TaxTMI 
TaxTMI 
2025 (5) TMI 8
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....g, it is noticed that the assessee had received Rs. 1,16,00,000/- as unsecured loans from shell company which is bogus accommodation loan entries of Rs. 1,16,00,000/- obtained by the assessee. However, nothing was found on record to show that the issue was examined. The AO has completed the assessment without making enquiry about unsecured loans, which is one of the reasons for reopening the assessment. Hence, the case falls under explanation 2(a) of 263 of the Act. b) The AO has failed to disallow Sales tax penalty of Rs. 28,165/- as the same is not allowable and to be disallowed u/s 37 of the income Tax Act. c) The employees contribution of PF and ESI has been paid by assessee after the due date specified in the respective Act, hence the AO ought to have disallowed the above payments u/s 36(1)(va) of the income Tax Act, however the AO failed to disallow the same. 2. Against the reassessment order passed by the AO dated 30.03.2022, Pr. CIT issued show cause notice. The Pr. CIT called for details from DDIT (Inv.), Unit - 1(3), Kolkata, vide his office letter dated 11.03.2024 through mail during the pendency of 263 proceedings. In response to the reference of the Pr.CIT, the ....
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....r submitted based on case law that is was prerogative of AO to make relevant enquiries. However, it is seen that inspite of evidence available from Investigation Wing, the AO failed to make necessary enquiry into the bogus loans and further failed to make required addition which was warrented in the facts of the case. Accordingly, the case laws quoted by the assessee do not apply he facts of the present case. Based on the fact discussed above, it is evident that the AO has committed an error which is erroneous and prejudicial to the interest of revenue. 4. Further, Pr.CIT has also found that sales tax penalty of Rs. 28,165/- and employees' contribution to PF and ESI of Rs. 8,159/- has not been examined and disallowed. Therefore, he observed that reassessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue in terms of section 263 of the act and not made proper verification / enquiry while making the assessments. Accordingly, he set aside the Assessment Order and directed to pass a denovo assessment with a direction to the observation of the Pr.CIT and completed the Order on 23.03.2024. 5. The learned Counsel for the assessee reiterated the su....
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....ion 143(2) is specifically designed to scrutinize the return of income filed by the assessee. 8. Learned DR further submitted that the assessee has not furnished return of income within the time allowed of 30 days as per notice issued section 148 of the Act vide notice dated 31.03.2021. Assessee furnished return of income only on 04.03.2022 which is beyond the statutory period, therefore, the return filled by the assessee belatedly is treated as invalid return . In case of invalid return no notice is required to be issued u/s 143(2) of the Act. . Further, it is clear from the notice issued by the AO under section 142(1) of the Act dated 21.01.2022 in Annexure form in which it has been stated as under : In the case of VINOD KUMAR SINGHAL, PAN: AIMPS4044E, Notice u/s 148 of the Income Tax Act, 1961 was issued on 3/31/2021 for the assessment year 2014-15. As per information available, till date, the assessee has not filed a return of income / valid return of - income in response to the Notice issued u/s 148 (mentioned above) for the AY2014-15. Hence, the assessee is show caused to explain as to why the scrutiny assessment proceeding for the AY 2014-15 shall not be completed on ex....
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....rn of income acknowledgement dated 14.02.2023. Thus, the CIT(A) has rightly dismissed this ground with the precise observation. Hence ground no.1 is dismissed": He submitted that as per the above judgment, in the case of assessee the notice under section 143(2) of the Act is not required to be issued and the case of the assessee is similar with the judgment cite4d supra. The ld. DR further submitted that in section there id no provision in section 147 for issuance of notice u/s 143(2) of the Act. In section 158BD there is mandatory provision for issue of notice u/s 143(2) of the therefore, judgment of Hon'ble apex court in the case of ACIT vs Hotel Blue Moon will not apply in this case. 10. The learned DR further submitted that while completing the reassessment proceedings by the AO, the AO has not examined the issue for the very purpose the case was reopened on the basis of reasons recorded. Therefore, the reassessment passed by the AO is suffering from infirmity and it is complete lack of enquiry which is erroneous and prejudicial to the interest of Revenue. 11. The ld. AR of the assessee submitted that the AO after issue of Show cause notice on 26.03.2022 only one day time wa....
