ORDER
1. These three appeals have been preferred by the Revenue against separate orders passed by the National Faceless appeal Centre (NFAC), Delhi in the cases of ‘Sahara City Homes’ group cases for assessment year 2011-12, as per details given below:
| (a) |
|
In ITA No.127/LKW/2025 in the case of Sahara City Homes, Kanpur-1 against the order of the NFAC dated 30.12.2024 for assessment year 2011-12. |
| (b) |
|
In ITA No.176/LKW/2024 in the case of Sahara City Homes Anand against the order of the NFAC dated 12.02.2024 for assessment year 2011-12. |
| (c) |
|
In ITA No.365/LKW/2024 in the case of Sahara City Homes Karnal against the order of the NFAC dated 03.04.2024 for assessment year 2011-12. |
The assessee (Sahara City Homes Karnal) has filed Cross Objection bearing C.O. No.21/LKW/2024 in ITA No.365/LKW/2024 in support of the order of the Ld. First Appellate Authority.
2. Since the facts and the issues involved in the above captioned appeals are almost identical, therefore, they were taken up together for hearing and are being disposed of through this common order for the sake of convenience.
3. First, we will deal with the issues involved in the case of the assessee (Sahara City Homes Karnal) in ITA No.365/LKW/2024 for assessment year 2011-12. The brief facts are that the assessee-firm was constituted with the objects of carrying on business of Construction, Development of Township, Housing Projects and other Reality Projects. The assessee-firm was formed on 28.03.2011 and at the time of formation of the firm, it had eight partners. Out of the eight partners, six partners contributed their land and/or work-in-progress to the partnership firm, the amount of which was credited in their capital account. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice under section 148 of the Act after recording detailed reasons as enumerated in the assessment order at pages 1 and 2. In compliance to the notice under section 148 of the Act, the assessee filed its return of income for the year under consideration on 02.04.2019, declaring a total loss of Rs.2,758/-. The Assessing Officer (AO) noticed that after constitution of the assessee-firm on 28.03.2011, it had entered into an MoU with the company, M/s Sahara India Commercial Corporation Ltd. (SICCL) on 30.30.2021 and according to which the assessee-firm took over Work-in-Progress (WIP) from SICCL of Rs.146,43,91,467/-. From the Balance Sheet furnished by the assessee for the period ending on 31.03.2011, it was noticed by the AO that an amount of Rs.1,47,82,79,811/- was reflected at the liability side of the Balance Sheet under the head ‘Current Liabilities’, which included the WIP received from SICCL of Rs.146,43,91,467/-, Customer Advances of Rs.1,38,85,586/-and Sundry Creditors of Rs.2,758/-. The assessee was specifically asked to furnish the details of these items vide notice under section 142(1) of the Act. After considering the reply furnished by the assessee, the AO held that the assessee had failed to provide any document/detail/evidence/verification regarding the amount shown under the head ‘Current Liabilities’ in the Balance Sheet, which included the WIP received from SICCL of Rs.1,46,43,91,467/- and Customer Advances of Rs.1,38,85,586/- claimed to have been received from M/s Sahar Prime City Limited (SPCL). The AO held that the assessee had incurred the expenditure of Rs.1,46,43,91,467/- in the previous year, i.e., assessment year 2010-11 and since the assessee had failed to offer any explanation about the source and nature of the expenditure, the same was to be treated as unexplained expenditure of the assessee and accordingly, the same was added Rs.1,46,43,91,467/- to the total income of the assessee under section 69C of the Act.
3.1. Further, in the Journal Register, the assessee had shown Rs.30,05,39,913/- as WIP taken over from the M/s Sahara Prime City Limited (SPCL), which was one of the partners in the partnership firm. The AO noted that in the partnership deed, nothing was mentioned about the WIP of SPCL, as to what may be taken over as the WIP of the SPCL and how and on what basis the WIP of SPCL was taken over by the firm. The AO further noted that the assessee did not produce any document, which may prove the genuineness and value of the WIP taken over by the assessee and that neither any details regarding the valuation of the WIP nor any document regarding as to how and on what basis the WIP of Rs.30,05,39,913/- was taken over from the partner company SPCL was produced by the assessee. The AO, therefore, treated the same as unexplained expenditure of the assessee and, accordingly, added Rs.30,05,39,913/- to the total income of the assessee under section 69C of the Act.
