TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 1547
X X X X Extracts X X X X
X X X X Extracts X X X X
.... selected under CASS and assessment under section 143(3) of the Act was completed on 29.11.2017 accepting the return of income. 4. The brief background is that the AO was in receipt of the information from DDIT (Inv.), Mumbai vide letter dated 09.11.2016 regarding on money transactions between the assessee and M/s. Runwal Group. As per said information during F.Y. 2014-15 relevant to A.Y. 2015-16, the assessee Mrs. Sonali Hemant Bhavsar had paid on money of Rs. 1,14,06,000/- to M/s. Runwal Homes Pvt. Ltd. towards purchase of two shops. The DDIT (Inv.), Mumbai reported that during the course of search and seizure under section 132 of the Act in the case of M/s. Runwal Group a statement of one of the directors Shri Subodh Runwal was recorded under section 132(4) of the Act on 21.11.2014 wherein Shri Subodh Runwal had admitted to have received cash over and above the agreement value of the properties and accordingly disclosed an additional income for respective years being on money. Thus the assessee has purchased two shops being G-104 & G-105 from M/s. Runwal Homes Pvt. Ltd. by making cash payment of Rs. 1,14,06,000/- which was not disclosed before the AO during assessment proceedi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be dropped." Thereafter the Pr. CIT, the after considering the submissions of the assessee, found the same as untenable by holding that the AO has failed to make necessary enquiries in respect of cash transactions and source thereof and accordingly held the assessment order dated 29.11.2017 is erroneous and prejudicial to the interest of the Revenue. The Ld. Pr. CIT set aside the assessment order by directing the AO to frame the assessment denovo after making necessary enquiries and verifications. The Ld. A.R. vehemently assailing the order of Ld. Pr. CIT passed under section 263 dated 02.01.2019 whereby the Ld. Pr. CIT set aside the order of AO by directing the AO to frame the assessment order denovo after examining the issues relating to payment of on money on the purchase of two shops by the assessee from M/s. Runwal Homes Pvt. Ltd. The Ld. A.R. submitted that the case of the assessee was selected for limited scrutiny under section 143(2) of the Act for examination of transaction of purchase of property for which the notice under section 143(2) dated 19.09.2016 was issued to the assessee wherein the specific issue of purchase of property was raised. Thereafter, the transaction....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has been assumed that all the shops were sold @ Rs. 26,000/- per sqr. ft. inclusive of on money however in the appellant case the agreement itself has been executed at @ Rs. 26,000/- per sqr. ft. and hence there is no scope for any on money addition. The Ld. A.R. submitted that the agreement for purchase of shop was duly examined by the AO where rate itself was Rs. 26,000/- per sqr. ft. The Ld. A.R. submitted that even in the case of seller M/s. Runwal Homes Pvt. Ltd. the co-ordinate bench of the Tribunal vide order dated 20.12.2017 in ITA No.5621/M/2017 has deleted the addition of on money calculated by taking rate @ Rs. 26,000/- per sqr. ft. by placing a copy of the decision before the Bench. Thus the Ld. Counsel submitted that even on merit the order of the AO is not erroneous and prejudicial to the interest of the Revenue and therefore the revisionary order passed under section 263 is wrong and may kindly be quashed. 5. The Ld. D.R., on the other hand, relied heavily on the order of Ld. Pr. CIT by arguing that it has very common practice in the industry to pay on money at the time of purchase property which issue has escaped the attention of the AO and thus the revisionary ju....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 02.06.2017 wherein the co-ordinate bench of the Tribunal has held as under: "4. We have heard the rival contentions of the parties and perused the materials on record. The primary issue in the case on hand revolves whether it is a case selected under CASS for limited scrutiny or regular scrutiny. It can be seen from the grounds of appeal that the assessee wants to contend that the very initiation of proceedings u/s 143(3) of the Act on the basis of regular scrutiny under the Act was bad in law. The proceedings under section 143(3) of the Act should have been limited to the extent of the information gathered through AIR. Accordingly the proceedings u/s 263 of the Act cannot be expanded beyond the issue raised in AIR. Thus the order u/s 143(3) of the Act beyond the points of AIR is invalid in law and so the same is with the order passed u/s 263 of the Act. It is the further contention of