TaxTMI 
TaxTMI 
2014 (8) TMI 1087
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....l may take in A.Y 2006-07, the same may be followed in A.Y 2010-11. We, therefore, dispose off all the four appeals on the basis of the facts relating to A.Y 2006-07. 3. The Assessees in ITA Nos. 170 & 171/PNJ/2014 for A.Y 2006-07 have taken the following common grounds of appeal : "1. On the facts and circumstances and in law the learned C.I.T erred in passing order u/s 263 holding that the order passed A.O is erroneous and prejudicial to the interest of revenue. 2. The learned C.I.T erred in not appreciating that the A.O had after detailed analysis in a scrutiny assessment u/s 153A r.w.s 143(3) formed a view that there was no transfer in relevant A.Y 2006-07. 3. The learned CIT failed to appreciate that a similar view in assessee's own case on similar facts for A.Y 2003-04 was confirmed by the Hon'ble High Court. 4. The learned C.I.T erred in not appreciating that there was a transfer u/s 2(47) of the I.T. Act r.w.s. 53A of Transfer of Property Act 1882 in A.Y 2012-13 and the same was rightly disclosed and offered by the assessee. 5. The learned C.I.T erred in not appreciating that there was a view formed by A.O after detailed analysis and scrutiny and merely b....
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....ing aside the original assessment order passed by the DCIT, Central Circle, Panaji, Goa vide sec 153A w.r.s 143(3) dated 29.12.2011 and recovery proceedings for the relevant assessment year till this appeal is heard and disposed by the Hon ITAT, Appellate Authorities." 4. The only issue involved in the grounds taken by the Assessees relate to the validity of the order passed u/s 263. The brief facts of the case for A.Y 2006-07 are that a search and seizure action u/s 132 of the Income Tax Act was conducted in the case of the Assessee on 25.2.2010. The search assessments were completed u/s 153A r.w.s. 143(3) for A.Y 2006-07 on 29.12.2011 and the income was divided between both the assessees as per the provisions of Sec. 5A of the Income Tax Act. During the course of search, evidence relating to development of land at Oxdel, Dona Paula by the Assessee was found and seized vide pg. 25-30 of the seized material A/EB/21 dt.25.2.2010. The Assessee entered into Memorandum of Understanding dt. 31.3.2006 along with his wife and Mr. Armando Gonsalves with M/s. Emgee Housing Pvt. Ltd. for sale of the property at Survey No. 234/2 admeasuring 18,500 sq. mtrs. for a consideration of Rs. 6 cror....
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.... property as it may deem fit and shall be entitled to deduct/adjust the cost of such settlement from the said consideration of Rs. 6 crores. The registered agreement of sale and development was effectively drawn on 6.5.2011 to take into consideration all these obligations. Clause 32 of this agreement rescinds earlier MOU dt. 31.3.2006. Subsequently, Power of Attorney was also executed in favour of the developer on 28.8.2012. Therefore, the tax incidence on this transaction will arise only in 2013-14. Thus, it was contended that there was no error in the order of AO for A.Y 2006-07 and the proceedings initiated u/s 263 be dropped. Reliance was placed in this regard on the following decisions : CIT vs. Smt. Minalben S. Parekh, 215 ITR 81 (Guj.) ii) CIT vs. Aravind Jewellers, 259 ITR 502 (Guj.) CIT after considering the submission of the Assessee took the view that the order passed by the assessing officer is erroneous as well as prejudicial to the interest of revenue and ultimately set aside the order for A.Y 2006-07 and directed the AO to consider this transaction in accordance with the provisions of Income Tax Act after giving sufficient opportunity to the Assessee by mentioni....
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....) CIT vs. Anand Food Products, 39 taxmann.com 187 (AP) iv) CIT vs. Amit Corporation, 21 taxmann.com 64 (Guj) v) CIT vs. Anil Kumar Sharma, 335 ITR 83 (Del) vi) CIT vs. Meshana Dist Co-op Milk Producers Union Ltd., 263 ITR 645 (Guj) vii) Pyarelal Jaiswal vs. CIT, 41 taxmann.com 278 (All) viii) Indu Fine Lands (P) Ltd. vs. CIT, 45 taxmann.com 307 (Hyd) ix) Anand Poddar vs. ACIT, 33 taxmann.com 367 (Gauh) x) CIT vs. Vodafone Essar South Ltd. 212 Taxmann 184 (Del.) 6. The ld. DR on the other hand drew our attention towards pg. 6 of the second paper book which contains questionnaire made by the AO, especially query no. 37 by which the AO asked the Assessee to furnish detailed note on the transaction with M/s. Emgee Housing Pvt. Ltd., development of land at Oxdell, Dona Paula, whether the transaction has been completed. The AO also asked detailed working of the income generated therefrom. By referring to the reply of the Assessee, it was contended that the Assessee simply submitted the MOU dt. 26.11.2009 but did not submit any note etc. on the transaction which the Assessee had with the said party. 7. When the Bench countered Ld AR with this fact, the Ld. AR agreed that e....