3.2. The AO also noted that the assessee had booked ‘Customer Advances’ at Rs.1,38,85,586/- under the head ‘Current Liabilities’ and from a perusal of the Journal Register, it was noticed by the AO that the Customer Advances were taken over from the company, M/s Sahara Prime City Ltd. (SPCL) and nothing, in this regard, was mentioned in the Partnership deed dated 28.03.2011. According to the AO, the assessee had failed to produce any document/ evidence with regard to the customer advances taken by the partner company, M/s SPCL and transferred to the assessee firm later on. Since the assessee had failed to offer any explanation with regard to the nature/purpose/mode of receiving the Customer Advance of Rs.1,38,85,586/-, he treated the same as unexplained cash credit and added the same to the income of the assessee under section 68 of the Act.
3.3 The AO also noticed from the Journal Register that the assessee had shown Customer Advances of Rs.1,38,17,486/-(Rs.1,09,49,708/- + Rs.28,67,778/-), which was taken over on 31.03.2011, after constitution of the assessee firm. As per the AO, since the assessee had failed to offer any explanation with regard to the nature/purpose/mode of receiving the Customer Advances, the AO treated the same as unexplained cash credit and added Rs.1,38,17,486/- also to the income of the assessee under section 68 of the Act.
3.4 The AO completed the assessment under section 143(3) of the Act read with section 147 of the Act, computing the income of the assessee as under:
| Returned Income/loss |
(-) Rs.2,758/- |
| Addition u/s 69C of the Act |
Rs.146,43,91,467/- |
| Addition u/s 69C of the Act |
Rs.30,05,39,913/- |
| Addition u/s 68 of the Act |
Rs.1,38,85,586/- |
| Addition u/s 68 of the Act |
Rs.1,38,17,486/- |
| Total Income |
Rs.1,79,26,31,694/- |
| Rounded off |
Rs.1,79,26,31,690/- |
3.5 Aggrieved, the Assessee preferred an appeal before the NFAC, which allowed the appeal of the assessee by quashing the assessment order framed by the AO, observing as under:
“6.2 Notice u/s. 148 of the Act in the case of the assessee was issued for A.Y. 2011-12 on 28.02.2019 on the basis of the directions u/s. 150(2) of the Act of CIT(A) Varanasi as per his order dated 27.11.2018 which are reproduced as under.-
“However, since the appellant has itself claimed that the alleged liability of SICCL on account of WIP and customer advance has been accepted and addition was made by it in the earlier year i.e. A.Y. 2011-12 and since the liability has not been proved by the assessee as genuine and the addition made by the AO are confirmed, the AO is directed to issue notice u/s. 148 of the Act in the case of the appellant for A.Y. 2011-12 on the protective basis to protect the interest of revenue. This direction is issued u/s. 150(2) of the I.T. Act as the notice u/s. 148 of the I.T. Act for A.Y. 2011-12 could have been issued at the time when the assessment order for A.Y. 2012-13 was passed by the AO”.
