TaxTMI 
TaxTMI 
2023 (2) TMI 1195
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....uashed or modified as your honours deem it proper. 3. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 3. The relevant material facts, as culled out from the material on record, are as follows. The assessee before us is a firm and filed its return of income for assessment year 2012-13 on 16.08.2012 declaring total income of NIL. Thereafter, assessee`s case was selected for scrutiny and assessment order u/s 143(3) of the Income Tax Act was framed by the assessing officer on 25.03.2015 determining total income at NIL. 4. Thereafter, an information was received from DDIT(Inv.), Unit 7(2), Mumbai that assessee was maintaining a bank account No. 5500111032480 with ING Vysya Bank having credit entry of Rs.70,13,43,319/- and same bank account was not disclosed by the assessee in its Return of income for year under consideration. Further, during the year, the assessee firm claimed exemption u/s 10AA of the Income Tax Act of Rs.87,21,44,414/-. However, as per the information received, exemption u/s 10AA claimed by the assessee firm was disallowed by the assessing officer while passing the assessment order fo....
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....n of ld PCIT: As per the provisions of Income tax Law, it is mandatory to disclose all bank account accounts held by the assessee in its Income Tax Return. However, the assessee firm has disclosed one bank account maintained with Allahabad Bank in its ITR filed on 01.08.2012. Further, as per the Notification No.41/2015/ F.No.142/1/2015-TPL], dated 15th of April, 2015 issued by the Central Board of Direct Tax, it is mandatory to disclose all the bank accounts held by the assessee in its Income Tax Return. The assessee also filed its return of income on 14.12.2019, in response to notice issued u/s 148 of the IT. Act. However, the assessee firm has again not disclosed, it's all the bank accounts in the Income Tax Return filed in response to notice u/s 148 of the I.T. Act. Further, the assessee firm argued that all the books of accounts produced before the AO during the course of assessment proceedings. As per the show cause notice issued by the AO dated 09.11.2019, it is found that various notices u/s 142(1) of the I.T. Act were issued to the assessee firm, however, it had remained non-compliant till date 09.11.2019. Thereafter, the assessee firm just filed its reply on electronic....
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....sessment order. Therefore, the credits entries in said bank remained unexplained as the AO has not made the necessary inquiries on this issue and has not applied his mind before passing the assessment order. (iv) Arugument No-4 of assessee: During the course of assessment proceedings, the assesses produced the books of accounts which were tallied with banks statements filed by the assessee. Observation of ld PCIT: As discussed above that as per the show-cause notice issued by the AO dated 09.11.2019, it is found that various notices u/s 142(1) of the I.T. Act were issued to the assessee firm, however, it had remained noncompliant till date 09.11.2019. Thereafter, the assessee firm just filed its reply on electronically, vide its letter dated 24.12.2019, stating various contentions against the proposed addition. The assessee firm also not filed its Audit Report on e-filling portal of the Department along with its Return of Income. Audited Books of Account was not furnished by the firm during the course of revision proceeding. Therefore, the AO failed to make an enquiry in respect of credit entries received in its bank account No.550011032480 with ING Vysya Bank. Th....
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....s set-aside with the direction to the AO to re-frame the assessment order. 11. Aggrieved by the order of the Ld. PCIT, passed under section 263 of the Act, the assessee is in appeal before us. 12. Learned Counsel for the assessee submitted that in the assessee's case, original assessment was framed under section 143(3) of the Act, dated 28.03.2015. Subsequently, the Assessing Officer has initiated the revision proceedings under section 147/148 of the Act and then after assessment order was framed under section 143(3) r.w.s 147 of the Act dated 28.12.2019. In the reassessment proceedings, the Assessing Officer has raised mainly two issues, first is undisclosed bank account and second is deduction under section 10AA of the Act. During the reassessment proceedings, the assessee has submitted the information regarding the undisclosed bank account and the information regarding deduction under section 10AA of the Act. The Assessing Officer has examined both the issues which were the subject matter of reassessment proceedings and disallowed the deduction of the assessee under section 10AA of the Act to the tune of Rs.87,21,44,415/-. During the reassessment proceedings, the assessee ....