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....l not complete. We have so far received Rs. 5.16 crores. Out of which Rs. 4.5 crores has paid to the Mapusa Urban Co-op Bank. The balance amount is still to be received since there is litigation on the property. In the assessment completed under section 153A r.w.s. 143(3) of the Income Tax Act for the AY 2006-07, without considering the above issue. As per the agreement for development and sale with M/s. Emgee Housing Pvt. Ltd, the assessee received a sum of Rs. 2.5 crores vide cheque No.677503 dated 31.03.2006 drawn on Indian Bank, Wadala Branch, a sum of 49 lakhs paid vide various modes and Rs. 1 lakh within one month. The assessee had not declared income in respect of this transaction for the Asst. Year 2006-07. Section 2(47) of the IT Act, defines the term "transfer" in clause (v), as per which it includes any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. Therefore, the income arising from the above transactions has to be assessed in the year in which the assessee has entered into an agreement i.e. AY200....
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.... shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, the High Court or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 8.1 From the perusal of the aforesaid section, it is apparent that there are four main features of the power of revision to be exercised u/s 263 by the Commissioner of Income-tax. Firstly, the Commissioner may call for and examine the records of any pr....
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....perty at Survey No. 234/2 admeasuring 18,500 sq. mtrs. for a consideration of Rs. 6 crores on the basis of MOU dt. 31.3.2006. Further, the property at Survey No. 225/1 and 4 and 227/1 admeasuring 28,341 sq. mtrs. belonging to Sajjad Sheikh and Mrs.Zaibum Sheikh were also agreed to be sold to M/s. Emgee Housing Pvt. Ltd. at Oxdell at Dona Paula for a consideration of Rs. 6 crores. Both the properties were adjacent to each other. The total consideration for both the properties is Rs. 12 crores. According to CIT, there had been transfer u/s 2(47) during the year. This has not been examined by the assessing officer. First, we would deal with this issue. The record and the evidence produced before us during the course of hearing reflect apparently that the A.O. in this case during the impugned A.Y. has even though issued questionnaire to the assessee by way of following query being query no.37 which read as under:- "37. Please furnish a detailed note on the transactions with M/s. Emgee Housing Pvt. Ltd - Development of land at Oxdell - Dona Paula - Whether the transaction has been completed - if so, please furnish detailed working on the income generated." the assessee did not submi....
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....ngs of fact are shown to have been recorded by the Assessing Officer on these aspects. The nature of business mentioned at page no. 1 of the assessment order simply states the ex-facie position as is narrated by the assessee in the return of income filed by him. The same does not constitute any finding of fact reached after making any enquiry by the Assessing Officer. It thus is apparent that the Assessing Officer accepted the claim on its face without performing his functions as are required of him as a quasi judicial authority. The assessment order thus made was erroneous and under the circumstances of the case, it was not necessary for the learned CIT to make further enquiries before setting aside the order and find out himself all such relevant facts in a manner as are required to be done by the assessing authority. The aspect of deduction of interest paid on income tax was neither enquired nor shown to have been verified by the Assessing Officer and thus the order of assessment is erroneous on that count as well. 13. Admittedly the Assessing Officer being a quasi-judicial authority had three functions -(i) to collect the materials and information (ii) to process the materia....
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....as also relied on the decision of I.T.A.T. Delhi in the case of Saw Pipes Ltd., 3 SOT 237 for the purpose of the lack of enquiry. The learned A. R., before us, tried to distinguish the facts of the case and vehemently relied in respect of this issue which is the one on the basis of which the proceedings u/s 263 were initiated. 8.6 We have gone through the provisions of section 2(47). This section defines the term transfer for the purpose of charging the capital gain. Section 45 mandates that the capital gain is chargeable to tax in the year in which the capital asset is transferred. The assessing officer in our opinion was bound to inquire into the transaction which the assessee has entered into with M/s Emgee Housing Pvt Ltd on the basis of page 25 to 30 of the seized material A/EB/21 dated 25.2.10.The AO, in this case, we noted, except asking for the note on the transaction with details, assessee entered into with M/s Emgee Housing P Ltd did not examine whether the provision of section 2(47) are applicable on these transaction or not during the year. Not only this, this an disputed fact that the assessee did not file any note or details on the transactions entered into by the as....
