TaxTMI 
TaxTMI 
TaxTMI 
2021 (5) TMI 831
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.... issues which are not part of revision order. 2. The learned CIT has also erred treating the assessment order as erroneous and prejudicial to revenue on account of issue of booking advances from Shamco of Rs. 10.00 Lakh and to hold that provision of 68 do apply to advances with the same force & the learned CIT has also erred in setting aside order for all advances which are not part of show cause notice. 3. The learned CIT has also erred treating the assessment order as erroneous and prejudicial to revenue on account of issue of loan from Shri Pratapchandra Naik and has also not given in specific finding after submission of documents to treat as erroneous and prejudicial to revenue. 4. The learned CIT has erred to treat the order as erroneous and prejudicial to revenue on the issue of all unsecured loans generally without differentiating in all cases and to hold that in the absence of cheque no., bank account no., bank branch address makes the confirmations invalid in eyes of law and the learned CIT has also erred to substitute his own view when the AO himself had conducted an inquiry. 5. The learned CIT has erred to treat the orders as erroneous and prejudicial to revenue ....
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....we summarize and concise the grounds raised by the assessee, as follows: " The learned PCIT has erred treating the assessment order as erroneous and prejudicial to revenue on account of the following issues: (i) Issue of booking advances from Shamco of Rs. 10.00 Lakh. (ii) Issue of loan from Shri Pratapchandra Naik. (iii) Issue of all unsecured loans. (iv) Issue of expenses & sundry creditors (v) Issue of agriculture income" 4. The relevant material facts, as culled out from the material on record, are as follows. The assessee before us is an individual and filed his return of income on 08.10.2013 declaring total income of Rs. 1,39,930/-. The assessee`s case was selected for Scrutiny and the assessment under section 143(3) of the Act was framed by assessing officer on 19.12.2014, determining total income of Rs. 2,59,930/-. 5. Thereafter, Learned Principal Commissioner of Income Tax, Valsad [in short " ld. PCIT"] has exercised his jurisdiction under section 263 of the Income Tax Act. The ld PCIT observed that assessment order framed in the assessee`s case under section 143(3) of the Act, dated 19.12.2014, is erroneous as well prejudicial to the interest of revenue and....
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....ntioned on it. Therefore, the first requirement of section 68 i.e. the identity of the cash creditor itself is not fulfilled. The other requirements of creditworthiness of the lender/cash creditor and genuineness of the transaction, needless to say, remain unexamined by the AO. (iii) Similarly, in respect of other loan confirmations, there are following defects which make the loan confirmations invalid in the eyes of law. None of the loan confirmations have the details of cheque no., bank account no., bank branch address mentioned which makes the loan confirmation, a useless piece of paper which cannot be verified with respect to its correctness in the absence of the relevant particulars of payment received from such creditors. Further, the AO has not bothered to obtain any documents in support of source of funds in respect of these unsecured loans. The third requirement of section 68 i.e. the genuineness of the transaction has not been and could never have been verified in the absence of relevant particulars in respect of the unsecured loans. Therefore, this makes the order erroneous as well as prejudicial to the interest of revenue on this issue. (iv) The AO has not made any ....
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....VLS/H./263/2016-17 Date:- 06.03.2017 To, Shri Ramjibhai Virji Joyshar, Kalpvrukh, Pali Hill, E-Road, Tithal Road, Valsad-396001 Sub:-Proceedings u/s. 263 of the I. T. Act, 1961 in your case for A. Y. 2012-13- reg. Ref:- Your letter No. Nil dated 06.03.2017. Please refer to above. 2. The contentions raised vide above referred to letter submitted by your AR Shri Bipin R. Shah, CA, and submitted during the course of hearing on 06.03.2017 are being replied to rebutted as follows: - (a) copy of ledger account is not the same thing as confirmation in respect of advance claimed to have been received from M/s. Shamco. Legally speaking the AO has no authority to consider and accept the copy of ledger account as confirmation and the provisions of 68 do apply to the advance under consideration with the same force as in the case of an unsecured loan. (b) The loan confirmation from Shri Pratapchandra P. Maik without containing the PAN particulars remains a deficient document and does not qualify to be treated as a loan confirmation to meet the requirements of section 68 unless it is specifically ....
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....he above, the contention raised by you are without any basis and you are required to submit the documents in respect of which the assessment order of the AO has been found to be erroneous and which has been mentioned in para-4(i) to (v) of this office notice u/s. 263 dated 16.02.2017; The next date of hearing in your case is being fixed on 10.03.2017 at 3.00 P.M. at the request of Shri Bipin R. Shah, CA and your AR. [Satbir Singh] Pr. Commissioner of Income Tax Valsad" 7. In response to the above show cause notice, the assessee filed some details before PCIT, vide letter dated 10.03.2017. However, the assessee did not file the entire details and documents asked by ld PCIT, therefore, ld PCIT asked the assessee to submit remaining documents and details. The assessee submitted remaining details and documents on 22.03.2017 enclosing the loan confirmations and copies of bank statement in respect of two parties namely Purushottam D. Bhanushali and Shambhuram Hariram Ratda. No bank statement in respect of the other two parties whose confirmations were filed namely, Chagbai G. Joyshar and Jyotiben B. Bhaunshali, were filed. In these cases, only the loan confirmations have been file....
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....ish the documents in support of sources of funds, and the AO also did not ask for further details/question about the sources of funds, the order of the AO became defective/erroneous on account of absence of any inquiry by the AO which was mandated in the facts and circumstances of this case. (iv) Except that the amount of agricultural income is small, no documents have been filed which could support the factum of assessee having received the agricultural income of Rs. 94,700/-. The AO should verify the fact. While doing so, it must be kept in mind that the mere ownership of land does not mean that the assessee has actually carried out the agricultural operations. Therefore, the AO should look into the purchase of agricultural inputs, carrying out of tilling and other agricultural operations and sale of agricultural etc. so that the claim of the assessee can be verified for acceptance/rejection. (v). The expenses debited to Profit and Loss accounts and sundry creditors for expenses and contract should be examined by the AO after obtaining relevant details from the assessee. 9. Therefore, in view of the above issues, which were not examined by the assessing officer, the ld PCIT he....
