Vrushali Vijay Kulkarni, Latur V. Principal Commissioner of Income-Tax -1, Nashik

ITA 276/PUN/2022

AI Insights

The case involves an appeal by Vrushali Vijay Kulkarni against the order of the PCIT, Nashik-1, which revised the assessment for the year 2011-12 under Section 263 of the Income Tax Act, 1961. The PCIT had deemed the original assessment erroneous and prejudicial to the interests of the Revenue on several grounds, including unverified cash deposits and incorrect computation of the indexed cost of improvement. The Tribunal, however, found that the reopening of the assessment under Section 147 was not legally sustainable as it did not adhere to the principles laid down by the jurisdictional High Court in CIT vs. Jet Airways (I) Ltd. Consequently, the Tribunal set aside the revision order, emphasizing that the foundation of the PCIT's revision was flawed, leading to the collapse of the entire revision proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137354 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 27-04-2022
• Other Referred Cases: CIT vs. Jet Airways (I) Ltd., NTPC vs. CIT, All Cargo Global Logistic Ltd. vs. DCIT, Kiran Singh and Others Vs. Chaman Paswan and Others, Deep Chand Kothari Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B” : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA.No.276/PUN./2022 Assessment Year 2011-12 Vrushali Vijay Kulkarni, Mahsul Colony, Old Agra Road, Latur. Maharashtra. PIN – 413 531 PAN AGBPK2682B vs. The PCIT-1, Kendriya Rajaswa Bhawan, Gadkari Chowk, Nashik – 422 002. Maharashtra. (Appellant) (Respondent) For Assessee : Shri Girish Ladda For Revenue : Shri B. Koteswara Rao Date of Hearing : 10.01.2023 Date of Pronouncement : 13.01.2023 ORDER PER SATBEER SINGH GODARA, J.M. This assessee’s appeal for assessment year 2011- 2012, arises against the PCIT, Nashik-1, Nashik’s DIN & Order No.ITBA/REV/F/REV5/2020-21/1031212624(1), dt.4/3/21, involving proceedings under Section 263 of the Income Tax Act, 1961 (in short “the Act”). Heard both the parties. Case file perused. 2. We note at the outset that the learned PCIT’s has exercised his sec.263 revision jurisdiction for terming the Assessing Officer’s sec.143(3) r.w.s. 147 re-assessment dated 28.09.2018 as an erroneous one causing prejudice to interest of Revenue inter alia, on three counts i.e., source of cash 2 ITA.No.276/PUN./2022 Vrushali Vijay Kulkarni, Latur, Maharashtra. deposits, non-verification of credit entries of Rs.12,78,607/- and Rs.12,84,234/- [both dated 14.01.2011] and the alleged erroneous computation of indexed cost of improvement disallowed of Rs.95,000/- only than the correct sum of Rs.1,35,905/-, respectively. 3. It transpires during the course of hearing from the perusal of the Assessing Officer’s re-assessment that he had recorded twin reasons of reopening involving the assessee’s total term deposits of Rs.10,000/- and cash deposits of Rs.20,000/-, respectively whereas no addition was made regarding the same since the assessment had disallowed the cost of improvement of Rs.95,000/- only. The said reopening, therefore, was prima facie found to be not sustainable in law in the light of hon'ble jurisdictional high court’s landmark decision in CIT vs. Jet Airways (I) Ltd., [2011] 331 ITR 236 (Bom.). Their lordship hold that a reopening does not survive in case the departmental authorities make addition on other issues than those forming the reasons of assessment which vitiates the entire sec.148/147 mechanism. 4. Faced with this legal position, Mr. Koteswara Rao vehemently argued that the impugned validity of the reopening could hardly be looked into once we are dealing with correctness of PCIT assuming sec.263 revision jurisdiction. We find no merit in Revenue’s instant technical arguments in the 3 ITA.No.276/PUN./2022 Vrushali Vijay Kulkarni, Latur, Maharashtra. light of this tribunal’s coordinate bench’s recent order dated 12.05.2022 in ITA.Nos.883 to 885/PUN./2016 rejecting the very stand as follows : 5. “We find no merit in the Revenue’s instant technical objections pleading estoppel as well as approbate and reprobate in the light of Hon’ble apex court’s landmark judgment in NTPC vs. CIT (1998) 229 ITR 383 (SC); as considered the tribunal’s Special Bench decision in the case of All Cargo Global Logistic Ltd. vs. DCIT (2012) 137 ITD 287 (Mum) (SB), that this tribunal can very well entertain a pure question of law going to route of the mater so as to determine the correct tax liability of an assessee provided all the relevant facts form part of the records. We make it clear that the assessee’s detailed paper book running into 150 pages has already placed on record the corresponding reopening reasons in all these three assessment years. We thus admit the assessee’s forgoing additional substantive ground in these circumstances. 6. We further wish to observe here that this tribunal various Co-ordinate benches decision M/s. Classic Flour and Food Processing Pvt. Ltd. Vs. DCIT in ITA Nos. 764 to 766/KOL/2014 (and other similar cases) order dated 05.04.2017 holds that an assessment is in the nature of primary and section 263 revision 4 ITA.No.276/PUN./2022 Vrushali Vijay Kulkarni, Latur, Maharashtra. exercise amounts to collateral proceedings wherein the forming validity could very well be challenged to the extent of correctness of CIT’s revision action only. Learned co-ordinate bench taken note of (1955) 1 SCR 117 (SC) in Kiran Singh and Others Vs. Chaman Paswan and Others holding that a decree passed by a court without jurisdiction is a nullity which could always be challenged in execution proceedings as well. The assessee further placed reliance on Deep Chand Kothari Vs. CIT 1988 171 ITR 381 (Raj.) that such basic principles of civil jurisprudence apply in tax proceedings. We hold in view of foregoing list of precedents that defect in primary proceedings strikes at the very authority in collateral exercise which is not curable by consent of the parties. We accordingly conclude that the assessee before us is very much entitled to challenge correctness of the primary proceedings to the limited extent of correctness of the instant section 263 revision actions only.” 4. We adopt the foregoing detailed reasoning mutatis mutandis to hold that once the Assessing Officer’s reopening itself is invalid in law, the PCIT revision jurisdiction has hardly any legs to stand as per “sublato fundamento cadit opus” i.e., when the foundation is removed, the superstructure also falls. We make it clear that our instant adjudication is confined to 5 ITA.No.276/PUN./2022 Vrushali Vijay Kulkarni, Latur, Maharashtra. the limited extent of the latter’s impugned revision order under challenge only. All other consequences shall continue to follow from the above stated re-assessment in other words. Ordered accordingly. 5. This assessee’s appeal is allowed in above terms. Order pronounced in the open Court on 13.01.2023. Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 13 th January, 2023 VBP/- Copy to 1. The appellant 2. The respondent 3. The Ld. CIT(A) concerned. 4. The CIT concerned 5. D.R. ITAT, Pune “B” Bench, Pune 6. Guard File. //By Order// Assistant Registrar, ITAT, Pune Benches Pune.