AI Drafter 
TaxTMI 
TaxTMI 
2022 (1) TMI 1116
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....ation for deciding the above appeals en masse. 3.The grounds of appeal raised by the assessee in lead case (in ITA No.60/SRT/2021 for AY.2015-16), are reproduced below: "1. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has grievously erred in initiating the proceedings u/s263 of the Act, 1961. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has grievously erred in assuming jurisdiction u/s263 of the Act, 1961. 3. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has erred in violating the principles of natural justice by not mentioning the grounds for initiating action u/s263 of Income Tax Act, 1961 in the show cause notice issued. As such the order passed u/s263 is void ab-initio. The action of the Ld. CIT was wholly unreasonable, uncalled for the bad in law. 4. On the facts and in the circumstances of the case as well as law on the subject, that the order of u/s263 is merely 'change in opinion'.....
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.... us is an Individual. In assessee`s case, the assessment under section 143(3) r.w.s.153A of the Income-tax Act, 1961,for A.Y.2015-16, was framed by the assessing officer on 29.12.2018, by accepting his return of income. 6. Later, Learned Principal Commissioner of Income Tax, [in short "ld. PCIT"], has exercised his jurisdiction under section 263 of the Income Tax Act, 1961. The ld. PCIT observed that a search and seizure action under section 132 of the Act, was conducted in the case of SRK Group, firm and its related group entities/partners at Surat, on 19.07.2016, along with survey action under section 133A of the Act, at the office premises of the entities and the construction projects carried on by them. In the said operation, a search and seizure action under section 132 of the Act, was carried out in the case of the assessee, at his residential premises. During the course of search and seizure action, in the cases of Shri Manish Sheladiya, Shri Karnlesh Babubhai Bhesania, Shri Jignesh Radadiya, various incriminating documents related to unaccounted income earned by assessee were found and seized/impounded from the business premises of M/s Radhika Builders and M/s Radhika Co....
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.... not examined the source of making such advance/loan in cash as assessee has not furnished such details/evidence. The seized document clearly mentions that loan was advanced by assessee on which interest has also been paid from time to time. In spite of having the above incriminating documents/evidences on record and also having gone through the same, the Assessing Officer has not carried out proper verification on enquiries on the same. This shows lack of application of mind and lack of enquiries while finalizing the assessment proceedings." 8. In response to the above show cause notice, the assessee submitted that all the details called by the AO has been duly submitted and the same was accepted by the Assessing Officer. During the course of assessment proceedings complete details and explanation in respect of the impounded material was submitted which has been duly considered by the Assessing Officer before finalizing the assessment. Therefore, none of the above conditions are satisfied in this case. It is further submitted that there is difference between lack of inquiry and inadequate inquiry and it is only in cases of lack of enquiry that the PCIT can exercise his....
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.... PCIT may be quashed. 12.On the other hand, Learned Departmental Representative (ld. DR) for the Revenue argues that there was no further inquiry made by the Assessing Officer in the course of assessment proceedings on the points raised by the Commissioner and, therefore, invoking of section 263 was quite justified.The ld. DR submitted that ld. PCIT has passed the speaking order and narrated the facts in para no.7.4, 7.5 and 7.6 of the revision order under section 263 of the Act, therefore the revision order passed by the ld. PCIT may be upheld. 13. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld PCIT and other materials brought on record. We find merit in the submission of ld Counsels and note that various issues raised by ld PCIT, in these present seven appeals, have been examined and adjudicated by the Coordinate Bench in the group case of Shri Bhavesh D. Paghdal and others, in ITA Nos.69 to 87 and 95 to 99/SRT/2021, order dated 30.09.2021, thus these seven appealsare squarely covere....
