TaxTMI 
TaxTMI 
2024 (7) TMI 1832
X X X X Extracts X X X X
X X X X Extracts X X X X
....law to the extent it is prejudicial to the interest of the appellant. 2 The Ld. Pr. CIT erred in holding that the Assessment order passed by the AO u/s 143(3) r.w.s. 153A on 26-09-2021 and the order of approval u/s 153D of the Act dated 24-09-2021 issued by the Addl. CIT, Central Range-2, Hyderabad are erroneous and prejudicial to the interests of revenue. 3 The Ld. Pr. CIT erred in setting-aside the assessment to the file of the AO and Addl. CIT, Central Range-2, Hyderabad for the limited purpose of recording satisfaction with regard to non- compliance with the provisions of Section 269SS of the Act. 4. a) The Ld. CIT(A) ought to have appreciated that the assessment proceedings and penalty proceedings are two independent proceedings, that penalty proceedings cannot form part of the assessment proceedings and that the failure of the AO to record his satisfaction regarding the leviability of penalty cannot be considered as erroneous and prejudicial to the interests of revenue. b) The Ld. Pr. CIT ought to have appreciated that an assessment order for a particular Asst. year cannot be said to be erroneous or prejudicial to interests of the revenue because of the f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act, 1961 was conducted in the case of the assessee on 22.10.2019. Consequent to the search, notice u/s 153A of the Act was issued and in response, the assessee has filed return of income for all the 3 A.Ys. Thereafter, assessment was completed u/s 143(3) r.w.s. 153A on 26.09.2021 after obtaining approval u/s 153D of the I.T. Act, 1961 from the Addl. CIT, Central Range-2, Hyderabad. 4. The case has been subsequently taken up for revision proceedings u/s 263 of the I.T. Act by the learned Principal CIT (Central) Hyderabad. Accordingly, a show cause notice dated 5.10.2023 was issued to the assessee. In the said show cause notice, the learned PCIT observed that the assessments for the A.Y 2017-18 to 2019-20 were completed u/s 143(3) r.w.s. 153A on 26.09.2021 and during the course of assessement proceedings, the Assessing Officer, on the basis of information available and also on the basis of seized material noted that the assessee company had received sale consideration, in cash, over and above the sale value as per registered sale deed and the same was not accounted for in the books of account of the company for all the 3 A.Ys. The Assessing Officer after considering the income ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....visions of the Act observed that, the assessment order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue because the Assessing Officer has failed to record satisfaction for initiating penalty proceedings u/s 271D of the Act, even though the cash consideration received over and above sale consideration as per the registered sale deed is in violation of the principles of section 269SS of the I.T. Act, 1961, which attracts penal provisions u/s 271D of the Act. The learned PCIT has discussed the issue in the light of decision of Hon'ble Supreme Court, in the case of CIT vs Jai Laxmi Rice Mills Amabala City reported in (2015) 379 ITR 521 (S.C) where it has been held that non recording of the satisfaction during the course of assessment proceedings is fatal and consequently, the penalty proceedings cannot be sustained and thus by considering the ratio laid down by the Hon'ble Supreme Court held that non-recording of the satisfaction by the Assessing Officer during the course of assessement proceedings for initiating penalty proceedings u/s 271D renders the assessment order to be erroneous and prejudicial to the interest of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ling for revision u/s 263 of the I.T. Act, 1961. Therefore, he submitted that the learned PCIT erred in setting aside the assessment order u/s 263 of the I.T. Act, 1961. In this regard, he relied upon the following judicial precedents: i) ITAT Jaipur Bench in the case of Harish Jain vs. PCIT (ITA No.214 to 216/JP/2022) ii) ITAT Jaipur Bench in the case of Dheeraj Singh Sisodiya vs. PCIT (ITA No.132/JP/2022) iii) ITAT Hyderabad Benches in the case of Sri Aditya Homes (P) Ltd in ITA Nos.230 and 2312/Hyd/2023 iv) Hon'ble Rajasthan High Court in the case of CIT vs. Keshrimal Parasmal (1986) 27 Taxmann 447. v) Hon'ble Punjab & Haryana High Court in the case of CIT vs. Rakesh Nain Trivedi (2017) 80 Taxmann.com 238 vi) ITAT Hyderabad Benches in the case of Sunil Kumar Ahuja vs. DCIT (Ita Nos.501, 502/Hyd/2023) 8. The learned DR, on the other hand, supporting the order of the learned PCIT submitted that the Hon'ble Supreme Court in the case of CIT vs Jai Laxmi Rice Mills Amabala City (Supra) has considered the issue of recording satisfaction for initiating penalty proceedings u/s 271E of the I.T. Act, 1961 and in the said....
X X X X Extracts X X X X
X X X X Extracts X X X X
....passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. The assessment order passed by the Assessing Officer can be said to be erroneous in so far as it is prejudicial to the interest of the Revenue, in case the Assessing Officer passed the assessment order without considering the relevant fact in light of applicable provisions of the Act. Unless the learned PCIT makes out a case that the assessment order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue with reasons, he cannot invoke jurisdictional powers to set aside the assessment order. In the present case, the learned PCIT observes that non recording of satisfaction for initiating penalty u/s 271D of the Act for violation referred to u/s 269SS of the Act is erroneous in so far it is prejudicial to the interest of the Revenue. First of all, the penal provisions u/s 271D of the Act shall be imposed by the Jt. Commissioner of Income Tax in case a reference is received by the Assessing Officer with regard to the violation referred to u/s 269SS or 269T of the I.T. Act, 1961. The CBDT has accepted the legal principles laid do....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ata (supra) wherein it was held by the Tribunal by following the decision of Hon'ble Calcutta High Court in the case of CIT vs. Linotype & Machinery Ltd., (supra) that the failure of the A.O. to initiate proceedings under section 271D for violation of section 269SS could not be considered as an error calling for revision under section 263. We therefore, find merit in the contention of the Ld. Counsel for the assessee that there were no errors in the orders passed by the A.O. under section 143(3) read with section 153A of the Act for all the five years under consideration which were prejudicial to the interests of the Revenue calling for revision by the Ld. CIT(A) under section 263. Accordingly, the impugned common order passed by the Ld. CIT under section 263 for all the five years under consideration is set aside restoring back the orders passed by the A.O. under section 143(3) read with section 153A. 11. Having said so, let us come back to another aspect of the issue. Admittedly, the Assessing Officer assessed unaccounted cash receipts as per seized documents as undisclosed income of the assessee and the same has been reached to the Tribunal and the ITAT Hyderabad Bench fi....