TaxTMI 
TaxTMI 
2021 (9) TMI 1331
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....he order passed by the learned Principal Commissioner of Income Tax(Central), Surat,under section 263 of the Income Tax Act. 2. Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No. 69/SRT/2021 for Assessment Year 2014-15, have been taken into consideration for deciding the above appeals en masse. 3. Grievances raised by the assessee in lead casein ITA No. 69/SRT/2021 for AY.2014-15, are as follows: "1. On the facts and in circumstances of the case as well as law on the subject, the learned Pr. CIT has erred in passing the order u/s 263, although he assessment order passed u/s 143(3) r.w.s. 153A of the I. T. Act,1961 was neither erroneous nor prejudicial to the interest of the revenue. 2. 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. Brief facts as discernable from the orders of lower authorities are thatassessee filed his original return of income u/s 139 of the Act on 31.12.2014 dec....
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.... of the Act dated 16-03-2021, was issued by the ld PCIT, fixing the case for hearing on 22-03-2021. The relevant para of the same is reproduced as under: "3. Subsequently, on verification of the case-records, it is observed that the assessment in your case was completed without proper verification or enquiries in respect of the incriminating documents found and seized during the course of search and survey proceedings. In the initial part of the assessment proceedings, the Assessing Officer issued a detailed questionnaire along with notice under Sec, 142(1) of the Act dated 24.10.2018 based on the incriminating documents found and seized/impounded during the course of search and survey proceedings. A notice under Sec. 143(2) of the Act was also issued on 16.11.2018 and duly served upon you. After considering the preliminary submissions made by you, the Assessing Officer issued a detailed show cause notice on 10.12.2018 requiring you to explain the specific points mentioned therein. In compliance to the said show cause notice issued by the Assessing Officer you have furnished certain explanation which is placed on record. However, on perusal of the case records and details/evidenc....
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....he residence of Shri Manish Naranbhai Sheladiya situated at E203. Swastik Towers, Sarthana Jakat Naka, Varachha Road, Surat shows details of loans advanced by you and two other partners of M/s. Amrut Sarovar. This document also confirms that the said land was purchased by you along with other partners of the firm and payment of unaccounted cash was made for the same to the sellers. Page No.7 & 9 shows advancement of loans by you amounting to Rs. 2,05,00,000/-and other partners to the Partnership Firm and on Page No. 10, there is a noting of return of loan of Rs. 10000 (Coded) i.e. 1 Crore to 'Bhaveshbhai on 08.10.2013. On 08.10.2013, cash payment has also been made of aggregate Rs. 3 Crore to Shri Govindbhai Vekharia as noted in the a copy of Rojmel impounded from the premises of the firm, M/s. Amrut Sarovar. This confirms the modus operandi of payment of cash on-money to sellers of the property. The details of the above unaccounted payments were also recorded by the assessee group in the Lenova laptop seized from the residence of Shri Rajeshbhai Laxmanbhai Mangroliya, located at flat no. E-202, Swastik Towers, Sarthana Jakat Naka, Surat. In the said laptop, the same is avail....
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....Lenova laptop seized from the residence of Shri RajeshbhaiLaxmanbhaiMangroliya, located at flat no. E-202, Swastik Towers, SarthanaJakat Naka, Surat. In the said laptop, the same is available in the form of an excel spreadsheet named as 'JAMIN NU PAYMENT.xlsx. In the Rojmel, on various dates and payments have been made by way of cash/cheque towards purchase of land in the name of the assessee and therefore, the cash payment component was also required to be assessed in your hands. The Assessing Officer has simply accepted your submission that the payment for the same has been made by the partnership firm and it is covered by the disclosure made by the firm in IDS, 2016 in respect of net profit from on money transactions. However, the Assessing Officer has failed to carry out any enquiries especially when the partnership firm cameinto existence only on 15.07.2013 and the assessment proceedings in the case of the partnership firm and land owners were open before him simultaneously. The share of investment on the part of Shri Bhavesh Dhirubhai Paghdal is l/3rd of the amount, which works out to Rs. 3,79,33,333/-. The year wise bifurcation of the payments made is as follows : A.Y. ....
