Mikado Realtors (P) Ltd, New Delhi V. Pr. CIT (Central), Gurugram

ITA 50/DEL/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5189 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Appeal Filed On: 27-01-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMITA M BISWAS
• Keywords: Sale consideration of property below Jantri Value; Invalid notice; Business income; Rectification of order; Search and seizure; Document seized; Question of law; Assessment record; Revised return; Reason to believe; Documents seized; Set aside; Capital Gains
• Section: 143(3); 50C; 142(1); 80HHC; 153A; 80IB; 133(6); 195; 201; 143(2); 139(1); 64; 2(A); 13; 153; 22; 153C; 147; 148; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO.50/DEL/2021 ASSESSMENT YEAR: 2017-2018 MIKADO REALTORS P. LTD., OFFICE NO., 1121-A, DEVIKA TOWER, 12 TH FLOOR, 6, NEHRU PLACE, NEW DELHI. VS. PR. CIT(CENTRAL) GURUGRAM. TAN/PAN: AAECM7429E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI GAUTAM JAIN, ADV. & SHRI LALIT MOHAN, CA RESPONDENT BY: MS. PRAMITA M. BISWAS, CIT-D.R. DATE OF HEARING: 18 03 2021 DATE OF PRONOUNCEMENT: 20 04 2021 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 24.12.2020, PASSED BY LD. PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) GURG AON IN HIS REVISIONARY JURISDICTION U/S.263 FOR THE ASSESSM ENT YEAR 2017-18. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED AS MANY AS 16 GROUNDS OF APPEAL, WHEREIN THE IMPUGNED ORDER HAS BEEN CHALLENGED ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THAT ORDER DATED 24.12.2020 U/S 263 OF THE ACT BY L EARNED PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), GUR GAON HAS BEEN MADE WITHOUT SATISFYING THE STATUTORY PRECONDI TIONS CONTAINED IN THE ACT AND IS THEREFORE WITHOUT JURIS DICTION AND THUS, DESERVES TO BE QUASHED AS SUCH. ITA NO.50/DEL/2021 2 2. THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX HAS ERRONEOUSLY ASSUMED JURISDICTION U/S 263 OF THE ACT BY FAILING TO APPRECIATE THAT THE ORDER SOUGHT TO BE REVISED DATE D 18.12.2018 U/S 143(3) OF THE ACT WAS AN ILLEGAL AND INVALID OR DER. 2.1 THAT THE FINDING THAT ASSESSEE DID NOT FILE ANY AP PEAL AGAINST THE ORDER DATED 18.12.2018 AND IT ATTAINED FINALITY AND THEREFORE ASSESSEE HAVING FAILED TO DO SO CANNOT CHALLENGE IT DURING THE REVISIONARY PROCEEDINGS U/S 263 OF THE ACT IS BASE D ON COMPLETE MISCONCEPTION OF FACTS AND LAW AND HENCE UNSUSTAINA BLE. 2.2 THAT RELIANCE IS PLACED ON THE JUDGMENT OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT V. JACOB J. THAILIATH REPO RTED IN 11 TAXMANN.COM 12 AND HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. A. SAMARAPURI CHETTY REPORTED IN 64 TAXMAN 3 44 IS BASED ON COMPLETE MISCONCEPTION OF FACTS AND LAW AN D HENCE UNSUSTAINABLE. 3. THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX HAS FAILED TO APPRECIATE THAT PROCEEDINGS FOR THE INSTA NT ASSESSMENT YEAR OUGHT TO HAVE BEEN INITIATED U/S 153C OF THE A CT AND THUS ORDER OF ASSESSMENT FRAMED U/S 153C/143(3) OF THE A CT AND NOT U/S 143(3) OF THE ACT; HENCE CONSEQUENTIALLY THE IM PUGNED ORDER IS VOID-AB-INITIO. 3.1 THAT THE FINDINGS RECORDED IN PARAS 4.2.1 TO 4.2.2 OF THE IMPUGNED ORDER ARE CONTRARY TO JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. RRJ SECURITIES LTD. REP ORTED IN 380 ITR 612 AND THEREFORE ORDER SO MADE IS PERSE ILLEGA L, INVALID AND WITHOUT JURISDICTION. 3.2 THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX HAS FAILED TO APPRECIATE THAT AS PER PROVISO TO SECTION 153C OF THE ACT FOR TAKING ACTION N U/S 153C THE DATE OF SEARCH WOU LD BE SUBSTITUTED BY THE DATE OF RECEIVING THE BOOKS OF A CCOUNT OR DOCUMENTS OR THE ASSETS ALLEGEDLY BELONGING TO THE ASSESSEE AND SEIZED IN THE COURSE OF SEARCH OF THE SEARCH PERSON AND ACCORDINGLY, IF NOTICE U/S 153C IS DATED 25.9.2018 , THEN IN ABSENCE OF ANY EVIDENCE TO THE CONTRARY, IT IS TO B E ASSUMED THAT ON 25.9.2018, MATERIAL HAS BEEN HANDED OVER TO THE LEARNED ASSESSING OFFICER AS SUCH, THE YEAR OF SEARCH WOULD BE 2018-19 I.E. ASSESSMENT YEAR 2019-20 AND SIX EARLIER ASSESS MENT YEARS ITA NO.50/DEL/2021 3 WOULD BE ASSESSMENT YEAR 2013-14 TO ASSESSMENT YEAR 2018-19 AND CONSEQUENTLY THE FINDING THAT PERIOD OF SIX YE ARS WILL BE INVARIABLY DECIDED WITH REFERENCE TO THE DATE OF SE ARCH IN THE CASE OF THE ORIGINAL GROUP WHICH IS 21.7.2016 IS M ISCONCEIVED, MISPLACED AND UNTENABLE. 3.3 THAT THE FURTHER FINDING THAT THE AMENDMENT SECTIO N 153C(1) INSERTED BY THE FINANCE ACT 2017 W.E.F. 01.04.2017 FURTHER CLARIFIES THE SAID PROVISIONS; AND THE SAID AMENDME NT IS APPLICABLE TO THE ASSESSEE AS NOTICE U/S 153C OF TH E ACT WAS ISSUED ON 25.9.2018 IS ALSO NOT IN ACCORDANCE WITH LAW, SINCE THE SEARCH WAS CONDUCTED ON 21.7.2016 I.E. MUCH PRI OR TO AMENDMENT UNDER CONSIDERATION. 4. THAT FURTHERMORE THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX HAS ERRED IN ASSUMING JURISDICTION BY FAILING T O APPRECIATE THAT SINCE NO NOTICE U/S 143(2) OF THE ACT WAS ISSU ED SUBSEQUENT TO THE FILING OF RETURN OF INCOME ON 11.10.2018 IN RESPONSE TO NOTICE U/S 142(1) OF THE ACT, THE ORDER OF ASSESSME NT DATED 18.12.2018 U/S 153B(L)(B)/143(3) OF THE ACT WAS WIT HOUT JURISDICTION AND THEREFORE THE SAME COULD NOT BE VA LIDLY REVISED U/S 263 OF THE ACT 4.1 THAT THE FINDING THAT ON PERUSAL OF THE ASSESSMENT RECORD IT IS NOTED THAT DURING THE ASSESSMENT PROCEEDINGS NOTICE U/S 143(2) WAS ISSUED BY THE AO TWICE ON 28.9.2018 AND 16.10.2 018 WHICH WAS WITHIN THE PRESCRIBED TIME LIMIT FOR ISSU E OF NOTICE U/S 143(2) WITH REFERENCE TO THE REVISED RETURN FILED O N 18.9.2018 AND RETURN FILED ON 11.10.2018 IN RESPONSE TO NOTIC E U/S 142(1) OF THE ACT IS FACTUALLY INCORRECT LEGALLY MISCONCE IVED AND CONTRARY TO RECORD; AND HAS BEEN RECORDED WITHOUT A NY OPPORTUNITY TO THE APPELLANT COMPANY. 4.2 THAT FURTHERMORE EVEN THE CONCLUSIONS THAT ISSUING OF NOTICE UNDER SECTION 143(2) OF THE ACT IS NOT MANDATORY RE QUIREMENT OF SEARCH CASES FOR THE YEARS FOR WHICH NOTICE UNDER S ECTION 153A/153C WAS ISSUED AND EVEN IN CASE OF SITUATION COVERED U/S 153C(2) IS ALSO MISPLACED, MISCONCEIVED AND AL SO UNTENABLE. 5. THAT FURTHERMORE THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX HAS FAILED TO APPRECIATE THAT SINCE APPROVAL U/ S 153D OF THE ITA NO.50/DEL/2021 4 ACT WAS INVALID AND ILLEGAL, THE INSTANT _ ORDER OF ASSESSMENT DATED 18.12.2018 U/S 153B(L)(B)/143(3) OF THE ACT W AS VITIATED ORDER AND THEREFORE COULD NOT BE REVISED UNDER SECT ION 263 OF THE ACT. 5.1 THAT THE FINDING THAT SINCE, THERE WAS NO DETAILED REPLY FURNISHED BY THE ASSESSEE, THE RETURNED INCOME WAS ACCEPTED AND APPROVAL U/S 153D WAS ACCORDED BY THE JCIT ON T HE BASIS OF MATERIAL AVAILABLE ON THE RECORD IS LEGALLY MIS CONCEIVED AND MISPLACED. 5.2 THAT FINDING THAT JCIT IS ACTIVELY INVOLVED IN ASS ESSMENT OF ALL SUCH CASES FROM BEGINNING AND AT ALL STAGES OF SEAR CH AND SEIZURE ASSESSMENT THE ASSESSING OFFICER DISCUSSES AND SEEKS HIS GUIDANCE IN THE APPROVAL LETTER WAS GENERALIZE D OBSERVATION AND THEREFORE NOT TENABLE. 5.3 THAT FURTHER CONCLUSION THAT THE APPROVAL GRANTED BY THE JCIT IS IN THE NATURE OF ADMINISTRATIVE POWER AND THERE IS NO NEED FOR THE JCIT TO GIVE A HEARING TO THE ASSESSEE BEFORE G RANTING APPROVAL IS ALSO MISCONCEIVED, MISPLACED AND ALSO UNTENABLE. 6. THAT IN ANY CASE THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX OUGHT TO HAVE HELD EVEN GOING BY HIS OPINION TH AT THERE WAS APPLICATION OF MIND BY THE AO AND JCIT THEREFORE TH E ORDER OF ASSESSMENT DATED 18.12.2018 COULD NOT BE REVISED U/ S 263 OF THE ACT. 6.1 THAT FINDING OF LEARNED PRINCIPAL COMMISSIONER OF I NCOME TAX THAT WITHOUT PREJUDICE OF THE ABOVE, SINCE THE AO AND THE JCIT BOTH FAILED TO CONSIDER THE REPLY FURNISHED BY THE ASSESSEE ON 18.12.2018 AND CONDUCT ENQUIRIES AS REQUIRED, MAKES THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT IS PREJU DICIAL TO THE INTEREST OF REVENUE SHOWS THAT HE HAS ADOPTED INCO NSISTENT AND CONTRADICTORY POSITION AND THEREFORE THE REVISION U /S 263 OF THE ACT IS OTHERWISE TOO A VITIATED ORDER. 