TaxTMI 
TaxTMI 
2019 (1) TMI 996
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....3.2014 framed u/s 147/ 143(3) of the Act and directing a fresh assessment in lieu thereof is devoid of jurisdiction and being misconceived, erroneous, illegal and unwarranted must be quashed. 2. Additionally, on the facts and in the circumstances of the case, the Commissioner of Income-tax erred in invoking the revisionary powers u/s 263 of the Income Tax Act, 1961 despite the fact that even after a thorough examination, no specific error in the assessment order causing prejudice to the Revenue has been identified and the revision is ordered tentatively on the erroneous basis that necessary enquiries do not appear to have been made. The order being ab initio illegal and void must be quashed." 3. The assessee i.e. Surya Irrigation Private Limited in ITA No. 2182/Del/2017 for the Assessment Year: 2010-11 has raised the following grounds of appeal:- "1. That on law and facts and circumstances of the case, the learned CIT has erred both in law and on facts in invoking the provision of section 263 without appreciating the fact that the order passed by learned Assessing Officer is neither erroneous nor prejudicial to the interest of the revenue as order under section....
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....the view taken by the AO is after detailed enquiry and has not been shown to be the wrong view. 3. The CIT has erred in revising assessment order by seeking to substitute his view with the AO's." 5. The assessee i.e. SSE Commodities Pvt. Ltd in ITA No. 2841/Del/2017 for the Assessment Year 2010-11 has raised the following grounds of appeal:- "1. That on the facts and circumstances of the case and in law, the order passed by the Pr. Commissioner of Income-tax (CIT), u/s 263 of the I T Act 1961 ('the Act') setting aside the assessment framed u/s 143(3) of the Act as erroneous and prejudicial to the interest of the revenue is without jurisdiction, bad in law and void ab-initio. 2. That on the facts and circumstances of the case and in law, the Pr. CIT erred in holding that the assessment order is erroneous and prejudicial to interest of revenue on the issue of accepting the explanation of the appellant u/s 68 of the Act in relation to the cash credit of Rs. 7,50,000/- accepted from M/s Victory Software Pvt Ltd after conducting due enquiry on the basis of the information received from the Investigation Wing of the department. 2.1 That on the f....
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.... holding that the order passed by the ld AO is erroneous and prejudicial to the interest of the revenue. according to the notice it was stated that the ld Assessing Officer has failed to examine the relevant seized material pertaining to the assessee found during the course of search at the premises of Sri Surender and Sri Virender Jain. The ld CIT in para No. 2 has also stated the relevant information at page 8 and 9 of annexure A-62 and the reference was made to cash book at annexure A-113 of the seized material. Assessee in response to the notice produced the reasons recorded and also stated that the Assessing Officer has verified all the details and the directors were summons u/s 131 of the Act and the statements were also recorded. Therefore, the ld AO has made detailed inquiry. The assessee also relied upon the several decisions in its support. The ld CIT vide para No. 5 onwards of his order u/s 263 of the Act has held that the ld AO has not conducted the enquiry in manner it should have been conducted. Vide para No. 10 of his order it was held that there is nothing on record to show that the ld Assessing Officer has ever confronted the assessee on such seized documents. Furt....
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....fore the ld Assessing Officer whose statement was recorded and the ld AO is satisfied about the identity, creditworthiness, and genuineness of the transaction. Therefore, all the due enquiries, which could have been made by the ld AO, has been made and therefore, such order cannot be held to be an order passed without making adequate enquiries. 9. The ld Departmental Representative vehemently submitted that the ld Assessing Officer has neither confronted the seized material to the assessee nor he himself considers them while making the assessment. The ld DR stated that this issue is squarely covered on the identical facts and circumstances against the assessee by the decision of the coordinate bench in Surya Financial Pvt Ltd where coordinate bench has held that AO failed to consider the seized material during the course of search of SK Jain Group, the order was held to be erroneous and prejudicial to the interest of revenue. the ld DR further stated that issue is squarely covered in favour of the revenue by the decision of the Hon'ble Supreme Court in case of Daniel Merchant Pvt. Ltd. He submitted that amendment to the provisions of section 263 w.e.f 01.06.2015 also covers ....
