AI Drafter 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2012 (11) TMI 1120
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 213(Asr)/2011 -do- 2008-09 214(Asr)/2011 "1. That order u/s 263 of the Act, passed by ld. CIT(Central), is illegal & without jurisdiction. 2. That Ld. CIT has grossly erred in holding that assessment order passed by the AO was erroneous and prejudicial to the interest of revenue. Action of the Ld. CIT in invoking the provisions of section 263 of the Act is illegal & bad in law. 3. (a) That the Ld. CIT has grossly erred in concluding that property transactions made by Sh. Jeetu Keshi belongs to the assessee. Conclusion drawn by the Ld. CIT is without any material on records and as such is illegal and bad in law. b) That conclusion of the Ld. CIT that property transactions made by Sh. Jeetu Keshi belongs to the assessee is illegal and bad in law since during assessment proceedings of the assessee, Sh. Jeetu Keshi in response to notice u/s 131 of the Act appeared before the AO and in his statement recorded by the AO admitted that all property transactions belong to him only and assessee has nothing to do with the those transactions. c) That conclusion of the Ld. CIT that property transactions made by Sh. Jeetu Keshi belongs to the assessee is illegal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....u/s 263 of the Act, passed by ld. CIT(Central), is illegal & without jurisdiction. 2. That Ld. CIT has grossly erred in holding that assessment order passed by the AO was erroneous and prejudicial to the interest of revenue. Action of the Ld. CIT in invoking the provisions of section 263 of the Act is illegal & bad in law. 3. (a) That the Ld. CIT has grossly erred in concluding that property transactions made by Sh. Jeetu Keshi belongs to the assessee. Conclusion drawn by the Ld. CIT is without any material on records and as such is illegal and bad in law. b) That conclusion of the Ld. CIT that property transactions made by Sh. Jeetu Keshi belongs to the assessee is illegal and bad in law since during assessment proceedings of the assessee, Sh. Jeetu Keshi in response to notice u/s 131 of the Act appeared before the AO and in his statement recorded by the AO admitted that all property transactions belong to him only and assessee has nothing to do with the those transactions. c) That conclusion of the Ld. CIT that property transactions made by Sh. Jeetu Keshi belongs to the assessee is illegal and bad in law since AO of the assessee (person searched) recorded his satisfa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-do- 2007-08 203(Asr)/2012 -do- 2008-09 204(Asr)/2012 "1. That order u/s 263 of the Act, passed by ld. CIT(Central), is illegal & without jurisdiction. 2. That Ld. CIT has grossly erred in holding that assessment order passed by the AO was erroneous and prejudicial to the interest of revenue. Action of the Ld. CIT in invoking the provisions of section 263 of the Act is illegal & bad in law. 3. (a) That the Ld. CIT has grossly erred in concluding that property transactions made by Sh. Mithlesh Kumar belongs to the assessee. Conclusion drawn by the Ld. CIT is without any material on records and as such is illegal and bad in law. b) That conclusion of the Ld. CIT that property transactions made by Sh. Mithlesh Kumar to the assessee company is illegal and bad in law since during assessment proceedings of the assessee company Sh. Mithlesh Kumar in response to notice u/s 131 of the Act appeared before the AO and in his statement recorded by the AO admitted that all property transactions belong to him only and assessee has nothing to do with the those transactions. c) That conclusion of the Ld. CIT that property transactions made by Sh. Mithlesh Kum....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d or amend the grounds of appeal before the appeal is heard or disposed off." 4. Since the facts in all the above mentioned appeals are identical, which are arising out of the order of the Ld. CIT(Central), Ludhiana, therefore, for the sake of convenience, all the above mentioned appeals are being decided by this consolidated order. 5. The brief facts as arising from the orders of the Ld. CIT(Central) Ludhiana and on the basis of records before us in all the appeals mentioned hereinabove, are that search operations were carried out at the residential premises of Sh. Parminder Singh and survey operations at the business premises of M/s. Kapurthala Estates (P) Ltd. and M/s. Kapurthala Promotors & Developers (P) Ltd; on 04.03.2008. All the assessees for different years have filed returns of income for all the assessment years mentioned hereinabove and assessments were completed. The Ld. CIT(Central), Ludhiana, issued show cause notices in all the above mentioned cases asking the assessees why assessment order dated 29.12.2009 passed u/s 143(3)/153A should not be revised/modified/enhanced or set aside with the directions to make the assessments denovo. On perusal of the orders of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....Y. 2008-09 in the case of assessee. A.Y. 2007-08: Order is erroneous and prejudicial to interest of revenue on the ground of property transactions made by assessee in the name of Sh. Jeetu Keshi & Sh. Mithlesh Kumar as per detailed reasons discussed in orders