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2023 (3) TMI 810
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....e Tax Act, 1961 (the Act), when the assessment for the impugned assessment year 2017-18 had already been concluded by Assessing officer (AO), u/s 143(3) of the Act, after seeking explanations and making all the enquiries necessary for the completion of assessment. Appellant prays order so passed u/s 263 may please be held as bad in law. 2. That the PCIT has failed to appreciate that the assessment order was neither erroneous nor prejudicial to the interest of the revenue and thus order u/s 263 is bad in law, illegal, ultra-vires, in excess of and/or in want of jurisdiction and otherwise void. That the order u/s 263 setting aside already completed assessment as made by the Assessing Officer u/s 143(3) of the Income Tax Act is based upon incorrect assumption of fact which cannot render the order erroneous. Furthermore, inaction of AO towards inadequate enquiry cannot be said to be prejudicial to the interests of the revenue. Therefore, the mandatory twin conditions of section 263 are not fulfilled. 3. That the Ld. PCIT has erred in invoking clause (a) of explanation 2 of section 263(1) of as the explanation does not authorize unfettered powers to the CIT to revise e....
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.... to make any independent enquiry before initiating proceedings u/s 263. 9. That there was no prima facie satisfaction recorded by the PCIT on the basis of material available on record and on the basis of reply submitted by the assessee that the order passed by AO was erroneous and prejudicial to the interest of revenue. 10. That the order passed u/s 263 is without jurisdiction because the PCIT has travelled on issue of capital contribution by the partners, and which is not flagged in the notice u/s 143(2). That the PCIT has no jurisdiction to convert the limited scrutiny into complete scrutiny by invoking the provisions of section 263. 11. That the appellant craves leave to add, amend, or alter any of the above grounds of appeal before or during the course of appellate proceedings." 2. Tersely, we advert, the fact of the case that the assessee is a partnership firm and the dealer of the liquor. The assessment was completed u/s 143(3) of the Act. The notice u/s 263 was issued by the ld. PCIT and the details submission was filed by the assessee against the show cause notice & finally the ld. PCIT had set aside two issues for further verification before t....
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.... this issue as was called for by the Assessing Officer during assessment proceedings, yet the AO completed the assessment and accepted the explanation of the assessee without taking note of the fact that the information as called for by him had not been furnished. The AO also did not make any independent or requisite enquiries or verifications regarding the source, financial capacity of the creditors or of the genuineness of transactions as were called for in the facts and circumstances of the case. III). The squared-up loans were as under: Name of the creditor Amt. taken during the year Amt. returned during the year Closing balance Naresh Aggarwal 80,00,000 15,00,000 65,00,000 Gautam Construction Co 75,00,000 75,00,000 nil Prem Arora 40,00,000 40,00,000 nil (IV) Vide questionnaire dated 17.10.2019 at point no.3, the assessee was asked by the AO to furnish the following: "Complete details of unsecured loans including squared up accounts with opening and closing balances and sources / copy of accounts for amounts received during the year. Give complete address and PAN of depositors". In response, a r....
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.... is extracted as below: "XII). During the entire assessment proceedings, no independent verification or examination of the source of very substantial addition to the Partners' capital was made. No information was called by the AO from the partners u/s 133(6) of the Act. The relevant bank statements / other accounts of the partners were not examined to see as to how the credit balances had built up in these accounts from where large capital contribution was made by the partners. (XIII). Thus the source of the large capital of Rs.37,63,96,365/- introduced in the books of the assessee firm under the head Capital introduction by the partners remained unverified though the AO had initiated queries in this regard by asking the assessee to explain sources of addition to partners' capital accounts vide notice u/s 142(1) dated 17.10.2019. The assessment is thus erroneous and prejudicial to the interest of revenue. 5. As mentioned above, the assessment has been concluded In this case by the Assessing Officer without carrying out the necessary enquiries and verifications on the issue flagged under CASS for which the case had been selected for scruti....