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....edings under Sec. 153A of the Act were initiated as a consequence of search proceedings in the SRK group of cases. The assessment proceedings under Sec. 143(3) r.w.s. 153A of the Act was completed on 29.12.2018 by accepting the returned income of Rs. 34,08,540/- Here, it is pertinent to mention that it was imperative on the part of the Assessing Officer to enquire into the issues of 'Purchase of Property' and "Unsecured Loans", the reasons for which the case was selected for scrutiny under CASS. However, from the perusal of the records, it appears that the Assessing Officer has neither verified nor enquired into these issues. This shows lack of application of mind while completing the assessment proceedings. 7. In view of the above facts and circumstances of the case, it is observed that the Assessing Officer has not made any effort to verify the above issues by taking cognizance from the incriminating documents found and seized/impounded during the course of search proceedings or which were available on records. It is, therefore, evident that the assessment in your case was completed by accepting the returned income without making due inquiries and verification in respect of th....
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.... on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal 9a[Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Princ....
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....d not be made in the hand assessee-firm as well as in the hands of partners/individuals. The said transactions have been again repeated by the ld PCIT in his order under section 263 of the Act, therefore, it is tantamount to impose tax on the same income twice, which is not the intention of the Income Tax Act, therefore, on this fact alone, the jurisdiction exercised by the ld PCIT is void ab-initio in the eye of law. Further, ld Counsel submits in brief that during the assessment proceedings, the Assessing Officer has issued notice u/s 142(1) of the Act wherein the Assessing Officer has raised all the queries / questions which are raised by the Ld. PCIT in his order u/s 263 of the Act. In response to queries raised by the Assessing Officer u/s 142(1) of the Act, the assessee has submitted his reply alongwith evidences. The Assessing Officer after going through the reply of assessee has passed order u/s 143(3) r.w.s 153A of the Act. Therefore order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of revenue. He further contends that in order to invoke the provision of Section 263 of the Act, twin condition needs to be satisfied, first the order ....
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....Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to theinterest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has ....
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.... No.518, 519 and 522A of Rs. 2,71,41,970/- of Khator village. In addition to this, Ld. PCIT has raised the issue about non-verification of cash loan advance to partnership firm and validity of disclosure under IDS. We note that all issues were questioned by the Assessing Officer during the assessment stage, by way of notice u/s 142(1) of the Act and assessee has replied the same during assessment proceedings. (d). In ITA No.84/SRT/2021, for AY 2015-16, we note that Ld. PCIT has raised the issue regarding payment for the purchase of land in Block No.514, 515, 516/1 & 516/2 of Rs. 2,28,36,707/- of Khator village and payment for purchase of land in Block No.518, 519 & 522A of Rs. 18,41,363/- of Khator village. The Ld. PCIT also raised the issue about the non-verification of Annexure-BS-39 and 87 and income disclosed under IDS. Undisclosed capital gains on sale of land and validity of disclosure under IDS were also raised by the Ld. PCIT. We note that during the assessment stage, the Assessing Officer issued show-cause notice u/s 142(1) of the Act and assessee has submitted its reply during the assessment stage. Therefore, assessee has submitted each evidence before the Assessing Off....
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....f Rs. 3 crores on 12.12.2014 and source of loan advance to firm of Rs. 3 crore on 01.01.2015. We note that about source of loan advance to firm the Ld. Counsel for the assessee demonstrated that the issue has been examined by the Assessing Officer vide paper book pages 92 and 63 respectively. The source of advance to firm of Rs. 3 crore has also been examined by the Assessing Officer vide paper book page 89 and 61 respectively. During the assessment stage, the Assessing Officer has raised the query and assessee has submitted the reply alongwith documentary evidences. (b) In respect of ITA No.75/SRT/2021,for AY 2016-17, Ld. PCIT has raised the issue mainly for understatement of income of Rs. 7,96,86,000/-. Ld. PCIT also raised the issue relating to source of loan advanced to firm of Rs. 10 lakh and Ld. PCIT also observed that Assessing Officer has not initiated penalty proceedings u/s 269SS and 269TT of the Act. The ld Counsel has submitted the relevant evidences before the Bench, vide paper book page 89 and paper book page nos. 8 to 11 of the paper book submitted by the assessee. The Ld. Counsel for the assessee also explained that the booking advance has been received by the ass....
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....other co-owners vide paper book page 50, 37, 44 and 62 respectively. Therefore, Assessing Officer has examined the issue during the assessment stage. (4). (a) Regarding Shri Amita Kamlesh B Bhensania in ITA No.80/SRT/2021 for AY 2017-18, the Ld. PCIT has raised the issue about investment of Rs. 1,59,84,800/- in Mangal Murti Complex and payment for purchase of land Block 494 at Kamrej. The Ld. PCIT has also raised the issue about nonverification of cash loan of Rs. 4,63,475/- as per Annexure A1 and B1 respectively. The Ld. PCIT also observed that Assessing Officer has not verified the sale of Rs. 66,66,666/- along-with other co-owners. The Ld. PCIT also noted that Assessing Officer has not initiated penalty u/s 271D of the Act. We note that about investment in Mangal Murti Complex, the assessee submitted the relevant evidences which are placed at paper book page 85, 58, 26 and 60 and paper book page 41 submitted by assessee. In respect of payment for purchase of land in Block 494, we note that assessee has submitted relevant documentary evidence which is placed at paper book page 41, and in respect of non-verification of cash loan of Rs. 4,63,475/- as ....