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....r. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue "unless the view taken by the Assessing Officer is unsustainable in law". 11. Taking note of the aforesaid dictum of law laid down by the Hon'ble Apex Court, let us examine in each case whether assessing officer has raised query during the assessment stage and assessee has submitted reply with documentary evidences during the assessment proceedings and these documentary evidences have been examined by the assessing officer. We will take each case of the assessee to see whether assessing officer has applied his mind and have examined the various issues raised by the ld PCIT in his order under section 263 of the Act: (1).(a)In case of Shri Vallabhabhai B. Paghdal, we....
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....ch evidence before the Assessing Officer, and AO has examined the same. (e)In respect of ITA No.95/SRT/2021,for AY 2016-17, the Ld PCIT has raised the issue regarding cash payment of booking of plot at Rs. 9.50 lakh and undisclosed capital gains on acquisition of land which was transferred by assessee on book value. The Ld. PCIT has also raised the issue regarding deduction u/s 57 of the Act, validity of disclosure made under IDS, gift from wife of Rs. 10 lakh, interest on reward on compulsory acquisition of land of Khator village, increase in value of Khator land in AY 2017-18, payment for the purchase of land, Block No.514, 515, 516 of Rs. 47,29,960/- relating to Khator village etc. The Ld PCIT also raised the issue relating to non-verification of source of loan of Rs. 9,89,000/- to M/s Amrut Sarovar. The ld Counsel explained that these issues raised by Ld. PCIT were examined by the Assessing Officer, as the Assessing Officer has issued the notice u/s 142(1) of the Act and assessee submitted his reply in response to Notice u/s 142(1) of the Act which is placed at paper book page 58 and 87 regarding cash payment of booking of plot. The other relevant evidences are placed ....
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....g advance has been received by the assessee on business account therefore no penalty should be levied, as the booking advance is part of the business receipts of the assessee which has been duly explained by the assessee during the assessment stage, vide paper book pages 89 and 61 respectively. (c) In respect of ITA No.76/SRT/2021 for AY 2017-18, we note that Ld. PCIT has raised the issue about repayment of loan and interest to the tune of Rs. 28,96,730/- and receipt of interest of Rs. 23,500/-. The Ld. PCIT has also noted that AO had not initiated penalty u/s 269SS of the Act. We note that assessee has submitted the relevant documentary evidence in respect of repayment of loan and interest, vide paper book 90 and 62.Theld Counsel has also explained receipt of interest of Rs. 23,500/- which is placed at paper book page no. 62. Therefore Ld. Counsel for the assessee submits that assessee has submitted relevant documentary evidences during the assessment stage, in response to notice u/s 142(1) of the Act. Therefore, order passed by the Assessing Officer should not be erroneous. (3) (a).In respect of Shri Mukesh A Moradiya, in ITA No.78/SRT/2021, for AY 2017-18, we n....
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.... Annexure A1 and B1, the assessee has submitted the relevant documentary evidence before the Assessing Officer which is placed at paper book 95 and 65. About the non-verification of transaction of sale of Rs. 66,66,666/- alongwith other co-owners, the assessee has submitted the relevant documentary evidences. The Ld. Counsel for the assessee also submits that there should not be any penalty u/s 271D of the Act as all the transaction made by the assessee were relating to business and therefore no penalty should be levied. (b).In ITA No.79 and 99/SRT/2021, for AY 2016-17 the Ld. PCIT has raised the issue about payment for purchase of 22 bighas of land at Rajkot of Rs. 52,25,000/- along-with other co-owners. The Ld.PCIT has also raised the issue about non-verification of transaction of sale of Rs. 7,96,86,000/- along-with other co-owners. The Ld. Counsel for the assessee submits that assessee has submitted the relevant documentary evidences during the assessment stage which is placed at paper book 85, 39 and 59 respectively. During the assessment stage, the Assessing Officer has examined these issues, therefore order passed by the Assessing Officer should not be erroneous. ....
