TaxTMI 
TaxTMI 
2021 (8) TMI 750
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....ion of Rs. 4,50,00,000/- u/s 69A of the Act. 3. That on the facts and circumstances of the case Ld PCIT, Jalandhar -1 ('Ld.CIT') has grossly erred in law in passing order u/s 263 of the Act even though the assessment order u/s 143(3)/147 of the Act dated 26.12.2018 passed by the AO was neither erroneous nor prejudicial to interest of revenue. 4. That on the facts and circumstances of the case Ld PCIT, Jalandhar -1 ('Ld.CIT') has grossly erred in law in passing order u/s 263 of the Act, when the assessment has already been concluded by the AO u/s 143/147 of the Act after seeking explanations and making all the enquiries necessary for completion of assessment reopened u/s 148 of the Act for specific issue of amount credited Rs. 4,50,00,000/- in assessee's bank account with PNB Industrial Area, Jalandhar. 5. that without prejudice to our aforesaid legal grounds of appeal 1 to 4, even otherwise: a) the Ld. PCIT has grossly erred in concluding that unaccounted cash belonging to the assessee was deposited in the bank account of Saradjyot singh. b) the LD PCIT has grossly erred in disregarding the fact that loan was repaid by the assessee by de....
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....ved notice dated 29.03.2018 issued u/s 148 of the Act, on 30.03.2018. it may relevant to mention here that reasons for reopening were provided to the assessee vide letter dated 20.3.2018 (page 204) wherein it was mentioned that "a TEP in assessee case was received from the investigation wing through the Joint Commissioner date 27/3/2017.As per Bank statements of assesses account no 024200PC00037676 an amount of Rs. 4.5 cr has been credited in it on 10/7/2010." 4. Appellant vide letter dated 03.04.2018 informed the Assessing Officer that return already filed be treated as return in response to notice u/s 148 of the Act. 5. Thereafter the AO had issued the notice under section 142(1) of the Act on 8.8.2018 and 143(2) of the Act were received. 6. During assessment proceedings, information was filed vide letters dated 05.10.2018, 09.10.2018, 30.11.2018. the information was filled by the assessee credit entry of same date in the account of the assessee includes copy of loan account showing the entry of loan amount of Rs. 4.5 cr in account number 0242002101004903 , letter dated 21.9.2013 whereby bank had informed to the official of the respondent that " It is true from the recor....
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....assed on 28.12.2018 in the light of the discussion made above and charge interest as per Income Tax Act, 1961." Submissions of the AR 14. AR for the assessee had submitted that order u/s 263 of the Act was passed in mechanical manner without application of mind since in the show cause notice as well as in the order u/s 263 of the Act assessment order dated 18.12.2018 has been held to be erroneous in so far as it is prejudicial to interest of revenue whereas there is no assessment order dated 28.12.2018. it was submitted that the AO had passed the order on 26/12/2018 and not on 28/12/2018. 15. Ld Ar had submitted that based on anonymous complaint that there were credit entries of Rs. 4,50,00,000/- in account no. 0242002101004903 and 024200PC00037676 maintained with Punjab National Bank, notice u/s 133(6) of the Act was received by the Appellant which was issued by Assessing Officer after obtaining prior approval of Ld. Principal Commissioner of Income Tax-1, Jalandhar. That Appellant vide letter dated 19.03.2018 filed reply to notice u/s 133(6) of the Act wherein it was explained that Appellant has raised a working capital term loan of Rs. 4,50,00,000/- which was debited in....
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....x-1, Jalandhar wherein following documents were enclosed. a) Letter dated 06.08.2019 to bank towards clarification of whether cash deposited by the firm on 06.07.2010. (Paper Book Page No. 123 to 124) b) Reply dated 08.08.2019 from bank towards confirmation that no cash has been deposited by the firm on 06.07.2010. (Paper Book Page No. 125) c) Affidavit by proprietor of the firm. (Paper Book Page No. 126-127) III. Written Submissions dated 21.08.2019 filed before Principal Commissioner of Income Tax-1, Jalandhar wherein following documents were enclosed. a) Balance Confirmation Certificate. (Paper Book Page No. 129) b) Bank Statement for the period 30.06.2010 to 10.07.2010. (Paper Book Page No. 130 to 163) IV. Written Submissions dated 21.08.2019 filed before Principal Commissioner of Income Tax-1, Jalandhar wherein copy of complaint filed against bank officials enclosed. V. Written Submissions dated 29.08.2019 filed before Principal Commissioner of Income Tax-1, Jalandhar wherein following documents were enclosed. a) Copy of transactions recorded. (Paper Book Page No. 185 to 186) b) Copy of b....