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....der passed by the Assessing Officer should not be erroneous. (b) In respect of ITA No.71/SRT/2021, for AY 2016-17, the Ld. PCIT has raised the issue relating to payment for purchase of land, Block No.514, 515, 516/1 and 516/2 of Rs. 47,29,960/- of Kathor village and payment for purchase of land for Block No.518, 5119 & 522A of Rs. 89.50 lakh of Kathor village. The Ld. PCIT also noted that assessee has not explained the source of investment of Rs. 2,85,333/- and Rs. 2,99,166/- in Block No.411 and 406 respectively in village Hathoda, Mangrol. The ld Counsel has submitted the relevant documentary evidences during the assessment stage, which is placed at paper book page no. 82 and 240 respectively. We note that the issue relating to purchase of land in Kathor village is a common issue in all the appeals, wherein the assessee has explained with documentary evidences before the Assessing Officer during the assessment stage. Therefore, order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the revenue. (c). In respect of ITA No.70/SRT/2021, for AY 2015-16, theLd PCIT has raised the issue about payment for purchase of land, Block No.514, 515 &516 ....
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....idences which were submitted by the assessee before the Assessing Officer. This cash loan and expenses partly explained by assessee as a part of sale of mango. The Assessing Officer made adequate inquiry during the assessment stage and assessee has submitted the relevant documentary evidences before the Assessing Officer. (7) In respect of Harsukhbhai Vallabhai, in ITA Nos.85,86,87/2021, the same issues were raised by the ld PCIT which are duly examined by the assessing officer. In respect of Kapil Kumar in ITA No.72,73/2021,the same issues were raised by the ld PCIT which are duly examined by the assessing officer. Therefore, Ld Counsel for the assessee submits that order passed by the Assessing Officer should not be erroneous. 12. We are aware of the fact that Assessing Officer's role while framing an assessment is not only an adjudicator. The AO has a dual role to dispense with i.e. he is an investigator as well as an adjudicator; therefore, if he fails in any one of the role as afore-stated, his order will be termed as erroneous. We note that in these group cases, the assessing officer has issued notice under section 142(1) of the Act and in response to notice under section 1....
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....o revision proceedings. Therefore, the very initiation of proceeding u/s 263 of the Act by the Ld. Pr. C.I.T. is in violation of the settled position in law. When the conditions precedent for invoking revisional power u/s 263 of the Act on the facts and in the circumstances of the case are not fulfilled in the case of the assessee, the subsequent action in passing the order u/s 263 on such invalid proceeding becomes null and void. Reliance is placed on the following decisions, the ratios of which are totally applicable to the facts of the assessee's case: (1) Smt. Juthika Kar vs. ITO [I.T.A. No.1128/Kol/ 2009, dated 16.5.2012] "8. With the leave and consent of my learned brother, however, I may add a few words to my learned brother's analysis of Hon'ble Delhi High Court's judgment in the case of Gee Vee Enterprises (supra). Undoubtedly, as noted by their Lordships in that case, an Assessing Officer cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. In such a case, revision proceedings can indeed be initiated and there seems to be no serious controversy in this respect. The fine point, however, one must bear in mind is the di....
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....8, 2008, was regularly passed. There is evidence to show that the Assessing Officer had required the Assessee to answer 17 questions and to file documents in regard thereto. If the A.O. cannot be shown to have violated any form prescribed for writing an assessment order, it would not be correct to hold that he acted illegally or without applying his mind." [Emphasis given] 15. We note that section 263 of the Act speaks of revision of orders prejudicial to revenue. As per the said section and various judicial precedents including those of Hon'ble Apex Court in the cases of Malabal Industrial Co. Ltd. vs. CIT (243 ITR 83) and CIT vs. Max India Ltd. (295 ITR 282), in order to invoke provisions of section 263 of the Act, twin conditions need to be satisfied exhaustively, viz. first, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. Such occasions arise when the A.O. while passing assessment order u/s 143(3) r.w.s 153A did not have called for such information/ documents from the assessee to frame the assessment and did not consider the same before completing the assessment. Once the A.O. conducts enquiry as deem f....
