TaxTMI 
TaxTMI 
2023 (10) TMI 773
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....ssessment order under revision is neither erroneous nor prejudicial to the interest of the revenue. As a corollary, the assessee has sought to impugn the revisional order passed by the Pr.CIT under Section 263 of the Act. The Grounds raised by the assessee to challenge the revisional order are reproduced hereunder: "1. That the Ld. Pr. CIT has erred in passing the order u/s. 263 of the Act on the ground that the order passed by the Assessing Officer u/s 143(3) of the Act was found to be erroneous and prejudicial to the interest of Revenue. 2. That the Ld. Pr. CIT has erred in invoking the provisions of section 263 of the Act on the ground that the Assessing Officer had failed to make sufficient inquiries while passing the regular assessment order. 3. That the Ld. Pr. CIT has erred in holding that the loan of Rs. 4 crore received by the assessee from M/s Transnational Growth Ltd. and of Rs. 2 crore from M/s RKG Finvest Ltd. was an accommodation entry and the Assessing Officer had not made any proper inquiry and had not taken cognizance of search material circulated by Investigation Wing in the case of Jain Bros. In fact, no material in respect of these loa....
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....016 relevant to Assessment Year 2013-14. The assessee had filed the return at loss of Rs. 3,44,964/- which was assessed at a loss of Rs. 2,63,933/-. Subsequent to the assessment, the Pr.CIT received a proposal from the new incumbent AO [ ITOWard (2) New Delhi] vide its communication dated 20.03.2018 seeking invocation of supervisory jurisdiction under Section 263 of the Act. Thereafter, in exercise of powers conferred under Section 263 of the Act, the Pr. CIT issued Show Cause Notice (SCN) to the Assessee on the next date i.e. dated 21.03.2018 under Section 263 of the Act alleging that the impugned assessment order is erroneous in so far as it is prejudicial to the interest of the Revenue for the reasons mentioned the SCN. As per the contents of the SCN, the Pr.CIT sought compliance of the SCN on 26th March, 2018 at 3.30 a.m. The hearing was thus allowed to be availed by a solitary notice in a gap of 1 effective working day from service. As per the SCN, the Pr. CIT made allegations to assail the assessment order. The Pr. CIT alleged that the AO has failed to carry out necessary verification towards unsecured loans aggregating to Rs. 8 crore received from certain parties. The SCN is....
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....ng from different addresses. However, confirmation letter have been generated or the same date i.e. 09.09.2015. Language of the confirmation is also word to word same although no authorized signatory was common. These facts signifies that it was only a cover up exercise by the assessee company. Notices u/s 133(6) of the IT Act, 1961 were issued on 18.10.2015 through speed post in the name of M/s Bailley Foods Pvt. Ltd., M/s Lessure Buildcon Pvt. Ltd., M/s. Sandeep Credits Pvt. Ltd. & M/s. White House Buildtech Pvt. Ltd. to furnish details of transaction held with the assessee company along with supporting documents in order to justify identity creditworthiness and genuineness of the transactions. The information was required to be furnished by 30.10.2015. In the following cases notices returned unserved with postal remark 'left': S.No. S. No. Name of the company Amount 1 M/s Bailley Foods Pvt. Ltd Rs. 47,00,000/- 2 M/s LessureBuildcon Pvt. Ltd: Rs. 75,00,000/- 4 M/s White House Buildtech Pvt. Ltd. Rs. 55,00,000/- Further, In case of M/s Sandeep Credits Pvt. Ltd, no information was furnished in compliance to notice issued u/s....
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....s/PO DD in lieu of cash to a large number of beneficiary companies through more than 100 paper and dummy companies/ firms/proprietorship concerns floated and controlled by them through various persons by appointing them as directors / partners/ proprietors. Post search, & seizure operation carried by the Department, both Jain brothers continued their old activity of accommodation entry provider in shape of share capital/premium, loan etc. and also formed new corporate entity so that nobody keep track on them. Besides, in the assessment order for AY. 2005-06 in the case of Sh. Virendra Kumar Jain, the AO confronted various materials impounded during the search & seizure operation, and held that Jain brothers are accommodation entry provider. During the assessment proceedings, both of them chose not, to explain the source of cash deposits, therefore, entire cash received was held as unaccounted income and further commission of 1.8% was also charged to tax as income earned from commission for providing accommodation entries. In second appeal, the Jain Brothers admitted before the Hon'ble ITAT that they are engaged in the business of providing accommodati....