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....Co. Ltd. vs CIT, (2000) 243 ITR 83 (SC). 15. On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue submitted that issue in reassessment was to examine the credit entry in the bank account to the tune of Rs.70,30,43,319/-. The Assessing Officer nowhere stated in the assessment order whether he has examined the credit entries in the bank account no. 5500111032480 of ING Vysya Bank. The Assessing Officer simply received the bank account from the assessee and did not verify the credit entries, therefore the object for which the reassessment proceedings were initiated have not been fulfilled and therefore the ld. PCIT has rightly exercised his jurisdiction under section 263 of the Act. 16. About claim of deduction under section 10AA of the Act to the tune of Rs.87,21,44,414/-, the Ld. DR pointed out that the assessment order was framed on dated 31.12.2019 and the Ld. PCIT exercised his jurisdiction under section 263 of the Act and notice under section 263 of the Act was issued by the ld. PCIT on 11.01.2022, however, ld. PCIT was not informed neither by the assessee nor by the Assessing Officer that assessee has filed the appeal before the ld. CIT(A) in re....
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....m does not speak in that behalf. We cannot assume, in order to provide legitimacy to the assessment order, that the AO has adopted a permissible course of law or taken a possible view where his order does not say so. The submissions made by the learned counsel, if accepted, would require us to form, substitute and read our view in the order of the AO when the AO himself has not taken a view. It could have been a different position if the AO had "adopted" or "taken" a view after analysing the facts and deciding the matter in the light of the applicable law. However, in the case before us, the AO has not at all examined as to whether only one view was possible or two or more views were possible and hence, the question of his adopting or choosing one view in preference to the other does not arise. The aforesaid observations of the Hon'ble Supreme Court do not, in our view, help the assessee; and rather they are against the assessee. 15. In the case of Padmasundara Rao v. State of Tamil Nadu [2002] 255 ITR 147 (SC) the Hon'ble Supreme Court has held that :- '"... There is always peril in treating the words of a speech or judgment as though they are words i....
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....while discharging the aforesaid roles and consequently passes an erroneous order causing prejudice either to the assessee or to the State Exchequer or to both, the order so passed by him is liable to be corrected. As mentioned earlier, the assessee can have the prejudice caused to him corrected by filing an appeal; as also by filing a revision application under s. 264. But the State Exchequer has no right of appeal against the orders of the AO. Sec. 263 has therefore been enacted to empower the CIT to correct an erroneous order passed by the AO which he considers to be prejudicial to the interest of the Revenue. The CIT has also been empowered to invoke his revisional jurisdiction under s. 264 at the instance of the assessee also. The line of difference between ss. 263 and 264 is that while the former can be invoked to remove the prejudice caused to the State the latter can be invoked to remove the prejudice caused to the assessee. The provisions of s. 263 would lose significance if they were to be interpreted in a manner that prevented the CIT from revising the erroneous order passed by the AO, which was prejudicial to the interest of the Revenue. In fact, such a course would be c....
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....3,43,319/- and; (ii) Disallowance of deduction under section 10AA of the Act to the tune of Rs.87,21,44,414/-. 20. We note that Assessing Officer issued show cause notice dated 20.12.2019 which is placed at paper book page no.14 wherein the Assessing Officer asked the assessee to furnish the following details: "Kindly refer to this office show cause dated 21.12.2019. You have filed certain details but complete reply is still pending. You were specifically required to show cause that why it may not be concluded that neither you were having any machinery for manufacturing nor any electricity consumption was there which support that actually any activities were carried out during the year. You have submitted the Bills of electricity but that also shows that electricity consumption as per trading account was only Rs.59,426/- meaning thereby less than Rs.5,000/- for month. 2. In the above background you were required to show cause that why the exemption claimed u/s 10AA may not be treated as non-genuine and to be disallowed. The complete reply is still pending. 3. Further on going through the partners detail it has been ascertained that Shri Ramesh....