6.3 The directions issued by the Id. CIT(A) Varanasi are expunged by the Hon’ble ITAT, Lucknow vide its order No. ITA No. 36/LKW/2019 dated 31.01.2022. Hence, since the very basis on which notice u/s. 148 of the Act dated 28.02.2019 was issued does not survive, the notice u/s. 148 of the Act also does not survive. It is also noted that notice u/s. 148 dated 28.02.2019 was issued beyond the time limit prescribed in Sec. 149 of the Act for issue of notice u/s. 148 in view of directions issued u/s 150(2) by the CIT(A). Without the directions u/s. 150(2) of the Ld. CIT(A), the AO could not have issued notice u/s. 148 in the case of the assessee after 31.03.2018 for the AY 2011-12. As the notice u/s 148 in the case of the assessee for the AY 2011-12 was issued beyond the time limit prescribed in Sec. 149 of the Act, notice u/s. 148 is void ab initio in view of the order in ITA No. 36/LKW/2019 dated 31.01.2022 of the Hon’ble ITAT, Lucknow and hence, the order passed u/s. 143(3) rws 147 dated 25.12.2019 on the basis of such notice also becomes void ab initio. Hence, Ground No. 2 and the additional ground raised by the appellant challenging the validity of notice u/s. 148 of the Act and reassessment proceedings are allowed. It is held that notice u/s. 148 of the Act dated 28.02.2019 was void ab initio and hence, the reassessment order u/s. 147 rws 143(3) of the Act dated 25.12.2019 passed on the basis of such notice is also void ab initio.
6.4 Since the re-assessment proceedings itself had been held bad in law and void ab initio, none of the additions made by the AO survives and the various grounds raised by the appellant on the merits of the addition made are not being adjudicated upon.
7. Accordingly, the appeal of the appellant is ALLOWED.”
3.6 Now the Revenue has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:
1. That the Ld. CIT(A) erred in law as well as on the facts and circumstances of the case in allowing appeal of the assessee without appreciating that under provisions of section 251(c), the CIT(A) had power to pass such orders in the appeal as he thinks fit.
2. That the Ld. CIT(A) has not appreciated the facts of case that the AO reopened the case u/s 147 on the specific direction of the CIT(A) and therefore cases relied upon to expunge the direction of the CIT(A) are distinguishable on facts and law in the instant case of the assessee.
3. That the Ld. CIT(A) erred in law as well as on facts of case in not adjudicating the addition made under section 69C of Rs.1,46,43,91,467/-being unexplained expenditure of carried forward work in progress (WIP) on merit as no substantial evidence has been produced by the assessee, on the hypothetical ground that the section 68 and 69C have no interplay with valuation of the work in progress.
4. That the Ld. CIT(A) erred in law as well as on facts of case in not adjudicating the addition made under section 690 of Rs.30,05,39,913/-being unexplained expenditure of carried forward work in progress (WIP) take over from SPCL on merit as no substantial evidence has been produced by the assessee, on the hypothetical ground that the section 68 and 69€ have no interplay with valuation of the work in progress
5. That the Ld. CIT(A) erred in law as well as on the facts of the case in not adjudicating the addition made under section 68 of Rs.1,38,85,586/-being cash credit relating to customer advances on merit as no substantial evidence has been produced by the assessee
6. That the Ld. CIT(A) erred in law as well as on the facts of the case in not adjudicating the addition made under section 68 of Rs.1,38,17,486/-being cash credit relating to customer advances on merit a no substantial evidence has been produced by the assessee.
7. The appellant craves leave to add or amend the grounds of appeal as and when need of doing arises.
3.7. On identical set of facts, as narrated above in the case of Sahara City Homes Karnal in ITA No.365/LKW/2024 for assessment year 2011-12, in other cases of the assessees also similar additions were made by the AO.
3.8. In the case of Sahara City Homes, Kanpur-1 in ITA No.127/LKW/2025, the AO completed the assessment under section 143(3) of the Act read with section 147 of the Act, computing the income of the assessee as under:
| Returned Income/loss |
(-) Rs.2,758/- |
| Addition u/s 69C of the Act |
Rs.1,36,95,77,732/- |
| Addition u/s 69C of the Act |
Rs.27,51,68,885/- |
| Addition u/s 68 of the Act |
Rs.2,97,17,365/- |
| Addition on a/c of Sundry Creditors |
Rs.2,758/- |
| Total Income |
Rs.1,67,44,63,982/- |
3.9. In the case of Sahara City Homes-Anand in ITA No.176/LKW/2024, the AO completed the assessment under section 143(3) of the Act read with section 147 of the Act, computing the income of the assessee as under:
| Returned Income/loss |
(-) Rs.2,758/- |
| Addition u/s 69C of the Act |
Rs.27,65,14,573/- |
| Addition u/s 68 of the Act |
Rs.29,51,815/- |
| Addition u/s 68 of the Act |
Rs.29,49,261/- |
| Total Income(rounded off) |
Rs.28,24,12,890/- |
3.10. In the cases of Sahara City Homes, Kanpur-1 (ITA No.127/LKW/2025) and in the case of Sahara City Homes-Anand (ITA No.176/LKW/2024) also, the reassessment proceedings initiated by the AO were quashed and accordingly he allowed the appeals of the assessees.