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....l power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous. It may be said in such a case that the order in question is prejudicial to the interest of the revenue. But that by itself would not be enough because the first requirement, namely, that the order is erroneous, is absent. Similarly if an order is erroneous but not prejudicial to the interest of the revenue, then the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject - matter of revision because the second requirement must be fulfilled. Ar had placed reliance on Malabar Industrial Co. Ltd. (243 ITR 83(SC) . 20. It was further submitted that if an AO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by CIT simply because according to him the order should have been written more elaborately. Cases may be visualized where the AO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The CIT, on perus....
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.... the action of the AO cannot be impugned under s.263 of the Act. Further, the Hon'ble Gujarat High Court in the case of CIT vs. Arvind Jwellers 259 ITR 502 (Guj) has held that provisions of Section 263 of the Act cannot be invoked to correct each and every type of mistake or error committed by the AO. Further, reliance is placed on the decision of Hon'ble Gujarat High Court in the case of CIT vs. R. K. Construction Co. (2009) 313 ITR 65 (Guj) for the proposition that where the AO has taken a particular view on the basis of evidences produced before him, it is not open for the Commissioner, in the revisional proceedings under s.263 of the Act, to take a different view on the same material. The AO in the instant case has specifically examined all the issues raised by Pr.CIT albeit not probably in the manner in which the Pr.CIT would have liked but this cannot be the ground for assumption of jurisdiction under s.263 of the Act. Thus, the assessment order under review cannot be labelled as erroneous in so far as prejudicial to the interest of the Revenue within the terms of Section 263 of the Act in the circumstances so narrated. 22.1 The condition precedent to the exercise of juris....
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....CIT (2010) 195 Taxman 63 (Patna)(SMC).Whether CIT has suo motu powers to pass the Order by merely stating that Assessing Officer has not properly enquired - Same materials were there before the Assessing Officer who had passed the impugned Order by applying his mind - Recourse to section 263(1) cannot be taken if the Order is erroneous but not prejudicial and vice versa - Held, provision 263 has not been rightly invoked.CIT vs. Vikash Polymers (2010) 236 CTR 476 (Delhi) 22.5 Merely because an assessment order does not refer to queries raised by Assessing Officer during course of scrutiny and response of assessee thereto, it cannot be said that there has been no enquiry and the assessment is erroneous and prejudicial to interest of revenue. CIT vs. Ashish Rajpal (2009) 180 Taxman 623 (Delhi). Order passed by Assessing Officer in accordance with law, judicial pronouncements and after considering relevant replies duly supported by evidence cannot be branded as erroneous, merely because commissioner is of other view or in his opinion order passed is weak and not a detailed order. Section 263 empowers the commissioner to have a supervisory jurisdiction and does not visualize a case o....
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....w, the decision of the Income tax officer cannot be regarded as erroneous merely because in the opinion of the Commissioner it should have been made or written in a different manner. The section does not visualize change of opinion or substitution of the judgment of the Commissioner for that of the Income tax Officer. It is axiomatic that if the order is not erroneous, it will not vest the Commissioner with the power to invoke section 263(1) of the Act. Even if he is of the opinion that the order in question is prejudicial to the interest of the revenue." 22.9 The judgment of Hon'ble Allahabad High Court in case of K.N. Agarwal Vs. C.I.T 189 ITR 769 as well as decision of Allahabad High Court in case of C.I.T. Vs Lata Sunderlal 96 ITR 310(All), the decision of the Bombay high court in case of C.I.T Vs. Paul Brothers 216 ITR 548, the judgment of the Calcutta high court in case of Russel properties Private Ltd. Vs. CIT 109 ITR 229 are also relevant. "Where assessment order is in accordance with law, it cannot be termed to be erroneous, C.I.T Vs. Ashoka Traders SLP Civil no. 2374-2375 of 1995 dismissed by the Supreme Court 212 ITR (ST) 369." 23. It was submitted that th....
