AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 1074
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....s arising out of the order u/s 143(3) of the Act dated 24.03.2015 framed by ACIT-2(1), Indore. 2. As the issues raised in these appeals are common and relates to same assessee these were heard together and are being disposed off by way of this consolidated order for sake of convenience and brevity. 3. Brief facts as culled out from the records are that the assessee is a Doctor by profession and earns income from Remuneration, House property, Share of profit and income from other sources. Survey proceedings u/s 133A of the Act was carried out at the premises of M/s Bhandari Hospital & Research Centre (In short BHRC) on 24.09.2011. During the course of survey proceedings certain discrepancies were noticed. Incriminating material in the form of Hundis were found and impounded. The assessee in his individual capacity admitted the discrepancies of un secured loan given to various persons and surrendered additional income of Rs. 7 crores for Financial Year 2011-12 relevant to Assessment Year 2012-13. Subsequently assessee e-filed return of income for Assessment Year 2012-13 on 28.03.2013 declaring income of Rs. 7,01,74,054/- which was further revised on 18.07.2013 declaring income ....
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....dicial to the interest of revenue. Ld. PCIT-1 after considering the submission made by the assessee directed the Ld. A.O to pass a fresh assessment after making proper enquiries and investigation as directed in the order u/s 263 of the Act. Against the order u/s 263 assessee is in appeal before the Tribunal by way of filing ITA No.350/Ind/2017. 6. As regards ITA No.57/Ind/2017 the same is arising out of the assessment order u/s 143(3) r.w.s. 263 of the Act wherein the Ld. A.O did not made any new addition and same income of Rs. 14,75,87,000/- assessed as was assessed u/s 143(3) of the Act. Against this order also assessee went before Ld. CIT(A) but could not succeed and now the assessee is in appeal before the Tribunal vide ITA No.57/Ind/2017. The fate of this appeal will depend on the outcome of our decision to be taken in the case of ITA No.350/Ind/2017. 7. Now we first take up ITA No.350/Ind/2017 wherein the assessee has raised various grounds but the substantial issue is challenging the order issued u/s 263 of the Act passed by Ld. PCIT- 1 contending that Ld. PCIT exceeded his jurisdiction by wrongly invoking the provisions of 263 of the Act and the impugned order is b....
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....OR. 3.1 That the assessment order clearly points out the fact that the disallowance of Rs. 39,33,844 was intimated by the assessee himself and was not discovered by the AO thus the Ld. CIT failed to appreciate that there was no occasion for the AO to initiate penalty. 4.NO JUSTIFICATION EITHER IN LAW OR IN FACTS IN EXERCISING JURISIDCTION U/S 263 IN RESPECT OF THE FOLLOWING ITEMS SINCE THERE WAS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER AND THE ORDER IN RESPECT OF THESE ITEMS WAS PASSED AFTER DUE AND SUFFICIENT ENQUIRY AND THE SAME WAS ALREDAY TAXED :- 4.1 No justification to regard increase in income of Rs. 41,07,848 shown in the return as causing any prejudice to the Income-tax department. 4.2 No justification to ask the AO to make independent verification of certificate of done uls80G(S)(vi) and LIC receipt as these were duly and sufficiently verified by the AO and even the CIT could not point out any error in the documents filed. 4.3 No justification to ask the AO to make enquiry regarding year-wise investment made in movable and immovable properties which was already done by the AO. THAT EXTENSIVE INFORMATION WAS SOUGH....
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....n to SAIMS and SAIMST, the certificate given by the competent authority is only up to 31.03.2011. Proper investigation was not made before allowing the said deduction and claim allowed contrary to law. G. The enquiry regarding year wise investment made in movable and immovable property and accretion in wealth was not made'. 9. On receiving the show cause notice assessee made detailed written submissions which read as follows:- 1. With reference to the show cause notice issued to us, as a general submission against all of your observations, we would like to bring to your attention that the explanation (2) to sub-section 1 of section 263 has been inserted w.e.f 1/6/2015 and is thus applicable to assessment orders passed after 1/6/2015. Consequently, the discretionary powers bestowed on you by virtue of sub-clause (a) of Explanation (2) are not applicable to the Assessment order passed in our case which was passed in January 2015 and which is subject matter, of your referred notice. Also the explanation inserted is not retrospective in nature as has been clarified / held in the following order of the Supreme court. 2. The Supreme Court in CIT v. Vatika To....
