TaxTMI 
TaxTMI 
2024 (12) TMI 1803
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....ereafter, proceedings u/s 263 of the Act were initiated and after providing opportunity of hearing to the assessee order u/s 263 was passed. Aggrieved by the order u/s 263 of the Act, the assessee has preferred the appeal on the grounds mentioned herein above. (a) On the facts and in the circumstances of the case, the Commissioner of Income-tax, hereinafter referred to as the "CIT", has erred in invoking the provisions of section 263 of the Income tax Act, 1961 in the case of the appellant and in directing the assessing officer to make a fresh assessment in the case of the appellant. (b) On the facts and in the circumstances of the case, the CIT has failed to appreciate the fact that the initiation of reassessment in the case of the appellant was itself not justified and correspondingly no addition could have been made in the case of the appellant while completing the reassessment which was not a valid reassessment. (c) The CIT has failed to appreciate that the onus u/s. 69 or section 69B or section 69C is squarely on the department and further that this onus could not have been discharged by the assessing officer in absence of material available with the....
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....y Ld. CIT(IT) by referring to office note attached to the order of the AO, wherein it has been mentioned as under: "As per the information received in this case, the assessee jointly with her husband Shri. Sachin Shivaji Rao Deokar, purchased a residential flat from M/s. Shanti Enterprises at A- 1203, Sky Oasis, Ulwe, Navi Mumbai, on 14.12.2012 for total consideration of Rs. 35,00,000/-. It is noticed that as per the Index II the market value determined by Stamp duty authorities is Rs. 21,78,000/- in respect of said flat. As per the information Search and Survey action was carried out in the case of M/s. Bhagwati Developers and on the basis of examination of seized material in this case, it was noticed that the above assessee paid total consideration of Rs. 60,81,875/-for purchase of above mentioned flat. The agreement value was Rs. 35,00,000/- and on-money to the extent of Rs .25,81,875/- was paid by the assessee as per the information. However, no other documentary evidence or incrementing documents have been forwarded in this case. During the course of reassessment proceedings, the assessee strongly denied having paid any on-money or cash payment for t....
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.... that for taxing unexplained investment there is an onus on the Revenue to seek out cash withdrawals from bank accounts which are duly disclosed to the department e. In effect on account of the above the AO revered the burden of proof in the assessment proceedings and used it to wrongly reach a conclusion without conducting any inquiries in the matter. 7. Whereas, the fact remains that during the year under consideration the assessee had purchased the residential flat from M/s. Shanti Enterprises for a total sale consideration of Rs. 35,00,000/-, the value adopted by the stamp duty authorities was of Rs. 21,78,000/-, which shows that the consideration paid by the assessee for the purchase of flat in question was higher than the stamp duty value. The return of the income for the year under consideration was initially processed u/s 143(1) of the Act, however, later on the case was taken up for reassessment and during the course of reassessment it was categorically denied by the assessee regarding making payment of any cash amount and after considering the documents placed on record, the AO computed the assessment u/s 143(3) r.w.s 147 of the Act on 29.09.2021, after being ....
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....is was clearly in breach of settled position in law that re-opening notice has to be issued by Assessing Officer on his own satisfaction and not on borrowed satisfaction Section 147 of the Income-tax Act, 1961 - Income-escaping assessment - Non-disclosure of primary facts (Information) - Assessment year 2003-04 - Whether where Assessing Officer has merely issued a reassessment notice on basis of intimation regarding re-opening notice from DDIT (Inv.), this is clearly in breach of settled position in law that re-opening notice has to be issued by Assessing Officer on his own satisfaction and not on borrowed satisfaction - Held, yes - Whether where reasons as made available to assessee for reopening assessment merely indicated information received from Director (Investigation) about a particular entity, entering into suspicious transactions and, that material was not further linked by any reason to come to conclusion that assessee had indulged in any activity which could give rise to reason to believe on part of Assessing Officer that income chargeable to tax had escaped assessment, reassessment was an evidence of a fishing enquiry and not a reasonable belief that income cha....
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.... the validity of the revision orders passed by Ld CIT. 2. The facts relating to the issue are stated in brief. The assessee originally filed returns of income for both the years under consideration u/s 139(1) of the Act. Subsequently information was received from Bangalore office of Income tax that they had carried out search and seizure operations in the case of M/s R.N.S Infrastructure Ltd on 16.02.2012 and during the course of the search, certain documents indicating payments made to persons holding public office were seized. One of the said documents contained certain payment details under the heading "Rane C M". Based on this information, the assessing officer reopened the assessment of both the years under consideration by issuing notices u/s 148 of the Act. The AO completed the assessments u/s 143(3) r.w.s. 147 of the Act, accepting the explanations of the assessee that the said incriminating document do not relate to him. Thus the assessing officer completed the assessment without making any addition, i.e., accepting the income returned by the assessee. 3. On examination of the assessment records, the Ld Pr. CIT took the view that the assessing officer did....