dated 26.03.2012 made u/s 263 of the Act for A.Y. 2007-08 & 2008-09 in the case of Kapurthala Estates Pvt. Ltd; and order u/s 263 of the Act for A.Y. 2008-09 in the case of assessee. A.Y. 2008-09: Order is erroneous and prejudicial to interest of revenue on the ground of property transactions made by assessee in the name of Sh. Mithlesh Kumar as per detailed reasons discussed in orders dated 26.03.2012 made u/s 263 of the Act for A.Y. 2008-09 to 2008-09 in the case of Kapurthala Estates Pvt. Ltd; and order dated 27.03.2012 for A.Y. 2008-09 in the case of M/s. Kapurthala Promoters & Developers (P) Ltd. 5.1. In the case of M/s. Kapurthala Estates Pvt. Ltd in orders passed u/s 263 of the Act, the Ld. CIT has held: A.Y. 2004-05, 2005-06 & 2006-07: Order is erroneous and prejudicial to interest of revenue as per detailed reasons discussed in orders dated 26.03.2012 made u/s 263 of the Act for A.Y. 2007-08 & 2008-09 in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de. (Para 11, page 12 of the Order ). Parminder Singh in his statement has admitted that registration deeds have been got done by Jeetu Keshi & Mithilesh Kumar on behalf of M/s. Kapurthala Estate Pvt. Ltd, & M/s. Kapurthala Promoters & Developers Pvt. Ltd, ( Para 12, page 13 of Order). Submission of the assessee that assessee retracted from the statement vide his letter dated 10.10.2008 is not tenable. (Pare 13, Page 14 & 15 of Orders). Contention of the assessee before Assessing Officer that Jeetu Keshi & Mithilesh Kumar were never employees of the companies. Since their name neither appear in the attendance register of the assessee companies nor any salaries have been paid to them as per books of accounts, is not tenable since books of accounts were not available at the time of search. ( Para 14 to 16, page 15 & 16 of order). Property transaction carried out by Jeetu Keshi & Mithilesh Kumar on behalf of M/s. Kapurthala Estate Pvt. Ltd. & M/s. Kapurthala Promoters & Developers Pvt. Ltd. are duly recorded in books of accounts but property transaction carried out by them in their individual name have not been recorded by the assessee ( Para 17, Page 16 to 18 of Order). Jeetu Keshi &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....framed in the case of Jeetu Keshi & Mithlesh Kumar stood merged with the order of CIT (A) since all property transacted by them had been subject matter of appeal before CIT(A) Also there should not be double taxation of the income cannot be accepted. ( Para 30 page 24 & 25 of the Order ). Assessing Officer has not properly applied his mind. ( Para 31, page 25 of the Order ). In Para 32 to 34, Ld. CIT has discussed enquiries to be conducted regarding the truth and genuineness of deposits and loan. ( Page 25 to 28, of the Order ). In para 35, Ltd. CIT has relied upon various case laws. ( Page 28 to 31, of the order). Submission of the assessee that during assessment proceedings copies of accounts of creditors/depositors & confirmation in respect of few cases of creditors and depositors were filed as per questioner/queries raised which implies that Assessing Officer has applied his mind and as such provision of section 263 of the Act cannot be invoked. It was further stated that items of regular assessment cannot be added back in proceedings u/s. 153A when no incriminating documents were found during search. Assessee further submitted that proceedings u/s. 263 of the Act cannot be ini....
X X X X Extracts X X X X
X X X X Extracts X X X X
....page No. 286 to 305 of the paper book. 8. That to invoke provisions of section 263 of the Act order of the Learned. Assessing officer should be erroneous as well as prejudicial to the interest of revenue. Both the conditions must co- exist. Reliance is being placed on : a) MALABAR INDUSTRIAL CO. LTD. vs. COMMISSIONER OF INCOME-TAX 243 ITR 83(Supreme Court.) b) ST. DALJIEET KAUR VS COMMISSIONER OF INCOME-TAX 184 ITR 149(Gau). c) COMMISSIONER OF INCOME-TAX VS. GEORGE WILLIAMSON (ASSAM) LTD 250 ITR 747 (GUJ) d) COMMISSIONER OF INCOME-TAX VS. GABRIEL INDIA LTD.203 ITR 108 (Bom). 9. That words erroneous and prejudicial to the interest of revenue have not been defined in the law. An order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law make certain assessment, the same cannot be branded as erroneous simply because, the order should have been written more elaborately. Case may be visualized where the Income-tax Officer while making an assessment examines the accounts makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 8(a), 8(b),8(f), 8 (o) & 8(q) 11 That the assessee, vide aforesaid letters, further explained that provision of section 263 of the Act are not attracted since issues raised in the notice u/s. 263 of the Act were subject matter of appeal before Learned Commissioner of Income Tax (Appeals) ['Ld. CIT (A)' ] and on the basis of doctrine of merger, order passed by the AO merged with order of Ld. CIT(A) which is not amenable u/s 263 of the Act in view of provisions of section 263(1)(c). For this proposition, reliance is being placed on : a) Punjab State Civil Supplies Corporation Ltd. vs. CIT, (1993) 200 ITR 536(P&H) (FB). b) CIT vs. Shri Arbuda Mills Ltd (1998) 231 ITR 50 (SC) c) CIT vs. Jayakumar B. Path (1999) 236 ITR 469 (SC) d) Ranka Jewellers vs. Addl. CIT & Anr. (2010) 328 ITR 148(Bom.) e) CIT vs. Shalimar Housing and Finance Ltd. (2009) 320 ITR 157 (MP) This will meet case of the Ld. CIT referred in para 8(e), 8(f), 8(k), 8(m) & 8(p).. 