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....use property) b. Certificate of approval u/s 80G of the institutions to whom donations were made, which- means she had verified the deductions claimed.- c. Details of disallowance of excess interest u/s 57 d. Details of amounts appearing in 26AS Statement 4. Further the A.O had - in its show cause notice dt./ 18/03/2015 also mentioned interest amount of Rs. 3479097/- in addition to Rs. 7.00 Crores surrendered during the Survey. From all the above it is clear that the A.D had obtained the details of all the heads of the assessment proceedings. It may kindly be noted that the amount of 41,07,848/- was higher than previous year and tax has already been paid on the above. 5.There was nothing in the impound material related to the assessee other than the documents on the basis of which surrender of Rs. 7.00 cores was made. So mere mention of test check by the AD. that impounded material does not render the order as erroneous and prejudicial to the interest of the revenue since the AO had already made unjust and high pitched order in the favour of revenue by adding the same income twice. The AO has verified the transactions f....
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....e no.14/13 and for 8 students in case no.12/13. He has not been named as an accused in any other cases of this Matter. *The total amount involved in the above cases was Rs. 50.00 Lacs and Rs. 142.00 Lacs in case no.12/13 and 14/13 respectively which has already been fully seized from Shree Pradeep Raghuvanshi's house at Indore by the Police authorities as is brought out in the FIR statement enclosed as page No. _. Consequently, there is no cash specific to the above cases which is presently not found or not seized by Police authorities. Further and more importantly the matter referred in which Dr. Vinod Bhandari is accused is with reference to the F.Y. 2012-13 whereas our assessment orders which are subject matter of show cause notice u/s 263 are with respect to FY 2011-12 Le. A.Y. 2012-13. Despite of above, and without bringing any evidence to the contrary and only based on pure conjecture, the A.D. has double added surrendered income as income from unknown sources alleging his involvement in Vyapam case. 8. The assessee had paid L1C premium of Rs. 1026737/- however due to error deduction was claimed only for Rs. 49,062. Copies of L....
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....the Ld. A.O did not obtain break up of income of Rs. 41,07,848/-, A.O has not examined the real source of the surrendered income of Rs. 7 crores allegedly represented by the assessee having earned unaccounted professional receipts which were invested in short term advances in the form of 'Hundis' which matured during the year. Ld. PCIT also brushed aside the submissions made by the assessee explaining that all the issues raised in the show cause notices have already been examined by Ld. A.O and additions have also been made. Ld. PCIT directed the Ld. A.O to pass fresh assessment order after making proper enquiries of investments thereby treating the assessment order issued u/s 143(3) dated 24.3.2015 as erroneous and prejudicial to the interest of revenue. Relevant extract is reproduced below:- 14. It is apparent that AD has not investigated and examined the matter properly which should have been done. 15. The Commissioner can regard the order as erroneous, on the ground that in the circumstances of the case, the Assessing Officer should have made further inquiries. It is duty of the Assessing Officer to ascertain the truth of the facts stated by the assessee. It i....
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....nt issues making the assessment order erroneous and prejudicial to the interest of revenue. 19. The assessment order made by the Assessing Officer, in respect of examination of facts/issues mentioned above is erroneous m so far as it is prejudicial to the interest of revenue and is therefore hereby set aside u/s 263 of the Income tax Act,,1961 accordingly. The Assessing Officer is directed to pass the fresh assessment order after making proper enquiries and investigation as discussed on aforesaid issues and opportunities to the assessee of being heard. 11. Now the assessee is in appeal against the order issued u/s 263 of the Act by ITA No.350/Ind/2017 pertaining to Assessment Year 2012-13. 12. Ld. Counsel for the assessee apart from reiterating the submissions made before Ld. A.O during the course of assessment proceedings and before Ld. PCIT during the course of proceedings u/s 263 of the Act further argued that the order u/s 143(3) of the Act is passed by Ld. A.O after making inquiries and verification which should have been made. The AO, exercising its quasi-judicial power, had issued a detailed questionnaire u/s 142(1) which was duly answered by way of various de....
