TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 671
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....rried out in the case of the assessee. The Ld. Pr. CIT further noted that the assessee had claimed during the assessment proceedings that this cash of Rs. 2 Crores belonged to his deceased father, Late Sh. Satish Mehta and that the source of this cash was agricultural income of his father which had been duly declared in the father's return of income for Assessment Year 2017-18. The Ld. Pr. CIT also noted that it was the assessee's submissions before the Assessing Officer that the assessee had received 2 Crores in cash after the demise of his father and it was the same cash which had been deposited in assessee's bank accounts and had been seized by the Department. The Ld. Pr.CIT further noted that the Assessing Officer had accepted the assessee's claim that the source of cash found in his possession had been generated through the agricultural activities carried out by the father of the assessee by the Assessing Officer without any enquiry. The Ld. Pr. CIT also noted that the original return of income of assessee's father, which was filed on 08.03.2018, did not disclose any agricultural income and the return was revised on 30.03.2018 wherein an amount of Rs. 2.05 Crores was mentioned....
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....of the case, the order of the AO was void-ab-initio as the same has been passed in pursuance to a mechanical approval of Add CIT u/s 153D and hence the consequential proceedings would also be a nullity. 4. On the facts and under the circumstances of the case and having regard to the fact the draft approvals were sent on the same day when the approval was accorded, would prove beyond doubt that the approval was mechanical approval. 5. On the facts and under the circumstances of the case & having regard to the fact that the approving authority has granted a consolidated approval, ignoring the mandatory language and correct PAN number would also prove beyond doubt that the approval was a mechanical approval and hence all proceedings are void ab initio. 6. Without prejudice to the above, on the facts and under the circumstances of the case the CIT has failed to appreciate that the order of the AO has been passed with the approval of the Additional CIT, which orders are not covered in the provisions of section 263 of the Act. 7. On the facts and circumstances of the case the CIT has failed to appreciate that action of search is a full fledge enquiry of the facts & hence the orde....
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....s not a case of lack of enquiry as was being stated by the Ld. Pr. CIT. It was argued that the Assessing Officer had conducted due enquiry although, the same might not have been in the way the Ld. Pr. CIT would have wanted but this cannot be a reason for passing a revisionary order. The Ld. AR prayed that the impugned order u/s 263 of the Act deserved to be quashed. 4.0 Per contra, the Ld. CIT-DR placed extensive reliance on the order of the Ld. Pr. CIT and while reading out the relevant paragraphs from the impugned order, it was emphasized that the Ld. Pr. CIT had rightly passed the revisionary order as the Assessing Officer had completely failed to enquire into the source and nature of the cash deposit amounting to Rs. 2 Crores and being claimed by the assessee as being agricultural income of his father. 5.0 We have heard the rival submissions and have also perused the material on record. The facts in the case are not in dispute. There was a seizure of cash by the Police in the case of the assessee and subsequently, the Income Tax Department was informed. A search operation was carried out by the Department and this cash had by the then been deposited into three bank accounts o....
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....he assessee as agricultural income of his father. However, the Ld. AR again expressed his inability to provide a copy of such questionnaire. Thus, although it is the claim of the assessee that the Assessing Officer had carried out proper enquiries regarding the impugned issue, there is nothing on record to demonstrate and establish that proper enquiry had been conducted by the Assessing Officer. A perusal of the assessment order also shows that the Assessing Officer has discussed the issue in a very cryptic manner by just stating that he has examined the documents and the lease deed of land and has found it in order and that the statement of Sh. Vijay Kumar has been recorded u/s 131 of the Act. Thus, apparently and admittedly from the record before us, the assessee has failed to demonstrate that proper enquiry was made by the Assessing Officer during the course of assessment proceedings and that such enquiry had been duly responded to by the assessee in a proper manner in form of documents and evidences which would establish that the impugned amount of Rs. 2 Crores belonged to the father of the assessee as his agricultural income. 5.3 We also note that when the Ld. Pr. CIT issued ....
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.... we cannot but come to a conclusion that the entire claim of the assessee regarding the impugned amount belonging to the father of the assessee as agricultural income has no edifice to stand on and is rather more of an after thought when the seizure of cash by the Police Authorities during the demonetization came to the light of the Income Tax Department. 5.5 The Ld. Pr. CIT, in paragraph -8 of the impugned order has raised 10 points which have not been examined by the Assessing Officer before reaching the conclusion that impugned amount of Rs. 2 Cores belonged to the father of the assessee as his agricultural income. The issues pointed out by the Ld. Pr. CIT in para 8 of the impugned order are being reproduced herein under for a ready reference:- "1. The assessing officer has failed to call report from the state authorities to ascertain the genuineness of the agricultural activities undertaken during the year under consideration or prior/subsequent to it on the said land. 2. Nor details of persons from whom such income was received has not been called for by the AO neither any verification or enquiry has been made in this regard. 3. Similarly, the details of expenses incurr....
