5.4. I HAVE CONSIDERED THE ASSESSMENT ORDER AS WEL L AS THE WRITTEN SUBMISSIONS OF THE ASSESSEE ON THE ISSUE UNDER REFE RENCE. I HAVE ALSO CONSIDERED THE OTHER MATERIAL BROUGHT ON RECORD IN THE CASE OF THE PARTNERSHIP FIRM M/S. CITY PLAZA, RAINIK BAZAR, JAL ANDHAR. ON THE PERUSAL OF MATERIAL BROUGHT ON RECORD IT HAS BEEN N OTICED THAT THE ASSESSING OFFICER WAS HAVING PLENTY OF REASONS TO I SSUE NOTICE U/S. 148 OF THE ACT. DURING THE COURSE OF INVESTIGATIONS BY THE ADIT(INV.), THE ASSESSEE HAS NOT DISCLOSED THE FACTS WHICH ARE NOW BEING DISCLOSED AT THE TIME OF APPELLATE PROCEEDINGS. MOREOVER, PROOF OF PAYMENT MADE BY THE BUYER HAS NO T BEEN FILED. THE CHEQUES ISSUED BY SHRI SURINDER MOHAN SINGH TO THE OUTGOING PARTNERS WERE FOUND TO BE DRAWN ON AN ACCOUNT WHICH WAS NOT IN HIS NAME OR IN THE NAME OF PARTNERSHIP FIRM. IN THESE F ACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT HE ASSESSING OFFICER IS FULLY JUSTIFIED IN ASSUMING JURISDICTION IN THIS CASE U/S. 147/148 OF THE ACT AND MAKING ASSESSMENT IN THIS CA SE. IN THE RESULT, THE GROUND OF APPEAL NO. 1 TAKEN BY THE ASS ESSEE IS, THEREFORE, DISMISSED. 6. QUITE INTERESTINGLY, EVEN AS THE CIT(A) UPHELD T HE REASSESSMENT PROCEEDINGS THE VERY ADDITIONS MADE ON THE BASIS OF THE REASONS FOR REOPENING WERE QUASHED. THE REASONING ADOPTED BY TH E CIT(A) IN CANCELLING THESE ADDITIONS WERE AS FOLLOWS: 6.4. I HAVE CONSIDERED THE ASSESSMENT ORDER AS WEL L AS THE WRITTEN SUBMISSIONS OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE OTHER MATERIAL BROUGHT ON RECORD IN THE CASE OF PARTNERSH IP FIRM M/S CITY PLAZA AS WELL AS IN THE CASE OF OTHER PARTNERS. DUR ING THE COURSE OF APPELLATE PROCEEDINGS, IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT THE PAYMENTS MADE BY THE PARTNERSHIP FIRM M/S. CITY PLA ZA OR BY ITS CONTINUING PARTNERS WERE MADE OUT OF THE SALE PROCE EDS OF THE COMMERCIAL BUILDING KNOWN AS CITY PLAZA. NOT ONLY T HIS, IT HAS FURTHER BEEN STATED THAT THE PAYMENTS TO THE OUTGOING PARTN ERS AS WELL AS THE PAYMENT TO M/S. CITIZEN URBAN CO-OPERATIVE BANK TOW ARDS TERM LOAN AND INTEREST THEREON HAS BEEN MADE DIRECTLY BY THE PURCHASER OF PROPERTY KNOWN AS CITY PLAZA BUILDING I.E. BY SH. P REM KUMAR ITA NO. 247/HYD/2019 :- 6 -: BHAGAT. THE NECESSARY EVIDENCE WITH REGARD TO THE P AYMENT OF BANK LOAN AND INTEREST THEREON HAS ALSO BEEN BROUGHT ON RECORD. THE PAYMENTS TO THE OUTGOING PARTNERS WERE ALSO FOUND T O BE MADE BY THE PURCHASER OF THE PROPERTY. THE DETAILS OF THE PAYME NTS TO OUTGOING PARTNERS ARE GIVEN IN THE SALE DEED ITSELF WHICH IN FACT HAVE BEEN MADE DURING F.Y. 2005-06. THE POST DATED CHEQUES WE RE ALSO NOT