TaxTMI 
TaxTMI 
2022 (3) TMI 765
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.... With the consent of both the parties, the case of the assessee, Smt. Sunita Gupta in ITA No. 106/Chd/2021 for assessment year 2016-17 was taken as a lead case wherein the contentions advanced by both the parties were heard and material pursued in the context of following grounds of appeal taken by the assessee: "1. Whether on the facts and circumstances of the case and in law, the ld. CIT has exceeded legislative jurisdiction under section 263 of the Act thus order passed is bad in law. 2. That the ld. CIT has erred in passing order under section 263 in the absence of any erroneous position prejudicial to the interest of Revenue in the original assessment order passed by the ld. ITO under section 143(3) of the Act. 3. That the ld. CIT has erred in concluding proceedings under section 263 of the Act without proper perusal of the assessment record. 4. That the ld. CIT has erred in substituting an alternative view as against the firm view adopted by the ld. A.O. at the time of original assessment under section 143(3) of the Act." 4. Briefly, the facts of the case are that during the year under consideration, the assessee derives income from shar....
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....ar through M/s. Vikson Securities Pvt. Ltd. has not been investigated and questioned by the A.O. and the A.O. has failed to raise any query in this regard. 8. It was further held by the Ld. Pr. CIT that the assessee has claimed that statement received from M/s. Vikson Securities Pvt. Ltd. is incomplete and a complete statement has been provided by her and as per which, the premium earned is Rs. 25,33,788/-. However, as per the said statement, there is a closing balance of various options and futures as on the last day of the year, the value of which has to be considered for working out the exact premium earned by the assessee. Since the A.O. has failed to consider the same, the order so passed by the A.O. is erroneous and being prejudicial to the interest of the Revenue. 9. It was further held by the Ld. Pr. CIT that on perusal of the copy of account of M/s. Vikson Securities Pvt. Ltd., it is noted that the assessee has received Rs. 1,32,300/- from M/s. Vikson Securities Pvt. Ltd. on 29.04.2015 and has paid Rs. 25 lacs to M/s. Vikson Securities Pvt. Ltd. on 20.04.2015 and thereafter has received back various amounts from time to time during the course of the year. The Ld. Pr.....
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....e segment)/sauda summary, profit & loss summary (cash segment) and Demat account detail of the assessee and thereafter taking into consideration the submissions filed by the assessee, which were independently verified and corroborated by the information submitted by the broker, the assessment proceedings were completed accepting the returned income so filed by the assessee. It was accordingly, submitted that the findings of the Ld. Pr. CIT that the A.O. has neither called for the relevant documents, nor examined the documents filed by the assessee, nor considered the legal provisions of the Act, are factually incorrect and the said findings deserve to be set aside. It was submitted that the A.O. has conducted proper enquiries and examined all facts and after thorough scrutiny of the documents so filed, the returned income has been accepted. In support, reliance was placed on the Coordinate Bench's decisions in the case of M/s. Darshan Medicos Vs. CIT (2021) 62 CCH 341 (Chandigarh Trib.), in the case of CIT Vs. Pawan Kumar (2015) 62 Taxmann.com 260 and in the case of CIT Vs. Rajshyama Constructions Pvt. Ltd. (2012) 20 Taxmann.com 251. 12. It was further submitted by the ld. A....
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....the Act. It was submitted that calling for such records from NSEL cannot be deemed to be a record for the purpose of Explanation-1(b) to section 263 of the Act. It was submitted that the proceedings u/s. 263 of the Act, were nothing but remedial action created on the request of the Addl. CIT and approved by the Ld. Pr. CIT. It was submitted that in the show cause notice, where the Ld. Pr. CIT has stated that he has perused the assessment records and found difference in the income declared by the assessee and the income as per details furnished by the NSEL, the so called NSEL data was not part of the assessment records and the same has been specifically called for to take remedial action u/s. 263 of the Act. It was submitted that the NSEL data has been collected behind the back of the assessee purposefully to create an action u/s. 263 of the Act and there existed no record with respect to NSEL data which has been merely placed on the file by making a requisition u/s. 133(6) of the Act by Addl. CIT. It was submitted that the evidence which was not available at the time of assessment proceedings nor was lawfully acquired, is being used as the basis for assuming jurisdiction u/s. 263 o....
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.... 263 of the Act without rebutting the submissions so made by the assessee. Without prejudice, it was submitted that if at all, there is any concrete information/material from NSEL which comes on record and which has escaped the attention of the A.O. resulting in any escapement of income and which is not the case currently, the right course of action would be for the A.O. to invoke his jurisdiction u/s. 147 of the Act and not for the ld. PCIT to acquire jurisdiction u/s. 263 of the Act as has happened in the instant case. It was accordingly, submitted that the order so passed by the Ld. Pr. CIT u/s. 263 be quashed and set aside in absence of requisite jurisdiction and also on merits of the case where the matter has been properly examined by the Assessing officer. 15. Per contra, the Ld. CIT DR drawn our reference to the provisions of section 263 of the Act and submitted that the Ld. Pr. CIT may call for and examine the records of any proceedings under this Act and if he consider that any order passed therein by the A.O. is erroneous in so far it is prejudicial to the interest of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causi....
