TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 75
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....ee's return of income or affairs having a bearing on his income for the year, and direct him to do so. Sure, the AO can, where he deems it proper, seek conversion of the limited scrutiny case into a complete scrutiny case by obtaining necessary permission for the same, but his discretion in the matter cannot be questioned. That is, the revisionary power qua a limited scrutiny case is on aspects of the return outside the specified areas, circumscribed. The proposition was stated to be supported by the decisions by the Tribunal, copies of which were though not supplied nor, therefore, referred to during hearing. 2.2 The second ground of challenge is that the assessment order is itself a nullity, so that there can be in law no revision thereof. On the basis of a response to an Application u/s. 7(1) of the Right to Information Act, 2005, whereby it stands clarified that there is no satisfactory note by the AO u/s. 153C(1) on record, nor in fact any notice u/s. 153A(1) r/w s. 153C issued, it is claimed that the assessment u/s. 153C/143(3) is void ab initio inasmuch as no assessment u/s. 153C r/w s. 143(3), i.e., as made, could be in law made. 2.3 Third, each of the queries raised by t....
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....ment made being, as contended, u/s. 153C r/w s.153A(1)? The response to the application under RTI Act, bringing the facts on record to the fore, rather, supports the case of the Revenue. There is no reference to the basic incidents of an assessment u/s. 153C r/w s. 153A(1), viz. satisfaction with regard to the seized material having a bearing on the total income of the assessee - nay, of any reference to such material; issue of notice u/s. 153A(1), etc. in the assessment order. The assessee has therefore not furnished any return u/s.153A(1), which would, in case of a s. 153A(1) assessment, be u/s. 153A(1) r/w s. 144, i.e., a best judgment assessment. Even no approval of the Jt. CIT, as required u/s. 153D, for an assessment u/s. 153A r/w s.153C, stands taken. The complete absence of the pre-requisites for initiating proceedings u/s. 153A(1) in case of a person other than the person searched would only imply that the assessment made is a regular assessment u/s. 143(3). The mere describing of the assessment as an assessment 'u/s.153C/143(3)', i.e., instead of as 'u/s. 143(3)', would be by itself of no moment or consequence. The same in fact cannot even be read as 'u/s. 153C r/w s.143(....
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....d be nugatory. It is again trite law that mention of a wrong section, as long as the source of power exercised is available, would be of no moment (L. Hazarimal Kuthiala (supra); Hukumchand Mills Ltd. v. State of Madhya Pradesh & Anr. [1964] 52 ITR 583 (SC)). There are in fact several aspects to the matter - all in favour of saving the assessment proceedings, and even if the seized material had been, of which there is though nothing to suggest, used in assessment. However, having been neither argued nor could be regarded as within the purview of the instant, collateral proceedings, it is not considered proper to dilate further thereon. It is in fact doubtful if such contentions could at all be raised in the instant proceedings, being, as reassessment proceedings, for the benefit of the Revenue. Suffice to state that we find the assessment proceedings to have been validly initiated, and the absence of jurisdictional fact for proceeding u/s. 153A(1) r/w s. 153C. The finality of concluded proceedings cannot be lightly, if at all, disturbed (CIT v. Mtt. Ar. S. Ar. Arunachalam Chettiar [1953] 23 ITR 180 (SC); Hindustan Coca Cola Beverage (P.) Ltd. v. CIT [2007] 293 ITR 226 (SC)), much l....
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....hat only one condition is to be satisfied to validate a notice u/s. 148(1), i.e., of there being a reason to believe an escapement of income from assessment. The question is not if an assessment u/s. 153A (1) r/w. section 153C could be, even assuming so, being itself a very precarious and tenuous issue, made, but validity of the assessment as made. That there is no basis, factual or legal, for an assessment u/s. 153A(1) r/w s. 153C in the instant case, has been made abundantly clear. The next decision cited, i.e., Vision Promoters & Builders (P.) Ltd. v. CIT [2017] 190 TTJ 398 (Chd), is again supportive of what is being stated by us, i.e., a valid basis for the jurisdiction assumed, or lack of it, is decisive of whether the assessment as made is in law valid or void ab inito, in which latter case it therefore cannot be subject to revision u/s. 263. In the facts of the said case an assessment u/s. 153C r/w s. 143(3) was made without recording satisfaction, which was accordingly held as without jurisdiction. Proceedings u/s. 153C, admittedly initiated in that case, are admittedly absent in the instant case. The third decision, i.e., Pioneer Distillers Ltd. v. Pr. CIT (ITA No. 479/P....
