TaxTMI 
TaxTMI 
2018 (2) TMI 2025
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....others 41,75,65,793 2 Capital credit balance in the firm 9,95,81,999 3 FDs, PF and misc 49,91,897 The Assessing Officer while completing the assessment has failed to examine the issue as to why this amount has not been offered to tax. It is also observed that assessee has claimed deduction in respect of interest paid on ICICI loan at Rs. 11,21,756/- against the income from house property. However, Assessing Officer failed to examine the utilisation of loan and its allowability as deduction while computing the income from house property. During the course of search at the premises of Ms.Priti Milan Mehta, certain pages were seized out of which page 118 to 127 pertain to Swiss Bank Account statement with JP Morgan in the name of the assessee. This particular bank account with JP Morgan was not disclosed by the assessee in his return of income filed u/s.139 or u/s.153A of the Act. The Assessing Officer failed to examine the said mentioned bank account and tax the undisclosed income. The Assessing Officer was given show cause notice and assessee has replied as under:- "3. The assessee submitted his explanation through his authorized represe....
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....be quashed and the assessment order of the A.O dated 18.06.2015 may be restored. Ground No. 2:- On the facts and in the circumstances of the case and in law, the Hon'ble Principal Commissioner of Income Tax (Central)-I erred in holding that the assessment order passed by the Ld. AO u/s. 153A r.w.s 143(3) of the Act dated 18.06.2015 is erroneous and prejudicial to the interest of the revenue and hence set aside the appellant case back to the Ld. A.O. for making a fresh assessment. The appellant prays that the said action of Hon'ble Principal CIT be may kindly be quashed. Ground No. 3:- On the facts and in the circumstances of the case and in law, the Hon'ble Principal Commissioner of Income Tax (Central)-I erred in holding that the Ld. A.O. has failed to examine Goodwill credited from GuficHira Construction amounting to Rs. 3,76,98,585 and setting aside the appellant's case back to the Ld. A.O. for making a fresh assessment of such issue. The appellant prays that the said action of Hon'ble Principal CIT be may kindly be quashed. Ground No. 4:- On the facts and in the circumstances of the case and in law, the Hon'ble Principal Com....
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....pleted before the date of search. The assessment for such assessment years was therefore non-abated as time limit for issuance of notice was already expired before the date of search.As per the said provisions, the Assessing Officer had no jurisdiction to make additions in respect of non-abated years i.e. years for which assessment were completed u/s 143(3) of the Act or time limit for issuing notice u/s 143(2) had expired except if the additions were based on incriminating material found during the course of search. As per the said provisions, the Assessing Officer had no jurisdiction to make additions in respect of non-abated years i.e. years for which assessment were completed u/s 143(3) of the Act or time limit for issuing notice u/s 143(2) had expired except if the additions were based on incriminating material found during the course of search. The learned AR also submitted that no incriminating material was found during the course of search that took place in case of assessee with respect to the above issues at the assessee's premises. Hence, in absence of incriminating material, the Assessing Officer could not have made any additions on the above issues. The issue is now se....
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....der u/s.143(3) r.w.s.153A of the Act cannot be revise without revising the approval of Addl. CIT. The learned AR for this proposition relied upon the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar in I.T.A No.192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT u/s.153D, cannot be subjected to revision u/s.263 of the Act. Therefore, it was submitted that since the CIT has not revised the approval of Addl. CIT in the present case, the CIT could not have revised the order passed by Assessing Officer u/s. 143(3) r.w.s 153A of the Act. In this proposition the CIT has relied upon the decision of:- 1. Hon'ble Allhabad High Court in case of CIT Vs. Dr. Ashok Kumar in ITA No.192 of 2000. 2. Tribunal's judgement in case of Trinity Infra Ventures Ltd. Vs. DCIT CC 2(1) in ITA No.584-589/Hyd/2015 dated 04.12.2015 3. Tribunal's judgement in case of Dhariwal Industries Ltd. Vs. CIT in ITA Nos.1108-1113/Pn/2014 dated 23.12.2016. 8. The learned AR submitted that CIT has no CIT has not conducted any enquiry before directing the Assessing Officer to decide the issues afresh. It was submitted that a sho....
