TaxTMI 
TaxTMI 
2019 (6) TMI 1608
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.... 3. The Learned Principal CIT -14, Mumbai erred in law and on the facts and circumstances of the case, in setting aside the assessment order passed u/s. 143(3) r.w.s 147 of the Income Tax Act, 1961 passed by the Learned A.O. during 1st reassessment proceeding dated 29-12-2016 and issuing directions of reassessment pursuant to the provisions of Section 263 of the I.T. Act. 4. The Learned Principal CIT - 14, Mumbai has erred in not appreciating the facts that the Learned A.O. had made all relevant enquiries and verified all related documents and specifically mentioned in the assessment which have been the focus of the order passed u/s. 263 of the Income Tax Act, which amounts to the re-appreciation of the same facts. 5. The Learned Principal CIT - 14, Mumbai has erred by not taking cognizance of Affidavit to this effect from Minaxi Suppliers Pvt. Ltd. and not appreciating the facts that during the 2nd reassessment proceeding the Learned A.O. after being satisfied with the submission of Appellant has dropped the reassessment proceeding on 28/12/2018 u/s.152(2). The order passed by the Principal C.I.T. - 14 may please be cancelled. 2. Brief facts of the ....
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....ong with the explanation 2(b) of section 147." 3. The assessing officer after considering the detail submission furnished by assessee completed the re-assessment on 29th of December 2016. The assessing officer accepted the income returned by the assessee without making any addition, while passing assessment order under section 143 (3) read with section 147 on 29th of December 2016. 4. The assessing officer again vide notice under section 148 dated 13th March 2018 reopened the assessment. The assessing officer recorded the following reasons of reopening under section 147. "Reasons for re-opening of the assessment u/s .. 147 r.w.s. 148 of I TAct 1 Name of the assessee Goldcity Properties Pvt. Ltd. 2 Address of the assessee B-123, Vrindavan, LBS Marg, Ghatkopar West, Mumbai- 400086 3 Permanent Account No. AACCG 1757H 4 Assessment Year 2011-12 5 Details of Assessing Officer having jurisdiction over the Assessee ITO 14(1 )(4), Mumbai 1. The assessee, Goldcity Properties Pvt. Ltd. is a company and as per the records the assessee has filed Return of income for A. Y. 2011-12 on 20.09.2011declaring total ....
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....6. It is, therefore, concluded that the assessee has failed to fully disclose its true and correct income for A. Y. 2011-12 as the loans and advances received by it are not explained. In view of the facts of the case as discussed above I have reason to believe that income of the assessee being unexplained loans and advances has escaped assessment. 7. Accordingly, subject to the provisions of section 148 there is a need to reassess the income of assessee which has escaped assessment in the A Y 2011- 12. Since the scrutiny assessment in this case has not been completed u/s. 143(3) of the IT. Act, but four years has expired from the end of the relevant assessment year 2011-12, kind administrative sanction of the Pr Commissioner of lncome-tax-14, Mumbai, is solicited m accordance with the provisions contained in sub-section (1) of See. 151 of the IT Act, for issue of Notice u/s 148 of the IT Act to bring to tax the escaped income and also any other income chargeable to tax which has escaped assessment which comes to notice subsequently in the course of proceedings for reassessment for that assessment year." 5. No further re-assessment order was passed or communicated to the....
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....SPL. The assessee further stated that second notice under section 148 was issued on 30.03.2018 in the name of Goldcity Property Pvt. Ltd (GPPL), a non exiting entity. M/s Goldcity Private Limited was merged with Super Gold Property Pvt Limited (SGPL) w.e.f. 01.04.2016. The reasons of reopening in the second notice were the same as was in the first notice. The assessee challenged second reopening on various grounds and filed various documentary evidences vide their submissions dated 25.12.2018. It was further stated that the reassessment has been completed twice and no adverse opinion was recorded by both the officer. The assessee contended that the assumption of jurisdiction under section 263 is wrong, when the transaction has been verified twice; therefore, the assessment order passed under section 143(3) cannot be revised. The proposed revision is merely a change of opinion and amounts to fishing inquiries. The assessee also relied on various case laws. 8. The reply of the assessee was not accepted by ld. PCIT. The ld. PCIT concluded that the contention of the assessee that the assessment was completed twice is incorrect. In the notice under section 148 dated 30.03.2018 (secon....
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....ide the assessment order passed u/s. 143(3) r.w.s 147 dated 29-12-2016 and issuing directions of reassessment pursuant to the provisions of Section 263. The AO examined all the aspect of the case and was fully satisfied about the identity, creditworthy and genuineness of the transaction with MSPL. During the assessment the A.O. had made all relevant enquiries and verified all related documents and specifically which have been the focuses of the order passed u/s. 263 of the Income Tax Act, which amounts to the reappreciation of the same facts. 10. The ld PCIT failed by not taking cognizance of Affidavit to this effect from MSPL and not appreciating the facts that during the 2nd reassessment proceeding the A.O. after being satisfied with the submission of Appellant has dropped the reassessment proceeding on 28/12/2018 u/s.152(2). The ld. AR for the assessee submits that the assessee was not communicated about the dropping of the reassessment only through the order of ld. PCIT. It was argued that in response to the notice under section 148 dated 22.03.2016, the assessee filed detailed submissions dated 21.010.2016 and again on 16.12.2016. The ld. AR submits that the copies of the s....