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....Rs. 2,28,36,707/- of Kathor village and payment for purchase of land Block No.518, 519 and 522A of Rs. 18,41,363/-.The PCIT also raised the issue relating to source of investment of Rs. 27.50 lakh in land at Block No.318, 319 and 324 at Kholvad village with co-owners Harsukh Bhanderi. We note that Ld. PCIT has also raised the issue about cash loan of Rs. 2 lakh and also noted that Assessing Officer has not initiated the penalty proceedings u/s 271D of the Act. The Ld Counsel for the assessee explained before the Bench that the issue relating to purchase of land at Kathor village, is a common issue in all the appeals and Ld. PCIT has raised this common issue in all the appeals, however assessee has explained with documentary evidences before the Assessing Officer and explained the source of investment in respect of Kathor village. The Ld. Counsel for the assessee also explained the unaccounted cash loan of Rs. 2 lakh. The Ld Counsel states that since the transaction was in the course of business and these were explained before the Assessing Officer. Therefore, there is no question of initiating penalty u/s 271D of the Act. (d) In respect of ITA No.69/SRT/2021, for AY 2014-1....
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....2(1) of the Act, the assessee has submitted documents and evidences which were examined by the assessing officer and while examining the assessing officer has applied his mind also. On this finding of fact by us, we cannot term the assessment order passed by the AO u/s 153A/143(3), as erroneous. 13.It is pertinent to mention here that there was as such no allegation of 'no enquiry' or 'lack of enquiry' or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O.'s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. The main allegation of ld PCIT in his order under section 263, was that assessing officer has not made further inquiry. It means inquiry has been made by the assessing officer. The ld Counsel at this juncture submitted before the Bench that there is no end of further inquiry, the assessing officer whenever needed made further inquiry also. It is the domain of the assessing officer to decide, whether further inquiry is needed or not in a particular case. After getting the documents....
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....e must bear in mind is the distinction between adequate enquiries not having been conducted and the result of such enquiries not having been dealt with by way of a speaking order or not having resulted in the conclusion that could be, in the wisdom of a person other than the Assessing Officer, more appropriate. Here is a case in which sufficient enquiries were conducted. As learned brother has rightly noted, the Assessing Officer called for specific details, confirmations and even copies of bills. It could not, therefore, be said that sufficient enquiries were not conducted. 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-&agrav....
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....eting the assessment. Once the A.O. conducts enquiry as deem fit to complete the assessment u/s 143(3) r.w.s.153A and takes a possible view on such enquiry and consideration of facts and explanation of the assessee, in that case, jurisdiction to invoke provisions of section 263 does not lie. As stated above, during the course of the scrutiny assessment proceeding, the assessee furnished full details of land at Khator village, investments, amount advanced and amount received, balances shown in ledger accounts and books of accounts, details of capital gains, trading activities, party-wise break-up of debit and credit entries/balances of sundry debtors and creditors, audited books of account, notes of the financial statements, , bank details, quarterly VAT returns etc., which were as well filed before the Ld. Pr. C.I.T. during 263 proceeding. The A.O. also raised further queries to establish genuineness of sales, purchases, advances received and paid, investments in land, gift, cash deposit in bank out of assessee`s own fund, debtors and creditors etc, during the year. Considering all these facts and hearing the A.R. of the assessee on various dates, the impugned assessment order unde....
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....ing aside an assessment is large and wide, but that cannot be exercised to allow the A.O. to make up the deficiency of his case. We note that Coordinate Bench of I.T.A.T., Kolkata in the case of Plastic Concern vs. ACIT [61 TTJ 87 (Cal) has held that mere possibility of gathering more material to prove the claim of the assessee wrong would not make the concluded assessment erroneous so long as the ld. A.O. had acted judiciously and conducted enquiries in the course of assessment proceedings. 17. We note that after deep enquiry and considering the explanation of the assessee vis-a-vis the details/documents submitted, the Ld. A.O. accepted the documents and evidences and items as shown in the books of account of the assessee. That being so, the inference of the Ld. Pr. C.I.T. in support of his invoking jurisdiction u/s 263 of the Act that the "AO has passed the impugned assessment order without making further enquiries" is totally unfounded, baseless and beyond the facts of the case, as explained above and was based on the expectation of a fishing and roving enquiry, wrongly treated on par with lack of enquiry, which is different from inadequate enquiry, so that even on this....