the assessee that in the items which are not subject matter of AIR cannot subject matter of scrutiny. Such matters include salary of the assessee, loans & interest on loans, payment of LIC, Commission & brokerage income etc. It is the case of the assessee that in the assessment order passed u/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch validity can be challenged even in collateral proceedings. The Mumbai bench took the view that the proceedings u/s 147 of the Act are primary proceedings and proceedings u/s 263 of the Act are collateral proceedings and in such collateral proceedings, the validity of initiation of the original proceedings u/s 147 of the Act can be challenged. The Mumbai bench of the Tribunal in this regard has placed reliance on several decisions, the principal decision being that of the Hon'ble Supreme Court in the case of Kiran Singh & Ors. V. Chaman Paswan & Ors. [1955] 1 SCR 117(SC) wherein the Hon'ble Supreme Court observed as follows :- "It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties." Now com....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in Goa where total deposits of Rs. Rs.19,31,750/- was made by the assessee but the AO found credited amount of Rs. Rs.5,76,056/- only. Thus, total deposits made in the bank were not brought to tax; (iii) There was transactions of Rs.3 76,225/- through credit card which was not explained and thus the entire amount was liable to be added to the total income of assessee but the AO has added only a sum of Rs.2,98,225/- to the total income of assessee. Thus, there was under assessment of income by Rs.78,000/-; (iv) The assessee during the year has sold property for Rs.36 lakh and exemption of Rs.19,74,763/- was claimed by assessee u/s. 10(38) of the Act. This fact was not verified by the AO at the time of assessment proceedings. In view of above, the Ld. CIT found the order of AO is erroneous in so far as prejudicial to the interest of Revenue and therefore show-cause notice was issued u/s. 263 of the Act vide dated 13.10.2015 for the clarification of the above transactions. In compliance thereto, the assessee submitted as under : i) The deposit in HDFC bank account No. 03151930000609 was duly reflected in his IT return. Therefore, no cause has happened to the Revenue which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r income and the order has become erroneous and prejudicial to the interest of the revenue. In view of the above, the order dated 29/03/2014 passed by ACIT, Circle-43, Kolkata is found to be erroneous and prejudicial to the interest of revenue and hence it is set aside with the direction to pass fresh assessment order after examining the evidences and documents in respect of the above issues raised after giving opportunity to the assessee and in accordance with law." Being aggrieved by this order of Ld. CIT assessee is in appeal before us on the following grounds:- "(1) For that the L'd Pr. Commissioner of Income Tax erred in exercising the power of revision for the purpose of directing the AO to hold another investigation when the order passed by the AO was neither erroneous nor prejudicial to the interest of revenue. (2) For that the L'd Pr.CIT erred and exceeded jurisdiction by giving direction in respect of the matters which are subject matters of appeal before the CIT(A), therefore order passed by Pr. CIT-15 is unlawful, beyond provision of law and therefore liable to be quashed. (3) For that the L'd Pr. CIT had alleged arbitrarily irrelevant matters, factu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unexplained cash credit. Therefore, the allegation of the ld. CIT-A that the order of AO is erroneous and prejudicial to the interest of Revenue is not true. c) Credit card payment of Rs.3,76,225/- From the order of AO, we find that the AO has made the addition of Rs.2,78,225/- out of total credit card payment of Rs.3,76,225/-. Therefore, it is clear that AO has applied his mind while framing the assessment proceedings u/s. 143(3) of the Act. Thus, the allegation of the AO in the impugned order or Ld. CIT u/s. 263 of the Act that there was no proper enquiry conducted by AO at the time of assessment proceedings is not true. d) Sale of property for consideration of Rs. 36 lakh. On perusal of AIR information which is placed on page 1 of the paper book, we find that no immovable property has been sold by assessee in the year under consideration. Besides the above, there is also no whisper in the assessment order for any addition on account of capital gains. Therefore, we find that the allegation of Ld. CIT that AO has not conducted sufficient enquiry in relation to sale of immovable property is not true. 5.1 In view of the above we find that Ld. CIT has passed impugned order ....