3.11. Now the Revenue has approached this Tribunal challenging the orders of the NFAC, by raising the following grounds of appeal:
GROUNDS IN ITA No.127/LKW/2025:
1. That the learned CIT appeal has erred in law in not appreciating the mandate of section 150(1) of the IT Act 1961 in as much as that the provisions of section 150(1) have overriding effect over section 149 and vest plenary powers to issue notice under section 148 at any time for the purpose of making an assessment or re assessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the I.T Act 1961 by way of appeal reference or revision.
2. That the provisions of section 150 (1) of the IT Act 1961 are complete code unto itself for the purpose of issuing notice under section 148 in consequence of or to give effect to such finding or direction as noted above.
3. That the learned CIT appeal has not appreciated that the case laws cited by him mostly relate to erstwhile section 34 (3) of the IT Act 1922 which has been repealed whereas the impugned order has been passed under the provisions of the IT Act 1961.
4. The learned CIT (appeal) has not taken pains to decide the appeal on its merits and has decided the appeal only on the technical ground which does not sustain in the eyes of law.
5. Appellant craves leave to add, alter, amend or withdraw any or all grounds of appeal at any time before and during the course of the hearing.
GROUNDS IN ITA No.176/LKW/2024:
1. That the Ld. CIT(A) erred in law as well as on the facts and circumstances of the case in allowing appeal of the assessee without appreciating that under provisions of section 251(c), the CIT(A) had power to pass such orders in the appeal as he thinks fit.
2. That the Ld. CIT(A) has not appreciated the facts of case that the AO reopened the case u/s 147 on the specific direction of the CIT(A) and therefore cases relied upon to expunge the direction of the CIT(A) are distinguishable on facts and law in the instant case of the assessee.
3. That the Ld. CIT(A) erred in law as well as on facts of case in not adjudicating the addition made under section 69C of Rs.27,65,14,573/- being unexplained expenditure of carried forward work in progress (WIP) on merit as no substantial evidence has been produced by the assessee, on the hypothetical ground that the section 68 and 69C have no interplay with valuation of the work in progress.
4. That the Ld. CIT(A) erred in law as well as on the facts of the case in not adjudicating the addition made under section 68 of Rs.29,51,815/-being cash credit relating to customer advances on merit as no substantial evidence has been produced by the assessee.
5. That the Ld. CIT(A) erred in law as well as on the facts of the case in not adjudicating the addition made under section 68 of Rs.29,49,261/-being cash credit relating to customer advances on merit as no substantial evidence has been produced by the assessee.
6. The appellant craves leave to add or amend the grounds of appeal as and when need of doing so arises.
4. During the course of hearing before us, the Ld. CIT(DR) submitted that the Ld. First Appellate Authority, while quashing the assessment orders passed by the AO, has not appreciated the facts of the case that the AO had reopened the case of the assessees under section 147 of the Act on the specific direction of the ld. CIT(A) and, therefore, the cases relied upon to expunge the direction of the ld. CIT(A) are distinguishable on facts and law. The Ld. CIT(DR) submitted that the orders of the Ld. First Appellate Authority are not sustainable in law and, therefore, the orders of the Ld. First Appellate Authority may be set aside in all the cases and that of the AO maybe restored.