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....3 of the Act was erroneous and prejudicial to the interest of the Revenue. The ld. PCIT has not made any enquiry on his own but simply directed the AO to make further verification and examination therefore, the order of the ld. CIT u/s 263 of the Act deserves to be set aside. Recently, the Hon'ble Delhi High Court in the case of Ld. PCIT v. Delhi Airport Metro Express Pvt. Ltd. [ITA No. 705/2017] has categorically held that for the purpose of exercising jurisdiction u/s 263 of the Act and reaching a conclusion that the order is erroneous and prejudicial to the interest of revenue, the ld. PCIT has to undertake some minimal inquiry and in fact where the ld. PCIT is of the view that AO had not undertaken any inquiry, it becomes incumbent on the Ld. PCIT to conduct such enquiry. Further in the case of PCIT v. Modicare Limited [ITA No. 759/2017] Hon'ble Delhi High Court has followed its decision in Income Tax Officer v. DG Housing Projects Limited [343 ITR 329], DIT v. Jyoti Foundation [357 ITR 388] and Ld. PCIT v. Delhi Airport Metro Express Pvt. Ltd. (supra) to hold that the exercise of jurisdiction u/s 263 of the Act cannot be outsourced by the PCIT to the AO and therefore, ....
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....r is unsustainable in law. The Tribunal has further held that the intention of the legislature could not have been to enable the ld. PCIT to find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law, since such an interpretation will lead to unending litigation and there would not be any point of finality in the legal proceedings. The opinion of the Ld. PCIT referred to in section 263 of the Act has to be understood as legal and judicious opinion and not arbitrary opinion. 19. Ld. Counsel for the assessee also submitted that details of interest income of Rs. 39,33,844/- was duly shown in the computation of income and due taxes paid therein. The surrendered income of Rs. 7 crores is the unaccounted income from profession/ business income which were invested in hundis as short term advances for earning interest and the details of such hundis which were impounded during the course of survey were available with the Ld. A.O. As regards the alleged involvement of assessee in Vyapam case it was submitted that the assessee is accused in Case No.12/13 and 14/13 with respect to ....
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.... Govindram Seksariya Cahrity Trust, 166 ITR 580 (M.P) l. Hari Iron Trading Co. v/s CIT, 263 ITR 437 (P&H) m. CIT v/s HARI Singh & Associates, 267 CTR 442 (Raj.) n. 335 ITR 83, CIT vs. Anil Kumar Sharma (Delhi), o. 341 ITR 537 (Delhi), CIT vs. Vikas Polymers p. 343 ITR 342, CIT vs. Hero Auto Ltd. (Delhi H.C.), q. 344 ITR 554, CIT vs. International Travel House Ltd. (Delhi H.C.), r. 343 ITR 329, CIT vs. D.G. Housing Projects Ltd. (Delhi H.C.), s. 111 ITR 326, J.P. Srivastava & Sons Vs. CIT, (Allhd. H.C) t. 320 ITR 674, CIT vs. Ashish Rajpal (Delhi H.C.). At u. 323 ITR 632, CIT vs. Design and Automation Engineers (Bombay) P. Ltd. (Bombay H.C.), of v. 323 ITR 206, CIT vs. Development Credit Bank Ltd. w. 243 ITR 83, Malabar Industrial Co. Ltd. Vs. CIT(SC) x. 203 ITR 108 CIT Vs. Gabriel India Ltd., (Bombay H.C.) y. Mukesh Sharma v. CIT 25 ITJ 341 (Indore ITAT) 22. Per contra Ld. Departmental Representative strongly supported the order u/s 263 of the Act passed by Ld. PCIT and further submitted that assessee was required to furnish complete details of the person....
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....ome at Rs. 7,01,74,054/-, Ld. A.O assessed income at Rs. 14,75,87,000/- and the additions included the addition made for alleged income from Vyapam scam. Ld. PCIT after assuming the jurisdiction u/s 263 of the Act has observed that the order of the Ld. A.O is erroneous in so far as it is prejudicial to the interest of the revenue and needs to be assessed afresh after making proper enquiries and investigations. Before proceeding to examine the facts of the case we will first go through the provisions of Section 263 and various judgments and decisions rendered with regard to Section 263 of the Act. Section 263 of the Act 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, or canc....
