TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 1144
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....he subject, the learned Pr.CIT has erred in passing the order u/s. 263, although the assessment order passed u/s.143(3) r.w.s 153C of the I. T. Act, 1961 was neither erroneous nor prejudicial to the interest of the revenue. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr CIT has erred in passing ex-parte order under section 263 without providing reasonable opportunity to the assessee. It was practically impossible to file reply in bulk cases of group in short time when the proceedings u/s 263 was initiated at the fag end of limitation period in the month of March, 2021. The first notice u/s 263 was issued only on 08.03.2021. 3. It is therefore prayed that above order passed by Pr. CIT u/s. 263 may please be quashed or modified as your honours deem it proper. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 2. Brief facts of the case are that the assessee is a partnership firm. The assessee is engaged in the business of construction and development of housing projects. There is four partners in firm namely Bhavesh Dhirubhai Padhgal, Harshukh Vallabhbhai ....
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.... under section 271B&271D of the Act ( in all three AYs), * (viii) Non-verification of loan availed from ManishbhaiSheladiya (in AY 2014-15 only). 4. The ld. PCIT recorded that the assessee was given opportunity of being heard on 05.03.2021 and on 12.03.2021, however, the assessee neither attended the hearing nor filed written submission in respect of proposed revisions proceedings under section 263. The ld PCIT, accordingly presumed that the assessee has nothing to say and he decided to pass order on the basis of material available on record in AY 2014-15 to 2016-17. The ld. PCIT after considering the record of assessment held that in the search and survey of SRK group and it related parties, of which the assessee is also part, has resulted in to impounding of documents/ books of accounts and evidence related with evidence of undisclosed receipt and expenses in respect of project "Amrut Sarovar Residenty". The ld. PCIT also held that AO passed assessment order in haste and without making proper inquiry and verification of documents found in the documents seized and initiated proceedings at the fag end of the limitation period and completed in short time. The assessee not furnish....
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.... and its group i.e. Radhika Construction, Radhika Corporation, Radhika Infrastructure, and Shyam Textile Park all are engaged in construction and development of various projects. On the basis of material found in the course of search and survey action, the assessee prepared books of accounts. The books of accounts so prepared were produced during the course of assessment proceedings. Before issuing the notice under section 153C of the Act, the assessee made disclosure under income disclosure scheme (IDS) 2016. The ld AR for the assessee filed the following bifurcation of amount disclosed in IDS; Name of firms Discloser amount AY's Radhika Construction Rs. 3.50 Crore 2015-16 Rs. 53 Lakhs 2016-17 Total (1) Rs. 4.03 Crore AmrutSarovar Rs. 2.05 Crore 2014-15 Rs. 1.55 Crore 2015-16 Rs. 1.90 Crore 2016-17 Total (2) Rs. 5.50 Crore Satyam Textile Park Rs. 5.00 Crore 2016-17 Total (3) Rs. 5.00 Crore Radhika Corporation Rs. 1.00 Crore 2016-17 Total (4) Rs. 1.00 Crore Radhika Infrastructure Rs. 1.70 Crore 2015-16 Rs. 1.80 Crore 2016-17 Total (5) Rs. 3.50 Crore Vall....
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....pending. Further it is submitted that IDS declaration was accepted by the ld PCIT-Surat and therefore, the assessing officer, or supervisory Joint Commissioner of Income -tax (JCIT) could not reject IDS declaration. The IDS declaration was not made by misrepresenting facts and therefore it is perfectly valid. The certificate issued by PCIT was not revoked and tax paid under IDS was not refunded to the assessee. Even otherwise, assessee declared more income and paid more tax than payable as per normal provisions of the Act. Assessee made a declaration of Rs. 5,50,00,000/- while the income on the basis of seized / impounded materials was of Rs. 2,49,74,748/- for all the years. For A.Y. 2014-15, assessee made declaration of Rs. 2,05,00,000/- while income on the basis of impounded / seized material was 2,01,72,794/-. The ld AR for the assessee submits that during the assessment the assessee filed detailed submission to justify the IDS declaration for all the years vide its submission, copy of is placed at Page No 35 to 43 of the Paper Book. Thus, this issue was looked into it by AO. The ld PCIT in the show cause notice simply mentioned that IDS was made by misrepresentation. The ld. PC....