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....urces and may not be added back into the income of your Firm as Income from Other Sources after disallowing the deduction u/s 10AA of the Act. Please note that it's a time barring issue and due to limitation of time the reply should be submitted to this office on or before 28/12/2017 at 10.30 AM. It may please further be noted that, if complete details are not furnish within the stipulated date, the assessment will be completed as per the facts and material available on record without further intimation." 21. In response to the notice issued under section 142(1) of the Act, the assessee submitted its reply dated 24.12.2019 which is reproduced below: "SUB: ASSESSMENT PROCEEDINGS U/S. 142(1) OF THE I.T. ACT, 1961 FOR THE A/Y. 2013-14 IN THE CASE OF NYA INTERNATIONAL. SURAT. PAN: AAFHN 1681M REF: Show Cause Notice No. ITBA/AST/F/17/2019-20/1021622366(1) dated 04.12.2019 We are in receipt of your Show cause notice dated 04.12.2019. In this connection, we state and submit the following details: The assessee firm had filed the return of income on 01.08.2012 declaring total income at Rs. Nil after claiming deduction of ....
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....he original assessment proceedings. We are once again attaching the following documents for your kind perusal; 1. Copy of SEZ approval from ministry of commerce and industry 2. Copy of LUT accepted by development commissioner 3. Copy of letter of allotment for Surat SEZ plot 4. Copy of Kasez approved IEC 5. Copy of Pan card 6. Copy of Surat SEZ lease 7. Copy of original assessment order u/s 143(3) of the Act passed on 28.03.2015 by your predecessor. Considering the above, your good self would appreciate that the assessee had rightly claimed the deduction u/s 10AA of the Act. Further, in para no.4.2 of your show cause notice your good self has mentioned that the Deputy Director, Revenue Intelligence, Zonal Unit, Mumbai has shared the information that the firm is maintaining a bank account with ING Vysya bank bearing account number 550011032480 and there is a total credit of Rs.70,13,43,319/- in the said bank account. In this connection we would like to state that the details of the ING Vysya bank account was duly mentioned in the financials of the company and the Return of Income filed for assessment ye....
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....z: (i) The credit entry in ING Vysya Bank Account No.5500111032480 to the tune of Rs.70,13,43,319/- and;(ii) Disallowance of deduction under section 10AA of the Act to the tune of Rs.87,21,44,414/-. The ld PCIT has exercised his jurisdiction under section 263 of the Act in respect of first issue, that is, credit entry in ING Vysya Bank Account No.5500111032480 to the tune of Rs.70,13,43,319/-. So far this issue is concerned, we note that assessee has also submitted its reply before the assessing officer. The assessing officer after getting the reply of the assessee, has applied his mind and framed the assessment order. Therefore, such order passed by the assessing officer cannot be termed as erroneous and prejudicial to the interest of revenue. We also note that assessing officer had with him copy of said bank account at the time of reopening of assessment under section 147 of the Act, as the reasons were recorded by AO based on the copy of the said bank statement. Therefore, entries in the said bank statement were examined by the AO in the reassessment proceedings and AO has applied his mind also. 26. We are aware of the fact that the Assessing Officer's role while framing an a....
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....may add a few words to my learned brother's analysis of Hon'ble Delhi High Court's judgment in the case of Gee Vee Enterprises (supra). Undoubtedly, as noted by their Lordships in that case, an Assessing Officer cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. In such a case, revision proceedings can indeed be initiated and there seems to be no serious controversy in this respect. The fine point, however, one must bear in mind is the distinction between adequate enquiries not having been conducted and the result of such enquiries not having been dealt with by way of a speaking order or not having resulted in the conclusion that could be, in the wisdom of a person other than the Assessing Officer, more appropriate. Here is a case in which sufficient enquiries were conducted. As learned brother has rightly noted, the Assessing Officer called for specific details, confirmations and even copies of bills. It could not, therefore, be said that sufficient enquiries were not conducted. However, what is opinion formed as a result of these enquiries is something which is in exclusive domain of the Assessing Officer, and even if Commiss....