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2023 (9) TMI 255
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....and accepted the submissions of the assessee" 2. BECAUSE the ld. Pr. Commissioner of Income-tax has erred in law and on facts in holding that the A.O has not examined/enquired into the facts of the case is contrary to the facts on record that the assessment order dated 24.12.2019 was passed by A.O. after examining the books of account and all the contentions/replies of the assessee as per the queries raised under section 142(1) of the Act. 3. BECAUSE the ld. Pr. Commissioner of Income-tax has erred in law and on facts in holding that there was lack of inquiry dehors the notice u/s 142(1) of the Act dated 17.10.2019 in which the Ld. A.O has asked the assessee to furnish the details business along with the books of account, ledger account, cash flow statement and bank details with details of deposits. 4. BECAUSE the ld. Pr. Commissioner of Income-tax has erred in law and on facts in not finding any error in the notice issued by the A.O. 5. BECAUSE the ld. Pr. Commissioner of Income-tax has erred in law and on facts in making fresh allegation/issues in his order passed under section 263 of the Act which was not raised in his notice dated 27.01.2021 and is against principle of ....
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....quiry made by the AO regarding genuineness of the source of cash deposit of Rs. 18,00,000/- on 10.11.2016 in Bank of Baroda Account and Rs. 14,86,500/- from 08.11.2016 to 17.11.2016 in Dena Bank account during demonetization period. ii) AO did not enquire about the details of license issued to him for the trading of liquor. iii) During the year, there was addition to member's capital account amounting Rs. 79.10 lakhs. AO did not verify the source, genuineness, creditworthiness of the partners as well as the mode of payment. iv) There were major expenses like purchases, processing fees, carriage onwards and other expenses, which were not examined by the AO neither with regard to genuineness of the expenses claimed nor whether the same were allowable as per provisions of the Act. v) During the year, the assessee has paid security deposit of Rs. 40 lakhs from 04.04.2016 to 07.04.2016. The AO has not verified the source of this huge amount deposited in cash. The Assessing officer has passed the assessment order on 29.07.2019 u/s 143(3) of the Act without enquiries on the above issues and accepted submissions of the assessee." (A.1.1) This appeal has been filed by the ass....
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....o finalize the assessment under the very orders, which are under challenged in appeal before the ITAT, by 31st March, 2023. Hence, this petition seeking deferment of assessment proceedings. Shri Dixit, learned counsel for the Income Tax Department says that the Assessing officer is under an obligation to complete the proceedings by 31st March, 2023, lest they become time barred. However, he could not deny the fact that the appeal of the petitioner cannot be heard as of now on account of nonavailability of Members at the ITAT. At this stage, learned counsel for the petitioner invited our attention to the provisions contained in Section 153 of the Income Tax Act regarding time limit for completion of assessment proceedings, reassessment and re-computation specially explanation-1 thereof. According to which for the purposes of this section in computing the period of limitation inter-alia the period during which assessment proceedings is stayed by an order for injunction of any Court shall be excluded. The right of appeal u/s 253 of the Income Tax Act against the order dated 22.02.2022 is a valuable right and same should not be allowed to be defeated merely on account of non-avai....
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....sment order dated 24/11/2019 was set aside and the Assessing Officer was directed to frame de novo assessment as per law. The learned PCIT was of the opinion that the Assessing Officer had not examined/enquired into the details of the facts of the case and the assessment order passed u/s 143(3) of the IT Act was erroneous in so far as prejudicial to the interest of the Revenue. In this case there are directions from Hon'ble Allahabad High Court, vide order dated 24/03/2023 in Writ Petition bearing No. 70 of 2023 which was filed by the assessee seeking writ of mandamus directing the Assessing Officer not to finalize the remand assessment proceedings in pursuance to the order dated 22/02/2022 passed u/s 263 of the IT Act which were initiated by means of a notice u/s 142(1) of the IT Act dated 03/03/2023, till decision of appeal I.T.A. No.75/Lkw/2022, pending before learned Income Tax Appellate Tribunal ("ITAT" for short). Vide aforesaid order dated 24/03/2023, Hon'ble Allahabad High Court directed the Assessing Officer to defer the reassessment proceedings pending before him in pursuance to the order of Pr. Commissioner dated 22/02/2022, for a period of three months or till....
