TaxTMI 
TaxTMI 
2017 (6) TMI 1120
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....arh as the appellant was not aware that the appeal can be filed before the Hon'ble ITAT against the CIT's order u/s 263 of the Act, and also the legal advisor of the appellant did not advice the same. ii. Now the appellant has changed the Counsel for appearing before the ld. ACIT, Central Circle II, Chandigarh for assessment proceedings in pursuance of order u/s 263 of the IT Act and the counsel has advised that the appeal against the order u/s 263 lies before the Hon'ble ITAT, Chandigarh Bench, Chandigarh. On the basis of the above, it was submitted by the learned counsel for the assessee that keeping in view the ignorance on the part of the assessee as also the principle of natural justice, the delay in filing these appeals may be condoned and the appeals may kindly be admitted for hearing. 4. On the other hand, the learned DR strongly opposed the above prayer of the learned counsel for the assessee with the submission that ignorance cannot be a ground for condoning the delay in filing these appeals. He further submitted that there is inordinate delay in filing of these appeals and as such these appeals deserve to be dismissed having been filed beyond the peri....
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....avit stating that he had given all the necessary papers for filing appeal before Tribunal and he was under bonafide belief that appeal has been filed. He further stated that subsequently around March 2012 he received penalty order u/s 271 (1) (c) of the Act, then he came to know that the appeal against quantum order of the Ld. CIT(A) has not been filed before Ld. CIT(A). Thereafter, he collected his records from his old counsel and engaged new counsel and consequently the appeal before ITAT was filed by 533 days delay. The Ld. A.R submitted that in view of the proposition laid down by ITAT, Mumbai in the order dated 7/1/2011 in IT(SS) No. 24/Mum/2009 for A.Y 2002-03 and other related appeal in the case of M/s Gregory & Nicholas vs ACIT, the delay in filing appeal may be condoned. 6. On the other hand, the Ld. DR placing reliance on the order of the ITAT "A" Bench in the case of DCIT V/s M/s Brijwasi Impex Pvt. Ltd. in ITA No. 361/Del/2011 dated 3/9/2014 and submitted that the assessee cannot take shelter of ignorance of law or failure to seek legal advice and these are not sufficient and good causes for condonation of delay. The Ld. DR strongly opposed the prayer of the as....
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....ieve and repose faith in their counsel having satisfied his professional requirements and given necessary papers and documents along with requisite instructions to his counsel. Thereafter, the litigant may be justified in believing that his counsel would discharge his professional functions and obligations as per his (assessee's) instructions. In these cases, where it is brought on record that the party has done everything within his powers, capacity and ability which is necessary for initiation of legal proceedings or appeal before higher forum, the courts should be liberal in considering the sufficiency of the cause shown by the assessee in support of his prayer for condonation of delay and should be in favour of the assessee. 10. In view of above well settled proposition when we analyze the facts and circumstances of the present case, we note that the assessee and his earlier counsel has deposed on affidavit, which remained unrebuttedby the Revenue, by collectively stating that the assessee handed over all necessary papers/documents which were required for filing an appeal before this Tribunal and subsequently when the assessee received penalty order, he came to know th....
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.... for the assessment years 2005-06 to 2007-08 were passed in the case of the assessee on 25.8.2011. Subsequently, the CIT (Central), Gurgaon, (hereinafter referred to as 'Commissioner') called for the assessment record and noted that during the course of search proceedings in the case of Shri Ashok Mittal certain, documents relating to R.D. Property Consultants were found. These documents were print outs of ledger account and trial balance of R.D. Property Consultants for the period from 1.4.2004 to 24.8.2006 pertaining to the period, under consideration, in all the three assessment years. It was also noted that during the assessment proceedings in the case of Shri Ashok Mittal, he denied to have any connection with the seized documents or with R.D. Property Consultants. The learned CIT also observed that in respect of credit entry of Rs. 3,19,14,006/- in the name of "Dimple" in the trial balance of R.D. Property Consultant, it was discovered that "Dimple" is alias of Ramesh Mittal, the assessee, whose residence, house no. 515, Sector 16, Panchkula, was also covered during search operation. The address of "Dimple" was given by Shri Ashok Mittal in his written submissions which also ....