7. THAT FURTHERMORE THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX WHILE MAKING THE IMPUGNED ORDER HAS FAILED TO A PPRECIATE THAT SCOPE OF INSTANT ASSESSMENT OUGHT TO HAVE BEEN CONFINED TO INCRIMINATING DOCUMENTS FOUND IN SEARCH OF THIRD PA RTY; AND SINCE DOCUMENTS FOUND WERE NEITHER INCRIMINATING NO R HAVING A ITA NO.50/DEL/2021 5 BEARING ON DETERMINATION OF TOTAL INCOME THEREFORE, NOTICE UNDER SECTION 142(1) OF THE ACT ON THE BASIS OF SATISFACT ION NOTE IS, AN INVALID NOTICE AND; IN ANY CASE, THE ORDER UNDER SE CTION 143(3)/153C OF THE ACT IS AN INVALID ORDER WHICH CO ULD NOT BE REVISED U/S 263 OF THE ACT. 8. THAT LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX H AS ERRED BOTH IN LAW AND ON FACTS IN FURTHER HOLDING THAT TH E THE ASSESSMENT ORDER PASSED IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2017-18 BY THE A.O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND ALSO IN VIEW OF THE PROVISION OF SECTION 263 R/W EXPLANATION 2 OF THE A CT IN RESPECT OF THE THREE ISSUES WHICH ARE AS UNDER: A) THE ASSESSMENT ORDER WAS PASSED BY THE AO WITHO UT MAKING PROPER ENQUIRIES OR VERIFICATION AND INVOKING THE P ROVISION OF SECTION 50C(1) AND 50C(2) OF THE ACT. B) THE AO FAILED TO CARRY OUT ANY ENQUIRY OR VERIFI CATION IN RESPECT OF THE COST OF SEVEN PLOTS AND THE AMOUNT O F RS. 37,27,570/- WHICH WAS WRITTEN OFF AS LAND COST COV ERED BY PANCHAYAT WRITTEN OFF WHICH WAS USED FOR COMPUTATIO N OF INCOME UNDER THE HEAD CAPITAL GAINS BY THE ASSESSEE. C) THE AO FAILED TO CARRY OUT THE ENQUIRIES IN RESP ECT OF OTHER EXPENSES OF RS. 76.32 LAKH ESPECIALLY LEGAL AND PRO FESSIONAL FEES OF RS. 71.01 LAKH OUT OF WHICH RS. 61,66,921/- + RS . 4,60,000/- WAS REQUIRED TO BE CAPITALIZED BEING IN THE NATURE OF CAPITAL EXPENSES AND RS. 4,60,000/- WAS REQUIRED TO BE DISA LLOWED AS THE SAME WAS NOT INCURRED FOR THE PURPOSE OF THE BU SINESS OF THE ASSESSEE THE FINDING IS FACTUALLY INCORRECT, LEGALLY MISCONC EIVED, CONTRARY TO RECORD AND UNTENABLE. 9. THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX HAS FAILED TO APPRECIATE THAT ONCE THE LEARNED ASSESSIN G OFFICER ON EXAMINATION OF THE FACTS ON RECORD AND AFTER MAKING ALL POSSIBLE ENQUIRIES HAD ACCEPTED CLAIM OF THE APPELLANT THEN SUCH AN ORDER OF ASSESSMENT COULD NOT BE REGARDED AS ERRONEOUS IN AS MUCH AS PREJUDICIAL TO THE INTEREST OF REVENUE MERELY BECAU SE THE LEARNED COMMISSIONER OF INCOME TAX HAD A DIFFERENT OPINION AND THAT ITA NO.50/DEL/2021 6 TOO, WITHOUT HAVING ESTABLISHED IN ANY MANNER THAT, VIEW ADOPTED BY THE LEARNED ASSESSING OFFICER WAS AN IMP OSSIBLE VIEW. 10. THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX HAS ALSO FAILED TO APPRECIATE THAT, U/S 263 OF THE ACT, AN ORDER OF ASSESSMENT CANNOT BE SET- ASIDE TO SIMPLY TO MAKE F URTHER ENQUIRIES AND THEREAFTER PASS FRESH ORDER OF ASSESS MENT AND AS SUCH, IMPUGNED ORDER IS CONTRARY TO LAW AND HENCE, UNSUSTAINABLE. 11. THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX HAS FAILED TO APPRECIATE THAT ACTION U/S 263 OF THE ACT IS OTHERWISE TOO INAPPLICABLE ON THE FACTUAL MATRIX OF THE FACTS OF THE INSTANT CASE SINCE ADMITTEDLY, UNDISPUTEDLY AND UNDENIABLY NOT A CASE OF LACK OF ENQUIRY OR LACK OF INVESTIGATION AND PERUSAL OF THE SHOW CAUSE NOTICE ITSELF WOULD SHOW THAT IT HAS NOT BEEN DENIED OR DISPUTED THAT ALL RELEVANT INFORMATION INCLUDING BOOKS OF ACCOUNTS HAVE BEEN FURNISHED/OBTAINED IN THE COURSE OF ASSESSMENT PROCEEDING AND THEREFORE INABSENCE OF AN Y ENQUIRIES BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX THE INVOCATION U/S 263 OF THE ACT IS NOT IN ACCORDANCE WITH LAW. 12. THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX HAS FAILED TO APPRECIATE THAT THE ALLEGATION THAT ACTU AL CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF LAN D PARCELS BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS RS . 20,01,68,750/-; WHEREAS THE VALUE OF THESE LAND PAR CELS ASSESSED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY W AS RS. 33,92,14,687/-; AND DESPITE THEREOF, AO DID NOT INV OKE THE PROVISION OF SECTION 50C(1) OF THE ACT AND AS A CON SEQUENCE UNDER ASSESSED THE INCOME UNDER THE HEAD CAPITAL GA INS BY AN AMOUNT OF RS. 13,90,45,937/- (RS. 33,92,14,687/- - RS. 20,01,68,750/-) IS FUNDAMENTALLY FLAWED AND WHOLLY UNSUSTAINABLE. 13. THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX HAS FURTHER FAILED TO APPRECIATE THAT FURTHER ALLEGATIO N THAT THE ASSESSMENT ORDER WAS PASSED BY THE AO WITHOUT MAKIN G PROPER ENQUIRIES OR VERIFICATION IN RESPECT OF APPLICABILI TY OF THE PROVISIONS OF SECTION 50C OF THE ACT AND COST OF LA ND PARCELS/LOSS ITA NO.50/DEL/2021 7 CLAIMED BY THE ASSESSEE OF RS. 37,27,570/- AS LAND COST COVERED BY PANCHAYAT WRITTEN OFF, HENCE THE ASSESSMENT ORDE R PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IN VIEW OF PROVISION OF SECTION 263 READ WI TH EXPLANATION 2(A) OF THE ACT IS ALSO NOT BASED ON C ORRECT APPRECIATION OF FACTS AND LAW. 14. THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCO ME TAX HAS FURTHER FAILED TO APPRECIATE THAT ANOTHER ALLEGATIO N THAT THE ASSESSMENT ORDER WAS PASSED BY THE AO WITHOUT MAKIN G PROPER ENQUIRIES OR VERIFICATION AND OTHER EXPENSES OF RS. 76.32 LAKH WERE ALLOWED UNDER THE HEAD BUSINESS INCOME WHICH I S AGAINST THE PROVISION OF THE ACT IS ALSO CONTRARY TO FACTS AND LAW AND THEREFORE UNTENABLE. 15. THAT FINDING AND CONCLUSION OF THE LEARNED COMM ISSIONER OF INCOME TAX THAT THE ASSESSMENT ORDER PASSED BY THE AO IS, THEREFORE, SET ASIDE ON THESE ISSUES. THE AO IS DIR ECTED TO CALL FOR THE DETAILS AND MAKE NECESSARY ENQUIRIES IN RESPECT OF THESE ISSUES AND PASSED THE ORDER IN ACCORDANCE WITH THE LAW AFTER PROPER VERIFICATION IS ILLEGAL, INVALID AND WITHOU T JURISDICTION 16. THAT VARIOUS ADVERSE FINDINGS AND CONCLUSIONS R ECORDED IN THE IMPUGNED ORDER ARE NOT ONLY FACTUALLY INCORRECT BUT ALSO CONTRARY TO FACTS ON RECORD. PRAYER IT IS THEREFORE PRAYED THAT, IMPUGNED ORDER MADE UNDER SECTION 263 OF THE ACT DATED 24.1.2019 BE HELD TO B E WITHOUT JURISDICTION AND, THEREFORE BE QUASHED AND APPEAL O F THE APPELLANT COMPANY BE ALLOWED. 2. BEFORE US LD. COUNSEL, MR. GAUTAM JAIN ON BEHALF OF THE ASSESSEE, FIRST OF ALL, ARGUED THE LEGAL ISSUE AS R AISED IN GROUND NO.1 TO 3.3 (SUPRA). THE PRIMARY CONTENTION OF LD. COUNSEL BEFORE US IS THAT, IN THIS CASE THE ASSESSM ENT PROCEEDINGS FOR ASSESSMENT YEAR 2017-18 HAS BEEN COMPLETED U/S. 143(3) PURSUANT TO NOTICE U/S.142(1) , WHICH OTHERWISE OUGHT TO HAVE BEEN INITIATED U/S.153C AS PER LAW, AND CONSEQUENTLY, THE ASSESSMENT ORDER ITSELF SHOUL D HAVE ITA NO.50/DEL/2021 8 BEEN FRAMED U/S.153C/143(3) AND NOT U/S.143(3). HEN CE, THE ASSESSMENT ORDER ITSELF IS VOID AB INITIO AND INVALID ORDER WHICH COULD NOT HAVE BEEN REVISED U/S.263 BY THE LD . PCIT. THE RELEVANT FACTS QUA THE ISSUE HAVE BEEN HIGHLIGH TED BY FOLLOWING SEQUENCE OF EVENTS:- SR. NO. DATE PARTICULARS I) 13.10.2017 THAT APPELLANT HAD FURNISHED AN ORIGINAL RETURN OF INCOME DECLARING LOSS OF RS. 75,62,079/- FOR THE FINANCIAL YEAR 2016-17 RELEVANT TO ASSESSMENT YEAR 2017-18 U/S 139(1) OF THE ACT. THIS RETURN WAS ACCOMPANIED BY FOLLOWING DOCUMENTS: I) ACKNOWLEDGEMENT OF RETURN OF INCOME DATED 13.10.2017 II) COMPUTATION OF TOTAL INCOME III) AUDITED FINANCIAL STATEMENT II) 18.9.2018 THAT APPELLANT HAD FURNISHED A REVISED RETU RN OF INCOME DECLARING LOSS OF RS. 7,03,89,637/- FOR THE FINANCIAL YEAR 2016-17 RELEVANT TO ASSESSMENT YEAR 2017-18 U/S 139(1) OF THE ACT. THIS RETURN WAS ACCOMPANIED BY COMPUTATION OF INCOME, AUDITED FINANCIAL STATEMENTS AND AUDITED REPORT FOR THE FINANCIAL YEAR 2016-17 RELEVANT TO ASSESSMENT YEAR 2017-18. III) 21.7.2016 I) THAT A SEARCH AND SEIZURE OPERATION WAS INITIATED ON M/S M3M GROUP U/S 132(1) OF THE ACT THAT PANCHNAMA DRAWN IN RESPECT OF THE FOLLOWING COMPANIES AT PARAS TWIN TOWER, TOWER-B, 6 TH FLOOR, GOLF COURSE ROAD, SECTOR- 54, I) M/S M3M INDIA LTD. II) M/S M3M INDIA (P) LTD. III) M/S M3M INDIA HOLDINGS (P) LTD. IV) M/S MISTY MEADOW (P) LTD. IV) 25.9.2018 THAT PURSUANT TO THE AFORESAID SEARCH, NOTICES ITA NO.50/DEL/2021 9 UNDER SECTION 153C OF THE ACT HAD BEEN ISSUE D TO THE APPELLANT COMPANY FOR ASSESSMENT YEARS 2011-12 TO 2016-17 AND NOTICE DATED 25.09.2018 U/S.142(1) OF THE ACT FOR ASSESSMENT YEAR 2017-18. V) 25.09.2018 THAT PROCEEDINGS U/S.153C OF THE ACT WAS INITIATED ON THE BASIS OF A SATISFACTION NOTE. 3. BRIEF FACTS QUA THIS ISSUE ARE THAT, A SEARCH AN D SEIZURE OPERATION WAS INITIATED ON M/S. M3M GROUP U/S.131 O N 21.07.2016 AND IN PURSUANCE TO THE AFORESAID SEARCH , NOTICE U/S.153C HAS BEEN ISSUED TO THE ASSESSEE RIGHT FROM THE ASSESSMENT YEARS 2011-12 TO 2016-17 ON 25.09.2018 A ND ON THE SAME DATE NOTICE U/S. 142(1) WAS ALSO ISSUED FO R ASSESSMENT YEAR 2017-18. THE SATISFACTION NOTE RE CORDED BY THE ASSESSING OFFICER TO ACQUIRE JURISDICTION U/S.15 3C ON 25.09.2018 READS AS UNDER:- BY VIRTUE OF THE AUTHORIZATION OF THE DIRECTOR OF I NCOME TAX / (INVESTIGATION), CHANDIGARH, A SEARCH & SEIZURE O PERATION U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CA LLED THE ACT) WAS CARRIED OUT ON 21.7.2016 AT THE RESIDENTIAL/BUSINESS PREMISES OF THE PERSONS ASSOCI ATED WITH THE M/S M3M GROUP. 