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....herefore, in our considered opinion, this is a case where the Assessing Officer did not make any enquiry whatsoever and simply accepted the return of income filed by the assessee. ....herein mentioning by the assessee that he has carried out the necessary enquiries and called for the required documents and has examined them would not absolve the Assessing Officer from the duty cast upon him as there is nothing in the case records which could suitably lend credence to the statement of the Assessing Officer as well as the claim of the assessee that the Assessing Officer had made adequate enquiries and that the assessee duly responded to such queries. Even the statement recorded u/s 131 of the Act of Sh. Vijay Kumar as mentioned in the assessment order, was not produced before us to substantiate the veracity of the Assessing Officer in the assessment order as well as the claim of the assessee of that having been done. Therefore, it is our considered view that this is not a case of inadequate enquiry as the Ld. AR would want us to accept, but is rather a case of complete "lack of enquiry" by the Assessing Officer and, therefore, we hold that the Ld. Pr. CIT was absolutely correct in in....
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....e-tax officer, Howrah, while remarking that the source of income of the assessee was income from speculation and interest on investments stated that neither the assessee was able to produce the details and vouchers of the speculative transactions made during the accounting year nor was there evidence regarding the interest received by the assessee from different parties on her investments. Notwithstanding these defects the Income Tax Officer did not investigate into the various sources but assessed the assessee on a total income of Rs. 9,037. The inquiries made by the Commissioner revealed that the assessee did not reside or carry on business at the address given in the return. The Commissioner was also of the view that the Income-tax Officer was not justified in accepting the initial capital, the sale of ornaments, the income from business, the investments etc., without any inquiry or evidence whatsoever and that the order of assessment was erroneous and prejudicial to the interests of the revenue. The High Court held that there were materials to justify the Commissioner's finding that the order of assessment was erroneous in so far as it was prejudicial to the interests of th....
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....ts Ltd. decided on 1st March, 2012, in ITA No. 179/2011 and observed as under:- "10. Revenue does not have any right to appeal to the first appellate authority against an order passed by the Assessing Officer. Section 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expressiono.....prejudicial to the interest of the Revenue" is of wide import and is not confined to merely loss of tax. The term "erroneous" means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. 11. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified ....
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....x Officer. The Commissioner can regard the order 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." 14. The aforesaid observations have to be understood in the factual background and matrix involved in the said two cases before the Supreme Court. In the said cases, the Assessing Officer had not conducted any enquiry or examined evidence whatsoever. There was total absence of enquiry or verification. These cases have to be distinguished from other cases (i) where there is enquiry but the findings are incorrect/erroneous; and (ii) where there is failure to make proper or full verification or enquiry. 15. In the case of Commissioner of Income Tax v. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del), Delhi High Court was considering the aspect, when there is no proper or full verification, and it was held as under:- "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 of Income-tax under secti....
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.... 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. 1TO [1977] 106 ITR I (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 Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income tax Offi....
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.... enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the Cl'T 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 thoitgh 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 afresh 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/questio....
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....not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue. " 5.9 In view of foregoing discussions, we are inclined to hold that the present case is squarely covered in favour of the revenue by the decisions of Hon'ble Jurisdictional High Court of Delhi in the case of Gee Vee Enterprises vs. ACIT (supra) and CIT vs. Nagesh Knitwears P. Ltd. (supra) as in the present case, the AO did not raise any query of make any inquiry pertaining to the claim of expenses submitted by the assessee in its books and statements of accounts submitted along with return and this is a clear case of "lack of inquiry". We may also point out that if the AO fails to conduct the said investigation, he commits the error and the word "erroneous" includes failure to make inquiry. In such cases, the order becomes erroneous because necessary inquiry or verification has no....
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....in the case of CIT Vs. Dr. Ashok Kumar[ INCOME TAX APPEAL No. - 192 of 2000 dated 06.08.2012. We have carefully considered the above decision. The Hon'ble High Court in that decision upheld the order of the Co-ordinate Bench quashing the 263 order passed by the Ld. CIT as per para No. 8 wherein it has been held that the Tribunal has found that the assessee had sufficiently explained the retraction of his statement given on 12.12.1994 and the Ld. CIT could not point out as to whether the Assessing Officer had failed to work out the amount of concealed income correctly. Hon'ble High Court further held that the Assessing Officer had made the addition on estimate basis for all the assessment years and there was no material indicating suppression of receipts. Therefore, the Hon'ble High Court on this issue upheld the order of the ITAT quashing the order of the Ld. CIT passed under Section 263 of the Act. The Hon'ble High Court though has reproduced para No.5.2 of the order of the Co-ordinate bench, but it has mainly agreed with the order of the Co-ordinate Bench as in para No. 1 of the order of the co-ordinate bench. The complete order of the Hon'ble High Court is as under:- "1. We ha....
