2021 (10) TMI 1144 - AT - Income Tax

Revision u/s 263 by CIT - scope of revisionary jurisdiction of ld. PCIT - validity of declaration made under IDS - income declared by assessee under IDS was accepted without any variation or objection - AO issued notice u/s 153C requiring the assessee to file return of income - search and survey of SRK group and it related parties of which the assessee is also part has resulted in to impounding of documents/ books of accounts and evidence related with evidence of undisclosed receipt and expenses in respect of project Amrut Sarovar Residenty - HELD THAT - We find the there is no dispute that the AO while passing the assessment order accepted the claims of the assessee in non- speaking order. It is not the case of ld PCIT that the AO is not authorised (empowered) to accepted the return of income in non-speaking order. We have seen that the AO while passing the assessment order recorded that the Authorized representative of the assessee vide various order sheet entries have furnished the relevant details and information called for. After affording ample and adequate opportunities of being heard to the assessee assessment proceedings have been completed on the basis of the submissions and details collected and in consequence upon the conclusion of proceeding and hearing of evidences assessment is made by this order - A perusal of show cause notice under section 263 dated 08.03.2021 clearly demonstrate that the ld PCIT identified all the issues which were the subject matter of the notice under section 142(1) and the questionnaire attached thereto were issued by the assessing officer except the issue of initiation of penalty 271D. The ld PCIT in his show cause notice (SCN) under section 263 has accepted that the AO made detailed questionnaire dated 03.12.2018. And on perusal record and details /evidences available on record the PCIT noted that AO has not made further inquiry. PCIT has not made a case that there was no enquiry or lack of inquiry rather recorded that the AO called detailed inquiry. We find that the ld. PCIT has not specified that what kind of further inquiry was required when the income disclosed in IDS was duly accepted by higher authority. And the acceptance of IDS was never questioned by Board or other superior authority then PCIT. We find that in SCN the ld PCIT observed that the assessee made declaration on the basis of misrepresentation of fact. However the ld PCIT failed to mentioned the nature of misrepresentation or the basis of his such observation. PCIT failed to give any specific finding on his observation while revision the assessment order. After going through the entire material we find that the AO had taken a conscious decision on the basis or explanation furnished by assessee. Furthermore the assessment order was duly approved by the ld JCIT. There in not finding of ld PCIT that the approval granted by the JCIT is not proper or non-application of proper procedure. We find that in the case in hand the AO has made required inquiry and came to a plausible reasonable and legally sustainable conclusion in allowing the claims to the assessee. Non initiation of penalty under section 271D/ 271E - We find that in case of CIT Vs Suresh G. Shah 2006 (8) TMI 101 - HIGH COURT GUJARAT and CIT Vs Parmanand M. Patel 2005 (7) TMI 72 - GUJARAT HIGH COURT it was held that CIT cannot exercise his jurisdiction under section 263 for the purpose of initiation of penalty proceedings. Otherwise also we find that the assessee has specifically in its reply to the SCN to the ld PCIT has stated that the cash was received only against the booking and no loan or such transaction was undertaken by them. PCIT failed to specify the transaction on which initiation of penalty either under section 271D or 271E was warranted. And on the issues of validity of discloser in IDS the ld PCIT has not specified that while making declaration the assessee made any misrepresentation of any facts. Once the IDS in all cases were accepted by ld. PCIT the AO or the Range head no authority to relook or power to revoke or to examine its validity. We further find that the ld PCIT while directing the AO has not himself revoked the IDS nor directed to refund the payment of tax to the assessee. In the IDS the assessee has paid more tax to the revenue then the rate of normal tax so there is no loss of revenue. At the cost of repetition we note that the AO while passing the assessment order in all years have made inquiry and took reasonable plausible and legally sustainable view. The Hon ble Delhi High Court in CIT Vs Kelvinator of India Ltd 2002 (4) TMI 37 - DELHI HIGH COURT held that if the AO has adopted one of the course permissible in law which resulted in loss of revenue or where two view is possible and the AO has taken one view with which the CIT does not agree it cannot be treated as erroneous order prejudicial to the interest of revenue unless view taken by the AO is not sustainable in law. At the cost of repetition we may note that the ld PCIT neither in his show cause notice nor in ultimate / final order has held that the order passed by the AO is unsustainable in law. We are of the considered view that the ld PCIT was not justified in subjecting the assessment order for all three years to revision proceedings by taking view that the AO has not made further inquiry therefore we quash the revision order (s) in all three assessment years.- Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of declaration made under IDS (in all three AYs)
2. Validity of return of income & assessment (in all three AYs)
3. Allowability of total expenses (in all three AYs)
4. Non-verification of cash payment for purchase of land (only in AY 2014-15)
5. Non-verification of cash expenses incurred on consolidation and conversion of land of Rs. 2.75 Crore (only in AY 2015-16)
6. Genuineness of cash loan (in all three AYs)
7. Non-initiation of penalty under section 271B & 271D of the Act (in all three AYs)
8. Non-verification of loan availed from Manishbhai Sheladiya (in AY 2014-15 only)