2. DURING SEARCH & SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT CARRIED OUT AT CHAMBER NO. PARAS TWIN TOWE RS, TOWER-B, 6TH FLOOR, GOLF COURSE ROAD, SECTOR-54, GU RGAON- 122002 BELONGING TO M3M GROUP SEIZED MATERIAL I.E. ANNEXURE A-8 WAS SEIZED FROM THE AFOREMENTIONED PREMISES. ITA NO.50/DEL/2021 10 3. IN VIEW OF THE ABOVE AND AS PER THE PROVISIONS O F SUB SECTION (1) OF THE SECTION 153C OF THE ACT, I AM SA TISFIED THAT THE DOCUMENT SEIZED AS MENTIONED ABOVE CONTAINS INFORMATION RELATING TO THE ASSESSEE M/S MIKADO REA LTORS (P) LTD. AND WILL HAVE BEARING ON THE DETERMINATION OF TOTAL INCOME FOR THE A.Y. 2011-12 TO 2017-18 OF M/S MIKAD O REALTORS PVT. LTD. ACCORDING AFTER CONSIDERATION, I T IS DECIDED TO ISSUE SUCH OTHER PERSON (M/S MIKADO REALTORS PVT . LTD.) NOTICE AS PER PROVISIONS OF SECTION 153C READ WITH SECTION 153A OF THE ACT. 4. THE CASE OF THE LD. COUNSEL BEFORE US IS THAT, T HE DATE OF SATISFACTION NOTE, I.E., 25.09.2018 HAS TO BE RECKO NED AS REFERENCE DATE, AND THEREFORE, SIX EARLIER ASSESSME NT YEARS SHALL BE ASSESSMENT YEARS 2012-13 TO ASSESSMENT YEA R 2018- 19. AS A CONSEQUENCE, ASSESSMENT FOR THE ASSESSMENT YEAR 2017-18 OUGHT TO HAVE BEEN COMPLETED U/S.153C AND N OT U/S. 143(3). HERE IN THIS CASE, THE NOTICES U/S.153 C HAVE BEEN ISSUED FOR THE ASSESSMENT YEARS 2011-12 TO 201 6-17 AND HAD NOT BEEN ISSUED FOR ASSESSMENT YEAR 2017-18 , ALBEIT HAS BEEN TREATED AS REGULAR ASSESSMENT. IN SUPPORT OF HIS CONTENTION, HE HEAVILY RELIED UPON THE JUDGMENT OF H ONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. R.R.J. SECURITIES LTD. REPORTED IN 380 ITR 612 ; AND IN THE CASE OF ARN INFRASTRUCTURE INDIA LTD. VS. ACIT, REPORTED IN 394 ITR 569 . THUS, HE SUBMITTED ONCE THE ASSESSMENT ORDER WHIC H IS BEING SOUGHT TO BE REVISED U/S.263 BY THE LD. PCIT, ITSELF IS INVALID AND HENCE SUCH AN ORDER CANNOT BE REVISED O R SET ITA NO.50/DEL/2021 11 ASIDE. IN SUPPORT OF HIS CONTENTION THAT SUCH A VAL IDITY OF THE ASSESSMENT CAN BE CHALLENGED IN THE PROCEEDINGS U/S .263. HE HEAVILY RELIED UPON THE JUDGMENT OF ITAT MUMBAI BENC H IN THE CASE OF M/S. WESTLIFE DEVELOPMENT LTD. VS. ACIT REPORTED IN 49 ITR (T) 406 . 5. ON THE OTHER HAND, LD. CIT-DR VEHEMENTLY OBJECTE D TO THE CONTENTION RAISED BY THE LD. COUNSEL THAT VALID ITY OF THE ASSESSMENT CAN BE CHALLENGED IN THE REVISIONARY PRO CEEDINGS U/S.263. SHE POINTED OUT THAT, THIS ISSUE WAS RAISE D EVEN BEFORE THE LD. PCIT WHICH HAS BEEN DEALT BY HIM IN THE IMPUGNED ORDER IN DETAIL IN PARAGRAPH 4 TO 4.2.4. S HE SUBMITTED THAT THERE ARE TWO SPECIFIC JUDGMENTS OF H ONBLE KERALA HIGH COURT AND HONBLE MADRAS HIGH COURT WHI CH HAS BEEN RELIED UPON BY THE LD. PCIT, WHEREIN THE HONB LE HIGH COURT HAS CLEARLY HELD THAT THE VALIDITY OF THE ASS ESSMENT PROCEEDINGS CANNOT BE CHALLENGED IN THE PROCEEDINGS U/S.263. SHE FURTHER SUBMITTED THAT, IF AT ALL THE ASSESSEE WAS AGGRIEVED BY THE ASSESSMENT ORDER, THEN IT COULD HA VE FILED AN APPEAL BEFORE THE LD. CIT (A) AND ONCE THE ASSESSEE ITSELF HAS ACCEPTED THE ASSESSMENT ORDER, THEN SAME CANNOT BE CHALLENGED IN A COLLATERAL PROCEEDINGS WHEREIN THE LD. PCIT HAS SPECIFICALLY HIGHLIGHTED VARIOUS POINTS AS TO H OW THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, NEITHER SUCH A PLEA SHOULD B E ENTERTAINED NOR SHOULD BE PERMITTED TO BE RAISED WH EN THE LD. PCIT HAS SET ASIDE THE ASSESSMENT ORDER WHICH WAS E ARLIER ACCEPTED BY THE ASSESSEE. LD. CIT-DR FURTHER SUBMIT TED THAT ITA NO.50/DEL/2021 12 OTHERWISE ALSO, IN THIS CASE FOR INITIATING PROCEED INGS U/S.153C, THE DATE OF SEARCH SHOULD BE TAKEN INTO CONSIDERATION FOR COUNTING SIX ASSESSMENT YEARS IMM EDIATELY PRECEDING ASSESSMENT YEARS IN WHICH SEARCH WAS COND UCTED AND THEREFORE, ASSESSING OFFICER HAS RIGHTLY ISSUED NOTICE U/S 153C FOR THE ASSESSMENT YEARS 2011-12 TO 2016-17 AN D FOR AY 2017-18 U/S 142(1) AND HE WAS LEGALLY CORRECT TO MAKE THE ASSESSMENT U/S 143(3). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO P ERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AN D THE RELEVANT FACTS PLACED ON RECORD. THE MAIN ISSUE ARG UED BEFORE US IS FIRSTLY , WHETHER THE APPELLANT/ASSESSEE CAN CHALLENGE THE VALIDITY OF THE ASSESSMENT ORDER DURING THE REV ISIONARY PROCEEDINGS U/S.263 WHEN THE ASSESSMENT ORDER STAND S ACCEPTED; AND SECONDLY , WHETHER THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) ITSELF W AS BAD IN LAW OR NOT. AS EVIDENT FROM THE SEQUENCE OF EVENTS INCORPORATED IN THE FORGOING PARAGRAPH, THE DATE OF SEARCH AND SEIZURE OPERATION IN THE CASE OF M/S. M3M GROUP WAS ON 21.07.2016. THE LD. ASSESSING OFFICER ACQUIRE THE J URISDICTION U/S.153C VIDE SATISFACTION NOTE DATED 28.01.2018 FO R THE ASSESSMENT YEARS 2011-12 TO 2016-17; AND FOR THE ASSESSMENT YEAR 2017-18, HE HAS ISSUED NOTICE U/S.1 42(1) WHICH WAS SERVED ON 26.09.2018 TO FILE THE RETURN O F INCOME. HE HAS TREATED THE ASSESSMENT YEARS 2017-18 AS YEAR OF SEARCH AND HAS PASSED REGULAR ASSESSMENT ORDER U/S. 143(3). ONE OF THE ARGUMENTS TAKEN BY THE LD. CIT-DR IS THA T EVEN IN ITA NO.50/DEL/2021 13 THE CASES FOR INITIATING PROCEEDINGS U/S.153C, THE DATE OF SEARCH DETERMINES THE SIX ASSESSMENT YEARS IMMEDIAT ELY PRECEDING ASSESSMENT YEARS IN WHICH SEARCH WAS COND UCTED. EVEN PRIOR TO THE AMENDMENT BROUGHT BY THE FINANCE ACT, 2017 W.E.F. 01.04.2017 IN SECTION 153C THE SPIRIT A ND THE INTENTION OF THE STATUTE WAS THE SAME. 7. WE WILL FIRST TAKE UP THE ISSUE, WHETHER IN C ASES OF SECTION 153C, THE PERIOD OF SIX YEARS HAS TO BE REC KONED FROM THE DATE OF RECORDING OF SATISFACTION NOTE OR FROM THE DATE OF SEARCH CARRIED OUT IN A CASE OF A PERSON PROVIDED I N SECTION 153A. THIS PRECISE ISSUE HAS BEEN DEALT BY THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RRJ SECURITIES LTD. AS REPORTED IN 380 ITR 612 IN THE CONTEXT OF SECTION 153C OF THE ACT, WHEREIN IT WAS LAID DOWN AS UNDER: FURTHER, THE PERIOD OF SIX YEARS WOULD ALSO HAVE T O BE RECKONED WITH RESPECT TO THE DATE OF RECORDING OF S ATISFACTION NOTE - THAT IS, 8TH SEPTEMBER, 2010 - AND NOT THE D ATE OF SEARCH . 24. AS DISCUSSED HEREINBEFORE, IN TERMS OF PROVISO TO SECTION 153C OF THE ACT, A REFERENCE TO THE DATE OF THE SEA RCH UNDER THE SECOND PROVISO TO SECTION 153A OF THE ACT HAS T O BE CONSTRUED AS THE DATE OF HANDING OVER OF ASSETS/DOC UMENTS BELONGING TO THE ASSESSEE (BEING THE PERSON OTHER T HAN THE ONE SEARCHED) TO THE AO HAVING JURISDICTION TO ASSESS T HE SAID ASSESSEE. FURTHER PROCEEDINGS BY VIRTUE OF SECTION 153C(1) OF THE ACT WOULD HAVE TO BE IN ACCORDANCE WITH SECTION 153A OF THE ACT AND THE REFERENCE TO THE DATE OF SEARCH WOU LD HAVE TO BE CONSTRUED AS THE REFERENCE TO THE DATE OF RECORD ING OF ITA NO.50/DEL/2021 14 SATISFACTION . IT WOULD FOLLOW THAT THE SIX ASSESSMENT YEARS FOR WHICH ASSESSMENTS/REASSESSMENTS COULD BE MADE UNDER SECTION 153C OF THE ACT WOULD ALSO HAVE TO BE CONST RUED WITH REFERENCE TO THE DATE OF HANDING OVER OF ASSETS/DOC UMENTS TO THE AO OF THE ASSESSEE. IN THIS CASE, IT WOULD BE T HE DATE OF THE RECORDINGS OF SATISFACTION UNDER SECTION 153C O F THE ACT, I.E., 8TH SEPTEMBER, 2010. IN THIS VIEW, THE ASSESS MENTS MADE IN RESPECT OF ASSESSMENT YEARS 2003-04 AND 2004-05 WOULD BE BEYOND THE PERIOD OF SIX ASSESSMENT YEARS AS REC KONED WITH REFERENCE TO THE DATE OF RECORDINGS OF SATISFA CTION BY THE AO OF THE SEARCHED PERSON. IT IS CONTENDED BY THE REVENUE THAT THE RELEVANT SIX ASSESSMENT YEARS WOULD BE THE ASSESSMENT YEARS PRIOR TO THE ASSESSMENT YEAR RELEV ANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED. IF THIS INTERPRETATION AS CANVASSED BY THE REVENUE IS ACCEP TED, IT WOULD MEAN THAT WHEREAS IN CASE OF A PERSON SEARCHE D, ASSESSMENTS IN RELATION TO