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....oes away. The CIT also failed to point out as to why the AO failed to work out the amount of concealed income correctly, rather the AO had made the additions on estimate basis for all the assessment years though there was no seized material indicating suppression of receipts for these assessment years and for a.y. 1995-96 the material found at the time of search had been analysed after necessary enquiries and assessment had been framed accordingly. 5.2 In the last it is also relevant fact that the AO was fully alive about the facts of the case and that is why he got necessary approval of Addl. Commissioner before completing the assessment orders for all the assessment years and once that is not disputed by the Revenue than the CIT would not be justified in interfering in the approval accorded by the Addl. CIT for framing the assessment order and thus there was no case for setting aside the assessment orders for the assessment years in question. On the basis of facts and circumstances of the case I am of the opinion that the impugned order is liable to be quashed accordingly. 6. In the result, appeals are allowed." 7. Sri R.K. Upadhyay had relied upon Malabar Industrial Co. Lt....
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....? (ii) Whether in the absence of prior approval/permission the assessment order passed by Assessing Officer is null and void? (iii) Whether in fact and circumstances of the case, the action of the ld. Tribunal passing the impugned order dated 02.01.2017 Annexure-A7 is legally sustainable in the eyes of law?'' 6.5 In that case the Ld. CIT passed an order under Section 263 of the Act in the case of search assessment passed under Section 153A of the Income Tax Act (it is mandatory to pass any order under Section 153A/153C with the approval of the Joint Commissioner of Income Tax as provided u/s 153D of the Act ). In para Nos. 8 -11 the Hon'ble High Court held as under:- "8. Although the assessee claims that three substantial questions of law arise, in fact the issue involved in the present appeal is:- ''Whether under Section 153D of the Act there is a requirement of fresh approval for complying with the remand directions under Section 263, in a case where the assessment under Section 153A of the Act was originally framed after compliance of Section 153D of the Act?'' 9. We answer the question against the assessee. Section 153D is as under: '....
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....taken up in revision; ii. The approval under Section 153D was not set aside; iii. Section 153D of the Act is only applicable for passing an assessment order or re-assessment order; iv. Even otherwise there is no question of seeking an approval from the Joint Commissioner or the Addl. Commissioner, an officer lower in rank than the Commissioner for complying with the direction given by the Commissioner. 6.7 Thereafter, in para No. 14 it upheld the assessment order passed under Section 263 of the Act framed under Section 143(3) of the Act pursuant to the direction of the Commissioner without obtaining the approval of the Joint Commissioner once again under Section 153D of the Act. 6.8 So the principal that emerges is that when a higher authority is exercising jurisdiction i.e. Commissioner under Section 263 of the Act, the approval granted by the lower authority under Section 153D does not infringe upon powers of the higher authority. 6.9 It was further held that the approval of Section 153D is only for passing of the order. 6.10 Provisions of section 263 of teh act are as under :- Revision of orders prejudicial to revenue. 28a 263. (1) The 28[28b[Principal Chief Commissi....
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....al to the interests of the revenue, if, in the opinion of the Principal 45[Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] 46[(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.] (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, 47[National Tax Tribunal,] the High Court or the Supreme ....
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....f the Act are satisfied. In arriving at this conclusion, he is not to be controlled even by a higher authority. Likewise, the higher authority is not to interfere with the independence of his unfettered discretion which is statutorily conferred upon the Commissioner." 6.14 Thus, even the authority above PCIT and CIT cannot deprive the powers of the revision and thus there is no reason that lower authority exercising powers granted to it can prevent the PCIT or the CIT to exercise revisionary powers. Therefore, it is apparent that none of the lower authorities or even a superior authority cannot put spokes in exercising the power of the Pr. Commissioner of Income Tax. Such is the mandate of the Hon'ble Delhi High Court. 6.15 Now we come to the decision of the Hon'ble Supreme Court in T.N. Civil Supplies Corpn. Ltd Vs Commissioner of Income-tax [2003] 260 ITR 82 (SC) wherein the Assessing Officer passed an order on the direction of the Inspecting Assistant Commissioner under Section 144B of the Act, which was subject to revision under Section 263 of the Act. The Hon'ble Supreme Court in that particular case has categorically held that the orders are to be revised are orders passed ....