TaxTMI 
TaxTMI 
2022 (4) TMI 384
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....L for buying and selling of various commodities. The trading on this exchange platform was suspended on 31.7.2013 by the Government of India. At that point of time, as per the information, the assessee had an outstanding obligation to the tune of 10.75 cores rupees. As per the Department, the assessee failed to either deliver the equivalent commodities or to pay the outstanding amount. As per the information with the Department, the assessee had accepted this liability of Rs. 10.75 crores in a joint meeting held on 04.08.2013. Subsequently, on receipt of this information, notice u/s. 148 of the Act was issued on 17.01.2018 requiring the assessee to file return of income. In response thereto, the assessee submitted that the return filed earlier on 29.11.2014 may be treated as return of income in pursuance of notice issued u/s. 148 of the Act. Subsequently, during the course of reassessment proceedings, the assessee produced books of account along with the relevant vouchers etc. and, thereafter, the Assessing officer reached the conclusion that the earlier assessed loss of Rs. 6,69,32,289/- was to be accepted. 2.1. Subsequently, notice u/s. 263 of the Act was issued on 6.8.2019 me....
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....and therefore unsustainable. 2.2 That the direction that "AO should make proper verification and inquire into the information received from NSEL to check the out of book sales of goods" and also detailed inquiries should be conducted on the issue since information in response to notice u/s. 133(6) of the Act has been received from NSEL" is illegal, invalid and establishes that the learned Principal Commissioner of Income Tax has assumed jurisdiction on surmises, conjecture and suspicion and therefore the notice issued u/s. 263 of the Act may kindly be quashed as such. 2.3 That the learned Principal Commissioner of Income Tax has erred in holding that it is a case of "lack of enquiry" and, further failing to appreciate that alleged inadequate enquiry in the manner suggested without any independent evidence and, without any further enquiries by him cannot be a basis for assumption of jurisdiction u/s. 263 of the Act. 2.4 That the learned Pr. Commissioner of Income Tax has failed to appreciate that once the learned Assessing Officer on examination of the facts on record and after making all possible enquiries had accepted claim of the appellant then such an ....
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....belatedly by 27 days. The Ld. AR submitted that there is no delay in filing of the appeal in view of the order of the Hon'ble Apex Court vide dated 27.04.2021 in suo motu Writ Petition (Civil) No. 3 of 2020, wherein, judicial notice of steep rise in Covid-19 Virus cases was taken by the Hon'ble Supreme Court and it was directed by the Hon'ble Apex Court that the period(s) of limitation, as prescribed under any general or special law in respect of all judicial or quasi-judicial proceedings, whether condonable or not, would stand extended till further orders. So, it was submitted that accordingly in view of this order passed by the Hon'ble Apex Court, there was no actual delay in filing of the appeal. It was prayed that the appeal may be admitted for hearing on merits. 3.1. Per contra, the Ld. CIT DR could not controvert the averments of the Ld. AR. 3.2. Keeping in mind the averments of the Ld. AR and the binding order of the Hon'ble Apex Court as afore mentioned, we admit the appeal for regular hearing. 4. Arguing on ground Nos. 1, 2 & 3, the Ld. Authorised Representative (AR) drew our attention to the show cause notice dated 6.8.2019 issued u/s. 263 of ....
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....iew the facts stated above, I have reasons to believe that income of Rs. 10.75 Cr. has escaped assessment along with any other income which may be noticed during the course of assessment has escaped assessment for the assessment year 2014-15 within the meaning of section 147(c) of the Income-tax Act, 1961. Issue notice u/s. 148 for the assessment year 2014-15" 4.2. The Ld. AR, thereafter, submitted that a perusal of the order of the Ld. PCIT would show that the proceedings u/s. 263 of the Act had been initiated on identical grounds on which action was taken u/s. 147 of the Act. The Ld. AR submitted that the main thrust of observations of the Ld. PCIT was that- i) The replies filed during the assessment proceedings were just placed on record and the Assessing Officer (AO) had failed to verify the out of the book sales of goods amounting to Rs. 10.75 crore; ii) The main information on which the case of the assessee was selected for scrutiny was not properly verified before passing the assessment order; iii) The AO had completed the assessment without due verification and enquiry of the issue involved, therefore, the assessment order was prima fa....
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....ll be received from the NSEL, Mumbai in response to above letter, action u/s. 148/263 of the I.T. Act, 1961 may be considered. 4.4. The Ld. AR submitted that it was evident from a plain reading of the office note that the allegation by the Ld. PCIT was misconceived and factually incorrect. The Ld. AR further argued that, undisputedly, the present case was not a case of either lack of enquiry or lack of investigation and, therefore, the assessment was neither erroneous nor prejudicial to the interest to Revenue for the simple reason that it was not based on any incorrect application of law or incorrect application of fact; or non-application of mind. It was argued that since the Assessing officer had made detailed inquires during the course of assessment proceedings and the assessee had given detailed explanations to such inquiries and the Assessing officer, on being satisfied with the explanations of the assessee, had accepted the assessed income, the order of the Assessing officer could not be revised u/s. 263 of the Act. 4.5. The Ld. AR drew our attention to the direction of the Ld. PCIT in the impugned order that the Assessing officer should make proper verification and in....
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....ugh there has been an amendment in the provisions of section 263 of the Act by which Explanation 2 has been inserted w.e.f. 01.06.2015, still this did not given unfettered powers to the Ld. Commissioner to assume jurisdiction u/s. 263 of the Act to revise each and every order of the Assessing officer to re-examine the issues already examined during the course of assessment proceedings. Our attention was drawn to the order of the ITAT Mumbai Bench in the case of Narayan Tatu Rane vs ITO reported in [2016] taxman.com 227 (Mumbai), wherein, it was held that the said Explanation cannot be said to have overridden liability as interpreted by the Hon'ble Delhi High Court, according to which the Commissioner has to conduct the inquiry and verification to establish and show that the assessment order was unsustainable in law. The Ld. AR submitted that in this case the ITAT Mumbai Bench had further held that the intention of the legislature could not have been to enable the CIT to find fault with each and every assessment order without conducting any inquiry or verification in order to establish that the assessment order is not sustainable in law, since such an interpretation will lead to....
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....erefore, it was very much erroneous as well as prejudicial to the interest of Revenue. It was argued that the Assessing officer had failed to examine the dispute between the assessee and NESL and had also not examined the issue on merits so as to logically conclude the re-assessment. The Ld. CIT DR submitted that the impugned order passed u/s. 263 of the Act deserved to be upheld. 6. We have heard the rival submissions and have also perused the material on record. It has been vehemently argued by the Ld. AR that the Ld. Ld. PCIT was legally wrong in assuming jurisdiction u/s. 263 of the Act specially because the assessee's case had earlier been reopened on the same issue u/s. 148 of the Act and the re-assessment proceedings had been completed after duly considering the submissions and explanations of the assessee and at the earlier assessed income. We note that the issue for which the Revisionary powers were invoked by the Ld. PCIT pertains to alleged out of books sales amounting to Rs. 10.75 cores through terminal of NSEL. It is seen that the original assessment which had been completed earlier u/s. 143(3) of the Act was reopened for the reason that the assessee had receive....
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....s date 25.12.2018 and 27.12.2018 are also issued to the NSEL but no compliance had been made by the NSEL. It is also stated in the office note that, therefore, in the absence of any evidence regarding this information, no adverse inference was called for and the Assessing officer noted that, further, if any information will be received, subsequently, suitable action u/s. 148/263 of the Act may be considered. Thus, at the time of completion of re-assessment proceedings on 29.12.2018 (undisputedly, the reassessment was getting time barred on 31.12.2018), the Assessing officer, after duly considering the explanation offered by the assessee and the documents furnished in this regard, arrived at one of the possible views which could be taken in the present case. 6.2. At this juncture, it will be relevant to refer to the judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Ltd. reported in [2011] 332 ITR 167 (Del.). In paragraph 17, the Hon'ble High Court has ruled that one has to keep in mind the distinction between 'lack of inquiry' and 'inadequate inquiry' and further if there was any inquiry, even inadequate, that would not by itself....
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.... Ltd. Vs. Principal CIT (2017) 51 CCH 0473 (Delhi-Tribunal)wherein, the Delhi Bench, while relying upon the judgement of the Hon'ble Delhi High Court in the case of PCIT Vs. Delhi Airport Metro Express Pvt. Ltd. (ITA No. 705/2017) has held that Explanation 2 cannot be stated to have overridden the law as interpreted by various High Courts, where the High Courts have held that before reaching the conclusion that the order of the Assessing officer is erroneous and prejudicial to the interest of Revenue. The Commissioner himself has to undertake some enquiry to establish that the assessment order is erroneous and prejudicial to the interest of Revenue. Similarly, the Coordinate Bench of ITAT, Mumbai in the case of Narayan Tatu Rane reported in TS-290-ITAT 2016 (Mumbai) has held that Explanation 2 to section 263 does not provide unfettered right to the PCIT to revise each and every order. It was held that it is the responsibility of the PCIT to show that the enquiry for verification conducted by the Assessing officer was not in accordance with the enquires or verification that would have been carried out by a prudent officer. 6.5. On the entire factual matrix of the case, it is ....