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....IT that since, this account was not disclosed by the assessee in his return of income the Assessing Officer had not examined the said bank account and the order was erroneous and prejudicial to interest of revenue and he directed the Assessing Officer to examine the issue afresh. In respect of this the learned AR submitted that certain allegedly incriminating documents were found from the search conducted in premises of Ms.Priti Milan Mehta 11.03.2014. It was submitted that Ms.Priti Milan Mehta is ex-wife of assessee. They were divorced on 04.09.2009. It was submitted that the documents were not found from the search conducted in case of assessee. Hence, with respect to the current assessment year, the Assessing Officer would have no jurisdiction to make any addition pertaining to the said bank account since the said document has not be found during the course of search conducted in case of assessee. The learned AR submitted that the Assessing Officer has to assesses the income found during the course of search S. 132 of the Act conducted in case of assessee. On a conjoint reading of section 153A and section 132 of the Act, it is evident that the purpose of section 132 of the Act i....
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....o the assessee. After recording the said satisfaction, the Assessing Officer of Ms.Priti Milan Mehta should have forwarded the documents belonging to the assessee to the Assessing Officer in case of assessee. The Assessing Officer in case of assessee should have recorded separate satisfaction that the said document belongs to assessee. The recording of such satisfaction the Assessing Officer in case of assessee should have completed the assessment u/s 143(3) r.w.s. 153C of the Act. The correct course of action for making addition, if any, on this issue would be making assessment u/s 143(3) r.w.s. 153C of the Act. Hence, the Assessing Officer in case of assessee could not have made this addition while passing the assessment order u/s 143(3) r.w.s. 153A of the Act since this addition could only have been made if the assessment order was passed u/s 143(3) r.w.s. 153C of the Act after following the above mentioned procedure. Since the Assessing Officer could not have made this addition in the assessment order passed u/s 143(3) r.w.s. 153A of the Act, non-consideration of this issue in the assessment order would not make the order erroneous or prejudicial to the interest of assessee. ....
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....closed income) of 6 years. In the case of Sanjay AggarwalVs. DCIT, ITAT, Delhi has addition in a search assessment for a A.Y. which is not pending can be made only if incriminating material is found during search. The learned DR is relied upon the decision of Hon'ble Supreme Court in the case of Rajmandir Estates (P.) Ltd. Vs. Pr.CIT [77 taxman.com 285 (SC)] and submitted that the Assessing Officer has completed assessment without holding requisite investigation except for calling for records. Commissioner passed order under section 263 of the Act and opined that this could be a case of money laundering which went undetected due to lack of requisite enquiry into increase and it is nonapplication of mind of Assessing Officer. The action of 263 of the Act was upheld by the Hon'ble Supreme Court of India. The learned DR also relied upon the decision of Hon'ble Delhi High Court in case of CIT Vs. Ashok Logani [2011] 11 taxmann.com 208 wherein it is held that the Assessing Officer vide passing the order the assessment becomes final and no appeal can be filed against the order of Assessing Officer by the revenue department. Limited jurisdiction is given to the CIT to revise such orders, ....
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.... (d) the order has not been passed in accordance with any decision which is prejudicial to the assesses, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] It is pertinent to mention here that "Explanation 2" has been amended by Finance Act, 2015 (w.e.f.-01/06/2015). Therefore, if the order u/s. 263 passed either before or after 01/06/2015, the words 'declared' and 'shall be' are remained in the framework of the Act. Therefore, the intention of the legislature was clear that the Commissioner of Income Tax has the power to make revision of the order of the AO if it is erroneous and prejudicial to the interest of the revenue. III) It is worth mentioning that that the section 263 does not invalidate the order of the Pr. Commissioner of Income Tax. IV) Reliance is also placed SC decision in the case of C.I.T v/s. Amitabh Bachchan reported in [2016] 69 taxmann.com 170 (SC), wherein the powers of Pr Commissioner of Income Tax has been explained. This is the latest legal position; therefore, the same may be taken note of. V) The various objection raised by the assessee during t....