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....de wishes interim relief/interim order, a separate application is filed by the concerned party. In the present case, no such application was filed by either side. (ii) In this case, the appellant assessee did not approach ITAT with an application for early hearing of the appeal, and instead approached Hon'ble High Court by filing Writ Petition (Writ Tax No.70 of 2023). In case the assessee had approached ITAT with request for early hearing, it was possible to grant early hearing (through video conferencing, if required) despite non availability of Members of ITAT in Lucknow by way of physical presence. (iii) Even if the Assessing Officer passes fresh assessment order in pursuance of aforesaid order dated 22/02/2022 and learned PCIT before disposal of this appeal; the fresh assessment order would be liable to be quashed in case the aforesaid order dated 22/02/2022 of learned PCIT is quashed by ITAT while disposing off this appeal in ITAT. When the hearing resumed after the brief adjournment today, it was clarified by learned Counsel for the assessee that the aforesaid purchase invoices were not filed before the Assessing Officer during the assessment proceedings. The learn....
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....s Excise Act, 1910 (U.P. Act no. IV of 1910)' was not available; the Hon'ble Bench was pleased to grant time to file materials in support the contention. The appellant has filed the aforesaid 'Act' along with the paper book. It is at serial no 13 of the paper-book. 2. It is respectfully stated that sec.3 (13) defines "intoxicant" means any liquor or intoxication drug as defined by this Act. Sec. 6 provides power of the State Government to declare limit of sale by retail; and sec. 7 provides sale by whole sale. Sec.20 of this Act provides that 'Possession of intoxicants in excess of the quantity prescribed by the State Government prohibited except under permit. Sec. 21 provides sale of intoxicant without license prohibited. Further, sec. 60 of the aforesaid Act provides 'Penalty for unlawful import, export, transport, manufacture, possession, sale, etc. From the perusal of the aforesaid section, your Honour will appreciate that liquors cannot be purchased from open market without license. 3. The appellant most humbly request to the Hon'ble Bench that the case may kindly be heard on the basis of my written submission/argument, paper-book and compilatio....
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.... at page No. 59-74 of aforesaid paper book filed on 15/06/2023 were produced before the Assessing Officer and are part of record in the files of Income Tax Department) was due to typographical error. This acceptance is because of bonafide conduct of learned Counsel for the assessee at the time of hearing on 22/06/2023 when he requested for beief adjournment of the hearing (for 30 minutes) for ascertaining the factual correctness of the claim; and clarified the matter when the hearing resumed after 30 minutes [copy of order sheet dated 22/06/2023 has already been reproduced in foregoing paragraph (A.2.1) of this order]. Moreover, shortly thereafter, the paper book filed on 15/06/2023 was replaced with fresh paper book filed on 28/06/2023 along with amended certificate. Relevant portion of aforesaid letter dated 28/06/2023 is reproduced below: "May it please the Hon'ble Members', I respectfully submit that at the time of hearing i.e. 22.06.2023, the Hon'ble Bench pointed out that at Sl. No. 12 of the paper book which was filed on 15.06.2023 states that "purchase invoices were produced before the Assessing Officer for test check" whereas the certificate states that pur....
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.... notices, the appellant filed pointwise replies and also filed relevant information/ documents. Books of accounts alongwith AOP agreement and bills and vouchers were also produced for examination before AO at the time of assessment proceedings. The assessment was completed by making addition of Rs. 60,500/- as unexplained cash credits and Rs. 2,18,300/- as adhoc disallowance of expenditure shown in the books of the assessee. The appellant is in appeal against the assessment order. 3. The Id. Pr. Commissioner of Income Tax (P.C.I.T) issued notice u/s 263 of the Act dated 27.01.2021 in which he has stated that "The A.O. was expected to follow the guidelines and issue specific queries to examine the source of cash deposits as well as to make relevant enquires before completion of assessment proceedings." The notice was issued on the following grounds: "1. However, the AO has not made enquiry from State Excise department regarding the purchases made by the assessee. The A.O should have examined the expenditure in Trading Account as well as in the P&L A/C on test-check basis for the year under consideration. He should have undertaken third party enquires w.r.t. major heads of Balanc....