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....ue for invoking the jurisdiction u/s 263 of the Act. In other words, the Ld. Pr. C.I.T. on the same set of facts and evidences on record was of the opinion that the A.O. should have made further inquiry, and he should have taken the stand which the Ld. Pr. C.I.T. hinted in the impugned order u/s 263 of the Act. This is not permissible under law. For better appreciation, the relevant portion of the judgment in the case of Malabar Industrial Co. Ltd. vs. CIT (supra) is quoted below : "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 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 Income-tax Officer is unsustainable in law". ....
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..... The aforesaid position gets further strength from the decision of Hon'ble jurisdictional High Court in the case of CIT vs. J.L. Morrison (India) Ltd. (2014) 366 ITR 593 (Cal), the relevant finding of which is applicable to the facts of the present assessee is quoted below : "85. Whether the assessment order dated March 28, 2008, was passed without application of mind is basically a question of fact. The learned Tribunal has held that the assessment order was not passed without application of mind. The records of the assessment including the order-sheets go to show that heard from time to time. In deciding the question the court has to bear in mind the presumption in law laid down in Section 114 clause (e) of the Evidence Act: "that judicial and official acts have been regularly performed. 86. Therefore, the court has to start with the presumption that the assessment order dated March 28, 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 Assessing Officer cannot be shown to have violated any form prescribed for writing an assessment orde....
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....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 principles of law. It cannot be an arbitrary opinion bereft of facts or law. The aforesaid clause only provides for situation where inquiries or verifications should be made by reasonable and prudent officer in the context of the case. Such clause cannot be read to authorize or give unfettered powers to the Commissioner to revise each and every assessment order. The applicability of the clause is thus essentially contextual. It has to be the opinion of a prudent person properly instructed in law. The Hon'ble Supreme Court in Maneka Gandhi Vs. Union of India reported in 1978 AIR (SC) 597 has laid down the law that a public authority should discharge his duties in a fair, just and reasonable, manner and the principle of due process of law was recognized by the Hon'ble Supreme Court. Therefore, the opinion of the Ld. CIT has to be in consonance with that of the well settled judicial principles and cannot be arbitrarily made discarding the judicial precedent on the subject. The opinion of the Ld. Pr. CIT has to be reason....
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....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 not be taxed twice. Therefore, we are of the view that jurisdiction exercised by the ld PCIT u/s 263 of the Act in not in accordance with law.We note that in assessee`s case under consideration, sufficient enquiries were conducted by assessing officer. The Assessing Officer called for specific details, confirmations and even copies of bills, copies of agreements, books of accounts, and seized material etc. It could not, therefore, be said that sufficient enquiries were not conducted. 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 Ld PCIT 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 records of the assessment go to show that appropriate enquiry was made and the Assessee was heard from time to time. Where another view is possible, revision is not permissible. ....
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.... A.O. and verified by him and that being so the order passed u/s 263 of the Act on such erroneous stand is liable to be quashed. Therefore, we quash the order of the ld. PCIT u/s 263 of the Act." 14. As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in assessees own group cases and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench. We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the judgment of the Coordinate Bench in assessees own group cases (supra), the order passed by ld PCIT under section 263 of the Act should be quashed. 15. Before parting, we may also refer to an argument put-forth by both the Learned Counsels that in case of main partners, namely: (i) Radhika Construction (vide ITA No.88,89&64/SRT/2021), (ii) Radhika Infrastructure (vide ITA No.66,67 &68/SRT/2021), and (iii) Radhika Corporation, (vide ITA No.65/SRT/2021), this Tribunal has already quashed the orders passed by the PCIT under section 263 of the Act. Therefore, these seven appeals are also covered in ....