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....00 1. In this regard we are enclosing here with the copy of assessment order for the AY 2017-18 duly submitted before worthy PCIT in reply to notice u/s 263. (Refer page no. 68-74). 2. The PCIT was also apprised with the issue that the investment made by the partner has duly been verified by the respective assessing officer vide questionnaire dated 09.12.2019 for AY 2017-18 [Refer Page no. 75-77]. The relevant question raised by the assessing officer in the questionnaire (Relevant Page no 77)is being re-produced for your ready reference: - "Please furnish copies of ledger account in all the concerns where you are a partner/director". 2.1 In response to the same, the partner Sh. Harpreet Singh Gulati furnished capital account along with the cash book during assessment proceedings to substantiate the course of capital investment being made during the year under consideration. The copy of reply is enclosed at page no. 80of the paper book. 2.2 The copy of cash book as submitted during the assessment proceedings of the partner Harpreet Singh Gulati duly submitted before the PCIT under proceedings u/s 263 is enclosed....
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....vide questionnaire dated 23-11-2019 has specifically asked the detail in which the company is having interest in form of shareholding/partnership. The same was submitted during the assessment proceedings vide reply dated 18-12-2019. 6. That from the above facts, it is evident that the AO of the partner has made a detailed enquiry through notice dated 23.11.2019 and the assessment order u/s 143(3) has been passed on 27-12-2019 i.e. after the reply to such questionnaire was furnished. Therefore, in no circumstance, it can be said that the order is erroneous or prejudicial to the interests of the revenue. A.D. Enterprises P Ltd AAHCA5833H 22,51,20,000 1. In this regard we are enclosing here with the copy of assessment order for the AY 2017-18 duly submitted before worthy PCIT in reply to notice u/s 263. (Refer page no. 366--373 relevant page no 372-373). 2. That during the assessment proceedings of the partner M/s A.D. Enterprises P Ltd was asked to explain the source of investment made in Hoshiarpur Traders. It was submitted by the partner that the same was made out of cash sales of Rs. 112 crore out of Total sales o....
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....r is enclosed at page no 485. GautamAggarwal ADNPA7060L 2,55,00,000 1. That the assessee has furnished date-wise capital account, Copy of ITR and copy of computation of partner ShriGautamAggarwal during the proceedings under section 263.The copy of the same is enclosed at page no 486-487 and 543 to 544. 2. That during proceedings under section 263 the assessee had furnished the copy of affidavit regarding capital contribution made by partner Gautam Aggarwal. (Refer page no. 542 of the paper book) 3. Furthermore, the assessee also submitted copy of cash book of GautamAggarwalto substantiate the source of capital investment made. The copy of the cash book submitted before PCITis enclosed at page no. 488- 541 of the paper book. 4.6 The following details were submitted by the assessee before both the revenue authorities in relation to the source and creditworthiness of the partners; a) Copy of cash book APB page nos. 81 to 94. b) Audited balance sheet APB page nos. 2 to 42. c) APB page nos. 305 to 311 and date wise investment APB page nos. 312 to 316. 4.7 In further argument the assessee subm....
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....ssessee] iii. Judgment in the case of Commissioner of Income-tax vs. Rameshwar Dass Suresh Pal Cheeka l63 TAXMAN 270 (PUNJ. & HAR.) HIGH COURT OF PUNJAB AND HARYANA IT REFERENCE NO. 95 OF 1999 DECEMBER 8, 2006 [Refer Page no 10-12 of judgement paper book] and the relevant portion of the judgment is reproduced below: "Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1987-88 - During course of assessment, Assessing Officer found that 'K' i.e., partner in assessee-firm, deposited certain amount in her capital account - Assessing Officer did not accept explanation of 'K' that apart from being a partner of assessee firm, she had income from interest and other sources, which were declared under Amnesty Scheme and added said amount to income of firm on account of cash credit - Tribunal, however, accepted assessee's plea that once partner, accepted having made deposits, no addition could be made in firm's income and held that no case was made out for addition to income of assessee-firm, even if deposits made with firm by partner were unexplained income of partner - Whether Tribunal was justified in holding so - Held, Yes" ....
