$~07.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision:14.11.2019
% ITA 510/2019
PR. COMMISSIONER OF INCOME TAX- 2 ..... Appellant
Through: Mr. Zoheb Hossain, Advocate.
versus
M/S CENTURY METAL RECYCLING PVT. LTD..... Respondent
Through: Mr. Piyush Kumar Kamal with Mr.
Gautam Jain, Advocate.
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
HON'BLE MR. JUSTICE SANJEEV NARULA
VIPIN SANGHI, J. (ORAL)
1. We have heard learned counsels and proceed to dispose of the appeal
at this stage. The following question of law arises and is framed for our
consideration in this appeal:
"Whether on the facts and in the circumstances of the case and
in law, ITAT is correct in law and fact by quashing the
reassessment proceedings made by the AO"
2. The original assessment order was passed under Section 143(3) of the
Act assessing a total loss of Rs. 3,63,58,446/- against the declared loss of
Rs. 3,80,64,292/-. A notice under Section 148 was issued to the assessee for
reopening the assessment on the basis of an information received from the
Office of the ADIT (Inv) II Faridabad, premised on Survey operation
ITA NO. 510/2019 Page 1 of 5
conducted on the assessee on 26.03.2015. It was alleged that during the
survey proceedings, evidence of discrepancies/ tax evasion was found and it
emerged that the assessee during the Financial Year 2008-2009 was engaged
in the sale of Aluminum Dross, which emerged during the manufacture of
Aluminum alloy ingots in the guise of "Ash and Residue" , with the intention
to suppress the actual value of aluminum dross and to evade payment of
appropriate duty on the actual value thereof. Pursuant to the said notice
under Section 148 of the Act, a reassessment order was passed making an
addition of Rs. 13,99,00,275/- which rejecting the respondent's arguments
and holding that the respondent had sold Aluminum Dross valued at Rs.
13.19,00,275/- during the financial year fraudulently by issuing sale invoices
of Ash and Residue to suppress the actual value thereof clandestinely.
3. The CIT (A) upheld the action of the reopening under Section 148 of
the Act, but deleted the addition of Rs. 13,19,00,275/- primarily on the basis
that there was no evidence that the assessee has sold Aluminum Dross
during the year, or that it had under-reported its sales. The CIT (A) also
noticed that the CESTAT had set aside the findings in the adjudication
orderholding that the revenue had failed to bring out any corroborative
evidences in the form of any cash transaction, or other evidences to support
its findings.
4. The revenue preferred the appeal before the learned Tribunal being
ITA No. 6657/Del/2017 for the assessment year 2009-10, wherein the
respondent preferred CO No. 36/Del/2018. The Tribunal rejected the appeal
preferred by the Revenue primarily relying upon on the order passed by the
CESTAT taken note of hereinabove.
ITA NO. 510/2019 Page 2 of 5
5. The submission of Mr. Hossain, learned senior standing counsel for the
revenue is that the approach of the Tribunal in rejecting the appeal on the basis
of the order passed by the CESTAT was not correct inasmuch, as, the revenue
has preferred an appeal before the Punjab and Haryana High Court against the
order of the CESTAT. A copy of the order passed by the CESTAT has been
tendered in Court by learned counsel for the respondent. The same bears
different dates different places.
6. Be that as it may, there is no dispute that the Commissioner of Central
Excise has preferred appeals before the Punjab and Haryana High Court being
C.A. No. 57, 58, 66 to 68 of 2017, against the order of the CESTAT. This
position is not disputed by learned counsel for the respondent assessee.
7. Mr. Hossain submits that in view of the said appeal being preferred, the
Tribunal should have adopted the same course as prescribed by this Court in
A.T. Kearney India Ltd. v. Income Tax Officer, (2015) 371 ITR 179. In that
case, though the appeal had not been preferred against the order, setting aside
the order which formed the basis for issuance of notice under Section 148, the
period of limitation was still available. In that light, the Division Bench
observed as follows:
"6. We find that there is one factor which is different from that
case and, that is, that while in the previous case no appeal had
been filed against the Tribunal's order, in the present case the
Tribunal's order had been passed only on 26.08.2014 and there
is still time for filing of the appeal on the part of the Revenue.
In these circumstances, while the very basis for the issuance
of the notice under Section 148 no longer survives, we are of
the view that as there is still time for the filing of an appeal by
the Revenue before this court, a different order would be
required to be passed.
ITA NO. 510/2019 Page 3 of 5
7. It is clear that as the position stands today, the reasons do
not survive. However, subsequently the position may be altered
in case the Revenue files and appeal and succeeds therein.
Therefore, the Revenue also has to be protected. Consequently,
we are inclined to adopt the approach indicated in National
Agricultural Co-operative Marketing Federation of India
Ltd. v. Assistant Commissioner of Income Tax - Circle 32(1),
W.P.(C) 5895/2010 decided on 07.08.2014 wherein we passed
the following order:-
"In these circumstances, we find that as of now, the very basis
of initiating the re-assessment proceedings by virtue of the
notice dated 02.02.2010 issued under Section 148 of the
Income Tax Act, 1961 does not survive. Therefore, we are
disposing of this writ petition with liberty to both sides to seek
revival in case the need arises. We make it clear that in case it
is ultimately held in favour of the revenue, then the revenue
shall be entitled to revive its proceedings pursuant to the
notice under Section 148 of the said Act and the assessee shall
not take up the plea of limitation.
The writ petition stands disposed of accordingly."
8. Consequently, we direct that the re-assessment proceedings
stand closed and the present writ petition is disposed of with
liberty to both sides to seek revival in case the need arises. We
make it clear that if the case is ultimately decided in favour of
the Revenue in respect of the assessment year 2009-10, then
the Revenue shall be entitled to revive its proceedings
pursuant to the impugned notice under Section 148 of the said
Act and the assessee shall not take up the plea of limitation.
As of now, the re-assessment proceedings initiated by virtue of
the impugned notice under Section 148 does not survive. We
are making it clear that we have not expressed any opinion with
regard to the validity of the issuance of the notice under Section
148 on the date on which it was issued." (emphasis supplied)
8. Mr. Hossain submits that, accordingly, the Tribunal should have
disposed of the appeal while reserving the liberty of the appellant/ revenue to
ITA NO. 510/2019 Page 4 of 5
revive the re-assessment proceedings, in case the order which forms the basis
of issuance of the notice under Section 148 of the Income Tax Act being
eventually upheld, while making it clear that the assessee could not be entitled
to raise a plea of limitation.
9. Learned counsel for the respondent has no objection to the said course of
action being adopted.
10. Accordingly, we answer the question framed in favour of the Revenue,
and we direct that the appeal preferred by the revenue before the Tribunal is
deemed as disposed of with liberty to both sides to seek revival in case need
arises. We make it clear that, in case, the order, which forms the basis of
issuance of the notice under Section 148 of the Act, is upheld and sustained,
eventually, then the Revenue shall be entitled to revive its proceedings pursuant
to notice under Section 148 of the Act and the assessee shall not take up the
plea of limitation. As of now, the re-assessment proceedings initiated by virtue
of the notice under Section 148 do not survive due to the subsisting order of the
CESTAT.
11. We make it clear that we have not expressed any opinion with regard to
any aspect on merits of the case.
12. The appeal stands disposed of.
VIPIN SANGHI, J
SANJEEV NARULA, J
NOVEMBER 14, 2019
N.Khanna
ITA NO. 510/2019 Page 5 of 5
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