SIX PREVIOUS YEARS PRECE DING THE YEAR IN WHICH THE SEARCH TAKES PLACE CAN BE REOPENE D BUT IN CASE OF ANY OTHER PERSON, WHO IS NOT SEARCHED BUT H IS ASSETS ARE SEIZED FROM THE SEARCHED PERSON, THE PERIOD FOR WHICH THE ASSESSMENTS COULD BE REOPENED WOULD BE MUCH BEYOND THE PERIOD OF SIX YEARS. THIS IS SO BECAUSE THE DATE OF HANDING OVER OF ASSETS/DOCUMENTS OF A PERSON, OTHER THAN TH E SEARCHED PERSON, TO THE AO WOULD BE SUBSEQUENT TO THE DATE O F THE SEARCH. THIS, IN OUR VIEW, WOULD BE CONTRARY TO THE SCHEME OF SECTION 153C (1) OF THE ACT, WHICH CONSTRUES THE DA TE OF RECEIPT OF ASSETS AND DOCUMENTS BY THE AO OF THE ASSESSEE ( OTHER THAN ONE SEARCHED) AS THE DATE OF THE SEARCH ON THE ASSESSEE. THE RATIONALE APPEARS TO BE THAT WHEREAS IN THE CAS E OF A SEARCHED PERSON THE AO OF THE SEARCHED PERSON ASSUM ES ITA NO.50/DEL/2021 15 POSSESSION OF SEIZED ASSETS/DOCUMENTS ON SEARCH OF THE ASSESSEE; THE SEIZED ASSETS/DOCUMENTS BELONGING TO A PERSON OTHER THAN A SEARCHED PERSON COME INTO POSSESSION O F THE AO OF THAT PERSON ONLY AFTER THE AO OF THE SEARCHED PE RSON IS SATISFIED THAT THE ASSETS/DOCUMENTS DO NOT BELONG T O THE SEARCHED PERSON. THUS, THE DATE ON WHICH THE AO OF THE PERSON OTHER THAN THE ONE SEARCHED ASSUMES THE POSS ESSION OF THE SEIZED ASSETS WOULD BE THE RELEVANT DATE FOR APPLYING THE PROVISIONS OF SECTION 153A OF THE ACT. WE, THER EFORE, ACCEPT THE CONTENTION THAT IN ANY VIEW OF THE MATTER, ASSE SSMENT FOR AY 2003-04 AND AY 2004-05 WERE OUTSIDE THE SCOPE OF SECTION 153C OF THE ACT AND THE AO HAD NO JURISDICTION TO M AKE AN ASSESSMENT OF THE ASSESSEE'S INCOME FOR THAT YEAR. THIS PRINCIPLE WAS FURTHER REITERATED IN THE CASE OF ARN INFRASTRUCTURE INDIA LTD. V. ACIT AS REPORTED IN 394 ITR 569, WHEREIN IT HAS BEEN HELD AS UNDER: '12. THE DECISION IN RRJ SECURITIES LTD. (SUPRA) IS CATEGORICAL THAT UNDER / SECTION 153C OF THE ACT, THE PERIOD OF SIX YEARS AS REGARDS THE PERSON OTHER THAN THE SEARCHED PERSON W OULD COMMENCE ONLY FROM THE YEAR IN WHICH THE SATISFACTI ON NOT IS PREPARED BY THE AO OF THE SEARCHED PERSON AND A NOT ICE IS ISSUED PURSUANT THERETO. THE DATE OF THE SATISFACTION NOTE IS 21 ST JULY, 2014 AND THE NOTICE UNDER SECTION 153C OF THE ACT WAS ISSUED ON 23 RD JULY, 2014. THE PREVIOUS SIX AYS WOULD THEREFORE BE FROM AY 2009-10 TO AY 2014-15. THIS WOULD THEREFORE NOT INCLUDE AYS 2007-08 AND 2008-09 . 8. IF WE APPLY THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT, IN THE PRESENT CASE, THE N THE DATE ITA NO.50/DEL/2021 16 OF SATISFACTION, I.E., 25.09.2018 HAS TO BE RECKONE D AS THE DATE OF REFERENCE FROM WHERE SIX ASSESSMENT YEARS IMMEDI ATELY PRECEDING ASSESSMENT YEARS HAS TO BE CONSTRUED AND THEREFORE, SIX PRECEDING ASSESSMENT YEARS IN THIS C ASE SHALL BE FROM ASSESSMENT YEAR 2012-13 TO ASSESSMENT YEAR 201 8-19. THE INSTANT ASSESSMENT YEAR, I.E., ASSESSMENT YEAR 2017-18 ERGO WOULD BE COVERED IN THE EARLIER SIX ASSESSMENT YEARS WHERE THE ASSESSMENTS HAVE TO BE FRAMED U/S.153C ON LY, WHEREBY THE ASSESSING OFFICER WAS REQUIRED TO ISSUE A NOTICE U/S.153C, AND FRAME THE ASSESSMENT U/S.153C/143(3). CONTRA TO THE LAW AS INTERPRETED BY THE HONBLE JUR ISDICTIONAL HIGH COURT, THE LD. ASSESSING OFFICER HAD ISSUED NO TICE U/S.142(1) AND RESULTANTLY HAS FRAMED THE ASSESSMEN T U/S.143(3), TREATING IT TO BE REGULAR ASSESSMENT FO R THE YEAR OF SEARCH. THE AMENDMENT TO CLARIFY THIS POSITION U/S. 153C (1) WAS BROUGHT IN THE STATUTE BY THE FINANCE ACT, 2017 W.E.F. 01.04.2017, WHEREIN IT HAS BEEN PROVIDED THAT THE S IX PRECEDING ASSESSMENT YEARS FOR THE PERSON COVERED U /S 153C WOULD BE SAME AS THAT OF THE SEARCHED PERSON COVERE D U/S 153A. IN OTHER WORDS, IN CASE OF THE OTHER PERSON (I.E. PERSON COVERED U/S 153C), SIX PRECEDING ASSESSMENT YEARS H AS TO BE RECKONED FROM THE YEAR OF SEARCH. THIS AMENDMENT HA S BEEN HELD TO BE PROSPECTIVE BY THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS. SARWAR AGENCY P LTD. AS REPORTED IN 397 ITR 400, WHEREIN THE HONBLE COURT OBSERVED AND HELD AS UNDER: ITA NO.50/DEL/2021 17 10. MR. SALIL AGGARWAL, LEARNED COUNSEL FOR THE AS SESSEE, HAS DRAWN THE ATTENTION OF THE COURT TO THE RECENT AMEN DMENT MADE IN SECTION 153 C OF THE ACT BY THE FINANCE ACT, 2017 W ITH EFFECT FROM 1ST APRIL 2017. THIS AMENDMENT IN EFFECT STATES THA T THE BLOCK PERIOD FOR THE SEARCHED PERSON AS WELL AS THE 'OTHE R PERSON' WOULD BE THE SAME SIX AYS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THIS AMENDMENT IS PROSPECTIVE. 11. MR. ASHOK MANCHANDA, LEARNED SENIOR STANDING CO UNSEL FOR THE APPELLANT, SOUGHT TO PURSUE THIS COURT TO RECONSIDE R ITS VIEW IN RRJ SECURITIES (SUPRA). THE COURT DECLINES TO DO SO FOR MORE THAN ONE REASON. FIRST, FOR REASONS BEST KNOWN TO IT, THE RE VENUE HAS NOT CHALLENGED THE DECISION OF THIS COURT IN RRJ SECURI TIES (SUPRA) IN THE SUPREME COURT. THE SAID DECISION HAS BEEN CONSISTEN TLY FOLLOWED BY THE AUTHORITIES UNDER THIS COURT AS WELL AS BY T HIS COURT. THIRDLY, THE RECENT AMENDMENT TO SECTION 153C (1) OF THE ACT STATES FOR THE FIRST TIME THAT FOR BOTH THE SEARCHED PERSON AND TH E OTHER PERSON THE PERIOD OF REASSESSMENT WOULD BE SIX AYS PRECEDING T HE YEAR OF SEARCH. THE SAID AMENDMENT IS PROSPECTIVE. 12. CONSEQUENTLY, NO SUBSTANTIAL QUESTION OF LAW AR ISES FROM THE IMPUGNED ORDER OF THE ITAT. THE APPEAL IS, ACCORDIN GLY, DISMISSED. 9. FURTHER, HONBLE GUJARAT HIGH COURT IN THE CASE OF ANIL KUMAR GOPIKISHAN ARAWAL V. CIT AS REPORTED IN 418 ITR 25 HAS ALSO CLARIFIED THAT SUCH AN AMENDMENT IS PROSPE CTIVE AFTER OBSERVING AS UNDER:- 19.19 IT MAY BE PERTINENT TO NOTE THAT VIDE CBDT C IRCULAR NO. 2/2018 / DATED 15.2.2018, IT HAS BEEN CLARIFIED THA T THE AMENDED PROVISIONS OF SECTION 153A OF THE ACT SHALL APPLY WHERE SEARCH UNDER SECTION 132 OF THE ACT IS INITIA TED OR REQUISITION UNDER SECTION 132A OF THE ACT IS MADE O N OR AFTER 1ST DAY OF APRIL, 2017. IT IS FURTHER STATED THEREI N THAT SECTION ITA NO.50/DEL/2021 18 153C OF THE ACT HAS ALSO BEEN AMENDED TO PROVIDE A REFERENCE TO THE RELEVANT ASSESSMENT YEAR OR YEARS AS REFERRE D TO IN SECTION 153A OF THE INCOME-TAX ACT. IT IS ALSO STATED THEREIN THAT HUS, THE AMENDMENT WILL TAKE EFFECT FROM 1ST APRIL, 2017. THEREFORE, EVEN THE CBDT, IN THE CONTEXT OF TH E AMENDED PROVISIONS OF SECTION 153A OF THE ACT, HAS CLARIFIED THAT IT WOULD APPLY WHEN SEARCH OR REQUISITION IS MADE AFTER THE DATE OF THE AMENDMENT. EVIDENTLY, THEREFORE, EVEN THE AMENDED PROVISIONS OF SECTION 153C OF THE ACT WOULD APPLY WHEN SEARCH OR REQUISITION IS MADE AFTER THE AMENDMENT. 10. SIMILAR AMENDMENTS HAVE BEEN MADE FROM TIME TO TIME IN SECTION 153C AND ONE OF SUCH AMENDMENT WAS IN TH E FINANCE ACT, 2015 BROUGHT IN THE STATUTE FROM 01.06 .2015, WHEREBY THE STATUTE EXTENDED THE SCOPE OF SECTION 1 53C BY HOLDING THAT NOT ONLY THE SPECIFIED ITEMS BELONGIN G TO OTHER PERSON WOULD TRIGGER THE PROVISION OF SECTION 153C BUT ALSO ANY BOOKS OF ACCOUNT OR DOCUMENTS, SEIZED OR REQUIS ITIONED WHICH PERTAIN TO, OR ANY INFORMATION CONTAINED THER EIN, WHICH RELATES TO OTHER PERSON WOULD ALSO TRIGGER THE PROV ISIONS OF SECTION 153C OF THE ACT. THIS AMENDMENT TOO HAS BEE N HELD TO BE PROSPECTIVE AND APPLICABLE ONLY TO SEARCHES COND UCTED AFTER 1.6.2015. THIS HAS BEEN HELD SO AS HONBLE JURISDICTIONAL HIGH COURT IN VARIOUS JUDGMENTS, SOM E OF WHICH ARE AS UNDER: I) 399 ITR 202 (DEL) CANYON FINANCIAL SERVICES LTD. V S. ITO 5. THE SEARCH IN THE DALMIA GROUP OF COMPANIES TOOK PLACE ON 20TH JANUARY, 2012 AND THE SATISFACTION NOTE BY THE AO OF THE ITA NO.50/DEL/2021 19 SEARCHED PERSON WAS DATED 13TH MARCH, 2014. THEREFO RE, SECTION 153C AS IT STOOD PRIOR TO THE AMENDMENT WIT H EFFECT FROM 1ST JUNE, 2015 APPLIED TO THE CASE ON HAND. IN TERMS OF THE SAID PROVISION I.E., 153C(1), THE AO OF THE SEA RCHED PERSON HAD TO BE SATISFIED THAT THE DOCUMENTS SEIZED BELO NGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED T O IN SECTION 153A' IN ORDER THAT THE AO OF THE SEARCHED PERSON C OULD TO HAND OVER SUCH DOCUMENTS TO THE AO HAVING JURISDIC TION OVER SUCH OTHER PERSON. THE CHANGE BROUGHT ABOUT BY THE PROSPECTIVE AMENDMENT, WITH EFFECT FROM 1ST JUNE 20 15, IS THAT FOR INITIATING PROCEEDINGS UNDER SECTION 153 C ARISING FROM SEARCHES AFTER THAT DATE IT IS ENOUGH FOR THE DEPARTMENT TO SHOW THAT A PARTICULAR SEIZED DOCUMENT 'PERTAINS TO' THE OTHER PERSON. HOWEVER, IN THE PRESENT CASE, SINCE T HE PROCEEDINGS UNDER SECTION 153 C (1) OF THE ACT AGAI NST THE ASSESSEE COMMENCED PRIOR TO 1ST JUNE 2015, THE DEPA RTMENT IS NOT RELIEVED OF THE BURDEN OF SHOWING THAT THE S EIZED DOCUMENTS IN FACT BELONG TO (AND NOT MERELY PERTAIN TO) THE ASSESSEE. II) 417 ITR 617 (DEL) PCIT VS. DREAMCITY BUILDWELL (P) LTD. 17. IN THE PRESENT CASE THE SEARCH TOOK PLACE ON 5 TH JANUARY 2009. NOTICE TO THE ASSESSEE WAS ISSUED UNDER SECTI ON 153 C ON 19TH NOVEMBER 2010. THIS WAS LONG PRIOR TO 1ST J UNE, 2015 AND, THEREFORE, SECTION 153C OF THE ACT AS IT STOOD AT THE RELEVANT TIME APPLIED. IN OTHER WORDS, THE CHANGE B ROUGHT ABOUT PROSPECTIVELY WITH EFFECT FROM 1ST JUNE. 2015 BY THE AMENDED SECTION 153C (11 OF THE ACT DID NOT APPLY T O THE SEARCH IN THE INSTANT CASE. THEREFORE, THE ONUS WAS ON THE REVENUE TO SHOW THAT THE INCRIMINATING MATERIAL/DOC UMENTS ITA NO.50/DEL/2021 20 RECOVERED AT THE TIME OF SEARCH 'BELONGS' TO THE AS SESSEE. IN OTHER WORDS, IT IS NOT ENOUGH FOR THE REVENUE TO SH OW THAT THE DOCUMENTS EITHER 'PERTAIN' TO THE ASSESSEE OR CONTA INS INFORMATION THAT 'RELATES TO' THE ASSESSEE. 