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....on behalf of the beneficiaries through the mediators. Jain Brothers were providing accommodation entries by accepting funds from their beneficiaries through mediators and converting the same into share premium transactions in the beneficiary company. In this process Jain Brothers earned money as a certain percentage of the unaccounted money converted into share capital &share premium. The Enforcement Directorate also arrested one of the mediators of this group Shri Rajesh Aggarwal who facilitate accommodation entry for the end users. In view of the above fact, loan of Rs. 6 crore received from M/s RKG Finvest Ltd. and M/s Trans National Growth Ltd. is merely an accommodation entry and the A.O. has not made any proper enquiry and also not take cognizance of the search material circulated by the Investigation Wing of the Department in case of Jain Brothers. Further, loan of Rs. 2 crore received from other companies also paper companies engaged in the business of providing accommodation entries as discussed above. You are, therefore; directed to show cause as to why an order In terms of provisions of section 263 may not be passed for AY 2013-14 setting aside the order passed ....
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....d loan confirmation of the following investors:- S.No. S. No. Name of the company Amount 1 M/s Bailley Foods Pvt. Ltd Rs. 47,00,000/- 2 M/s LessureBuildcon Pvt. Ltd: Rs. 75,00,000/- 3 M/s Sandeep Credit Pvt. Ltd. Rs. 23,00,000/- 4 M/s White House Buildtech Pvt. Ltd. Rs. 55,00,000/- 5. M/s. Vinsan Credit & Securities Pvt. Ltd. Rs. 20,00,000/- In the confirmation, companies mentioned S. No. 1 to 4 were operating from different addresses. However, confirmation letter have been generated or the same date i.e. 09.09.2015. Language of the confirmation is also word to word same although no authorized signatory was common. These facts signifies that it was only a cover up exercise by the assessee company. Notices u/s 133(6) of the IT Act, 1961 were issued on 18.10.2015 through speed post in the name of M/s Bailley Foods Pvt. Ltd., M/s Lessure Buildcon Pvt. Ltd., M/s. Sandeep Credits Pvt. Ltd. & M/s. White House Buildtech Pvt. Ltd. to furnish details of transaction held with the assessee company along with supporting documents in order to justify identity creditworthiness and genuineness of the transactions. The informa....
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....rtment Delhi on 19.04.2010 at the residential and business premises of Shri Surender Kumar Jain and his brother Shri Virender Jain. Various incriminating documents were seized and impounded. During post search/survey operation of the seized /impounded documents and spot inquiries conducted, it was revealed that Shri Surender Kumar Jain and Shri Virender Kumar Jain were engaged in the business of providing accommodation entries-by making payments in form of RTGS/Cheques/PO DD in lieu of cash to a large number of beneficiary companies through more than 100 paper and dummy companies/ firms/proprietorship concerns floated and controlled by them through various persons by appointing them as directors / partners/ proprietors. Post search, & seizure operation carried by the Department, both Jain brothers continued their old activity of accommodation entry provider in shape of share capital/premium, loan etc. and also formed new corporate entity so that nobody keep track on them. Besides, in the assessment order for AY. 2005-06 in the case of Sh. Virendra Kumar Jain, the AO confronted various materials impounded during the search & seizure operation, and held that Jain br....
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....e racket to be worth about Rs. 8,000/- crore of slush funds and has detected about half of it as per its latest probe. The Enforcement Directorate also confirmed that the modus operandi of Jain brothers was to launder the unaccounted money through the process of placement of funds, layering of transactions and the final integration of laundering money into the banking charnel camouflaged as legitimate share premium transactions. Funds were brought in by the mediators on behalf of the beneficiaries through the mediators. Jain Brothers were providing accommodation entries by accepting funds from their beneficiaries through mediators and converting the same into share premium transactions in the beneficiary company. In this process Jain Brothers earned money as a certain percentage of the unaccounted money converted into share capital &share premium. The Enforcement Directorate also arrested one of the mediators of this group Shri Rajesh Aggarwal who facilitate accommodation entry for the end users. In view of the above fact, loan of Rs. 6 crore received from M/s RKG Finvest Ltd. and M/s Trans National Growth Ltd. is merely an accommodation entry and the A.O. has not made any....
