2019 (6) TMI 1296 - AT - Income Tax

Tribunal affirms tax assessment as erroneous, dismissing appeal challenging reassessment proceedings.

The Tribunal upheld the order passed by the Principal Commissioner of Income Tax (Pr. CIT) under Section 263, affirming that the assessment order was ... Revision u/s 263 - assessment order passed u/s 147 r.w.s. 143 (3) is erroneous and prejudicial to the interest of the revenue - unexplained cash credit - HELD THAT:- Identical issue has been decided by the coordinate bench in ITA number 6905/del/2017 for assessment year 2007 – 08 along with 4 other assessees having similar facts , where in the order passed by the learned Pr. CIT u/s 263 of the income tax act was upheld. The case of the assessee is also falling into the similar factual matrix including the name of the accommodation entry provider and the similar seized material. The coordinate bench vide para number 10 and 11 has considered the two decisions of the coordinate benches for upholding the order passed by the CIT u/s 263 of the income tax act. Further the factual matrix is also identical to the decision of the honourable Calcutta High Court in case of Raj mandir Estates private limited vs CIT [2016 (5) TMI 801 - CALCUTTA HIGH COURT] where the action of the learned CIT-A invoking jurisdiction u/s 263 of the income tax act was upheld. We do not find any reason to not to uphold the order of the learned Pr. CIT u/s 263 of the income tax act as the order passed by the learned assessing officer u/s 147 read with section 143 (3) of the income tax act is erroneous and prejudicial to the interest of the revenue. Accordingly, all the grounds raised by the assessee in this appeal are dismissed. Issues Involved:1. Validity of the order passed under Section 263 of the Income Tax Act.2. Allegation of the assessment order being erroneous and prejudicial to the interest of the revenue.3. Examination of seized materials and incriminating documents.4. Adequacy of opportunity provided to the assessee.5. Validity of reassessment proceedings under Section 147/143(3) of the Income Tax Act.6. Issuance and service of notice under Section 143(2) of the Income Tax Act.Detailed Analysis:1. Validity of the Order Passed under Section 263 of the Income Tax Act:The primary issue revolves around whether the order passed by the Principal Commissioner of Income Tax (Pr. CIT) under Section 263 of the Income Tax Act was valid. The Pr. CIT held that the assessment order passed under Section 147 read with Section 143(3) was erroneous and prejudicial to the interest of the revenue. The Tribunal upheld the Pr. CIT’s order, emphasizing that the Assessing Officer (AO) failed to examine the seized material and documents related to the accommodation entries allegedly taken by the assessee from the SK Jain group.2. Allegation of the Assessment Order Being Erroneous and Prejudicial to the Interest of the Revenue:The Pr. CIT alleged that the AO did not properly examine the details and incriminating documents, including the appraisal report and seized materials. The Tribunal supported this view, stating that the AO's failure to examine the seized material and confront the assessee with the same rendered the assessment order erroneous and prejudicial to the revenue's interest. The Tribunal cited several judicial precedents, including decisions from the Calcutta High Court and the Supreme Court, to substantiate this position.3. Examination of Seized Materials and Incriminating Documents:The Pr. CIT noted that the AO did not look into the relevant seized material in the soft copy furnished to him, which included details of cheques issued by the SK Jain group. The Tribunal found that the AO did not make adequate inquiries regarding the genuineness of the transactions and the seized materials, which clearly indicated that the cheques were issued against the receipt of cash through intermediaries. This lack of examination was deemed a significant oversight, justifying the invocation of Section 263.4. Adequacy of Opportunity Provided to the Assessee:The assessee argued that the Pr. CIT exceeded the inquiry beyond the show cause notice issued under Section 263 without providing adequate opportunity. However, the Tribunal found that the Pr. CIT had provided sufficient opportunity to the assessee to present their case and that the proceedings were conducted in accordance with the principles of natural justice.5. Validity of Reassessment Proceedings under Section 147/143(3) of the Income Tax Act:The assessee contended that the reassessment proceedings were invalid as no notice under Section 143(2) was served. The Tribunal examined the records and found that the notice under Section 143(2) was indeed issued on 7/7/2014, as corroborated by the order sheet and the assessment order. Therefore, the Tribunal dismissed the additional ground raised by the assessee regarding the invalidity of the reassessment proceedings.6. Issuance and Service of Notice under Section 143(2) of the Income Tax Act:The assessee claimed that no notice under Section 143(2) was served, rendering the assessment order invalid. The Tribunal found that the AO had issued the notice on 7/7/2014 and mentioned the issuance of statutory notices under Sections 143(2) and 142(1) in the assessment order. This was further supported by the order sheet entries. Consequently, the Tribunal dismissed the assessee's contention on this issue.Conclusion:The Tribunal upheld the order passed by the Pr. CIT under Section 263, affirming that the assessment order was erroneous and prejudicial to the interest of the revenue due to the AO's failure to examine the seized material and make proper inquiries. The Tribunal dismissed all grounds raised by the assessee, including the additional ground regarding the validity of the reassessment proceedings. The appeal filed by the assessee was thus dismissed.