TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 760
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....issues of transfer of unaccounted fund of Rs. 25,00,000/- after layering through various companies to the assessee companies Bank A/c and fictitious loss of Rs. 43,02,450/- on account of transactions in Scan Steel Ltd. are irrelevant, erroneous and contrary to facts on record since order u/s. 143(3)/147 was passed by Ld. AO after proper verification and enquiries. 4. That on the facts and in the circumstances of the case, Ld. Pr. (CIT-2, Kolkata has erred in not appreciating the facts properly that the A.O. has conducted complete enquiries and verified all the details and after proper satisfaction framed assessment u/s. 143(3)/147. 5. That on the facts and in the circumstances of the case, Ld. Pr. (CIT-2, Kolkata has erred in passing order u/s. 263 mechanically without proper application of mind. 6. That the appellant craves leave to add, alter, adduce or amend any ground or grounds on or before the date of hearing of the appeal." 3. The assessee while raising aforesaid issues has raised a legal issue in respect invocation of revisionary jurisdiction by the Ld. Pr. CIT u/s. 263 of the Act against the AO's reassessment order dated 29.03.2019 pursuant to reopening of the a....
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....e Ld. Pr. CIT, the AO has not properly enquired into this issue during reassessment proceedings though the AO reopened about this unaccounted fund of Rs. 25 lakhs. Therefore, the reassessment order of the AO, according to Ld. Pr. CIT, was erroneous as well as prejudicial to the interest of revenue. And likewise the Ld. Pr. CIT was of the opinion that the loss claimed by the assessee of Rs. 43,02,450/- was fictitious and was on account of transaction in penny stock (M/s. SSL). Therefore, the reassessment order passed by the AO dated 27.12.2019 is erroneous as well as prejudicial to the interest of the revenue and, therefore, he was pleased to set aside the reassessment order directing the AO to frame the assessment afresh after taking into consideration the facts discussed by him. This action of the Ld. Pr. CIT is being challenged by the assessee on the legal issue that Ld. Pr. CIT did not had the jurisdiction to invoke revisional jurisdiction u/s. 263 of the Act and his finding that the AO's reassessment is erroneous as well as prejudicial to the interest of the revenue is, therefore, bad in the eyes of law. 7. We have heard rival submissions and gone through the facts and cir....
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....ording to the Ld. Pr. CIT, the AO has not properly enquired into this issue though the AO had reopened in respect of this unaccounted fund of Rs. 25 lakhs. Therefore, the reassessment order of the AO was erroneous as well as prejudicial to the interest of revenue. And likewise the Ld. Pr. CIT was of the opinion that the loss claimed by the assessee of Rs. 43,02,450/- was fictitious and was on account of transaction in penny stock (M/s. SSL). Therefore, the reassessment order passed by the AO dated 27.12.2019 is erroneous as well as prejudicial to the interest of the revenue and, therefore, he was pleased to set aside the reassessment order directing the AO to frame the assessment afresh after taking into consideration the facts discussed by him. This action of the Ld. Pr. CIT is being challenged by the assessee on the legal issue that Ld. Pr. CIT did not had the jurisdiction to invoke revisional jurisdiction u/s. 263 of the Act and his finding that the AO's reassessment is erroneous as well as prejudicial to the interest of the revenue is bad in the eyes of law. 8. Before we advert to the legal issue raised by the assessee let us examine the settled legal precedents on the reo....
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.... be held invalid and the reassessment would be nixed. In this context let us look at some well settled judicial precedents on the issue in hand. It is well settled in law that reasons, as recorded by the AO for reopening the reassessment, are to be examined on a standalone basis. Nothing can be added to the reasons so recorded, nor can anything be deleted from the reasons so recorded. The Hon'ble Bombay High Court in the case of Hindustan Lever [2004] 267 ITR 332 has inter-alia, observed that ".............. it is needless to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn on the basis of reason not recorded by him. He has to speak through the reasons." Their Lordship added that "The reasons recorded should be self-explanatory and should not keep the assessee guessing for reasons. Reasons provide link between conclusion & the evidence.........". Therefore it has to be kept in mind that reasons are to be examined only on the basis of the reasons as recorded by the AO. Another important point is that even though reasons, ....
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....y or adequacy of the material & substitute its own opinion for that of the ITO on the point as to whether actions should be initiated for reopening assessment. At the same time we have to bear in mind that it is not that any or every material, howsoever vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee." 9. And while reopening an assessment the AO should keep in mind another important point that information adverse may trigger "reason to suspect"; then AO has to make reasonable enquiry and collect material which would make him believe that there is in fact escapement of income. With the aforesaid judicial precedents and the settled position of law in respect of reopening of the assessment, when we examine the legal issue raised by the assessee, we note that in this case the original assessment u/s. 143(3) of the Act was framed on 30.03.2015 (refer page 14 to 17 of paper book); and thereafter, the AO has reopened the assessment by issuing notice u/s. 148 of the Act on 29.03.2019 conveying his desire to reopen the original assessment and thereafter conveyed to the assessee the....
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....it. Therefore, according to the Ld. AR, since the AO has enquired into both the issues in detail and the assessee had replied to it and the AO has taken a plausible view on both the issues it could not have been disturbed by the Ld. Pr. CIT by invoking his jurisdiction u/s. 263 of the Act, without he himself conducting enquiry and finding that the view taken by the AO is unsustainable in law. And according to Ld. A.R., even if the Ld. Pr. CIT has different view after the outcome of his own enquiry then also he cannot upset the AO's view if the AO's view is a possible view; and the Ld. Pr. CIT can only interfere if he can hold that the view taken by the AO only if it is unsustainable in law. (refer Hon'ble Supreme Court decision in the case of Malabar Industrial Co. (supra). Therefore, according to Ld. A.R., since in this case the AO has inquired into both the issues and has taken a plausible view, the Ld. Pr. CIT could not have interfered with the AO's action, unless he has recorded a finding after enquiry by himself that AO's view are unsustainable in law. 10. One more legal angle the Ld. AR pointed out is that in the reasons recorded by the AO it can be noted....
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....not draw any adverse inference against the assessee on this issue and now through this via media of this impugned order, the Ld. Pr. CIT has desired to interfere by improving the allegation about Rs. 25 lakhs wherein he has made improvement in the allegation that this amount has given through layering from M/s. Kalyan through M/s. BSR Finance and ultimately the beneficiary was the assessee. Therefore, from this factual aspect itself the Ld. CIT, DR pointed out that the AO did not do proper enquiry to find out the layering which AO could have brought out if proper enquiry was done regarding this transaction of assessee wherein M/s. Kalyan was also there albeit through another entity M/s. BSSR; and it was pointed out by the Ld DR that even though the assessee might not have received the money directly from M/s. Kalyan, however the assessee was the ultimate beneficiary through M/s. BSR Finance. However, we do not countenance this contention of the Ld. CIT, DR for the simple reason that in the reasons recorded the AO has alleged about Rs. 25 lakhs assessee receiving from M/s. Kalyan. And the assessee was confronted with these reasons recorded and the assessee rebutted this alleged fact....