TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 732
X X X X Extracts X X X X
X X X X Extracts X X X X
....1. That we had received an order u/s 263 passed by Id Principal Commissioner of Income-tax, Central Circle, Patna on 26.03.2022. 2. That based upon our understanding of the matter, an appeal against the said order was filed with Hon'ble High Court of judicature at Patna. 3. That during the course of arguments, it transpired that the said order is appealable before Hon'ble Income Tax Appellate Tribunal, Patna Bench, Patna. Copy of the order passed by Hon'ble Patna High Court is enclosed as Annexure to this application. 4. That the petition was hence withdrawn and this present application is being made for condonation on the basis of directions contained in the said order which has been downloaded from the website of Hon'ble Patna High Court. ............................." 2.1. Thought the Revenue has opposed the request for condonation of delay, we on perusal of the petition, are convinced that the assessee was prevented for reasonable cause from filing these appeals in prescribed time limit. Accordingly, we condone the delay and admit the appeals for hearing on merits. 3. As the issues raised in the present appeals are identical, they were heard together a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and point-wise reply of the questionnaire issued by ld. Assessing Officer. All the submissions of the assessee on the relevant issues were duly considered and the returned income was accepted. The assessment order has been passed with the prior approval of JCIT, Central Range-1, Patna, vide letter dt. 27/12/2019. Thereafter, the ld. Pr. CIT, Central Patna, called for the assessment records and invoked the revisionary powers u/s 263 of the Act by issuing notice u/s 263 of the Act on 23/02/2022. 6. The ld. Pr. CIT issued a detailed show cause notice and has referred to various seized materials found during the course of search, reference to the statement of Shri Satyendra Kumar Sharma about various documents and books of account seized. The ld. Pr. CIT also referred to the statement of Shri Atul Kumar Agarwal, part time accountant of the assessee firm. Thereafter, reference has been made to various ledger accounts of the assessee company and the assessee was asked to give reply to the issues raised in the show cause notice because ld. Pr. CIT observed that ld. Assessing Officer has not examined all these documents and that the order of the ld. Assessing Officer is erroneous and pre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ultifold contentions which in brief are:- (i) When the assessment order has been framed u/s 153A of the Act after obtaining necessary approval from Additional Commissioner of Income-tax (ACIT) u/s 153D of the Act, such assessment cannot be revised without revising the directions of the ACIT given u/s 153D of the Act. (ii) The ld. Pr. CIT erred in invoking the revisionary powers without considering the fact that the ld. Assessing Officer has conducted detailed enquiry by issuing questionnaires to the assessee to which compliance has been made by the assessee by way of filing the details along with the copies of returns, pointwise replies addressing all the issues raised in the questionnaire issued u/s 142(1) of the Act. Therefore, once the ld. Assessing Officer has carried out sufficient enquiry and taken one of the possible views in the light of the settled judicial pronouncements, the ld. Pr. CIT cannot assume jurisdiction u/s 263 of the Act. (iii) Even on merits, the assessee deserves to succeed because firstly there is no prejudice to the revenue because the additions have been made in the hands of Shri Satyendra Kumar Sharma, who has admitted the unaccounted income arisin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce u/ s 153A of the Act furnished on 02/12/2019. Thereafter the assessee was served with the statutory notices u/s 143(2) & 142(1) of the Act and various questions were raised in the notice u/s 142(1) of the Act as well as during the course of assessment proceedings. In the assessment order framed u/s 153A of the Act, the ld. Assessing Officer has mentioned that the details were filed along with the submissions as well as copies of returns, computation of income and point-wise reply. Further the assessment was completed after taking necessary approval u/s 153D of the Act from JCIT, Central, Range-1, Patna. Finally, the assessment for all the impugned assessment years for Assessment Year 2015-16 to 2018-19 were completed accepting the returned income filed by the assessee. Now, all the four assessment years evenly dt. 27/12/2019 are the subject matter of the revisionary proceedings invoked by the ld. Pr. CIT u/s 263 of the Act, wherein after referring to the seized material and other discussions, all these four assessments have been held to be erroneous and prejudicial to the interest of the revenue. 