TaxTMI 
TaxTMI 
2022 (4) TMI 724
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....A.O. during the course of assessment proceedings asked the assessee to submit computation of income, copy of the bank statement, cashflow statement etc. and asked the assessee to explain the source of cash deposits with supporting evidence. After considering the requisite details filed by the assessee from time to time, the A.O. accepted the returned income of Rs. 8,39,850/-. 2.1. Subsequently, the PCIT examined the records and noted that the case of the assessee was re-opened u/s 147 for the reason that cash amounting to Rs. 59,24,000/- was deposited in the bank account. He noted that account record of M/s Garhwal Hosiery, Rishikesh was squared up at the end of relevant previous year 2010-11, whereas confirmation of accounts from the books of Garhwal Hosiery revealed that there was closing debit balance of Rs. 8,51,000/- at the end of the previous year to the credit of the assessee. The difference in the closing balance is nothing but un-disclosed business income which has escaped assessment. Similarly, during the year under consideration, the assessee had received Rs. 2,00,000/- in cash from his wife on 23.11.2010 as gift. However, the same is not supported by cogent and relia....
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....er due verification and after affording proper opportunity of being heard to the assessee by observing as under : "3.1. In respect of the first issue raised as discussed in para 2.0 supra, the assessee has submitted that M/s Garhwal Hosiery is the proprietary concern of Sh. Punit Gupta, the younger brother of the assessee. The assessee took loan from Sh. Punit Gupta partly prior to FY 2008-09 and partly in FY 2008-09. As on 01.04.2010, outstanding loan amount was Rs. 14,81,000/- out of which Rs. 8,51,000/- was repaid during FY 2010-11 through Bank and the balance of Rs. 6,30,000/- remained to be paid as at 31.03.2011. Sh. Punit Gupta has shown addition in capital by Rs. 8,51,000/- during the FY 2010-11. Prior to this Sh. Punit Gupta was having no books of accounts where he could show the outstanding loans to be taken from Sh. Nitin Gupta (the assessee). The assessee's submission is untenable as it is contradictory to his earlier submission vide point no. 6 of reply submitted on 27.12.2018 during the assessment proceedings that the unsecured loans in respect of M/s Garhwal Hosiery has been squared up during the year under consideration. 3.2. Regarding gift of Rs. 2....
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....alid and not tenable. 5. That furthermore even otherwise learned Pr. Commissioner of Income Tax has further erred both in law and on facts in invoking section 263 of the Act in respect of the outstanding balance of loan from Sh. Punit Gupta on misplaced and misconceived assumption and presumption and therefore untenable. 6. That also the conclusion that learned AO had not enquired into the genuineness of transaction of loan of Rs. 8,51,000/- to wife of the appellant thus invoking section 263 of the Act is misconceived. 7. 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 order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Pr. Commissioner of Income Tax had a different opinion and that too, without having established in any manner that, view adopted by the learned Assessing Officer was an impossible view. 8. That the learned Commissioner of Income Tax has also failed to appreciat....
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....enue unless the view taken by the A.O. is unsustainable in law. 4.2. He submitted that for assuming jurisdiction under section 263 of the Act, the twin conditions namely (a) the order is erroneous and (b) prejudicial to the interests of Revenue must be satisfied and absence of any one of the above makes the assumption of jurisdiction under section 263 a nullity. The Learned Counsel for the Assessee further submitted that Explanation-2 to Section 263 of the Act does not authorize or give unfettered power to the Commissioner to revise each and every order and, is not a substitute to the precondition under section 263(1) of the Act. Further Explanation-2 to Section 263 is inserted w.e.f. 01.06.2015 which operates prospectively. 4.3. Learned Counsel for the Assessee submitted that notice dated 27.03.2018 issued by the ITO, Ward-2(5), Ghaziabad is without jurisdiction. Therefore, once the order dated 28.12.2018 passed under section 147/143(3) of the I.T. Act, 1961 is invalid, then, the consequential proceedings under section 263 of the Act is also invalid. Relying on the following decisions with different propositions, he submitted that the order of the Ld. PCIT of assuming jurisd....
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....ECTION 263 OF THE ACT. 112 taxmann.com 321 (Del.) ETT Ltd. vs. CIT 120 taxmann.com 187 (Mad) CIT vs. Padmavathi 275 Taxman 394 (Mad) CIT vs. Vijay Kumar Koganti 117 taxmann.com 986 (Gauhati) Abdul Hamid vs. ITO 6. THAT SECTION 263 DOES NOT PERMIT REVISION OF AN ORDER ON THE BASIS OF SUSPICION, CONJECTURES AND SURMISES. 108 ITR 407 (Cal) Jeewanlal [19291 Ltd. vs. Addl. CIT 290 ITR 395 (Gau) B & A Plantation & Industries Ltd. vs. CIT 296 ITR 238 (P&H) CIT vs. Sohana Woolen Mills ITA No. 690/Chd/2010 A.Y. 2005-06 dated 9.3.2012 Sh. Jaswinder Singh vs. CIT ITA No. 367/Chd/2012 A.Y. 2007-08 dated 7.3.2013 Aarti International vs. CIT 384 ITR 147 (Del) CIT vs. G&G Pharma India Ltd ITA no. 7785/2015 (Del) dated 13.10.2015 Pr. CIT vs. Rakam Money Matters (P) Ltd 7 THAT SECTION 263 OF THE ACT CANNOT BE INVOKED TO MAKE DEEPER ENQUIRY: 341 ITR 166 (Del) CIT v. Leisure Wear Exports Ltd. 357 ITR 388 (Del) DIT v. Jyoti Foundation 332 ITR 167 (Del) CIT v. Sunbeam Auto Ltd. 341 ITR 537 (Del) CIT....
