TaxTMI 
TaxTMI 
2019 (1) TMI 274
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.... based in Jaipur, the assessee has filed the present appeal on 12.02.2018 though with a delay of 10 days and an affidavit in support of the petition was also filed which is placed on record. It was submitted that the delay was not intentional, hence, the said delay may kindly be condoned and the appeal may be admitted for adjudication on merits. The ld. CIT DR was heard who has not raised any specific objection. After hearing both the parties, considering the fact that the assessee sought opinion of his local Counsel who in turn referred him to Counsel based in Jaipur and in the process of said consultation, the delay of 10 days has occurred, considering the fact that this is the first stage where the assessee can challenge the order of the ld Pr CIT and the bonafide of the assessee not being in doubt, delay of 10 days in filing the present appeal is hereby condoned. 3. Now coming to the merits of the case. Briefly, the facts of the case are that the assessee filed his return of income on 21.01.2015 declaring total income of Rs. 1,38,250/-, notice U/s 143(2) of the Act was issued to the assessee and thereafter considering the submissions of the assessee, the AO brought long term....
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....ince been affirmed by the Hon'ble Rajasthan High Court in D.B. ITA No. 172/2018 dated 31.07.2018. Further, referring to the Revenue's paper book submitted by the ld. CIT-DR and in particular, copy of order sheet contained at para 1 to 6 of the Revenue's paper book, the ld. AR submitted that the proceedings U/s 263 of the Act were initiated after receiving the proposal from the ITO, Ward-1(1), Alwar and such proceedings again reflects satisfaction of the ITO and not that of the ld. Pr. CIT, and where such proceedings have been initiated after receiving the proposal from the ITO, the said proceedings again deserved to be quashed and in support, reliance was placed on the Coordinate Bench decision in case of Rajiv Arora vs. CIT reported in 11 taxmann.com 182. 6. It was further submitted by the ld AR that the assessment order U/s 143(3) which has been quashed by the ld. Pr. CIT was the subject matter of appeal before the ld. CIT(A) and our reference was drawn to the appeal memo (Form no. 35) filed by the assessee U/s 246A of the Act against the order passed by the AO U/s 143(3) dated 28.03.2016. It was accordingly submitted that where the assessment order was the subject matter of a....
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....e 5 of the order sheet of the case records available in the Revenue's paperbook at page 12 to 14 and submitted that the proper satisfaction was recorded by the ld. Pr. CIT, Alwar before issuance of show-cause notice. It was submitted that after proper verification of facts and due application of mind, draft notice was put up by the ITO (Tech.) which was approved by ld. Pr. CIT, Alwar vide order sheet entry dated 06.10.2017. Further, drawing our reference to the provisions of Section 282A(2) of the Act, it was submitted that the notice was issued from the office of the ld. Pr. CIT as printed on notice dated 06.10.2017, and name & office of the Pr. CIT is also printed on the notice. Further, it is evident from the said notice that stamp of Commissioner mentioning Pr. CIT, Alwar is also affixed and hearing was fixed before the Pr. CIT, Alwar, therefore, there should not be any confusion with regard to proper service of the notice and the same has been done in accordance with provisions of Section 282A(2) of the I.T. Act. 9. Further, ld CIT-DR placed reliance on the decision of Hon'ble Gujarat High Court in case of Smt. Anantkuverba vs. CIT 201 ITR 42 for the proposition that no not....