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.... (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, National Tax Tribunal, the High Court or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of subsection (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. 25. From perusal of the aforesaid section, it is apparent that there are mainly four features of the power for revision to be exercised u/s 263 of the Act by the Pr. CIT. i. The Pr. CIT may call for and examine the records of any proceedings under the Act and for this purpose he/she need not to show any reason or record any reason to b....
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....tion under section 263(1) cannot be exercised by the Commissioner, even though the order is erroneous. The argument that such an order may possibly be challenged in appeal by the assessee, and for this reason it is prejudicial to the interests of the revenue, has no merit. Section 263(1) clearly contemplates that the order of assessment itself Should be prejudicial to the interests of the revenue and this prejudice has to be proved by reference to the assessment order only. It cannot be argued that there is some possibility of the assessment order being challenged or revised in appeal and, therefore, on account of this contingency, the order becomes prejudicial to the interests of the revenue.' [emphasis supplied] 28. Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. - [2000] 243 ITR 83 - order pronounced on 10.02.2000 - HEAD NOTE - "Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1983-84 - Whether in order to invoke section 263 Assessing Officer's order must be erroneous and also prejudicial to revenue and if one of them is absent, i.e., if order of Income-tax Officer is erroneous but is not pr....
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.... basis that the order under consideration is erroneous. If the material in that regard is available on the record of the assessee concerned, the Commissioner cannot exercise his powers by ignoring that material which links the income concerned with the tax realization made thereon. The two questions are inter-linked and the authority exercising powers under section 263 is under an obligation to consider the entire material about the existence of income and the tax which is realizable in accordance with law and further what tax has in fact been realised under the alleged assessment orders.[emphasis supplied] 30. Hon'ble Karnataka High Court in the case of V. G. Krishnamurthy - [1985] 20 Taxman 65 - order pronounced on 19.03.1984 - Para 10 - "Section 263 can be invoked by the Commissioner only when he prima facie finds that the order made by the ITO was erroneous and was prejudicial to the interests of the revenue. Both these factors must simultaneously exist. An order that is erroneous must also have resulted in loss of revenue or prejudicial to the interests of the revenue. Unless both these factors co-exist or exist simultaneously, the Commissioner cannot invoke or resort to se....
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....cise of jurisdiction under section 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the Commissioner of Income tax has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question....' Similar view has been expressed by Hon'ble Madras High Court in the case of CIT Vs. Amalgamations Ltd (238 ITR 963) 32. The law interpreted by the Hon'ble courts makes it clear that Ld. PCIT before holding the order of the Ld. A.O as erroneous in so far as prejudicial to the interest of revenue should have to conduct necessary enquiries or verification in order to show that the findings given by Ld. A.O is unsustainable in law. Similar view was taken by the Hon'ble Delhi High Court in the case of Income Tax Officer v/s D.G. Housing Projects Ltd (2012) 343 ITR 329 (Delhi) wherein the Hon'ble Court after referring to judgments of Hon'ble High Court in the case of Addl. CIT V/s Gee Vee Enterprise (1975) 99 ITR 375 (Delhi), CIT V/s Sunbean Auto Ltd (2011) 332 ITR 167(Delhi), Malabar Industries 243 ITR 83(SC) held in favour of the assessee confirming the order of the Tribunal ....
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....above judgments so as to find that whether the assessment order passed u/s 143(3) is erroneous in so far as it is prejudicial to the interest of revenue. Ld. PCIT in the show cause notice dated 15.3.2017 has raised following issues referring to the assessment proceedings carried u/s 143(3) of the Act. (a) Penalty u/s 271(1)(c) of the Act not initiating action for furnishing inaccurate particulars of income for claiming against interest expenditure of Rs. 39,83,844/-. (b) Break up of income of Rs. 41,07,848/- not obtained. (c) Not mentioning the link source of Rs. 7 crores surrendered with the Vyapam case. (d) Not calling information from various agencies involved in investigation of Vyapam case. (e) No proper investigation on claim of deduction under Chapter VIA. (f) No enquiry made about the year wise investment made in moveable and immoveable property. The first thing we need to treat is that what type of details were asked by the Ld. A.O during the assessment proceedings and replies made there to by the assessee and details filed along there with. 34. We observe that the notice u/s 143(2) issued on 14.8.2013 fixing the dat....
