M/S SEYAD SHARIAT FINANCE LIMITED, TIRUNELVELI V. PRINCIPAL COMMISSIONER OF INCOME TAX,CENTRAL -2., CHENNAI

ITA 979/CHNY/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5696 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-08-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 22-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Period of limitation; Time period of passing order; Reassessment proceedings; Set aside
• Section: 143(3); 80IA; 153C; 263; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , . , % BEFORE SHRI V.DURGA RAO, JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T . A . NO.979/CHNY/2020 ( / ASSESSMENT YEAR: 2013-14 ) M/S. SEYAD SHARIAT FINANCE LTD., 54B/8A, KANGADHARA BUILDING S N HIGH ROAD, TIRUNELVELI-627 001. VS THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-2, CHENNAI. PAN: AADCS 9042E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. B.RAMAKRISHNAN, FCA /RESPONDENT BY : MR. ABANI KANTA NAYAK, CIT /DATE OF HEARING : 26.08.2021 /DATE OF PRONOUNCEMENT : 17.09.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE PCIT., CENTRAL, CHENNAI-2, DATED 09.12.2020 PASSED U/S.263 OF THE INCOME TAX ACT, 1961 AND PERTAINS T O ASSESSMENT YEAR 2013-14. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FINANCIAL ACTIVITIES FILED ITS RET URN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 27.09.2013 ADMITTING TOT AL INCOME OF RS.5,89,30,600/-. THE ASSESSMENT FOR THE IMPUGNE D ASSESSMENT YEAR HAS BEEN COMPLETED U/S.143(3) OF TH E INCOME TAX ACT, 1961 ON 28.03.2016 AND DETERMINED TOTAL IN COME AT 2 ITA NO. 979/CHNY/2020 RS.6,17,53,051/-, AFTER ALLOWING DEDUCTION OF RS.7, 63,323/- U/S.80IA OF THE INCOME TAX ACT, 1961. THEREAFTER, A SEARCH ACTION U/S.132 OF THE INCOME TAX ACT, 1961 WAS COND UCTED IN THE CASE OF SEYADU GROUP OF CONCERNS, TIRUNELVELI O N 28.06.2017. CONSEQUENT TO SEARCH, ASSESSMENT HAS BE EN COMPLETED U/S.143(3) R.W.S 153C OF THE INCOME TAX A CT, 1961 ON 24.12.2019 AND DETERMINED TOTAL INCOME AT RS.8,39,57,050/-, AFTER MAKING ADDITIONS TOWARDS UN EXPLAINED CASH CREDIT U/S.68 OF THE ACT FOR RS.2,22,04,000/-. 3. THE CASE HAS BEEN, SUBSEQUENTLY TAKEN UP FOR REV ISION PROCEEDINGS U/S.263 OF THE INCOME TAX ACT, 1961, O N THE GROUND THAT ASSESSMENT ORDER PASSED BY THE ASSESSIN G OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE I NTERESTS OF REVENUE ON ACCOUNT OF ALLOWING DEDUCTION U/S.80IA O F THE ACT TO THE TUNE OF RS.7,63,323/- WITHOUT EXAMINING CASE WI TH REFERENCE TO RELEVANT PROVISIONS OF THE ACT TO ASCERTAIN WHET HER ASSESSEE HAS SATISFIED CONDITIONS PRESCRIBED THEREIN. THE L EARNED PCIT HAS PROPOSED TO REVISE ASSESSMENT ORDER ON THE GROU ND THAT THE ASSESSING OFFICER HAS ALLOWED DEDUCTION U/S.80 IA OF THE ACT, WITHOUT EXAMINING FACT OF FURNISHING AUDIT RE PORT REQUIRED TO BE FILED IN FORM NO.10CCB, AS REQUIRED UNDER 18BBB OF THE 3 ITA NO. 979/CHNY/2020 INCOME TAX RULES, 1962, WHICH RENDERED ASSESSMENT O RDER ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTE RESTS OF REVENUE. IN RESPONSE, THE ASSESSEE VIDE ITS LETTER DATED 17. 