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2015 (10) TMI 2371 - ITAT CHANDIGARH

2015 (10) TMI 2371 - ITAT CHANDIGARH - TMI - Revision u/s 263 - Assessing officer has accepted VDIS claim without enquiry - Held that:- It is a matter of fact that the Assessing officer being an adjudicating officer has to form an opinion on the basis of evidence, which he has duly done. If the Ld. CIT on the same set of evidence forms an opinion, it being a question of fact, does not given him jurisdiction to revise the same u/s 263 of the Act. This is certainly a case of difference of opinion .....

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'lack of inquiry' that such a cause of action could be open. Assessing officer called for action, assessee replied to the Assessing officer, Assessing officer accepted and even in the office note meant for internal purposes he mentions that the assessee has substantiated the jewellery seized. In view of these evidences, this is not a case of lack of inquiry either.

In view of the above analysis, we do not find any error in the order of Assessing officer. Hence, we set aside the order .....

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.3.2015 for assessment year 2011-12 in all the cases. 2. Since the issues are the same in all the appeals, we are adjudicating them together. First, we will take up appeal in ITA No. 427/Chd./2015. 3. The brief facts of the case are that the assessee filed his return of income as on 24.9.2011 declaring income of ₹ 1,94,75,810/-. The assessment was completed under section 143(3) r.w.s. 153A of the Act as on 31.1.2013 assessing the income at ₹ 1,98,15,490/-. 4. Later on, on perusal of .....

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arch u/s 132 of the I.T. Act, 1961 was conducted on 30.06.2010 in Narain & Company Group of cases. The assessee Sh. Narain Singla Prop. Narain & Co., Mandi Gobindgarh belongs to Narain and Company Group of cases. The return of income for A. Y. 2011-12 declaring income of ₹ 1,94,75,810/- was filed on 24.09.2011. Assessment was completed determining total income of ₹ 1,98,15,490/- vide order dated 31.01.2013 passed u/s 143(3) r.w.s. 153B(l)(b)/153A of the I.T. Act. 2. After goi .....

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urse of search from the various residential premises, following jewellery were found and seized: PARTICULARS: OTY. IN CRAMS RESIDENCE OF SH. NARAIN SINGLA & SMT. SHASHI SINGLA 2809.910 SH. ASHISH SINGLA AND RUCHI SINGLA 469.370 SH. MANISH SINGLA AND RICHA SINGLA 563.110 SMT. SHASHI SINGLA & NARAIN SINGLA 48.640 TOTAL JEWELLERY FOUND DURING SEARCH 3891.030 LESS: JEWELLERY ALLOWED AS PER BOARD CIRCULAR BEING ISTRIDHAN GRAMS SMT. SHASHI SINGLA 500.00 SMT. RUCHI SINGLA 500.00 SMT. RICHA SING .....

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ed benefit of 1334 gms. of gold jewellery declared under VDIS scheme, 1997 in the hands of his wife Smt. Shashi Singla. Even though assessee has filed VDIS certificates in support of the declaration of 1334 gms. but same has been accepted by the Assessing Officer without any enquiry. To explain the source of jewellery found during the search, assessee has produced VDIS certificates as an evidence. However, assessee Sh. Narain Singla and his wife Smt. Shashi Singla have filed their wealth-tax ret .....

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- 1794 gms. (valued at ₹ 39,98,826/-do- 2013-14 27.12.13 4223100/- 1794 gms. (valued at ₹ 42,23,076/- From the above details, it is noticed that Smt. Shashi Singla w/o the assessee Sh. Narain Singla has shown 1794 gms. of jewellery valued at ₹ 39,98,826/- for the first time in her wealth-tax return filed for assessment year 2012-13. Further, assessee himself has shown jewellery weighing 807.39 gms. valued at ₹ 17,99,672/- in his wealth-tax return filed for the assessment .....

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be filed, had the assessee's claim of jewellery under VDIS Scheme, 1997 declared by his wife Smt. Shashi Singla been true. Even otherwise A. O. did not enquire whether same jewellery continued to be held by Smt Shashi Singla even at the time of search. All these aspects have been accepted without enquiry. In the light of the aforesaid facts, it is considered that the order passed u/s 143(3) r.w.s. 153B(l)(b)/153A of the Act dated 31.01.2013 by the DOT, Central Circle-III, Ludhiana is prima .....

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2nd Floor, Near B.V.M. School, Ludhiana on 20.01.2015 at 12.30 P.M. On that date, you may submit your objections with evidence, if any, to the proposed action in writing. In case of your failure to attend on the aforesaid date or to submit written reply by that date, it will be presumed that you have no objection to the proposed action and matter shall be decided on merits". 5. In reply to the said show cause, the assessee submitted that the assessment was completed after due application of .....

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shi Singla wife of the assessee. The Assessing Officer had accepted the claim of the assessee without verifying and enquiring into the facts and the issue under consideration. The Assessing Officer had not verified whether the same jewellery continued to be held by Smt. Shashi Singla wife of the assessee even at the time of search. As per the learned Commissioner of Income Tax, the filing of a certificate of VDIS 1997 does not provide immunity from enquiries that were required to be conducted by .....