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....gation of the Ld. Pr. C.I.T. in his show cause notice u/s 263 that "AO has passed the impugned assessment order without making further enquiries" does not come within the purview of twin conditions contained in section 263 of the Act. The Ld. Pr. C.I.T. by setting aside the assessment order has allowed the Ld. A.O. to reopen the concluded issue, which was adjudicated upon after detailed enquiry. This course of action on the part of Ld. Pr. C.I.T. is not permissible u/s 263 of the Act. It is a settled position in law that the proceedings u/s 263 cannot be initiated by the Ld. Pr. C.I.T. merely in his supervisory capacity. Before invoking the powers u/s 263 of the Act, it is necessary for him to demonstrate that the A.O. had committed a patent error which resulted in prejudice to the revenue. On the contrary, where the Ld. A.O. has conducted enquiries and after due consideration of the facts and circumstances of the case backed by relevant details/documents, he comes to a conclusion, then it is not open to the Ld. Pr. C.I.T. to invoke revisionary jurisdiction. The power envisaged u/s 263 of the Act in setting aside an assessment is large and wide, but that cannot be exercised to allo....
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....ation to the issues raised by the Ld. Pr. C.I.T., which were examined by Assessing Officer. Therefore, it is the appraisal of the same records which are already with the Ld. A.O. and the Ld. Pr. C.I.T. took a different view than adopted by the A.O. on the same set of facts, which is not permissible u/s 263 of the Act. In the above circumstances, the view taken by the A.O. was one of the possible views and the assessment order passed by him could not be held to be erroneous and prejudicial to the interests of revenue. For that we rely on the decision of Hon'ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd. [(2010) 189 Taxman 436 (Del)]. Further, it was settled by Hon`ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] (supra), wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s 263 of the Act. In other words, the Ld. Pr. C.I.T. on the....
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....er does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. For that we rely on the decision of the Coordinate Bench of I.T.A.T., Kolkata in the case of Smt. JuthikaKar vs. ITO [I.T.A. No.1128/Kol/ 2009, dated 16.5.2012 ], wherein it has been held as under (relevant portion) :- "8......However, what is opinion formed as a result of these enquiries is something which is in exclusive domain of the Assessing Officer, and even if Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. The conclusions arrived at as a result of enquiries cannot be tinkered with in the revision proceedings. The conclusions being drawn up as a result of enquiry is a highly subjective exercise and as to what is appropriate conclusion is something on which perceptions vary from person to persons. These variations in the perceptions of the Assessing Officer vis-a-vis that of the Commissioner, cannot render an order erroneous and prejudicial to the interest of the revenue." 20. The aforesaid position gets further strength from the decision of Hon'ble jurisdictional High Court in the case of CIT v....
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....nt order, that would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision." [Emphasis supplied] 21. According to the decision of Coordinate Bench of I.T.A.T., Hyderabad in the case of Manisha Agri Biotech P. Ltd. vs. CIT (2014) 36 ITR (Trib.) 42 -, wherein it was held as follows: "The respondent had no different or new material to take a different view from the one taken by the Assessing Officer and the reasons given by him to reopen the assessment and sustain the revision are totally unacceptable. The respondent is not vested with any power under section 263 to initiate proceedings for revision in every case and start re-examination and fresh enquiries in matters which have already been concluded under the law. " 22. Coming to the expression in Explanation -2 to section 263 of the Act. The ld PCIT has stated in his order that he has power to exercise the jurisdiction under section 263 of the Act in the four circumstances mentioned therein. The said explanation states that " if in the opinion of the Ld. CIT", it must be the considered opinion of the CIT which is based on the correct facts and in accordance with the ....
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....t. The Ld. CIT can exercise his revisional jurisdiction in the event the assessment order is erroneous as well as prejudicial to the interest of the Revenue as discussed above and not otherwise. 23. Conclusion: We note that main grievance of Learned Counsel is that most of the issues raised by the ld PCIT in his order under section 263 of the Act, are covered by the disclosure made by the assessee firm in IDS, 2016 in respect of net profit from "on money" transactions, therefore further additions should not be made in the hands of assessee-firm and in the hands of partners and other individuals. The said transactions have been again repeated by the ld PCIT in his order under section 263 of the Act, therefore, it is tantamount to impose tax on the same income twice, which is not the intention of the Income Tax Act. We note that Hon'ble Supreme Court in ITO Vs. CH. Atchaiah (1996) 218 ITR 239 (SC) has held that the income should be assessed on the right person, right year and it should be on the right income. From the aforesaid decision of the Hon'ble Supreme Court only the right person and the right person alone is liable to be taxed and not the wrong person. The same income should....