TaxTMI 
TaxTMI 
2024 (10) TMI 1698
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....der passed by the Assessing Officer under section 153A/143(3) of Act was erroneous and prejudicial to the interest of the revenue. 3. On the facts and circumstances of case and in law, the directions issued by the Ld. PCIT under section 263 of Act are erroneous, vague, ambiguous and untenable and, therefore the order u/s 263 of the Act passed by the Ld. PCIT is liable to be quashed. 4. On the facts and circumstances of case and in law, the order passed under section 263 of the Act by the Ld. PCIT is bad in law as the same has been passed without application of mind and deserves to be quashed. 5. On the facts and circumstances of the case and in law, the Id. PCIT erred in setting aside the assessment order without appreciating the fact that the same was passed after taking due approval u/s 153D of JCIT. 6. On the facts and circumstances of the case and in law, the Id. PCIT erred in stating that the assessment passed by the assessing officer was without making inquiries or verification which should have been made 7. On the facts and circumstances of case and in law, the Ld. PCIT erred in invoking the provisions of section 263 of the Act, a....
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....ue raised in order u/s 263, was beyond the scope of provisions of section 153A cannot be said to be erroneous in so far as it is prejudicial to the interest of the revenue. The ld. AR argued that as per the show cause notice and order u/s 263 of PCIT, during the course of search action u/s 132 of the Income Tax Act, 1961 in case of Shri Devesh Singh/Manoj Kumar Singh certain excel sheets were found and seized from laptop and pen drive of Shri Devesh Singh and the ld. PCIT held that, as per the aforesaid seized excel sheets the assessee had advanced a sum of Rs. 27 crores as investment/loan. It was argued that the ld. PCIT wrongly held that the Assessing Officer has made addition of Rs. 11,41,03,645/- only without appreciating/inquiring the facts of the case and ignored the evidence of Rs. 27 crores as loan/investment found during the course of search action. The ld. AR argued that even the addition of Rs. 11,41,03,645/- made by the AO is erroneous leave alone the question of making addition of Rs. 27 crores and that underlying assessment order has been made u/s 153 A of the Act and since the excel sheet have not been found or seized during the course of sea....
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....to the interest of revenue but not erroneous. It was argued that if Assessing Officer acting in accordance with law makes a certain assessment, the same cannot be branded as "erroneous" by the ld. PCIT merely because, according to him, the order should have been written differently or more elaborately. The provisions of Section 263 of the Act do not visualize the substitution of the judgment of the Commissioner for that of the AO unless his order is not in accordance with law. There again every erroneous order cannot be the subject matter of revision because the second requirement has also to be fulfilled. 9. On the other hand, the ld. DR supported the order of the ld. PCIT passed u/s 263 of the Act. 10. Heard the arguments of both the parties and perused the material available on record. 11. For the sake of ready reference and completeness, the order of the ld. PCIT is reproduced as under: "A search and seizure action under section 132 of the Income-tax Act, 1961 was carried out on 14.10.2020 in the case of Sh. Manoj Kumar Singh, his associates and various transacting parties. During the course of search proceedings, it was found that Sh. Manoj Kumar Singh entere....
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.... ii. Interest Ledger of Manoj K Singh iii. Interest Free Ledger of Narang (School share A/c) from 01.01.2016 2.1.2 As the name suggest, the first portion i.e. 'Interest Ledger of Mr. Narang (School Share A/c) from 01-01-2016 to 31-03-2016' pertain to transactions between Sh. Naveen Narang and Sh. Manoj Kumar Singh on account of the investment made by Sh. Naveeh Narang in G. D. Goenka Public School, Dwarka, New Delhi (School controlled and managed by Sh. Manoj Kumar Singh). The screenshot of the said excel sheet is given hereunder: FIRST PORTION Interest Ledger of Mr. Narang (School share A/c) from 01.01.2016 to 31.03.2016 Date Particulars Recd. Paid Cum. Balance Days Intt. @ 15% P.A. 01 February 2016 Naveen Narang 27,00,00,000 - 27,00,00,000 - 05 February 2016 Transfer from Billing A/c - 50,00,000 26,30,00,000 4 4,43,836 15 February 2016 Transfer from Billing A/c - 50,00,000 26,00,00,000 10 10,89,041 01 March 2016 Transfer from Billing A/c - 26,53,501 25,73,46,499 15 16,02,740 01 March 2016 C to Mr. Narang - 1,00,00,000 ....
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....5,00,000 25,00,000 Cr. 14.7.2015 To Axis Bank 913020041423814 Payment 650 25,00,000 10.12.2015 By Axis Bank 913020041423814 Receipt 4119 20,00,000 20,00,000 Cr. 13.1.2016 To Axis Bank Payment 1294 20,00,000 913020041423814 45,00,000 45,00,000 2.1.5 The said loan was being repaid in cash or through bogus billing from the school with the narration "transfer from billing A/c." The screenshot of the narration showing the repayment of Rs. 3,26,50,248/- is produced below for reference: S. No. Date Repayment Amount in (Rs.) Narration 1 05 February 2016 50,00,000 Transfer from Billing A/c 2 15 February 2016 50,00,000 Transfer from Billing A/c 3 01 March 2016 26,53,501 Transfer from Billing A/c 4 01 March 2016 1,00,00,000 C to Mr. Narang 5 02 March 2016 4,02,007 Transfer from Billing A/c 6 03 March 2016 3,32,225 Transfer from Billing A/c 7 04 March 2016 13,07,075 Transfer from Billing A/c 8 05 Mar....
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....sheet is inserted hereunder: Summary of Billing till 16.03.2016 Cheque Amount paid to Vendor 2,80,61,432 Less: Commission 8,43,685 From Vendors to Narang Ji 2,72,17,747 Less: Transfer to Interest Ledger 16/01/2016 25,00,000 (as per Mr. Narang) 05/02/2016 50,00,000 (as per Mr. Narang) 15/02/2016 50,00,00 (as per Mr. Narang) 01/03/2016 26,53,501 (Balance billing amount transfer to School Intt. A/c) Balance in hand with Narang Ji: 1,20,64,246 Less: Transfer to Interest Ledger (on the basis of cheque clearing) 02/03/2016 4,02,007 03/03/2016 3,32,225 04/03/2016 13,07,075 05/04/2016 9,53,588 07/03/2016 22,10,300 08/03/2016 11,98,426 14/03/2016 16,42,559 15/03/2016 9,70,000 16/03/2016 9,80,567 Balance in hand with Narang Ji 20,67,499 2.1.8 it is evident from the discussion made above and perusal of the relevant portion of the different excel sheets inserted above that ....
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.... Sh. Naveen Narang till A.Y. 2020-21 from the unaccounted loan/investment made by Sh. Naveen Narang during A.Y. 2016-17. As per the evidences found, the said bogus billing from school was used for repaying the liabilities of loan/investment of Rs. 27,00,00,000/- given by Sh. Naveen Narang. As such the action of the AO was not correct in reducing the amount of bogus billing from unaccounted cash loan/investment made by Sh. Naveen Narang. 2.2.4 Further, the seized excel sheet not only mentioned cash Investment of Rs. 27 Cr. on 01.02.2016 but the very same ledger a/c also mentioned loan repayment of Rs. 3.28 Cr. during that period itself which proves that this investment was not a singular transaction. Thus, there was no scope of ambiguity that as per the seized material, the amount of Rs. 27 Cr. was a distinct & unaccounted loan/investment by Sh. Naveen Narang to Manoj Singh as part of "school share a/c". However, the AO failed to investigate the issue of investment of Rs. 27 crore. 2.2.5 The AO have claimed in the assessment order that "after verification of facts", instead of Rs. 27 Crores, addition of Rs. 11,41,03,845/- was made....
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....7 Cr. despite it being integral part of seized material, Further, the AO also failed to add the interest accrued on the said investment/loan during the year under consideration. As such the order passed by the AO is erroneous and prejudicial to the interest of revenue. 3. Keeping in view of the above facts, the addition was to he made solely in the hands of Sh. Naveen Narang who had made cash investment/loan transaction of Rs. 27 Crore since it was an unrecorded & unaccounted cash investment made by Sh. Naveen Narang in G. D. Goenka school. However, the AO failed to thoroughly enquire/investigate the information available with him and passed the order without verifying the facts. As such, the assessment order passed by the AO, in this case for A.Y. 2016-17 is not only erroneous but also prejudicial to the interest of the Revenue in terms of section 263 of the income-tax Act, 1961. 4. Accordingly, show cause notice u/s 263(1) of the IT. Act, 1961 for the A.Y. 2016-17 dated 26.03.2024 was issued to the assessee through ITBA Portal asking it as to why the assessment order so passed should not be revised as the same was erroneous & prejudicial to the interest of ....
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.... to make compliance to the notice; considering the time constraint, it is not possible for the assessee to file proper reply. It is reiterated that the notice is illegal and in gross violation of principle of natural justice." 4. As per your captioned show cause notice, during the course of search action u/s 132 of the Income Tax Act 1961 in case of Shri Devesh Singh/Manoj Kumar Singh certain excel sheets were found and seized from laptop and pen drive of Shri Devesh Singh, in the captioned show cause notice, it has been alleged that as per the aforesaid seized excel sheets the assessee had advanced a sum of Rs. 27 crores as investment/loan. According to your captioned SCN, the assessing officer has made addition of Rs. 11,41,03,645/- only without appreciating/inquiring the facts of the case and ignored the evidence of Rs. 27 crores as loan/investment found during the course of search action. Vide para 3.3 of your captioned notice you have stated that "The order is passed without making inquiries or verification which should have been made." 5. In this regard, it is humbly submitted that even the addition of Rs. 11,41,03,645/- made by the Asses....
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....ction evidence of Unaccounted Loan/Investment of Rs. 27 crores was found in the seized excel file, "Narang (0101-2016).xlsx" maintained by Sh. Devesh Singh, clearly establishes the investment of fund by Sh. Naveen Narang regarding the investment made in G. D. Goenka Public School, Dwarka. The excel sheet shows that Sh. Naveen Narang advanced a sum of Rs. 27 crores as investment/loan on 01.02.2016, and received repayments of loan on such investment totaling Rs. 3,26,50,248/- till 31.03.2016 through bogus billing for G.D. Goenka Public School. Furthermore, the Loan/investment transactions were not found reflected in the financial/ITR of Sh. Naveen Narang and the repayments were made through bogus billing from G.D. Goenka Public School as well as repayment in cash, which is evidenced from the seized materials found and seized during the course of search action. (ii) It is pertinent to mention here that Sh. Devesh Singh is the key employee of Sh. Manoj Kumar Singh who control and manage the affairs of G.D. Goenka Public School. Sh. Naveen Narang is the business partner of Sh. Manoj Kumar Singh, Sh. Naveen Narang also invested funds in various business entities o....
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.... 6,18,763 15 March 2016 Transfer from Billing A/c - 9,70,000 24,83,30,319 1 1,02,452 16 March 2016 Transfer from Billing A/c - 9,80,567 24,73,49,752 1 1,02,054 01 April 2016 Interest till 31.03.2016 16 16,26,409 28,00,00,000 3,26,50,248 24,73,49,752 63,03,262 Summary of interest ledger till 31.03.2016 Principal outstanding 24,73,49,752 Interest outstanding 63,03,262 Total outstanding 25,36,53,014 (iii) Despite having evidence of this loan/investment the Assessing Officer only added Rs. 11,41,3, 645/- to the income without proper investigation or consideration of the evidence .The AO attributed Rs. 15,58,96,355/- of bogus billing to Sh. Naveen Narang and calculated commission income from A.Y. 201617 to A.Y. 2020-21. The seized excel sheet indicated that the unaccounted loan/investment of Rs. 27 Cr. was made during A.Y. 2016-17, and the bogus billing was utilized to repay this loan/investment from A.Y. 2016-17 to 2020-21. Thus, there was no basis for reducing the bogus billing from the unaccounted cash investme....
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....itled "Narang (01-01-2016).xlsx," maintained by Sh. Devesh Singh, was found which contain record of unaccounted loan/investment of Rs. 27 crores by Sh. Naveen Narang in G. D. Goenka Public School, Dwarka. Further, the excel sheet contain repayments totaling Rs. 3,26,50,248/- were made through bogus billing and cash payments, till 31.03.2016, Further the seized material shows bogus billing to the tune of Rs. 15,58,96,355/- during the A.Y. 2018-17 to A.Y. 2020-21. However, despite having clear evidence, the Assessing Officer only added Rs. 11,41,03,645/- to the income of the assessee during the year under consideration without proper investigation. The AO reduced the amount of Rs. 15,58,96,355/- of bogus hilling attributed to subsequent event while passing the assessment order in the case of Sh. Naveen Narang for the A.Y. 2016-17 without considering the full extent of the unaccounted loan/investment of R. 27 crores which is the first event of unaccounted cash transactions and warranted full amount of addition during the year under consideration as unexplained money/investment of Sh. Naveen Namag. The AO's failure to thoroughly investigate the Rs. 27 Cr. ....