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....as raised certain grounds of appeal before the ld. CIT(A), the ld. Pr. CIT cannot assume the jurisdiction U/s 263 of the Act and in support, reference was drawn to Clause C to Explanation 1 to Section 263 which provides that where any order passed by the Assessing Officer had been the subject matter of any appeal filed by the assessee, the powers of the ld. Pr. CIT shall be deemed to extend to such matter as had not been considered and decided in such appeal. It was submitted by the ld CIT-DR that the matter relating to cash deposit in the assessee's bank account, the matter relating to interest on bank deposit and matter relating to cost of acquisition regarding plot of land which has been sold by the assessee were not the subject matter of appeal before the ld CIT(A) though the order of the AO as such was subject matter of appeal and thus, there is no basis for the ld AR to argue against the assumption of jurisdiction by the ld Pr.CIT u/s 263 of the Act. 15. Further, on merits, the ld. CIT-DR supported the order of the ld. Pr. CIT and submitted that there was cash deposit of Rs. 1,40,25,000/- in various bank accounts of the assessee and it was explained before the AO that a su....
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....s and without due application of mind by the AO. Thus the assessment order passed u/s 143(3) is not only erroneous but prejudicial of interest of Revenue and it was accordingly submitted that the impugned order passed by the Ld. Pr. CIT be upheld. 18. We have heard the rival contentions and perused the material available on record. The first objection of the ld AR is regarding the validity of the show cause notice that it was not signed by the ld Pr. CIT and therefore, the assumption of jurisdiction by the ld. Pr. CIT U/s 263 of the Act is bad in law. In this regard, we refer to the provisions of Section 263 of the Act which reads as under: "263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, 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 order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, o....
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....ion enshrined in the provision. This is the well-established legal position which has been reiterated by the Courts from time to time. 20. In this regard, we refer to the decision of the Hon'ble Supreme Court in case of Rampyari Devi Sarogi (supra), which has been relied upon by the ld CIT-DR, wherein it was held in context of Section 33B of Indian Income Tax Act, 1922 which is analogous to Section 263 of the Act as under (head notes): "The High Court was right in overruling the contention of the assessee. The order of the Commissioner was a detailed order. There was no doubt that he did mention some facts which were not indicated or communicated to the assessee and which the assessee had had no opportunity of meeting. The High Court was right in holding that all this material was supporting material and did not constitute the basic grounds on which the orders under section 33B were passed by the Commissioner. There was ample material to show that the ITO made the assessments in undue hurry. The assessee was a new assessee and filed voluntary returns in respect of a number of years, i.e., from assessment years 1952-53 to 1960-61. The return for the assessment y....
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....he case of section 34 of the 1922 Act. Section 33B merely requires that an opportunity of being heard should be given to the assessee and the stringent requirement of service of notice under section 34 cannot, therefore, be applied to a proceeding under section 33B. The High Court had found after an examination of the evidence of the case that the appellant was given an opportunity of being heard before respondent No. 1 made the order under section 33B of the 1922 Act. There was no reason to differ from the finding of the High Court on this aspect of the case. Accordingly, the appeal failed and was dismissed." 22. Thereafter, in case of CIT vs Electro House (1971) 82 ITR 824, the Hon'ble Supreme Court has reiterated the legal proposition and has held as under: "This section unlike section 34 does not prescribe any notice to be given. It only requires the Commissioner to give an opportunity to the assessee of being heard. The section does not speak of any notice. It is unfortunate that the High Court failed to notice the difference in language between sections 33B and 34. For the assumption of jurisdiction to proceed under section 34 the notice as prescribed in that sect....
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.... authority. While Section 147 confers power on the Assessing Authority itself to proceed against income escaping assessment, Section 154 of the Act empowers such authority to correct a mistake apparent on the face of the record. The power of appeal and revision is contained in Chapter XX of the Act which includes Section 263 that confer suo motu power of revision in the learned C.I.T. The different shades of power conferred on different authorities under the Act has to be exercised within the areas specifically delineated by the Act and the exercise of power under one provision cannot trench upon the powers available under another provision of the Act. In this regard, it must be specifically noticed that against an order of assessment, so far as the Revenue is concerned, the power conferred under the Act is to reopen the concluded assessment under Section 147 and/or to revise the assessment order under Section 263 of the Act. The scope of the power/jurisdiction under the different provisions of the Act would naturally be different. The power and jurisdiction of the Revenue to deal with a concluded assessment, therefore, must be understood in the context of the provisions of the rel....