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.... CIT ITA NO. 258/ASR/2019 ,A.V. Industries vs. ACIT ITA No.3469/M/2010,Metacaps Engineering & Mahendra Construction Co. vs. CIT I.T.A. No. 2895/Mum/2014 . Submissions of the DR 25. Per Contra Ld. DR for the Revenue had drawn our attention to paragraph 4.3 of the order of the Pr. CIT whereby it was mentioned that no independent inquiry was made by the Assessing Officer. Further it was noted that the AO had not issued summons to the Chief Manager PNB to cross verify the fact of cash deposit in the bank account of the assessee. The letters issued by the Bank ant to cross check the claims made by the assessee. Further the Ld. DR had drawn our attention to paragraph 6 of the order of Pr. CIT wherein it was mentioned that the amount was routed through Saradjot Singh's account by using a colorable device rather and outright sham scripted and executed for the purpose of lending legitimacy to the assessee's unaccounted income. Further DR had submitted that the assessee had failed to show that the cash did not belong to the assessee and she had nothing to do with the account. The Ld. DR had also drawn our attention to paragraph 7.1, 7.2 and 9.1 of the order wherein the Ld. Pr. CIT h....
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....able asset or unexplained Money. It is amply proved beyond doubt that the assessee has deposited Cash in bank account and the source of the cash remains unexplained, and the sum of Rs. 4,50,00,000/- are identifiable unexplained assets. All three limbs of Section 69A of the Act stands qualified in the case of the assessee, i.e. ❖the assessee was found to be owner of the Money; ❖such Money was not recorded in the books of accounts; and ❖ its nature and source is not identifiable. 9.1 From the facts of the case aforesaid, it is clearly established that the assessee has employed colorable device to avoid the payment of legitimate tax and the action of the assessee is intended to defraud the revenue. Therefore, considering the totality of the facts and circumstances of the case and taking into account the various judicial pronouncements, the explanation offered by the assessee about the said credit is not satisfactory. In this case, the assessee has failed to prove this fact that the Cash deposited is normal business cash or does not belong to her, I therefore, hold that the amount of Deposits made in the bank accounts, represents....
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....t is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the Income-tax Officer 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 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. The phrase "prejudicial to the interests of the Revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly....
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....ve and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law. In some cases possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under Section 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the CIT has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question 32. The observation of the Hon'ble Bombay High Cour....
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....otices to the Bank and in reply thereof the official of the Bank vide their communication dated 21.9.2013 had mentioned that no cash was deposited by the assessee in her Bank account, as there is no details of currency in cash deposit . 36. During argument our attention was drawn to letter dated 14.3.2018 written by the Assessing Officer at page 9 of the paper book where the Assessing Officer while exercising jurisdiction u/s 133(6) of the Act as for the following information. 1. Whether you are an Income Tax Assessee or not? 2. Please furnish a self attested copy of your PAN 3. Furnish detail of all your sources of income. 4. Source of credit entries in your above mentioned Bank Accounts during F.Y. 2010-11 37. The same was duly replied by the assessee vide reply dated 19/3/2018 which submitted along with the documents sought by the officials. Along with the reply the assessee had also filed the Pan card ,ITRS , bank statements relevant for the period, computation of income ,balance sheet certificate etc .issued by the Bank at paper book page 100 and 119 dated 04.06.2019 that no cash has been received and paid in actual. 38. As mentione....
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....whom amount transferred/received. Sh. Saradjyot Singh s/o Manohar Singh A/c no. 024200125537289 Date of voucher In which account transfer Amount 03.04.2010 To 3171104 7,00,000/- 12.04.2010 To 3171104 53,00,000/- 22.05.2010 To 3171104 25,00,000/- 31.05.2010 To 3171104 15,00,000/- 14.06.2010 To 3171104 8,00,000/- 23.06.2010 To 3171104 7,00,000/- 01.07.2010 To 3171104 10,00,000/- 05.07.2010 To 3171104 30,00,000/- 10.07.2010 PC37676 4,50,0,000/- 13.07.2010 To 3171104 9,00,000/- 14.07.2010 To 3171104 9,00,000/- 16.07.2010 To 3171104 8,00,000/- 19.07.2010 To 3171104 5,00,000/- 22.07.2010 To 3171104 14,00,000/- 23.07.2010 To 3171104 9,00,000/- 26.07.2010 To 3171104 9,00,000/- 30.07.2010 To 3171104 11,00,000/- 07.08.2010 To 3171104 2,00,000/- 17.08.2010 To 3171104 7,00,000/- 21.12.2010 To 3171104 5,07,500/- Please provide the name of bank and name of account holder from/to whom amount transferred/received. This information is being called u/s 133(6) of the Income Tax Act, 1961,....
