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TaxTMI 
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TaxTMI 
2022 (2) TMI 1181
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....ted. 2.1 The assessee has raised the following grounds of appeal: 1. The Ld. POT (Central), Ahmedabad ("the PCIT") has grossly erred on facts and in law in invoking jurisdiction u/s 263 of the Act and has further erred in directing the AO to pass a fresh assessment order in accordance with law and facts of the case 2. The Ld. PCIT has grossly erred on facts and in law in passing order u/s 263 of the Income Tax Act, 1961 ignoring the fact that the assessments completed in the cases identical to the case of the of the appellant were quashed by the Hon'ble Income Tax Appellate Tribunal, Ahmedabad for incorrect invocation of Jurisdiction u/s 153C of the Act and for the same reasons the assessment sought to be reviewed was ab-initio bad in law and unsustainable. 3. The Ld. PCIT has grossly erred on facts and in law in failing to appreciate that the invocation of jurisdiction by the AO under section 15SC of the Act was bad in law and has further erred in directing the AO to make fresh assessment in the case of the appellant on the basis of peak working of the duly recorded transactions in the duly audited' books of account/ROI in gross dis-regard of the settled law that ....
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....turn of income declaring total income of Rs. 52,80,181/- from the source of interest on the loans and advances. There was a search action u/s 132 of the Act in the case of Venus Group at various premises. As a result of search the documents pertaining to the assesse were found and therefore proceedings u/s 153C of the Act were initiated on 08/05/2015. Consequently, the assessment was completed u/s 143(3) r.w.s. 153C of the Act, vide order dated 28/12/2017 by accepting the income declared by the assessee in the return of income. 4.1 However, the Ld. Pr. CIT on perusal of the case records found that the assessee was engaged in providing accommodation entries to various associated concerns. The AO during the assessment proceedings vide notice dated 08/12/2017 show caused the assessee to adopt peak credit theory for determining the unaccounted income. As such there were many entries reflected in the bank account of the assessee bearing A/c No. 482313810 in Indian Bank. Thus, it was proposed to adopt the peak balance amount lying in the bank as unaccounted income plus the commission income @ Rs. 50 per lacs. Thus, the AO worked out the proposed income of the assessee for different asse....
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....ith it (the assessee) for Rs. 9,64,30,427/- right from the Financial Year 2004-05 which is more than the purported peak working of the bank balance. 4.6 Furthermore, the amount of share capital, reserve and surplus was accepted by the Revenue in the assessment framed u/s 143 of the Act, for the Assessment Years 2005-06 and 2006-07. Thus, the interest income was offered to tax by assessee from its regular bank account and in such situation the question of adopting peak credit amount lying in the bank cannot be applied. 4.7 The assessee also contended that the peak credit theory is an alternate method of making the assessment which is adopted when books of accounts of the assessee are not reliable. Thus if peak credit theory is adopted in the case of assessee and then there cannot be any addition based on the income declared by the assessee otherwise it would lead to double addition. In view of the above the assessee contended that the AO in the assessment framed u/s 143 r.w.s. 153 C of the Act has taken one of the possible view which cannot be disturbed in the proceedings u/s 263 of the Act. 4.8 Without prejudice to the above, the assessee also submitted that the assessment frame....
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....nk Account i.e. Indian Bank account No,482313810 in F.Y.2008-09 relevant to A.Y.2009-10 is stated to be Rs. 170,63,843/-, Therefore, the peak credit balance of Rs. 170,63,843/- is to be examined and to determine the taxability of same for A.Y.2009-10. 6.3. During the assessment proceedings, the assessee before the Assessing officer had stated that the gross returned income for all years under consideration (A.Y.2009-10 to A.Y.2014-15) is more than the proposed additions for A.Y.2009-10 to A.Y.2014-15. The Assessing Officer has not made addition in this regard accepting the contention of the assessee. 6.4. The stand taken by the assessing officer is in contravention to the provisions of the Act as income u/s 153C has to be taxed on year to year basis and not on cumulative basis. The Assessing Officer has therefore erroneously considered total income shown of all the assessment years i.e. A.Y.2009-10 to A.Y.2014-15 with respect to peak of the bank balance to be taxed as unaccounted income. As per provisions of Income Tax Act every assessment year is separate and needs to be assessed independently. The total income for a particular period can't be taken to explain the credit....
