TaxTMI 
TaxTMI 
2022 (3) TMI 918
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....oneous as well as prejudicial to the interest of revenue. 3. That the Pr. CIT has failed to appreciate the fact that the assessment had been framed after due application of mind and thorough investigation and all the issues, on which the Pr. CIT has set aside the assessment, have been enquired into and dealt in by the concerned Assessment Officer. 4. That the Pr. CIT has grossly erred in invoking the explanation-2 to section 263, since the Ld. Assessing Officer has applied his mind fully to the issues taken by the Pr. CIT u/s. 263(1). 5. That the appellant company has already opted for VSV Scheme, 2020 and had filed Form 1 & 2 on 08.05.2020 before issuing the show cause notice u/s. 263. 6. That no opportunity had been given by the Pr. CIT(Central), Ludhiana. 2. The ld. AR inviting attention to the impugned order submitted that the assessment order dated 30.12.2018 passed u/s. 143(3) has been held to be erroneous and prejudicial to the interests of the Revenue. 2.1. Inviting attention to the impugned order it was submitted that the return was selected under CASS for completing scrutiny on specific issues for examination. This fact has been n....
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....tion thereon, it was submitted that he would first want to address the background of how the ld. PCIT came to be looking at these issues and advance arguments to show how the powers have been exercised. For the said purposes, it was submitted, he would first want to argue ground Nos. 5 and 6. 3. Considering the ground No. 6, ld. AR was required to submit whether he would be satisfied by an opportunity of being heard. 4. The ld. AR opposed the said suggestion. Addressing ground No. 6, it was the vehement submission of the ld. AR that the said ground is to agitate the arbitrariness and the assessee does not seek to provide another opportunity to the PCIT to relook again beyond the statutory limitation available to him. The remand back of the issue was opposed. It was submitted that the assessee has raised the ground only to show how arbitrarily the powers have been exercised. 5. Referring to the facts, it was submitted that after the issuance of the Show Cause Notice dated 23.11.2020, ld. PCIT noticed that no reply had been filed and without carrying out any enquiry at his own end or provide any further opportunity to the assessee, passed the order on 30.03.2021 on the very ....
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....tted that the assessee had pleaded that since the time available for reply was too short, hence without prejudice to the reply, written request was made seeking more time. In the said background, it was submitted that the ld. PCIT in para 3.1 incorrectly records that there was no response on behalf of the assessee. The information available in the Portal of the department itself and the reply placed on record is ignored. The sum total of these facts was that the time given to the assessee for responding to the detailed queries raised was only 4 or 5 days. In letter dated 23.11.2020, it was re-iterated the assessee had sought atleast 15 to 20 days' time and had also informed that the assessee had opted for 'Vivad Se Vishwas Scheme'. Form No. 3, it was submitted, had been accepted. It was his submission that it is a matter of record that no further queries were raised by the ld. PCIT from the assessee and after sitting over the issue for a period of 4 to 5 months wherein on a reading of the impugned order it is evident that no enquiries were made from anywhere else also, the ld. PCIT exercising the powers u/s. 263 proceeded to hold the assessment order as erroneous and pr....
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.... the CIT(A)-5, Ludhiana and had opted for the VSV Scheme, 2020, which has been accepted by the same Pr. CIT (Central), Ludhiana vide order dated 30.01.2021. e. Also, in that application to PCIT, it was submitted that since the time allowed is very short, a time to 15 to 20 days may be granted for preparation of the reply and proof of sending the reply online have been placed at page No. 71 and the reply is at page No. 72 of the paper book. 3. However, the Ld. Pr. CIT (Central), Ludhiana without affording any other opportunity and totally ignoring the reply of the assessee in para 3.1 of his order has mentioned that since, as per the show-cause notice, neither any submission was received nor any request was made for adjournment and, he passed an order after 4 months and three days i.e. starting from 27.11.2020 to 30.03.2021. There was no communication to the assessee about any fresh date which the Ld. Pr. CIT (Central), Ludhiana ought to have given. Further, the assessee was under bona fide belief since, he had opted for VSV Scheme, 2020 with the same Pr. CIT (Central), Ludhiana and, therefore, the proceedings must have been filed. Further, the Ld. Pr. CIT (Central....