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....which have been incorporated by him at pages 2 and 3 of the impugned order, wherein he has specifically brought out that the Assessing Officer has failed to consider the relevant seized material pertaining to the assessee-company, which was evident from 'Annexure A-13 back page 38 of the seized material, wherein there is a categorical 18 mention of an amount of Rs. 25 lacs was taken by the through cheque No.369817 dt. 18.3.2010 of Rs. 5 lacs; cheque no. 378628 dated 18.3.2010 of Rs. 10 lacs and cheque no. 029630 dated 18.3.2010 of Rs. 10 lacs 244595, dated 29/1/2009; and there was also a corresponding entry in the cash book on 18/3/2010 seized as per Annexure A- 13/Page15 shows that cash of Rs. 25 lacs was given by the same Goyal Sahab to SK Jain Group. We note that the relevant copies of the seized material relating to the assessee, were not only given to the assessee along with the show cause notice but was also confronted during the course of proceedings under section 263 of the Act. Assessee's AR in his submissions has stated that the AO on the basis of the information / documents available on record had made independent and proper enquiry. The AO directed the Assessee to furni....
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.... dated 18.3.2010 for Rs. 10 lacs was issued by Shalini Holding From Axis Bank and cheque no. 029630 dated 18.3.2010 for Rs. 10 lacs by Apoorva from Axis Bank in favour of the assessee company. In other words, on 18.3.2010 total cheques of Rs. 25 lacs were issued by three companies as mentioned above in favour of the assessee company. All the three cheques have been credited in the account of the assessee, therefore, authenticity of the seized pages cannot be doubted. On perusal of the cash book as on 18.3.2010 which has been scanned as page no. 15 of Annexure A-13 and reproduced as above, it was seen that cash of Rs. 25 lacs has been received from same Goyal Sahab on 18.3.2010 itself. This prima facie shows that the entry of Rs. 25 lacs was received against the payment of cash of Rs. 25 lakhs." 6.1 We further note that similarly, in the Appraisal Report the year wise details of accommodation entries provided by SK Jain Group to various beneficiary companies was tabulated for the Charge of CIT-8 as mentioned at page no. 9 to 16 of the impugned order, which shows that the AO made the table on the basis of reopening the assessment as it clear from the reasons recorded for the....
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....h seized documents and had the Assessing Officer examined the seized material, he should have made some noting either in the order sheet or in the questionnaire issued to the assessee or any kind of reference would have been made in the submissions made by the assessee before the Assessing Officer. Therefore, the decisions and the case laws relied upon by the assessee's counsel would not be applicable that the Assessing Officer had formed an opinion on the relevant seized material. Accordingly, Ld. Pr. CIT has rightly set aside the re-assessment order on the ground that the Assessing Officer has not made any proper verification/enquiries and, therefore, the said assessment order is deemed to be erroneous and insofar as prejudicial to the interest of the Revenue in terms of amended provisions inserted in section 263 of the Act by way of Explanation 2. Thus, the order of the Assessing Officer was set aside with the direction to examine the seized material and confront the assessee and if the Assessing Officer find that there is any nexus between the cash deposits and the cheques issued by the group companies of SK Jain, then the same may be taxed accordingly. 6.2 Now coming ....
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....ct would have been invoked. But here in this case what has been found, is the regular entries in the books of account of the concerns of S.K. Jain group, in which name of the assessee is appearing. Such entries in the cash books depicting the details of cheques issued in favour of the assessee as well as cash deposit through intermediates on various dates cannot be reckoned as document or books of account of the assessee. This fact has been noted by the Pr. CIT in the impugned order, wherein the entries pertains to the assessee for a sum of Rs. 25 lacs. Thus, the contention raised by the ld. counsel on this point is out rightly rejected that the 25 proceedings under section 153C of the Act should have been initiated instead of under section147 of the Act. 6.3 As regards the contention that material or information found during the course of search in the case of S.K. Jain group cannot be held to be a tangible material pertaining to the assessee, we are unable to accept such a contention for the reason that, firstly, there was a categorical information and material coming on record, that assessee was one of the beneficiaries of accommodation entries provided by one of the gr....
