IN THE INCME TAX APPELLATE TRIBUNAL, “ C ” BENCH, KOLKATA

I.T.A No. 189/Kol/2013 A.Y 2005-06
M/s. Surana Mercantile Pvt. Ltd (Appellant) Vs. A.C.I.T, CC-XXIII, Kolkata (Respondent)
Date of Hearing: 09-09-2015
Date of Pronouncement: 11-09-2015

ORDER

SHRI M.BALAGANESH, AM

This appeal of the assessee arises out of the order of ld. CIT(A), Kolkata in appeal no. 282/CC-XXIII/CIT(A)C-III/11-12/Kol dated 18-10-2012 against the order of assessment framed u/s 154/ 153A/143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 30-09-2011 for the assessment year 2005-06.

2. S/Shri S.L Kochar& Anil Kochar, Advocates, ld.ARs represented on behalf of the assessee and Shri Niraj Kumar, CIT/ ld. Sr. DR represented on behalf of the revenue.

3. Brief facts of the case are that there was a search and seizure operation conducted u/s. 132 of the I.T Act 1961 in Surana Group cases on 19/03/2009. Pursuant to the same, assessment u/s. 153A r.w.s 143(3) of the Act was framed for the assessment year 2005-06 on 31-12-2010 making various additions. The said assessment was subject to appeal before the ITAT. This ITAT had quashed such assessment vide its order dated 22-06-2015 in IT(SS) A Nos. 17 to 19/Kol/2012 for the AYs. 2004-05 to 2006-07 when the appeal against the original assessment proceedings were pending, the ld.AO sought to rectify the original assessment order dated 31-12-2010 by passing an order dated 30-09-2011 u/s. 154/153A/143(3) of the Act. In the rectification proceeding, the AO stated that the ld. AR of the assessee had accepted to the proposal for rectification for disallowance of interest payment of Rs. 48,08,900/-. On 1st appeal, the ld. CIT(A) upheld the said addition on the ground that the ld.AR of the assessee had accepted the addition and hence, no appeal could lie before him. Aggrieved, the assessee is in appeal before us.

4. Shri S.L. Kochar, Advocate, the ld.AR of the assessee argued that during the course of section 154 proceeding before the ld. AO, he had agreed by stating that the assessee has challenged that the disallowance of interest paid for capital gains before the ld. CIT(A). Accordingly, he stated that assessee has no objection if disallowance of Rs.48,08,900/- is added back to the total income of the assessee. He further argued that he had not accepted the addition before the ld. AO in 154 proceedings but instead stated that the appeal is pending before the ld. CIT(A) against the original assessment. The ld. AR of the assessee also argued that when the original assessment order passed u/s. 153A r.w.s 143(3) is quashed by the ld. Tribunal as bad in law, any order passed to rectify an illegal order cannot be sustained in the eyes of law, irrespective of the fact that the addition made thereon is accepted or not by the assessee. In response to this, the ld. CIT DR vehemently supported the orders of the lower authorities.

5. We have heard the rival submissions and perused the material available on record. It is observed that the original assessment order dated 31/12/2010 passed u/s 153A r.w.s 143(3) of the Act has been quashed by this tribunal vide its order dated 22-06-2015 in IT(SS) Nos. 17-19/Kol/2012 for the AYs. 2004-05 to 2006-07. Relevant portion of the order is reproduced hereunder:-

“15. In view of the facts in entirety and the legal principles enunciated by Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd., supra, of Hon’ble Allahabad High Court in the case of Shaila Agarwal, supra and Mumbai Special Bench decision in the case of All Cargo Logistics, supra, we are of the view that there is no incriminating material found during the course of search in the present case for these assessment years, except the statement of one Shri Sabhu Kr. More, as admitted by the AO in his remand report dated 23.09.2011 and despite number of opportunities revenue could not produce any incriminating material before the Bench and the assessments are already completed for these assessment years originally, the assessments framed u/s. 153A of the Act is in valid and hence, quashed. “

6. We find lot of force in the arguments of the ld.AR that when the original assessment was quashed by the ITAT vide its order dt. 22.6.2015 as bad in law, it loses the character of an order in the eyes of law. Any subsequent order passed to rectify an illegal order would not be an order in the eyes of law irrespective of the fact that the ld.AR of the assessee had accepted to the said addition of Rs.48,08,900/- during 154 proceeding before the ld.AO. We find that since the original assessment order itself is quashed by the tribunal, subsequent order, if any, passed u/s. 154 of the Act dated 30-09-2011 also becomes bad in law and deserves to be quashed and hence, we refrain to go into the merit of the case. Accordingly, the grounds raised by the assessee are allowed.

7. In the result, the appeal of the assessee stands allowed.

THIS ORDER IS PRONOUNCED IN OPEN COURT ON Dt 11 /09/2015

Sd/-                                                                                         Sd/-
(Mahavir Singh, Judicial Member )    (M. Balaganesh, Accountant Member)
Date 11/09/2015

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