TMI Blog2017 (8) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed an opinion making no addition of the same. Further we find that the issue relating to the price of the shares of Pragati Nirman had been settled by the Income-tax Appellate Tribunal in the case of Ashish Singla (2016 (2) TMI 1105 - ITAT CHANDIGARH) wherein addition made on account of the alleged higher price fetched was deleted. Therefore the view formed by the Assessing Officer was in consonance with that of the Income-tax Appellate Tribunal. There was therefore, we hold, no justification for the learned Principal Commissioner of Income-tax to initiate proceedings under section 263 as there was no error in the assessment order. - Decided in favour of assessee. - I. T. A. Nos. 429, 424 and 431/Chd/2015 - - - Dated:- 18-4-2017 - Bhavnesh Saini (Judicial Member) And Annapurna Gupta (Accountant Member) For the Appellants : Sudhir Sehgal For the Respondent : Sushil Kumar, Commissioner of Income-tax-Departmental Representative ORDER Annapurna Gupta (Accountant Member) 1. All the above three appeals filed by the different assessees are directed against the separate orders passed by the learned Principal Commissioner of Income-tax (Central), Ludhiana, unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In response to the notice, the assessee submitted reply vide his letter dated February 4, 2015 which is reproduced at paragraph 2 of the impugned order, in which the assessee submitted that the documents on the basis of which the purchase price of the shares was worked out at ₹ 6,554 were not connected to the assessee, nor any amount having been paid or received by the assessee mentioned in the same. The assessee submitted that it had not purchased any shares from Shri Surinder Kumar Gulati and had in fact purchased the shares from Shri Narain Dass Shah of Varanasi. The details of the purchase of shares made by the assessee along with the affidavit of Shri Narain Dass Shah were submitted. The assessee also contended that even otherwise the additions on account of the alleged higher sale price fetched by Shri Surinder Kumar Gulati had been deleted by the Commissioner of Income- tax, Gurgaon. The assessee also submitted that no document was found from the possession of the assessee and the same documents were found from the residence of Shri Surinder Kumar Gulati which were not incriminating in nature against the assessee. The learned Principal Commissioner of Income-tax, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereunder : February 20, 2013 Present Sh. Jeewan Bansal, chartered account ant, produced books of account and test checked. The assessee was asked to file the detail of share purchase of M/s. Pragati Nirman Pvt. Ltd. The case is adjourned to March 7, 2013. 6. The learned counsel for the assessee thereafter drew our attention to the reply filed by the assessee in this regard vide its letter dated March 7, 2013 and pointed out that all the details pertaining to the shares purchased had been filed to the Assessing Officer and further the assessee had also submitted as to why the share price of ₹ 6,554 per share be not applied in the present case. The relevant reply of the assessee is reproduced hereunder : I have purchased 3150 shares of Pragati Nirman Private Limited from Sh. Narayan Dass Shah Ck 19/17 Chowk Varanasi for consideration of Rs. l,22,85,000 paid vide DD through Oriental Bank of Commerce Chandigarh on February 14, 2006 at ₹ 3,900 per share. The source of the same was provided during the course of assessment. 3150 Shares of Pragati Nirman Private Limited was purchased by the applicant form the above said person at ₹ 3,900 per sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chd/2014 vide order dated February 15, 2016) wherein an identical addition made in the hands of the assessee on account of the alleged higher purchase price paid was deleted by the Income-tax Appellate Tribunal. The learned counsel for the assessee stated that since the issue of the alleged higher sale price of shares of M/s. Pragati Nirman Pvt. Ltd. has also been settled by the Income-tax Appellate Tribunal, the learned Principal Commissioner of Income-tax could not have taken this as the basis for invoking the revisionary proceedings under section 263 of the Act. In support of its submissions, the learned counsel for the assessee relied upon the order of the Income-tax Appellate Tribunal, Chandigarh Bench in the case of Lakshmi Energy and Foods Ltd. v. CIT [2016] 48 ITR (Trib) 409 (Chd) (I. T. A. No. 329/Chd/2015 dated April 18, 2016) 8. The learned Departmental representative on the other hand, relied upon the order of the learned Principal Commissioner of Income-tax. 9. We have considered the rival submissions. We find that the primary basis for holding the assessment order passed in the present case as erroneous under section 263 is that as per the learned Principal Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be subject matter of proceedings under section 263 of the Act. All the original seized material have already been considered by the Assessing Officer and the learned Commissioner of Income-tax (Appeals), there was no justification to initiate the proceedings under section 263 after passing of the assessment order and the appellate order. Further, no evidence was found against the assessee to connect with the addition on the merits. Therefore, the issue is covered in favour of the assessee by order of the Income-tax Appellate Tribunal Chandigarh Bench in the case of R. P. Import Export Pvt. Ltd. and there is no justification for the learned Principal Commissioner of Income-tax to initiate proceedings under section 263 of the Act. 13. We may also note here that when the additions on the merits have been made on the identical issue in the cases of Shri Ashish Singla and others and the learned Commissioner of Income-tax (Appeals) deleted on merit, the Revenue preferred appeals titled as Deputy CIT v. Ashish Singla in I. T. A. 129/2014 for the same assessment year 2006-07, the Tribunal vide order dated February 15, 2016 dismissed the Departmental appeal holding no justification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same cannot take place of proof. It is also admitted fact that the assessee did not have any transaction with Shri Surinder Gulati or any of his family members. The assessee had purchased shares from Chadha family and even in search in the case of Chadha family, no material or document was found making any allegation against the assessee. 10.