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....as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. We derive support for the proposition as stated above from the decision of the Hon'ble Delhi High Court in the case of Gee Vee Enterprises 99 ITR 375 (Del). 14. Since in the present case ld PCIT has exercised jurisdiction u/s 263 of the Act on th....
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....00/- per month for the whole family. The total household expenses as per the estimate comes to Rs. 1,20,000/-. As such, an addition of Rs. 1,20,000/- is made on account of low household withdrawal to the total income of the assessee. 5. Subject to the above remarks and after discussion, the total income is computed as under:- Total Income as per computation of Income. Rs. 1,39,930/- Add: Addition on account of low house hold withdrawal Rs. 1.20.000/- Total Income Rs. 2,59,930/- Agriculture Income (for rate purpose) Rs. 94,700/- 15. We note that there is no whisper in the above assessment order, to discuss and examine the issues raised by the ld PCIT in his 263 order. The ld PCIT has raised the following issues in his 263 order, which are again reproduced below for ready reference: (i) Issue of booking advances from Shamco of Rs. 10.00 Lakh. (ii) Issue of loan from Shri Pratapchandra Naik. (iii) Issue of all unsecured loans. (iv) Issue of expenses & sundry creditors (v) Issue of agriculture income" Thus, it is abundantly clear that assessing officer did not discuss and verify the above issues, in his assessment order framed under section 143(3) of the Act....
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....T has given direction in general for all advances without specifying any specific name,difference between all advances and reason for treating as Erroneous and prejudicial. LOAN FROM PRATAP NAIK YES NO 250000 Though specific show cause notice issued for above party but in direction no specific name is mentioned & reason for treating as Erroneous and prejudicial is also not mentioned. LOAN FROM JAYABEN NO NO 230000 The issue in show cause was only regarding loan from four loan parties namely 1) PARSOTAM BHANUSHALI ,2)SHABHURAM,3)CHAGB AI, 4)JYOTIBEN (in para 7 of AO) The PCIT has given direction in general for all loans without specifying any specific name in final direction but at para 7 name of loan parties are mentioned which does not contain the name of Jayaben anywhere in the revision order and reason for treating as Erroneous and prejudicial is not mentioned anywhere in the Revision Order. AGRICULTURE INOCME YES YES 94,700 By way of the above chart, ld Counsel wants to demonstrate that some of the issues shown in above table, were not part of the notice of the ld PCIT under section 263 of the Act, therefore, ld PCIT ought not to have given dir....
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....ipin R. Shah, CA attended the office of ld PCIT on 10.03.2017 ( vide para no.6 of PCIT order). Then after, ld PCIT issued other notice to assessee on 20.03.2017, In response to this notice, AR of the assessee, Shri Bipin R. Shah, CA attended the office of ld PCIT on 23.03.2017 ( vide para no.7 of PCIT order). We note that these all notices issued by the ld PCIT covered all the issues raised by the ld PCIT under section 263 of the Act and AR of the assessee was aware about all these issues and in fact submitted reply to the ld PCIT during 263 proceedings in respect of these impugned issues. Hence, the contention of the ld Counsel for the assessee that these issues were not part of the show cause notice under section 263 of the Act, is not acceptable, in the light of the bare facts narrated above. 20. The contention of the ld Counsel that Ld PCIT has issued notice only for "Loans" and not for "Advances", is not tenable. We note that ld PCIT has found out specific mistakes in the assessment order framed by the assessing officer. The ld PCIT has used the terminology "advance received" which is nothing but "unsecured loans", vide para 4(i) of PCIT order. Therefore, to use the different....
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.... are different; the first would comprehend a prior notice detailing the specific grounds on which revision of the assessment order is tentatively being proposed. Such a notice is not required. What is contemplated by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. Reference in this regard may be illustratively made to the decisions of this Court in Gita Devi Aggarwal vs. Commissioner of Income Tax, West Bengal and others1 and in The C.I.T., West Bengal, II, Calcutta vs. M/s Electro House2. Paragraph 4 of the decision in The C.I.T., West Bengal, II, Calcutta vs. M/s Electro House (supra) being illumination of the issue indicated above may be usefully reproduced hereunder: "This section unlike Section 34 does not pre- scribe any notice to be given. It only requires the Commissioner to give an opportunity to the assessee of being heard. The section does not speak of any notice. It is unfortunate that the High Court failed to notice the difference in language betwe....
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....a notice proposing the revisional exercise is given to the assessee indicating therein broadly or even specifically the grounds on which the exercise is felt necessary. But there is nothing in the section (Section 263) to raise the said notice to the status of a mandatory show cause notice affecting the initiation of the exercise in the absence thereof or to require the C.I.T. to confine himself to the terms of the notice and foreclosing consideration of any other issue or question of fact. This is not the purport of Section 263. Of course, there can be no dispute that while the C.I.T. is free to exercise his jurisdiction on consideration of all relevant facts, a full opportunity to controvert the same and to explain the circumstances surrounding such facts, as may be considered relevant by the assessee, must be afforded to him by the C.I.T. prior to the finalization of the decision. 12. In the present case, there is no dispute that in the order dated 20th March, 2006 passed by the learned C.I.T. under Section 263 of the Act findings have been recorded on issues that are not specifically mentioned in the show cause notice dated 7th November, 2005 though there are three (03) issue....