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....se bills too. The second part of the grounds deals with examination of expenditure of trading and P&L account of test check basis. Your honour will appreciate that at page 1 para 2 of the assessment order clearly states that "The information/documents furnished were verified and books of account produced were examined on test check basis." Further, the Ld. AO at page 3 para 5 has discussed in detail about the expenses of the assessee shown in the trading and P&L account. He has disallowed Rs. 2,18,300/- on the ground that some of the vouchers were hand written, unsigned and unclear. 4.2. Ground no 2 and 4 states that the AO has not enquired about shop wise purchases and sales and expenses. The Ld. Pr. CIT completely ignored the fact that on 13.12.2019, the assessee had produced the books of accounts along with bills and vouchers for verification and were cross checked as also stated by the AO in his order. It is also pertinent to mention that purchase bills were also produced for verification. The appellant begs to submit that as states above, TCS were made on the purchases; therefore, it is available for verification on e-filing portal of Income-tax Department. So far as corresp....
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....ppellant begs to submit that the Ld. AO had raised detailed queries in relation to assessee's business, cash deposits, bank statement, cash flow statement, sundry creditors and also asked to produce books of account along with bills and vouchers supporting its claim. The assessee responded by the replies filed of various dates. Cash Book, bank statement and Books of account were also filed/produced and which was cross verified. An enquiry was made by the assessing officer and the assessment order was passed. It was only if the Assessing Officer had not made any enquiry then it could be said that the order passed was erroneous. This is not a case of lack of enquiry. 7. Your honour will appreciate that it is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. The order which is not in accordance with law or which has been passed by the AO without making enquiries in undue haste. The order will not be erroneous and prejudicial to the interest of the Revenue if ....
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....pilation) iv) The Hon'ble Chennai ITAT in the case of SICAL Logistics Ltd. v. Addl. CIT [2010] 127 ITD 187 held that merely because A.O. did not conduct inquiry into Books of Account in way Commissioner wanted it, it could not be treated as erroneous order. v. Narayan Tatu Rane Vs. ITO, I.T.A. No. 2690/2691/Mum/2016, dt. 06.05.2016"..........we are of the view that the said Explanation cannot be said to have over ridden the law interpreted by Hon'ble Delhi High Court, referred above. (CIT Vs. Goetze (India) Ltd (361 ITR 505)) If that be the case, then the Ld Pr. CIT can find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law and order for revision. He can also force the AO to conduct the enquiries in the manner preferred by Ld Pr. CIT, thus prejudicing the independent application of mind of the AO. Definitely, that could not be the intention of the legislature in inserting Explanation 2 to sec. 263 of the Act, since it would lead to unending litigations and there would not be any point of finality in the legal proceedings. The Hon'ble Supreme Court has h....
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....vest P. Ltd. Vs. PCIT, I.T.A. No. 2519/DEL/2019, dt. 19.09.2019 "We further note that Explanation to section 263 of the Act does not change the scope of section 263 of the Act, the Mumbai Tribunal in the case of Narayan Tatu Rane vs. ITO reported in 70 taxmann.com 227 has also held that in a case where learned Pr. CIT has not brought any material on record by making enquiries or verifications to substantiate his inference, the learned PCIT is not justified in holding that the impugned assessment order was erroneous. 5.4.1 In view of above, we note that notice u/s. 263 of the Act issued by the Pr. CIT is vague and only for making deeper enquiry and re-considering the evidences already on record duly considered during assessment proceedings based on purported proposal that fresh facts have been emerged subsequent to the order of assessment which is factually incorrect and untenable and the conditions or the factors enabling the Ld. Pr. CIT to invoke his jurisdiction uls 263 have not been satisfied." (page 52-62 of compilation) Whether an assessment order u/s 143(3) can be revised u/s 263 by PCIT without recording a finding on merit of the case? 7. Without going into merit of th....