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....ase of non-abated years, additions can be made only on the basis on incriminating material found during the course of search pertaining to those additions in respect of non-abated years. In respect of Canara Housing Development and Co. and submitted this decision has been considered by the Hon'ble Delhi High Court in case of CIT Vs. Kabul Chawla [380 ITR 573 (Del) has considered. Moreover, in case of Hon'ble Karnataka High Court, the Hon'ble Delhi High Court has considered the decision of Hon'ble Karnataka High Court. Learned AR submitted that the Jurisdictional High Court in case of CIT v. All Cargo Global Logistics Ltd (375 ITR 645) has decided in favour of the assessee and wherein it is held that in case of non-abated additions can only be made on the basis of incriminating material found during the course of search pertaining to those additions. In case of CIT Vs. Ballarpur Industries Ltd. [2017] Tax Pub (DT) 4015 (Bombay High Court / 85 taxmann.com 10) relied by the Assessing Officer. Learned AR submitted that the reason for upheld the CIT u/s.263 of the Act was that the assessing officer had failed to cause inquiry. In the present case, all the details were filed before CIT a....
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.... 2011-12 AY 2012-13 1. Return of income filed u/s. 139(1) of the Act 30.09.2008 29.09.2009 29.09.2010 29.09.2011 28.09.2012 2. Date of search 11.03.2014 3. Due date for selecting the case for scrutiny 30.09.2009 30.09.2010 30.09.2011 30.09.2012 30.09.2013 4. Date of scrutiny assessment u/s. 143(3) of the Act Not selected 20.08.2010 Not selected 31.07.2012 Not selected 16. Short table for issue involves in the years which reads as under:- Sr.No. Issue Ground No A.Y. 08-09 A.Y. 09-10 A.Y. 10-11 A.Y. 11-12 A.Y. 12-13 A.Y. 13-14 A.Y. 14-15 1. CIT erred in assuming jurisdiction u/s. 263 and holding that assessment completed had been made without carrying out necessary enquires and hence, the assessment order is erroneous and prejudicial to the interest of the revenue. 1 2. CIT erred in setting aside the assessee's case back to the Ld. A.O. for making a fresh assessment. 2 3. Amount received from partnership firm upon retirement 3 - - - - - - 4. Amount credited in capital account - ....
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.... issue is settled by the Hon'ble Bombay High Court in case of CIT v. All Cargo Global Logistics Ltd (375 ITR 645) wherein, it is held that in respect of non-abated years, additions can only be made on the basis of incriminating material found during the course of search pertaining to those additions. We find that the Assessing Officer had no jurisdiction to make additions on the above issues, non-consideration of those issues in the assessment order would not make the assessment order passed u/s 143(3) r.w.s. 153A of the Act erroneous and prejudicial to the interest of Revenue. Hence, the CIT could not have disturbed the said assessment order by exercising jurisdiction u/s 263 of the Act. 19. Further it is observed that in the case of Jitendra Mehta v. CIT in ITA No. 1872/Mum/2015 dated 24.06.2015 also, the CIT sought to revise the assessment order passed u/s 153A of the Act on the ground that the Assessing Officer had not examined the issue of depreciation on windmill. However, the year pertaining to which assessment order was passed, being a non-abated year, addition could have been made in case any incriminating material was found during the course of search pertaining to the....