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....lso not help the Assessee the reason being that in the case of the Assessee, the AO had specifically asked a note from the Assessee in respect of the transactions which the Assessee had withM/s. Emgee Housing Pvt. Ltd. but the Assessee did not submit the said note. Therefore, it cannot be said that the AO has applied his mind while passing the order u/s 143(3). The case of the Assessee, as we have already held, is a case where in respect of transactions with M/s. Emgee Housing Pvt. Ltd., the AO has not examined the issue. 8.9 We have also gone through the decision of Hon'ble Andhra Pradesh High Court in the case of CIT vs. Anand Food Products, 39 taxmann.com 187. In this case we noted that the AO examined the bills, books of accounts, invoices, payments etc. and even made inquiries on the issue under consideration and the Assessee had given a detailed explanation by letter furnishing the data. Under these facts, it was held that the order cannot be said to be prejudicial to the interest of the revenue because the AO did not make a detailed discussion. In the case of the Assessee, we noted that even though the AO has raised the query, the Assessee did not reply and even no such....
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.... of the Assessee the AO has without making any inquiry about the transaction which Assessee had with M/s. Emgee Housing Pvt. Ltd. passed the order. Therefore, the case of the Assessee, in our opinion, relates to lack of inquiry. 8.13 We have also gone through the decision in Pyarelal Jaiswal vs. CIT, 41 taxmann.com 278 (All). In this case, we noted that the Allahabad tribunal has clearly held that where in a proceeding u/s 143(3) the Assessee on being asked by the AO files several replies as well as details and evidences and the AO considering the same took one of the views possible in the matter, the order of the AO cannot be said to be erroneous insofar as prejudicial to the interest of the revenue. This case will also not help the Assessee because in the case before us, the Assessee did not file the reply to the query raised by the AO. 8.14 Coming to the decision in the case of Indu Fine Lands (P) Ltd. vs. CIT, 45 taxmann.com 307 (Hyd) we noted that in this case the Assessee company has advanced a sum of Rs. 20 crores to another company for buying a piece of land and entered into development agreement with its group company. The deal could not materialize and the group company....
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....er should have been more elaborate or further inquiries should have been made. 8.18 In the case of Nabha Investments Pvt. Ltd. Vs. Union of India &Ors. 246 ITR 41 (Del) we noted that question does not relate to the lack of inquiry. Therefore, this decision will not assist the Assessee. 8.19 In the case of Indian Hotels Ltd. Vs. DCIT, ITA no. 3234/B/92 we noted the court quashed the 263 proceedings as in that case inquiry had been made by the AO with regard to the question involved relying on the decision of Mumbai High Court in the case of Gabriel India, 203 ITR 108. 8.20 In the case of CIT vs. Gabriel India, 203 ITR 108 (Mum) the AO had made the inquiries in regard to the nature of the expenditure incurred by the Assessee and Assessee had given detailed expenditure. The order passed by the AO was held not to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Thus, in our view the case law relied on by the ld. AR for lack of inquiry/inadequate inquiry will not assist the Assessee. 8.21 The decision of the coordinate Bench in the case of the V.N. Salgaoncar is binding on us and we cannot take a different view as suggested by learned ....
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....g the facts regarding initial capital, the ornaments and presents received at the time of marriage, other gifts received from her father in law, etc., which should have put any Income tax Officer on his guard. But the Income tax Officer without making any inquiries to satisfy himself passed the assessment order... A short stereo typed assessment order was made for each assessment year... No evidence whatsoever was produced in respect of the money lending business done...No names were given as to the parties to whom the loans were advanced ......" 8.22 Thus, the law as may be stated after going through both the decisions of Supreme Court is very clear that if the assessment has been made without making the proper enquiry and application of mind, the order is erroneous and prejudicial to the interest of Revenue. Unlike the Civil Court which is neutral to give a decision on the basis of evidence produced before it, an Assessing Officer is not only an adjudicator but is also an investigator. The Assessing Officer cannot remain passive on the face of a return which is apparently in order but calls for further enquiry. It is the duty of the Assessing Officer to ascertain the truth of t....
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....f a return which is apparently in order but calls for further enquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word 'erroneous' in section 263 emerges out of this context. The word 'erroneous' in that section includes cases where there has been failure to make the necessary inquiries. It is incumbent on the Assessing Officer to investigate the facts stated in the return when circumstances make such an inquiry prudent and the word 'erroneous' in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an enquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. In the instant case, the Assessing Officer failed to make any enquiry in regard to the allowability of the provision for gratuity. As such, the order was erroneous and prejudicial to the interests of the revenue. Therefore, the conditions precedent for assuming jurisdiction under section 263 did exist in the facts of the instant case." 8.24 We have ....