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....nce on 26.8.13, 24.2.14, 10.3.14, 20.8.14 and 23.9.15. The submissions made on the above referred dates are mentioned below:- Copy of letter dated 26.8.2013. With reference to above, we are submitting the following documents as required by you vide above cited notice:- I. Letter of Authority 2.Copy of acknowledgement of Income Tax return along with Computation of income 3.Evidences in support of payment of taxes a.TDS certificates b.Self assessment Challan 4. Evidence in respect of deduction claimed under chapter VIA of the Act a. Copy of Donation receipts to certain funds for deduction U/s 80-G Copy of letter dated 24.2.2014. We are submitting the following documents as required by you vide above cited notice:- 1.Please specify the source of your income and Address of Head office and branches of the business carried by you. Assessee is a Doctor practicing in as partner into firms as under. Share in Firms:- a) Bhandari Hospital and Research Centre: Firm is running a hospital at Scheme No. 54, Opp. Meghdoot Garden, Indore b) Indore Institute....
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.... In view of Section 14A, Assessee has already not disallowed by not claiming deduction of interest paid on Term Loan to Bank of Maharashtra Rs. 33,47,429/which has been debited to the capital account. Apart from above there is no other disallowable expenditure U/s 14A of the Income tax Act, 1961. 13. Please produce all the Books of accounts, vouchers and bills etc. NA - no business carried by' the assessee se no becks of accounts are required to be maintained by the assessee. Copy of letter dated 10.3.2014 With reference to above, and further to our hearing held on 6th Aug 2014 we are submitting the following pending documents for your kind perusal:- 1 Details of AIR entries (Page 2) Details of AIR - enclosed herewith 2 Copy of Housing Loan Certificate. (Page 3-4) Copy of Housing Loan Account statement enclosed where total interest paid is reflected. 3.Furnish Copy of Capital account in partnership Firms Bhandari Hospital and Research Centre and Indore Institute of Medical Sciences. (page 5-19) Copy of Capital account in partnership Firms Bhandari Hospital and Research Centre and Indore I....
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....following documents as required by you vide above cited notice:- 1.Letter of Authority 2.Copy of acknowledgement of Income Tax return 3.Computation of income 4.Balance Sheet, Profit & Loss Accounts, Capital Account for the A.Y. 2012-13. However it may kindly be noted that Assessment Year 2012-13 is already under assessment proceedings u/s 143(2) and is still pending for order. So all the required documents are already under proceedings. 36. Thereafter notices were issued u/s 143(2) of the Act on 18.3.15 specifically calling about the details of the surrendered income, details of hundis. The copy of show cause notice is reproduced below:- 1. During the assessment proceedings you were asked to give details of amount deposited in bank, you have shown cash deposited in your account from available cash balance in your cash book. From copy of was that deposit of was shown by you in form repayment of unsecured loan by various persons (as in table below]. These deposits as claimed by you were out of repayment of loans given by you from undisclosed income of Rs. 7,OO,OO,OOO/- during survey action u/s 133A in September 2011. Most of th....
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....the information about the source of immovable property purchased by you 37. The assessee duly replied to the above show cause notice dated 16.3.15 giving complete details about the information called for in the show cause notice and the same is extracted below:- With reference to above, and further to our hearing held on 09/03/2015 we are submitting the following pending documents for your kind perusal:- 1. Credit entries and cash deposited in the bank accounts to be explained. Asseseee has duly maintained his books of account. All the credit entries in bank account are duly entered by the name of person from whom amount was received. As regards to the Cash deposited in the bank account which was deposited out of the cash balance available at the hand of the assessee at particular point of time during the year. We have enclosed the explanations of all the credit entries in all the bank accounts and also cash book of the assessee for the relevant year. [Page 1 to 22] 2. Source of undisclosed income surrendered during the survey proceedings Dr. Vinod Bhandari i.e. assessee is renowned doctor of the City and is in medical professional fo....