11. HERE IN THIS CASE, SINCE THE DATE OF SEARCH IS 21.07.2016, THEREFORE, THE AMENDMENT BROUGHT BY THE FINANCE ACT , 2017 WOULD NOT BE APPLICABLE AND EX CONSEQUENTI THE ASSESSMENT FOR THE INSTANT ASSESSMENT YEAR 2017-18 OUGHT TO HA VE BEEN COMPLETED U/S.153C OF THE ACT AND THE ORDER OF ASSE SSMENT DATED 18.12.2018 PASSED U/S 143(3) IN PURSUANT TO N OTICE U/S. 142(1) IS BAD IN THE EYES OF LAW IN VIEW OF TH E LAW INTERPRETED AND UPHELD BY THE HONBLE JURISDICTIONA L HIGH COURT IN CIT VS. RRJ SECURITIES LTD. AND ARN INFRASTRUCTURE INDIA LTD. V. ACIT AS CITED SUPRA. 12. ANOTHER CORE ISSUE HEREIN ARGUED BEFORE US IS, WHETHER THE LEGALITY OF THE ASSESSMENT CAN BE CHALLENGED IN A COLLATERAL PROCEEDINGS LIKE REVISIONARY PROCEEDINGS U/S.263, W HICH LD. PCIT HAS HELD THAT THE SAME CANNOT BE CHALLENGED AN D HAS BEEN VEHEMENTLY SUPPORTED BY THE LD. CIT-DR. THIS P RECISE ISSUE HAS BEEN DEALT IN DETAIL BY THE CO-ORDINATE B ENCH OF ITAT MUMBAI BENCH IN THE CASE OF M/S. WESTLIFE DEVELOPMENT LTD. V. PR. CIT AS REPORTED IN 49 ITR (T) 406 WHEREIN THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER : 8. CHALLENGING THE JURISDICTIONAL DEFECTS OF ASSES SMENT ORDER FOR ASSAILING THE JURISDICTIONAL VALIDITY OF THE REVISI ON ORDER PASSED U/S 263: ITA NO.50/DEL/2021 21 THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION I S - WHETHER THE ASSESSEE CAN CHALLENGE THE JURISDICTIONAL VALIDITY OF ORDER PASSED U/S 143(3) IN THE APPELLATE PROCEEDINGS TAKEN UP FO R CHALLENGING THE ORDER PASSED U/S 263? IF WE ANALYSE THE NATURE OF BOTH OF THESE PROCEEDINGS, WHICH ARE UNDER CONSIDERATION BE FORE US, WE FIND THAT THE ORIGINAL ASSESSMENT PROCEEDINGS CAN B E CLASSIFIED IN A WAY AS PRIMARY PROCEEDINGS. THESE ARE, IN EF FECT, BASIC/FOUNDATIONAL PROCEEDINGS AND AKIN TO A PLATFO RM UPON WHICH ANY SUBSEQUENT PROCEEDINGS CONNECTED THEREWIT H CAN REST UPON. THE PROCEEDINGS INITIATED U/S 263 SEEKING TO REVISE THE ORIGINAL ASSESSMENT ORDER IS OFF SHOOT OF THE PRIMA RY PROCEEDINGS AND THEREFORE, THESE MAY BE TERMED AS COLLATERAL P ROCEEDINGS' IN THE LEGAL FRAMEWORK. THE ISSUE THAT ARISES HERE IS WHETHER ANY ILLEGALITY/INVALIDITY IN THE ORDER PASSED IN THE 'P RIMARY PROCEEDINGS' CAN BE SET UP IN THE 'COLLATERAL PROCE EDINGS' AND IF YES, THEN OF WHAT NATURE? 8.1. WE HAVE ANALYSED THIS ISSUE CAREFULLY. THERE I S NO DOUBT THAT AFTER PASSING OF THE ORIGINAL ASSESSMENT ORDER , THE PRIMARY (I.E. ORIGINAL PROCEEDINGS) HAD COME TO AN END AND ATTAINED FINALITY AND, THEREFORE, OUTCOME OF THE SAME CANNOT BE DISTURBED, AND THEREFORE, THE ORIGINAL ASSESSMENT ORDER FRAMED TO CONCLUDE THE PRIMARY PROCEEDINGS HAD ALSO ATTAINED FINALITY AND IT ALSO CANNOT BE DISTURBED AT THE INSTANCE OF THE ASSESSEE , EXCEPT AS PERMITTED UNDER THE LAW AND BY FOLLOWING THE DUE PR OCESS OF LAW. UNDER THESE CIRCUMSTANCES, IT CAN BE SAID THAT EFFECT OF THE ORIGINAL ASSESSMENT ORDER CANNOT BE ERASED OR MODIF IED SUBSEQUENTLY. IN OTHER WORDS, WHATEVER TAX LIABILIT Y HAD BEEN DETERMINED IN THE ORIGINAL ASSESSMENT ORDER THAT HA D ALREADY BECOME FINAL AND THAT CANNOT BE SOUGHT TO BE DISTUR BED BY THE ITA NO.50/DEL/2021 22 ASSESSEE. BUT, THE ISSUE THAT ARISES HERE IS THAT I F THE ORIGINAL ASSESSMENT ORDER IS ILLEGAL IN TERMS OF ITS JURISDI CTION OR IF THE SAME IS NULL & VOID IN THE EYES OF LAW ON ANY JURIS DICTIONAL GROUNDS, THEN, WHETHER IT CAN GIVE RISE TO INITIATI ON OF FURTHER PROCEEDINGS AND WHETHER SUCH SUBSEQUENT PROCEEDINGS WOULD BE VALID UNDER THE LAW AS CONTAINED IN INCOME TAX A CT? IT HAS BEEN VEHEMENTLY ARGUED BEFORE US THAT THE SUBSEQUEN T PROCEEDINGS (I.E. COLLATERAL PROCEEDINGS) DERIVE ST RENGTH ONLY FROM THE ORDER PASSED IN THE ORIGINAL PROCEEDINGS (I.E. PRIMARY PROCEEDINGS). THUS, IF ORDER PASSED IN THE ORIGINAL PROCEEDINGS IS ITSELF ILLEGAL, THEN THAT CANNOT GIVE RISE TO VALID REVISION PROCEEDINGS. THEREFORE, AS PER LAW, THE VALIDITY OF THE ORDER PASSED IN THE PRIMARY (ORIGINAL) PROCEEDINGS SHOULD BE ALLOWED TO BE EXAMINED EVEN AT THE SUBSEQUENT STAGES, ONLY FOR THE LIMITED PURPOSE OF EXAMINING WHETHER THE COLLATERAL (SUBSEQUENT) PROCEEDINGS HAVE BEEN INITIATED ON A VALID LEGAL PL ATFORM OR NOT AND FOR EXAMINING THE VALIDITY OF ASSUMPTION OF JUR ISDICTION TO INITIATE THE COLLATERAL PROCEEDINGS. IF IT IS NOT S O ALLOWED, THEN, IT MAY SO HAPPEN THAT THOUGH ORDER PASSED IN THE ORIGI NAL PROCEEDINGS WAS ILLEGAL AND THUS ORDER PASSED IN TH E SUBSEQUENT PROCEEDINGS IN TURN WOULD ALSO BE ILLEGA L, BUT IN ABSENCE OF A REMEDY TO CONTEST THE SAME, IT MAY GIV E RISE TO AN 'ENFORCEABLE' TAX LIABILITY WITHOUT AUTHORITY OF LA W. THEREFORE, THE COURTS HAVE TAKEN THIS VIEW THAT JURISDICTIONAL ASP ECTS OF THE ORDER PASSED IN THE PRIMARY PROCEEDINGS CAN BE EXAM INED IN THE COLLATERAL PROCEEDINGS ALSO. THIS ISSUE IS NOT RES INTEGRA. THIS ISSUE HAS BEEN DECIDED IN MANY JUDGMENTS BY VARIOUS COURTS, AND SOME OF THEM HAVE BEEN DISCUSSED BY US IN FOLLO WINGS PARAGRAPHS. ITA NO.50/DEL/2021 23 8.10 THUS, ON THE BASIS OF AFORESAID DISCUSSION WE CAN SAFELY HOLD THAT AS PER LAW, THE ASSESSEE SHOULD BE PERMIT TED TO CHALLENGE THE VALIDITY OF ORDER PASSED U/S.263 ON T HE GROUND THAT THE IMPUGNED ASSESSMENT ORDER WAS NON EST AND WE HOLD ACCORDINGLY. [EMPHASIS SUPPLIED]. 13. OTHERWISE ALSO, IT IS A WELL ESTABLISHED JURISP RUDENCE LAID DOWN BY THE VARIOUS COURTS, INCLUDING HONBLE APEX COURT, REITERATING THE FUNDAMENTAL PRINCIPLE THAT THE DECR EE OR ORDER PASSED BY A COURT WITHOUT JURISDICTION IS A NULLITY AND ITS VALIDITY COULD BE CHALLENGED WHENEVER IT IS SOUGHT TO BE ENFORCED OR RELIED UPON, EVEN AT THE STAGE OF EXECU TION AND IN COLLATERAL PROCEEDINGS. THIS PRINCIPLE HAS BEEN LAI D DOWN BY THE HONBLE APEX COURT IN THE FOLLOWING JUDGMENTS:- I) AIR 1954 SC 340 KIRAN SINGH AND OTHERS V. CHAMAN PAWAN AND OTHERS (PAGES 518-525 OF JPB-III) THE FACTS WERE THAT THE APPELLANT IN THAT CASE HAD UNDERVALUED THE SUIT AT RS.2,950 AND LAID IT IN THE COURT OF THE SUBORDINATE JUDGE, MONGHYR FOR RECOVERY OF POSSESSI ON OF THE SUIT LANDS AND MESNE PROFITS. THE SUIT WAS DISMISSE D AND ON APPEAL IT WAS CONFIRMED. IN THE SECOND APPEAL IN TH E HIGH COURT THE REGISTRY RAISED THE OBJECTION AS TO VALUA TION UNDER SECTION 11. THE VALUE OF THE APPEAL WAS FIXED AT RS .9,980. A CONTENTION THEN WAS RAISED BY THE PLAINTIFF IN THE HIGH COURT THAT ON ACCOUNT OF THE VALUATION FIXED BY THE HIGH COURT THE APPEAL AGAINST THE DECREE OF THE COURT OF THE SUBOR DINATE JUDGE DID NOT LIE TO THE DISTRICT COURT, BUT TO THE HIGH COURT AND ON THAT ACCOUNT THE DECREE OF THE DISTRICT COUR T WAS A NULLITY. ALTERNATIVELY, IT WAS CONTENDED THAT IT CA USED PREJUDICE ITA NO.50/DEL/2021 24 TO THE APPELLANT. IN CONSIDERING THAT CONTENTION AT PAGE 121, A FOUR JUDGE BENCH OF HON'BLE SUPREME COURT SPEAKING THROUGH VANKATARAMA AYYAR, J. HELD THAT: 'IT IS A FUNDAMENTAL PRINCIPLE WELL-ESTABLISHED THAT A DECREE PASSED BY A COURT WITHOUT JURISDICTION IS A NULLITY, AND THAT ITS INVALIDITY COULD BE SET UP WHENEVER AND WHEREVER IT IS SOUGHT TO BE ENFORCED OR RELIED UPON, EVEN AT THE STAGE OF EXECUTION AND EVEN IN COLLATERAL PROCEEDINGS. A DEFECT OF JURISDICTION, WHETHER IT IS PECUNIARY OR TERRITORIAL, OR