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.... of hearing, the Ld. Counsel at the outset pointed that the present appeal is filed belatedly by about 230 days. An application for condonation of delay dated 14/09/2021 was adverted to in this regard to demonstrate existence of mitigating circumstances. It was essentially pointed out that the delay is attributable to lapse on the part of his legal advisors to communicate the order in time. Coupled with this, some time was spent to visualize as to whether to opt for remedy by way Writ before Hon'ble High Court or prefer appeal before ITAT. It was pointed out that the assessee has a prima facie case to dislodge the revisional order and thus no presumption of malafide can be imputed. It was further pointed out that the delay occurred is not intentional or deliberate and the aforesaid delay of 230 days occurred has not caused any serious prejudice to the Revenue The learned counsel referred to the decision rendered by the Hon'ble Supreme Court in the case of Collector of Land Acquisition vs. Mst. Katiji & Ors. 167 ITR 471 (SC) to contend that the substantial justice deserves to be preferred over the technical glitch committed by the assessee in belated filing for plausible reasons. Ha....
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....the contents thereof to the Assessee at any point of time despite the structured mandate of s. 263 and codified safeguard of opportunity. 7.1 As further submitted, while the Pr.CIT brushed aside the bar of limitation raised on behalf of the assessee but however did not care to provide any opportunity to meet the allegations of show-cause on merits. 7.2 The Ld. Counsel contends that the Pr.CIT has brushed aside the assessment order on flimsy grounds solely at the instance of the new incumbent in assessment without giving any opportunity to defend the assessment order and to bring the perspective of the assessee on the subject matter. As further quipped, the revisional action of such wide amplitude carrying adverse consequences has been exercised casually at the fag end of the limitation (despite time limit of 2 long years available from the end of the financial year in which assessment order under review was passed) in total disregard to the canons of judicial propriety and thus has fastened civil consequences on the assessee by impinging upon the salutary rights of the assessee of being heard. The Pr.CIT proceeded to set aside the completed assessment without confronting fres....
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....to the assessee. To obtain independent verifications of loans and collection of supporting documents in relation to credit entries, notices under Section 133(6) were issued on 10.12.2015 in the name of all lenders namely, RKG Finvest Pvt. Ltd., Sandeep Credit Pvt. Ltd., Bailley Foods Pvt. Ltd., White House Buildtech Pvt. Ltd., Lessure Buildcon Pvt. Ltd. and Vinsan Credit & Securities Pvt. Ltd. It can also be seen from the proposal of the AO addressed to the Pr. CIT that lenders have duly responded to such notices and furnished the desired information and confirmed the factum of lending to the assessee. The source of the loans were thus examined by the AO to form a credible view on propriety of loans in question. The AO thus acted with degree of caution and circumspection. Hence, the allegation that adequate inquiry contemplated was not made on the point in issue is contradictory to the assessment records itself and does not hold any water. Also, the case of the Pr.CIT is nowhere about the 'lack of inquiry' per se but is built on 'inadequacy of inquiry' as is evident from the SCN as well as the revisional order. The ld. Counsel thus submitted that revision based on inadequacy or ins....
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....Act is in controversy. 10. Supervisory jurisdiction vested under Section 263 of the Act enables the concerned Pr.CIT/CIT to review the records of any proceedings and order passed therein by the AO. It empowers the Revisional Commissioner concerned to call for and examine the records of another proceeding under the Act and if he considers that any order passed therein by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue, then he may (after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary), pass such order thereon as the circumstances of the case justify, including the order enhancing or modifying the assessment or canceling the assessment and directing afresh assessment. Thus, the revisional powers conferred on the Pr.CIT/CIT under s. 263 of the Act are of very wide amplitude with a view to address the revenue risks which are objectively justifiable. 11. In the backdrop of factual matrix, subsisting in the case in hand, the substantive issue that emerges for adjudication is whether the Pr.CIT under the umbrella of revisonary powers is entitled to upset the finality of ass....