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..... 3125/Mum/2017 dated 19.01.2018 M/s Indus Best Hospitality & Realtors Pvt Ltd vs Pr CIT 86 taxmann.com 128 (Mum-Trib.) Metacaps Engineering and Mahendra Construction Co. (J.V.) vs. CIT ITA No. 3469/M/2010 dated 6.11.2015 A.V. Industries vs. ACIT ITA No. 3259/M/2017 dated 6.10.2017 Reliance Money Infrastructure Ltd. v PCIT 70 taxmann.com 227 (Mum) Narayan Tatu Rane v. ITO ITA No. 3498/ Mum/2017 dated 02.01.2018, Shri Anil L. Todarwal. 11 THAT NOTICE ISSUED BY THE LEARNED INCOME TAX OFFICER, WARD-2(5), GHAZIABAD IS WITHOUT JURISDICTION 219 CTR 183 (Del) CIT v. Anjali Dua 2 taxmann.com 307 (Del) CIT vs. Anil Khosla 381 ITR 428 (Del) Dushyant Kumar Jian v. DCIT 339 ITR 37 (Cal) Smt. Smriti Kedia vs. UOI ITA No. 406/D/2011 dated 14th October, 2011 Shri Kamal Piyush vs. ITO 120 TTJ 517 (Del) Ranjeet Singh vs. ACIT ITA No.2141/Del/2009 dated 9.12.2010 ACIT vs. Smt. Chetna Kukreja ITA No.2098/Del/2009, order dated 7.08.2009 ITO vs. Shri Karan Sawhney ITA 838/2008 (Del) dated 01.09.2008 CIT vs. Anil Khosl....
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....cts (P Ltd. presently known as Aas Research & Solutions (P) Ltd. in ITA No. 466/2017 dated 2.5.2017. ITA Nos 3825 to 3827/D/2018 dated 5.9.2018 M/s NKG Infrastructure Ltd. v. Pr. CIT ITA.No.2857/Del./2017 dated 10.12.2018 in the case of M/s. SPJ Hotels Pvt. Ltd. vs The PCIT-8 ITA No. 2269/D/2017 dated 10.12.2018 M/s Supersonic Technologies (P) Ltd. vs. PCIT ; I.T.A. No.50/DEL/2021 Assessment year: 2017-18 Mikado Realtors (P) Ltd. vs. Pr. CIT (Central) ITA.No.2527/Del./2017 dated 10.12.2018 M/s. Shiv Sai Infrastructure (P) Ltd., New Delhi ITA.No.3216/Del./2017 dated 09.01.2019 M/s. Sri Balaji Forgings (P) Ltd vs The PCIT ITA No. 5473/D/2019 dated 3.3.2020 Arihant Technology (P) Ltd. v. PCIT 109 taxmann.com 5 (Del) Dwarkadhis Buildwell (P) Ltd. v. CIT 49 ITR (T) 406 (Mum) M/s Westlife Development Ltd v. Pr. CIT ITA No. 742/Mum/2019 dated 17.5.2019 Mrs. Sonali Hemant Bhavsar v. Pr. CIT 99 ITD 621 (Luck) Inder Kumar Bachni (HUF) v. ITO 94 ITD 131 (Coch) Paul John, Delicious Cashew Co. v. ITO ITA No(s) 764 to 766/Kol/201....
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.... proceedings has not properly examined the difference in the closing balance of Rs. 8,51,000/-. Further the gift of Rs. 2 lakhs received by the assessee from his wife was not supported with proper documentary evidences. Therefore, the Ld. PCIT was fully justified in assuming jurisdiction under section 263 of the Act. 6. We have considered the rival arguments made by both the sides, perused the orders of the A.O. and the Ld. PCIT and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessment in the instant case was originally completed by the A.O. under section 143(3) of the Act accepting the returned income of Rs. 8,39,850/- wherein the A.O. had examined the copy of the bank statements, cash flow statement, source of cash deposits and supporting evidence etc. We find the Ld. PCIT observing that the account of M/s. Garhwal Hosiery, Rishikesh in the books of the assessee was squared-up at the end of the relevant assessment year whereas the confirmation of accounts from the books of M/s. Garhwal Hosiery reveals that there was a closing debit balance of Rs. 8,51,000/- at the end of the previous year to the as....
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....count on 22.11.2020 and the cash gift was made on 23.11.2010. Under these circumstances, when the A.O. had made full enquiry, in our opinion, the same cannot be considered as lack of enquiry or lack of investigation. Further the view taken by the A.O. after considering various details furnished by the assessee during the course of assessment proceedings cannot be termed as unsustainable in law. The A.O. in the instant case has taken a plausible view. 6.2. It has been held in various decisions that for invoking the provisions of Section 263 of the Act, the twin conditions namely (1) the order is erroneous and (2) order is prejudicial to the interests of revenue must be satisfied. Absence of any one of the above does not empower the Ld. PCIT to assume jurisdiction under section 263 of the Act. 6.3. We find the Hon'ble Delhi High Court in the case of CIT vs., Vikas Polymers reported in 342 ITR 537 (Del.) held as under : "13. It is also trite that there is a fine though subtle distinction between "lack of inquiry" and "inadequate inquiry". It is only in cases of "lack of inquiry" that the Commissioner is empowered to exercise his revisional powers by calling for and exam....
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....ommitted by the assessing officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not conferred to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions^!' the Act and this task is entrusted to the revenue. If due to an erroneous order of the Income Tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the assessing officer. Every loss of revenue as a consequence of an order of assessing officer cannot be treated as prejudicial to the interests of the revenue, for example, when a....