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.... a view to start fishing and roving inquires in the matters which had already concluded. The Ld. Pr.CIT has initiated proceedings starting a fishing and roving enquiry in the matter without bringing on record any material or evidence demonstrating that he has acted in a reasonable manner. 9.1 In case of Gabriel India Ltd.'s (supra), law on this aspect was discussed in the following manner: " From a reading of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is 'erroneous insofar as it is prejudicial to the interests of the revenue'. It is not an arbitrary or unchartered power. It can be exercised only on fulfillment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous insofar as it is prejudicial to the interests of the revenue must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commi....
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.... travel beyond the reasons given by him for revision in the show-cause notice without appreciating that the power of revision under Section 263 of the I.T. Act is not contingent on the giving of a notice to show cause?" The Hon'ble Court has held that "9. In the case at hand, there is a finding by the Tribunal, as noted earlier, that no issue was raised by the CIT in respect of particulars of payment made to persons specified under Section 40A(2)(b) of the Act and even the show cause notice is silent about that. 10. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law." (page 8693 of compilation) 11. The appellant respectfully submits that as per page 5 of order u/s 263 following were the grounds points which seem uncovered in original assessment hence A.O. was directed to frame assessment denovo. i) No enquiry made by the AO regarding genuineness of the source of cash deposit of Rs. 18,00,000/- on 10.11.2016 in Ban....
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....2019 of above referred notice vide regarding Capital introduction & the was complied with acknowledgment no 04121912490473 our above referred reply & A.O. also verified the same from Books of accounts produced vide Acknowledgement Number: 13121912692355. same iv) Regarding ground/point no. 4, it is stated that these expenses were verified from Books of accounts & bills & vouchers produced vide Acknowledgement Number: 13121912692355 & after verification Rs. 2,18,300/- has been disallowed. by A.O. on this very count which is evident from page 3 of assessment order (10% of expenses referred in assessment order. v) Regarding point no. 5 assessee would like to submit that A.O. raised the query on point no. 13 of notice u/s 142(1) dated 17/10/2019 regarding details of security. deposit during the year & the same has been submitted by us in our reply filed vide Acknowledgement Number: 04121912490473. (B.1.1.1) Moreover, further written submissions vide separate letter dated 28/06/2023, relevant portion of which is reproduced below: "The appellant assessee most humbly submits that on the last date of hearing i.e. 22.06.2023, it was argued by the Ld. Counsel that 'the liquors can....
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....f Hon'ble Allahabad High Court in the case of CIT vs. Mahendra Kumar Bansal reported in 297 ITR 99 (All) 10. Copy of judgment of Hon'ble Supreme Court in the case of CIT (Central) vs. Max India Ltd reported in 295 ITR 282 (SC) 11. Copy of judgment of Hon'ble Bombay High Court in case of CIT vs. Gabriel India Ltd reported in 203 ITR108 (Bom) 12. Copy of judgment of Hon'ble Bombay High Court in case of Pr.CIT vs. M/s Universal Music India, ITA 238 of 2018 13. Copy of judgment of Hon'ble Income tax Appellate Tribunal, Lucknow Bench, in the case of M/s Basti Wine Co (English) vs Pr.CIT, ITA No.409/Lkw/2018 (B.2) Also, as mentioned in foregoing paragraph (A.3) of this order, a paper book earlier filed from the assessee's side on 15/06/2023 was subsequently replaced by another paper book filed on 28/06/2023 along with amended certificate. The contents of the aforesaid paper book filed on 28/06/2023 are as under: 1. Copy of notice u/s 263 of the Act dated 27.01.2021 issued by PCITBareilly 2. Copy of notice u/s 263 of the Act dated 18.11.2021 issued by PCITBareilly 3. Copy of reply filed by the appellant in compliance to notice u/s 263 of the Act dated 12....