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....ut to decide the case on merits on the basis of material on record, which cannot be said to be violation of principles of natural justice. 10. On careful consideration of the above arguments in the wake of the facts of the case, from para 4 of the impugned order of the Commissioner it is vivid that on 11.2.2014 the assessee through his counsel sought for adjournment which was allowed for 14.3.2011 and on that date of hearing neither the assessee nor his authorised representative attended the proceedings nor any application for adjournment or written submissions were filed. Therefore, since the case was going to be time barred on 31.3.2014, the Commissioner was quite correct and justified in proceeding to pass final order on 27.3.2014. In this situation, we decline to accept the contention of the learned AR that the orders have been passed violating the principles of natural justice ex-party and hence, ground no. 1 of the assessee being de void of any merit, is dismissed. GROUND NOs. 2 & 3 11. Apropos these grounds, the learned counsel for the assessee drew our attention to copy of notice dated 21.3.2014 under section 263 of the Act and submitted that the Commissioner himse....
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....ally asked that as per the provisions of section 269-C, the onus is on Shri Ashok Mittal to explain the entries recorded in these documents. The Assessing Officer further elaborated that since Shri Ashok Mittal has failed to discharge the onus lay upon him, therefore, he was asked to show cause as to why the total cash credits of Rs. 3,19,14,006/- appearing in the name of "Dimple", should not be treated as unexplained cash credit under section 68 of the Act. The learned counsel for the assessee vehemently pointed out that from the copy of the said notice available at pages 16 to 19 of the assessee's paper book it is clear that the Assessing Officer applied his mind to the alleged trial balance, etc. during the assessment proceedings of Shri Ashok Mittal and raised queries by way of notice u/s 142(1) of the Act during scrutiny assessment proceedings. The learned counsel for the assessee further pointed out that during the course of hearing before the Income Tax Settlement Commission, the Commissioner directed the Assessing Officer to examine 5 persons whose names appeared in the trial balance of R.D. Property Consultants and after verification by the Assessing Officer, no adverse re....
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....he assessee i.e. Shri Ashok Mittal but the Settlement Commission held that no adverse view is taken in the case of Shri Ashok Mittal. The learned counsel for the assessee submitted that when the existence and constitution of R.D. Property Consultants could not be discovered by the Assessing Officer, by the special auditor and by the Commissioner himself then the conclusion drawn by the Assessing Officer cannot be held as erroneous and prejudicial to the interest of the revenue. Therefore, the provisions of section 263 of the Act cannot be invoked in this regard. The learned counsel for the assessee submitted that the Commissioner has not drawn definite conclusion whether these documents were examined or not by the Assessing Officer and if examined, the conclusion which naturally flows, has not been drawn in the absence of the same and he is not justified in holding that the assessment order is erroneous and prejudicial to the interest of the revenue. Placing reliance on the decision of the ITAT, Delhi Bench, in the case of Bharati Airtel Limited; 44 CCH 95 (Del Tri) the learned counsel for the assessee submitted that where there is no definite conclusion or opinion of the Commissio....
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....t any evidence, the assessee cannot be linked with unanimous personality named as "Dimple", that too by an entity whose constitution and existence could not be discovered despite several efforts of the Assessing Officer, special auditor and Settlement Commission. 17. The learned counsel for the assessee submitted that these documents were not found from the assessment record of the assessee but these were part of assessment record of Shri Ashok Mittal and in the case of Shri Ashok Mittal these papers were duly examined and if it is also a part of assessment record of Shri Ramesh Mittal even then it is clear that these documents have already been examined by the same Assessing Officer who is dealing with the cases of Shri Ashok Mittal and Shri Ramesh Mittal i.e. the present assessee. The learned counsel for the assessee submitted that for invoking the provisions of section 263 of the Act, the Commissioner is required to refer to the records of the assessee and the alleged documents which were seized during search and seizure operation from Shri Ashok Mittal which were part of the assessment record of Shri Ashok Mittal and the same cannot be said to be a part of the assessment rec....