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....clearly mentioned in Para 19 and 20 of the said notice, copy of which is filed at page No 48 to 56 of PB. The assessee filed its submission vide its reply, copy of which is placed at Page No 35 to 43 of PB. The ld AR for the assessee submits that further submission was again filed, copy of which is placed at Page No 44 to 45 of PB. Further with reference to personal hearing assessee field further submission which is placed at Page No 33 and 34. The assessee prepared the day to day books of accounts on the basis of the impounded / seized materials which were verified by the assessing officer. As per section 292C of the Act, the material found in the course of search / survey are required to be presumed to be true unless rebutted otherwise, the PCIT did not rebut the presumption as required under section 292C. Further out of the total expenses of Rs. 41,25,04,436/- debited in the books of accounts for all three assessment years, the expenditure of Rs. 29,18,06,000/- relates to the land payment made in cash. This land was developed for the project. Assessee has given the details of all the expenses under the head Direct and Indirect expenses in the P&L account. The balance sheet was a....
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....who are partners in the assessee firm where it was explained that the payment of the on money for purchase of the land were made by assessee firm out of the booking advance which is part of the disclosure made under IDS. It is submitted that net profit on basis of seized material comes to Rs. 2,49,74,748/- and assessee made declaration of Rs. 5,50,00,000/- under IDS which is far in excess of the actual income. In course of assessment proceedings, assessee filed Exhibit 2A (Page No 71 of PB). Assessee filed the submission before assessing officer in the course of assessment proceedings on this issue vide letter dated Nil which can be found at Page No 35 to 43. In form of the IDS, assessee is required to shown only the undisclosed asset and not the source of the income as explained by the Circular 25 of 2016 issued by CBDT dated 30.04.2016 by Question and Answer No 9 of the said circular. Although the assessee was not required to disclose source of earning undisclosed income, the source is evident from the seized material and the revised books of accounts produced by the assessee in the course of assessment proceedings on the basis of impounded material. 15. The ld AR for the assess....
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....on-initiation of penalty under section 271D & 271B ( in all three AYs), the ld AR for the assessee submits that the assessee made declaration under IDS, the provisions of section 271D are not applicable. On merits it is submitted that the assessee did not take any loan and therefore the provisions of section 271D are not applicable. The amount involved was booking advances and not loan. The ld AR for the assessee further submits that for non initiation of penalty proceedings, the revision proceedings under section 263 cannot be made as held by Honourable Gujarat High Court in case of CIT v/s. Suresh G. Shah [289 ITR 110 (Guj)] and CIT v/s. Parmanand M. Patel [287 ITR 3 (Guj)]. Thus, the issue raised/ identified by ld PCIT will not survive. 18. On the eighth issue identified by ld PCIT, which relates to non-verification of loan from Manishbhai Sheladiya. The ld AR for the assessee submits that during assessment the AO raised specific query in notice under section 142(1) dated 03.12.2018 requiring assessee to give explanation on Annexure BS 83 seized from residence of Shri Manish Sheladiya at Para No 20(h) of the said notice, copy of which is placed at page No 56 of PB. The assessee....
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....e amount of Rs. 5.50 Crore, includes the declaration for all three assessment years i.e. AY 2014-15 to 2016-17. In the show cause notice issued by the same assessing officer on 07.12.2018, he raised specific issue that assessee collected amount in cash against booking receipts for F.Y. 2014-15 to 2016-17 of the said notice, the assessee filed satisfactory reply stating that the said transactions were duly covered in the income offered under IDS for the year ended 31.03.2016 in the form of "Receipt" and "expenses" as at the year end. Accordingly, assessing officer has duly considered the issue. The ld AR for the assessee submits that the jurisdictional Gujarat High court in various decision held that only net profit of suppressed receipts is required to be estimated as income. The rate of 15% is most reasonable in the construction project, particularly when in course of search and survey operation, no unexplained investment or unexplained expenditure were detected. The reliance is places on decision of Gujarat High Court in case of Abhishek Corporation [I.T. Reference No 15 of 2003] pronounced on 07.11.2014, in which other decision of the Gujarat High Court were cited. It is to be n....
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....f the AO during the course of assessment made detailed enquiry, the assessee given detailed explanation in writing, all the questions and answers furnished by the assessee are part on record of the case and claims of assessee are allowed by AO being satisfied with the explanation of assessee. Such order of the AO cannot be held to be erroneous, simply because in his order, the AO did not make elaborate discussion. The ld. PCIT himself even after initiating the proceedings and considering the submission of assessee have not given any finding as to how the claims are not allowable. The ld. PCIT has not given any finding as to what other enquiry was required to be made by the AO. If the assessment order is revised in such an approach, there would no end for such enquiries. The ld.AR of the assessee further submitted that assessee made declaration under IDS which is more than the income that can be accessed on the basis of impounded / seized materials. The assessee was eligible to make declaration under IDS as declaration was filed before issue of notice u/s. 153C. By declaring the income under IDS, the assessee in fact paid more tax than the tax payable as per normal provision. The as....
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....) dated 03.12.2018 with its Annexure, * Reply filed in response to notice under section 142(1) for AY 2014-15 to 2016- 17, along with annexure, * Exhibit - Showing calculations under IDS Scheme, * Form- 1& 4 of IDS-2016 * Copy of Form - 4 IDS, 2016 for AY 2015-16 and 2016-17, 26. To buttress his all submissions, the ld.AR of the assessee relied upon the following decisions: * CIT vs. Max India Ltd. [295 ITR 0282 (SC)], * Malabar Industries Co. Ltd. vs CIT [ 243 ITR 0083] (SC)' * CIT vs M. Mittai Stainless Steel Pvt Ltd [263 ITR 0255] (SC), * CIT vs Amit Corporation [81 CCH 0069] (Guj HC), * CIT vs Arvind Jewellers [259 ITR 05021 (Guj HC), * Bilag Industries Pvt. Ltd. vs. CIT(A) [SCA No. 24128 of 2005] (Guj HC), * CIT vs. R K Construction Co. [313 ITR 0065] (Guj HC), * CIT vs. Nirma Chemicals Works. Pvt. Ltd. [309 STR 0067] (Guj HC), * Rayon Silk Mills vs. CIT(A) [221 ITR 0155] (Guj HC),PCIT vs. Shreeji Prints Pvt. Ltd. [Tax Appeal No. 828 of 2019] (Guj),, * CIT vs. Nirav Modi [390 ITR 0292 (Bom. HC)], * CIT vs Gabriel India Ltd. [203 ITR 108(Bom), * Moil Ltd. vs CIT [ 81 taxmann.com 420 (Bom. HC)]' * CIT vs. Fine Jewellery India Ltd. [55 texmann.c....
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....sessment order passed by AO is erroneous insofar as prejudicial to the interest of the Revenue. The ld. CIT-DR for the revenue submits that the twin condition as enunciated in section 263 are fulfilled in the present case. The ld. CIT-DR for the revenue prayed for upholding the order of ld. PCIT. 28. In rejoinder submission, the ld.AR of the assessee submits that on careful perusal of show cause notice under section 263 of the Act issued by the ld. PCIT, it is clearly discernible that the ld. PCIT identified issues only on the basis notice issued by AO under section 142(1) of the Act. No new issues are identified by ld. PCIT. The ld. PCIT has not made any enquiry of his own before holding that assessment order is erroneous or erroneous and insofar as prejudicial to the interest of the Revenue on any of the issue. The ld. PCIT has not specified as to what kind of information or further details or questionnaire or effort was required to be made by AO. The AO before accepting the submission of assessee obtained prior approval of Range Head. The approval granted by Range head is in accordance with law. No deficiency is pointed out by ld. PCIT in the approval granted by Range head. In ....
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....rder 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 an 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 interests 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 Commission....
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....ing some estimate himself. The Commissioner, 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 Commissioner he would have estimated the income at a figure higher than the one determined by the ITO. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the revenue. But that by itself will not be enough to vest the Commissioner with the power of suo-motu revision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of re....
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....rder is erroneous, that section will be attracted and incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. The Supreme Court has also made it clear that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer and that 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. It was further emphatically stated that when an ITO adopts one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. 33. The Hon'ble Jurisdictional High Court in Aryan Arcade Ltd., vs PCIT (2019) 412 ITR 277 (Gujarat) held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enq....
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....the assessee in the course of section 263 proceedings. (*underline by us) 34. Now adverting to the facts of the present case. We find the there is no dispute that the AO while passing the assessment order accepted the claims of the assessee in non- speaking order. It is not the case of ld PCIT that the AO is not authorised (empowered) to accepted the return of income in non-speaking order. We have seen that the AO while passing the assessment order recorded that "the Authorized representative of the assessee vide various order sheet entries have furnished the relevant details and information called for. After affording ample and adequate opportunities of being heard to the assessee, assessment proceedings have been completed on the basis of the submissions and details collected and in consequence upon the conclusion of proceeding and hearing of evidences, assessment is made by this order". A perusal of show cause notice under section 263 dated 08.03.2021, clearly demonstrate that the ld PCIT identified all the issues which were the subject matter of the notice under section 142(1) and the questionnaire attached thereto, were issued by the assessing officer, except the issue of ini....