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....153C of the Act was barred by limitation as provided u/s 153B of the Act. As per the Ld. AR the AO of the assesse as well as the search person was common and therefore the time limit for making the assessment framed u/s 153C of the Act, could have been two years from the end of the Financial Year in which the last of the authorization for search u/s 132 of the Act was executed. 9.1 The Ld. AR further contended that the AO during the assessment proceedings u/s 153C of the Act, has taken one of the possible view and therefore the same cannot be revised under the provision of section 263 of the Act. 9.2 The Ld. AR further submitted that the AO during the assessment proceedings has conducted various enquiries and thereafter framed the assessment after due application of mind. Therefore, the order cannot be revised u/s 263 of the Act. 10. On the other hand the Ld. DR before us submitted that the proceedings under section 153C of the Act were initiated after recording the satisfaction as required under the provisions of law. Therefore, the assessment based on such satisfaction cannot be regarded as invalid. 11. The provisions of the income tax requires to tax the income in the hands ....
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....g on the determination of the total income for the assessment year. Therefore, it is fit case for initiation of proceeding u/s. 153C of the I.T. Act. 13.1 From the above, there remains no ambiguity to the fact that there was no document found from the search premises belonging to the assessee. Therefore the assessment in itself is bad in law. In holding so we draw support and guidance from the order of this tribunal in the case of the group of the assessee of Shri Hitesh Ashok Vaswani and others Vs. DCIT in IT(SS)A 118-123/AHD/2019 wherein it was held as under: 23. In the appeals of the present assessees, identical situation is there. A perusal of the satisfaction note would indicate that the AO nowhere held that documents belonged to the present appellants were found at the premises of searched person/entity. As far as case laws relied upon by the Id.CIT-DR are concerned they are not directly on the point. He put emphasis on the decision of Hon'ble Kerala High Court cited (supra) for buttressing his contentions that no incriminating material is required for proceedings under section 153A or 153C. This proposition is contrary to the decision of Hon'ble Gujarat High Cour....
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....ile appeal before Mumbai tribunal. The learned AR for the assessee contended that the order under section 143(3) passes by the AO in the name of non-existing/ amalgamated company therefore the assessment itself is invalid. Hence the order which is invalid cannot be revised under section 263 of the Act. However the learned DR contended that the validity of original assessment cannot be challenged in the proceeding under section 263 of the Act. The coordinate bench in light of the above counter argument held that the proceeding under section 263 is collateral proceeding to original. Thus the validity of the original assessment can be challenged along the proceeding of section 263 of the Act. The relevant finding of the Mumbai bench is reproduced here under: 8. Challenging the jurisdictional defects of assessment order for assailing the jurisdictional validity of the revision order passed u/s 263: The first issue that arises for our consideration is - whether the assessee can challenge the jurisdictional validity of order passed u/s 143(3) in the appellate proceedings taken up for challenging the order passed u/s 263? If we analyse the nature of both of these proceedings, which a....
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.... limited purpose of examining whether the collateral (subsequent) proceedings have been initiated on a valid legal platform or not and for examining the validity of assumption of jurisdiction to initiate the collateral proceedings. If it is not so allowed, then, it may so happen that though order passed in the original proceedings was illegal and thus order passed in the subsequent proceedings in turn would also be illegal, but in absence of a remedy to contest the same, it may give rise to an 'enforceable' tax liability without authority of law. Therefore, the Courts have taken this view that jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings also. This issue is not res integra. This issue has been decided in many judgments by various courts, and some of them have been discussed by us in followings paragraphs. 13.4 The next controversy arises whether the assessment framed by the AO under section 153C read with section 143(3) of the Act is barred by limitation as provided under the provisions of section 153B of the Act. It was contended by the AR that the time provided for framing the assessment under sectio....
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....ch is conducted the documents are looked into by the AO during the proceedings, if he/she finds that any documents belongs to/pertains to the other persons then he/she can initiate proceedings against such other persons after recording the satisfaction to that effect. Now at what stage the AO will come to know during the proceedings that any of the documents found at the premises of searched person belongs/pertain to the other persons? This fact is not known and therefore the lawmakers have given extended time limit for framing the assessment of the other persons. Thus there will not be any change in the provisions of law despite the fact that there was the common AO of the searched as well as other party. Thus we disagree with the contention of the learned AR and accordingly reject the same by holding that the assessment order was not barred by time. 13.7 Moving further, we also note that the AO has made the assessment after making necessary enquiries. For this purpose we refer to the notice issued under section 142(1) of the Act dated 8-12-2017 wherein it was proposed, inter-alia, to make the addition of the peak amount lying in the Indian Bank bearing A/c No. 482313810 of the a....