WHETHER IT IS IN RESPECT OF THE SUBJECT-MATTER OF THE ACTION, STRIKE S AT THE VERY AUTHORITY OF THE COURT TO PASS ANY DECREE A ND SUCH A DEFECT CANNOT BE CURED EVEN BY CONSENT OF PARTIES.' II) BALWANT N. VISWAMITRA AND OTHERS V. YADAV SADASHIV MUL (DEAD) THROUGH IRS AND OTHERS REPORTED IN (2004) 8 SCC 706 (PAGES 657-667 OF JPB-III) HAS HELD AS UNDER: 9 THE MAIN QUESTION WHICH ARISES FOR OUR CONSIDERA TION IS WHETHER THE DECREE PASSED BY THE TRIAL COURT CAN BE SAID TO BE 'NULL AND 'VOID'. IN OUR OPINION, THE LAW ON THE PO INT IS WELL SETTLED. THE DISTINCTION BETWEEN A DECREE WHICH IS VOID AND A DECREE WHICH IS WRONG, INCORRECT, AND IRREGULAR OR NOT IN ACCORDANCE WITH LAW CANNOT BE OVERLOOKED OR IGNORED . WHERE A COURT LACKS INHERENT JURISDICTION IN PASSING A DECR EE OR MAKING AN ORDER, A DECREE OR ORDER PASSED BY SUCH COURT WO ULD BE WITHOUT JURISDICTION NON EST AND VOID AB INITIO. A DEFECT OF JURISDICTION OF THE COURT GOES TO THE ROOT OF THE M ATTER AND STRIKES AT THE VERY AUTHORITY OF THE COURT TO PASS A DECREE OR MAKE AN ORDER. SUCH DEFECT HAS ALWAYS BEEN TREATED AS BASIC ITA NO.50/DEL/2021 25 AND FUNDAMENTAL AND A DECREE OR ORDER PASSED BY A C OURT OR AN AUTHORITY HAVING NO JURISDICTION IS NULLITY. VALIDITY OF SUCH DECREE OR ORDER CAN BE CHALLENGED AT ANY STAGE, EVEN IN EXECUTION OR COLLATERAL PROCEEDINGS. 10 FIVE DECADES, IN KIRAN SINGH & ORS. V. CHAMAN PASWAN & ORS., [SCR P. 121) THIS COURT DECLARED; 'IT IS A FUNDAMENTAL PRINCIPLE WELL ESTABLISHED THA T A DECREE PASSED BY A COURT WITHOUT JURISDICTION IS A NULLITY AND THAT ITS INVALIDITY COULD BE SET UP WHENEVER AND WHEREVER IT IS SOUGHT TO BE ENFORCED OR RELIED UPON, EVEN AT THE STAGE OF EXECUTION AND EVEN IN COLLATERAL PROCEEDINGS. A DEFECT OF JUR ISDICTION STRIKES AT THE VERY AUTHORITY OF THE COURT TO PASS ANY DECREE AND SUCH A DEFECT CANNOT BE CURED EVEN BY CONSENT O F PARTIES. 11 THE SAID PRINCIPLE WAS REITERATED BY THIS COURT IN SETH HIRALAL PATNI V. SRI KALI NATH. THE COURT SAID: (SCR PP. 751-52) 'COMPETENCE OF A COURT TO TRY A CASE GOES TO THE VE RY ROOT OF THE JURISDICTION, AND WHERE IT IS LACKING, IT IS CA SE OF INHERENT LACK OF JURISDICTION.' 12 IN VASUDEV DHANJIBHAI MODI V. RAJABHAI ABDUL RE HMAN & ORS., [1871] 1 SCR 66, A DECREE FOR POSSESSION WA S PASSED BY THE COURT OF SMALL CAUSES WHICH WAS CONFIRMED IN APPEAL AS WELL AS IN REVISION. IN EXECUTION PROCEEDINGS, I T WAS CONTENTED THAT THE SMALL CAUSES COURT HAD NO JURISD ICTION TO PASS THE DECREE AND, HENCE, IT WAS A NULLITY. 13 REJECTING THE CONTENTION, THIS COURT STATED: (SC C P. 672, PARA 6) ITA NO.50/DEL/2021 26 'A COURT EXECUTING A DECREE CANNOT GO BEHIND THE DE CREE : BETWEEN THE PARTIES OR THEIR REPRESENTATIVES IT MUS T TAKE THE DECREE ACCORDING TO ITS TENOR, AND CANNOT ENTERTAIN ANY OBJECTION THAT THE DECREE WAS INCORRECT IN LAW OR O N FACTS. UNTIL IT IS SET ASIDE BY AN APPROPRIATE PROCEEDING IN APP EAL OR REVISION, A DECREE EVEN IF IT BE ERRONEOUS IS STILL BINDING BETWEEN THE PARTIES. 14 SUFFICE IT TO SAY THAT RECENTLY A BENCH OF TWO- JUDGES OF THIS COURT HAS CONSIDERED THE DISTINCTION BETWEEN N ULL AND VOID DECREE AND ILLEGAL DECREE IN RAFIQUE BIBI V. S AYED WALIUDDIN,. ONE OF US (R.C. LAHOTI, J. AS HIS LORDS HIP THEN WAS), QUOTING WITH APPROVAL THE LAW LAID DOWN IN VA SUDEV DHANJIBHAI MODI, STATED: (SCC PP. 291-92, PARAS 6-8 ) '6 WHAT IS 'VOID' HAS TO BE CLEARLY UNDERSTOOD. A D ECREE CAN BE SAID TO BE WITHOUT JURISDICTION, AND HENCE A NULLIT Y, IF THE COURT PASSING THE DECREE HAS USURPED A JURISDICTION WHICH IT DID NOT HAVE; A MERE WRONG EXERCISE OF JURISDICTION DOES NO T RESULT IN A NULLITY. THE LACK OF JURISDICTION IN THE COURT PASS ING THE DECREE MUST BE PATENT ON ITS FACE IN ORDER TO ENABLE THE E XECUTING COURT TO TAKE COGNIZANCE OF SUCH A NULLITY BASED ON WANT OF JURISDICTION, ELSE THE NORMAL RULE THAT AN EXECUTIN G COURT CANNOT GO BEHIND THE DECREE MUST PREVAIL. 7 TWO THINGS MUST BE CLEARLY BORNE IN MIND. FIRSTLY , 'THE COURT WILL INVALIDATE AN ORDER ONLY IF THE RIGHT REMEDY I S SOUGHT BY THE RIGHT PERSON IN THE RIGHT PROCEEDINGS AND CIRCU MSTANCES. THE ORDER MAY BE A 'A NULLITY' AND 'VOID' BUT THESE TERMS HAVE NOT ABSOLUTE SENSE: THEIR MEANING IS RELATIVE, DEPE NDING UPON THE COURT'S WILLINGNESS TO GRANT RELIEF IN ANY PART ICULAR SITUATION. IF THIS PRINCIPLE OF ILLEGAL RELATIVITY IS BORNE IN MIND, ITA NO.50/DEL/2021 27 THE LAW CAN BE MADE TO OPERATE JUSTLY AND REASONABL Y IN CASES WHERE THE DOCTRINE OF ULTRA VIRES, RIGIDLY AP PLIED, WOULD PRODUCE UNACCEPTABLE RESULTS.' (ADMINISTRATIVE LAW, WADE AND FORSYTH, 8TH EDN., 2000, P. 308). SECONDLY, THERE I S A DISTINCTION BETWEEN MERE ADMINISTRATIVE ORDERS AND THE DECREES OF COURTS, ESPECIALLY A SUPERIOR COURT. 'TH E ORDER OF A SUPERIOR COURT SUCH AS THE HIGH COURT MUST ALWAYS B E OBEYED NO MATTER WHAT FLAWS IT MAY BE THOUGHT TO CONTAIN. THUS, A PARTY WHO DISOBEYS A HIGH COURT INJUNCTION IN PUNIS HABLE FOR CONTEMPT OF COURT EVEN THOUGH IT WAS GRANTED IN PRO CEEDINGS DEEMED TO HAVE BEEN IRREVOCABLY ABANDONED OWING TO THE EXPIRY OF A TIME-LIMIT.' (IBID., P. 312) 8 A DISTINCTION EXISTS BETWEEN A DECREE PASSED BY A COURT HAVING NO JURISDICTION AND CONSEQUENTLY BEING A NUL LITY AND NOT EXECUTABLE AND A DECREE OF THE COURT WHICH IS M ERELY ILLEGAL OR NOT PASSED IN ACCORDANCE WITH THE PROCEDURE LAID DOWN BY LAW. A DECREE SUFFERING FROM ILLEGALITY OR IRREGULA RITY OF PROCEDURE, CANNOT BE TERMED INEXECUTABLE BY THE EXE CUTING COURT; THE REMEDY OF A PERSON AGGRIEVED BY SUCH A D ECREE IS TO HAVE IT SET ASIDE IN A DULY CONSTITUTED LEGAL PROCE EDINGS OR BY A SUPERIOR COURT FAILING WHICH HE MUST OBEY THE COM MON OF THE DECREE. A DECREE PASSED BY A COURT OF COMPETENT JUR ISDICTION CANNOT BE DENUDED OF ITS EFFICACY BY ANY COLLATERAL ATTACK OR IN INCIDENTAL PROCEEDINGS.' FROM THE ABOVE DECISIONS, IT IS AMPLY CLEAR THAT AL L IRREGULAR OR WRONG DECREES OR ORDERS ARE NOT NECESS ARILY NULL AND VOID. AN ERRONEOUS OR ILLEGAL DECISION, WH ICH IS NOT VOID, CANNOT BE OBJECTED IN EXECUTION OR COLLAT ERAL PROCEEDINGS . ITA NO.50/DEL/2021 28 15 FROM THE ABOVE DECISIONS, IT IS AMPLY CLEAR THAT ALL IRREGULAR OR WRONG DECREES OR ORDERS ARE NOT NECESS ARILY NULL AND VOID. AN ERRONEOUS OR ILLEGAL DECISION, WHICH I S NOT VOID, CANNOT BE OBJECTED IN EXECUTION OR COLLATERAL PROCE EDINGS. .. 20 IN OUR CONSIDERED OPINION, SUCH A DECREE, BY NO STRETCH OF IMAGINATION, CAN BE DESCRIBED NULLITY. I F THE DECREE IS NOT NULL AND VOID, AS PER SETTLED LAW, APPROPRIATE PROCEEDINGS WILL HAVE TO BE TAKEN BY THE PERSONS AGGRIEVED BY S UCH DECREE. 14. SIMILAR VIEW HAS BEEN EXPRESSED BY THE JUDGME NTS OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CI T V. KALYAN SOLVENT EXTRACTION LTD. REPORTED IN 276 ITR 154 AND CALCUTTA HIGH COURT IN THE CASE OF KESHAV NARAYAN B ANERJEE V. CIT REPORTED IN 238 ITR 694. HONBLE CALCUTTA HI GH COURT IN THE CASE OF KESHAV NARAYAN BANERJEE (SUPRA) HAS HELD AS UNDER: WE HAVE, THEREFORE, NO HESITATION IN HOLDING THAT THE SERVICE BY REGISTERED POST OF THE NOTICES ALLEGEDLY SENT TO TH E APPELLANT WRIT APPLICANT, RESULTING IN THE PASSING OF THE ORDER UN DER SECTION 147 OF THE ACT WAS NOT PROPERLY EFFECTED OR ACCOMPL ISHED. SINCE, ADMITTEDLY, THE SERVICE OF SUCH NOTICES WAS A NECES SARY PRE- REQUISITE, A CONDITION PRECEDENT FOR PASSING OF THE ORDERS UNDER SECTION 147 OF THE ACT, WE ALSO HAVE NO HESITATION IN HOLDING THAT SUCH ORDERS WERE BAD IN LAW, AND, THEREFORE, T HE PROCEEDINGS UNDER SECTION 263 OF THE ACT, ADMITTEDL Y, ORIGINATING FROM SUCH ORDERS COULD NOT BE INITIATED AGAINST THE APPELLANTS. ITA NO.50/DEL/2021 29 ALSO, HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT V. KALYAN SOLVENT EXTRACTION LTD. (SUPRA) HAS H ELD AS UNDER : ONCE THE ORIGINAL ORDER STANDS RECTIFIED THEN IT L OSES ITS IDENTITY AT LEAST TO THE EXTENT IT STOOD RECTIFIED. IN SUCH CIRCUMSTANCES, THE COMMISSIONER SHOULD HAVE INVOKED HIS SUO MOTU P OWERS UNDER SECTION 263 OF THE ACT AGAINST THE SUBSEQUENT RECTIFIED ORDER DATED MARCH 14, 1989, IF HE WAS OF THE VIEW T HAT THE SAME IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE ARE, THEREFORE, OF THE VIEW THAT THE TRIBUNAL MA DE NO MISTAKE IN COMING TO THE CONCLUSION THAT THE ORDER OF THE COMMISSIONER PASSED UNDER SECTION 263 OF THE ACT WH ICH HAD THE EFFECT OF SETTING ASIDE THE ASSESSMENT ORDER DA TED MARCH 13, 1987, IS WITHOUT JURISDICTION. ACCORDINGLY, AND IN VIEW OF THE AFORESAID DISCUSSIO N, WE ANSWER THE REFERENCE AGAINST THE REVENUE AND IN FAV OUR OF THE ASSESSEE. 