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....tion, Kudal Similarly for the A.Y. 2008-09, similar payments were noticed as mentioned hereunder: Rane - CM 14.3.2008 50,00,000/- NAVEEN 14 .3.2008 17,00,000/- SITE The Assessing Officer did not examine and verify the above issues while completing the assessment u/s 143(3) r.w.s 147 of the Act for both the A.Ys. and accepted the assessee's explanation that he did not have any transactions with M/s. R. N. S. Infrastructure Ltd. or Shri Sunil D. Sahastrabudhe, Vice President, Finance and had not received any cash from him and assessed the total income at Rs. 21,18,945 and Rs. 13,68,103/ - respectively without examining and correlating the evidences found in the course of the search, which resulted in incorrect computation of income for both the years as the amounts shown to be received were not been added to the total income by the Assessing Officer. For the said reasons, the assessment order made by the Assessing Officer was found to be erroneous in so far as it was prejudicial to the interest of the revenue. Hence, a notice u/s 263 of the Act dated 1.3.20 16 was issued to the assessee as the order was found to be erroneous & prejudic....
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....d Pr. CIT also observed that the AO may pass the assessment order within six months under the guidance and after obtaining prior approval of the It. Commissioner of Income tax. For the sake of convenience, we extract below the operative portion of the revision order passed by Ld Pr. CIT. "7. I have considered the facts of the case, the assessment records, show cause notice issued and appellant's submission and the case laws relied upon by the assessee. In CIT Vs. Gabriel India Ltd 203 ITR 108, 114-115, 117 (Born), the assessee had claimed a deduction of Rs. 99,326 under the head plant 'relay-out expenses' which was allowed by the Assessing Officer while the CIT was of the view that it was a capital expenditure. Hon'ble Bombay High Court held that the Commissioner could not be vested with the power to re-examine the accounts and determine the income himself at a higher figure. The claim was allowed by the Assessing Officer on being satisfied with the explanation of the assessee and such decision cannot be held to be 'erroneous' simply because in his order he did not make an elaborate discussion in that regard. The decision is distinguishable on facts....
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....irst two entries. The last entry indicates that the amount was paid to Shri Narayan Rane for the election expenses. Further, it is also observed that no notices u/s 133(6) were issued to M/s R.N.S Infrastructure Pvt Ltd and neither was any opportunity given to the assessee to cross examine the said person Shri Sunil Sahasrabudhe (VP - Finance) on the basis of whose statement the case was reopened. Merely on the basis of the assessee's submissions and arguments, the proceedings u/s 148 were completed. It is, therefore, evident that the information was not verified properly. Thus it is held that the requisite inquiry and verification was not carried out before passing the orders u/s 143(3) r.w.s. 147 of the Act as the Assessing Officer did not make necessary enquiry on this issue and accordingly, in view of clause (a) of Explanation 2 below sub section (1) of section 263 of the Income tax Act, 1961, the order passed by the Assessing Officer is deemed to be erroneous and prejudicial to the interests of revenue." 6. Aggrieved by the common order passed by Ld CIT, the assessee has filed these appeals before us. 7. The Ld A.R submitted that the assessing officer had....
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.... He further submitted that the Ld Pr.CIT has not shown as to how the entries made in the incriminating document could translate into income in the hands of the assessee. He further submitted that the impugned incriminating document was a dumb document and even the official of M/s R.N.S. Infrastructure also did not implicate the assessee, when specific questions were put to him about the impugned incrimating document. Accordingly he submitted that the assessment order cannot be considered to be prejudicial to the interest of the revenue. He further submitted that the Ld Pr. CIT has also not shown as to how the assessment order is erroneous one. He further submitted that the Ld CIT can initiate revision proceedings only if both the conditions specified in sec. 263 of the Act is satisfied, viz., the assessment order was erroneous and it was prejudicial to the interest of the revenue. For this proposition he placed strong reliance on the decisions rendered by Hon'ble Supreme Court in the case of Malabar Industrial Co. (243 ITR 83)(SC) and CIT Vs. Max India Ltd (295 ITR 282)(SC). 9 On merits, the Id A.R submitted that the impugned incriminating document was a dumb document ....
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....d opportunity to the assessee to cross examine them. Accordingly he submitted that the assessing officer has completed the assessment upon incorrect presumption of facts and without making proper enquiries and without taking a view. The Ld D.R placed reliance on the decision rendered by Hon'ble Madras High Court in the case of CIT Vs. Amalgamations Ltd (238 ITR 963) to contend that the incorrect assumption of facts renders the assessment order as erroneous. He further relied upon the decision rendered by Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd (supra) to contend that non-application of mind on the part of the AO on the facts collected would render the assessment order erroneous. He further submitted that omission on the part of the assessing officer to consider various factual aspects such as the date of birth of the assessee, date of assumption of public officer, constituency form which he won election etc. has led the AO to frame the assessment in an arbitrary manner and hence the said assessment order is liable for revision as held in the case of CIT Vs. V.P. Agarwal (68 Taxman 236)(All). He further submitted that the Explanation 2 given under sec....
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....the Ld CIT could not have taken support from the Explanation 2 inserted by Finance Act, 2015 prospectively. He submitted that the Ld Pr. CIT has thrust upon the assessing officer his views through this revision orders and hence the same are not sustainable. 12. We have heard rival contentions and perused the record. Before going into the merits of the issue, we would like to discuss about the legal position with regard to the power of Learned CIT to invoke revision proceedings under section 263 of the Act. The scope of revision proceedings initiated under section 263 of the Act was considered by Hon'ble Bombay High Court, in the case of Grasim Industries Ltd. V CIT (321 ITR 92) by taking into account the law laid down by the Hon'ble Supreme Court. The relevant observations are extracted below: "Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary,....
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.... only on the basis of the impugned incriminating document found at the premises of M/s RNS infrastructure. We also notice that the search team has recorded a statement from VP - Finance of M/s RNS Infrastructure Ltd u/s 132(4) of the Act on 16.12.2012 and he was confronted with the impugned incriminating document. In the reply given by the VP - Finance, he has stated that the entries were made by him on the basis of information given to him over phone from its Kudal Maharashtra branch. With regard to the entry made as "Rane-CM" also, he simply stated that the information was received from the branch. Thus, we notice that in none of the answers given, the VP- finance has implicated the assessee. In spite of these facts, the investigation wing has passed on these documents and information to the assessing officer and accordingly he has also reopened the assessments of the two years under consideration. The assessing officer has also furnished to the assessee the reasons for reopening of the assessments and the assessee has also objected to the reopening. The assessing officer has specifically addressed those objections and has also rejected the same. In the notice issued u/s....
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....ncome himself at a higher figure. It is because the Income tax officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion.... There must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed" The Hon'ble High Court has considered the definitions given to the words "erroneous", "erroneous assessment" and "erroneous judgment" in Black's Law Dictionary and accordingly held that an order cannot be termed as erroneous unless it is not in accordance with law. An order can be termed as "erroneous" only if it is not in accordance with the law. 17. The Hon'ble Delhi High Court has also followed the above said view in the case of CIT Vs. Sunbeam Auto Ltd (2011) (332 ITR 167). The Hon'ble Delhi High Court has also extracted following observations made by the Tribunal: - "38. Still f....
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....ied for exercise of jurisdiction under section 263 of the Act. In such matters, to remand the matter to the Assessing Officer would imply and mean the Commissioner of Income tax has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question.... " Similar view has been expressed by Hon'ble Madras High Court in the case of CIT Vs. Amalgamations Ltd (238 ITR 963). 19. The law interpreted by the High Courts makes it clear that the Ld Pr. CIT, before holding an order to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the assessing officer is erroneous, the Ld Pr. CIT should have shown that the view taken by the AO is unsustainable in law. In the instant case, the Ld Pr. CIT has failed to do so and has simply expressed the view that the assessing officer should have conducted enquiry in a particular manner as desired by him. Such a course of action of the Ld Pr. CIT is not in accordance with the mandate of the provisions of sec. 263 of the Act. The Ld Pr. CIT has taken support of the newly inserted Explanation 2(a) to sec. 263 o....
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....ries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquiries or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant. 21 In the instant case, as noticed earlier, the AO has accepted the explanations of the assessee, since there is no fool proof evidence to link the assessee with the document and M/s RNS Infrastructure Ltd, from whose hands it was seized, also did not implicate the assessee. Thus, the assessee has been expected to prove a negative fact, which is humanely not possible. No other corroborative material was available with the department to show that the explanations given by the assessee were wrong or incorrect. Under these set of facts, the AO appears to have been satisfied with the explanations given by the assessee and did not make any addition. We have noticed that the Hon'ble Supreme Court has held in the case of Central ....
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....clearly shows that they are also not sure as to whether these entries could be considered as income in the hands of the assessee. Further, we notice that the Ld Pr. CIT has not brought on record any material to show that these amounts were paid to the assessee or on his behalf. Even if it is considered for a moment that the assessee could be linked with it, without showing that the entries noted down in the impugned document results in income in the hands of the assessee, in our considered view, it cannot be said that the assessment orders passed by the AO could be taken as prejudicial to the interests of the revenue. Accordingly, we are of the view that the revision orders passed by Ld Pr. CIT falls on this ground also. 23. In view of the foregoing discussions, we are of the view that the Ld Pr. CIT has failed to show that the impugned assessment orders passed by the assessing officer were not only erroneous but also prejudicial to the interests of the revenue. It is a well-established proposition that both the above said conditions are required to be satisfied before invoking the revisional powers given u/s 263 of the Act. In the instant case, we are of the view that the....