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....the document found during the course of search and seizure openation under section 132 of the Act in the case of other persons, the proceedings under section 147 / 148 of the Act cannot be done on the same documents / incriminating materials. The proceedings should have been done under section 153C of the Act. Therefore, the entire reassessment proceedings completed by the AO Order dated 30.03.2022 is non-est in the eyes of law. Therefore, once the very basis for initiating proceedings is wrong, thereafter any action is taken subsequently on the basis of that Order is also non est under section 263 of the Act is wrong, He relied on the following judgments: i. Ikon Projects Vs. ITO in ITA Nos. 771, 772/B ang/2017 dated 26.10.2023 ii. ACIT Vs. Srionivas Rao Hoskote in ITA Nos. 1154, 1155/Bang/2015 dated 21.02.2018 iii. Shyam Sunder Khandelwal Vss. ACIT [2024] 161 tgaxmann.com 255 (Rajasthan) 11. Considering the rival submissions, we noted that the assessee has raised legal issue regarding the very basis of exercising jurisdiction under section 263 of the Act by the Pr.CIT is based on the invalid reassessment order as per the legal grounds raised by the assessee. As per the sho....
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....ment the notice under section 143(2) of the Act can be issued by AO only if there is valid return filed by the assessee under section 139 of the Act in pursuance of the notice issued u/s 148 of the Act . In the case on hand the asseseee has not filed valid return within the time allowed. Hence, the arguments submitted by the learned Counsel for the assessee in regard to issue of notice u/s 143(2) are rejected. The case law relied on by the learned Counsel for the assessee in the case of CIT Vs. Nagendra Prasad [2023] 165 taxmann.com 19 (Patna High Court) supra is not jurisdictional High Court. Therefore, we are not bound to follow the above judgment. The ld. Ar was unable to produce any judgment of the Jurisdictional High Court of Karnataka on similar facts and circumstances. 13. During the course of hearing, the learned Counsel for the assessee strongly objected, at the time of exercising powers under section 263 of the Act, the Pr.CIT had no "record" which is clear from para 6.1 of his Order. On going through the observation of the ld. Pr.CIT, we noted that at the time of exercising of power under section 263 of the Act, the ld. Pr.CIT had no complete record available and which ....
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.... electrical installation to the Valuation Officer (P & M). His report was not received by the ITO when the assessment was completed. It was received by him after the assessment proceeding was completed. The Commissioner took into consideration the said valuation report and found he assessment order erroneous. In that context, the question which had arisen for consideration was whether the Commissioner in exercise of jurisdiction under section 263(1) could have relied upon the valuation report which had come into the possession of the ITO subsequent to the completion of the assessment. The Calcutta High Court held that "the record contemplated in section 263(1) does not mean only the order of assessment but it comprises all proceedings on which the assessment is based. The Commissioner is entitled, for the purpose of exercising his revisional jurisdiction, to look into the whole evidence. The expression 'record' as used in section 263 is comprehensive enough to include the whole record of evidence on which the original assessment order was passed. The valuation proceeding is a part of the assessment proceeding. But once the valuation report was received by the ITO, although ....
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....anation to section 263(1), it has to be held that while calling for and examining the record of any proceeding under section 263(1) it is and it was open to the Commissioner not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination. 15. 16. 17. We, therefore, hold that it was open to the Commissioner to take into consideration all the records available at the time of examination by him and, thus, to consider the valuation report submitted by the departmental valuation cell subsequent to the passing of the assessment order and, so the order passed by him was legal. The High Court was wrong in taking a contrary view. We, therefore, allow this appeal, set aside the judgment and order passed by the High Court and answer the question referred to the High Court in the negative, i.e., in favour of the revenue and against the assessee. In view of the facts and circumstances of the case, there shall be no order as to costs. 15. Respectfully following the above judgment, we set aside the Order passed by ld. Pr.CIT. 16. The learned Counsel for the assessee has further objected that those issues which ....