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.... Kishan Singh Pawar 4000000 4 Mangilal Motwani 4000000 5 Manoj Shrivas 5000000 6 Narendra Kumavat 3500000 7 Rajmohan Shah 4500000 8 Ram Singh 2500000 9 Ramesh Agrawal 2500000 10 Ramesh Chand Jain 5000000 11 Suraj Kulkarni 5000000 12 Surendra Kothari 3000000 13 Suresh And Sons 5000000 14 Vallabh Chand Mundra 5000000 15 Viiav Dhakad 2500000 16 Viiav Dhakad 4000000 17 Viiav Varqiva Rathore 4500000 TOTAL 70000000 Addresses or other details of the above parties are not available with the assessee. Assessee has already paid taxes on this undisclosed income. After getting back the amount from above parties it has not been further given on loan to any other person. 5. To produce books of accounts and other documents Other Books of accounts enclosed in CD. 6. To confirm that approval u/s 80G is not cancelled in case of the institutes to whom donations were given during the year. Letters given by the Sri Aurobindo Institute of Medical Sciences, Indore and Sri Aurobindo Institute of Management S....
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....urce of deposit of cash, the amount of Rs. 7,34,79,097/- is being added to total income of assessee as unexplained cash deposits. I am satisfied that assessee has concealed particulars of his income and has furnished in accurate particulars, hence penalty under section 271(1)(c) is initiated. 39. After referring to all the submissions made by the assessee we find that the same have been duly considered by the Ld. A.O before finalizing the assessment making addition of Rs. 7,74,12,941/- to the returned income of Rs. 7,01,74,054/-. 40. Now we take up each issue raised by Ld. PCIT in the show cause notice so as to see that whether enquiry was conducted by the Ld. A.O and whether the decision so taken on deciding the issue was erroneous or prejudicial to the interest of revenue. (a) As regards not initiating the penalty u/s 271(1)(c) of the Act for the interest income of Rs. 7,39,73,844/-, we observe that the assessee filed the original return on 28.3.2013 and revised return on 18.3.2015. In the revised return the correct claim of interest expenditure was made. Though the original return was belated but still in the given case where the assessee has revised the return be....
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....g Officers during the course of assessment proceedings and there seems no logic in naming the type of books and amount verified because books of accounts itself cover up the financial details maintained by the assessee for the concerned year. Clause-C of show cause notice u/s 263 of the Act also do not stand for. (d) As regards Clause-D wherein Ld. PCIT has alleged that Ld. A.O has not examined the link of source of Rs. 7 crores surrendered with the vyapam case, we observe that the assessee has surrendered Rs. 7 crores as his unaccounted undisclosed income for financial year 2011-12. The assessee is a medical practitioner and partner of BHRC which is engaged in providing medical services. The surrendered income was linked by the assessee to the unsecured loans given by him in the form of hundis which were found and impounded during the course of survey. In other words when the hundis were impounded the assessee surrendered unaccounted income invested in the hundis. These hundis are for short period normally given as loans for few months. Complete details of hundis with respect to name, amount, interest and due date of receiving the interest are mentioned which als....
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.... or is found to be the owner of money, bullion, jewellery or other valuable articles or any other unexplained expenditure and is unable to provide explanation about the nature and source of such income then Section 68 to 69C of the Act comes into play. For better understanding of proper provisions of Section 68 to 69C of the Act reads as follows:- Section 68 (Cash Credits) Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded....
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....e excess amount may be deemed to be the income of the assessee for such financial year. Section 69C (Unexplained expenditure) Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. It is clear from the above referred provisions that if any income for which the assessee is unable to provide any explanation about the nature and its source then the same could be offered to tax as unexplained income which can be either unexplained cash credit (Section 68), unexplained investment (Section 69) unexplained money etc (Section 69A) amount of investment which fully not disclosed (Section 69....
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....he fact that on 23.11.2017 the Central Bureau of Investigation has filed the charge sheet in the registered case No.12/13 but as stated by Ld. Senior Counsel for the assessee neither the name of the assessee nor any official of the institution or medical college having connection with the assessee have been named as accused in the said charge sheet. Even before us Revenue failed to bring any evidence on record to rebut the contention of Ld. Senior Counsel for the assessee. In the back ground of these facts the issue raised by Ld. PCIT in Clause-E of the show cause notice u/s 263 of the Act do not stand for as a basis for invoking provisions u/s 263 of the Act. (f&g) As regards Clause F & G pertaining to claim of deduction under Chapter VIA and year wise investment in moveable and immoveable property, we find that the assessee had paid LIC premium of Rs. 10,26,737/- but claimed the deduction for Rs. 49,062/-. Copies of LIC were submitted along with submissions dated 26.8.2013 and 24.2.2014. As regards the certificate for 80G approval which was valid up to 31.3.2011, the Central Board of Direct Taxes has clarified vide its circular No.7/10 dated 27.10.2010 that any approval ....