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....d perused the material placed before us including the orders of authorities below and judicial decisions relied upon by the parties.........We find form the record available before us and from the contentions of both the parties that no incriminating documents were found and seized during the course of search with respect to three loan creditors as mentioned above and therefore the issue which is not backed or supported by any incriminating document found in the search could not be added by the A.O in the assessment which is framed u/s. 143(3) r.w.s. 153A of the Act." ............................................................................................. .................... 8. Finally, in view of the ratio laid down in the above decisions, the ld. AR submitted that the assessment order passed by the A.O under section 143(3) r.w.s. 153A was not erroneous and prejudicial to the interest of the revenue and therefore revisionary powers u/s 263 of the Act were wrongly invoked and exercised by the Commissioner and prayed that the order passed by the Commissioner u/s 263 be set aside and that of A.O be restored by allowing the appeal of the assessee. 9 ......
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....tion to examine the said loan, then how the lad. Principal CIT can take a view that non examination of loan by the A.O made the assessment order as erroneous and prejudicial to the interest of Revenue. It is noted by us that the legal position has also been clarified in this regard by the co-ordinate bench of Mumbai Bench in the case of Jitendra Mehta (supra) by observing as under.... 5. This view has been followed by Mumbai Bench of the Tribunal in the case of Mrs.ShwetaAvarsekar v. DCIT (supra). Thus, from the facts of this case and legal discussion as made above, it is clear that the assessment order passed by AO cannot be held to be erroneous or prejudicial to the interest of the Revenue for the reason as has been mentioned by Ld. Principal CIT. We find that the impugned order u/s 263 is contrary to law and facts and, therefore the same is hereby quashed" 22. The decision of the Hon'ble Delhi High Court in case of CIT v. Mahesh Kumar Gupta in ITA No. 810 of 2016 dated 22.11.2016 wherein the Assessing Officer had passed the order u/s 153A of the Act in respect of nonabated year. The CIT sought to revise the order passed by Assessing Officer on the ground that the Ass....
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....roval of ACIT as per provisions of section 153D of the Act. We find that the order u/s.143A r.w.s. 153 of the Act cannot revise without revising the approval of ACIT. We find that as per the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar in I.T. Appeal No.192 of 2000 wherein it is held that the assessment order approved by the ACIT u/s.153D of the Act cannot subject to revision u/s.263 of the Act.The learned DR could not file any evidence to show that such permission was revised by ACIT in present case, therefore, CIT cannot revise the order passed by AO u/s.153 of the Act. As per section 153A of the Act. 26. Tribunal in case of Trinity Infra ventures Ltd v. DCIT CC 2(1) in ITA Nos. 584-589/Hyd/2015 dated 04.12.2015 wherein, the Hon'ble Tribunal has held that the assessment order passed u/s 143(3) r.w.s. 153A of the Act cannot be revised without revising the approval of Addl. CIT: 5.4. The Ld. Counsel for the assessee has further submitted that the assessment under section 143(3) read with section 153C was passed after getting approval of Addl. CIT under section 153D of the I.T. Act and therefore such an assessment cannot be revised with....
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....passed in terms of section 153D of the Act. 14.2 We find the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. (Supra) had an occasion to decide an identical issue and it held that the assessment order approved by the Addl.CIT u/s.153D cannot be subject to revision u/s.263 of the I.T. Act. The relevant observation of the Tribunal at Para 5.4 of the order reads as under. 28. Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl.CIT u/s.153D of the I.T. Act, therefore, respectfully following the above-mentioned decisions of the Coordinate Benches of the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s.263 of the I.T. Act in the instant case since the same has been passed with the approval of the Addl.CIT u/s.153D of the I.T. Act. We respectfully following the decision of ACIT Vs.Dr. Ashok Kumar, ITA 192 of 2000. We find that in the instant case the original approval was granted by Addl. CIT and this assessment order is cannot be revise without approval of Add. CIT. (III) CIT has not conducted any enquiry before directing the Assessing O....