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.... response to your queries, I would like to submit as under: 1. That our business is that of retail trading of liquor at various outlets of district Sitapur, Lucknow and Lakhimpur-Kheri. 2. That as required I am enclosing herewith Computation of Income and tax, Balance Sheet and Profit & Loss account along with all their annexure for A.Y. 2017-18. 3. That the detail of bank accounts in required format is given on separate sheet enclosed along with all bank statements from 01.04.2015 to 31.03.2017. 4. That the details of deposit in required format are given on separate sheet enclosed. 5. That you are requested to kindly permit to produce the books of accounts along-with vouchers manually as per provision mentioned at point no. 4 (I) of Note on E-Proceeding as they are in bulk. 6. That the cash flow statement is given on separate sheet enclosed. 7. That during the financial neither any fresh unsecured taken nor any payments made. 8. That there were no sundry creditors at the end of year. 9. That we deal in non VAT goods hence there was no need for VAT registration. 10. That all expenses are below TDS limits hence no deduction was made during the yea. 11. That the....
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....es, which were not examined by the AO neither with regard to genuineness of the expenses claimed nor whether the same were allowable as per provisions of the Act. v) During the year, the assessee has paid security deposit of Rs. 40 lakhs from 04.04.2016 to 07.04.2016. The AO has not verified the source of this huge amount deposited in cash. (C.1) In the written submissions dated 21/06/2023 [referred to in foregoing paragraph (B.2) of this order], the learned Counsel for the assessee disputes the aforesaid finding of learned Pr. CIT. The relevant portion of the aforesaid written submissions dated 21/06/2023 is at paragraph 11.1 of the written submissions. Regarding point No. (i), the learned Counsel for the assessee has claimed that the relevant query was raised on point number (iv), (v) and (vi) of aforesaid notices u/s 142(1) of the IT Act dated 17/10/2019 and 12/12/2019 which were complied with by the assessee through the aforesaid replies dated 23/10/2019 and 12/12/2019. However, on perusal of records, we find that printout of PDF attachments of assessee's aforesaid replies dated 23/10/2019 and 13/12/2019 have not been provided from the assessee's side. Therefore, in view of ....
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....arned Counsel for the assessee in aforesaid written submissions dated 21/06/2023 that this query was raised by the Assessing Officer at Sl.No. 13 of aforesaid notice u/s 142(1) dated 17/10/2019 and that the assessee complied vide reply filed on 23/10/2019. However, on perusal of records, we find that the printout of PDF attachments of assessee's aforesaid reply dated 23/10/2019 have not been filed from the assessee's side. Therefore, in view of foregoing paragraph (B.3) of this order, we hold that the assessee has failed to establish that necessary details were filed by the assessee during assessment proceedings and that the Assessing Officer has completed assessment after due verification on this point. Thus, we conclude that on all the five points identified by learned Pr. CIT in his aforesaid impugned revisionary order dated 22/02/2022, the assessee, during appellate proceedings in ITAT, has failed to establish that the necessary details were filed by the assessee during assessment proceedings and that the Assessing Officer has completed the assessment after due verification on these five points. The case before us in this appeal is very clearly one in which the assessment order....
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.... order has been passed by the Assessing Officer on 24/12/2019. The aforesaid impugned revisionary order has been passed by learned Pr. CIT on 22/02/2022. The aforesaid dates of 24/12/2019 and 22/02/2022 fall after aforesaid date of 01/06/2015 and the relevant assessment year is 2017-18 in the present case. Therefore, there is no doubt about applicability of aforesaid Explanation (2) to section 263(1) of the IT Act in the present case before us. (C.3) The learned Counsel for the assessee has placed reliance on certain decisions which are referred to in aforesaid written submissions dated 21/06/2023 and in the aforesaid compilation of judgments, referred to in foregoing paragraph (B.1.2) of this order. With utmost regard to Hon'ble Supreme Court, Hon'ble High Court and various Benches of the ITAT, we may mention that the aforesaid cases vide Malabar Industrial Co. Ltd. vs. CIT (supra), CIT vs. Indo German Fabs (supra), CIT vs. Sunbeam Auto Ltd., J. P. Srivastava & Sons (Kanpur) Ltd. vs. CIT (supra), CIT vs. Goyal Family Specific Trust (supra), CIT vs. Mahendra Kumar Bansal (supra), CIT vs. MAX India Limited (supra) and CIT vs. Gabrial India Limited (supra) were passed after ....