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....and no further corroboration is required. The Hon'ble jurisdictional High Court in the matter of State Bank of India vs H. Satish Hosiery Factory and another 2003 SCC OnLine P&H 1185 : (2005) 1 RCR (Civil) 120 had held as under : 13. The learned counsel for the defendant has argued that the statement of account does not contain the date on which statement of account was prepared and thus such statement of account is not admissible. Such certificate is required to be dated and subscribed by the principal accountant, manager of the bank with his name and official title. Since the date on such certificate is not mentioned, therefore, it is not a certified copy within the meaning of Section 2(8) of the Bankers Books Evidence Act. Sections 2(8) and 4 of the Bankers Books Evidence Act read as under: "2(8). Certified copy means a copy of any entry in the books of bank together with a certificate written at the foot of such copy that it is a true copy of such entry, that such entry is, contained in one of the ordinary books of the bank and was made in the usual and ordinary course of business, and that such book is still in the custody of the bank (and where the copy was ....
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....3 field before DIT(I&CI) authenticated copy filed on 11.9.2019: the letter claims that Rs. 4,50,00,000/- was remitted through RTGS on 6.7.2010 in reference of the purchase, but due to slow connectivity, the transaction could not be put through and amount was transferred to sundry. However there are no documents showing request for RTGS or letter or debit voucher signed by the assessee to the bank dated 6.7.2010 requesting for adjustment of the loan. The letter confirms that on 6.7.2010 Rs. 4,50,00,000/- was posted in SF A/c no. (0242000125537289 (Saradjyot singh) instead of A/c no. 0242002101004903 9 Ramco Auto) by the clerk/officer through oversight. Thus Rs. 4.5 crores deposited in cash on 6.7.2010 was to be deposited directly into Ramco Auto Industries account. * Letter Dated 4.6.2019- the letter relied upon by the assessee to claim that no cash has been deposited by voucher dated 6.7.2010, only states that 'seems only book entry", it does not confirm that these are only book entries. The system generated vouchers and the cash book clearly show that these are cash transactions. * Letter dated 29.8.2019- this letter has been relied upon by the assessee to confir....
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.... producing them. (3) The production of the bank employees at that time would only delay the proceedings as they would only stand by the documents of the bank and would not have any other document/evidence in their possession to make any other claim. 54. Quiet contrary to her reasons for not permitting assessee to examine these persons, the statement of the Chief Manager was recorded by the AO on 11.9.2019 u/s 131 and the letter dated 29.8.2019 was confronted to him. The PCIT records that cash might have been deposited. 55. The PCIT had also reproduced the summary of the statement recorded the section 131 at page 11 of her order in following manner: 1. Day book prepared by the Cashier- at the time of receiving the cash: it was stated by the Chief Manager in his statement that the same has been sold in Raddi as a part of weeding out of old records. This cash book was an important evidence to show primary receipt of cash by the cashier at the time of deposit itself. Non-production shows connivance of the bank officials. 2. All Vouchers for 30.06.2010, 06.07.2010 and 10.07.2010- Except payment voucher for 30.06.2010 none of the other vouchers were avail....
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.... are admissible in law. Further the whole case of reopening was hinges on, the cash deposit in the bank account of the assessee, the above said fact was denied by the bank in the documents submitted to the assessing officer in response to the notice issued by the assessing officer to the bank. 59. Further we are also of the opinion that when the assessee had requested Pr. CIT to examine the official of the bank then the Pr. CIT had denied the summoning of the said officials by observing at point no. 3 page 7 of the order as under : "the production of the bank employees at this time would only delay the proceedings as they would only stand for the documents of the bank and would not have any other document/evidence in their possession to make any other claim" . 60. In our considered opinion, the Pr. CIT cannot be permitted to blow hot and cold, on the one hand, the Pr. CIT is holding that order of AO was erroneous as documents issued by the Bank were required to be corroborated Chief Manager and on the other hand Himself is not making enquiry/ examining the officials of the Bank to ascertain the true facts by denying the summoning of the officials of the Bank on the r....