TaxTMI 
TaxTMI 
2022 (4) TMI 97
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.... CBDT Circular No. 19 of 2019. 2. The Appellant prays that the order passed u/s. 263 of the Act be treated as invalid and be quashed. WITHOUT PREJUDICE TO GROUND NO. I: GROUND NO.II: IMPUGNED ORDER PASSED BY INVOKING PROVISIONS OF SECTION 263 OF THE ACT IS BAD IN LAW: 1. On the facts and circumstances of the case and in law, the ld. Pr. CIT erred in invoking the provisions of section 263 of the Act and setting aside the assessment order treating the same as erroneous and prejudicial to the interest of the revenue and directing the AO to pass an order de novo. 2. Ld. Pr. CIT, inter-alia, failed to appreciate and ought to have held that: i. Order u/s. 263 of the Act cannot be passed without giving a reasonable opportunity of being heard to the Appellant; ii. Ld. LEARNED PCIT herself should have made finite enquiries and concluded that both ingredients (erroneous and prejudicial) are satisfied before passing an order u/s 263 of the Act." 03. Fact of the case shows that the assessee is a company engaged in financial services business, filed its return of income declaring total loss of Rs. 28,75,898/-. The case of the ass....
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....ort adjournment. 07. The learned PCIT passed an order under section 263 of the Act on 10th March, 2021 noted that; i. Assessee has accepted loan of Rs. 68,55,000/- from M/s Sri Gopikrishna Trust, which is having a corpus fund of Rs. 1 lacs. Further, the loan sanctioned of HDFC Bank to that trust is on 26th September, 2014 of Rs. 750,00,00,000/-, whereas, the loan has been given to the assessee of Rs. 65,55,000/- before that date of loan from bank and only Rs. 2 lacs is advanced after the sanctioned of the loan to the trust by bank. Therefore, source of the loan is not clear. The Assessing Officer failed to verify the same. The Assessing Officer also did not make any third party inquiry to verify the genuineness of the transaction. Further, the bank account of the trust as well as the corporate trustee i.e. Akshar Fincom Limited was one bank account but the transactions in books of trust are recorded separately, hence, whether source of the funds belongs to the corporate trustee or the trust was not known. ii. With respect to the details in relation to other payable of Rs. 13,48,320/- and loan and advance of Rs. 3,27,83,970/- as assessee did not submit any reply....
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....y by issue of notice under section 142(1) of the Act dated 19th June, 2017 with respect to unsecured loan from the persons. On 14th August, 2017, the assessee vide point no. 26 submitted that assessee has received unsecured loan of Rs. 67,55,000/- from M/s Sri Gopikrishna Trust through its corporate trustee Akshar Fincom Pvt. Ltd. It was further stated that name, address, Loan amount, and PAN of the said trust is appearing in clause 31 of the tax audit report of assessee. He also referred to the balance sheet of the assessee where it was noted that M/s Sri Gopikrishna Trust through its corporate trustee Akshar Fincom Pvt. Ltd. is holding 100% shares of the assessee company. He further referred to note no. 3 of the annual account wherein the understating unsecured loan from related party of Rs. 68,06,874/- is shown. In view of this, he submitted that assessee has furnished details before the Assessing Officer and therefore, there is no further information that Assessing Officer could have inquired. e. On the issue of ' Other payable' and " Loans and advances' He submitted that the Assessing Officer raised an query vide notice under section 142(1) of the Act dated 6th Decemb....
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....ssessment Year 2016-17 of the trust. (iv) the assessment order of the corporate trustee Akshar Fin Com Ltd. under section 143(3) of the Act on 26th March, 2015 (v) The letter dated 24th May, 2017 filed by the M/s Sri Gopikrishna Trust before the learned Assessing Officer of the trust along with its bank statement (the bank statement in the name of Akshar Fincom Pvt. Ltd.) (vi) The letter dated 25th September 2017 filed by the Trust before its Assessing Officer wherein the submission of the ledger account of the assessee was made. On this basis, the argument of the learned Authorized Representative was that before the learned PCIT complete details were furnished and nothing was left therefore, she should have accepted that there is no error in the order of the learned Assessing Officer. j. With respect to not giving opportunity, he further referred to the adjournment letter dated 9th March 2021 filed before ld PCIT that despite seeking an adjournment the learned PCIT passed an order with respect to the loan amount and other payables. 011. In view of the above facts, it was argued that the order passed by the learned PCIT is bad in law, Order passed by ld AO is after maki....
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....rtunity. j. On the issue of mentioning the DIN in the order passed by the learned PCIT he referred to the intimation letter dated 11th March, 2021, wherein PCIT has mentioned the DIN number in the order passed under section 263 of the Act dated 11th March, 2021. He therefore, submitted that the claim of the assessee that DIN is not mentioned in order passed under section 263 of the Act is not correct. 013. The learned Authorized Representative in rejoinder submitted that the order under section 263 of the Act was passed on 10th March, 2021 where letter dated 11th March, 2021 of ld PCIT gives same Document Identification Number (DIN) but with respect to the order under section 263 of the Act dated 11th March, 2021. He therefore, submitted that this clearly proves that there is no document identification number in the order passed by the learned PCIT on 10/3/2021. Further there is no reference that why such number is not mentioned in the order . He specifically referred to the instruction of CBDT dated 14th August 2019, which clearly says that any communication, which is not in conformity with paragraph No. 2 and paragraph no. 3 of the circular, shall be treated as invali....
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....there has to be a proper recording of reasons in writing needs to be recorded in the file as well as the approval of Chief Commissioner etc. Further, the communication issued should also contain the fact that it is issued manually without a DIN and the date of obtaining written approval of higher authorities. There is also a specific format given in the circular of recording such as fact. In paragraph no. 4 it is also provided any communication, which is not in conformity with the above provision, shall be treated as invalid, and shall be deemed to have never been issued. It further provides that the manual communication is also require to be regularized within 15 working days by holding the manual communication generating DIN and its communication to the other party. Therefore, It needs to be examined whether the order passed by the learned PCIT is in conformity with the above direction or not. The learned PCIT-8, Mumbai passed the order under section 263 of the Act on 10th March, 2021. It does not contain any DIN and further any of the six paragraphs in her order shows that this communication is issued manually without having DIN as it falls in any of the exceptions, and any perm....
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....d no further information was submitted by the assessee. Merely submitting the name, address, PAN number of the lender does not prove any creditworthiness and genuineness of the transaction. Further, the learned PCIT, on information produced by assessee, clearly carried out her own independent enquiry on the documents furnished by the assessee to note that GopiKrishna Trust did not have any bank account of its own but is transacting from the bank account of its corporate trustees Akshar Fincom Pvt. Ltd. Further, she has also co-related the source of the fund available to the trust as well as the dates of loan given by bank to the assessee and thereafter held that substantial loan given by the M/s Gopikrishna Trust to the assessee is prior to obtaining loan by the trust from banks. Further, in absence of any independent bank account of M/s Sri Gopikrishna Trust no information is available about whether loan given by sources from sources of the corporate trustee or by the trust. Thus, sources of funds belonging to Gopikrishna Trust were also not clear. Thus, it is clearly demonstrated by the ld PCIT That the learned Assessing Officer has not made any inquiry worth its name about above....