5. However, on a query raised by the Bench, the Ld. CIT(DR) accepted that the Department had not filed any appeal before the Hon’ble High Court against the order of the Tribunal in ITA Nos. 24 to 39/LKW/2019 for assessment year 2012-13, vide order dated 31.01.2022 and, thus, the above said order of the Tribunal had attained finality. The Ld. CIT(DR) on another query by the Bench also fairly accepted that the facts in the above said order passed by the Tribunal and the present set of appeals were identical.
6. Per contra, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that in similar group cases in ITA Nos.24/LKW/2019 to 39/LKW/2019 for assessment year 201213, the respective assessees had filed appeals before the Lucknow Bench of the Tribunal against the orders of the ld. CIT(A) and the Tribunal vide order dated 31.01.2012 held that the direction issued by the ld. CIT(A) to the AO to reopen the assessment for assessment year 2011-12 was unsustainable and was expunged. The Ld. A.R. submitted that on the basis of this order of the Tribunal, the Ld. First Appellate Authority, in the cases of the assessees in the assessment year under consideration, had held that the direction issued by the Ld. First Appellate Authority to reopen the assessment for the year under consideration was unsustainable and accordingly he quashed the assessments and allowed the appeal of the assessee. The Ld. A.R. submitted that the Ld. First Appellate Authority has rightly quashed the assessments and, therefore, no interference is called for in the orders of the AO.
7. We have heard the rival submissions and have also perused the material on record. The facts are not in dispute. The Ld. CIT(DR) has also accepted that the order of the Tribunal vide dated 31.01.2022 was on identical set of facts as in the present appeals filed by the Department. It has also been informed by the Ld. CIT(DR) that the Department has not filed any appeal against the above said order dated 31.01.2022 passed by the Co-ordinate Bench of this Tribunal in ITA Nos.24 to 39/LKW/2019. Therefore, there is no doubt that the above said order of the Tribunal has attained finality and, therefore, the Ld. CIT(A) was right in his approach to have allowed relief to the assessee following the above said orders of the Tribunal.
7.1 For the sake of completeness, the relevant extract from the order of the Ld. First Appellate Authority for assessment year 2011-12 are being reproduced hereunder:
“6.1 From perusal of Order No. ITA/36/LKW/2019 of the Hon’ble ITAT, Lucknow Bench ‘A’ dated 31.01.2022 for A.Y. 2012-13, it is found that the assessee and 15 other assessees had filed appeal with the Hon’ble ITAT against the order of the CIT(A) and all the 16 appeals are disposed of by the Hon’ble ITAT by a single order. Para No. 75 to 90 of the order of the Hon’ble ITAT deals with directions given by the CIT(A) to issue notice u/s. 148 of the Act in the case of the assessee for A.Y. 2011-12 on a protective basis to protect the interests of the revenue. Para 75 to 90 of the order of the Hon’ble ITAT are reproduced as under :-
“75. Now we take up Ground no.5 of the Concise Grounds of Appeal, which deals with the directions of the Id. CIT(A) to the Assessing Officer to reopen the assessment for Assessment Year 2011-12.
76. In para 15 of the appellate order, the CIT(A) has directed the Assessing Officer to issue notice under section 148 of the Act in the case of assessee for A.Y. 2011-12 on a protective basis to protect the interests of the Revenue. In this regard, the assessee has raised the following contentions:
(1) The direction issued by the CIT(A) is beyond his jurisdiction as per section 251 of the Act and hence, such direction is bad in law.
77. It is stated that the first appellate authority has no jurisdiction to direct the Assessing Officer to bring the amount to tax in another assessment year. The appellate authority has to decide the matter relating only to the assessment year before him and not to any other year which he is not in seisin of. The CIT(A) has no power to give direction to the Assessing Officer for reopening of the completed assessment. Such directions are entirely uncalled for and are required to be expunged. In this respect reliance has been placed on the following case laws:
a. Mrs. R. H. Dave v CIT [140 ITR 1035 (Cal)) (ABP 640645).
b. ITO v Murlidhar Bhagwan Das (52 ITR 335 (SC)) (ABP 646-666).
