SRS BUILDCON PVT. LTD.,NEW DELHI V. DCIT, CENTRAL CIRCLE-II, FARIDABAD

ITA 7431/DEL/2019

AI Insights

The case involves M/S SRS Buildcon Pvt. Ltd., which appealed against the order of the CIT(Appeals-3), Faridabad, confirming the reassessment made by the Assessing Officer (AO) under sections 147 and 148 of the Income Tax Act, 1961 for the assessment year 2010-11. The primary contention was that the reassessment was initiated inappropriately as the original assessment was completed under section 143(3) within the four-year period, and there was no failure to disclose material facts by the assessee. The Tribunal examined the legal provisions and precedents cited by the assessee, leading to the decision to quash the reassessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31636 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Other Referred Cases: Duli Chand Singhania vs. APT, Haryana Acrylic Manufacturing Co. vs. CIT & Anr., Wei Intertrade Pvt. Ltd. vs. ITO, JSRS Udyog Limited & Anr. vs. ITO, Sterlite Industries (India) Ltd. vs. ACIT & Anr., Idea Cellular Ltd. vs. DCIT & Ors., German Remedies Ltd. vs. DCIT, ITO vs. M/s IME International Pvt. Ltd., Subhash Chander Kathuria vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: SOMIL AGARWAL
• Keywords: Opportunity of being heard; Reasonable cause; Unexplained cash credit; Depreciation; Principle of natural justice; Reason to believe
• Section: 147; 148; 143(3); 143(2); 153; 68; 22; 139