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the Assessing Officer to conduct proper enquiries in this respect instead of blindly believing assessee's claim of declaration of jewellery under VDIS 1997. In view of this, the learned Commissioner of Income Tax held the assessment order to be erroneous insofar as prejudical to the interest of the Revenue. The learned Commissioner of Income Tax relying on a number of judicial pronouncements set aside the assessment order with the direction to the Assessing Officer to make fresh assessment .....

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icer with the direction to make fresh assessment. 2. That the Worthy Principal CIT (Central) has also erred in setting aside the earlier assessment and giving the direction to the Assessing Officer to make a fresh assessment de novo. 3. That the Worthy Principal CIT (Central) has failed to consider the facts that the earlier assessment as framed by the Assessing Officer vide order, dated 31.01.2013 have been passed after due application of mind by the concerned Assessing Officer and the CIT (C) .....

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e Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off." 7. During the course of hearing, the learned counsel for the assessee took us to various pages of the Paper Book filed by the assessee. Our attention was invited to page 5 of the Paper Book which is a questionnaire issued by the Assessing Officer during the course of assessment proceedings as on 14.8.2012. At point No. 5 of this questionnaire, the Assessing Officer had specifi .....

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the assessee to the Assessing Officer (relevant page 21), whereby at point No.18, the assessee had given the details of source of total jewellery found during the course of search weighing 3891.030 gms. in the form of a chart. Out of 3891.030 gms of jewellery, 1950 gms was claimed to be the Istri Dhan of the ladies of the family as per Circular of the CBDT No. 1916 dated 11.5.1994. Further, 1334 gms of jewellery was claimed to be declared in VDIS 1997 in the hands of Smt. Shashi Singla. In this .....

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the copies of wealth tax returns. These evidences were submitted before the Assessing officer in proceedings u/s 153A. All these documents were shown to us to emphasize the fact that the Assessing Officer was open to the issue of jewellery found during the course of search and he has taken this view only after appraisal of said documents. At pages 33 and 34 of the paper book, assessment order made under section 143(3) r.w.s. 153A of the Act was enclosed. Further, our attention was specifically i .....

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nt that the Assessing Officer during the course of assessment proceedings had applied his mind to all the evidences and explanation furnished by the assessee regarding the jewellery found during the course of search, formed his opinion and thereafter made assessment order. In view of this, it was prayed that the jurisdiction assumed by the learned Commissioner of Income Tax under section 263 of the Act is not as per law. 8. The learned D.R. relied upon the order of the learned Commissioner of In .....

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t applied his mind to the issue of seized jewellery. The Assessing officer was fully aware of the matter, he has appraised the evidences filed by the assessee and then has formed a view to accept the same. Even the CIT in his show-cause notice u/s 263 has reproduced the reply filed by the assessee. Certainly this is not a case of lack of enquiry/investigation. The fact that on appraisal of evidence and explanation filed by the assessee the Assessing officer forms an opinion which is not in conso .....

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me Tax, which is quite a valid document to prove the possession of jewellery by the assessee, which the Assessing officer accepted as such. Secondly, as per CIT, the assessee had filed wealth tax return only after the search. Even if there is something not as per law in not filing the Wealth Tax Return earlier to the date of search, it does not affect the fact that assessee was having the jewellery as per the VDIS certificate. Thirdly, the CIT's objection is that the Assessing officer did no .....

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on the legality of assumption of jurisdiction by the CIT(A) u/s 263 of the Act, an order can be revised under section 263 of the Act by the learned Commissioner of Income Tax only if it satisfies the twin conditions of being erroneous as well as prejudicial to the interests of Revenue. In the present case, we find no error in the order of the Assessing Officer. Our view gets strengthen by the judgment of the Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR .....

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e Hon'ble Jurisdictional Punjab & Haryana High Court in the case of CIT v. Indo German Fabs [IT Appeal No. 248 of 2012, dated 24-12-2014, in the following words: "Section 263 of the Act confers power to examine an assessment order so as to ascertain whether it is erroneous and prejudicial to the interest of the revenue but does not confer jurisdiction upon the CIT to substitute his opinion for the opinion of the Assessing Officer. The words prejudicial and erroneous have to be read .....

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law has not been done by the Assessing officer. Another situation in which CIT can assume jurisdiction u/s 263 is that he brings on record something to disprove the finding arrived at by the Assessing officer. i.e. in such cases, where though apparently nothing illegal has been done by the Assessing officer, CIT has to come to a conclusion himself and decides that the order is erroneous by conducting necessary enquiry, if required before he passes the order u/s 263. In the present case, no such .....

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The learned Commissioner of Income Tax can also invoke jurisdiction under section 263 of the Act in a situation when there is a lack of enquiry. If there is an inquiry, however, inadequate it may be, it does not give jurisdiction to the learned Commissioner of Income Tax under section 263 of the Act to substitute his opinion. In the present case CIT himself has quoted the reply of the assessee in his show cause. Though it may not be proper in his opinion. In case of difference of opinion, the le .....

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oes not given him jurisdiction to revise the same u/s 263 of the Act. This is certainly a case of difference of opinion between Assessing officer and CIT. The only contention of the CIT seems that the Assessing officer should have made further enquiries / investigation, which he has not done. However, for assuming jurisdiction u/s 263, one has to keep in mind the distinction between lack of inquiry and inadequate enquiry. If there was an enquiry, even inadequate, that would not by itself give oc .....

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