EN- CASHED BY THE OUTGOING PARTNERS AND THEY RECEIVED T HE PAYMENT IN RESPECT OF THEIR SHARE DIRECTLY FROM THE PURCHASER OF THE PROPERTY I.E. FROM SHRI PREM KUMAR BHAGAT. THESE FACTS AND ALSO S UBMISSIONS MADE BY THE ASSESSEE WITH REGARD TO THE PAYMENT TO OUTGOING PARTNERS AND BANK HAVE ALSO NOT BEEN CONTROVERTED B Y THE ASSESSING OFFICER. IN THESE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE PAYMENTS TO OUTGOING PARTNERS AS WELL AS IN RESPECT OF BANK LOAN AND INTEREST ARE SATISFACTORIL Y EXPLAINED BY THE ASSESSEE WITH DOCUMENTARY EVIDENCE. I AM, THEREFORE , OF THE OPINION THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKI NG THE ADDITIONS WHICH HAVE BEEN CHALLENGED VIDE GROUNDS OF APPEAL N O. 2, 3, 4 & 5. THE ADDITIONS OF RS.17,67,750/-, RS.10,22,657/- AND RS.10,23,142/- ARE, THEREFORE, DIRECTED TO BE DELETED. IN THE RESU LT, GROUNDS OF APPEAL NO. 2, 3, 4 & 5 TAKEN BY THE ASSESSEE ARE ALLOWED. 7. THE SHORT QUESTION BEFORE US REALLY IS WHETHER I N SUCH CIRCUMSTANCES THE CIT(A) OUGHT ALSO TO HAVE CANCELL ED THE REASSESSMENT PROCEEDINGS AS WELL AND WHETHER THERE IS ANY CONTRADICTION IN THE ACTION OF THE CIT(A) IN UPHOLD ING THE REASSESSMENT PROCEEDINGS AND QUASHING THE ADDITIONS MADE ON THE BASIS OF THE REASONS RECORDED FOR REOPENING THE ASS ESSMENT. THIS QUESTION ASSUMES SIGNIFICANCE IN THE LIGHT OF THE F ACT THAT WHILE THESE ADDITIONS STAND DELETED, SOME OTHER ADDITIONS, MADE DURING THE COURSE OF REOPENED ASSESSMENT, CONTINUE TO SURVIVE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 9. WE HAVE NOTED THAT THE ASSESSMENT WAS REOPENED O N THE GROUND THAT THE PARTNERSHIP FIRM CITI PLAZA, IN WHICH THE ASSESSEE HAD 25% SHARE, HAD ISSUED THREE POST DATED CHEQUES OF RS 23 ,57,000 EACH AND MADE BANK PAYMENTS OF RS.40,90,630 TOWARDS PRIN CIPAL AND RS 40,92,568 TOWARDS INTEREST, WHEREAS THE ABOVE PAYM ENTS WERE MUCH MORE THAN THE INCOME DECLARED BY THE ASSESSEE . LEARNED CIT(A) HIMSELF HOLDS, IN PARAGRAPH 6.4 EXTRACTED AB OVE, THAT THE POST DATED CHEQUES ISSUED BY THE PARTNERSHIP FIRM WERE N OT ENCASHED AND THAT THE BANK PAYMENTS WERE NOT MADE BY THE PARTNER SHIP FIRM BUT BY THE BUYERS OF THE PROPERTY SOLD BY THE PARTNERSH IP FIRM. DURING THE APPELLATE PROCEEDINGS, THE ASSESSING OFFICER WAS DU LY CONFRONTED WITH THE RELATED FACTS AND HE COULD NOT, AS THE CIT (A) HAS NOTED IN SO MANY WORDS, CONTROVERT THE STAND OF THE ASSESSEE. C LEARLY, THEREFORE, ITA NO. 247/HYD/2019 :- 7 -: THE REASONS FOR REOPENING THE ASSESSMENT WERE INCOR RECT. THE CIT(A) HAS HELD SO AND THE ASSESSING OFFICER IS NOT IN CHA LLENGE AGAINST THESE FINDINGS. YET, WHEN IT CAME TO ADJUDICATE UPO N THE