c. N. Kt. Sivalingam Chettiar v CIT [66 ITR 586 (SC)) (ABP 667-671).
d. Bakshish Singh v ITO (93 ITR 178 (Cal)) (ABP 721-729).
e. Order of the ITAT, Kolkata Bench, in the case of ITO v. Sri Biswajit Chatterjee in ITA no. 565/Kol/2013 dated 10.11.2017 (ABP 672-679).
f. Order of the ITAT, Indore Bench, in the case of ACIT v. Shri Mukesh Sharma and others in ITA(SS) no, 88/Ind/2013 dated 04.06.2019/(ABP 680-712).
g. Order of the ITAT. Delhi Bench in the casey Thakur v. DCIT in ITA no. 3785/DeS/2015 dated 12.07.2018 (ABP 713-720).
(II) The CIT(A), after confirming the addition in the year under consideration, cannot hold that the income has escaped assessment in the preceding assessment year,
78. It is contended that once the addition has been made as well as confirmed in A.Y. 2012-13, it cannot be said that the impugned additions constitute “escaped income” for A.Y. 2011-12, warranting issue of notice under section 148 of the Act, and that too, so as to make protective additions. Therefore, the direction issued by the CIT(A) is bad in law. In this respect, reliance has been placed on the following decisions:
a. KIIC Investment Company v. DCIT (Mum)) (ABP 730-738).
b. DCIT v. Bullion Investments & Financial Services (P.) Ltd. 123 ITD 568 (Bang)) (ABP 739-745).
(III) The direction given by the CIT(A) is barred by limitation as per section 150 of the Act.
79. It has been averred that the order of the Id. CIT(A) was passed on 27.11.2018 and the Assessing Officer could issue notice under section 148 of the Act for A.Y. 2011-12 only upto 31.03.2018. Therefore, the direction issued by the Id. CIT (A) is barred by limitation. In this respect, the following decisions have been cited:
a. Order of the Tribunal, Lucknow Bench, in the case of Allahabad Bank Karamchari Co-operative Credit Society Ltd. v. ITO [200 TTJ 905 (Luck)) (ABP 746-754).
b. Order of the Tribunal, Lucknow Bench, in the case of Sandeep Jain v. ITO in ITA no. 811 & 812/Lkw/2017 dated 24.08.2018 (APB 755-770).
c: Order of the Tribunal, Lucknow Bench, in the case of Smt. Neelam Gupta v. ITO 110 TTJ 714 (Luck)) (ABP 771775).
80. We have carefully considered all the above contentions of the assessee. We have also considered the argument of the Id. D.R. on this issue. The first issue to be decided is as to whether, while disposing of the assessee’s appeal for Assessment Year 2012-13, whether the Id. CIT(A) has power to give directions to the Assessing Officer to reopen the assessment for Assessment Year 2011-12. We find that a similar question was referred to the Hon’ble Calcutta High Court in the case of ‘Mrs. R.H. Dave v. CIT’ (supra). This question was:
“Whether, on the facts and in the circumstances of the case, the Tribunal having held that the Appellate Assistant Commissioner had no jurisdiction to direct the Income-tax Officer to bring the amount to fax in an assessment year not involved in the appeal before him, was justified in law in refusing to delete such direction given by the Appellate Assistant Commissioner?”
81. On the abov question, the Hon’ble Calcutta High Court gave the following findings:
“The Tribunal, as we have mentioned before, came to a categorical finding that the AAC had no jurisdiction to direct the ITO to bring the amount to tax in the correct assessment year, for, he could only decide the matter relating to the assessment year before him and not otherwise. This view of the Tribunal is corroborated by several decisions of the Supreme Court We may refer to the latest decision of the Supreme Court in the case of Rajinder Nath v. CIT, where the Supreme Court categorically observed that the expressions “finding” and “direction”, in Section 153(3) were limited in meaning. The Supreme Court observed that a finding given in an appeal, revision or reference, arising out of assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the assessee and in relation to the particular assessment year, to be a necessary finding, the Supreme Court observed, that it must be directly involved in the disposal of the case; it was possible in certain cases that in order to render a finding in respect of A, a finding in respect of B might be called for, for instance where the facts showed that the income could belong to either A or B and to none else, a finding that it belonged to B or did not belong to B, would be determinative of the issue as to whether it could be taxed as A’s income; a finding respecting B was initially involved as a step in the process of reaching the ultimate finding respecting A: if, however, the finding as to A’s liability could be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B was an incidental finding only and it was not a finding necessary for the disposal of the case pertaining to A.”