15. FURTHER, HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. SOFTWARE CONSULTANTS REPORTED IN 341 ITR 240 HAS HELD AS UNDER: 14. FOR EXERCISE OF POWER UNDER SECTION 263 OF THE ACT, IT IS MANDATORY THAT THE ORDER PASSED BY THE ASSESSING OF FICER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION FOR THE REASONS RECORDED AT THE T IME OF ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. THIS POSITION IS NOT DISPUTED AND DISTURBED BY THE COMMISSIONER OF I NCOME ITA NO.50/DEL/2021 30 TAX IN HIS ORDER UNDER SECTION 263 OF THE ACT. SEQU ITUR IS THAT THE ASSESSING OFFICER COULD NOT HAVE MADE AN ADDITI ON ON ACCOUNT OF SHARE APPLICATION MONEY IN THE ASSESSMEN T PROCEEDINGS UNDER SECTION 147/148. ACCORDINGLY, THE ASSESSMENT ORDER IS NOT ERRONEOUS. THUS, THE COMMIS SIONER OF INCOME TAX COULD NOT HAVE EXERCISED JURISDICTION UN DER SECTION 263 OF THE ACT. 16. LD. COUNSEL HAS ALSO PLACED CATENA OF VARIOUS I TAT JUDGMENTS WHEREIN IT WAS HELD THAT WHERE ASSESSMENT ORDER IS ITSELF INVALID THEN SAME CAN BE CHALLENGED IN TH E PROCEEDINGS U/S.263 AND SOME OF SUCH JUDGMENTS OF T HE CO- ORDINATE BENCHES OF ITAT ARE AS UNDER: I) ITA NO(S) 1399/D/2012 DATED 16.5.2014 SHEENA INDUSTRIES V. CIT 19 NOW, ONCE THE ISSUE OF DEDUCTIONS UNDER SECTION 80HHC AND 80IB OF THE ACT COULD NOT BE THE SUBJECT MATTER OF ASSESSMENT U/S 153A, OBVIOUSLY, THE ORDER PASSED U/ S 153A IS NOT REVISABLE BY INVOKING THE PROVISIONS OF SECT ION 263. IT HAS BEEN SO HELD IN PAUL JOHN DELICIOUS CASHEW V. ITO 94 ITD 131 (COCHI) AND INDER KUMAR BACHANI V. ITO 99 ITD 621 (LKW) II) ITA NO. 4562/D/2011 DATED 24.9.2015 KRISHNA KUMAR SARAF V. CIT '17. THERE IS NO QUARREL WITH THE PROPOSITION ADVAN CED BY ID. DR THAT THE PROCEEDINGS U/S 263 ARE FOR THE BENEFIT OF REVENUE AND NOT FOR ASSESSEE. 18. HOWEVER, U/S 263 THE ID. COMMISSIONER CANNOT REVISE A NON EST ORDER IN THE E VE OF LAW. SINCE THE ASSESSMENT ORDER WAS PASSED IN PURSUANCE TO THE ITA NO.50/DEL/2021 31 NOTICE U/S 143(2'). WHICH WAS BEYOND TIME, THEREFOR E, THE ASSESSMENT ORDER PASSED IN PURSUANCE TO THE BARRED NOTICE HAD NO LEGS TO STAND AS THE SAME WAS NON EST IN THE EVES OF LAW. ALL PROCEEDINGS SUBSEQUENT TO THE SAID NOTICE ARE OF NO CONSEQUENCE. FURTHER, THE DECISION OF HON'BLE MADRA S HIGH COURT IN THE CASE OF CIT VS. GITSONS ENGINEERING CO . 370 ITR 87 (MAD) CLEARLY HOLDS THAT THE OBJECTION IN RELATI ON TO NON SERVICE OF NOTICE COULD BE RAISED FOR THE FIRST TIM E BEFORE THE TRIBUNAL AS THE SAME WAS LEGAL, WHICH WENT TO THE R OOT OF THE MATTER. 19. WHILE EXERCISING POWERS U/S 263 ID. COM MISSIONER CANNOT REVISE AN ASSESSMENT ORDER WHICH IS NON EST IN THE EYE OF LAW BECAUSE IT WOULD PREJUDICE THE RIGHT OF ASSE SSEE WHICH HAS ACCRUED IN FAVOUR OF ASSESSEE ON ACCOUNT OF ITS INCOME BEING DETERMINED. IF ID. COMMISSIONER REVISES SUCH AN ASSESSMENT ORDER, THEN IT WOULD IMPLY EXTENDING/ GR ANTING FRESH LIMITATION FOR PASSING FRESH ASSESSMENT ORDER . IT IS SETTLED LAW THAT BY THE ACTION OF THE AUTHORITIES T HE LIMITATION CANNOT BE EXTENDED. BECAUSE THE PROVISIONS OF LIMIT ATION ARE PROVIDED IN THE SAME 20. IN VIEW OF ABOVE DISCUSSIO N GROUND NO.3 IS ALLOWED AND REVISION ORDER PASSED U/S 263 I S QUASHED. ' [EMPHASIS SUPPLIED] III) ITA NO. 466/2017 DATED 2.5.2017 (DEL) PR. CIT V. KAIZEN PRODUCTS (P LTD. PRESENTLY KNOWN AS AAS RESEA RCH & SOLUTIONS (P) LTD . IV) ITA NO. 2808/D/2016 M/S AAS RESEARCH AND SOLUTIONS (P) LTD. (SINCE KAIZEN PRODUCTS (P) LTD.) V) ITA NOS. 3825 TO 3827/D/2018 DATED 5.9.2018 M/S NKG INFRASTRUCTURE LTD. V. PR. CIT WHEREIN IT WAS OBSERVED AND HELD AS UNDER:- ITA NO.50/DEL/2021 32 15. BASING ON THIS, THE LD. AR SUBMITS THAT THE AS SESSMENT ORDER IN THIS CASE IS BARRED BY LIMITATION AND IS N ON-EST IN THE EYE OF LAW. TAKING FORWARD THIS ARGUMENT AND PLACIN G RELIANCE ON THE DECISION OF THE HONBLE APEX COURT REPORTED IN KIRAN SINGH & ORS. V. CHAMAN PASWAN & ORS. [1955] 1 SCR 1 17, LD. AR SUBMITTED THAT THE LEARNED PRINCIPAL COMMISSIONE R OF INCOME TAX CANNOT ASSUME JURISDICTION UNDER SECTION 263 OF THE ACT TO REVISE THE ASSESSMENT ORDER, WHICH IS NON-ES T IN THE EYE OF LAW, BEING BARRED BY LIMITATION. 16. IN KIRAN SINGH & ORS. V. CHAMAN PASWAN & ORS. [1955] 1 SCR 117 HONBLE APEX COURT HELD THAT 'IT IS A FUNDAMENTAL PRINCIPLE WELL-ESTABLISHED THA T A DECREE PASSED BY A COURT WITHOUT JURISDICTION IS A NULLITY , AND THAT ITS INVALIDITY COULD BE SET UP WHENEVER AND WHEREVER IT IS SOUGHT TO BE ENFORCED OR RELIED UPON, EVEN AT THE STAGE OF EXECUTION AND EVEN IN COLLATERAL PROCEEDINGS. A DEFECT OF JURISDI CTION, WHETHER IT IS PECUNIARY OR TERRITORIAL, OR WHETHER IT IS IN RESPECT OF THE SUBJECT-MATTER OF THE ACTION, STRIKES AT THE VERY A UTHORITY OF THE COURT TO PASS ANY DECREE AND SUCH A DEFECT CANNOT B E CURED EVEN BY CONSENT OF PARTIES.' 17. IN THE LIGHT OF THIS DECISION, IN THE CASE OF M/S. WESTLIFE DEVELOPMENT LTD. VS PRINCIPAL C.I.T. IN ITA NO.688/ MUM/2016 ITAT, MUMBAI BENCH OF THE TRIBUNAL CONSIDERED THE Q UESTION AS TO WHETHER THE ASSESSEE CAN CHALLENGE THE VALIDITY OF AN ASSESSMENT ORDER DURING THE APPELLATE PROCEEDINGS P ERTAINING TO EXAMINATION OF VALIDITY OF ORDER PASSED U/S 263, AND HELD THAT THE PROCEEDINGS U/S 147 OF THE ACT ARE PRIMARY PROCEEDINGS AND PROCEEDINGS U/S 263 OF THE ACT ARE COLLATERAL PROCEEDINGS AND IN SUCH COLLATERAL PROCEEDINGS, THE VALIDITY OF INITIATION OF THE ORIGINAL PROCEEDINGS U/S 147 OF T HE ACT CAN BE CHALLENGED. 19. WE ARE, THEREFORE, CONVINCED WITH THIS ARGUMENT OF THE LD. AR AND HOLD THAT THE ASSESSMENT ORDER IS BARRED BY LIMITATION, THE ASSESSEE CAN CHALLENGE THE VALIDITY OF THE SAME DURING THIS APPELLATE PROCEEDINGS RELATING TO THE EXAMINATION O F THE VALIDITY OF THE ORDER PASSED UNDER SECTION 263 OF THE ACT. R ESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF ITA NO.50/DEL/2021 33 KIRAN SINGH (SUPRA); THE DECISIONS OF THE TRIBUNAL IN WEST LIFE DEVELOPMENT LTD (SUPRA) FOLLOWED BY THE DELHI TRIBU NAL IN CHENNAI INDUSTRIES (ITA 1398- 99/DEL/2012); AND THE KOLKATA TRIBUNAL IN M/S CLASSIC FLOOR AND FOOD PROCESSING P RIVATE LTD (SUPRA), WE HOLD THAT THE ORDER WHICH WAS BARRED BY LIMITATION CANNOT BE REVISED UNDER SECTION 263 OF THE ACT BY T HE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX. VI) ITA.NO.2857/DEL/2017 DATED 10.12.2018 IN THE CASE OF M/S. SPJ HOTELS PVT. LTD. VS THE PCIT-8 13.2. SINCE THE FACTS ARE TOTALLY DIFFERENT AS A.O. HAD REASON TO BELIEVE THAT RS.10 LAKHS HAS ESCAPED ASSESSMENT ON ACCOUNT OF RS.5 LAKHS RECEIVED FROM TWO COMPANIES REFERRED TO ABOVE, WHICH WAS ULTIMATELY FOUND TO BE INCORRECT AND NONE XISTENT, THEREFORE, THERE MAY NOT BE ANY APPLICATION OF MIND ON THE PART OF THE A.O. TO PROCEED TO INITIATE THE RE-ASSESSMEN T PROCEEDINGS. THERE IS NO OTHER MATERIAL AVAILABLE ON RECORD EXCE PT THE INFORMATION RECEIVED FROM THE INVESTIGATION WING. T HE A.O. ON THE BASIS OF THE INFORMATION AND MATERIAL RECEIVED FROM INVESTIGATION WING HAS RECORDED REASONS FOR REOPENI NG OF THE ASSESSMENT WHICH WAS ULTIMATELY FOUND TO BE INCORRE CT AND NON-EXISTENT. IT IS WELL SETTLED LAW THAT WHEN NO N EW MATERIAL OTHER THAN EXAMINED BY THE A.O ORIGINALLY FOUND ON RECORD FOR THE PURPOSE OF INITIATING THE RE-ASSESSMENT PROCEED INGS, THE PROCEEDINGS UNDER SECTION 148 OF THE I.T. ACT WOULD BE INVALID AND BAD IN LAW. WE RELY UPON DECISION OF DELHI HIGH COURT IN THE CASE OF ATUL KUMAR SWAMY 362 ITR 693, CONSULTIN G ENGINEERS SERVICES INDIA PVT. LTD., 378 ITR 318, NE STLE INDIA LTD., 384 ITR 334 AND PRIYADESH GUPTA 385 ITR 452. THE HONBLE DELHI HIGH COURT IN THE CASE OF SNG DEVELOP ERS LTD., 404 ITR 312 HELD THAT WHEN A.O. INITIATED THE RE-AS SESSMENT PROCEEDINGS WITHOUT APPLICATION OF MIND, SUCH PROCE EDINGS WOULD BE INVALID. A.O. IN THE PRESENT CASE HAS FAIL ED TO VERIFY THE INFORMATION RECEIVED FROM INVESTIGATION WING. T HEREFORE, IT IS NON APPLICATION OF MIND ON THE PART OF THE A.O. TO RECORD CORRECT FACTS IN THE REASONS FOR REOPENING OF THE ASSESSMEN T. IN SUCH CIRCUMSTANCES, THE RE-ASSESSMENT ORDER COULD NOT BE TREATED AS VALID AND IN ACCORDANCE WITH LAW. SINCE RE-ASSESSME NT PROCEEDINGS ARE INVALID AND BAD IN LAW, THEREFORE, SUCH ITA NO.50/DEL/2021 34 PROCEEDINGS COULD NOT BE REVISED UNDER SECTION 263 OF THE I.T. ACT. FOLLOWING THE REASONS FOR DECISION IN THE CASE OF M/S. SUPERSONIC TECHNOLOGIES PVT. LTD., (SUPRA), WE SET ASIDE THE ORDER PASSED BY THE LD. PR. CIT UNDER SECTION 263 O F THE I.T. ACT AND QUASH THE SAME. 14. IN THE RESULT, ITA.NO.2857/DEL./2017 OF THE ASS ESSEE IS ALLOWED. VII) ITA NO. 2269/D/2017 DATED 10.12.2018 M/S SUPERSONIC TECHNOLOGIES (P) LTD. VS. PCIT 6.1.... IT IS WELL SETTLED LAW THAT ASSESSEE CAN C HALLENGE THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS IN THE CO LLATERAL PROCEEDINGS (RELATING TO EXAMINATION OF VALIDITY OF ORDER PASSED) UNDER SECTION 263 OF THE I.T. ACT. WE RELY UPON THE ORDER OF ITAT, MUMBAI BENCH IN THE CASE OF WESTLIFE DEVELOPMENT LTD., VS. PCIT 49 ITR (TRIBU.) 