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....e is no infirmity in such an action whereby he has directed the A.O. to verify the said details which has resulted in under-assessment of income in the hands of the assessee. He accordingly, supported the findings of the Ld. Pr. CIT. 17. We have heard the rival contentions and pursued the material available on record. In the context of assessee's transactions in the F & O Segment and resultant net profit/premium arising therefrom, which are undisputedly subject matter of limited scrutiny before the A.O., the Ld. Pr. CIT has held that the A.O. has neither called for relevant documents, nor examined the documents filed by the assessee, nor considered the legal provisions of the Act and thereafter, it was also held by the Ld. Pr. CIT that there is failure to make proper enquiries/verification to arrive at the correct and complete facts and to apply the correct law and failure thereof makes the assessment order erroneous and prejudicial to the interest of the Revenue. We therefore find that in the context of examining a singular matter i.e., assessee's transactions in the F & O Segment and resultant net profit/premium arising therefrom, there are two sets of findings by the ....
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....case where no enquiry has been conducted by the Assessing officer, the Assessing officer has called for the information/documentation to verify the claim of the assessee, has thereafter called for the information from the assessee's broker through whom the transactions in the F & O Segment has been conducted and thereafter, taking into consideration, the entirety of information and documentation and in absence of any contrary facts and figures, the assessment proceedings were completed accepting the returned income so filed by the assessee. We therefore do not agree with the findings of the Ld. Pr. CIT that the A.O. has neither called for the relevant documents nor examined the matter and applied the legal provisions of the Act and it is therefore clearly not a case of no enquiry or lack of enquiry and the findings of the ld. PCIT in this regard are set-aside and the contentions so advanced by the ld. AR are accepted. 19. Now, coming to other findings of the ld. PCIT that proper enquiries which should have been conducted by the A.O. have not been conducted and therefore, the order so passed by the A.O. is erroneous in so far as prejudicial to the interest of the Revenue. The....
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....ndependently verify the said figures has further called for the information from the assessee's broker through whom the transactions in the F & O Segment were conducted and thereafter, the assessment proceedings were completed accepting the figures of income so reported and returned income so filed by the assessee was accepted. We therefore find that where the facts and figures so reported in the return of income were verified with the documentation so submitted by the assessee as well as cross-verified with the broker who has in turn submitted the documentation in support thereof, and where the facts and figures so reported were reconciled and there was nothing prima facie abnormal in terms of doubting the facts and figures or for that matter, the authenticity of any documentation so submitted which could have raised any suspicion calling for further or more extensive and deeper examination, we find that there was nothing on record which occasion any further verification or examination by the A.O. in terms of seeking and enquiring facts and figures with NSEL in respect of assessee's transactions so undertaken through the broker. The A.O. has done what all was expected from....
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....er is erroneous insofar as it is prejudicial to the interests of the revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry, he may come in possession of new material and he would be entitled to take that new material into account. If the material, which was not available to the ITO when he made the assessment could, thus, be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record, though subsequently to the making of the assessment, cannot be taken into consideration by him. Moreover, in view of the clear words used in clause (c) of the Explanation to section 263(1), it has to be held that while calling for and examining the record of any proceeding under section 263(1) it is and it was open to the Commissioner not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination." 23. The revisional powers conferred on the ld. PCIT u/s. 2....
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....rom data sought by assessee directly from NSEL subsequent to receipt of the show-cause notice u/s. 263, it doesn't tally. It was submitted that total amount earned by the assessee was substantially lower that what has been shown in the return of income and over a period of three years, excess income to the tune of Rs. 75,83,804/- has been shown in the return of income and excess taxes paid thereon. It was further submitted that in the transaction wise data of sales and purchase figures, effect of brokerage was also not been considered which was a substantial amount and therefore, the data so received by the ld. PCIT was incomplete and cannot be relied upon. It was submitted that said facts were brought to the notice of ld. PCIT during the course of revisionary proceedings, however, without rebutting the submissions so made, the proceedings u/s. 263 have been concluded. We find merit in the contentions so advanced by the ld. AR as evident from the assessee's submissions before the ld. PCIT which also find mention in the impugned order and the same read as under: "Para 8. Further, vide our request submitted on e-proceedings on 13/03/2021, your office was very kind to....
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....re forming part of raw data provided by NSEL and cannot be termed as tangible and determinative number reflective of net premium earned by the assessee and which is not even supported by adequate documentation as apparent from the findings of the ld. PCIT where he himself acknowledges as incomplete and direct the Assessing officer to examine and verify the said figures. 27. Having acknowledged this fact of incomplete data which doesn't reflect the net results of transactions so undertaken by the assessee during the year under consideration, it is also clear that right from the stage of show-cause till passing of the impugned order, the ld. PCIT has maintained a status quo or rather a silence and has blindly gone by the initial figure so stated in the show-cause notice and no efforts have been made even to look at the reconciliation so sought to be made by the assessee. Therefore, even taking into consideration the fresh material/data received from NSEL, which represent a broad, un-reconciled raw data, the said data and the figure of Rs. 47,41,907/- cannot be termed as tangible and determinative number by any stretch of imagination and in absence of any specific finding recor....
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....ng the word 'erroneous', it was observed that an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. Therefore, in order to hold an order to be erroneous, it must be passed either on an incorrect assumption of facts or there must be an incorrect application of law. 38. Now, we examine the facts of present case to determine that whether on the issues, on which learned CIT has invoked power under s. 263, the A.O. did not make any addition either on an incorrect assumption of facts or on an incorrect application of law. Incorrect assumption of facts can be said to have existed only if learned CIT is able to bring on record any material to show that apart from the vouchers, which were identified and stated in the assessment order, there were certain other vouchers which were unverifiable. Learned CIT has not brought any such material on record. In the absence of any such material, it is very difficult to hold that the assessment order passed by the A.O. was erroneous. What has been done by learned CIT is that he has simply cancelled the assessment order passed by the A.O. to be made afresh after gi....