82. The Hon’ble Calcutta High Court finally held that the Tribunal was in error in declining to delete the directions contained in the order of the AAC.
83. A similar view has been taken by the Hon’ble Calcutta High Court in the case of ‘Bakshish Singh v. ITO’ (supra), under similar facts.
84. We also find that the following observations of the Hon’ble Supreme Court in the case of ITO v. Murlidhar Bhagwan Das’ (supra) are directly on the issue:
“That the expressions “finding” and “direction”, in the second proviso to section 34(3), meant respectively, a finding necessary for giving relief in respect of the assessment for the year in question, and a direction which the appellate or revisional authority,, as the case may be, was empowered to give under the sections mentioned in that proviso. A “finding”, therefore, could only be that which was necessary for the disposal; of an appeal in respect of an assessment of a particular year. The Appellate Assistant, Commissioner might hold, on the evidence, that the income shown by the assessee was not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context was that the income did not belong to the relevant year. He might incidentally find that the income belonged to another year, but that was not a finding necessary for the disposal of an appeal in respect of the year of assessment in question.’
85. Following its above ratio, the Hon’ble Supreme Court, in its decision in the case of ‘N. KT. Sivalingam Chettiar v. CIT (supra), observed that a finding within the second proviso to section 34(3) must be necessary for giving relief in respect of the assessment of the year in question; and that the word “finding” only covers material questions which arise in a particular case for decision by the authority hearing the case or appeal which, being necessary for the subject of the controversy between the interested parties, or on which the parties concerned have been given a hearing.
86. Similar is the view taken by the Kolkata Bench of the Tribunal in the case of ITO v. Sri Biswajit Chatterjee ‘ (supra).
87. Rejecting the argument of the Revenue that the Id. CIT(A) ought to have given directions to reopen the case of the earlier year, the Tribunal referred to the power of the Id. CIT(A) under section 251 of the Act, and following the decision of the Hon’ble Supreme Court in the case of ‘ITO v. Murlidhar Bhagwan Das’ (supra), it categorically held that the Id. CIT(A) has no power under the provisions of the law for giving any direction to the Assessing Officer for reopening of the assessment. It was further held that the appeal before the Id. CIT(A) is confined to the particular assessment year which is before him.
88. The Indore Bench of the Tribunal, in the case of ‘ACIT v. Mukesh Sharma’ (supra), held that the Id. CIT(A) has powers to decide the appeal against the assessee, of a particular assessment, which he may confirm/reduce or enhance or annul. The order of the assessment relates to a particular assessment year or assessment years. The Id. CIT(A) is bound to adjudicate the issues emanating from the appeal for the respective assessment years. Giving directions to the Assessing Officer to consider for re-assessment for other assessment year/s, for which, no appeal is pending before the Id. CIT(A), is out of his/her jurisdiction.
89. Since no decision contrary to the above case laws has been brought to our notice, respectfully following the above decisions of the Hon’ble Supreme Court, High Courts and the Tribunal, we are of the view that the Id. CIT(A) had no power to issue directions to the Assessing Officer to reopen the assessment for Assessment Year 2011-12. Apart from this, we fail to understand as to how, having confirmed all the items of additions in Assessment Year 2012-13, the Id. CIT(A) can still come to a conclusion that the income has escaped assessment The directions given by the Id. CIT(A) are, thus, not only beyond jurisdiction, but also self-contradictory. We find our this view to be supported by the direct decisions in the cases of ‘KIIC Investment Company v. DCIT’ (supra) and ‘DCIT v. Bullion Investments and Financial Services Pvt. Ltd.’ (supra).