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.... warrant was received. These facts, in the opinion of this court, were material, and had been given weightage by the Tribunal in its impugned order. There is no dispute that the investment to the sister concern, was not questioned; even the Commissioner has not sought to undermine this aspect. Equally, there is no material to say that apart from that single dividend warrant, any other dividend income was received. Furthermore, there is nothing on record to say that the assessee had to expend effort, or specially allocate resources to keep track of its investments, especially dividend yielding ones. In these circumstances, it can be said that whether the deduction under section 14A was warranted, was a debatable fact. In any event, even if it were not debatable, the error by the Assessing Officer is not "unsustainable'. Possibly he could have taken another view; yet, that he did not do so, would not render his opinion an unsustainable one, warranting exercise of section 263.' 43. Hon'ble Gujarat High Court in the case of Arvind Jewellers (259 ITR 502) held that: "Held, that the finding of fact by the Tribunal was that the assessee had produced relevant ....
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.... view of judgment in the case of Malabar Industrial Co. (supra) as per which before invoking the provisions of Section 263 of the Act Ld. PCIT should have satisfied the twin conditions, namely order of the Ld. A.O stated to be erroneous and secondly it is prejudicial to the interest of revenue. But in the instant case wherein we have examined each and every issue raised by Ld. PCIT in the light of the reply filed by the assessee, information called by the Ld. A.O and the finding in the assessment order, we are of the considered view that under the given facts and in law the view taken by the AO in the order passed u.s143(3) of the Act dated 24.3.2015 seems to be reasonable and plausible which cannot be held as legally unsustainable and not in accordance with law. In our view it is passed with complete application of mind and thus it can neither be held as erroneous nor prejudicial to the interest of revenue. Therefore Ld. PCIT under the given facts and circumstances of the case erred in assuming jurisdiction u/s.263 of the Act since the Ld. A.O has made sufficient enquiry by way of questionnaire to which detailed reply have been filed from time to time and the Ld. A.O in the intere....
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....2017 passed u/s 143(3) r/w 263 is without jurisdiction, illegal and bad in law as the order is passed in pursuant to order passed u/s 263 which is subject matter of Appeal before this tribunal. The Appellant humbly craves leave to add, alter , and or supplement any ground or grounds, if necessary, at any time during the Appellant proceeding 49. Since while deciding ITA No.350/Ind/2017 we have quashed the proceedings u/s 263 of the Act carried out by the Ld. PCIT holding that Ld. PCIT wrongly assumed jurisdiction u/s 263 of the Act. We have restored the assessment order u/s 143(3) dated 28.3.2015. The instant appeal No.57/Ind/2017 will become infructuous since the very basis of assessment i.e. order u/s 263 of the Act have been quashed therefore the proceedings carried thereafter are void. Accordingly ITA No.57/Ind/2017 is dismissed as infructuous. 50. Now we take up ITA No.66/Ind/2017 wherein the assessee has raised following grounds of appeal:- "1. The Ld. CIT(A) has erred in law and on facts in upholding the order passed by the assessing officer u/s 143(3) of the Income Tax Act, 1961. 2. The Ld. CIT(A) has erred in law and on facts in confirming t....
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....closed. The survey was conducted in Sep 2011 and most of the Hundis were to mature in 2-3 months. As most of the cash deposits were in the month of February and March 2012 the Assessing Officer asked the appellant to furnish the name and addresses of the persons from whom repayment of hundis was being claimed. As the appellant failed to furnish the said information the Assessing Officer held that the onus of proving the identity and genuineness of source of cash deposits had not been discharged and treated the said amount as unexplained cash credits. 5.2 The appellant has challenged the addition of Rs. 7,34,79,097/- u/s 68. It is submitted that as per section 68 any sum should have been "credited: in the books of the assessee and which should be unexplained. If sum is not credited in the books even though it is unexplained it is not taxable under section 68 of the IT Act. The details of the entries passed in the books of accounts to offer unexplained amount of Rs. 7,00,00,000/- surrendered during the survey have been submitted as can be seen in the appellant's submissions reproduced above. It is seen that income account has been credited with Rs. 7,00,00,000/- and....
