TMI Blog2019 (9) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... an inquiry was incomplete or complete depends on the person who is examining the transactions. It may be complete for one but may be incomplete for another. As per assessee sufficient inquiry was conducted and all the information relevant thereto was supplied. On the other hand, Ld DR has submitted that the Ld.AO has not inquired about various documents which could prove that the assessee has relinquished his rights in the property. If detailed inquiry has been conducted by the AO and one of the legally permissible view is taken by the AO which may not be revenue favouring, cannot give power to the CIT to assume jurisdiction u/s 263 and to set aside the order of the Ld. AO. In the instant case the assessee had prepared an affidavit on 23.11.2007 duly notarized relinquishing his rights from all the properties jointly held with his father s family. Genuineness of this affidavit has not been doubted by the revenue authorities. In the sale deed assessee has not signed as a seller as has been alleged by the CIT which itself shows that the Ld. CIT has not examined the documents properly. The total sale consideration which was primarily credited in the joint account held in the nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hmedabad dated 04.02.2015 10.10.2016 which are arising out of the order u/s 143(3) r.w.s 263 of the Act, 1961 dated 01.03.2013 21.07.2015 respectively framed by ITO, Ahmedabad. 2. The assessee has raised following grounds of appeal in ITA No.839/Ahd/2015. 1. On the facts and in the circumstances of the case, the Ld. CIT erred in assuming his jurisdiction u/s 263 of the I.T. Act, whereas the mandatory conditions for assuming such jurisdiction are totally absent, with the result that the impugned order passed u/s 263 is bad in law. 2. On the facts and in the circumstances of the case, the Ld. CIT erred in arriving at a conclusion without any basis whatsoever to the effect that the assessment order passed by the Assessing Officer was erroneous as well as prejudicial to the interest of the revenue. 3. On the facts and in the circumstances of the case, the Ld CIT erred in cancelling the assessment order passed by the Assessing Officer on officer to make a fresh assessment. 4. On the facts and in the circumstances of the case, the order passed by the Ld. CIT is bad in law since proper opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with issuance of detailed questionnaire. After considering the submissions filed by the assessee assessment completed u/s 143(3) of the Act on 01.03.2013, accepting the returned income filed by the assessee. 6. Subsequently, Ld. CIT invoked the provisions of section 263 of the Act and held that the order u/s 143(3) of the Act, dated 01.03.2013 is erroneous and prejudicial to the interest of the revenue, as the assessing officer failed to the following two issues: (i) The AO has not made enquiry or called for any explanation in respect of income capital gain alleged to have been earned from sale of jointly owned property situate at Ahmedabad for a sale consideration of ₹ 23,00,000/-. (ii) Frequent cash deposit of ₹ 13,60,000/- in assessee s personal bank account with bank of Baroda were not examined by the Ld. AO. 7. Aggrieved assessee is in appeal before the Tribunal challenging the order u/s 263 of the Act dated 04.02.2015 contending that the Ld. CIT wrongly assumed jurisdiction and impugned order passed u/s 263 is bad in law and liable to be quashed. 8. Ld. counsel for the assessee re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y at the end of the assessing officer. 10. With regard to the observation of Ld. CIT that no inquiry was conducted about the cash deposits of ₹ 13,60,000/- made in the bank account of the assessee, it was submitted that the assessee is salaried employee and he is regularly earning income from last many years. Copies of bank account were filed which shows withdrawal of cash on various dates in past which were sufficient to cover the alleged cash deposits and in these details were examined by the Ld. AO. 11. In support of his contention Ld. counsel for the assessee relied on the judgment of Hon ble Jurisdictional High Court in the case of CIT vs. Kamal Galani (2018) 95 taxmann.com 261(Gujarat). Reliance was also placed on another judgment of Hon ble Jurisdictional High Court in the case of Pr. CIT vs. Shree Gayatri Associates (2019) 105 taxmann.com 30 (Gujarat) which was decided in favour of the assessee and the revenue s Special Leave Petition against this order was dismissed by the Hon ble Supreme Court of India vide order dated 01.03.2019 reported at (2019)106 taxmann.com 31 (SC). 12. Per contra Ld. Departmental Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 1.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) record shall incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a bare perusal of the sub section-1 of section 263 of the Act, would reveal that powers of revision granted to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his ITA No.47/Rjt/2011 and 701/Rjt/2014 order he does not make an elaborate discussion in that regard. 