2021 (10) TMI 1291 - ITAT SURAT

Revision u/s 263 by CIT - non-verification of cash loan received and repaid - eligible approval granted by the JCIT - 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 Radhika Homes - initiation of action under section 153C - PCIT held that AO while recording satisfaction for initiating assessment proceedings shown no reference of seized document/evidence - 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 nonspeaking 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/ 271E .

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. Thus, the ld. 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. It is the AO who has to take a conscious decision if any further inquiry is required or not. 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.

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. Other 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. The ld 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. Further, we find that 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.

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. So far as nonverification of CASS (only issue in AY 207-18 only), we find that the ld PCIT raised this issue that the item under the CASS were not verified by the assessing officer. We find that the assessment of this year (AY2017-2018) the assessment has not been made has been made consequent of survey and not under CASS hence, the said identification of such issue is not misplaced. - Decided in favour of assessee.