12. The assumption of jurisdiction u/s 263 of the Act holding the assessment order....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation- In computing the period of limitation for the purposes of subsection (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 13. A bare perusal of sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC)".[Emphasis Supplied] 15. In the light of the provisions of section 263 of the Act and a settled position of law, powers u/s 263 of the Act can be exercised by the Pr. Commissioner/Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and also prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard." 17. Apart from above stated broader principles, one more principle needs to be added in view of the judgment of Hon'ble Delhi High Court in the case of ITO vs. D.G. Housing Projects Ltd. [2012] 343 ITR 329 (Delhi) that the ld. CIT has to examine and verify the issue himself and give a finding on merits and form an opinion on merits that the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Relevant extract is reproduced below: "In the present case, the findings recorded by the Tribunal are correct as the CIT has not gone into and has not given any reason for observing that the order passed by the Assessing Officer was erroneous. The finding recorded by the CIT is that "order passed by the Assessing Officer may be erroneous". The CIT had doubts about the valuation and sale consideration received but the CIT should have examined the said aspect himself and given a finding that the order p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....D of the Act is concerned, the same reads as follows:- "153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of] section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner:] 18.1. Now, on perusal of the above Section which states that a prior approval is necessary for assessment in case of assessment search or acquisition, it is specifically mentioned that no order of assessment or re-assessment shall be passed by an Assessing Officer below the rank of JCIT except with the prior approval of the Joint Commissioner. Before us, the ld. Counsel for the assessee stated that for the search assessment cases whatever seized material are found belonging/pertaining to the assessee, a copy of complete set is also kept with the authority who has to provide the approval of the assessment or re-assessment. He also stated that during the course of assessment proceedings, the ld. Assessing Officer has to update about the proceedings to his senior who ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... could not be revised under section 263 of the I.T. Act, 1961. The Ld. D.R. has, however, relied upon the Order of ITAT, Panaji Bench, but, has not explained whether the Judgment of Hon'ble Allahabad High Court in the case of Dr. Ashok Kumar (supra) or different Benches of the Tribunal have been considered in this case by the Panaji Bench. It is not decided in this case that assessment order cannot be revised without revising the approval under section 153D of the I.T. Act and Explanation 1 to section 263 of the I.T. Act has also not been considered. Therefore, this decision relied upon by the Ld. D.R. would not apply to this case. Further the Judgment in the case of Param Transport (P.) Ltd. (supra), of Hon'ble Chhattisgarh High Court (supra) is not with regard to approval obtained under section 153D of the I.T. Act because in this case it was held that revisional power under section 263 of the I.T. Act is applicable to assessments under search and seizure. However, it is not explained by the Ld. D.R. whether in this case the approval under section 153D have been revised by the Learned PCIT. It may also be noted that it is well settled Law that if two views are possible, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made by both the sides, perused the orders of the AO and the Ld.CIT and the paper book filed on behalf of the assessee. 14. We find merit in the above submission of the Ld. Counsel for the assessee. We find the Lucknow Bench of the Tribunal in the case of MehtabAlam Vs. ACIT vide ITA Nos.288 to 294/Lkw/2014 order dated 18-11-2014 while deciding an identical issue has observed as under. 