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....ce the difference in language between Sections 33-B and 34. For the assumption of jurisdiction to proceed under Section 34, the notice as prescribed in that section is a condition precedent. But no such notice is contemplated by Section 33-B. The jurisdiction of the Commissioner to proceed under Section 33-B is not dependent on the fulfilment of any condition precedent. All that he is required to do before reaching his decision and not before commencing the enquiry, he must give the assessee an opportunity of being heard and make or cause to make such enquiry as he deems necessary. Those requirements have nothing to do with the jurisdiction of the Commissioner. They pertain to the region of natural justice. Breach of the principles of natural justice may affect the legality of the order made but that does not affect the jurisdiction of the Commissioner. At present we are not called upon to consider whether the order made by the Commissioner is vitiated because of the contravention of any of the principles of natural justice. The scope of these appeals is very narrow. All that we have to see is whether before assuming jurisdiction the Commissioner was required to issue a notice and ....
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....ovember, 2005 though there are three (03) issues mentioned in the show cause notice dated 7th November, 2005 which had specifically been dealt with in the order dated 20th March, 2006. The learned Tribunal in its order dated 28th August, 2007 put the aforesaid two features of the case into two different compartments. Insofar as the first question i.e. findings contained in the order of the learned C.I.T. dated 20th March, 2006 beyond the issues mentioned in the show cause notice is concerned the learned Tribunal taking note of the aforesaid admitted position held as follows: "In the case on hand, the CIT has assumed jurisdiction by issuing show cause notice u/s 263 but while passing the final order he relied on various other grounds for coming to the final conclusion. This itself makes the revision order bad in law and also violative of principles of natural justice and thus not maintainable. If, during the course of revision proceedings the CIT was of the opinion that the order of the AO was erroneous on some other grounds also or on any additional grounds not mentioned in the show cause notice, he ought to have given another show cause notice to the assessee on those gro....
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....s, the revisional authority took the view that the Assessing Officer, after being compelled to adjourn the matter from time to time, had to hurriedly complete the assessment proceedings to avoid the same from becoming time barred. In the course of the revisional exercise relevant facts, documents, and books of account which were overlooked in the assessment proceedings were considered. On such re-scrutiny it was revealed that the original assessment order on several heads was erroneous and had the potential of causing loss of revenue to the State. It is on the aforesaid basis that the necessary satisfaction that the assessment order dated 30th March, 2004 was erroneous and prejudicial to the interests of the revenue was recorded by the learned C.I.T. At each stage of the revisional proceeding the authorized representative of the assessee had appeared and had full opportunity to contest the basis on which the revisional authority was proceeding/had proceeded in the matter. If the revisional authority had come to its conclusions in the matter on the basis of the record of the assessment proceedings which was open for scrutiny by the assessee and available to his authorized representa....
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....ve. Therefore, we of the considered view that merely because the show cause notice dated 06.10.2017 is signed by the ITO (Technical), the same will not affect the assumption of jurisdiction by the ld Pr CIT u/s 263 of the Act and we are unable to accede to contentions so raised by the ld AR in this regard. 25. Now, coming to another contention of the ld AR that the proceedings U/s 263 of the Act were initiated after receiving the proposal from the ITO, Ward-1(1), Alwar and where such proceedings have been initiated after receiving the proposal from the ITO, the said proceedings again deserved to be quashed. 26. To appreciate aforesaid contention, we refer to the show-cause notice dated 6.10.2017 and the first para reads as under: "With reference to subject cited above, I am directed to state that on examination of assessment records in your case for the assessment year 2013-14, the Principal Commissioner of Income Tax, Alwar, has considered that the assessment order dated 28.03.2016 passed by the Income Tax Officer, Ward-1(1), Alwar, for this Assessment Year is erroneous in so far as it is prejudicial to the interest of the revenue on account of the reason(s) discuss....