90. Accordingly, Ground No.5 is accepted. The direction issued by the Id. CIT(A) to the Assessing Officer to reopen the assessment for Assessment Year 2011-12 is held to be unsustainable and is hereby expunged”.
6.2 Notice u/s. 148 of the Act in the case of the assessee was issued for A.Y. 2011-12 on 28.02.2019 on the basis of the directions u/s. 150(2) of the Act of CIT(A) Varanasi as per his order dated 27.11.2018 which are reproduced as under.-
“However, since the appellant has itself claimed that the alleged liability of SICCL on account of WIP and customer advance has been accepted and addition was made by it in the earlier year i.e. A.Y. 2011-12 and since the liability has not been proved by the assessee as genuine and the addition made by the AO are confirmed, the AO is directed to issue notice u/s. 148 of the Act in the case of the appellant for A.Y. 2011-12 on the protective basis to protect the interest of revenue. This direction is issued u/s. 150(2) of the I.T. Act as the notice u/s. 148 of the I.T. Act for A.Y. 2011-12 could have been issued at the time when the assessment order for A.Y. 2012-13 was passed by the AO”.
6.3 The directions issued by the Id. CIT(A) Varanasi are expunged by the Hon’ble ITAT, Lucknow vide its order No. ITA No. 36/LKW/2019 dated 31.01.2022. Hence, since the very basis on which notice u/s. 148 of the Act dated 28.02.2019 was issued does not survive, the notice u/s. 148 of the Act also does not survive. It is also noted that notice u/s. 148 dated 28.02.2019 was issued beyond the time limit prescribed in Sec. 149 of the Act for issue of notice u/s. 148 in view of directions issued u/s 150(2) by the CIT(A). Without the directions u/s. 150(2) of the Ld. CIT(A), the AO could not have issued notice u/s. 148 in the case of the assessee after 31.03.2018 for the AY 2011-12. As the notice u/s 148 in the case of the assessee for the AY 2011-12 was issued beyond the time limit prescribed in Sec. 149 of the Act, notice u/s. 148 is void ab initio in view of the order in ITA No. 36/LKW/2019 dated 31.01.2022 of the Hon’ble ITAT, Lucknow and hence, the order passed u/s. 143(3) rws 147 dated 25.12.2019 on the basis of such notice also becomes void ab initio. Hence, Ground No. 2 and the additional ground raised by the appellant challenging the validity of notice u/s. 148 of the Act and reassessment proceedings are allowed. It is held that notice u/s. 148 of the Act dated 28.02.2019 was void ab initio and hence, the reassessment order u/s. 147 rws 143(3) of the Act dated 25.12.2019 passed on the basis of such notice is also void ab initio.
6.4 Since the re-assessment proceedings itself had been held bad in law and void ab initio, none of the additions made by the AO survives and the various grounds raised by the appellant on the merits of the addition made are not being adjudicated upon.”
7.2 A perusal of the above extract show that the ld. CIT(A) has allowed relief to the assessee by relying on the order of the Tribunal in the cases of similar assessees and on identical set of facts in ITA Nos.24 to 39/LKW/2019, vide order dated 31.01.2022 and as we have stated in previous paragraph, the above said order of the Tribunal has attained finality. Therefore, respectfully following the same, we are of the considered view that the ld. CIT(A) has rightly adjudicated the appeals in favour of the assessees in the cases of the captioned assessees in the captioned assessment year.
7.3 Therefore, the grounds raised by the Department in the cases of all the three assessees are dismissed and accordingly the three appeals filed by the Department are dismissed.
7.4 Since the Cross Objection of the Assessee in CO No.21/LKW/2024 is only supporting the order of the ld. CIT(A), the same is allowed.
8. In the final result, the three appeals of the Department are dismissed and the Cross Objection of the Assessee is allowed.