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA NO. 7431/Del/2019 A.YR. : 2010-11 M/S SRS BUILDCON PVT. LTD., (MERGED WITH M/S BTL INDUSTRIES LTD., LATER MERGED AND NOW KNOWN AS M/S BTL HOLDING CO. LTD.), FLAT NO. 202, 2ND FLOOR, 24, NEW DELHI HOUSE, BARAKHAMBA ROAD, CONNAUGHT PLACE, NEW DELHI - 1 (PAN: AAICS9912Q) VS. DCIT, CENTRAL CIRCLE-II, FARIDABAD HARYANA – 121001 (APPELLANT) (RESPONDENT) Appellant by : Sh. Somil Agarwal, Adv. Respondent by : Sh. Sahil Kumar Bansal, Sr. DR. Date of hearing : 07.01.2025 Date of pronouncement : 09.01.2025 ORDER PER SHAMIM YAHYA, AM : The assessee filed the present appeal against the order of the Ld. CIT(Appeals-3), Faridabad dated 15.3.2019 pertaining to assessment year 2010-11 on the following grounds:- 2 | P a g e “1) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in assuming jurisdiction to issue notice u/s 148 of the Income Tax Act, 1961 (the Act) and the consequent assessment proceedings in the case and the assessment order passed are bad in law and against the facts and circumstances of the case and void-abinitio, and more so when the entity in whose name jurisdiction u/s 147 and 148 of the Act was assumed and assessment was framed did not exist, and basic jurisdictional conditions and pre-requisites under section 147 to 151 of the Act were not met. [as same filed in CIT(A)] 2) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. and recording the reasons and issue of notice u/s 148 and 143(2) of the Act in the name of M/s SRS Buildcon P. Ltd. are bad in law and against the facts and circumstances of the case and the order passed u/s 143(3)/147 of the Act, in the name of M/s SRS Buildcon P. Ltd. is void ab- initio. 3) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in making an addition of Rs. 47,16,500/- as unexplained credits u/s 68 of Income Tax Act, and that too without proper appreciation of facts on record, and by recording incorrect facts and findings, and making allegations without any basis, material or evidence and merely on the basis of surmises and conjectures and without observing the principal of natural justice. 4) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of Rs.47,16,500/- is bad in law and against the facts and circumstances of the case. 5) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in charging interest u/s 234D and withdrawing interest u/s 244A, more so when such interest could not be levied under the law. 6) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in passing the impugned order without giving 3 | P a g e adequate opportunity of being heard and by not observing the principles of natural justice. 7) That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.” 2. The brief facts of the case are that AO made the addition of Rs. 47,16,500/- as unexplained cash credit. Ld. CIT(A) in his appellate order sustained the said addition. Against the order of the Ld. CIT(A), assessee is in appeal before us. 3. We have heard both the parties and perused the records. Ld. Counsel for the assessee assailed that the jurisdiction assumed in this case u/s. 147 of the Act. In support of his contention, he filed the following submissions:- “It is respectfully submitted that the jurisdiction assumed u/s 147 and the notice issued u/s 148 dated 30.03.2017 for AY 2010-11 is bad in law and barred by limitation inter alia for the reason that assessment has already been framed u/s 153A(l)(b) r.w.s. 143(3) vide order dated 27.03.2015 (PB 41-46) and the impugned notice u/s 148 dated 30.03.2017 for AY 2010-11 has been issued after the expiry of the four years from the end of the relevant assessment year and there is no allegation by the Ld. AO in the reasons recorded that escapement of income is due to the failure of the assessed to disclose fully and truly all material facts necessary for assessment as is evident from reasons recorded reproduced on page 2 of the assessment order. Therefore, on the anvil of the Jurisdictional High Court decision in the case of Duli Chand Singhania vs. APT, 269 ITR 0192 (P&H) the re-assessment cannot be sustained as original assessment was done u/s 143(3) and four years thereafter re- opening was done which is barred by limitation in view of the first 4 | P a g e proviso to section 147 and reliance is also placed on the following judicial decisions: • Haryana Acrylic Manufacturing Co. VS. CIT & Anr. 308 ITR 38 (Del). • Wei Intertrade Pvt. Ltd. vs. ITO, 308 ITR 22 (Del). • JSRS Udyog Limited & Anr. vs. ITO, 313 ITR 321 (Del). • Sterlite Industries (India) Ltd. vs. ACIT & Anr. 305 ITR 339 (Mad). • Idea Cellular Ltd. vs. DCIT & Ors., 301 ITR 407 (Bom). • German Remedies Ltd. vs. DCIT, 287 ITR 0494 (Bom). • ITO vs. M/s IME International Pvt. Ltd., ITA no. 3483/2010 dated 30.09.2010 (Del). • Subhash Chander Kathuria vs. ACIT, ITA No. 3087/2010 dated 29.04.2011 (Del). In view of the above, it is respectfully submitted that the impugned re-opening is bad in law and barred by limitation in view of the first proviso to section 147 of the Income Tax Act, 1961 and therefore in view of the aforesaid judicial decisions the impugned re-assessment order deserves to be quashed and may please be so held.” 4. Per contra, Ld. DR relied upon the orders of the authorities below. 5. At the outset, it is noted that there is a delay of 45 days in filing the appeal before the Tribunal. The reasonable cause for the same has been attributed to judicial custody of the promoters. Hence, in the interest of justice, the delay in dispute is hereby condoned in the appeal. 6. Before going further, we may gainfully refer here the reasons recorded by the AO, which reads as under:- 5 | P a g e “Return declaring Nil income was filed on 10.09.2013. Assessment u/s. 153A(1)(b) of the I.T. Act, 1961 was completed on 27.03.2015 at income of Rs. 5,56,000/-. Later on information was received from Asstt. Director of Income- tax (Inv.) Unit-5(3), New Delhi vide her office letter f.No. ADIT(Inv.)/U5(3)/2016-17/243 dated 25.03.2017. An STR was received in the office of the investigation wing Unit 5(3), New Delhi, the perusal of which revealed that M/s SRS Buildcon Pvt. Ltd., has received credits into its bank account by accommodation entry through Trust Worthy Sales Agencies Pvt. Ltd. in the F.Y. 2009-10. The unaccounted funds received in the account of M/s SRS Buildcon Pvt. Ltd., are detailed as under:- S.No. Name of concern Financial Year Amount 1. M/s SRS Buildcon Pvt. Ltd. 2009-10 Rs. 42,00,000/- In view of the above facts, I have reason to believe and I am satisfied that income chargeable to tax has been under assessed to the extent of Rs. 42,00,000/- for the assessment year 2010-11 as per information obtained from the assessee as per return of income for the year under reference.” 7. We have carefully considered the submissions. It will be apt to refer to the provision of section 147, which read as under:- \"If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to the relevant assessment year): Provided that where an assessment under sub-section(3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four year from the end of the relevant assessment year, unless any income chargeable to tax has 6 | P a g e escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section(1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year.\" 8. In this regard, Assessee’s contention is that the assessment is barred by limitation for the reasons that assessment was already framed in this u/s. 153A(1)(b) r.w.s. 143(3) vide order dated 27.3.2015 and the impugned notice u/s. 148 of the Act dated 30.3.2017 for AY 2010-11 has been issued after the expiry of the four years from the end of the relevant assessment year and there is no allegation by the AO in the reasons recorded that escapement of income is due to the failure of the assessee to disclose fully and truly all material facts necessary for assessment, as it evident from the reasons recorded reproduced as above. To support our aforesaid view, we draw support from the decision of the Hon’ble High of Punjab and Haryana Court in the case of Duli Chand Singania vs. APT, 269 ITR 0192 (P&H) wherein, it has been held that the reassessment cannot be sustained as original assessment was done u/s. 143(3) and four years thereafter reopening was done which is barred by limitation in view of the first proviso to section 147. 9. In the background of the aforesaid discussions and respectfully following the aforesaid precedents, we are of the considered view that the reopening is bad in law and barred by limitation in view of the first proviso to section 147 of the Act and therefore, the reassessment order deserves to be quashed. Accordingly, 7 | P a g e the reassessment order is hereby quashed and the appeal of the assessee is allowed. 10. Since we have already quashed the re-assessment on jurisdiction, the adjudication on merits of the case have become academic, hence, need not be adjudicated. 11. In the result, the Assessee’s appeal is allowed in the aforesaid manner. Order pronounced on 09/01/2025. Sd/- (SUDHIR PAREEK) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "