TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 1698
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....us 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, and thereby directing the Assessing Officer to re-examine the issue of Rs. 27,00,00,000/- of alleged cash ....
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....icial 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 search in the case of the appellant, the same cannot be used for making addition u/s 153A in the case of the appellant. It was argued that....
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....he 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 entered into unaccounted cash transactions with the various persons/entities. The premise/locker of the assessee Sh. Naveen Narang was also covered during the searc....
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....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 24,73,46,499 - - 02 March 2016 Transfer from Billing A/c - 4,02,007 24,69,44,492 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 - 2....
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....,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 March 2016 9,53,538 Transfer from Billing A/c 9 07 March 2016 22,10,300 Transfer from Billing A/c 10 08 March 2016 11,98,426 Transfer from Billing A/c 11 14 March 2016 16,42,559 Transfer from Billing A/c 12 15 March 2016 9,70,000 Transfer from Billing A/c 13 16 March 2016 9,80,567 Transfer from Billing A/c 2.1.5 From the above sheet it can be seen that most of the repayments have been done through Billing a/c, barring an entry wherein the payment has been made in cash. The said entry has been given in the first portion of the excel sheet as C to Mr. Narang'. When the said cash payment entry was compared with the excel files "Myda....
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....4/03/2016 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 M/s G. D. Goenka Public School, Dwarka run by Lakhmi Chand Charitable Society has received unaccounted investment/loan in cash of Rs. 27 Crore during the F.Y. 2015-16 relevant to A.Y. 2016-17. It is further seen that this amount was returned back in different ways i.e. partly in cash and partly by way of bogus billing. 2.1.9 The above discussed facts and evidences found during the course of search proceedings clearly establish that Sh. Naveen Narang has given loan/investment of Rs. 27,00,00,000/- during the AY 2016-17. 2.2 Perusal of assessment records, replies of the assessee & seized materials reveal following lapses on the part of AO which indicate under-assessment of income on this issue: 2.2.1 From the above discussed facts and seized excel file "Narang (01-012016).xlsx" which contains a sheet "Narang" whose 1st portion pertains to the 'Interest Ledger of Mr. Harang (School share ....
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...., 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 as unaccounted cash for the A.Y. 2018-17 and an amount of Rs. 15,56,98,355/-, commission income was added in assessment years, but the "enquiry/ diligence" which supposedly led to the above conclusion is neither available in assessment records/assessment order. There is absolutely no justification or factual evidence as to why an addition of Rs. 11.41 Cr. was made instead of Rs. 27 crores on account of unaccounted loan/investment. 2.2.6 It is clearly mentioned in the information that the issue of the "cash investment/loan of Rs. 27 Crores by Naveen Narang in School share a/c of Manoj Singh" is clearly distinguishable from "commission on bogus billing" by Naveen Narang. The AO has converged the two distinct issues suo-moto resulting into under assessment of the case to the extent of Rs. 15,58,98,355/- on account of unaccounted loan/investment. As such, the order passed by the AO is erroneous and prejudicial to the int....
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....e 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 the revenue. In response, the assessee filed part reply vide letter dated 27.03.2024 and requested time for filing reply. Considering the request, the assessee was requested to file complete reply by 28.03.2024 as the case is getting barred by limitation for completing the proceedings as on 31.03.2024. In response, the assessee again requested 15 days time for filing reply vide his letter dated 28.03.2024, Despite of multiple opportunity, one mere final opportunity was given to the assessee for filing complete reply vide letter dated 28.03.2024 for filing reply by 29.03.2024. The specifically informed that the proceedings is getting barred by limitation as on 31.03.2024. Despite having knowledge of the fact of time limitation, the assessee, vide his reply dated 29.03.2024, once again sought time of 15 days stating as under:- "As earlier requested, please grant me time of 15 days as it will take time for preparation and submission of reply by my counsel/advocate who is pre....
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....thout 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 Assessing Officer is erroneous leave alone the question of making addition of Rs. 27 crores. It is pertinent to point out that underlying assessment order has been made u/s 153A of the Act. The so called excel sheet have not been found or seized during the course of search in my case. The so called excel sheets seized/found from Shri Devesh Singh during the course of search in his case cannot be used for making addition u/s 153A in my case. For using such excel sheets seized from third person, the compliance to provisions of section 153C of the Act had to be made. Accordingly, neither the addition of Rs. 11,41,03,645/- (as made by the AO) nor the addition of Rs. 27,00,00,000/- (as alleged in your captioned SCN) can be made in my case. Once an addition cannot made in the assessment order passed under section 153A itself, resort cannot be made to 263 proceedings for the said purpose. It is a settled law that what cannot be done directly cannot be done indirectly. 6. Further, the various allega....
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.... School. Sh. Naveen Narang is the business partner of Sh. Manoj Kumar Singh, Sh. Naveen Narang also invested funds in various business entities of Sh. Manoj Kumar Singh. During the course of search action u/s 132 of the Income-tax Act, 1961, the residential premise of Sh. Devesh Singh was covered on 14,10.2020 wherein statement of Sh. Devesh Singh was recorded on oath u/s 132(4) of the Income-tax Act, 1961 on 14.10.2020 wherein Sh. Devesh Singh gave his statement on oath u/s 132(4) of the IT Act, 1961 that the data found and seized from his possession contain record of cash transactions which was maintained on the instructions of Sh. Manoj Kumar Singh. He also told about the cash transactions between Sh. Naveen Narang and Sh. Manoj Kumar Singh. The evidences found from the possession of Sh. Devesh Singh is of unaccounted loan/investment to the tune of Rs. 27 crores as discussed in para 2.1.2 and 2.1.3. It clearly tells that an amount of Rs. 27,00,00,000/- was given by Sh. Naveen Narang to Sh. Manoj Kumar Singh on 01 February 2016. The relevant portion of the excel sheet discussed in para 2.1.2 of this order is given as under again: Interest Ledger of Mr. Narang (School ....
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.... Goenka Public School, Dwarka during the A.Y. 2016-17 after that in subsequent years the ban/investment was paid off via bogus billing from School. Thus the total investment of Rs. 27 Crores made by Sh. Naveen Narang during A.Y. 2016-17 is required to be taxed during A.Y. 2016-17. (iv) The perusal of assessment record shows that he AO tailed failed to investigate the issue of loan/investment of Rs. 27 crores despite having the documentary evidences. The AO adjusted the amount of bogus billing against the unaccounted loan/investment made by Sh. Naveen Narang, demonstrating lack of his investigation as the bogus billing is separate from the investment made by Sh. Naveen Narang. The AO has calculated commission income of Rs. 12,10,692/- on the bogus billing arranged by the assessee during A.Y. 2016-17 to A.Y. 2020-21. (v) The seized excel sheet not only recorded the cash investment of Rs. 27 Cr. on 01 February 2016 but also mentioned a loan repayment of Rs. 3.26 Cr. during the financial year 2015-16, indicating that this investment was not a one-time transaction. However, the AO failed to investigate the issue of the Rs. 27 Cr. investment thoroughly....
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.... revenue in terms of section 263 of the Income Tax Act, 1961. 5. In view of the above, the assessment completed in this case u/s 153A/143(3) of the Income Tax Act, 1961 dated 30.03.2022 clearly attracts the provisions of section 263 of the Income Tax Act, 1961 and needs to be rectified accordingly. 5.2 Hence, the provisions of clause (a) of Explanation 2 to section 283 of I.T, Act. 1981 are clearly applicable in this case. For ready reference, the Explanation 2 to section 263 of I. T. Act, 1961 are reproduced as under: "Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to the erroneous in so far as it is prejudicial to the interests of the revenue, it in the opinion of the Principal Commissioner or Commissioner- (a) the order is passed without making Inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which i....
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....ner of Income Tax had, after setting aside the order of the Assessing Officer; simply directed the Assessing Officer to carry thorough and detailed inquiry. It is this order which is upheld by the High Court, We see no reason to interfere with the order of the High Court." .................... 7. In view of above-mentioned facts and circumstances of the case, it can clearly be concluded that the assessment order for A.Y. 2018-17 was passed without inquiry and it can also be held that this action of the Assessing Officer is not only erroneous but also prejudicial to the interest of revenue. Therefore, the assessment order passed in the ease of the assessee for the A.Y. 2016-17 u/s 153A/143(3) of the Income-tax Act, 1961 on 30.03.2022 is required to be revised by virtue of the provisions of Section 263 of the Income Tax Act, 1961. For the sake of clarity, the relevant portion of Section 263 of the Income Tax Act, 1961 is reproduced as under: ".....263(1) The (Principal Commissioner or) Commissioner may call for and examine the record of any proceeding under (his Act, and if he considers that any order passed therein by the (Assessing) Officer Is erroneous in so far as it is ....
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....otice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then,- (A) the [Principal Director General or] Director General or [Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or....
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....ioner or] Chief Commissioner or [Principal Commissioner or] Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in section 120, it shall be competent for him to exercise the powers under this sub-section in all cases where he has reason to believe that any delay in getting the authorisation from the 65[Principal Chief Commissioner or] Chief Commissioner or 65[Principal Commissioner or] Commissioner] having jurisdiction over such person may be prejudicial to the interests of the revenue : Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing unde....
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....s sub-section. Explanation.-For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub-section (1). (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation.-For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. (4A) Where any books of acc....
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....ny other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf. (9A) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub-section (1), the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) seized under that sub-section shall be handed over by the authorised officer to the Assessing Officer having jurisdiction over such person within a period of sixty days from the date on which the last of the authorisations for search was executed and thereupon the powers exercisable by the authorised officer under subsection (8) or sub-section (9) shall be exercisable by such Assessing Officer. (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1A) objects for any reason to the approval given by the 72[Principal Chief Commissioner or] Chief Commissioner, 72[Principal Commissioner or] Commissioner, 72[Principal Director General or] Director General or 7....
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.... in case of an assessee "ABC" who is a founder, promoter and Director of the company and he keeps the second set of books of accounts to be kept with his manager on day to day basis, the manager is only in constructive possession of the documents but the manager is neither the owner of the documents nor has any say in such second set of books of accounts. It is the documents of the assessee which were believed to be in the possession of the manager by the revenue authorities and based on that belief, the revenue authorities have issued warrant of authorization on the manager as per the provisions of Section 132 of the Act. Even the legislative intention was not to burden an assessee with assessments u/s 153A, assessments u/s 153C and some more assessments u/s 148. The purpose of legislation is to aid its citizens with least possible procedural hitches to pay the right taxes but not to entangle in own citizens by subjecting them with plethora of assessments under various Sections as a result of one single action taken u/s 132 of the Act. 14. The seized material available reads as under: FIRST PORTION Interest Ledger of Mr. Narang (School share A/c) from 01.01.2016 to 31. 03. 20....
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....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 March 2016 9,53,538 Transfer from Billing A/c 9 07 March 2016 22,10,300 Transfer from Billing A/c 10 08 March 2016 11,98,426 Transfer from Billing A/c 11 14 March 2016 16,42,559 Transfer from Billing A/c 12 15 March 2016 9,70,000 Transfer from Billing A/c 13 16 March 2016 9,80,567 Transfer from Billing A/c 17. From the above sheet, it can be found that the repayments have been made through the billing account and cash of Rs. 1 Cr. was also paid to the assessee on 1st March 2016. 18. Reliance is being placed on the judgment of Hon'ble Courts wherein the Hon'ble Courts have held that assessment made without proper enquiry is erroneous and prejudicial to revenue and CIT can revise the Assessment Order u/s 263: ⮚ CIT Vs. Pushpa Devi, 173 ITR 445 (Patna) ⮚ Addl. CIT Vs. Mukur Corporation, 111 ITR 312 (Guj.) ⮚ Swamp Vegetable Products Industries Ltd. Vs. CIT, 187 ITR 412 (All.) ⮚ Thalibai F. Jain & others Vs. UO & Anr. (Kar.) 1....