TaxTMI 
TaxTMI 
2023 (4) TMI 680
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....f a difference of opinion with the Assessing Officer. 4. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr.CIT has erred in invoking his powers/ authority under section 263 of the Income Tax Act, 1961, and the order passed by him u/s.263 is without jurisdiction. 5. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr.CIT has failed to appreciate that the assessment order passed by the ACIT, Vapi Circle, Vapi (hereinafter referred to as the AO) was neither "erroneous" nor "prejudicial to the interest of the revenue" and thus the very invocation of power under section 263 is wholly illegal and beyond jurisdiction. 6. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr.CIT has erred in invoking powers under section 263 and passing order holding the assessment order to be "erroneous" and "prejudicial" without even justifying, which of the two phraseology used in section 263 is applicable and as to how the order of assessment is "erroneous" causing "loss to the revenue". 7. On the facts and in the circumstances of the ca....
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....AY.2017-18 on 30.10.2017 declaring total income of Rs.89,07,362/-. The return was selected for scrutiny through CASS. The assessment order u/s 143(3) was passed on 29/10/2019 accepting the returned income of Rs.89,07,362/-. 5. Later, Learned Principal Commissioner of Income Tax, Valsad [in short 'ld. PCIT'], exercised his jurisdiction under section 263 of the Income Tax Act, 1961. The ld PCIT noted that there was a survey at the business premises of the assessee on 10.09.2016 in which assessee had declared more than one crore rupees as its undisclosed income for the financial year 2015-16 and 2016-17, however this important fact has neither been mentioned in the assessment order nor any further enquiry or verification was done by the assessing officer, as far as, disclosure of the income by the assessee is concerned. The assessing officer failed to verify the nature of disclosure and the particular head under which it should actually be taxed. In view of the above factual position, a show cause notice vide DIN No. ITBA/REV/F/REV1/2021-22/1040967706(1) 17.03.2022 was issued by Ld. PCIT to the assessee. The show cause notice dated 17.03.2022 is as reproduced below: ....
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....ferred to in section 115BBE(1) of the Act. In this regard, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that in assessments prior to assessment year 2017-18, while some of the Assessing Officers have allowed set off of losses against the additions made by them under Section(s) 68/69/69A/69B/69C/69D, in some cases, set off of losses against the additions made under Section 115BBE(1) of the Act have not been allowed. As the amendment inserting the words 'or set off of any loss' is applicable, with, effect from month of April, 2017 and applies from assessment year 2017-18 onwards, conflicting views have been taken by the Assessing Officers in assessments for years prior to assessment year 2017-18. The matter has been referred to the Board so that a consistent approach is adopted by the Assessing Officers while applying provision of section 115BBE -assessments for period prior to the assessment year 2017-18. 3. The Board has examined the matter. The Circular No. 3/2017 of the Board dates 20th January, 2017 which contains Explanatory notes to the provisions of the Finance Act, 2016, at para 46.2, regarding amendment made in....
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....al on 24.03.2022 and 25.03.2022. However, Ld. PCIT after going through these assessee's replies noted that declaration made during the course of survey proceedings on the premises of the assessee on 10/09/2016 was on account of under the head sundry receivable account. It was further stated that the assessee firm had duly credited the same to the income declared during the survey and debited the same to the cash account. It is further submitted that the copy of cash book for financial year 2016-17 was also submitted during the assessment vide letter dated 27/10/2019. In this connection it was observed by Ld. PCIT that a person who receives goods or services from a business in credit or does not make the payment immediately and is liable to pay the business in the future is called a Sundry Debtor and businesses use an account to track these transactions and they are called as Sundry Debtor account or Accounts Receivable. 7. The Ld. PCIT noted that if the assessee has disclosed income on account of sundry receivables it was the duty of the assessee to show the complete transaction of sale and how much amount has been received and how much amount is pending. As accepted by the ....