16. Apart from the above principles, we deem it appropriate to make reference to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sun Beam Auto reported in 227 CTR 113 and Gee Vee Enterprises Ltd vs. Addl. Commissioner of Income Tax (99 ITR 375). In the case of Sun Beam Auto, the Hon'ble High Court has pointed out a distinction between lack of inquiry and inadequate inquiry. If there is a lack of enquiry, then the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very diffident from that of a civil court. The statement made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only on adjudicator but also an investigator. He cannot remain passive in the face of the return which is apparently in order but called for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry... It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would made such an inquiry prudent that the word 'erroneous' in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has sold one property which was jointly held with my mother and me. I have some family dispute with my father and he sold this property without informing me and I have not received any consideration from sale of this property. Please find attached sale deed and copy of bank account with HDFC bank of my father and Bank of Baroda which is joint account of me, my father and my mother . 25. We find that against specific query raised by the Ld. AO assessee has duly replied with the documentary evidences about the alleged transaction and informing that he has not received any consideration from the sale of property. The fact that he has a dispute with his family is also mentioned. 26. Now on the basis of these informations Ld. AO was satisfied and find the reply of the assessee to be genuine and did not raise further inquiry into the matter. Now root cause of this appeal lies on this point. That why the Ld. AO did not inquired further about the alleged transaction and its genuineness. It is not a case that no inquiry was done but it is a case that incomplete inquiry was done. Whether an inquiry was incomplete or complete depends on the person who is exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of Gauhati High Court in case of Commissioner of Income Tax vs. Jawahar Bhattacharjee C/TAXAP/1376/2007 JUDGMENT reported in 341 ITR 434 held that not holding such inquiry as is normal and not applying mind to relevant material in making assessment by the Assessing Officer would be an erroneous assessment warranting exercise of revisional jurisdiction. It was held as under: 23. Accordingly, we hold that Daga Entrade P. Ltd [2010] 327 ITR 467 (Gauhati) lays down correct law and the same is not in conflict with the earlier order of this court in Rajendra Singh [1990] 79 STC 10 (Gauhati). Jurisdiction under section 263 can be exercised whenever it is found that the order of assessment was erroneous and prejudicial to the interest of the Revenue. Cases of assessment order passed on wrong assumption of facts, or incorrect application of law, without due application of mind or without following the principles of natural justice are not beyond the scope of section 263 of the Act. 18. In case of Commissioner of Income Tax vs. Arvind Jewellers reported in 259 ITR 502 Division Bench of this Court referring to the judgement of Supreme Court in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76/2007 JUDGMENT Assessing Officer. We have reproduced some of the responses of the assessee only to highlight the nature of inquiries carried out by the Assessing Officer and the detailed answers given by the assessee. With respect to his brother, the assessee pointed out that he was running a successful business of trading, was engaged in various commercial and non-commercial activities. He was man of standing and means. In fact, the Commissioner has gone on record to suggest that he neither disputes the identity nor the creditworthiness of the brother of assessee to loan such amount. 21. The Assessing Officer having carried out such detailed inquiries, it was not open for the Commissioner to thereafter reopen the issues on mere apprehension and surmises. His two fundamental objections were that the Assessing Officer did not verify whether the remittances were from the own income or sources of the assessee and his brother or were merely by way of hawala transactions. In the process, he was also critical of the Asseessing Officer not insisting on collecting the details of the accounts from which the foreign remittances were made to the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned as a seller as has been alleged by the Ld. CIT which itself shows that the Ld. CIT has not examined the documents properly. The total sale consideration which was primarily credited in the joint account held in the name of family members has been immediately withdrawan and deposited in the bank account of assessee s father. All the series of documents and transactions also come to conclusion that the assessee was not liable to pay any tax on the capital gain from sale of alleged property. The Ld. AO in this case on examining the sale deed came to a conclusion at the first stage which was well within his power as it is not mandatory that for each and every aspect the Ld. AO has to doubt the transaction and call for information again and again. It is on the discretion, wisdom and understanding of facts by the Ld. AO which may prompt him to call for more information if any required. In our considered view and in the given facts and circumstances of the case we observe that for the alleged transaction of capital gain sufficient inquiry was conducted by the Ld. AO before accepting the contention made by the assessee. 30. As regards the judgments referred and relied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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