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....m that all the queries raised by the ld. Pr. CIT, claimed as unaddressed in the assessment proceedings, fall within the ambit of the limited scrutiny assessment, so that the AO, satisfied on inquiry, did not either probe further nor deemed it proper to get his limited jurisdiction extended by seeking approval from the Pr. CIT/DIT. No doubt, the assessee can raise contentions, without prejudice to each other. However, on facts, only one could obtain. Either all the queries raised by the ld. Pr. CIT fall within the purview of the limited scrutiny assessment, or some of the queries raised by him indeed travel beyond the scope of such an assessment, i.e., is an either/or situation. The matter is entirely factual, and was accordingly examined, to find that all the queries, save one, put forth by the ld. Pr. CIT per his notice u/s. 263, had been, as a fact, raised by the AO during the assessment proceedings. The only issue qua these queries that would therefore survive is if the replies furnished by the assessee in the assessment proceedings were indeed satisfactory, indicating an application of mind by the assessing authority in not making further inquiries, or not so. Each of these que....
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....Rs. 45.17 lacs) in the name of Shri Nirmal Singh Kurweti, his employee, surrendered by the assessee for the relevant year vide his statement u/s. 132(4) dated 17/10/2014, being Query # 2 per the s. 263 notice dated 26/3/2018. Shri Bardia, on being questioned in the matter during hearing, would fairly admit to no query in this regard having been raised by the AO during assessment proceedings. His plea, however, was that though no specific amount has been offered to tax in its respect, as pointed out by the ld. Pr. CIT, the same gets included in the cash paid to Nirmal Singh Kurweti inasmuch as the same was out of the cash available in the assessee's account books, duly produced before and examined by the AO in the assessment proceedings. The matter, i.e., the source of the said investment has, accordingly, received due consideration by the assessing authority, want of which is, in effect, the charge by the ld. Pr. CIT. Toward this, Shri Bardia would take us through the copy of the account of Shri Nirmal Singh Kurweti in the assessee's books (PB-II, pgs. 36-38), wherein loan/s stands advanced in cash for purchase of various pieces of land, at Rs. 2.95 lacs, Rs. 18.38 lacs and Rs. 26.....
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....- again liable for penalty u/s. 271E, or not, i.e., through the banking channel; the transaction being regarded as not genuine. Why, one may ask, would any person give 'loan' to such a person, i.e., knowing fully well that the latter does not have the capacity to repay? And, besides, for purchase of a number of plots of land, as in the present case? Implicit in the transaction of loan is the notion or belief, at least in the honest estimation or assessment of the lender, that the borrower has the capacity to repay the principal, if not also interest thereon. In other words, the transaction/s of 'loan/s' is, quite plainly, bogus. Yes, one could argue that the amount be regarded as a gift, reflecting the same by write-off of (or debiting) the loan amount to the capital account of the assessee-lender. The question posed hereinbefore for a 'loan' could, in that case, equally validly be asked for a 'gift'. In fact, the gift is itself liable to be taxed in the hands of the donee, an unrelated person, u/s. 56(2). The tax implication of a benami property, on the other hand, would be of it being taxed in the hands of its' actual owner where the source of investment is not satisfactorily pro....