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.... ii. Bassera Realtors (P.) Ltd. v CIT [163 TTJ 736 (Chandigarh)] iii. SubhlakshmiVanijya P. Ltd. v CIT (155 ITD 171) iv. CIT v Ashok Logani [347 ITR 22 (Del)] v. Rajmandir Estates (P.) Ltd. v Pr.CIT [77 Taxmann.com 285 (SC)] vi. Intas Pharmaceuticals Ltd. v DCIT [148 ITD 26 (Ahd). 33. In reply to DR's argument, learned AR submitted that in case of CIT v. Ballarpur Industries Ltd. the order passed by the CIT u/s. 263 of the Act was upheld for the reason that the assessing officer had failed to cause inquiry. It was not a case where all details were filed before CIT and the CIT had not applied his mind to the details filed by appellant. Similarly the case of SubhlakshmiVanijya P. Ltd. v CIT and CIT v Ashok Logani and Rajmandir Estates (P.) Ltd. v Pr.CIT and Intas Pharmaceuticals Ltd. v DCIT the order passed by the CIT u/s. 263 of the Act was upheld for the reason that the assessing officer had failed to cause inquiry. It was not a case where all details were filed before CIT and the CIT had not applied his mind to the details filed by appellant. In the case of Bassera Realtors (P.) Ltd. v CIT is the Hon'ble Tribunal held that the CIT had anal....
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....o provide opportunity of hearing to the assessee would show that CIT has to conduct some enquiry u/s.263 of the Act. Before coming to the conclusion that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue, we are of the view that the CIT has to apply his mind to the reply filed by the assessee during the course of proceeding u/s.263 of the Act and after due application of the mind he may proceed to direct the decide an issue denovo. The Hon'ble Delhi High Court in case of CIT v. Delhi Airport Metro Express in ITA No. 705 of 2017 dated 05.09.2017, the Hon'ble Court has held as under: "9. It is seen, in the order dated 30th March, 2016, the PCIT has proceeded by setting out the contents of SCN and the contents of reply given by the Assessee. It appears that no inquiry, as such, was undertaken by the PCIT to come to conclusion that the original assessment order was erroneous and prejudicial to the interests of the Revenue. 10. For the purpose of exercising jurisdiction under Section 263 of the Act, the conclusion that the order of the A.O is erroneous and prejudicial to the interests of the Revenue has to be preceded by ....
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....ovision. The underlying purpose of affording of such an opportunity of being heard to the assessee is to give an opportunity to him to explain as to how the order passed by the A.O on the issues on which the same is sought to be revised by the CIT, is not erroneous and prejudicial to the interest of the revenue. We are of the considered view that the very purpose of affording of an opportunity of being heard to the assessee, on the issues on which the order passed by the A.O is sought to be revised by the CIT would be lost and rendered otiose, in case the reply of the assessee explaining as to why the order sought to be revised is not erroneous and prejudicial to the interest of the revenue is not judicially deliberated upon by the CIT. We are of the considered view that it is obligatory on the part of the CIT to consider the reply of the assessee in respect of the issues on which the order of the A.O is sought to be revised by him. ....... We though are not oblivious of the fact that the view that an order passed by the A.O is found to be erroneous and prejudicial to the interest of the revenue remains within the exclusive realm of the wisdom of the CIT, but then the legislature b....
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.... a conclusion that the order passed by Assessing Officer is erroneous and prejudicial to the interest of revenue. (IV) Specific contention for Ground No 5 i.e. Undisclosed bank account with JP Morgan 41. Apart from the contention raised above, further specific submissions have been made by the appellant as certain documents were seized from the residence of Ms.Priti Milan Mehta, the ex-wife of appellant. In this connection, it is pointed out that during the course of search at the premises of Ms.Priti Milan Mehta, certain pages were seized out of which page 118 to 127 pertain to Swiss Bank Account statement with JP Morgan in the name of appellant. It was held by CIT that since, this account was not disclosed by appellant in his return of income the Assessing Officer had not examined the said bank account and the order was erroneous and prejudicial to interest of revenue and he directed the Assessing Officer to examine the issue afresh. 42. It is submitted by the Learned AR that certain allegedly incriminating documents were found from the search conducted in premises of Ms.PritiMilan Mehta 11.03.2014. It is submitted that Ms.Priti Milan Mehta is ex-wife of appellant.....