12. That it again is an established law that action u/s 263 of the Act, which results in double taxation is not permitted under the law: Reliance is being placed on: a. Commissioner of Income Tax vs. Smt. Mina....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ra 8(t) & 8(u). 16. Reliance of CIT on various case laws referred to in para 8(s), it is submitted that facts of the cases relied upon are altogether different. 17. The case of CIT referred to in para 8(h), 8(m) are not relevant for invoking provisions of section 263 of the Act." 8. The Ld. DR, Mr. R.L.Chhanalia, appearing on behalf of the Revenue relied upon the orders of the Ld. CIT passed in each and every case of the assessees. 9. We have heard the rival contentions and perused the facts of the case. We find that case of the Ld. CIT in all the above mentioned appeals is that investments have been made in various immovable properties in the form of land in the name of Sh. Jeetu Keshi & Sh. Mithlesh Kumar by above mentioned assessees. Immovable properties purchased by Sh. Jeetu Keshi and Mithlesh Kumar during the assessment year 2004-05, 2005-06, 2006-07, 2007-08 & 2008-09 belong to the above said assessees. In the case of M/s. Kapurthala Estates Pvt. Ltd. and M/s. Kapurthala Promoters and Developers Pvt. Ltd; the Ld. CIT (Central) has further observed that the AO has not conducted proper enquiries with respect to increase in sundry creditors & provisions and advances....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al before the Ld. CIT(A). Submission of the assessee that provisions of section 263 cannot be invoked for double taxation of some income and same issue for different assessees has been rejected by the Ld. CIT(Central). The contention of the assessee that Sh. Jeetu Keshi & Sh. Mithlesh Kumar were never employees of any of the above mentioned three assessees as per books of account and attendance register produced during assessment proceedings has been rejected by the ld. CIT(Central) on the ground that the books were not available at the time of search. 9.1. The Ld. counsel for the assessee has drawn our attention to PB 191 to 193 in the case of Sh. Parminder Singh which is copy of notice dated 08.12.2009 issued by the AO of Sh. Parminder Singh during assessment proceedings for the assessment years 2002-03 to 2008-09 in which the assessee has been asked to explain the property transactions carried out by Sh. Jeetu Keshi & Sh. Mithlesh Kumar, as power of attorney holder as well as property transactions in their individual names. Our attention has been drawn to PB 194 in the case of Sh. Parminder Singh which is reply to notice dated 08.12.2009 in which it has been explained that re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the AO of both Sh. Jeetu Keshi and Mithlesh Kumar in their assessment proceedings. The same set of transactions have been referred to by the Ld. CIT(Central) in the proceedings under section 263 of all the aforesaid three assessees. 9.5. It was further highlighted by the ld. counsel for the assessee that PB 262-265 are the copy of letters of ACIT addressed by the AO of the aforesaid three assessees to AO Kapurthala enclosing with these letters and copies of documents found and seized during search and survey operations in the case of aforesaid assessees asking the AO Kapurthala to prepare satisfaction note and make assessments in the case of Sh. Jeetu Keshi & Mithlesh Kumar. 9.6. Our attention was further drawn by the ld. counsel for the assessee to PB 266 to 272 which are satisfaction note in the case of Sh. Jeetu Keshi & Mithlesh Kumar, recorded by the AO Kapurthala in which it has been concluded that assessment proceedings for the assessment 2003-04 to 2008-09 be initiated against Jeetu Keshi & Mithlesh Kumar. Further, our attention was also drawn to PB 273 to 285 which are notices issued to Jeetu Keshi & Mithlesh Kumar during their assessment proceedings. Vide these noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and examined by the AO. No decision about the erroneous and prejudicial nature of the order has been taken by the Ld. CIT. The Ld. counsel for the assessee relied upon the decisions of various courts of law and stated in his written submission reproduced hereinabove. 9.11. On the basis of facts on record and submissions made by the Ld. counsel for the assessee and the Ld. DR appearing on behalf of the Revenue, we are of the view to invoke the provisions of section 263 of the Act, order of the AO should erroneous as well as prejudicial to the interest of Revenue. The twin conditions should co-exist. We are convinced with the submissions of the ld. counsel for the assessee that order passed after conducting enquiries in all the matters cannot be held to be erroneous or prejudicial to the interest of revenue because every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interest of revenue. Our views find support by the case laws relied upon by the ld. counsel for the assessee, as stated hereinabove. Accordingly, we are of the view that the AO in the aforesaid case has conducted all the enquiries of the transactions of property carried out....