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....Act issued by the Pr. CIT, was not only vague but also only for making deeper enquiry and re-considering the evidences already on record duly considered during assessment proceedings based on purported proposal that fresh facts have been emerged subsequent to the order of assessment which is factually incorrect and untenable and the conditions or the factors enabling the Learned. Pr. CIT to invoke his jurisdiction u/s 263 have not been satisfied. However, in the present case before us, the facts clearly distinguishable in view of the foregoing paragraph number (C.1) of this order in which we have held that the assessee has failed to establish that the necessary details were filed by the assessee during assessment proceedings and that the Assessing Officer has completed the assessment after due verification. In the case of Pr. CIT vs. Universal Music India Pvt. Ltd., the issue before Hon'ble High Court was whether the Commissioner can travel beyond the reasons given by him for revision in the show cause notice. In this regard, we take guidance from the well settled position, as enunciated by Hon'ble Supreme Court in the case of CIT vs. Amitabh Bachhan [2016] 384 ITR 200 in w....
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....as held to be erroneous, though the converse may not always be true. Still furthermore, it was held in the case of Indu Fine Lands (P.) Ltd. vs. CIT [2014] 45 Taxmann.com 307 (Hyd) (Trib.) that Commissioner may consider an order of the Assessing Officer to be erroneous not only when it contains some apparent error on reasoning or on law or on facts on face of it but also when it is a stereotype order which simply accepts what assessee has stated in his return of income and fails to make enquiries or examine genuineness of claim which are called for in circumstance of case. Moreover, in the case of Rajmandir Estate (P.) Ltd. vs. Pr. CIT [2017] 77 Taxmann.com 285 (SC) Hon'ble Supreme Court dismissed assessee's SLP against order of Hon'ble High Court, holding where assessee with some amount of authorized share capital raised used from on account of premium, exercise of revisionary powers of Commissioner opinion that this could be a case of money laundering, was justified. Also in the case of Sesa Starlite Ltd. vs. CIT [2021] 123 Taxmann.com 217 (Bom), the Assessing Officer sought information from the assessee; however, without considering such information produced by the asses....
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....(supra), we find that in the facts and circumstances of the present case, this order of Hon'ble Supreme Court goes against the assessee. In the case of Malabar Industrial Co. Ltd. (supra), Hon'ble Supreme Court held that incorrect assumption of facts or incorrect application of law will satisfy the requirement of the order being erroneous. Hon'ble Supreme Court also held that an order passed without application of mind also fell in the same category. Hon'ble Supreme Court upheld the order of Hon'ble Madras High Court in the case of Malabar Industrial Co. Ltd. vs. CIT [1991] 198 ITR 611 in which Hon'ble Madras High Court has held that the words prejudicial to the interest of Revenue are of wise import; that where the Assessing Officer has failed to apply his mind to the case in all its perspective, the order could be said to be prejudicial to the interest of the Revenue, conferring a jurisdiction upon the Commissioner u/s 263. On facts of the present case before us, therefore, order of Hon'ble Supreme Court in Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83 (SC) goes against the assessee. (D.1.1) Also we find that the case laws on which the learned Pr. CI....
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....een assessed to a larger amount, the assessment to made can certainly be erroneous and prejudicial to the interest of revenue." (iv) Hon'ble Delhi High Court in the case of Gee Vee Enterprises v/s Addl. CIT (1975) 99 ITR 375(Delhi) following the aforesaid above two judgements of the Hon'ble Apex Court held that "the position and function of the Income Tax Officer is very different from that of a Civil Court. The statements made in a pleading proved by minimum amount of evidence may be accepted by Civil Court in absence of any rebuttal. The Civil Court is neutral. It simply gives decision on the basis of the pleading and evidences which comes before it." Further, it was held by the Hon'ble Court that: "The Income tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparent in the order but call for further enquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an enquiry. The meaning to be given to the word "erroneous" in section 263 emerges out of its context. It is because it is incumbent on the Income Tax offi....