TaxTMI 
TaxTMI 
2021 (11) TMI 630
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have filed declaration under IDS declaring undisclosed income of Rs. 4.00 Crore (Rs. 1.50 Crore for AY 2014-15, Rs. 1.50 Crore 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 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tated that there is no stock of WIP. No sale deed was registered during this assessment year nor possession of any unit was hand over, 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 imp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ax-Departmental representative (CIT-DR) for the revenue and have gone through the revisions order passed by ld. PCIT and the assessment orders 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 asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he contents of para 6 of the assessment order dated passed under section 143(3) rws 153C dated 29.12.2018 of AY 2016-17. 14. The ld. AR for the assessee further submits that ld. PCIT at the fag end of limitation period exercised its power under section 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 ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome. Secondly, it may be noted that there is closing WIP of Rs. 4,07,504/- as at the yearend which is fully reflected in the return of income and thus, ld. PCIT has wrongly stated that there is no stock of WIP. Further, it may be noted that in the year under consideration, there was no execution of 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/- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of life to such assessment order, accordingly, the revision order passed by ld. PCIT will not survive on this aspect alone. 20. On the last and fifth issue identified by ld. PCIT, the ld. AR for the assessee submits that that when the IDS declaration was made, the notice under section. 153C was not issued and therefore the proceedings were not pending. Further it is submitted 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 * Ra....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., assessee disclosed the source of income at the time of assessment by incorporation all the entries of impounded/seized materials in the books of accounts. The assessee also filed the calculation in support of declaration filed under IDS at the time of filing the declaration as well as in the course of assessment proceeding. The survey and search action is ultimate weapon with the department to unearth the black 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Parmanand M. Patel [278 ITR 3] (Guj. HC) CIT vs. Abhishek Corporation [IT Ref No. 15 of 2003] (Guj. HC) R. Srinivasan vs. DCIT [29 taxmann.com 279] (Mad. HC) Vishwa Infraways Pvt. Ltd. vs. CIT [ITA 596, 597 & 599/Pun/2015] Sree Alankar vs. PCIT [ITA No. 108/CTK/2018] (CTK Trih.) JRD Tata Trust vs. DCST [122 taxmann.com 275] (Mum. Trib.) Narayan Tatu Rane vs. ITO [2016] 70 taxmann.com 227 (Mum) (Trib) Indus Best Hospitality & Realtors Pvt. Ltd. vs. PCIT [ITA No. 3125/Mum/2017] (Mum Trib) Shanti Krupa Estate Pvt. Ltd. vs. ACIT - [1252/Ahd/2015] (AhdTrib) Plastic Concern vs. ACIT (1998) 61 TTJ 0087 (Kol. Trib.) ACIT vs. 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 n....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... granted by Range head for framing assessment order; therefore, there is no reason for setting aside the assessment order for the subject assessment years. 27. We have considered the rival submissions of the parties and have deliberated on various case laws relied on behalf of the assessee. We have also considered the documentary evidences filed by the assessee on record. Before discussing the facts of the case in hand, let us referred certain leading case laws on the scope of revisionary jurisdiction of ld. PCIT. The Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 832 held that a bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. One finds that the expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' have been defined in Black's Law Dictionary. According to the definition, 'erroneous' means 'involving error; deviating from the law'. 'Erroneous assessment' refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, 'erroneous judgment' means 'one rendered according to course 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 ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realized or cannot be realized. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by him that the order of the Income-tax Officer is erroneous insofar as it is prejudicial to the interest of the revenue will not suffice. The exercise of the power being quasi-judicial in nature, the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income-tax Officer was not only erroneous but was prejudicial to the interest of the revenue. Thus, while the Income-tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon 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, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the case and the material placed before him in response to the various show cause notices, to take a conscious decision if any further inquiry is required or not. Furthermore, we find that the assessment order was duly approved by the ld. JCIT. There in not finding of ld. PCIT that the approval granted by the JCIT is not proper or non-application of proper procedure and practice of the revenue. 33. We find that in the case in hand the AO has made required inquiry and came to a possible conclusion in allowing the claims to the assessee. We also find that on the issues of validity of discloser in IDS, the ld. PCIT has not specified that while making declaration, the assessee made any misrepresentation of any facts. Once the IDS in all cases were accepted by ld. PCIT, the AO or the Range head no authority to relook or power to revoke or to examine its validity. We further find that the ld. PCIT while directing the AO has not himself revoked the IDS nor directed to refund the payment of tax to the assessee. Further, we find that in the IDS the assessee has paid more tax to the revenue then the rate of normal tax, so there is no loss of revenue. 34. We further find that the A....