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....ntry and the contents found qua the assessee being one of the beneficiary of the accommodation entry in the books of account of the concerns of S.K. Jain group are false or bogus; or assessee had amply demonstrated and 27 substantiated before the AO regarding the genuineness of the transaction of the accommodation entry. In absence of such a mandate which was cast upon the AO, we are of the opinion that the assessment order is not only erroneous but also prejudicial to the interest of revenue, as this matter definitely requires proper enquiry and verification by the AO. 6.5 In view of above, there is absolutely no dispute that the AO has not made any enquiry regarding the accommodation entry pertaining to the assessee specifically which was found during the course of search and investigation in SK Jain Group as highlighted by the Pr. CIT. Once adequate or proper enquiry has not been done, then in terms of Explanation 2 inserted in section 263 of the Act by the Finance Act, 2015, w.e.f. 1.6.2015, the assessement order is deemed to be erroneous in so far as it is prejudicial to the interest of Revenue. Hence, the present case is squarely covered by the decision of the ITAT, ....
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....nder section 143(3) vide order dated 30/11/2011, wherein admittedly the issue of loan or money received from M/s Shalini Holdings Ltd. was neither examined nor was enquired by the AO during the course of assessment proceedings, at least nothing has been brought on record before us by the assessee in the detailed paper book filed before us that any query or reply on this issue was raised by the Assessing Officer in the course of assessment proceedings. Even the assessment order merely speaks about accepting of the original return of income, when admittedly assessee had filed revised return of income on 14/9/2010. This shows completely lack of application of mind by the AO at the time of passing of original assessment order. Later on, assessee's case was reopened under section 147 by issuance of notice under section 148 dated 18/10/2013, which from the records before us shows that the said notice was withdrawn due to some technical reason and another notice under section 148 was issued on 25/3/2014. The "reasons" for reopening the assessment under section 147 and issuance of notice under section 148 has already been incorporated above. From the perusal of the same, it is seen that th....
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....lure on part of the assessee by the AO is sine-qua-non to acquire the jurisdiction beyond the period of 4 years where assessments have been completed under section 143(3) or 147. Post acquiring of jurisdiction under section 147, it is nowhere borne out from the records that the Assessing Officer has verified the genuineness of the transaction based on the information received, specifically on the Annexures and the information as elaborately discussed by the Ld. Pr. CIT in the impugned order, which has been stated to be available to the Assessing Officer also at the time of re-assessment proceedings. There is no rebuttal of the categorical observation of the Ld. Pr. CIT that "it is admitted by the ld. counsel for the assessee that no specific query was raised by the Assessing Officer regarding the seized material relating to M/s Shalini Holdings Pvt. Ltd. as mentioned in the show cause notice" (para 7.3 of the impugned order). The Ld. Pr. CIT has further observed that he has perused the case records of the assessee for the relevant Assessment Year and has found that there is nothing on the record to show that the Assessing Officer has ever confronted the assessee on such seized docu....
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....ssessment order can be challenged in the revisionary proceeding under section 263; and secondly, if any material has been found pertaining to the assessee in the case of person searched or covered u/s 153A, then only recourse was to initiate proceedings under section 153C and not under section 147. At the outset, we do not find any quarrel to the proposition that the validity of assessment or reassessment cannot be challenged in the revisionary proceedings u/s 263, however, on the facts of the present case, the ratio laid down in such judgments would not be applicable at all, because here in this case no document or material belonging to the assessee was found in the course of search proceedings in the case of S.K. Jain group, albeit assessee's name appears as one of the beneficiaries of accommodation entries in the books of account maintained by one of the concern of S.K. Jain group. The entries in the books of account of S.K. Jain group cannot be reckoned as any material or document belonging to the assessee so as to constitute document or asset seized or requisitioned in the case of person searched in terms of scope of section 153C. If certain documents or asset or books of acco....