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....ble Bombay High Court date 16.6.2016 in the case of CIT vs. Shri. Nirav Modi in ITA No. 117 of 2014 since reported as (2016) 138 DTR (Bombay) 81, decision of Hon'ble High Court in the case of PCIT vs. Harmony Yarns Private Limited dated 21.6.2016 also supports the case of the assessee that if the AO has called for the reply of the assessee who had given elaborate explanation alongwith relevant documentary evidence then this exercise undertaken by the AO in the reassessment proceedings shows endeavours and application of mind by the AO and the satisfaction of the AO on the basis of the documents produced by the assessee and such order of the AO cannot be alleged as erroneous and prejudicial to the interest of the Revenue in absence of making further inquiry by the CIT himself. He also contended that the allegation of inadequate inquiry cannot be made against the AO and order cannot be held as erroneous and prejudicial to the interest of the Revenue. The learned counsel also placed reliance on the decision of Hon'ble jurisdictional High Court of Delhi in the case of DIT vs. Jyoti Foundation reported as 357 ITR 358 (Delhi) and submitted that in cases of wrong opinion or findings on me....
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....eedings in the case of Shri Ashok Mittal, he has denied to have any connection with the seized documents or with R.D. Property Consultants and in respect of credit entry of Rs. 3,19,14,006/- in the trial balance in the name of one "Dimple", it was discovered that "Dimple" is alias of Shri Ramesh Mittal whose residence is house no. 515, Sector 16, Panchkula which was also covered during search operation. The learned DR further submitted that the address of "Dimple" as given by Shri Ashok Mittal was the same which was the address of Shri Ramesh Mittal and Shri Ashok Mittal in his written submissions stated that "Dimple" is the alias of Shri Ramesh Mittal i.e. the assessee and on this issue no examination or inquiry was conducted by the assessee. Therefore, it is a case of lack of inquiry and thus the Commissioner was quite correct and justified in holding the assessment order as erroneous and prejudicial to the interest of the revenue. The learned DR vehemently submitted that it was a major issue having substantial bearing on assessment of the income of the assessee for three years. Therefore, the Commissioner was quite correct and justified in invoking the provisions of section 263 ....
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.... conclusion which naturally flows in the facts and circumstances of the case as well as the available material on records has not been drawn_ From the perusal of assessment records, it transpired that during the course of search proceeding in the case of Sh. Ashok Mittal, certain documents relating to M/s R.D. Property Consultants were found. These are a printout of Ledger A/c and Trial Balance of M/s R.D. Property Consultants for the period 01.04.2004 to 24.08.2006 (inclusive of period under consideration). During assessments proceedings in the case of Sh. Ashok Mittal, he has denied to have any connection with the seized document or with M/s R.D. Property Consultant. However, in respect of credit entry of Rs. 3,19,14,006/- in the trial balance in the name of one "Dimple", it was discovered that "Dimple" is an alias of Sh. Ramesh Mittal whose resident, H.No. 515, Sector-16, Panchkula was also covered during search operation. This address of "Dimple" was given by Sh. Ashok Mittal in his written submission which also happens to be your residential address corroborating the statement given by Sh. Ashok Mittal in his written submission that "Dimple" is the alias of Sh. Ramesh Mittal, ....
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....us and also prejudicial to the interests of the Revenue, the CIT is empowered to pass an order as the circumstances of the case may warrant. He may pass an order enhancing the assessment or he may modify the assessment. He is also empowered to cancel the assessment and direct to frame a fresh assessment. He is empowered to take recourse to any of the three courses indicated in section 263. So, it is clear that the CIT does not have unfettered and unchequered discretion to revise an order. The CIT is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair play with due respect to the principle of audi alteram partem as envisaged in the Constitution of India as well as in section 263. An order can be treated as 'erroneous' if it was passed in utter ignorance or in violation of any law; or passed without taking into consideration all the relevant facts or by taking into consideration irrelevant facts. The 'prejudice' that is contemplated under section 263 is the prejudice to the Income Tax administration as a whole. The revision has to be done for the purpose of setting right distortions and prejudice....