CHALLENGE TO THE VALIDITY OF REASSESSMENT PROCEEDINGS, THE CIT(A ) HOLDS THAT THE ASSESSING OFFICER WAS HAVING PLENTY OF REASONS TO I SSUE NOTICE UNDER SECTION 148 OF THE ACT. HE DOES SO ON THE BASIS TH AT (A) THE ASSESSEE HAD NOT DISCLOSED THE FACTS WHICH ARE NOW BEING DIS CLOSED AT THE TIME OF APPELLATE PROCEEDINGS, AND THAT (B) THE CHEQUE S ISSUED BY SHRI SURINDER MOHAN SINGH (I.E. A PERSON OTHER THAN THE ASSESSEE) TO THE OUTGOING PARTNERS WERE FOUND TO BE DRAWN ON AN ACCO UNT WHICH WAS NOT IN HIS NAME OR IN THE NAME OF THE PARTNERSHIP F IRM. THESE THINGS WERE, IN OUR CONSIDERED VIEW, WHOLLY IRRELEVANT INA SMUCH AS THESE THINGS HAVE NOTHING TO DO WITH THE REASONS OF REOPE NING THE ASSESSMENT AS NOTED IN THE REASSESSMENT ORDER ITSEL F. 10. IN ANY EVENT, IT WAS NOT THE REVENUES CASE THA T THE ASSESSEE FAILED TO DISCLOSE WHAT HE OUGHT TO HAVE DISCLOSED UNDER THE LAW. SUCH A NON DISCLOSURE, THEREFORE, CANNOT BE A REASO N ENOUGH TO UPHOLD THE VALIDITY OF REASSESSMENT PROCEEDINGS. SI MILARLY, THE CHEQUES TO THE OUTGOING PARTNER OF THE FIRM, IN WHI CH ASSESSEE IS A PARTNER, HAVING BEEN ISSUED BY AN ACCOUNT OTHER THA N THE ACCOUNT OF THE ASSESSEE OR OF THE PARTNERSHIP FIRM CANNOT BE A REASON ENOUGH TO COME TO THE CONCLUSION THAT INCOME HAS ESCAPED ASS ESSMENT IN THE HANDS OF THE ASSESSEE. THERE IS NO CAUSE AND EFFE CT RELATIONSHIP IN THIS FACT AND THE INCOME ESCAPING ASSESSMENT IN THE HANDS OF THE ASSESSEE. 11. IT IS A WELL SETTLED LEGAL POSITION, AS HELD BY HONBLE BOMBAY HIGH COURT, IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.B. WADKAR [(2004) 268 ITR 332 (BOM)], THAT WHEN IT COMES TO EXAMINING THE VALIDITY OF REASSESSMENT PROCEEDINGS, '.... NO INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE BASIS OF REASONS NOT REC ORDED. IT IS FOR THE AO TO DISCLOSE AND OPEN HIS MIND THROUGH TH E REASONS RECORDED BY HIM . HONBLE BOMBAY HIGH COURT, IN THE CASE OF PRASHANT S. JOSHI VS. ITO [(2010) 324 ITR 154 (BOM) ] HAS OBSERVED : ' THE AO MUST HAVE REASONS TO BELIEVE THAT SUCH IS THE CASE (I.E. ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSE SSMENT FOR A PARTICULAR YEAR) BEFORE HE PROCEEDS TO ISSUE NOTICE UNDER S.147 ' AND THAT ' THE REASONS WHICH ARE RECORDED BY THE AO ARE THE ONLY REASONS WHICH CAN BE CONSIDERED WHEN FORMA TION OF BELIEF IS IMPUGNED '. IN VIEW OF THESE DISCUSSIONS, AND THE CORRECTNESS OF THE REASONS RECORDED FOR REOPENING T HE ASSESSMENT HAVING BEEN DECIDED AGAINST THIS ASSESSEE, THE CIT( A) OUGHT ALSO HAVE HELD THAT THE VERY REASSESSMENT PROCEEDINGS AR E LEGALLY UNSUSTAINABLE ON THE FACTS OF THIS CASE. THERE IS A N INHERENT CONTRADICTION IN THE APPROACH