406 IN W HICH IT WAS HELD 'ALLOWING THE APPEAL (I) THAT JURISDICTION ASP ECT OF THE ORDER PASSED IN THE PRIMARY PROCEEDINGS CAN BE EXAMINED I N COLLATERAL PROCEEDINGS ALSO. THUS, THE ASSESSEE COU LD BE PERMITTED TO CHALLENGE THE VALIDITY OF THE ORDER PASSED UNDER SECTION 263 ON THE GROUND THAT THE ASSESSMENT ORDER WAS NON- EST.' SINCE THE RE-ASSESSMENT ORDER ITSELF IS BAD I N LAW, THEREFORE, LEARNED COUNSEL FOR THE ASSESSEE, RIGHTL Y CONTENDED THAT THE SAME CANNOT BE REVISED UNDER SECTION 263 O F THE I.T. ACT. ONLY VALID RE-ASSESSMENT ORDER CAN BE REVISED UNDER SECTION 263 OF THE I.T. ACT. ON THIS GROUND ITSELF THE PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT ARE BAD IN LAW AN D LIABLE TO BE QUASHED. WE ACCORDINGLY, SET ASIDE THE ORDER OF LD. PR. CIT PASSED UNDER SECTION 263 OF THE I.T. ACT AND QUASH THE SAME. IN VIEW OF THE ABOVE, THE REMAINING PLEA OF THE ASS ESSEE ARE NOT REQUIRED TO BE ADJUDICATED. HOWEVER, WE MAY BRIEFLY NOTE THAT A.O. EXAMINED ENTIRE SEIZED MATERIAL AT THE TIME OF RECORDING REASONS AND RE-ASSESSMENT STAGE. THE ASSESSEE PRODU CED SUFFICIENT EVIDENCES AT THE RE-ASSESSMENT PROCEEDIN GS TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINE SS AND GENUINENESS OF THE TRANSACTION. THE A.O. ALSO MADE DIRECT ENQUIRY BY ISSUING SUMMONS UNDER SECTION 133(6) OF THE I.T. ACT TO THE INVESTORS WHO HAVE ALSO REPLIED DIRECTLY TO THE A.O. ITA NO.50/DEL/2021 35 THEREFORE, A.O. RIGHTLY ACCEPTED THE CREDITS AS GEN UINE. IN VIEW OF THE ABOVE FINDING, THERE IS NO NEED TO GIVE A FI NDING IN DETAIL ON MERITS. IN VIEW OF THE ABOVE, WE ALLOW THE APPEA L OF ASSESSEE. 17. LD. PCIT AS WELL AS LD. CIT-DR HAS STRONGLY REL IED UPON THE JUDGMENT OF HONBLE KERALA HIGH COURT IN THE CA SE OF CIT VS. JACOB J. THALIATH AS REPORTED IN 343 ITR 279 WHEREIN IT WAS HELD THAT TRIBUNAL BEING THE SECOND APPELLAT E AUTHORITY, CONSIDER THE VALIDITY OF RE-ASSESSMENT O RDER WHILE CONSIDERING THE APPEAL AGAINST ORDER ISSUED U/S.263 . THEIR LORDSHIPS OBSERVED AS UNDER:- IN SO FAR AS I.T.A. NO. 1197 OF 2009 IS CONCERNED, THE TRIBUNAL INTERFERED WITH SECTION 263 ORDER ISSUED FOR THE YE AR 1992-93 FOR THE REASON THAT THE REVISED ASSESSMENT ISSUED UNDER SECTION 147, THAT WAS THE SUBJECT MATTER OF REVISION UNDER SECTION 263 ITSELF IS AN INVALID ORDER. WE DO NOT THINK THAT TH E TRIBUNAL HAS ANY SUCH POWER TO CONSIDER THE VALIDITY OF ANY SUCH ORDER, WHILE CONSIDERING THE APPEAL FILED AGAINST THE ORDER ISSU ED BY THE COMMISSIONER UNDER SECTION 263. THE ASSESSEE HAVING NOT CHALLENGED THE REVISED ASSESSMENT, CANNOT ALSO CONT EST THE VALIDITY OF THAT PROCEEDINGS BEFORE THE TRIBUNAL IN AN APPEAL FILED AGAINST THE ORDER ISSUED UNDER SECTION 263. THE TRI BUNAL, BEING THE SECOND APPELLATE AUTHORITY, CANNOT CONSIDER THE VALIDITY OF AN ASSESSMENT OR REASSESSMENT ORDER WHILE CONSIDERING THE APPEAL FILED AGAINST AN ORDER ISSUED UNDER SECTION 263. SO MUCH SO, THE ORDER OF THE TRIBUNAL IS LIABLE TO BE VACATED. 17.1 IN OTHER JUDGMENT, RELIED UPON WAS THAT OF HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. A. SAMARAPURI CHETTY AS REPORTED IN 195 ITR 371. ON THE FACTS OF THE CASE ITA NO.50/DEL/2021 36 THE ISSUE WAS, WHETHER THE TRIBUNAL WAS JUSTIFIED I N CANCELLING THE SUO MOTU REVISION MADE U/S 263 OF THE ACT FOR THE REASON THAT THE ORDER SOUGHT TO BE REVISED WAS THE REVISED ASSESSMENT ISSUED U/S. 147 WHICH WAS RECTIFIED U/S 154 FOR MODIFICATION OF INTEREST LEVIED U/S. 234D OF THE AC T. IN THE SAID CASE,, THE FACTS WERE THE ASSESSEE FILED THE R ETURN IN NOVEMBER, 1974 WHICH WAS ASSESSED ON 23.12.1975. ON DECEMBER, 1975 THE ASSESSEE FILED A REVISED RETURN OF INCOME SHOWING AN ENHANCED INCOME. ON 11.3.1976, 1976, THE ANOTHER ASSESSMENT WAS MADE AT AN INCOME OF RS.17,0 97/- ON THE ASSESSEE. SUBSEQUENTLY, COMMISSIONER OF INCO ME TAX REVISED THE SECOND ASSESSMENT ORDER. THE HONBLE TR IBUNAL HELD THAT THE ALLEGED ASSESSMENT DATED 11TH MARCH,1 976 WAS NON-EST AND THAT THE COMMISSIONER COULD NOT TREAT A NON EST ORDER AS PREJUDICIAL TO THE REVENUE AND PASS AN ORD ER UNDER U/S. 263 OF THE ACT. THE HONBLE HIGH COURT IN AN A PPEAL HELD THAT THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT THE SECOND ASSESSMENT ORDER OF THE INCOME -TAX OFFICER WAS NON -EST IN ANY ABSOLUTE SENSE, SINCE IT WOULD BIND THE PARTIES UNLESS; IT WAS SET ASIDE BY THE COMMISSIONER UNDER SECTION 263 , IT BOUND THE PARTIES. 18. NO DOUBT, IN THE AFORESAID JUDGMENTS THOUGH FAC TS AND ISSUES MAY BE DIFFERENT BUT THE RATIO THUS CULLED O UT IS THAT THE ASSESSEE CANNOT CHALLENGE THE VALIDITY OF THE A SSESSMENT IN THE APPEAL FILED AGAINST ORDER U/S. 263. HOWEVER , THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SOFTWARE CONSULTANT, 341 ITR 240 IN THE CONTEXT OF ITA NO.50/DEL/2021 37 ASSESSMENT ORDER PASSED U/S. 147/148, IT WAS HELD T HAT IF THE ASSESSING OFFICER COULD NOT HAVE MADE THE ADDITION IN THE PROCEEDINGS U/S.148, THE LD. CIT COULD NOT HAVE EXE RCISED THE JURISDICTION U/S.263. 19. IT IS INCONTROVERTIBLE THAT PROCEEDINGS U/S. 263 ARE COLLATERAL PROCEEDINGS OF THE ASSESSMENT, BECAUSE L D. CIT/PCIT EXERCISE REVISIONARY JURISDICTION U/S.263 S EEKING TO REVISE THE ASSESSMENT ORDER ON THE GROUND THAT IT I S ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE. THE EDIFICE OF THE PROCEEDINGS U/S 263 IS THE ASSESSMENT ORDER WHICH IS THE ORIGINAL PROCEEDINGS WHICH HAS COME TO AN END. HOWEVER, IF THE ORIGINAL ASSESSMENT ORDER ITSELF WAS INVALID OR ILLEGAL IN TERMS OF JURISDICTI ON OR WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE STATUTE OR WAS BARRED BY LIMITATION, THEN SUCH AN INVALID ORDER CANNOT BE SUBJECT MATTER OF FURTHER PROCEEDINGS SO AS TO VALIDATE THE SAID ASSESSMENT ORDER IN COLLATERAL PROCEEDINGS LIKE U/S 263. THIS PRECISE PRINCIPLE HAS BEEN REITERATED BY THE HONBL E APEX COURT IN SEVERAL CASES WHICH IS EVIDENT FROM THE JUD GMENT OF KIRAN SINGH AND OTHERS VS. CHAMAN PAWAN AND OTHERS (SUPRA) AND BALWANT N. VISWAMITRA AND OTHERS VS. YA DAV SADASHIV MUL (SUPRA) WHICH WE HAVE QUOTED EXTENSO IN THE FORGOING PARAGRAPHS. IN VIEW OF THE BINDING JUDICIAL PRECEDENTS AND THE PRINCIPLE AND RATIO LAID DOWN BY THE HONBLE APEX COURT AS WELL AS BY THE HONBLE JURISD ICTIONAL HIGH COURT, THE PRINCIPLE LAID DOWN BY THE KERALA H IGH COURT AND MADRAS HIGH COURT MAY NOT HAVE THE BINDING PREC EDENCE ITA NO.50/DEL/2021 38 TO HOLD OTHERWISE. ACCORDINGLY, WE HOLD THAT THE PR ESENT PROCEEDINGS BEING COLLATERAL PROCEEDINGS AND IF THE ASSESSMENT ORDER IS INHERENTLY INVALID OR BAD IN LA W, THEN VALIDITY OF SUCH AN ORDER CAN BE CHALLENGED AT ANY STAGE IN THE COLLATERAL PROCEEDINGS INCLUDING THE PROCEEDINGS U/ S.263, BECAUSE INVALID ORDER CANNOT BE SET ASIDE OR CAN BE REVISED TO MAKE IT VALID. THOUGH ASSESSMENT ORDER MAY BE SAID TO BE ERRONEOUS BUT CERTAINLY IT CANNOT BE HELD PREJUDICI AL TO THE INTEREST OF THE REVENUE IN SUCH CIRCUMSTANCES WHEN ASSESSMENT ORDER ITSELF IS UNSUSTAINABLE, IN VIEW O F THE PROVISIONS OF LAW AS REITERATED BY THE HONBLE JURI SDICTIONAL HIGH COURT AS DISCUSSED HEREIN ABOVE. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED U/S.263, AS LD. PCI T COULD NOT HAVE REVISED THE ASSESSMENT ORDER WHICH ITSELF IS AN INVALID ORDER. ACCORDINGLY, THE APPEAL OF THE ASSES SEE IS ALLOWED ON THIS SCORE. THE OTHER GROUNDS RAISED BY THE ASSESSEE ARE TREATED AS ACADEMIC IN NATURE. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH APRIL, 2021 SD/- SD/ - [O.P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20/04/2021 PKK: