TaxTMI 
TaxTMI 
2021 (11) TMI 630
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....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 construction and development activities. The assessee firm have five partners. The names and shares of partners are as follows; 1 Ashok Narshibhai 18% 2 Dilipbhai Devrajbhai Kathiriya 20% 3 Kamlseh Babubhai Bhesaniya 17% 4 Mukeshbhai Arjanbhai Marodiya 27% 5 Ramesh Kumar Gordhanbai Kathiriya 18% 3. A survey action under section 133A of the Act was carried out on assessee's business premises. A survey action was carried out in SRK Group, Surat on 19.07.2016. The assessee is part of SRK Group. During the course of search and survey proceedings certain incriminating documents were found and seized. During the search, certain entries pertaining to the assessee were also found. Consequent upon, notice under section 153C dated 29.11.2018 was issued on assessee firm for various assessment years including for the subject assessment year. In response to notice under section 153C of the Act, the assessee filed its return of income for the A.Y. 2016-17 on 12.12.2018 declaring nill income. The Assessing Officer (AO) recorded....
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....for AY 2015-16 and Rs. 1.0 Crore for AY 2016-17). The IDS was accepted by Designated Authority i.e. ld. PCIT on 14.10.2017. The certificate of acceptance of disclosure made by assessee was also furnished. The assessee further stated that in the course of assessment proceedings, the assessee filed complete books of accounts of unaccounted transaction based on material impounded during the course of survey. As per the impounded material, profit of Rs. 37,97,085/- for the A.Y. 2016-17 was computed, accordingly, the assessee made a declaration of IDS considering these figures of profit. During the assessment, the AO issued notice under section 142(1) to file requires details on 14.12.2018. The assessee filed detailed explanation vide two different letters in the course of assessment proceedings. All details were verified by AO after discussing with the representative of assessee. Such observation about verification of details was made by AO in the assessment order itself. Accordingly, an assessment order was framed on 29.12.2018 determined total income at Nil income after obtaining approval of ld. Joint Commissioner of Income Tax (JCIT). The income on the basis of impounded material wa....
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....er, thus, there is no question of earning any income. The assessee has made disclose of Rs. 1.00 Crore in the year under consideration on the basis of books of account prepared from the impounded material in respect of unaccounted cash transactions for which complete details is part of assessment record. On the issue of non-reference of seized material, the assessee submitted that when ld. PCIT himself held that notice as well as order under section 153C is passed/issued without there being any seized documents being illegal, thus there is no question of revision of such order. The proceedings under section 153C can only be initiated when material relating to or pertaining to or belonging to the assessee are found in the case of search of other person 8. On the issue in show cause notice related with validation of disclosure made in IDS, the assessee submitted by assessee firm prepared and submitted day to day books of accounts on the basis of entire impounded material and has made discloser under IDS much in excess of the income reflected in the impounded material and each and every entry in the books of accounts were verified with the impounded material by AO during the assessme....
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....ers passed by AO in all three assessment years. The ld. AR for the assessee submits that assessee is a partnership firm engaged in the business of construction and development of housing project. A search and survey action was carried out by the Revenue on assessee and its group on 19.07.2016. On the business premises of assessee, only survey took place. During the course of search proceedings in assessee group, certain incriminating material in the form of papers and documents were found. The assessee and its group i.e. Radhika Construction, Radhika Corporation, Radhika Infrastructure, Amrut Sarovar 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 Cror....
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....on 263 of the Act and issued show cause notice. The copy of show cause notice is also placed on record. In the show cause notice for AY 2016-17, the ld. PCIT basically identified five issues. 15. On first issue which relates to unsecured loan as identified ld. PCIT. The ld. AR of the assessee submits that regarding the issue of non verification unsecured loan in assessment year as mentioned by the PCIT in the show cause notice and revision order. The ld. AR for the assessee submitted that the issue was raised in notice under section. 142(1) issued on 03.12.2018. In reply to this notice, assessee vide letter, copy of which is placed at Page 27 & 28 of the paper book submitted the details of unsecured loans were under compilation and the same would be furnished shortly. Thereafter, assessee furnished the details as called for. The finding of the PCIT that assessing officer has not called for such details/confirmation and nor the assessee has submitted the same is wrong. Further it is submitted that in the course of search and survey action conducted in various cases of the group assessee, no evidences were found indicating that assessee received any bogus loan or accommodation entry....
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.... registered sale deed and not handing over the possession of any unit by the assessee firm and hence, there is no any question of earning any profit. The disclosure of Rs. 1,00,00,000/- was made in the year under consideration under IDS, out of the total disclosure of Rs. 4,00,00,000/-, (for three AYs) on the basis of the books of accounts prepared from the impounded material in respect of the unaccounted cash transactions for which the complete details/working is forming part of the assessment record. The ld. AR for the assessee furnished the following working; Sr no. Particulars AY 2015-16 AY 2016-17 Total A Income as per seized material Net profit Rs. 6,30,000/- Rs. 37,97,085/- Rs. 44,27,085/- B Asset as per seized material -cash -receivables / sundry creditors Rs. 6,30,000/- Rs. 30,000/- Rs. 1,03,21,670/- Rs. 6,60,000/- Rs. 1,03,21,670/- Rs. 6,30,000/- Rs. 1,03,21,670/- Rs. 1,09,81670/- C Net profit % Unaccounted booking advances for entire project Net profit @ 15% Rs. 25,00,00,000/- X 15% Rs. 3,75,00,00/- D Net profit Residential 216770Sq ft X Rs. 100/- Per sq feet Commercial 34441 sq ft....
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.... that IDS declaration was accepted by the ld. PCIT and therefore, the assessing officer, or supervisory 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 ld. PCIT was not revoked and tax paid under IDS were not refunded to the assessee. Even otherwise, assessee declared more income and paid more tax than payable as per normal provisions of the Act. 21. The ld. AR for the assessee submits that assessment is completed under section 143(3) r.w.s. 153C of the Act after taking prior approval of ld. JCIT and no revision of such order is permissible as has been held by various Tribunals and Higher Courts. To support his submission, the ld. AR relied upon the following decision of Tribunal * Rasiklal M. Dhariwal (HUF) vs. CIT in ITA No. 1102 to 1104/PUN/2014 dated 28.12.2016, * B.U. Bhandari Schemes vs. PCIT in ITA No. 637 to 641/PUN/2018 dated 14.11.2018, * Vishwa Infraways Pvt. Ltd., vs. CIT in ITA No. 596, 597 & 599/PUN/2015 dated 28.11.2018 and * CIT Vs. Dr. Ashok Kumar in ITA No. 192 of 2000 dated 06.08.2012 of Hon'ble Allahabad High Court. 22. The ld. AR for the....
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....money. In this case, the survey actions were conducted in case of firms and search actions were conducted in the case of the partners of the firms. Even after these actions, the discrete inquiry was made by the assessing officer and the assessments were made in the group cases on the basis of incriminating materials impounded/seized in course of search/survey action. In the course of these actions, no unexplained valuables were found. Accordingly, assessments were framed considering all these facts and circumstances of the case and therefore, they are not liable for revision. Accordingly, it is a case of sufficient and proper inquiry made by the assessing officer. The ld. PCIT did not make any inquiry although in his opinion, the inquiry was insufficient. Accordingly, the PCIT arrived at subjective satisfaction. Needless to say the satisfaction must be one which is objectively justifiable and cannot be the mere ipse dixit of the PCIT. The assessee has placed following documents on record. * Notice issued under section 153C dated 29.11.2018, * Tax audit report with financial statements and details of expenses for AY 2016-17, * Notice issued under section 142(1) dated 03.12.201....
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....s. Subhodh Menon [2019] 103 taxmann.com 15 (Mum Trib.) 25. On the other hand, the ld. CIT-DR for the Revenue supported the order of ld. PCIT. The ld. CIT-DR submits that in the show cause notice under section 263 of the Act, the ld. PCIT has elaborately discussed the non-examination of various issues. In para 5 of this show cause notice, the ld. PCIT clearly held that inspite of having relevant evidence on record and calling for explanation in detailed questionnaire, the AO has not made any further effort to verify the same or carried out necessary enquiries thereof and accepted the submission on the issues identified by ld. PCIT. The AO accepted the explanation of assessee elaborately discussing the issue. Failure on the part of AO to carry out proper verification on the various issues, which were taken for enquiries at the initial stage by AO himself, shown lack of application of mind or proper appreciation of facts. It was the duty of the AO to ascertain all the facts on the basis of material available on record. The AO in not carrying out further verification or enquiries to assess total income of the assessee as evident from the incriminating material and to verify if it has ....
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.... the exercise of the jurisdiction by the Commissioner suo-motu under it, is that the order of the Income-tax Officer is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it 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. Understo....
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....se and practice of Court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles. The Hon'ble Court further held that from the above said definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an assessing 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 visualize a case of substitution of the judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases may be visualized where the ITO 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 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 deter....
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.... action of the authority is challenged before the Court, it would be open to the Courts to examine whether the relevant objectives were available from the records called for and examined by such authority. The decision of the ITO could not be held to be 'erroneous' simply because in his order he did not make an elaborate discussion in that regard. Moreover, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous, he simply asked the ITO to re-examine the matter, which was not permissible. 29. The Hon'ble Jurisdictional High Court in CIT Vs. Arvind Jewellers (259 ITR 502), while relying on the decision of Hon'ble Apex Court has taken a view that the provisions of section 263 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 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 t....
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....the Commissioner not to exercise his suo motu revisional powers unless supported by adequate reasons for doing so*. It was further held that applying the aforesaid law to the facts of the present case, we are of the view that the exercise of revisional power by the Commissioner in the instant case was uncalled for and unjustified. It was more in the nature of roving and fishing enquiry. The Commissioner has proceeded on the assumption that no such information, as was furnished to him, was furnished at the time of assessment. The Commissioner has mentioned that the Income-tax Officer has not examined the cash credits of the partners or deposits of Chit Fund. Assuming this to be so (though there does not appear to be any justification for the aforesaid observation), this may make the order erroneous, but how it is prejudicial to the interest of the revenue has not been stated by the Commissioner as he did not deal with the explanation given by the assessee in the course of section 263 proceedings. (*underline by us) 32. 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 i....