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....er the money has been received from these sundry receivables by the assessee and how and when the same was accounted for. (10) Whether any disclosure has been made by the auditor in the audit report. 8. Thus, Ld. PCIT noted that no such details were produced by the assessee either before the AO or even before him till the date of passing the order by him (ld PCIT) under section 263 of the Act. During the course of assessment the assessing officer is required to assess the correct income of the assessee. The assessing officer is required to go through the documentary evidences and books of accounts of the assessee and come to a conclusion that the income shown by the assessee in the return of income is correct. In this case the assessing officer has not even mentioned the most important fact that during the year under consideration a survey was conducted on the premises of the assessee and substantial income was disclosed. It is pertinent to note that from 1/4/2019 till the date of survey (six months), the assessee has disclosed an income of Rupees 50,26,300 and for remaining (six months) it is only Rupees 38,81,062 even though this part of the year the sales of the asse....
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....he basis of nature of that income i.e. whether it is unexplained investments, unexplained money or amount of investments which are not fully disclosed in the books of accounts or cash credits would be treated as deemed income which is to be taxed as per the provisions of section 115BBE. Thus, findings of survey proceedings are very important and are to be rigorously pursued in terms of enquiry or verification as to verify whether the income has to be taxed as per the provisions of section 115BBE or not. In the present case the AO has failed to do so. Further it has been submitted by the assessee that partners' capital account has been credited with the amount of Rs.50,26,300/-. The assessee has failed to appreciate that it was income of the firm which needed to be considered in the hands of the firm and only after that it has to be apportioned among the partners after being taxed. It is not that simple that even if the income belongs to the partnership firm simply by crediting the partners account an asset can be created in the partnership firm without routing it through profit and loss accounts. 10. Therefore, the Ld. PCIT further noted that the question involved in these p....
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....Ld. PCIT held that assessment order is not based on appreciation of facts which were very much available before the assessing officer nor law which demanded that the assessing officer to assess the income of the assessee under proper head and therefore the assessment order needs to be revised. Therefore, Ld. PCIT noted that the assessment order u/s. 143(3) of the I.T. Act, 1961 in the case of assessee(Hotel Royal Garden) for AY.2017-18 passed on 29.10.2019 by the Assessing Officer is erroneous in so far it is prejudicial to the interest of revenue. Therefore, the assessment order u/s. 143(3) of the Income tax Act, 1961 dated 29.10.2019 for A.Y. 2017-18 in the instant case was set-aside by Ld. PCIT with the direction to frame the assessment De novo after making proper enquiries on aforesaid issues. 12. Aggrieved by the order of the Ld. PCIT, the assessee is in appeal before us. 13. Learned Counsel for the assessee submitted before us that assessee made a declaration during the survey proceedings for two assessment years, namely AY.2016-17 and 2017-18 and at the time of survey proceedings, the statement recorded by the Income Tax Authority clearly shows that the amount was pert....
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....Departmental Representative (Ld. DR) for the Revenue pointed out that Assessing Officer has not raised the issue in the notice under section 142(1) of the Act, therefore there is non-application of mind by the Assessing Officer. The Assessing Officer did not ask the question during the assessment proceedings from the assessee about the issue raised by the Ld. PCIT, therefore there is complete non-application of mind by the Assessing Officer. Apart from this, had the Assessing Officer applied his mind, based on survey records, he would have brought these issues in his assessment order. There is no whisper in the assessment order about the issue raised by the Ld. PCIT, therefore the issue raised by the Ld. PCIT remain unattended on the part of the Assessing Officer. Neither the Assessing Officer has referred survey material in his assessment order nor the Assessing Officer issued the notice to the assessee to ask question. The assessee should reply to the Assessing Officer and this process has not been completed, therefore it is completely a non-application of mind and it is a case of complete "no inquiry". Therefore, Assessing Officer has not made any inquiry during the assessment p....
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....t is clear that assessing officer never asked the assessee about the undisclosed amount in survey and he never applied his mind. 21. We note that Assessing Officer has also issued a further notice under section 142(1) dated 28.08.2019 which is placed at page no.57 of the paper book, which reads as follows : 22. From the above notice it is vivid that the Assessing Officer has not asked the question about the (undisclosed income in survey) issue raised by the Ld. PCIT, therefore it is quite clear that Assessing Officer has not applied his mind nor examined the issue raised by the Ld. PCIT. 23. Now, we have to examine whether Assessing Officer has brought the material on his assessment order about the issue raised by the Ld. PCIT. To understand this, we have to go through the assessment order of the Assessing Officer, passed by him under section 143 (3), dated 29.10.2019, which read as follows: "1. In this case the assessee filed its return of income for the AY.2017-18 on 30.10.2017, declaring total income of Rs.89,07,362/- vide e-filling acknowledgement no. 274021491301017. Thereafter, the case was selected for complete scrutiny through CASS. Notice U/s. 143(2) of t....