11.2020 OPPOSED REVISION PROCEEDINGS TAKEN UP BY LEARNED P CIT AND ARGUED THAT ASSESSMENT ORDER PASSED BY THE ASSESSIN G OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERES TS OF REVENUE, BECAUSE ISSUE OF CLAIM OF DEDUCTION U/S.80IA OF THE ACT WAS ALLOWED BY THE ASSESSING OFFICER IN THE ORIGINAL AS SESSMENT ORDER PASSED U/S.143(3) DATED 28.03.2016 AND THUS, PROPOSED REVISION OF ASSESSMENT ORDER DATED 24.12.2019 IS CL EARLY BARRED BY LIMITATION. THE ASSESSEE HAS ALSO RELIED UPON C ERTAIN JUDICIAL PRECEDENTS INCLUDING DECISION OF THE HONBLE KERAL A HIGH COURT IN THE CASE OF M/S. SKYLINE BUILDERS LTD. VS. CIT ( 2019) 105 TAXMANN.COM 207. 4. THE LEARNED PCIT, AFTER CONSIDERING RELEVANT SUB MISSIONS OF THE ASSESSEE AND ALSO TAKEN NOTE OF VARIOUS FACT S, INCLUDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 28.03.2016 AND SUBSEQUENT ASSESSMENT ORDER PURSUANT TO SEARCH PRO CEEDINGS PASSED U/S.143(3) R.W.S 153C OF THE ACT DATED 24.1 2.2019, OBSERVED THAT PROPOSED REVISION OF ASSESSMENT ORDER IS TAKEN UP FOR REVISING ASSESSMENT ORDER DATED 24.12.2019 PASSED 4 ITA NO. 979/CHNY/2020 U/S.143(3) R.W.S.153C OF THE ACT, BUT NOT ASSESSME NT ORDER PASSED U/S.143(3) DATED 28.03.2016 AND THUS, PROPOS ED REVISION PROCEEDINGS IS WELL WITHIN PRESCRIBED TIME LIMIT PROVIDED U/S.263 OF THE INCOME TAX ACT, 1961. THE LEARNED PC IT ALSO DISCUSSED ISSUE IN LIGHT OF PROVISIONS OF SECTION 1 53A AND HELD THAT ONCE SEARCH ACTION TOOK PLACE, THEN ASSESSMENT FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING ASSESSMENT Y EAR IN WHICH SEARCH TOOK PLACE GETS REOPENED AND ASSESSING OFFICER SHALL HAVE POWER TO ASSESS / REASSESS TOTAL INCOME INCLUDING UNDISCLOSED INCOME, IF ANY FOUND AS A RESULT OF SEA RCH AND THUS, ONCE SEARCH TOOK PLACE, ORIGINAL ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT GETS WIPED OUT. THEREFORE, H E OPINED THAT THERE IS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT REVISION PROCEEDINGS IS BEYOND LIMITATION. THE LEARNED PCIT FURTHER REFERRING TO EXPLANATION 2 TO SECTION 263 OF THE AC T, OPINED THAT AN ORDER SHALL BE DEEMED TO BE ERRONEOUS, IF IT HAS BEEN PASSED WITHOUT MAKING INQUIRIES /VERIFICATION WHICH SHOULD HAVE BEEN MADE. SINCE, THE ASSESSING OFFICER HAS NOT EXA MINED ISSUE OF DEDUCTION U/S.80IA OF THE ACT, ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS I NSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE. HENC E, SET ASIDE 5 ITA NO. 979/CHNY/2020 ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AN D DIRECTED THE