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....er does not indicate the briefest of reasons for accepting the income declared by the assessee. 6.1 In the case of Malabar Industrial Co Ltd. Vs. CIT [(2000) 109 Taxman 86 (SC)/[2000] 243 ITR 83 (SC)/(2000] 159 CTR 1 (SC)], Hon'ble Supreme Court has held that, where Assessing Officer had accepted entry in statement of account filed by assessee, in absence of any supporting material without making any enquiry, exercise of jurisdiction by Commissioner under section 263(1) was justified. 6.2 in the case of Deniel Merchants Pvt. Ltd. vs. ITO [2017-TIOL-455-SC-IT], Hon'ble Supreme Court has upheld that decision of Hon'ble Calcutta High court in which it was held that CIT is entitled to revise the assessment order u/s 283 on the ground that the AO did not make any proper inquiry while accepting the explanation of the assessee insofar as receipt of share application money is concerned cannot be interfered with. The relevant extracts of the decision of Hon'ble Supreme Court is being reproduced as under: "In all these cases, we find that the Commissioner of income Tax had passed an order under Section 263 of the Income Tax Act, 1961 with the observations that ....
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....r giving an opportunity of being heard to the assessee." 12. The main arguments of the ld. Counsel was that the details of excel sheets found from the pen drive of Sh. Devesh Singh. Sh. Devesh Singh is the key employee of Sh. Manoj Kumar Singh. Sh. D. Singh and Sh. M. K. Singh were searched along with the assessee Sh. Naveen Narang on 14.10.2020 in consequence to the same satisfaction note which led to action u/s 132 of the Income Tax Act, 1961. The Section 132 of the Income Tax Act, 1961 reads as follows: "Search and seizure. (1) Where the 59[Principal Director General or] Director General or [Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under s....
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....ed officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing; (iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such mone....
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....rector or] Director or any other [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner to take action under clauses (i) to (v) of sub-section (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under subsection (1), such [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner may, notwithstanding anything contained in section 120, authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft.] (2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) or sub-section (1A) and it shall be the duty of every such officer to comply with such requisition. (3) The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or t....
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....uted or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (5) [***] (6) [***] (7) [***] (8) The books of account or other documents seized under sub-section (1) or sub-section (1A) shall not be retained by the authorised officer for a period exceeding thirty days from the date of the order of assessment under section 153A or clause (c) of section 158BC unless the reasons for retaining the same are recorded by him in writing and the approval of the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or Director General or [Principal Director or] Director for such retention is obtained : Provided that the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or] Director General or [Principal Director or] Director shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income tax Act, 1922 (11 of 1922), ....
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....d without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer- (i) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available ; (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1.-For the purposes of sub-section (9A), "execution of an authorisation for search" shall have the same meaning as assigned to it in Explanation 2 to section 158BE. Explanation 2.-In this section, the word "proceeding" means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year." 13. A comprehensive reading of the Section elucidate that the warrant of authorization would be issued by the DGIT/PDIT/CIT on any premises/person on whom the warrant issuing author....
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....4,492 1 1,01,649 03 March 2016 Transfer from Billing A/c - 3,32,225 24,66,12,267 1 1,01,484 04 March 2016 Transfer from Billing A/c - 13,07,075 24,53,05,192 1 1,01,348 05 March 2016 C to Mr. Narang 1,00,00,000 25,53,05,192 1 1,00,810 05 March 2016 Transfer from Billing A/c - 9,53,538 25,43,51,604 07 March 2016 Transfer from Billing A/c - 22,10,300 25,21,41,304 2 2,09,056 08 March 2016 Transfer from Billing A/c - 11,98,426 25,09,42,878 1 1,03,620 14 March 2016 Transfer from Billing A/c - 16,42,559 24,93,00,319 6 6,18,763 15 March 2016 Transfer from Billing A/c - 9,70,000 24,83,30,319 1 1,02,452 16 March 2016 Transfer from Billing A/c - 9,80,567 24,73,49,752 1 1,02,054 01 April 2016 Interest till 31.03.2016 16 16,26,409 28,00,00,000 3,26,50,248 24,73,49,752 63,03,262 Summary of interest ledger till 31.03.2016 Principal outstanding 24,73,49,752 Interest outstandi....