TaxTMI 
TaxTMI 
2016 (12) TMI 799
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....llahabad Bank. The statements of the accounts of ICICI Bank and Allahabad Bank were furnished by the assessee before the Assessing officer. For verification of the deposits in these bank accounts, the assessee was asked to produce the necessary evidence as well as source thereto and assessee submitted the required details and cash book for consideration of the Assessing officer. The Assessing officer found that no evidence with regard to the opening balance of Rs. 1,62,000/- could be furnished by the assessee and after giving availability of the funds of Rs. 30,000/-, the Assessing officer made addition of Rs. 1,32,000/- u/s.68of the I.T. Act. Further on examination of these bank accounts, it was also found that the assessee earned interest which have been not declared in the return of income, therefore, interest earned on this bank account was also added to the income of the assessee. 4. The Ld. Principal CIT found the assessment order to be erroneous in so far as it is prejudicial to the interest of Revenue. The Ld. Principal CIT issued show cause notice u/s.263of the Act which is reproduced in the impugned order and copy of the same is filed at page 22 of the paper book. In the....
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....nt. It was submitted that assessee executed agreement to sell dated 13.11.2009 and received advance of Rs. 90 lakhs from Smt. Balwant Kaur, the last date of execution of sale deed was fixed on 15.6.2011. The sale deed could not be executed because some people from Village claiming to be members of Harijan Cooperative Society Limited, Harpalpur filed litigation in respect of the said land. The case was filed against about 60 people including the assessee of the village who owned/purchased the said land from Harijan Co-operative Society Limited, Harpalpur. The civil suit is still pending in the Court of Additional Civil Judge. Moreover a criminal case was also registered. The assessee and other persons were convicted for one year and to pay one thousand rupees as fine. The assessee preferred appeal before the Hon'ble Punjab and Haryana High Court and sentence has been suspended in criminal appeal. The Assessing officer made entire investigation into the matter and examined the details, therefore, the assessment order could not be treated as erroneous or prejudicial to the interest of Revenue. The Assessing officer has adopted one of the course permissible in law with which if the....
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....n record which established the same, however, the AO failed to do so as he neither marked any inquiry nor asked the assessee to prove the genuineness of the said Ikrarnama. The assessment order as well as assessment record does not show any initiative of the AO in this regard. Thus, the assessment order passed by the AO is erroneous as well prejudicial to the interest of the revenue as the same has been passed without making any enquiries relevant to the case. Further, I do not think that this is a case where the AO has taken a possible view in the matter on the documents produced by the assessee in support of cash deposits in his saving bank account. Rather it is a case where the AO has accepted the explanation offered by the assessee on the face of it without making necessary inquiries that whether the said Ikrarnama is valid or not as the same was not registered with any of the competent revenue authority. During the course of proceedings u/s.263of the Act, the assessee's counsel submitted that the sale deed could not be executed because some people filed civil suit in respect of said land and the same has been disposed of by the Civil Judge, Rajpura in favour of the asse....
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....e with law in respect of the issues discussed as above and also raised in show cause notice u/s.263(1)of the Act, after giving sufficient opportunity of hearing to the assessee." 7. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below. He has also submitted that the Ld. Principal CIT initiated proceedings u/s.263of the Act merely on audit objection, copy of which is field at pages 15 to 21 of the paper book. He has submitted that agreement to sell, copies of be bank accounts, books of account and all other details called for by the Assessing officer were submitted at assessment stage which have been examined by the Assessing officer and he accepted the cash deposits in the bank accounts. Since the Civil suit was pending before the Civil Judge, therefore, no sale deed could be executed, in respect of agreement to sell dated 13.11.2009. The assessee is defendant No. 11 in the Civil suit, copy of the judgment of the Civil Court is filed in the paper book. He has submitted that the sale deed in favour of the assessee in respect of total land measuring 208 bighas 5 biswa, Nazool land situated in Revenue estate of village Harpalpur, Tehsil Rajpu....
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.... of the assessment on the basis of factual error pointed out by the audit party is permissible in law. He has relied upon the decision of the Supreme Court in the case of CIT vs. P.V.S. Beedies Pvt. Ltd. 9. We have heard the rival submissions and perused the material available on record. The entire issue revolve around the cash deposit by assessee in his two bank accounts i.e. Allahabad Bank and ICICI Bank, Rajpura amounting to Rs. 40,70,000/- and Rs. 32,49,500/- respectively. It is specifically mentioned in the show cause notice u/s.263of the Act that this case was selected for scrutiny on account of cash deposits exceeding Rs. 10 lakhs in the saving bank account of the assessee maintained with Allahabad Bank, Rajpura and ICICI Bank, Rajpura. It is also noted in the show cause notice that assessee has deposited a sum of Rs. 98,60,901/- through cash and transfer entries from various persons in the bank accounts. It is also noted that assessee has filed agreement executed on 13.11.2009 before the Assessing officer for the sale of the agricultural land for Rs. 16,40,000/- per acre and agreed to execute sale deed upto to 15.6.2011. It is also noted that the said agreement is not regi....
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....d could not be executed in the matter on the basis of agreement to sell dated 13.11.2009 because many people from village claiming to be member of Harijan Cooperative Society Ltd, Harpalpur filed a Civil Suit against many persons including the assessee who have purchased the land in question from Harijan Co-operative Society Limited, Harpalpur. Due to the pendency of the civil suit, no sale deed could be executed. The explanation of the assessee is supported by the judgment of the Civil Judge, Rajpura dated 16.2.2016, copy of which is also filed in the paper book at page 47 in the name of Gurmeet Singh and Others vs. Malkit Singh and others. In this judgment, the assessee is defendant No. 11, the claim of plaintiff are in respect of total land measuring 208 bighas 5 biswa, Nazool land situated in Revenue estate of village Harpalpur, Tehsil Rajpura, District Patiala. 10. The Agreement to sell dated 13.11.2009 is also in respect of same property in which assessee agreed to sale of 16 acres of land to the purchaser for Rs. 16,40,000/- per acre. The Ld. Civil Judge, Rajpura in the judgment held that Rule 7 of the Nazool Land transfer rules 1956 bars alienation of land by cooperative s....
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....noted above, when the title of the assessee for purchasing Harpalpur village land was set aside by the Civil Court and assessee was restrained from transferring/alienating the same to others, it would support the explanation of the assessee that assessee has genuinely entered into agreement to sell. The Ld. Principal CIT cannot reappraise the same evidence in proceedings u/s.263of the I.T. Act. The Ld. Principal CIT cannot direct the Assessing officer in what manner he should enquire the issue. The Assessing officer took one possible view with which Ld. Principal CIT did not agree, it cannot be treated as an erroneous and prejudicial to Revenue. 11. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT held as under:- "Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudic....
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....3 made by order dated May 16, 1994, had to be considered complete and final." 14. The Hon'ble Delhi High Court in the case of CIT vs. Vikas Polymers 341 ITR 537 (Delhi) 341 ITR 537 held as under:- "Held, that the Commissioner had mentioned that the Income-tax Officer had not examined the cash credits of the partners or deposits of chit fund. Assuming this to be so, this might make the order erroneous, but how it was prejudicial to the interests of the Revenue had not been stated by the Commissioner as he did not deal with the explanation given by the assessee in the course of the section263proceedings. The Commissioner observed in his order that the assessee had not filed certain documents on the record at the time of assessment. Assuming this was so it did not justify the conclusion arrived at by the Commissioner that the Assessing Officer had shirked his responsibility of examining and investigation the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the Commissioner, and this was duly reflected in the respective assessments of the partners who were Income-tax assessees....