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.... 31.3.2013 (PB-II, pg. 38), is unexplained. That is, the assessee's explanation before us that the source of cash for the property purchased, even if not specifically examined, gets indirectly examined through verification of cash availability with the assessee, explained with reference to his cash-book in assessment, gets disproved; there being an apparent difference of Rs. 21.33 lacs. Further still, it remains to be clarified/ascertained if the amount referred to in the assessee's statement u/s. 132(4) dated 17.10.2014, whereby surrender of Rs. 45.17 lacs has been made (in reply to Q.25), is in respect of the same land/s. It is only the matching of the relevant documents, i.e., the land deeds, etc. finding mention in the assessee's accounts, comprising the surrender amount of Rs. 45.17 lacs, that would establish the correspondence between the two. This is in view of the mismatch in the total amount surrendered and that reflected in the assessee's accounts (i.e., Rs. 47.59 lacs), as also the fact that the said amount stands paid over a period of 3 years, as afore-noted. 6.4 We are not, we may clarify, for a moment suggesting that an addition u/s.69/69B shall, in any case, ensue, ....
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....au)(FB)), for an order to be regarded as erroneous. For instance, an assessment made by accepting the income returned as such, without inquiring if the income returned had been earned by the person returning the same, was held by the Apex Court to be erroneous and prejudicial to the interest of the Revenue (Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC)). The case law in the matter is legion, with Hon'ble Courts all through, including the Apex Court (as in Toyota Motor Corp. v. CIT [2008] 306 ITR 52 (SC), affirming the decision by the High Court reported at [2008] 306 ITR 49 (Del), and the Hon'ble jurisdiction High Court (as in CIT vs. Deepak K. Garg [2008] 299 ITR 435 (MP); CIT v. Mahavar Traders [1996] 220 ITR 167 (MP)), holding like-wise in different fact settings. Reference, however, is being made only to the decision in Gee Vee Enterprises v. CIT (Addl.) [1975] 99 ITR 375 (Del), wherein reliance has been placed on the decisions in Rampyari Devi Saraogi vs. CIT [1968] 67 ITR 84 (SC) and Tara Devi Agarwal (supra), also referred to in Malabar Industrial Co. Ltd. (supra) and Jawahar Bhattacharjee (supra). As explained therein: 'It is not necessary for the Commissioner to m....
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....that score alone. In his view, the AO ought to have sought his approval for comprehensive scrutiny, and examined the issue/s referred to in his notice, for which reference is made by him to para 4 of the Board's Instruction No. 7/2014, dated 26/09/2014, reproducing it at para 8 (pg. 13) of his order. The assessee's case in this regard is that inasmuch as the same falls within the purview of limited scrutiny, the AO, satisfied with the availability of cash, making addition to the extent the deficit was in his opinion unexplained/not satisfactorily explained, did not consider it necessary to expand the scope of the inquiry further. That is to say, that the AO's discretion in the matter, i.e., for the conversion of a limited scrutiny to a comprehensive scrutiny, cannot be questioned. We have ourselves, in Vishal Sethi vs. CIT (I.T.A. No.57/Jab/2019, dated 07/9/2020), upheld this proposition. If the Assessing Officer himself is unable to, in view of his limited jurisdiction, act in a particular manner, his order cannot be regarded as erroneous and prejudicial to the interest of the Revenue on account of not inquiring into aspects (of the assessee's return) outside his purview in such p....
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....e-tax had not given any finding but only remanded the case to the Income Tax Officer for making assessment afresh. The Tribunal, instead of approaching the matter in the proper perspective, had on their own started making inquiries and found that the order passed by the Income Tax Officer was correct. This was erroneous. The order passed by the Commissioner of Income-tax was valid.' This infirmity, i.e., making an assessment without proper inquiry, i.e., as warranted by the facts and circumstances of the case, and the law in the matter; the issue in Mahavar Traders (supra), for instance, being the satisfaction of the conditions for allowance of deductions claimed u/ss. 80-HH & 80-J of the Act, in fact gets incorporated in law itself by way of Explanation 2 (clauses (a) & (b)) to section 263 by Finance Act, 2015, w.e.f. 01/06/2015, so that the same deems an order bearing the said infirmity as erroneous and prejudicial to the interests of the Revenue. 7.3 Now, it is axiomatic that while an assessment under comprehensive scrutiny is to be regarded as erroneous in-so-far as it is prejudicial to the interest of Revenue, for want of proper inquiry, a limited scrutiny assessment cannot,....