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.... was underscored: 14. We now also advert to the vehement opposition on behalf of the assessee on the ground of non-issuance of notice and on total lack of opportunity while concluding the proceedings under section 263 of the Act. It has been demonstrated on facts that only show cause notice issued to the assessee was for attendance on 15.03.2021 calling the assessee at earlier point of time i.e. 11.15 A.M on the same date, whereas the notice itself was issued at 1.49 PM. We are constraint to observe that such casual approach of a very senior functionary of the Department does not augur well in the eyes of the public. As stated in the bar, no such notice was served at all on the email id. as claimed. No other notice was served. Palpably, it is a case of total lack of opportunity to the assessee to defend its case. A question would arise as to whether a failure to give a reasonable opportunity to the assessee of being heard was only a procedural irregularity in such gross circumstances and thus curable and did not render the order passed by the PCIT ab initio void and nonest in law per se ? 15. In the case of Tata Chemicals Limited vs. DCIT, ITA No.3127/Mum/, order ....
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....revisional order on a standalone basis without any thing more. 15. The assessee has also questioned the assumption of revisional jurisdiction under s. 263 alleging that such action is at the behest of the new incumbent AO. 15.1 As noted, the substituted incumbent of the office of the AO moved a proposal to Pr.CIT for exercise of powers under s. 263 vide communication dated 20/03/2018. The Pr. CIT issued SCN on the very next day i.e. 21/03/2018. On reading the contents of the SCN in conjunction with aforesaid proposal, it is seen that the line of reasonings in the proposal is reproduced in verbatim in the SCN. Interestingly, the AO in its proposal made reference to 'then AO' twice to disown the alleged mistake of predecessor AO, which is quite understandable. What is not understandable is the use of similar expression of 'then AO' copied in the SCN too. The action of the Pr. CIT is overtly on dotted line and a mere copy paste. The SCN ex-facie reflects gross lack of application of mind by the Pr. CIT. It can be safely inferred that the proposal was made by the AO at the behest of Pr. CIT indeed which was thus copied in the SCN without change of even a coma. As a result, the ge....
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.... The issue was very much present to the mind of the AO. The relevant documents were also shown to have been filed in the assessment proceedings. We simultaneously notice a pertinent fact that the lenders were subjected to enquiry under s. 133(6) too by the AO for this purpose and evidences were collected and collated to weigh the surrounding circumstances. On such facts, one cannot be heard to say that it is a case of 'no enquiry' into the subject matter but may at best be a case of 'inadequacy in the extent of enquiry'. On the face of such enquiries conducted, the AO has not mechanically accepted the assessee's claim but has embarked upon an enquiry considered necessary to the wisdom of the AO albeit not matching from the idealistic point of view of the Revisional Commissioner. The records suggest that the AO cannot be blamed to have acted in a perfunctory manner merely because the expectations of Revisional Commissioner are purportedly not meet. 16.1 Noticeably, it is also not the case of Pr. CIT either that it is a case of 'lack of enquiry' per se. On a bare perusal of the SCN, it is seen that the Pr. CIT has alleged absence of 'proper enquiry'. In para 5 of the revisional or....
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....s the AO to exercise statutory discretion in a pragmatic and judicious manner, for or against, the assessee. The AO is thus not obliged to invoke the sphere of S.68 of the Act in all cases where the source is not proved to the last mile. This apart, it is well settled that while discharging the onus cast upon the assesse, it is not the stringent requirement of law that assessee needs also to prove the source of source i.e. money sourced by the lender to provide loan to the assessee. Once the assessee is able to establish that the money has been received from the source belonging to third party, he cannot be burdened with a further onus of establishing the source from which such third party has been able to obtain money. Useful reference in this regard can be made to the decision of Hon'ble Gujarat High Court in case of Rohini Builders (supra) and also Nemi Chand Kothari (supra); ITO vs. Diza Holdings (P) Ltd. 255 ITR 573 (Kerala) and so on. Thus, when seen in the light of judicial precedents elucidating law pertaining to Section 68 of the Act, it appears that it is not obligatory on the part of the assessee to steadfastly vouch the source of the source and thus, onus in the present....