ASSESSING OFFICER TO VERIFY THE ASSESSEES CLAI M OF DEDUCTION U/S.80IA OF THE ACT IN ACCORDANCE WITH LA W. 5. THE LEARNED A.R FOR THE ASSESSEE SUBMITTED THAT THE LEARNED PCIT HAS ERRED IN REVISION OF ASSESSMENT O RDER ON THE ISSUE OF DEDUCTION U/S.80IA OF THE INCOME TAX ACT, 1961, BEYOND PRESCRIBED TIME LIMIT PROVIDED UNDER SUB-SEC TION (2) OF SECTION 263 OF THE ACT, WITHOUT APPRECIATING FACT T HAT ISSUE OF DEDUCTION U/S.80IA WAS NOT SUBJECT MATTER OF VERI FICATION DURING THE REASSESSMENT PROCEEDINGS PASSED PURSUANT TO SEARCH ACTION U/S.143(3) R.W.S. 153C OF THE INCOM E TAX ACT, 1961. THE LEARNED A.R REFERRING TO THE PROVISIONS OF SECTION 263 OF THE ACT, SUBMITTED THAT AS PER PROVISIONS AN Y ORDER CAN BE REVISED WITHIN TWO YEARS FROM THE END OF FINANCI AL YEAR IN WHICH ORIGINAL ASSESSMENT ORDER WAS PASSED. IN THIS CASE, ORIGINAL ASSESSMENT ORDER WAS PASSED ON 28.03.2016 AND THE ISSUE OF DEDUCTION U/S.80IA WAS EXAMINED BY THE ASS ESSING OFFICER. FURTHER, SAID ISSUE WAS NEITHER SUBJECT MA TTER OF REASSESSMENT NOR WAS EXAMINED BY THE ASSESSING OFFI CER AND HENCE, QUESTION OF REVISION OF ASSESSMENT ORDER PA SSED 6 ITA NO. 979/CHNY/2020 U/S.143(3) R.W.S 153C OF THE ACT, DATED 24.12.2019 DOES NOT ARISE. THEREFORE, IF ORIGINAL ASSESSMENT ORDER DATE D 28.03.2016 IS CONSIDERED, THEN REVISION ORDER PASSED BY LEARNE D PCIT DATED 09.12.2020 IS CLEARLY BARRED BY LIMITATION AN D LIABLE TO BE QUASHED. 6. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T ONCE SEARCH TAKES PLACE, ORIGINAL ASSESSMENT GETS WIPED OUT AND THE ASSESSING OFFICER SHALL HAVE POWERS TO ASSESS OR RE ASSESS TOTAL INCOME INCLUDING UNDISCLOSED INCOME, IF ANY FOUND D URING THE COURSE OF SEARCH. THEREFORE, WHEN ASSESSMENT IS FRA MED PURSUANT TO SEARCH U/S.143(3) R.W.S 153C, IT IS DEE MED THAT THE ASSESSING OFFICER HAS CONSIDERED ALL THE ISSUES INC LUDING INCOME DECLARED IN THE RETURN OF INCOME AND ANY OTH ER INCOME COMES TO THE NOTICE ON THE BASIS OF SEARCH MATERIAL S. THE DR FURTHER SUBMITTED THAT SINCE THE ASSESSMENT ORDER H AS BEEN REFRAMED PURSUANT TO SEARCH, ISSUE OF DEDUCTION U/S .80IA ALSO EMANATES FROM NEW ASSESSMENT ORDER PASSED PURSUANT TO SEARCH U/S.143(3) R.W.S 153C OF THE ACT, AND THUS, REVISION ORDER PASSED BY LEARNED PCIT IS WELL WITHIN TIME LI MIT PRESCRIBED UNDER THE ACT. THE LEARNED DR FURTHER REFERRING TO DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF M/S .CANARA 7 ITA NO. 979/CHNY/2020 HOUSING DEVELOPMENT CO. LTD. VS. DCIT (2014) 49 TAXMANN.COM 98, SUBMITTED THAT ALTHOUGH THE DECISIO N WAS IN FAVOUR OF THE ASSESSEE, BUT RATIO LAID DOWN BY THE HONBLE HIGH COURT CLEARLY INDICATES THAT ONCE SEARCH TAKES PLA CE EARLIER ASSESSMENT, IF ANY PASSED U/S.143(3) GETS WIPED OUT AND NEW ASSESSMENT ORDER PASSED IN PURSUANT TO SEARCH U/S. 143(3) R.W.S 153A/153C ONLY PERSISTS AND HENCE, IF SUCH A SSESSMENT ORDER DATE IS CONSIDERED, REVISION ORDER PASSED BY LEARNED PCIT IS WELL WITHIN TWO YEARS FROM THE END OF RELE VANT FINANCIAL YEAR AND HENCE, THERE IS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT REVISION ORDER PASSED BY LEARNED PCIT IS BARRED BY LIMITATION. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT, 1961 EMPOWERS PR.CIT / CIT TO REVISE ASSESSMENT ORD ER PASSED BY THE ASSESSING OFFICER, IF PCIT SATISFIE S THAT ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER I S ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTER ESTS OF REVENUE. SUB-SECTION (2) OF SECTION 263 PRESCRIBES TIME L IMIT FOR PASSING REVISION ORDER, AS PER WHICH NO ORDER SHAL L BE MADE 8 ITA NO. 979/CHNY/2020 UNDER SUB-SECTION (1) AFTER EXPIRY OF TWO YEARS F ROM THE END OF FINANCIAL YEAR IN WHICH ORDER SOUGHT TO BE REVISED WAS PASSED. IF A COMBINED READING OF SUB-SECTION (1) AND (2) O F SECTION 263 OF THE ACT, IT IS VERY CLEAR FROM THE PROVISIONS O F THE ACT THAT IF THE PCIT WANTS TO EXERCISE HIS POWERS U/S.263 OF THE ACT, THEN HE SHOULD BE SATISFIED HIMSELF ABOUT ASSESSMENT ORD ER PASSED BY THE ASSESSING OFFICER AND OBSERVED THAT ASSESS MENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS INSO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE AND FURTHER , SUCH POWERS CAN BE EXERCISED WITHIN TWO YEARS FROM THE END O F THE FINANCIAL YEAR IN WHICH ORDER SOUGHT TO BE REVISED WAS PASSED. 8. IN LIGHT OF ABOVE LEGAL POSITION, IF YOU EXAMINE PRESENT CASE ONE HAS TO SEE WHETHER REVISIONAL ORDER PASSED BY THE LEARNED PCIT IS WITHIN THE TIME LIMIT PRESCRIBED U NDER THE ACT OR BARRED BY LIMITATION. ADMITTEDLY, ORIGINAL ASSES SMENT ORDER WAS PASSED U/S. 143(3) OF THE ACT ON 28.03.2016 . IN THE SAID ORDER, THE ASSESSING OFFICER HAS ALLOWED CLAIM OF DEDUCTION U/S.80IA OF THE INCOME TAX ACT, 1961. FURTHER, SUB SEQUENT ASSESSMENT ORDER WAS PASSED IN PURSUANT TO SEARCH ACTION U/S. 132 OF THE ACT ON 24.12.2019. IN THE SAID ASS ESSMENT ORDER, EXCEPT ISSUE OF ADDITIONS TOWARDS UNEXPLAINE D CASH 9 ITA NO. 979/CHNY/2020 CREDIT U/S.68 OF THE ACT, NO OTHER ISSUE WAS DISCUS SED BY THE ASSESSING OFFICER INCLUDING DEDUCTION CLAIMED U/S. 80IA OF THE INCOME TAX ACT, 1961. THE PROPOSED REVISION PROCEED INGS WAS TAKEN UP TO EXAMINE ISSUE OF DEDUCTION CLAIMED U/S .80IA OF THE ACT, AND SAID ISSUE WAS FIRST TIME EXAMINED IN ORIGINAL ASSESSMENT PROCEEDINGS U/S.143(3) OF THE ACT ON 28 .03.2016. IT IS A WELL SETTLED PRINCIPLES OF LAW BY VARIOUS C OURTS THAT PCIT/CIT CAN EXERCISE HIS REVISIONAL POWERS ON THE ISSUE WHICH WAS SUBJECT MATTER OF ASSESSMENT PROCEEDINGS WHETHE R OR NOT SAID ISSUE WAS DISCUSSED BY THE ASSESSING OFFICER . IN THIS CASE, THE LEARNED PCIT HAS TAKEN UP REVISION PROCE EDINGS ON THE ISSUE OF DEDUCTION