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.... explanation of the assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard as per opinion or expectation of the CIT. 24. From a careful reading of the impugned notice and the order of the Commissioner passed under section 263 of the Act we observe that the main and sole allegation of the Commissioner for invoking the provisions of section 263 of the Act is that while framing the Assessing Officer while framing the assessment orders for the assessment years 2005-06, 2006-07 and 2007-08 either not examined or if examined, the conclusion which naturally flows on the facts and in the circumstances of the case available on record, has not been drawn by the Assessing Officer The base of this allegation is that from the assessment record of Shri Ashok Mittal it was transpired that during the course of search proceedings in the case of Shri Ashok Mittal certain documents relating to R.D. Property Consultants were found which were print outs of ledger account and trial balance of the said firm for the period 1.4.0224 to 24.8.2006. The Commissioner further noted that during the asse....
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....ive inquiries regarding the constitution and ownership of R.D. Property Consultants as well as inquiries regarding the credit entries appearing the alias name of the assessee in the seized documents pertaining to R.D. Property Consultants. 25. In view of the above=noted facts, we may point out that the scheme of section 263 of the Act provides that the Commissioner may call for and examine the records of any proceedings under this Act and if he considers that the order passed therein by the Assessing Officer is erroneous and prejudicial to the interest of the revenue then he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such an order thereon as the circumstances of the case justify including an order of assessment or modifying the assessment or cancelling the assessment and directing a fresh assessment. So far as the question of definition of records is concerned, in our humble understanding, the legislature has used the word "records of any proceedings under this Act" meaning thereby for the purpose of the present case, the assessment records of Shri Ramesh Mittal i.e. the present ass....
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....gation further stated that since Shri Ashok Mittal has failed to discharge his responsibility, therefore, he was asked to show cause why total cash credits including credit of Rs. 3,19,14,006/- appearing in the name of "Dimple" should not be treated as unexplained cash credit u/s 68 of the Act. Further during the course of hearing before the Income Tax Settlement Commission, the Bench directed the Assessing Officer to examine the aforesaid five persons whose names were appearing in the trial balance of R.D. Property Consultants but no adverse inference was received by the Settlement Commission. In this regard it is profitable to refer para 15.7 at page 34 of the assessee's paper book wherein Settlement Commission held as follows :- "15.7 It is an admitted fact that pages 8 to 71 of Annexure A-3 contained ledger accounts of M/s R.D. Property concerns and page 72 contains the trial balance of the said concern. The Special Auditor cast a balance sheet from the trial balance as per which the total of credits came to Rs. 8,84,36,200/- which figure comprises of total capital raised by various persons at Rs. 6,95,22,030/- and Rs. 1,89,14,170/- from other creditors. CIT has relied....
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.... Consultants 28. In view of the above, we hold that there was a detailed report of special auditor which clearly shows that in the absence of relevant details regarding the bank accounts, PAN, income tax particulars and constitution of R.D. Property Consultants, the special auditor was not in a position to frame any opinion even regarding the constitution of R.D. Property Consultants and this report was a part of assessment record which was perused by the Commissioner at the time of invoking the provisions of section 263 of the Act. At the cost of repetition we may point out that in para 15.7 the Settlement Commission noted that in the course of hearing the Bench directed the Assessing Officer to examine 5 persons whose names appear in the trial balance of R.D. Property Consultants and after verification by the Assessing Officer, no adverse report has been furnished. These observations show that even the Assessing Officer himself conducted inquiry by way of issuing summons under section 131(1) of the Act to 5 persons including R.D. Property Consultants and "Dimple" and again the Assessing Officer on the directions of the Settlement Commission, verified these 5 persons and no adv....
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....cted by the Assessing Officer, special auditor and the Settlement Commission wherein the Commissioner himself furnished a report, which was not accepted by the Settlement Commission, the allegation of lack of inquiry against the same Assessing Officer cannot be levelled in the case of the assessee. Secondly, if it is presumed that the assessment record of Shri Ashok Mittal could not be called and perused while invoking the provisions of section 263 of the Act in the case of Shri Ramesh Mittal, then also, when these documents were not part of the assessment record of Shri Ramesh Mittal then the allegation of lack of inquiry on such documents, which were part of assessment record of another entity i.e. Shri Ashok Mittal cannot be alleged against the Assessing Officer. In this situation, we, respectfully hold that the benefit of the ratio of the decision as relied upon by the learned DR including the ratio of the decision of the Hon'ble Apex Court in the case of Malabar Industries Co. Ltd. (supra) is not available in favour of the revenue. 31. In the case of CIT Vs. DLF Ltd [supra], as relied by the ld. Counsel for the assessee, we observe that their Lordships held that it is n....