14.1 We find the Hyderabad Bench of the Tribunal in the case of CH. Krishna Murthy Vs. ACIT vide ITA No.766/Hyd/2012 order dated 13-02- 2015 following the decision of the Lucknow Bench of the Tribunal in the case of MehtabAlam (Supra) held that CIT is not justified in assuming jurisdiction u/s.263 when the order has been passed in terms of section 153D of the Act. 14.2 We find the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. (Supra) had an occasion to decide an identical issue and it held that the assessment order approved by the Addl. CIT U/S.153D cannot be subject to revision u/s.263 of the I.T. Act. iv. Trinity Infraventures Ltd. v. Dy. CIT [IT Appeal Nos. 584-589 (Hyd.) of 2015, dated 4-12-2015] 5.4. The Ld. Counsel for the assessee has further submitt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that detailed enquiry has been conducted and one of the view legally permissible has been taken, we, in view of the judgment in the case of Malabar Industrial Co. Ltd. vs. CIT (supra) and of Income-tax Officer v. D.G. Housing Projects Ltd. (supra) note that the assessments in question before us are search assessments. There is a separate procedure for carrying out the assessment for search cases. Though we have referred to the procedure in the preceding paragraphs, we will like to observe that prior to issuing of notice u/s 153A of the Act, complete seized material are available with the ld. Assessing Officer and a copy is also made available to the Senior Officer who has to grant the approval u/s 153D of the Act. Under the search assessment, the assessee has to be confronted with all the seized material belonging to the assessee. In the instant case there were certain documents which were owned by Shri Satyendra Kumar Sharma, in the statement recorded on oath where, he has categorically stated that these documents belong to him and were maintained by him and on the basis of such documents, additions have been made in the hands of Shri Satyendra Kumar Sharma also. Now, reference ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous." Further the Hon'ble Apex Court in its judgment in the case of CIT vs. Electro House reported in 82 ITR 824, had held that "the CIT before reaching his decision and not before commencing his enquiry is to give the assessee an opportunity of being heard and make or cause to make such enquiry as he deems necessary". We note that in the instant case the learned PCIT before reaching his decision that the documents found, belongs to the assessee had made no enquiry whatsoever. Thus learned PCIT failed to appreciate that before he could have considered the assessment order to be erroneous and prejudicial to the interest of the revenue, he ought to have brought material on record to show that the documents belongs to the assessee and not by merely referring to those very documents which already stood examined by the ld. Assessing Officer and considering the statement of Shri Satyendra Kumar Sharma, for coming to the conclusion that the documents cannot be said to be belonging to the assessee. 25. We observe that i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....whether they belong to the assessee, or pertain to the year under consideration. 28. We find that the learned PCIT in his show cause notice has referred to documents which even does not pertains to AY 2014-15 or 2015-16 but had been prepared thereafter and as such, it is evident that the order passed by ld PCIT apparently are without application of mind. The ld. Counsel for the assessee has referred to GIB-11 Page 8 which is in handwriting of Shri. Satyendra Kumar Sharma, is not a document for the AY 2015-16 or even AY 2016-17. In fact, there was no supporting evidence available for such figures and thus had no relevance at all in the eye of law for the assessment year either for AY 2015-16 or for AY 2016-17. 29. We note that the Learned CIT has committed a factual error observing at page 19 of his order, that the LD ACIT has committed an error by not examining the discrepancies pointed out by the DDIT(Inv) in his notice date 18.05.2018 in respect of the transactions with M/s Broadson Commodities Pvt Ltd. 30. However, it is an admitted fact that the Learned ACIT had duly examined each of the allegations stated in the notice under section 263 as is evident from the notice of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not be said to be erroneous as has been held by the Apex Court in the case of Malabar Industrial Co. Ltd. vs. CIT (supra). That same income cannot be taxed twice over, as held in the case of Smt. Tara Devi Aggarwal vs. CIT reported in 88 ITR 323, where an income has not been earned and is not assessable merely because the assessee wants it to be assessed in his or her hands in order to assist someone else who would have been assessed to a larger amount, an assessment so made will be erroneous and prejudicial to the revenue. In the instant case we find that the learned PCIT has not considered the order of assessment made in the case of Shri Satyendra Kumar Sharma, on the ground that the said documents did not belong to him but it belongs to the assessee. But ld. Pr. CIT has taken no action to cancel/revise the said assessments made in the case of Shri Satyendra Kumar Sharma. 32. Thus, in the light of the settled judicial precedents referred supra and on our examination of the facts of the case including the enquiries conducted by the ld. Assessing Officer regarding the transactions carried out during the impugned year as well as examining the seized material, and then getting neces....