OF THE CIT(A). ITA NO. 247/HYD/2019 :- 8 -: 12. LEARNED DEPARTMENTAL REPRESENTATIVES DEFENCE F OR THE STAND OF THE CIT(A)S ORDER IS RELIANCE ON HONBLE JURISDICT IONAL HIGH COURTS JUDGMENT IN THE CASE OF MAJINDER SINGH KANG (SUPRA). THAT WAS A CASE IN WHICH THEIR LORDSHIPS HAVE HELD THAT EVEN W HEN THE ASSESSING OFFICER DOES NOT MAKE ANY ADDITION IN RES PECT OF THE REASONS FOR WHICH REASSESSMENT PROCEEDINGS ARE INIT IATED, THE REASSESSMENT PROCEEDINGS CAN STILL BE VALID NEVERTH ELESS. TO QUOTE THE OBSERVATIONS MADE BY THEIR LORDSHIPS, A PLAIN READING OF EXPLANATION 3 TO SECTION 147 CLEARLY DEPICTS THAT T HE ASSESSING OFFICER HAS POWER TO MAKE ADDITIONS EVEN ON THE GROUND ON WHICH RE-ASSESSMENT NOTICE MIGHT NOT HAVE BEEN ISSUED IN CASE DURING REASSESSMENT PROCEEDINGS, HE ARRIVES AT A CONCLUSION THAT SOME OTHER INCOME HAS ESCAPED ASS ESSMENT WHICH COMES TO HIS NOTICE DURING THE COURSE OF PROC EEDINGS FOR RE-ASSESSMENT UNDER SECTION 148 OF THE ACT AND THAT THE PROVISION NOWHERE POSTULATES OR CONTEMPLATES THAT I T IS ONLY WHEN THERE IS SOME ADDITION ON THE GROUND ON WHICH RE- ASSESSMENT HAD BEEN INITIATED, THAT THE ASSESSING O FFICER CAN MAKE ADDITIONS ON ANY OTHER GROUND ON THE BASIS OF WHICH INCOME MAY HAVE ESCAPED ASSESSMENT. THE SLP FILED BY THE ASSESSEE, AGAINST THE VIEW SO EXPRESSED BY THEIR LO RDSHIPS, HAS BEEN DISMISSED BY HONBLE SUPREME COURT ON 19.08.20 11. 13. THE VIEW SO TAKEN BY THEIR LORDSHIPS IS THE LAW IN THE JURISDICTION OF HONBLE PUNJAB & HARYANA HIGH COURT EVEN THOUGH OTHER HONBLE HIGH COURTS HAVE TAKEN A CONTRARY VIEW. THE JUDICIA L PRECEDENTS FROM OTHER HONBLE HIGH COURTS, AS AVAILABLE IN THE PUBL IC DOMAIN AND EVEN AFTER TAKING NOTE OF THE VIEWS SO EXPRESSED BY THEIR LORDSHIPS, HAVE TAKEN A CONTRARY VIEW OF THE MATTER, SUCH AS I N THE CASES OF CIT VS MOHMED JUNED DADANI [(2013) 258 CTR 268 (GUJRAT) ], CIT VS JET AIRWAYS [(2011) 331 ITR 236 (BOMBAY)], RANBAXY LABORATORIES LIMITED VS CIT [(2011)336 ITR 136 (DEL HI)], ACIT VS MAJOR DEEPAK MEHTA [(2012) 344 ITR 641 (CHATTISG ARH)]. ALL THESE DECISIONS WERE DEALING WITH THE LAW AS IT STO OD AFTER THE INSERTION OF EXPLANATION 3 TO SECTION 147 BUT THEN THE VIEWS SO EXPRESSED BEING CONTRARY TO THE LAW LAID DOWN BY HO NBLE JURISDICTIONAL HIGH COURTS, THESE DECISIONS CANNOT INDEED BE APPLIED ON THIS ASSESSEE. BE THAT AS IT MAY, THAT IS A PURE LY ACADEMIC ASPECT OF THE MATTER. 