CLAIMED U/S.80IA OF THE AC T, AND SAID ISSUE WAS NOT A SUBJECT MATTER OF ASSESSMENT IN PUR SUANT TO SEARCH ACTION U/S.143(3) R.W.S. 153C OF THE INCO ME TAX ACT, 1961. ONCE ISSUE WAS NOT A SUBJECT MATTER OF ASSESS MENT PROCEEDINGS PURSUANT TO SEARCH, THEN DATE OF ASSESS MENT GOES BACK TO ORIGINAL ASSESSMENT PASSED U/S.143(3) OF T HE ACT AND IF YOU GO BY SAID ASSESSMENT ORDER, THEN DATE SHALL BE RECKONED FROM 28.03.2016. IF YOU GO BY THAT DATE, REVISION O RDER PASSED BY THE PCIT DATED 09.12.2020 IS CLEARLY BEYOND TWO YEARS FROM THE END OF FINANCIAL YEAR IN WHICH ORDER SOUGHT TO BE REVISED 10 ITA NO. 979/CHNY/2020 WAS PASSED. THIS LEGAL POSITION IS FORTIFIED BY THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF M/S.SKYLIN E BUILDERS VS. CIT (SUPRA), WHERE UNDER IDENTICAL SET OF FACTS , THE HONBLE HIGH COURT HELD THAT WHERE NO REVISIONAL ORDER WAS PASSED BY CIT AT THE TIME OF COMPLETION OF ORIGINAL ASSESSME NT, LIMITATION PERIOD FOR PASSING ORDER U/S.263 HAD TO COMMENCE F ROM FIRST ORDER OF ASSESSMENT. THE HONBLE MADRAS HIGH COURT IN THE CASE OF INDIRA INDUSTRIES VS. PCIT (2018) 95 TAXM ANN.COM 103 (MAD), HAD CONSIDERED AN IDENTICAL ISSUE AND HE LD THAT WHEN A NOTICE U/S.263 RAISES NEW ISSUES, WHICH AR E NOT SUBJECT MATTER OF REASSESSMENT PROCEEDINGS, THEN TW O YEARS PERIOD CONTEMPLATED UNDER SUB-SECTION (2) OF SECTI ON 263 WOULD BEGIN TO RUN FROM DATE OF ORIGINAL ASSESSMENT . THE HONBLE MADRAS HIGH COURT WHILE CONSIDERING THE I SSUE HAD FOLLOWED DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS.ALAGENDRAN FINANCE LTD. (293 ITR 1) (SC), WH ERE A SIMILAR VIEW HAD BEEN TAKEN BY THE HON'BLE SUPREME COURT. AS REGARDS CASE LAW RELIED UPON BY THE LEARNED DR IN T HE CASE OF M/S.CANARA HOUSING DEVELOPMENT CO. LTD. VS. DCIT ( SUPRA) AND OTHER CASE LAW, WE FIND THAT THOSE CASE LAWS RENDERED UNDER DIFFERENT SET OF FACTS AND HAS NO APPLICATIO N TO THE FACTS 11 ITA NO. 979/CHNY/2020 OF THE PRESENT CASE AND HENCE, CASE LAWS RELIED UP ON BY THE LEARNED DR ARE NOT CONSIDERED. 9. IN THIS VIEW OF THE MATTER AND CONSIDERING FACTS AND CIRCUMSTANCE OF THE CASE AND ALSO BY FOLLOWING RAT IO OF VARIOUS CASE LAWS DISCUSSED HEREIN ABOVE, WE ARE OF THE CON SIDERED VIEW THAT REVISION ORDER PASSED BY THE LEARNED PCI T DATED 09.12.2020 IS BARRED BY LIMITATION BECAUSE, SAID ORDER WAS PASSED AFTER EXPIRY OF TWO YEARS FROM THE END OF FI NANCIAL YEAR IN WHICH ORDER SOUGHT TO BE REVISED WAS PASSED. HE NCE, WE QUASH REVISION ORDER PASSED BY THE LEARNED PCIT U /S.263 OF THE INCOME TAX ACT, 1961. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO) (G.MANJUNATHA ) ! $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ! /CHENNAI, ' /DATED 17 TH SEPTEMBER, 2021 DS +, -, /COPY TO: 1. APPELLANT 2. RESPONDENT 3. . ( ) /CIT(A) 4. . /CIT 5. , 2 /DR 6. /GF .