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....ued by AO under section 142(1) of the Act speaks such fact that AO has raised the relevant query and assessee has replied the same. Therefore, the argument made by ld Counsel that "AO might have examined the issue" is not acceptable, because it is not ascertainable whether survey material was with the AO and he has examined the issue raised ld PCIT. The Assessing Officer has neither put the relevant question before the assessee during the assessment proceedings, by way of issue of notice under section 142(1) of the Act nor AO has discussed this issue raised by the Ld. PCIT in his assessment order passed by him. Therefore, we note that Assessing Officer has blindly allowed the claim of the assessee without making enquiry, which is not acceptable. Whether the Assessing Officer made sufficient enquiry or not, the said fact would come to know from his notice under section 142(1) of the Act and reply submitted by the assessee in response to such notice of AO, or at least, the AO should mention this fact, (that he has examined the survey material) in his assessment order passed by him. Therefore, it is a case of complete non-inquiry (no enquiry). Hence, we note that order passed by the a....
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....2014-15, wherein it was held as follows: "In the instant case there has been an information with the department which has been passed on to the Assessing Officer for verification and failure of the Assessing Officer to verify the transactions in the light of the information available makes the order erroneous and also prejudicial to the interest of the Revenue. The Assessing Officer has mentioned about inputs from investigation wing in assessment order but has not examined absolutely anything regarding the genuinity of the transactions. The Ld. PCIT had enough material in his custody to prima facie to show that the tax which was lawfully exigible has not been imposed. Similarly in the case of Sunbeam Auto the courts have held that in the case of lack of enquiry course of action under section 263 is valid. In this case on the facts of the record it can be observed that the Assessing Officer has not applied his mind regarding the allowability of the exemption of the Long Term Capital Gain. This is not the case of inadequate enquiry but is a clear case of lack of enquiry which makes it different from the case of Nirav Modi (supra). Obtaining of the information about the trans....
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....N 396210,Daman and Diu (UT) India PAN: AAEFH2587H Sir/Madam/M/s, AY: 2017-18 Dated: 01/10/2019 Notice No: ITBA/AST/F/142(1)/2019-20/1018528328(1) Notice under Sub Section (1) of Section 142 of the Income Tax Act, 1961 In connection with the assessment for the assessment year 2017-18 you are required to: a) Furnish or cause to be furnished on or before 08/10/2019 at 05:04 PM the accounts and documents specified overleaf. b) Furnish and verified in the prescribed manner under Rule 14 of 1.T. Rules 1962 the information called for as per annexure and on the points or matters specified therein on or before 08/10/2019 at 05:04 PM. c) The above mentioned evidence/information is to be furnished online electronically in 'E-Proceeding' facility through your account in 'e-filing' website of Income Tax Department. d) Para(s) (a) to (c) are applicable if you have an account in e-filing website of Income Tax Department. Till such an account is created by you, assessment proceedings shall be carried out either through your e-mail account or manually (if e-mail is not available). under section PARTID c e) In cases where order has....
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....tion with the assessment for the assessment year 2017-18 you are required to: a) Furnish or cause to be furnished on or before 05/09/2019 at 01:18 PM the accounts and documents specified overleaf. b) Furnish and verified in the prescribed manner under Rule 14 of 1.T. Rules 1962 the information called for as per annexure and on the points or matters specified therein on or before 05/09/2019 at 01:18 PM. c) The above mentioned evidence/information is to be furnished online electronically in 'E-Proceeding' facility through your account in 'e-filing' website of Income Tax Department. d) Para(s) (a) to (c) are applicable if you have an account in e-filing website of Income Tax Department. Till such an account is created by you, assessment proceedings shall account or manually (if e-mail is not available). e) In cases where order has to be passed under section PART be carried out either through your e-mail 153A/153C of the Income Tax Act, 1961 read with section 143(3), assessment proceedings would be conducted manually. Yours faithfully, SANGEETA YASHWANT GOKHALE VAPI CIRCLE, VAPI For HOTEL ROYAL GARDEN 4.P PARTNER Page | 15 Do....