TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 1015
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....e learned Principal Commissioner of Income Tax (Central) was not justified in law and fact to set aside the assessment order dated 29/12/2016 and direct the Assessing Officer to make redo the assessment de-nova after due consideration of the fact and law with regard to issues mentioned in the show cause notice. 3. The learned Principal Commissioner of Income Tax (Central) has grossly erred in revising the order passed by the Assessing Officer without appreciating that the order was not erroneous, much less prejudice to the interest of the revenue to warrant revision. 4. The learned Principal Commissioner of Income Tax (Central) was not justified in passing the order u/s 263 of the Income Tax Act, 1961 as the order passed u/s 143(3) r.w.s 153A of the Income Tax Act, 1961 was passed after proper enquiry on the facts and circumstances of the case and following the Jurisdictional High Court judgement in case of Lancy Constructions. 5. The learned Principal Commissioner of Income Tax (Central) erred in passing the order u/s 263 of the Income Tax Act, 1961 with the direction to make thorough verification of issues/evidences/documents which are not unearthed or found during the cour....
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....appeal before this Tribunal was not intentional and deliberate and grave injustice would be caused to assessee, if appeals are not admitted. Ld.CIT.DR on the contrary, vehemently argued for the appeals to be dismissed in limne. 3. We have perused submission by assessee in the affidavit. Hon'ble Supreme Court in Collector, Land Acquisition vs. Mst. Katji & Ors reported in (1987) 167 ITR 471 held that, when substantial justice and technical consideration are pitted against each other, cause of substantial justice deserves to be preferred. Hon'ble Court has held that, there is no presumption that delay is occasioned deliberately or on account of culpable negligence or on a malafide, and that litigation does not stand to benefit by resorting to delay, in fact he is on serious risk. 4. In various cases Hon'ble Supreme Court and Hon'ble High Court's time and again laid down principles that, there should be a liberal, pragmatic, justice oriented and non-pedantic approach while considering the application of condonation of delay. The term "sufficient cause" should be construed liberally and that substantial Justice being paramount and pivotal, technical consideration should not be g....
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....eing prior to insertion. He placed reliance on decision of Hon'ble Supreme Court in case of NTPC Ltd. vs.CIT, reported in 229 ITR 383. 7. We are convinced that this additional ground of appeal is purely legal ground emanating from facts available on record only. The admission of this ground does not require any further investigation into the facts. This has been fairly conceded by Ld.CIT.DR also. So this ground, being purely legal ground, is entertainable and admissible for hearing as per the provisions of Rule 11 of the ITAT Rules. Accordingly, following decisions of Hon'ble Supreme Court in case of NTPC Ltd. vs.CIT, reported in 229 ITR 383 and decision of Hon'ble Delhi High Court in case of Jute Corporation of India vs. CIT reported in 1991 AIR 241, we are inclined to admit the Additional Ground nos:12-13. Brief facts of the case are as under: 8. Separate assessment orders for all years under consideration have been passed by Ld.AO on 29/12/2016, under section 143(3) read with section 153A of the Act. On perusal of assessment order, it is noted that, search action under section 132 was conducted on Sh. K Muniraju and others (group) on 09/10/2014. 9. Consequentially, notice u....
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....egard, it is seen from the assessment order that no incriminating material has been brought on record in support of the additions which have been made. The Jurisdictional High Court judgment in the case of CIT. vs. Lancy Construction 383 ITR 168 Is the later judgment which is' being followed by the Bangalore Tribunal. Therefore, following judicial discipline, I hereby allow the above grounds of appeal. In the result, the appeal of the appellant is allowed." 12. Be that as it may, Ld.Pr.CIT sought to revise assessment orders for all assessment years under consideration, and issued separate notice u/s.263 on 04/03/2019 to assessee. Ld.AR submitted that, in notice issued, Ld.Pr.CIT, recorded that, Ld.AO did not examine payments made by assessee in cash for purposes of buying lands which was claimed as expenditure for arriving at direct income from sale of land, and whether such expenditure paid in cash attracts provision of section 40A(3) of the Act. He also noted that, Ld.AO neither examined nor made any enquiries regarding the same during assessment proceedings. 13. Ld.AR submitted that for years under consideration, Ld.Pr.CIT sought to revise assessment order for verifyin....
