TaxTMI 
TaxTMI 
2021 (8) TMI 805
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....stified to hold that the Ld. Assessing Officer framed the assessment without making any further inquiry, whereas the Ld. Assessing Officer had made specific querry regarding the alleged paper found from the possession of a third party. III. That the Ld. Principal CIT was not justified to hold that the Ld. Assessing Officer failed to verify the genuineness of sundry creditors, whereas no such issue was raised in the Show Cause Notice. 2. The grounds in all the four Appeals are common. Therefore, we are taking the file of Santok Singh Brar I.T. No.206 of 2017 as a lead case. 3. Brief facts: 3.1. A search and seizure under Section 132 of the Income Tax Act was conducted at the premises of M/s Godwin Group of Cases on 09.09.2010. During the course of search, certain documents pertaining to Assesse were found and the said documents were passed on to the Assessing Officer of the Assesse.On the basis of the information and after recording the satisfaction note, the case of the Assesse reopened under Section 153Cread with Section 153A of the Income Tax Act. 3.2. Notice under Section 153C was issued to the Assesse on 28.10.2013 calling upon the Assesse to file the retur....
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.... v) Your show cause notice has referred to a statement of Sh. Amarjit Singh Randhawa from perusal of the copy the document officially received from your office as per the request, it is submitted that Mr. Amarjit Singh Randhawa was admitted that he is holder of any Power of Attorney on behalf of assesses or has executed any agreement to sell on their behalf. Without prejudge to, above Mr. Amarjit singh Randhawa has denied the execution of any alleged receipt-cum- agreement to sell dated 28.03.2009. vi) From the inspection of the documents in your possession officially allowed by you as per the request of the assesses, we have not found any document either in original or a photocopy signed by the assesses or any GPA document relating to the. assesses, which are being relied upon by you for framing the assessments in the case of the assessee. 4. Keeping in view the submissions made above, it is clear, that no addition/ assessments can be made on account of purported alleged document referred by you in your show cause notice. As there is no document in the possession of IT. Department /your office, which can conclusively proved at the above referred assesses have rece....
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.... assesses never executed any agreement to appoint Sh. Amarjit Singh Randhawa as their GPA. Thus, alleged Receipt cum Agreement to Sell cannot be used against the assesses on that basis. The assesses never executed any agreement to sell dated 28.03.2009 as alleged in your show cause notice. If you have such document which contained the signatures of the assesses, the same may kindly be also provided. However, it is brought to your kind notice that the assesses have themselves executed the sale deed in the capacity of themselves which proves that no such GPA was ever given. v) Your Show Cause Notice has referred to a statement of Sh. Amarjit Singh Randhawa. From perusal of the copy of the document officially received from the Assessing Officer, it is submitted that nowhere Mr. Amarjit Singh Randhawa was admitted that he is holder of any Power of Attorney on behalf of the assesses or has executed any agreement to sell on their behalf. Without prejudice to above, Mr. Amarjit Singh Randhawa has denied the execution of any alleged receipt cum agreement to sell dated 28.03.2009. vi) From the inspection of the documents in the possession of the Ld. Assessing Officer, offi....
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....ociates of Phase- 5,Mohali. As per this agreement, this property was to be sold/or a consideration of Rs. 11,25,00,000/-. Documentary evidence of this agreement to sell is placed on record which has been signed by the sellers/purchasers alongwith witnesses. Further, there is another document which is minutes of meeting of Board Directors of Great Value infrapromoters Pvt. Ltd wherein the purchasers have authorized their representative to finalize the deal. The Assessing Officer has vide notice under section 142(1) of the Act has asked you to file the details of immovable properties acquired by you. On 16.03.2015, the Assessing Officer confronted you with the information available in his possession i.e. receipt-cum-agreement to sell dated 28.03.2009 and showed his intention to treat sum of Rs. 5. 75 Crore (11.25 crore - 5.50 crore) as unexplained receipts. 5. Thereafter, on 25.03.2015, the Assessing Officer again sent to you a copy of deal entered by Sh. Gurbachan Singh Brar with the Great Value Infrapromoters Pvt. Ltd for sale/purchase of above-referred property for Rs. 11.25 crore. 6. Finally, the Assessing Officer completed the assessment on 30.03.2015 ....
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....e Tax-3, Ludhiana passed an order u/s 263 of the Income Tax Act, 1961 dated 23.03.2017 by holding that the assessment order dated 30.03.2015 is erroneous in as much as prejudicial to the interest of Revenue and set aside the order to the file of the Assessing Officer for passing a fresh order in accordance with law in respect of the issue discussed regarding verification of genuineness of sundry creditors and also raised in show cause notice u/s 263 of the act after giving sufficient opportunity of hearing to the appellant. The PCIT in paragraph 4 had concluded as under:- "4. I have carefully considered assessee's submissions which are not acceptable on the issue that AO has excepted the submission made by the assessee without making any further enquiry whatsoever before accepting the returned income and before coming to the conclusion that assessee has not received any amount apart from his share in Rs. 5.50crore. AO has simply relied upon whatever submissions have been made by the assessee. The AO should have made independent enquiries from Sh. Amarjit Singh Randhawa as well as from the purchasers of the property regarding the monetary consideration involved in sale/....