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.... (243 ITR 83 SC), (xii) Mehta Trading Vs CIT ( ITA No. 2838/M/2013 dated 31.10.2014, (xiii) PCIT Vs Ginger Properties (P) Ltd. (396 ITR 496 Guj), (xiv) Pyre Lal Jaiswal Vs CIT (146 ITD 555 Allahabad), (xv) Rashtriya Chemical & Fertilizers Vs CIT ( ITA No. 3625/M/2017 dated 14.02.2018, (xvi) Reliance Gas Transportation Infrastructures Ltd Vs CIT ( ITA 4746/M/2012 dated 10.01.2014, (xvii) Bhavesh Vs CIT ( ITA No. 5688/M/2014 dated 25.03.2015, (xviii) CIT Vs Fine Jewellers (India) (ITA No 296 of 2013 dated 03.02.2015, (xix) CIT Vs Anil Kumar Sharma ( 335 ITR 83 Delhi), (xx) PCIT Vs Kaizen Products (P) Ld (406 ITR 311 Delhi), (xxi) DIT Vs Jyoti Foundation (357 ITR 388 Delhi) (xxii) Narayan Tatu Rane Vs ITO (2690 & 2691/ M/2016) dated 06.05.2016. 12. The following documents were filed by the ld AR for the assessee; (i) Copy of return of income with computation of income with Audited report, (ii) Notice under section 148 dated 23.03.2016, (iii) Notice under section 142(1) dated 13.10.2016, with reasons of reopening, (iv) Reply to Notice u/s 142(1) date....
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.... deliberated on various case laws relied by ld. PCIT in the impugned order as well as by ld. representatives of the parties. We have noted that initially the return of income was processed under section 143 (1) on 11 January 2012. The assessment was reopened under section 147 on 23rd of March 2016. The assessment was reopened to examine the transaction of Rs. 7.25 crore received from MSPL. During the reassessment, the assessing officer issued notice under section 142(1) and raised specific question relating to the nature and transaction made with MSPL. The assessing officer also sought the copy of complete bank statement of the parties. The assessing officer raised the following question in its notice dated 13 October 2016. "Please submit the details of transactions made with M/s Minakshi Suppliers Pvt Ltd indicating the nature of transaction." 16. The assessee filed its reply vide reply dated 21.10.2016. Along with the reply the assessee furnished copy of the ledger of MSPL it its books for the period 04.04.2010 to 31.03.2011. The assessee specifically stated that the said amount was received as part of contribution for joint venture agreement. The assessee again vide ....
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....s stated that A.O. dropped the proceeding on 28.12.2018 under section 152(2). It was further noted by ld. PCIT that the only assessment order for reckoning is order dated 29.12.2016. After considering the reply of the assessee the ld. P CIT has taken the view that the assessing officer has completed the assessments without making proper enquiries with regard to the transaction with MSPL. As per ld. PCIT, the AO should have made further enquiries in this matter. 19. The Hon'ble Supreme Court in Malabar Industrial Co Ltd (supra) has laid down the principal that for the exercise of suo moto jurisdiction under section 263 by the CIT that the order of AO is erroneous, so far as it is prejudicial to the interest of revenue. The CIT has to be satisfied twin conditions, namely (i), the order of AO sought to be revised is erroneous and (ii) it is prejudicial to the interest of revenue. If one of them is absent- if the order of AO is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue, recourse cannot be had to section 263 (1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by ....
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....er, unless the decision is held to be erroneous. This is may be visualised where the ITO while making the assessment examines the accounts, makes enquiries, applied his mind to the facts and circumstances of the case and determine the income either by accepting the accounts for by making some estimate himself. The CIT on perusal of records, may be of opinion that the estimate made by the officer concerned was on the lower side and left to the CIT, he would have estimated the income at a higher figure than one determine by the ITO. That would not vest the CIT with power to re-examine the accounts and determine the income himself at the higher figure. This is because ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous, simply because the CIT does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the CIT the order in question is prejudicial to the interest of revenue. But that by itself would not be enough to vest the CIT with the power to suo moto revision because the first requirement, namely that the order is erroneous, is absent.....
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....s not discernible from the assessment order. The tribunal held that the Commissioner in proceedings under section 263 also had all these details and materials available before it, but had not able to point out defects conclusively in the said material, for arriving at a conclusion that particular income had escaped assessment on account of non-application of mind by the assessing officer. The Tribunal, therefore, allowed the appeal of the assessee and quashed the order of the Commissioner passed under section 263of the Act. 22. Further Hon'ble Delhi High Court in case of DG Housing Projects Ltd (supra) held that the order is erroneous is a condition which must be satisfied for exercise of jurisdiction under section 263 of Income-tax Act. The matter cannot be remitted back for fresh decision to the assessing officer to conduct further inquires without a finding that order is erroneous. The commissioner must after recording reasons hold that order is erroneous. The Commissioner cannot direct reconsideration only when the order is erroneous. An order of remit cannot be passed by the commissioner to ask the assessing officer to decide whether the order was erroneous, which is ....
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.... figure higher than the one determined by the Income tax officer. That would not vest the Commissioner with power to examine the accounts and determine the income himself at a higher figure. It is because the Income tax officer has exercised the quasi judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. . . . There must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed." 24. The Hon'ble High Court has considered the definitions given to the words "erroneous", "erroneous assessment" and "erroneous judgment" in Black's Law Dictionary and accordingly held that an order cannot be termed as erroneous unless it is not in accordance with law. An order can be termed as "erroneous" only if it is not in accordance with the law. 25. The Hon'ble Delhi High Court has also followed the above said view in the case of Sunbe....
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....ions and there would not be any point of finality in the legal proceedings. The Hon'ble Supreme Court has held in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 that there must be a point of finality in all legal proceedings and the stale issues should not be reactivated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 28. Clause (a) of Explanation to section 263 states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. In our considered view, this provision shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by ld PCIT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO vis-à-vis its reasonableness in the facts and circumstances of the case. Therefore, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 26....