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.... or other documents". For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account...."From the above extract of the decision, it is clear that the purpose of search is to unearth incriminating documents in possession of appellant. It means that the incriminating documents should be present in the premises of appellant. It is submitted that Assessing Officer would have jurisdiction to make additions on the basis of those incriminating documents u/s 153A of the Act. Hence, it is submitted that, in respect of non-abated years, additions can only be made on basis of incriminating documents found in case of search of appellant. It is submitted that if documents are found from search in case of other person then no additions could have been made on the basis of those documents since the same cannot be considered as incriminating documents found from search conducted in case of appellant. 44. It can be inferred from the above decision that to make addition u/s 153A of the Act in respect of non-abated years, two conditions have to be fulfil....
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....e passing the assessment order u/s 143(3) r.w.s. 153A of the Act since this addition could only have been made if the assessment order was passed u/s 143(3) r.w.s. 153C of the Act after following the above mentioned procedure. Since the Assessing Officer could not have made this addition in the assessment order passed u/s 143(3) r.w.s. 153A of the Act, non-consideration of this issue in the assessment order would not make the order erroneous or prejudicial to the interest of appellant. In view of the same, we hold that the CIT would have no power to invoke jurisdiction u/s 263 of the Act. In respect of A.Y.2009-10:- 48. In respect of A.Y.2009-10, we find that this year is non-abated year therefore, our finding is similar as discussed above. We find that in A.Y.2009- 10 the search and seizure took place on 11.03.2014. Assessee was covered in the search action. As per provisions of section 153 of the Act, AO has to reassess the income of the assessee immediately preceding six years. The assessee's return was assessed u/s.143 of the Act. The assessment year therefore non-abated as the assessment was concluded u/s.143(3) of the Act before date of search. Since no incriminating mater....
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.... The purpose of search is to unearth incriminating documents in possession of assessee. It means that the incriminating documents should be present in the premises of assessee. Assessing Officer would have jurisdiction to make additions on the basis of those incriminating documents u/s 153A of the Act. Hence, additions can only be made on basis of incriminating documents found in case of search of assessee. If documents are found from search in case of other person then no additions could have been made on the basis of those documents since the same cannot be considered as incriminating documents found from search conducted in case of assessee. 53. In the present case, the document was found during the course of search in the case of third party, hence, the same could not be considered as 'incriminating document' found during the course of assessee's search. In view of the above, no incriminating document pertaining to the issues revised by the CIT was found during the course of search and hence, the proposition canvassed by assessee earlier would apply to this issue also in case of assessee hence, the Assessing Officer had no jurisdiction to make additions in respect of those i....
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....isdiction to make the addition pertaining to said bank account since the document has been not found during the course of search conducted in the case of the assessee. The AO could not have made any addition in the order passed u/s.143 r.w.s.153A of the Act. Therefore, the AO in case of assessee could not have made this addition while passing the order u/s.143(3) r.w.s.153. of the Act. Since the addition could have made if the order is passed u/s.143(3) r.w.s.153C of the Act. Since the AO could not have made this addition in respect of assessment order passed u/s.143(3) r.w.s.153 of the Act. Hence CIT has no jurisdiction to invoke section 263 of the Act. Therefore we are of the view that no inquiry was conducted by CIT setting aside the order of AO. Therefore order passed u/s.263 of the Act is bad in law. 56. Hon'ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar in I.T. Appeal No.192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT under section 153D, cannot be subjected to revision under section 263 of the I.T. Act. 57. We respectfully following the decision of Hon'ble Allahabad High Court and various Tribunal decisions, we a....