(i) It is interesting to note that when addition is made by the Assessing Officer in the case of Shri Surinder Gulati based on the same seized material by taking the same value of the share at ₹ 6,554, Shri Surinder Gulati preferred an appeal before the learned Commissioner of Income-tax (Appeals), Central, Gurgaon and the entire addition, on the basis of the same seized material have been deleted vide order dated March 25, 2014. Copies of the same assessment order and the appellate order in the case of Shri Surinder Gulati have been placed on record. The learned Departmental representative admitted that since the tax effect was low in the case of Shri Surinder Gulati, therefore, no Departmental appeal have been filed before the Tribunal. It, therefore, stands concluded that the addition made on the basis of the same seized materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate that the Assessing Officer, without any justification made the addition against the assessee. The learned Departmental representative however, relied upon the decision of the hon'ble Punjab and Haryana High Court in the case of Joginder Lal v. CIT [2015] 56 taxmann.com 150 (P H). In this case, the assessee purchased a plot vide registered sale deed for consideration of ₹ 3.70 lakhs and during the survey conducted under section 133A, the vendors declared sale consideration of the said plot at ₹ 38 lakhs. In the case of Hiren Vasantlal Shah v. Asst. CIT [2012] 19 taxmann.com 241 (Guj) pursuant to the search at the assessee's premises, certain documents were found and one of the said document contained working of interest at 3 per cent. on the total sum of ₹ 3 lakhs. However, in the case of the assessee, no document or material was found during the course of search against the assessee when the search was conducted in the case of Shri Surinder Gulati or in the case of the assessee. Therefore, both the decisions are distinguishable on facts. The decision in the case of R. P. Vashisht v. Deputy CIT [2008] 301 ITR (AT) 37 (P H) relied upon by learned Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Shri Surinder Kumar Gulati who was searched, instead of ₹ 3,900 per share shown by the assessee, which in turn warranted addition to be made on account of unaccounted investments. In the present case also, as demonstrated above by the learned counsel for the assessee, enquiry relating to the purchase price of the shares were made during the assessment proceedings and due reply filed by the assessee. A perusal of the reply filed by the assessee, as reproduced above, shows that he had also explained why the price of ₹ 6,554, based on the documents seized from the premises of Shri Surinder Kumar Gulati, be not substituted. Therefore, it is clear from the above that the issue had been duly enquired into during the assessment proceedings. The Assessing Officer had applied his mind on the issue and thereafter formed an opinion making no addition of the same. Further we find that the issue relating to the price of the shares of Pragati Nirman had been settled by the Income-tax Appellate Tribunal in the case of Ashish Singla (supra) wherein addition made on account of the alleged higher price fetched was deleted. Therefore the view formed by the Assessing Officer was in conso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Commissioner of Income-tax to assume jurisdiction under section 263 is that in case, on an appraisal of such enquiry, the Assessing Officer takes a view which is not in accordance with law. The present is not a case where some thing as prescribed under the law has not been done by the Assessing Officer. Another situation in which the Commissioner can assume jurisdiction under section 263 is that he brings on record some thing 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, the Commissioner of Income-tax 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 under section 263. In the present case, no such finding has been recorded by the Commissioner of Income-tax and the matter is restored to the Assessing Officer to make further enquiry/investigation. In this context, our view get strengthened by the judgment of the hon'ble Delhi High Court in the case of ITO v. D. G. Housing Projects Ltd. [2012] 343 ITR 329 (Delhi), wherein it has been held that the matter cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalysis, we do not find any error in the order of the Assessing Officer. Hence, we set aside the order of the learned Commissioner of Income-tax made under section 263 of the Act as the order of the Assessing Officer is not found to be erroneous. 11. Further as held in the case of Gopal Castings (P.) Ltd. also, the addition on the merits made on an identical issue in the case of Ashish Singla has been deleted by the Income-tax Appellate Tribunal in I. T. A. No. 129/Chd/2014 for the same assessment year. In such circumstances, where it was settled that there was no basis for substituting the purchase price of the shares of Pragati Nirman at ₹ 6,154 least of all on the basis of documents found during search from the premises of Shri Surinder Gulati, there would be no jurisdiction with the learned Commissioner of Income-tax to proceed with the provision under section 263 of the Act and no purpose would serve to uphold the order of the learned Principal Commissioner of Income-tax under section 263 of the Act. The Income-tax Appellate Tribunal, Chandigarh Bench in Lakshmi Energy and Foods Ltd. v. CIT [2016] 48 ITR (Trib) 409 (Chd) (I. T. A. No. 329/Chd/2015 vide order dated A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, which is not as per the view of the Income-tax Appellate Tribunal given in the earlier assessment years. In view of this, we do not find any error in the order of the Assessing Officer, not to talk about the prejudice to the interests of the Revenue. Therefore, in our view, the jurisdiction assumed by the Commissioner of Income-tax under section 263 of the Act is not as per law. 12. In view of the above and in the light of various orders referred to above, we are of the view that the proceedings under section 263 of the Act are clearly beyond competence of the learned Principal Commissioner of Income-tax and the whole proceedings are unjustified and unreasonable. We, therefore, set aside the impugned order under section 263 of the Act. 13. The appeal of the assessee is also in the above terms. I. T. A. No. 424/Chd/2015 (Smt. Ruchi Singla) I. T. A. No. 431/Chd/2015 (Shri Manish Singla) 14. It is relevant to observe here that the facts and circumstances of these two appeals are similar to that of Smt. Radha Aggarwal in I. T. A. No. 429/Chd/2015 and the findings given in I. T. A. No. 429/Chd/2015 shall apply to these appeals also with equal for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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