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....e order of the Assessing Officer passed u/s 153A of the Income Tax Act, 1961. 2. The Delhi Tribunal in case of Lord Krishna Dwellers (P) Ltd. Vs DCITITA No. 5294/DEL/2013 and 2403/DEL/2014 stated that "the transactions found in the sale deeds are duly recorded in the regular books of account of the assessee. The Assessing Officer has not pointed out any defect in the said transactions and also Assessing Officer has neither doubted the genuineness of the transaction nor he has doubted the identity of the payees. Hence-mechanical invocation of provisions of section 40A(3) could not be mechanically. The intention behind the provision of section 40A(3) of the Income Tax Act, 1961 has to be looked into. Section 40A(3) was inserted by the Finance Act, 1968 with the object of curbing the expenditure in cash and to counter tax evasion. The CBDT Circular No 6P dated 6.7.1968 reiterates this view that this provision is designed to counter evasion of a tax through claims for expenditure shown to have been incurred in cash with a view to frustrating proper investigation by the department as to the identity of the payee and reasonableness of the payment.,. Explanation 2 to Section 263.of ....
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....der of the Assessing Officer is merged with the order of the CIT(A), in all respect and for all issues, then CIT has no jurisdiction to revise the order u/s 263 of the Income Tax Act, 1961. II 5. Section 153D states that 'No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of] section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 1538, except with the prior approval of the Joint Commissioner. [Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or] Commissioner under sub-section (12) of section 144BA.]" In view of the above scenario and also evaluating the proposition led down in Madras and Karnataka High Court in case of Laxmi Jewellery Vs DCIT 252 ITR 712 Madras and Rishabchand Bhansali Vs DCIT 267 ITR 577 Karnataka cited in the context of Section 158BG of the Income Tax Act, 1961. The order passed by the Assessing O....
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....xmi Satranarayana Oil Mills vs. CIT 367 ITR 200 (T & AP) 2. Marigold Merchandise (P) Ltd. in ITA No.5170/Del/2014 dated 1110912017 3. Harshila Chordia vs. ITO 298 ITR 349 (Raj) And also, the assessee relied on the judgment öf.High Court of Delhi in case of R.C. Goyal Vs. CIT in ITA N6.636 of 2012. The above said judgments are squarely applicable to the facts of the Assessee's case. In view of the above submission Your Honour is requested to drop the proceedings initiated u/s 263." 15. Thereafter, on 26/03/2019, Ld.Pr. CIT passed impugned order by observing as under: "7. I have considered the submissions of the assessee and duly gone rough the records available and facts of the case, as also the legal position in this regard. 8. At the outset, the fact that the cash payments were made in acquiring the lands and such payments in arriving at the business income is established on record and there is no dispute whatsoever by the assessec in this regard. It is also a fact that the impugned cash payments prima facie attract the provisions of section 40A(3) of the Act, wherever the same exceeds Rs. 20000/-, subject to other conditions laid down therein. It is also a....
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....ng the same, we are of the considered view that the reasons assigned by the Tribunal are erroneous. Firstly, the judgment reported in CANARA HOUSING DEVELOPMENT COMPANY was riot even considered in Lancy Construction's case Seconding, Lancy's case was dismissed at the stage of admission without even a notice to the Assessee. The High Court in the case of LANCY CONSTRUCTIONS, was of the view that no substantial question of law would arise for consideration in the appeal. Therefore, in the absence of any substantial question of raw, the question of admitting the appeal would be inappropriate. A judgement of the court becomes binding only when a question arises for consideration, is contested by both sides and thereafter findings are recorded by the Court. None of these conditions 1taue been fulfilled. There is no notice issued to the other side. No question of law has been determined. The appeal was dismissed, as being bereft of any substantial question of law. Therefore, the judgment reported it Lancy's case cannot he said to be applicable in law or that it is binding for any reason whatsoever. The reliance placed by the Tribunal on the judgment in Lancy's case is mispl....
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....s clearly attracted in this case as the order is passed without making inquiries or verification which should have been made and hence it has made the assessment order passed not only erroneous but also prejudicial to the interests of revenue. Accordingly, the impugned assessment order is set aside with a direction to the Assessing Officer to make requisite inquiries and proper verification with regard to the issues mentioned above and redo the assessment de-novo after due consideration of the facts and law in this regard. The assessee is at liberty to adduce the facts as deemed relevant before the assessing officer at the time of assessment proceedings in consequence to this order and the Assessing officer shall allow the assessee adequate opportunity of being heard and to make relevant submissions." 16. Aggrieved by direction issued by Ld.Pr.CIT, assessee filed appeal before this Tribunal. 17. At the outset, Ld.AR submitted that, Additional Ground may be considered, as it goes to the root cause of impugned order. He submitted that, reason stated by Ld.Pr.CIT, forms part of clause (a) of Explanation 2 to section 263 (1) of the Act, which was inserted by finance act 2015 w.e.f. 0....