14. THERE CANNOT POSSIBLY BE ANY TWO OPINIONS WITH REGARD TO THE ENUNCIATION OF LAW BY THEIR LORDSHIPS IN MAJINDER S INGH KANGS CASE (SUPRA). HOWEVER, WE FIND THAT THE RELIANCE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THIS DECISION, ON TH E FACTS OF THIS CASE, TO BE INAPT. IN MAJINDER SINGH KANGS CASE, T HEIR LORDSHIPS HAVE NOWHERE HELD THAT THE PROPOSITION OF LAW LAID DOWN THEREIN TO BE APPLICABLE EVEN TO THE CASES WHEREIN EVEN WHEN REAS ONS RECORDED FOR REOPENING THE ASSESSMENT ARE HELD TO BE INCORRECT, AND THUS ITA NO. 247/HYD/2019 :- 9 -: UNSUSTAINABLE IN LAW, THE ASSESSING OFFICER CAN STI LL GO AHEAD AND MAKE ADDITIONS IN THE REASSESSMENT PROCEEDINGS IN R ESPECT OF REASONS OTHER THAN THE REASONS RECORDED FOR REOPENI NG THE REASSESSMENT. HONBE HIGH COURTS JUDGMENT IN THE C ASE OF MAJINDER SINGH KANGS CASE (SUPRA) HAS NOT BEEN SHOWN TO HAV E ALTERED, EVEN SUB SILIENTIO, THE WELL SETTLED LEGAL POSITION THAT THE VALIDITY OF REASSESSMENT PROCEEDINGS IS A SINE QUA NON FOR ANY ADDITIONS BEING MADE TO THE INCOME OF THE ASSESSEE, DURING THE COUR SE OF THE REASSESSMENT PROCEEDINGS WHETHER IN RESPECT OF THE REASONS RECORDED FOR REOPENING THE ASSESSMENT OR IN RESPECT OF THE R EASONS OTHER THAN THE REASONS RECORDED FOR REOPENING THE ASSESSMENT. 15. MOREOVER, PARTICULARLY IN THE LIGHT OF THE SCHE ME OF LAW AS VISUALIZED BY HONBLE SUPREME COURTS DECISION IN T HE CASE OF GKN DRIVESHAFTS VS ITO [(2003) 259 ITR 101 (SC)] , SUCH A SITUATION WOULD BE RATHER RARE. 16. THE REASON IS THIS. THE REASONS FOR REOPENING T HE ASSESSMENT, AS IS THE SCHEME OF LAW VISUALIZED AND SET OUT BY HON BLE SUPREME COURT IN THE GKN DRIVESHAFTS CASE (SUPRA), ARE TO BE CONFRONTED TO THE ASSESSEE AND THE ASSESSEE HAS AN OPPORTUNITY TO REB UT THESE REASONS. THIS IS A STAGE PRIOR TO THE ASSESSING OFF ICER PROCEEDING WITH THE REASSESSMENT PROCEEDINGS AND AFTER HE HAS ISSUE D NOTICE FOR REOPENING THE ASSESSMENT. IN A SITUATION IN WHICH T HE ASSESSEE CAN CONVINCE THE ASSESSING OFFICER THAT THESE REASONS A RE NOT GOOD ENOUGH TO MAKE THE ADDITIONS, THE REASSESSMENT PROC EEDINGS ARE TO BE DROPPED ANYWAY. 17. THERE IS NO BAR ON THE NATURE OF MATERIAL THAT THE ASSESSEE MAY SEEK TO RELY UPON, EVEN AT THE FIRST STAGE, TO DEMO NSTRATE THAT THE REASONS FOR REOPENING ARE UNSUSTAINABLE IN LAW AND EVEN THIS ADJUDICATION BY THE ASSESSING OFFICER IS SUBJECT MA TTER OF LEGAL SCRUTINY BY THE APPELLATE AUTHORITIES IN THE COURSE OF THE SAME APPELLATE PROCEEDINGS AS AGAINST THE REASSESSMENT O RDER. THE SCHEME OF LAW, AS LAID DOWN BY THE HONBLE SUPREME COURT IN GKN DRIVESHAFTS CASE, THUS PROVIDES FOR DUAL ADJUDICAT ION BY THE ASSESSING OFFICER ON THE CORRECTNESS OF THE REASONS RECORDED FOR REOPENING THE ASSESSMENT- ONE AT THE STAGE OF DEALI NG WITH THE OBJECTIONS OF THE ASSESSEE PRIOR TO PROCEEDING WITH THE REASSESSMENT PROCEEDINGS, AND THE OTHER AT THE POINT OF TIME WHE N, DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS TO TAKE A CALL ON ADDITIONS TO BE MADE IN RESPECT OF THESE REASONS. T HAT IS WHERE THERE IS A PARADIGM SHIFT IN THE SCHEME OF THINGS POST GK N DRIVERSHAFT DECISION. IN A SITUATION IN WHICH, DURING THE REASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER FINDS THESE REAS ONS TO BE SO INCORRECT THAT HE CONCLUDES THAT NO INCOME HAS ESCA PED THE ASSESSMENT AND THE ADDITIONS ON THAT COUNT ARE UNWA RRANTED, THE SAME SHOULD HAVE BEEN THE POSITION AT THE STAGE OF ADJUDICATING ON ITA NO. 247/HYD/2019 :- 10 -: THE CORRECTNESS OF THE REASONS RECORDED IN THE PRE- REASSESSMENT PROCEEDINGS. IN THE LATTER PROCEEDINGS ALSO, THE AS SESSEE HAS THE LIBERTY TO BRING THE MATERIAL, OTHER THAN THAT AVAI LABLE TO THE ASSESSING OFFICER ON HIS RECORDS, THAT NO INCOME HA S ESCAPED ASSESSMENT. THE CONCLUSIONS IN THESE TWO SETS OF SO MEWHAT PARALLEL EXERCISES CANNOT, THEREFORE, BE ORDINARILY DIFFEREN T. IN OTHER WORDS, WHEN THE ASSESSING OFFICER IS SATISFIED THAT NO ADD ITIONS CAN BE MADE ON THE BASIS OF THE REASONS OF REOPENING, AS RECORD ED BY HIM, HE HAS TO DROP THE REASSESSMENT PROCEEDING AT THIS INITIAL STAGE ITSELF. WHEN THE EXAMINATION OF CORRECTNESS OF THE REASONS RECOR DED COME UP FOR ADJUDICATION BEFORE THE APPELLATE AUTHORITIES, THE APPROACH, THEREFORE, CANNOT BE ANY DIFFERENT EITHER. 18. IN THE CASE BEFORE HONBLE JURISDICTIONAL HIGH COURT, AS EVIDENT FROM THE EXTRACTS FROM THE CIT(A)S ORDER REPRODUCE D THEREIN, THE REASSESSMENT WAS QUASHED ON THE GROUND THAT THE ASS ESSING OFFICER COULD NOT MAKE ADDITIONS IN RESPECT OF THE INCOME WHICH HAD NOT ESCAPED ASSESSMENT FOR WHICH NO NOTICE HAD BEEN GIV EN TO THE ASSESSEE UNDER SECTION 148 READ WITH SECTION 147 OF THE ACT. THEIR LORDSHIPS APPRECIATED THAT TO THAT EXTENT THE LEGAL PROPOSITION WAS INCORRECT IN THE LIGHT OF INSERTION OF EXPLANATION 3 TO SECTION 147, AND THE EARLIER JUDICIAL PRECEDENTS, WHICH WERE RELIED UPON BY THE ASSESSEE, DID NOT HOLD GOOD LAW, AS THEIR LORDSHIPS MADE CLEAR IN NO UNCERTAIN WORDS. THE CORRECTNESS OF THE REASONS OF REOPENING WAS NOT AN ISSUE BEFORE THEIR LORDSHIPS. THE CORRECTNESS OF THE REASONS FOR REOPENING WAS NOT, DIRECTLY OR INDIRECTLY, IN CHALL ENGE. 19. AS IS EVIDENT FROM THE DISCUSSIONS EARLIER IN T HIS ORDER, HERE IS A CASE IN WHICH THE VERY REASONS ON ACCOUNT OF WHICH THE CIT(A) HAS DELETED THE QUANTUM ADDITIONS WERE ALSO GOOD ENOUGH TO HOLD THAT THE INITIATION OF REASSESSMENT PROCEEDINGS IS BAD I N LAW AND YET THE CIT(A) WAS FIGHTING SHY OF THE LOGICAL CONCLUSIONS THERETO AND NATURAL COROLLARIES TO THESE FINDINGS. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT THE RELIEF SO GRANTED BY THE CIT(A), ON T HE BASIS OF WHICH THE ADDITIONS IN RESPECT OF THE REASONS RECORDED FOR RE OPENING THE ASSESSMENT WERE DELETED AND WHICH WERE, IN OUR CONS IDERED VIEW, GOOD ENOUGH TO QUASH THE REASSESSMENT ITSELF, IS NO T EVEN CHALLENGED IN FURTHER APPEAL. THESE FINDINGS OF THE CIT(A) HAV E THUS REACHED FINALITY. AND ARE NOT EVEN IN DISPUTE BEFORE US. IF SUCH BE THE FACTS, THERE CAN BE NO JUSTIFICATION FOR TAKING THESE FIND INGS TO ITS LOGICAL CONCLUSIONS AND, BASED ON THESE UNCONTROVERTED FIND INGS, QUASH THE REASSESSMENT ITSELF. WHAT HELD GOOD FOR DELETING TH E ADDITIONS ON THE BASIS OF THE REASONS RECORDED THE ASSESSMENT, ON TH E FACT OF THIS CASE AND IN OUR HUMBLE UNDERSTANDING, WAS GOOD ENOUGH TO HOLD THE REASONS FOR REOPENING THE ASSESSMENT TO BE INCORREC T AS WELL. WE ARE UNABLE TO SEE ANY LEGALLY SUSTAINABLE REASONS TO CO ME TO DIFFERENT CONCLUSIONS. IN OUR CONSIDERED VIEW, THEREFORE, THE CIT(A) OUGHT TO HAVE QUASHED THE REASSESSMENT AS WELL. ITA NO. 247/HYD/2019 :- 11 -: 20. IN VIEW OF THESE DISCUSSIONS, AND BEARING IN MI ND ENTIRETY OF THE CASE, WE HOLD THAT THE CIT(A) OUGHT TO HAVE, ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, QUASHED THE REASSESSMENT PROCEEDINGS AS WELL. WE, THEREFORE, QUASH THE REASSESSMENT PROCEED INGS. AS REASSESSMENT ITSELF IS QUASHED AS ABOVE, NOTHING EL SE SURVIVES FOR ADJUDICATION. 7. WE ADOPT THE FOREGOING DETAILED REASONING MUTATIS- MUTANDIS TO ACCEPT ASSESSEES FORMER SUBSTANTIVE GRIEVANCE CHALLENGING VALIDITY OF THE IMPUGNED RE-OPENING. THE SAME STANDS QUASHED. ALL OTHER PLEADINGS ON MERITS ARE RENDERED INFRUCTUOU S. 8. WE LASTLY ACKNOWLEDGE THAT ALTHOUGH THE INSTANT LIS IS BEING DECIDED AFTER A PERIOD OF 90 DAYS FROM THE DATE OF HEARING AS PER RULE 34(5) OF THE IT(AT) RULES 1963, THE SAME HOWEVER, DOES NOT APPLY IN THE COVID LOCKDOWN SITUATI ON AS PER HON'BLE APEX COURTS RECENT DIRECTIONS DATED 27-04-2021 IN M.A.NO.665/2021 IN SM(W)C NO.3/2020 IN RE COGNIZANCE FOR EXTENSION OF LIMITATION MAKING IT CLEAR THAT IN SUCH CASES WHERE THE LIMITATION PERIOD (INCLUDING THAT PRESCRIBED FOR INS TITUTION AS WELL AS TERMINATION) SHALL STAND EXCLUDED FROM 14 TH OF MARCH, 2021 TILL FURTHER ORDERS. 9. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JULY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 02-07-2021 TNMM ITA NO. 247/HYD/2019 :- 12 -: COPY TO : 1.M/S.GEL INFRASTRUCTURE PRIVATE LIMITED, C/O. P. M URALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2.THE INCOME TAX OFFICER, WARD-2(2), HYDERABAD. 3.CIT(APPEALS)-1, GUNTUR. 4.PR.CIT-II, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.