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.... repayment. Under the circumstances the Assessing Officer was justified in asking the appellant to furnish the name and addresses of the persons from whom he was claiming repayment of loan in cash. A show cause notice was issued on 18/03/2015 in response to which it was simply submitted that there should not be double taxation of the same amount. By simply passing entries in the books of accounts the appellant has not discharged his onus of justifying and providing the claim made. The bunching of all the cash deposits in the month of February and March makes it dubious considering the background of the appellant. 5.4 Various decisions have been cited to claim the benefit of telescoping. The benefit of telescoping is allowable but it had to be shown to the satisfaction of the Assessing Officer that the money surrendered during the survey is received back all repayment of the hundis. The onus was on the appellant to furnish the details of the persons from whom he was claiming the repayment of loan in cash in February and March 2012. Reliance is placed on the decision of Hon'ble I.T.A.T., Agra in the case of Poonam Gupta dated 17.07.2013 where in benefit....
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....ons made before Ld. CIT(A) and also mentioned that there was a direct nexus of the cash deposit in the bank account to the maturity proceeds of the hundis found during the course of survey proceedings. The unaccounted receipts in cash were used to provide short term loans and advances for earning interest income and for this purpose hundis were issued and the same were found during the survey proceedings. The maturity date of hundis were mentioned there on. The Ld. A.O has himself noted the details in the show cause notice. The surrendered income which was invested in hundis were received back in cash during the year under appeal on various dates as mentioned on the hundis. The cash receipt were duly accounted in the books of accounts. No other unaccounted source of income has been unearthed by the survey team or Ld. A.O. The cash deposit in the bank has a direct nexus with the surrendered income. Plethora of judgments are there supporting the assessee that telescoping benefit should be given. 54. Per contra Ld. Departmental Representative supported the findings of both the lower authorities. 55. We have heard rival contentions and perused the records placed before us. The so....
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....e subsequently fully recovered the hundi loans in the F.Y. 2011-12 but with a delay from their due dates, on account of original receipts being in possession of the Department. Interest on the delayed period was also recovered. The total sum against loans advanced and interest thereon was recovered in cash and deposited in Bank accounts of the Appellant. The appellant duly informed the Income tax department vide its letter filed on09/04/2012 of hundi loans having been recovered and deposited in his bank account. This unaccounted income was given as short term advance through hundis which were found during the course of survey. Necessary entries in the books of accounts were made on the date of survey by debiting parties account and crediting the income from undisclosed source offered to tax. The party account were made on the basis of names mentioned on the hundis. The original hundis impounded by the Income Tax Department were released and given to assessee in November, 2011 and December, 2011. The amounts were recovered from Hundis on following dates:- DR.VINOD BHANDARI DETAILS OF LOAN GIVEN TO HUNDI S. NO. PAYEE NAME AMOUNT GIVEN ON HUNDI INTEREST RECD. ON H....
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.... a. In Veerasinhaiah & co vs CIT (1980) 123 ITR 457 (SC), the Supreme court has clearly held that Secret profit/ Undisclosed income of an Appellant earned may constitute a fund, even thouqh concealed from which the Appellant may draw subsequently... b. In CIT V.s. K.S.M. Guruswamy Nadar & Sons (1984) 149 ITR 127 (Madras) it was held that "In this case, in addition to the Bogus cash credit there is an addition towards the Suppression of profit, 171 such a case as this When there are two additions it is always open to the Assessee to explain that the suppressed profit during the year has been brought in as cash credits and therefore one has to be telescoped into the other and there can be only one addition". c. In Addl CIT Vs. Dharamdas Agrawal (l983) 144 ITR 143, the Madhya Pradesh High court based on the Veerasinhaiah & Co's decision in Supreme court upheld the Assessee's contention of undisclosed Income of the Assessee earned in earlier asst. years being the source of Subsequent expenditure and or debits in Assessee's accounts. d. In Arun Kala Vs. Asstt. CIT [2005} 98 TTJ (Jp.) 1046 the tribunal ruled that "By considering the totality of the fact....