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....; Bench in case of Krishna Kumar Singhania Vs Dy. CIT LT(SS) Appeal No. 104 to 112 (Kol) of 2017 author of judgment Sri. N.V. Vasudevan 3M & M. * Indore ITAT in case of Omprakash Gupta Vs ACIT IT(SS)A.No.277 to 2811Ind/2017, 283 to 2871Ind/2017 * Delhi Bench ITAT in case of ACIT Vs SMC Power Generation Ltd in ITA No.33951Del/2015 CO No.4361DeI/2015 * Mumbai ITAT 'E' Bench in case of Dy.CIT Vs Sopariwala Exports in ITA No.3037, 3038, 3040 and 3077/Mum/2014 * ITAT Amritsar Bench, Jalandhar Camp in case of Sanjana Mittal Vs Dy CIT in ITA No.487/Asr/2018 21. On the contrary, Ld.Standing Counsel appearing for Department submitted that, in case of Malabar Industrial Co. Ltd. vs. CIT reported in (2000) 243 ITR 83, Hon'ble Supreme Court held that, there must be two conditions, namely order of assessment is erroneous, and that, the order of assessment is prejudicial to the interests of Revenue, which must be satisfied before Ld.Pr.CIT invoked his powers under Section 263 of the Act. Ld.Standing Counsel appearing for Department submitted that, assessing officer while passing assessment orders for all years under consideration did not verify huge expenditure made in cash by a....
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....to the revenue. At this juncture, we agree with argument advanced by Ld.Standing Counsel that if interpretation advanced by Ld.AR is accepted, all decisions passed by Hon'ble High Courts across the country and Hon'ble Supreme Courts, upholding orders passed under section 263 for no enquiry, will have to be considered redundant. This cannot be the intention of legislature. In our opinion, Eplanation 2 is clarificatory in nature, as it expressly specifies circumstances under which Ld.Pr.CIT could invoke section 263. Provisions of Section 263 was considered by Hon'ble Supreme Court in case of Malabar Industrial Co. Ltd. v. CIT (supra). It was held by Hon'ble Supreme Court that the phrase 'prejudicial to the interests of the revenue', has to be read in conjunction with an erroneous order passed by Assessing Officer and every loss of revenue as a consequence of such order of the Assessing Officer has be treated as prejudicial to the interest of revenue. At this juncture we also refer to decisions of Hon'ble Supreme Court in case of Ram Pyari Devi Sagar Vs. CIT reported in (1968) 67 ITR 84 and Taradevi Agarwal Vs. CIT reported in (1973) 88 ITR 323, wherein, it is held that, mere....
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....d.Standing Counsel submitted that reliance is placed by Ld.AR on CIT vs Lancy construction (supra) passed by Hon'ble Karnataka High Court. He further submitted that, Hon'ble Karnataka High Court in (GMR Energy Ltd.,) in ITA No. 358-360 of 2018 by order dated 08/01/2019 held that, view taken by coordinate bench of Karnataka High Court in Lancy construction (supra) is without considering decision in case of Canara Housing Development Company reported in 62 taxmann.com 650. Hon'ble Karnataka High Court, held the law expressed in Lancy construction (supra) case is no more a good law. He thus submitted that the ratio cannot be followed pursuant to view taken by Hon'ble Karnataka High Court in case of GMR energy (supra). 28. On perusal of decisions relied, we note that, facts are not similar to that of assessee. Most of these decisions( at sl.no. (a) to (i) refers to proceedings under section 153A of the Act, where there was no seized material based on which, certain additions were made in an unabated assessment. These decisions do not consider situation of no enquiry by Ld.AO on any issue. 29. In case of M/s Rajeesh exports Ltd vs principals CIT (supra), relied by Ld.AR, in identical ....
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....ct u/s 143(3) r.w.s 153A. On an appeal by assessee before Ld.CIT (A), we note that assessee challenged only disallowances made by Ld.AO, under the head capital gains. 34. Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT (supra) held that: "There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind." 35. Further Hon'ble Delhi High Court in the case of CIT v. Sunbeam Auto Ltd., reported in (2010) 189 Taxman 436 has held that; "The Assessing Officer in the assessment order is not required to give a detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see whether there was application of mind before allowing the expenditure in question. If there was any inquiry, even inadequate, that would not by itself give occasion to the C....