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.... the appellant. Having regard to the statutory limit within which the Appropriate Authority has to act and his failure to act in conformity with the principles of natural justice, the matter cannot be remanded to the Appropriate Authority. The order of the Appropriate Authority is quashed.--Son a Builders & Ors. vs. Union of India & Am (1998) 146 CTR (Raj) 712 set aside. Conclusion: Appropriate Authority having passed the order of purchase after giving only five days' time to the parties to respond to the notice and without furnishing copy of any document relating to the sale instance, there was gross breach of the principles of natural justice on both counts and the impugned order was liable to be quashed." The copy of the judgment is placed in the paper book-II at pages 3 to 6. 4. The same is the judgment of the Hon'ble Delhi High Court in the case of Tulsi Tracom Private Limited vs. CIT reported in 161 DTR 0148 (Del) in which the similar facts where the PCIT did not given adequate opportunity to the assessee in the notice issued u/s. 263 and it was held as under: "Thus, there was an outer limit in the statue u/s. 263 which was....
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....sons, who have purchased the shares of the company along with their addresses and PAN number and the details of the share price and premium and the total amount have been given at page No. 9 of the paper book. ii. The copy of the account of "Smt. Shweta Goyal" in the books of the assessee along with her bank statement and evidence of filing the return have been placed at page No. 10 to 12 of the paper book. iii. The copy of the account of "ADVAITH Investment Ltd." in the books of the assessee along with the bank statement and evidence of filing the return have been placed at page No. 13 to 17 of the paper book. iv. The copy of the account of "Interface Financial Security" in the books of the assessee along with the bank statement and evidence of filing the return by the company have been placed at page No. 18 to 21 of the paper book. v. The copy of the account of "Sun & Shine Worldwide Limited" in the books of the assessee along with the bank statement and evidence of filing the return have been placed at page No. 22 to 26 of the paper book. vi. The copy of the Form No. PAS-3 as filed under the Companies Act have been placed at page No. ....
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.... shares and its premium and valuation and also details of the "unsecured loans" which have been filed during the course of assessment proceedings, and, therefore, the contention of the Pr. CIT (Central), Ludhiana, that the A.O. has not examined the share applicants and did not make any enquiries is not tenable. The findings of the ld. Pr. CIT (Central), Ludhiana, that the material furnished by the assessee is fabricated and is not real, is a far fence imagination and only on presumptions. 10. Similarly, in respect of unsecured loans, all such details have been submitted and except one party, the other cheques from the various parties have not been encashed and, therefore, the reliance by the Pr. CIT (Central), Ludhiana on the judgment of the "Sumiti Dyal" is not relevant, because when the documentary evidence on record, there cannot be any scope for presumption and surmises. The Pr. CIT (Central), Ludhiana has mentioned that enquiries and verifications should have been made and it is not a case that no enquiries have been conducted which is apparent from the above submissions. 11. From the details as stated above, it is absolutely clear that the A.O. has applied h....
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....ssessment order that the entire issues have been looked into on account of brevity of the order even in such circumstances it has been recognized that assessees have no control over the A.O. and cannot persuade the A.O. to draft the assessment order in a particular manner in its discussion of the A.O. how to pass the assessment order. Thus where on fact the issuance of questionnaire by the A.O. and replies received in response thereto are evident then it could be seen that the issues were considered. Quashing of the order u/s. 263 in the circumstances has been held to be justified. 5.9. In the facts of the present case also, it was submitted, on a reading of the detailed order passed by the A.O. running into 10 pages, the A.O. conscious of the fact that a complete scrutiny on account of certain major issues for examination was mandated by CASS, one of them being large value of receipt of payment of loans and large share premium received during the year carried out a detailed enquiry on account of this specific fact and also made the addition. The ld. PCIT has exercised his powers taking note of the fact that the addition made by the A.O. on account of M/s. Advaith Investment Ltd....
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....at High Court in the case of Amit Corporation, (2012) 81 CCH 69; judgment of the Hon'ble ITAT Surat Bench, in the case of Pramod Keshari Chand Shah vs. PCIT in ITA No. 43/SRT/2018 and decision of the Hon'ble Bombay High Court in the case of Ranka Jewellers vs. ADIT 328 ITR 148 for the proposition that the order u/s. 263 may be quashed. 5.13. Carrying the Bench through the detailed assessment order and referring to the documents pointed out in Paper Book-1 specifically page-2 addressing the gross sales of the assessee company for the period ended on 31.03.2016 and 31.03.2015 which reflected gross sales of Rs. 3559839407 and Rs. 4095021857. Thus, it was his submission that the assessee is not a paper company and had substantial sales. It was submitted that the assessee is a company of means wherein parties have invested. Attention was also invited to the documents filed before the A.O., the balance sheet alongwith complete annexures. Confirmed copy of account of Smt. Shweta Goyal at pages 10 to 12, confirmed copy of account of M/s. Advaith Investment Ltd. (pages 13-17), confirmed copy of account of Interface Financial Securities alongwith bank statement and evidence of fil....
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....e submitted that he would first address Ground No. 6 wherein the assessee has agitated violation of the procedures of natural justice and pleaded that it is a case of lack of opportunity. The ld. CIT-DR submitted that the assessee is in receipt of the Show Cause Notice and has chosen not to give any reply and the reply referred to at pages 71-72 of the Paper Book, it was his submission, is in fact no reply as therein he only seeks a few days' time and then sits quietly and waits till the order is passed knowing fully well that the limitation is expiring and then now before the ITAT pleads for its quashing. It was his submission that on the receipt of the Show Cause Notice, what stopped the assessee to give a reply not within a few days as directed by the PCIT but after a fortnight or any time before the passing of the order. It is not a case that Show Cause Notice has been issued to the assessee and immediately thereafter the order u/s. 263 has been passed. 6.1. In the said factual matrix, it was submitted that all the decisions relied upon by the ld. AR were distinguishable and not relevant. 6.2. It was also his submission that the mere fact that the company is having a ....
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....e of Raj Mandir Estates P. Ltd. (2017) 77 taxmann.com 285(S.C). 6.4. Addressing the argument advanced by the ld. AR that the A.O. has examined and discussed the entire case, attention was invited to para 4 of the assessment order where the Assessing Officer observes that the issue of introduction of share capital/premium has been considered by him on a test check basis. He expressed his surprise on the said observation submitting that he has never come across any such instance where the order requiring such issues for consideration can be passed on a test check basis. The issues have to be considered minutely and meticulously. Whatever evidences, the assessee has filed before the A.O., it was his submission is not relevant. The settled legal position thereon, it was submitted, is that the evidence was neutral. Accordingly, it was his prayer that the order may be upheld. 7. In reply, the ld. AR submitted that it is a clear case of not granting opportunity of being heard to the assessee, granting merely four days, cannot be said to be a fair exercise which is why the assessee responded by way of a letter seeking more time. The assessee therein had also brought to the notice of ....
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.... 7.4. The objections posed by the PCIT ignoring the replies given by the assessee and relying upon the decision of the Apex Court in the case of Sumati Dayal incorrectly and instead ignoring the legal position as set out by the Apex Court in the case of Daulat Ram Chella Ram, it was submitted, is contrary to law. The conscious view taken by the A.O. and the PCIT remaining silent for four months, it was submitted, deserves to be quashed. 8. We have heard the rival submissions and perused the material available on facts. In the facts of the present case, the assessee has argued on the legality of the order passed which is stated to be an arbitrary exercise of power. The order is assailed as having been passed without caring to provide reasonable opportunity of being heard to the assessee leading to the order being passed in a mechanical manner. The assessee has also argued the appeal on merits submitting that the issue has been considered at length by the A.O. in the course of the assessment proceedings wherein specific attention has been invited to para 8 of the assessment order to show that the A.O. was conscious of the fact that the increase in share application money received....
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....ument that there was a total lack of application of mind on the part of the ld. PCIT or alternately the reply informing that the assessee had opted for 'Vivad Se Vishwas Scheme' was considered irrelevant, hence equivalent to no reply as canvassed by the ld. CIT(A). However, the fact remains that the assessee has sought time. In the said backdrop the argument of the ld. AR that the assessee remained sanguine in the belief that the reply offered is accepted and the proceedings are closed, are plausible and on the other hand, when juxtaposed with the finding in the order that no reply has been given, it clearly demonstrates a mechanical exercise of power coupled with the fact that the ld. PCIT did not even care to issue any further notice to the assessee before the passing of the order. The fact that no further opportunity was given to the assessee is a fact on record which is not disputed by the ld. CIT-DR also. It is seen that the ld. PCIT made no efforts to gather any information either from the public domain or refer to any efforts made by the Investigation Wing or any other authority to show that the order passed is an order which is erroneous and prejudicial to the inter....