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....essment proceedings queries were raised and the asessee responded to the same, then even if an Assessment order does not mention the same, it does not mean that the Assessing Officer has not applied his mind to the issues. It would be well nigh impossible for an Assessing Officer to complete all assessments assigned to him under Section 143(3) of the Act if he is required to deal with all issues which arose during the Assessment Proceedings. Thus, the Assessment Order primarily deal with only those issues in respect of which the Assessee has not been able to satisfy him and give reasons for his conclusion. This would enable the Assessee to challenge the same, if aggrieved. In fact the Gujarat High Court in CIT V. Nirma Chemical Works Ltd. reported in 309 ITR 67 has observed that if an assessment order were to incorporate the reasons for upholding the claim made by an asseseee, the result would be an epic tome and not an assessment order. In this case, during the assessment proceedings for both the Assessment Years, the Assessing Officer issued a query memos to the assessee, calling upon him to justify the genuineness of the gifts. The RespondentAssessee responded to the same by giv....
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.... High Court in CIT v/s. Vikas Polymers 341 ITR 537 and in DG Housing Projects(supra). In fact the Delhi High Court in DG Housing Projects (supra) while so holding placed reliance upon the decision of this Court in Gabriel (India) Ltd., (supra). It is very important to note that the CIT in his order under Section 263 of the Act has recorded the fact that there has been no adequate inquiry. Thus, this is not a case of no inquiry, warranting order under Section 263 of the Act. Thus, this objection on the part of the Revenue, is also not sustainable. 10 The Revenue placed reliance upon the decision of the Delhi High Court in DG Housing Projects Ltd., (supra) that as the Assessing Officer had not enquired into the source of the source of the gifts received by the Assessee, the Assessment Order is erroneous. The aforesaid decision holds that the power of Revision under Section 263 of the Act would normally be exercised in case of no enquiry and not in cases of inadequate enquiry. However, even in case of inadequate enquiry by the Assessing Officer, the order of the Assessing Officer could be erroneous in two classes of situation. The first class would be where orders passed by t....
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....e of documents seized from Shri Ashok Mittal pertaining to R.D. Property Consultants and there was sufficient inquiry in this regard and finally the Settlement Commission dismissed the recommendation of the Commissioner and no addition u/s 68 of the Act has been made by the Settlement Commission in the hands of Shri Ashok Mittal or any other entity. Therefore, in our humble understanding the ratio of the decision of the Hon'ble Apex Court in the case of Nirav Modi (supra) supports the case of the assessee. 34. At this juncture, we also find it appropriate to consider the ratio of the decision of the Hon'ble Delhi High Court of Delhi in the case of Sunbeam Auto Ltd.(supra) wherein it was held that when the AO having made enquiries elicited replies and thereafter allowed the claim of the assessee, then it cannot be said that it is a case of lack of enquiry and therefore, assessment order passed by the AO cannot be revised u/s 263 of the Act. In the present case, on the facts and circumstances as noted above in the earlier part of this order, there was sufficient inquiry pertaining to documents seized from Shri Ashok Mittal in the name of R.D. Property Consultants by the As....
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.... of the Hon'ble Delhi High Courtr in the case of ITO vs. D.G. Housing Project Limited reported in 343 ITR 329 [Del], it was held that if there is no finding that order of the AO is erroneous and prejudicial to the interest of Revenue by way of making independent inquiry by the CIT, the revision of such order u/s 263 of the Act on the basis of bald and baseless allegations is not permitted. 36. In the present case, the Commissioner invoked the provisions of section 263 of the Act as he was not satisfied with the assessment order passed by the Assessing Officer without making any inquiry himself and dismissing the explanation of the assessee without any reasoning and the Commissioner jumped to the conclusion that the Assessing Officer either failed to carry out any inquiry or the conclusion, which naturally flows on the facts and circumstances of the case, has not been drawn. This allegation in the notice as well as in the impugned order makes it clear that while issuing notice and invoking the provisions of section 263 of the Act even the Commissioner himself was not sure whether it is a case of no inquiry or inadequate inquiry. It is a well accepted proposition that if the C....