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....ion such a material and information does constitute a tangible and relevant material sufficient enough to form 'reason to believe' that income chargeable to tax has escaped assessment. Apart from that, it is seen from the records that the assessee had raised similar objections after the receipt of "reasons recorded" before the Assessing Officer during the course of re-assessment proceedings, which have been amply dealt with and discussed by the Assessing Officer inn detail vide his separate order, copy of which has been placed in the paper book. Against the said order, assessee has not sought for any remedy nor has it challenged this issue in appeal after the passing of the assessment order. In any case, we have already held Assessing Officer has rightly acquired jurisdiction under section 147 based on the information/material referred to in the "reasons recorded". Accordingly, this contention raised by the ld. Counsel is also rejected. 21. So far as the contention of the ld. counsel that no notice under section 143(2) has been issued or served upon the assessee during the course of re-assessment proceedings, we find that assessee has neither challenged this issue after th....
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....s in so far it is prejudicial to the interest of the Revenue. Accordingly, we confirm the order of the Pr. CIT and dismiss the grounds raised by the assessee before us." 12. Further, the Hon'ble Supreme Court has also in Daniel Merchants Pvt. Ltd Vs. ITO in Appeal No. 2396/2017 dated 29.11.2017 has dismissed an SLP against the decision of the Hon'ble Calcutta High Court wherein, the assessee challenged the order of the Calcutta High Court upholding the order of the ld CIT u/s 263 of the Act. Further, the Hon'ble Calcutta High Court in Raj Mandir Estates Pvt. Ltd Vs. 386 ITR 162 has also upheld the action of the ld CIT in invoking jurisdiction u/s 263 of the Act. Further, in the another decision of the Hon'ble Calcutta High Court in Pragati Financial Management Ltd 2017 (3) TMI-1242 dated 07.03.2017 has held that 263 is valid when the ld AO has not conducted proper enquiries. In that decision in para no. 7 the Hon'ble High Court has also quoted the decision of Subhalaxmi Vanijya Ltd 43 ITR (trib) 48 ( ITAT) ( Kol) of the coordinate bench wherein, it has been held that proviso inserted u/s 68 of the Act was retrospective in nature and upheld it. It is also interest....
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.... Pvt. Ltd. 16. The facts of the case shows that the notice u/s 148 of the Act was issued on 18.10.2013 on the basis of the information received from DIT that assessee is beneficiary of accommodation entries on the basis of search conducted on Surender Kumar Jain Group . During the course of assessment proceedings the ld Assessing Officer examined the details and issued notice u/s 133(6) of the Act to the company from whom alleged accommodation entries were received. Consequently, the assessment u/s 143(3) read with Section 147 of the Act was passed on 30.06.2014 accepting the return income of the assessee. The ld CIT passed an order u/s 263 of the Act on 17.03.2017 holding that the ld Assessing Officer has not Page | 20 examined the seized documents, which proves that the assessee is beneficiary of the accommodation entry. The documents were also not confronted to the assessee. Hence, the impugned assessment order passed by the ld Assessing Officer is erroneous so far as the prejudicial to the interest of the revenue. This order is under challenge before us. 17. The ld counsel raised all those argument, which were raised in earlier appeal. Over and above it was further stated....
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.... the interest of the revenue. 23. The facts in the present case are similar to the facts stated in the earlier above appeals. In the present case also the assessment was reopened u/s 148 of the Act based on the seized documents found in the search of Shri SK Jain and Virender Jain where, the assessee was found to be the person who have obtained accommodation entry of Rs. 60 lakhs from six companies. 24. The ld AR reiterated the similar submissions as made by the assessee in the other appeals and submitted that during the course of assessment proceedings the Assessing Officer has made the detailed enquiries. It was further stated that all the evidences were duly explained and verified by the ld Assessing Officer and therefore, there cannot be any error, which is prejudicial to the interest of the revenue. The ld AR also submitted a paper book to submit that the assessee has submitted complete information including the bank accounts of the depositors. He also referred to various pages of the paper book to state that no information further could have been verified by the ld AO. 25. The ld Departmental Representative vehemently submitted the same arguments as stated in the ear....