Detailed Analysis:

1. Validity of Declaration Made Under IDS:
The assessee declared income under the Income Disclosure Scheme (IDS) for AYs 2014-15 to 2016-17, which was accepted by the Principal Commissioner of Income Tax (PCIT). The PCIT later questioned the validity, alleging misrepresentation of facts. The tribunal found that the declaration was made before the issuance of notice under section 153C and was accepted without objection. The PCIT did not specify the nature of misrepresentation, and the IDS declaration was not revoked nor the tax refunded. The tribunal concluded that the AO was not empowered to question the IDS declaration once accepted by the PCIT.

2. Validity of Return of Income & Assessment:
The PCIT raised concerns about the validity of the returns filed by the assessee, noting that the relevant columns were not filled. The tribunal noted that the returns were filed in response to notices under section 153C and were based on the IDS declaration. The tribunal highlighted that the AO issued detailed questionnaires and the assessee provided comprehensive replies. The assessment orders were passed with the approval of the Joint Commissioner of Income Tax (JCIT). The tribunal concluded that the assessment orders were valid and not erroneous.

3. Allowability of Total Expenses:
The PCIT questioned the allowability of expenses claimed by the assessee, alleging a lack of supporting evidence. The tribunal found that the AO had issued specific queries regarding expenses and the assessee provided detailed replies. The expenses were recorded in the books of accounts prepared based on impounded/seized materials. The tribunal noted that the AO had accepted the expenses after proper verification and concluded that the assessment orders were not erroneous.

4. Non-Verification of Cash Payment for Purchase of Land (AY 2014-15):
The PCIT identified non-verification of cash payments for land purchase. The tribunal found that the AO had raised queries regarding on-money payments for land purchase, and the assessee provided satisfactory explanations. The tribunal concluded that the AO had made proper inquiries and the assessment order was not erroneous.

5. Non-Verification of Cash Expenses Incurred on Consolidation and Conversion of Land (AY 2015-16):
The PCIT raised concerns about the verification of cash expenses for land consolidation and conversion. The tribunal noted that these expenses were part of the total expenses debited to the profit and loss account and were verified by the AO. The tribunal concluded that the AO had made proper inquiries and the assessment order was not erroneous.

6. Genuineness of Cash Loan (in all three AYs):
The PCIT questioned the genuineness of cash loans. The tribunal found that the AO had raised specific queries regarding cash loans and the assessee provided detailed explanations. The AO accepted the explanations after proper verification. The tribunal concluded that the assessment orders were not erroneous.

7. Non-Initiation of Penalty Under Section 271B & 271D (in all three AYs):
The PCIT identified non-initiation of penalty under sections 271B and 271D. The tribunal noted that the amounts involved were booking advances and not loans. The tribunal also highlighted that revision proceedings cannot be undertaken solely for the purpose of initiating penalty proceedings. The tribunal concluded that the assessment orders were not erroneous.

8. Non-Verification of Loan from Manishbhai Sheladiya (AY 2014-15):
The PCIT raised concerns about the verification of a loan from Manishbhai Sheladiya. The tribunal found that the AO had raised specific queries regarding this loan and the assessee provided detailed explanations. The AO accepted the explanations after proper verification. The tribunal concluded that the assessment order was not erroneous.

Conclusion:
The tribunal found that the AO had made proper inquiries and verifications before passing the assessment orders. The PCIT did not provide specific findings or evidence to support the claim that the assessment orders were erroneous or prejudicial to the interest of the revenue. The tribunal quashed the revision orders passed by the PCIT for all three assessment years, concluding that the assessment orders were neither erroneous nor prejudicial to the interest of the revenue.