ACIT Vs Pradip Overseas Ltd (ITAT Ahmedabad)
ITAT Ahmedabad held that once the Income Tax Settlement Commission has passed final order u/s. 245D of the Income Tax Act, AO has no jurisdiction to reopen the same u/s. 148 of the Income Tax Act.
Facts- A search and seizure operation was carried in the case of assessee as on 21-09-2010. The assessee filed an application u/s. 245C(1) on 03-05-2023 for settlement of the case before Income Tax Settlement Commission. The Income Tax Settlement Commission passed an order dated 07-11-2014 u/s. 245D(4) settling the matter for assessment year 2006-07 to 2012-13. Thereafter, The Revenue authority issued notice u/s. 148 for assessment year 2012-13.
Notably, AO in the assessment order passed u/s. 144 r.w.s. 147 of the Income Tax Act, 1961 dated 21-12-2018 overlooked the decision of Income Tax Settlement Commission and made addition of Rs. 21,06,93,932/- on account of income earned by the employing circular inflated purchases thereby taking 3% of amount of circular trading in respect inflated stock which was not disclosed in the return of income. CIT(A) partly allowed the appeal.
Conclusion- Held that the Income Tax Settlement Commission has passed order which is binding on the Revenue Department and the Assessing Officer has no power to reopen the assessment. The ld. CIT(A) has rightly held that claims which are part of the resolution plan stood extinguished as well as once the Income Tax Settlement Commission has decided/settled the tax component between the assessee and the revenue, the revenue authorities do not have any power to reopen such assessment.
Held that once order has been passed by Income Tax Settlement Commission u/s. 245D, assessment for the year stands concluded and Assessing Officer has no power to reopen such assessment.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
These three appeals filed by the Revenue are against the order of the ld. Commissioner of Income Tax, CIT(A)-1 1, Ahmedabad, in proceeding u/s. 250 r.w.s. 144 r.w.s. 147 vide order dated 26/09/2022 passed for the assessment years 2012-13 & 2013-14.
2. The grounds of appeals are as under:-
ITA No. 543/Ahd/2022 A.Y. 2012-13
“1. On the facts and in the circumstances of the case, Ld. CIT(A) erred in holding that additions made by AO in present order would not survive after order of NCLT and consequentially deleted the additions.
2. On the facts and in the circumstances of the case, Ld. CIT(A) has failed to appreciate the order of Hon ‘ble Supreme Court in Civil Appeal No.1661 of 2020 in the case of State Tax Officer vs. Rainbow Papers Ltd inter-alia holding as below :-
“….(Para 58) ‘the Appellate Authority(NCLAT) and the Adjudicating Authority erred in law in rejecting the application/appeal of the appellant. As observed above delay in filing a claim cannot be the sole ground for rejecting the claim…”
“….(Para 57) the definition of secured creditors in the IBC does not exclude any Government or Governmental Authority….”
“………….. (Para 54) the Committee of Creditors, which might include
financial institutions and other financial creditors, cannot secure their own dues at the cost of statutory dues owned to any Govt. or Govtal Authority or for that matter, any other dues…”
3. On the facts and in the circumstances of the case, Ld. CIT(A) erred in deleting the addition of Rs.21,06,93,932/- being 3% of amount of Circular trading/inflated purchases.
4. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A. O.
5. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A. O. be restored to the above extent.”
ITA No. 544/Ahd/2022 A.Y. 2013-14
“1. On the facts and in the circumstances of the case, Ld. CIT(A) erred in holding that additions made by AO in present order would not survive after order of NCLT and consequentially deleted the additions.