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.... and prejudicial to the interest of the revenue as well." 3.12. Feeling aggrieved by the order passed by the PCIT, the Assesse is in appeal before us on the grounds mentioned hereinabove. 4. Submission of Assesse: 4.1 The Ld. AR had submitted that the order passed by the Learned Assessing Officer cannot be termed to be erroneous in as much as prejudicial to the interest of the Revenue as the same was passed after making detailed enquiry as will be clear from bare reading of the assessment order. 4.2 The Learned Assessing Officer has discussed in detail the queries raised and replies furnished by the appellant and after due application of mind and also approval obtained from the Learned Joint Commissioner of Income Tax u/s 153B, framed the assessment by accepting the return of the appellant. 4.3 The Ld. AR had submitted that the alleged document was not found from the possession of the appellant and it does not bear the signatures of either of the appellant. The alleged document is only a photocopy and despite the request of the appellant, original has never been made available. The Ld. AR had submitted that no addition can be made on the basis of photocopy of the doc....
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....which should have been made. This explanation also came for scrutiny before different judicial forums and it has been held that the explanation 2(a) to Section 263 does not authorise to give unfettered powers to Commissioner to revise each and every order, if in his opinion same has been passed without making enquiries or verification which should have been made. The Ld. AR relied upon the following judgments: • Judgment of the Hon'ble Income Tax Appellate Tribunal, Mumbai Bench "B" in the case of Narayan Tatu Rane Vs. Income Tax Officer, Ward 27(1)(1), Mumbai reported at [2016] 70 taxmann.com 227 (Mumbai-Trib). • Judgment of the Hon'ble Income Tax Appellate Tribunal, Delhi "A" Bench in the case of M/s Amira Pure Foods Pvt. Ltd. Vs. the Principal Commissioner of Income Tax, Central Gurgaon bearing ITA No. 3205/Del/2017. • Judgment of the Hon'ble Delhi High Court in the case of the Principal Commissioner of Income Tax Vs. Gabriel India Ltd. reported at [1993] 203 ITR 108 (Bombay) • Judgment of the Hon'ble Income Tax Appellate Tribunal, Delhi Bench "C", New Delhi in the case of Indian Farmers & Fertilizers Cooperative Limited Vs. th....
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.... no addition can be made on the basis of the photocopy of the Agreement to Sell allegedly executed by Shri Amarjeet Singh Randhawa. Further, the minutes of the Board Meeting though pertains to Great Value Infra does not reflect paying of any on money over and above the sale consideration mentioned in the Agreements. The present case before us is not a case of no enquiry rather it is a case of adequate enquiry the PCIT, in the Show Cause Notice also mentioned that the enquiries were made by the Assessing Officer. However, he has mentioned that more enquiries were required to be made. The explanation 2 Section 263 provide that the order would be erroneous and prejudicial in the interest of Revenue if the order was passed without making enquiries or verification which should have been done. 6.4 However, in the present case, the enquiries and verification were made by the Assessing Officer Assesse mentioned hereinabove. However, despite that the PCIT had mentioned that the enquiry should have been made from Shri Amarjeet Singh Randhawa as well as from the purchaser of the property regarding the monitoring consideration involved in the sale purchase of the property. In our view, the ....
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....er:- "12. In view of the above, we find it difficult to agree with the ld. DR that there was no enquiry conducted by the Ld. Assessing Officer by putting any specific question to the assessee as to the treatment given to the interest. As a matter of fact, the reason for the difference in the amount as per Form 26AS and ITR was due to the interest received from the banks that was duly accounted and considered in the financial statements of the company and was adjusted against the project expenditure. The very fact that pursuant to the scrutiny when the Ld. Assessing Officer proposed charging the interest amount received to tax, the very same explanation was offered by the assessee and was accepted by the Assessing Officer. We are, therefore, of the considered opinion that it is not a case of no enquiry and as a matter of fact, it was specifically brought to the notice of the Ld.Assessing Officer that the interest earned was adjusted against the project expenditure. 13. Further, it is an admitted fact that in this case, the business of the assessee was commenced in this case, unlike the facts in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra)....
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....fect. Issue no. (ii): 10. The standard to be adopted while dealing with the issue as to whether or not an AO has carried out an enquiry or verification, all that the Court is required to ascertain is as to whether the AO applied his mind. 10.1. The fact that the AO has not given reasons in the assessment order is not indicative, always, of whether or not he has applied his mind. Therefore, scrutiny of the record, is necessary and while scrutinising the record the Court has to keep in mind the difference between lack of enquiry and perceived inadequacy in enquiry. Inadequacy in conduct of enquiry cannot be the reason based on which powers under Section 263 of the Act can be invoked to interdict an assessment order. The observations made in this behalf, by the Division Bench of this Court, in Commissioner of Income-tax vs. Sunbeam Auto Ltd., [2010] 189 Taxman 436 (Delhi)/[2011] 332 ITR 167 (Delhi) being apposite, are extracted hereafter. "12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner....
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....in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that 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. [See : Parashuram Pottery Works Co. Ltd. v. ITO[1977] 106 ITR 1 (SC) at page 10]. ****** From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the....