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....uthorities in this reference we have no doubt that the Commissioner had complied with these provisions and, as such, his order ought to be sustained." We are therefore unable to accede to said contention of the ld AR as well and the decisions relied upon by the ld AR are distinguishable and subject to decision of the Hon'ble High Court as discussed supra. 27. Now, coming to the contentions of the ld AR regarding the subject matter/grounds of revision under the impunged revision proceedings. Firstly, regarding cash deposit found deposited in the bank account of the assessee, the ld AR submitted that necessary details were called for and examined by the Assessing Officer and after due examination, no negative inference was drawn by the AO and it was wrong on the part of the ld. Pr. CIT to hold that the Assessing Officer has not conducted proper enquiry or has not examined the said issue. In response, the ld. CIT-DR supported the order of the ld. Pr.CIT and submitted that there was cash deposit of Rs. 1,40,25,000/- in the bank accounts of the assessee and it was explained before the AO that a sum of Rs. 98,35,000/- was received from 76 persons as advance for sale of land and Rs.....
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....therefore, the gain arising out of it would be charged accordingly as capital gain. For the calculation of indexed cost of acquisition of the land the rate give by the assessee was Rs. 1,25,000/- for the entire land i.e. 2655 sq. yards. To know the correct/approximate rate of the land in that vicinity several letters Tehsildar, Sub-Registrar and DIG Stamps, Alwar had been written but no concrete reply regarding the land during the year 1981- 82 was received till the finalization of this order. Therefore, the assessment order is being passed with the rate as provided by the assessee with a note that in case something adverse is received later, the appropriate action will be taken accordingly." 29. On perusal of the above, it is apparent that the very basis for selection of the assessee's case for scrutiny was cash deposit in assessee's saving bank accounts. The Assessing officer has examined the source of such cash deposit and has recorded a finding, though not in the assessment order but at the same time, in an office note forming part of the assessment records that a big piece of land was cut into several plots and for such plots, the assessee has received cash from people to w....
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....et deposited in cash in his bank account and therefore, the said accounts withdrawn from bank accounts in cash & refunded to those persons on account of cancelation of agreement for sale of plots during the year and upto next 3 years. This was accepted by the AO merely on the basis of affidavit(s) filed only by the assessee as obtained from those persons and statement recorded of 5 persons out of these, stated to be purchaser of the plots, and without ascertaining the availability of the plots on the land of the assessee for selling to the extent of such numbers. Out of 76 persons who furnished the Affidavits and out of which the Statement recorded of 5 persons, none out of them had enclosed/produced/furnished any supportive evidence of the transaction made with the assessee in the form of purchase agreement made or agreement of conciliation made with the assessee. There was no supportive evidence of the transaction made by those persons with the assessee were present before the AO to make an assumption that the amounts arrived in the bank accounts of the assessee were from the cash advances received by the assessee from the purchasers of plots. Further, in the Affidavit(s) filed b....
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....th a direction to the Assessing officer to pass assessment order afresh. We therefore find that there is a clear finding recorded by the ld Pr CIT on examination of facts and material on record as to how the order passed by the Assessing officer is erroneous and prejudicial to the interest of the Revenue. And at the same time, to safeguard the interest of the Revenue and at the same time, keeping the principles of natural justice in mind, the matter was remanded back to the Assessing officer for fresh examination after due opportunity to the assessee. In the facts and circumstances of the present case, we are therefore of the view that the ld Pr CIT is right in remanding the matter for fresh examination. We therefore donot see any infirmity as far as this particular issue of cash deposit is concerned and the order of the Pr CIT is confirmed to this extent. 32. Regarding the second issue of cost of acquisition in respect of plots of land sold during the year, it was submitted by the ld AR that the same was duly examined by the Assessing Officer and it is wrong on the part of the ld. Pr. CIT to hold the same was not been properly examined by the Assessing Officer. Per contra, the ....