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....ions, in the shape of confirmations from the creditors who had given the money to the partners and in the shape of the copies of the returns of income/statements of computation of income/capital accounts of all the creditors. The Assessing Officer, however, rejected assessee's explanation and made addition under section 68. Held that on facts, onus cast upon the assessee in regard to the capital contributions made by the partners as per section 68 was duly discharged and, therefore, addition made under section 68 was to be deleted." 2ND ISSUE AMOUNT RAISED THROUGH UNSECURED LOAN:- 5. Next issue is related to the amount raise through unsecured loan. The ld. Counsel further argued that both in assessing authority and before the Revisional Authority the assessee has submitted the details related to the loan creditors. 6. The ld. Counsel first draw our attention in APB pages 667 to 676 the submission of information before the PCIT in further argument the following details was submitted: Name of Party Address Document submitted before AO Documents submitted before PCIT Prem Arora AHNPK7425P 55, Blue City Colony, Meera Court, Loharka Road, Amritsar....
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.... Model Town, Hoshiarpur 1. Copy of account of Sh. Naresh Aggarwal in the book of assessee. Please refer page no. 39 of the paper book. 2. Certificate from the Capital Small Finance Bank that the amount of Rs. 80 lacs was remitted on 05.04.2016 from the account number 004200001924 belonging to Sh. Naresh Aggarwal.Please refer page no. 40 of the paper book. The following documents were submitted before the PCIT 1. Confirmed copy of account of the assessee in the books of Sh. Naresh Aggarwal. Please refer page no. 545 of the paper book. 2. Bank statement of Sh. Naresh Aggarwal maintained with Capital Small Finance Bank. Please refer to page 546 of the paper book. 3. The affidavit of Sh. Naresh Aggarwal was also submitted before the PCIT in which it has been clarified by Sh. Naresh Aggarwal that the amount of Rs. 80 lacs has been remitted out of opening bank balance maintained with Capital Small Finance Bank. Please refer page 677 of the paper book. 4) Copy of ITR of Naresh Aggarwal for AY 2015- 16 declaring income of Rs 1103580/- Please refer page no 687. 5)Copy of bank statement for FY 2015-16 Please refer page no Th....
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....ted loan amount received by assessee from ST as unexplained cash credit and made additions under section 68 - It was noted that loan amount was given to assessee through cheque by ST - There was no dispute as to identity of creditor ST - There was also no dispute about genuineness of transaction - That apart, creditor had explained as to how credit was given to assessee as amount was received by it from RBS and ST - Further, revenue could not prove or bring any material to impeach source of credit - Whether, on facts, assessee had discharged its onus as per requirement of section 68 and it was not required for assessee to explain sources of source i.e. genuineness of receipt of amount by ST from RBS and SST - Held, yes - Whether, therefore, impugned addition under section 68 made to income of assessee was to be deleted - Held, yes [Paras 13 to 16] [In favour of assessee] 7. The ld. CIT-DR vehemently argued & relied on the order of revisional authority. But unable to bring any contrary fact in relation to the submission of the assessee. 8. We heard the rival submission and relied on the documents available in the record. The entire finding of the revisional authority was not o....
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....acity of donors and to decide about genuineness of gift afresh, was not sustainable CIT v Hindustan Marketing & Advertising Co. Ltd. 196 Taxman 368 (DEL) Commissioner set aside assessment orders holding that ITO had not made adequate and detailed investigations/enquiries in respect of a major area of assessee-company's operation and source of its income - Tribunal quashed revisional order passed by Commissioner - Whether in view of fact that ITO had made reasonably detailed enquiries, had collected relevant material and discussed various facets of case with assessee, order of Commissioner to direct fresh assessment by going deeper into matter would not form a valid or legal basis to exercise jurisdiction under section 263 - Held, yes - Whether, therefore, impugned order of Tribunal was to be upheld - Held, yes SMT. ANITA MALPOTRA V. ITO 109 TTJ 76 (ITAT, Amritsar) Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 2001-02 - Against assessment order passed by Assessing Officer, Commissioner passed order under section 263 on grounds that Assessing Officer had failed to make enquiry/investigation about expend....