TaxTMI 
TaxTMI 
2021 (8) TMI 750
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.... 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 debit to her current account. Since current account of the assessee stood debited by Rs. 4,50,....
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....opening 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 record the no cash of Rs. 4.5 cr was deposited as there is no details of currency in cash deposit voucher. We have already informed....
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....he 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 the loan account no. 024200PC00037676 and amount was credited to current account no. 0242002101004903. Copy of balance sheet and copy of return filed wer....
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....ds 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 bank certificate to the effect that loan was secured against FDR in the name of Smriti Jain. (Paper Book Page No. 187) VI. Written Submissions dated 11.09.2019 filed before Principal Commissioner of Income Tax-1, Jalandhar wherein following documents were enclosed. a) Copy of bank statement of C/A No. 0242002101....
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....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 perusal of the records, may be of the 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 figure higher than the one determined by the AO. That would not vest the CIT with power to re-examine the accounts and determine the income himself at a higher figure. It is because the AO has exercised the....
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....se 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 jurisdiction under section 263, was that the order sought to be revised must be erroneous in so far as it was prejudicial to the interest of revenue. When two views were possible, the assessment could not be revised. Grasim Industries Ltd. vs. CIT (2010) 321 ITR 92 / 229 CTR 347 / 35 DTR 142 (Bom. Since an enquiry was specifically held with reference to which a disclosure of details was cal....
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.... 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 of substitution of his judgment for that of Assessing Officer. Allied Engineers vs. CIT (2009) 180 Taxman 70 (Delhi) 22.6 There should be an incorrect assumption of facts or an incorrect application of law by Assessing Officer to bring order of Assessing Officer within category of its being erroneous under section 263 - To qualify an assessment order as an order being prejudicial to interest o....
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.... 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 the observations of Principal Commissioner of Income Tax-1, Jalandhar on page 9 to 22 of order are based on assumptions and presumptions as PCIT had not examined the record/ material available on AO file as well as his file , as he failed to consider following documents:- a) Sequence of events given by the Appellant as incorporated in para 5.1 of the order b) Copies of bank account of the Appellant filed during assessment procee....
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.... 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 had mentioned as under: "7.1 In the present case, the assessee had deposited Cash amounting to Rs. 4.5 crores which is treated as unexplained money. - The assessee is found to be the owner of the Money appearing in bank accounts, as is apparent from the use of the money to repay the Assessee's loan, but has not offered any acceptable and cogent explanation regarding the source of such Money found in its bank accounts. The scheme of Section 69A of the Income-tax Act, 1961, wo....
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.... 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 income from undisclosed sources. The assessee has concealed its true income which otherwise is taxable. Further, by relying upon the decision of Hon'ble Supreme Court in the cases cited above that there was ample evidence that Cash was deposited in bank accounts, which is prima facie evidence against the assessee that the deposits are undisclosed income on which the Department can proceed in absence of good explanation. The assessee has made cash deposits amounting to Rs. 4,50,00,000/- and the source thereof remains unexplained. The assessee failed to give ....
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....roneous. 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 be prejudicial to the interests of the Revenue. The phrase "prejudicial to the interest of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be....
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.... 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 Court in case of CIT v. Nirav Modi, 390 ITR 292 on this issue is as under : 4 (a) The powers u/s. 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions viz. the assessment order should be erroneous and prejudicial to the revenue. This power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no occasion to exercise powers of revision can arise. It was also held that revisional....
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.... 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 mentioned hereinabove the notice u/s 148 dated 29.3.2018 was issued to the assessee on account of cash deposit in the Bank account. In the reasons it was mentioned "As per Bank statements odf assessee,s account no 024200PC00037676 an amount of Rs. 4,50,00,000/- has been credited in it on 10/7/2010. 39. The reasons dated 20.03.2018 for reopening provides as under: "Since no PAN of the assessee is available on record as ond ate, it cannot be ascertained whether any return of income for the AY 2011-12 is filed by the assessee or not. A TEP in assessee's case was received from the investigation wing through the JCIT, Range -2, Jalandhar vide his office letter no. 2069 dat....
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....,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, and the information must reach this office by 28.08.2018. Please note that noncompliance to this letter may attract penal action as per provision of Income Tax Act, 1961. 42. Our attention was also drawn to the another notice dated 14.12.2018 calling for further information from the branch manager of PNB bank (page 209 of the paper book) 43. The reply was given by the bank officials and the documents were provided vide reply dated 19.12.2018. For the ready reference we are reproducing herein below the reply dated 19.12.2018 (page 210) * The entry dated 06.07.2010 of Rs. 4.50 crore was transferred from Ramco Auto Industries Account to sundry account (3171104) which was further debited through cash transaction on 06.07.2010. Further it appears that the same amount was credited by cash to Saadjyot Singh account 06.07.2010. * The voucher is enclose....
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....tificate 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 obtained by a mechanical or other process which in itself ensured the accuracy of the copy, a further certificate to that effect, but where the book from which such copy was prepared has been destroyed in the usual course of the banks business after the date on which the copy had been so prepared, a further certificate to that effect each such certificate being dated and subscribed by the principal accountant or manager of the bank with his name and official title)". "4. Mode of proof of entries in 'bankers' books.-Subject to the provisions of this Act, a certified copy of any entry in a bankers book shall in all legal proceedings be received as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not f....
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.... 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 confirm that no cash has been credited in Saradjyot Singh A/c 0242000125537289. 50. From the perusal of the various letters written by the bank to the revenue, it is abundantly clear that no cash was deposited by the assessee in her bank account. These documents and other correspondence clearly shows that the AO had made sufficient enquiry to find out whether the cash was deposited in the bank account of the assessee or not. After due satisfaction, that no cash was deposited in assessee's bank account, the assessment order was passed without making any addition. 51. As mentioned in herein above the reopening u/s 148 was made for the reasons that there was cash deposits of Rs. 4.5 crore in the bank account of the assessee. The PCIT in paragraph 5.5 of her order as mentioned that "it is true that the voucher by virtue of which cash of Rs. 4.5 crore has been deposited in the bank does not bear signatures of the assessee but the evidence is strongly ....
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....self. 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 available with the bank and they did nto produce the same. The chief manager stated in response to summons u/s 131 that the original vouchers of transactions showing deposit of cash into account transfer of entry from Ramco current account to loan account for repayment, if any, transfer of entry from Saradjyot Singh account to Ramco account are not available. Non production of vouchers for the specific dates further shows connivance of the bank officials. 3. Signed voucher for debiting current A/c of the assessee and crediting loan a/c of the assessee: It was confirmed by Chief Manager PNB, Industrial Area that no such voucher is available and only a request letter dated 6.7.2010 is available and that too only a copy and not the original letter signed by the assessee. Under the circumstances it is not possible to get the letter validated even from a forensic expert. It is surprising that for debit of the assessee's bank account no signed voucher is there and a letter is sufficient. 4. Jour....