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....n consideration thereof, we have considered that if for a moment we go alongwith with the submissions of the ld. DR that the reply was seen by the ld. PCIT and considered to be not relevant, the fact that the assessee was seeking time was patently evident from the said reply itself, what stopped the ld. PCIT to give an opportunity of being heard within a reasonable time. On this glaring shortcoming on this fact patently available on the face of the record, there is no submission. Examining the claim further, we deliberate that if the ld. PCIT who knowingly gives inadequate time to the assessee to file its reply considering the reply filed irrelevant notices that the assessee is seeking time, we do not find any reason why the ld. PCIT could not grant a hearing saying that time has been granted fix a date and then pass the order after hearing the assessee. However, in the facts of the present case, ld. PCIT fails to do so. So, whether the reply was noticed or remained un-noticed, the consequences are that if it was noticed, ld. PCIT failed to do what he was required to do and if it was not noticed, then he passed an order mechanically. These facts when further noticed in the backdrop....
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....no doubt was in the context of acquisition of immovable property, wherein the Appropriate Authority had not granted sufficient opportunity of being heard to the parties, the Court considering the statutory limit within which the Appropriate Authority, had to act and its failure to confirm to that time limit invoking the principles of natural justice, the Apex Court quashed the order and did not remand the matter back. The position of law as considered by the Hon'ble Gauhati High Court in the case of Smt. Leela Chaudhary Vs. CIT (2007) 289 ITR 226 (Gau) which mandates that the explanation offered by the assessee must be considered is also drawn support from. 12. Accordingly, considering the factual background as discussed above at length and the position of law, we deem it appropriate to quash the order passed on the legal grounds itself. Hence, the arguments advanced by the parties on merits though noticed in the order need not be adjudicated upon consequently. 13. At this stage it would be worthwhile to extract the valuable words of wisdom which their Lordships deemed it necessary to highlight. In the said decision rendered by the Apex Court in the case of CIT Vs. Amitab....
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....mplicit in the requirement cast by the Section to give the assessee an opportunity of being heard. It is in the context of the above position that this Court has repeatedly held that unlike the power of reopening an assessment under Section 147 of the Act, the power of revision under Section 263 is not contingent on the giving of a notice to show cause. In fact, Section 263 has been understood not to require any specific show cause notice to be served on the assessee. Rather, what is required under the said provision is an opportunity of hearing to the assessee. The two requirements are different; the first would comprehend a prior notice detailing the specific grounds on which revision of the assessment order is tentatively being proposed. Such a notice is not required. What is contemplated by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. Reference........................................". 13.1. Deliberating further on the mandatory procedure @ 211 in para 11, ....
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....rest judicial and quasi-judicial controversies as it must in other spheres of human activity." 15. Accordingly, for the detailed reasons given herein above, the appeal of the assessee is allowed. 16. In the result appeal of the assessee is allowed. Order pronounced on 09 March, 2022. ============= Document 1 PROCEEDING DETAILS PAN/TAN Name Assessment Year Financial Year Proceeding Name Document Reference ID Notice Section Descriptio Notice laue Date Due Date for Submission Communication Sexdate Document Id RESPONSE SUBMITTED Верона Туре Response Remarks e-Proceedings Response Acknowledgement INCOME TAX DEPARTMENT Acknowledgement Number: 27113013556298 71 AABCF3202D FORTUNE METALIKS LIMITED 2016-17 2015-16 Le 10000040269433 ITBAJ Letter 23-11-2020 17/20008697339(1) Hash value of SI Na Attachment me 1 METALIK Oba कोष मूलो SelyaOMVYICDEM दणà¥à¤¡à¥‡ Hash value of attachment ETTIN A RipshwjQ+ INCOME TAX DEPARTMENT This is a system generated acknowledge an....