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TMI Blog2020 (7) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... in existence which could have been cancelled. As such the order passed u/s 263 dated 28.03.2019 is perverse, illegal, abinitio void and fit to be cancelled. iii. For that in any view of the matter, Ld. CIT was not justified in passing order u/s 263 on simply change of opinion and only for re-verification. iv. For that other grounds, if any, will be argued/taken up at the time of hearing" 2. Facts of the case which can be stated quite shortly are as follows:The assessee is mainly engaged in the business of Iron Ore Mining at Barbil, Orissa.Intheassessee`s case a search and seizure operation was carried out in the business and residential premises of Padam Kumar Jain group of cases at Ranchi on 03.07.2014. Soon after completion of search and seizure a notice under section 153A of the Income Tax Act was issued to the assessee on 09.02.2015. In response to the notice under section 153A, the assessee filed its return of income for assessment year 2012-13 on 02.10.2016 declaring total income of Rs. 15,34,97,400/-. Thereafter, the original assessment order u/s 153A/143(3) was completed by the Assessing Officer on 28.12.2016. 3. Later on, ld Commissioner of Income Tax (Central) Patna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed income. The family members of the assessee have made disclosure separately. On careful consideration of above facts and circumstances, I am of the opinion that assessment order passed by the AO is erroneous and prejudicial to the interest of revenue. I, therefore, cancel the order of the AO passed u/s 143(3) of the I.T. Act for A.Y. 2012-13 and direct the AO to pass a fresh order after examination the issue discussed above. Due opportunity of being heard to be given before passing fresh order." 4. Thereafter, the assessing officer framed the assessment order under section 143(3) r.w.s. 263 of the Act, in pursuance of the direction of ld PCIT in first 263 order. 5. Subsequently, Ld PCIT has again exercised his jurisdiction under section 263 of the Act (hereinafter referred to as the "second 263 order") to revise the original assessment order passed by the assessing officer under section 153A/143(3) dated 28.12.2016. The second 263 order was passed by the ld PCIT on 28.03.2019 observing as follows: "Subsequently, on a careful examination of the records, it was observed that the assessment order dated 28.12.2016 for the A.Y. 2012-13 was prima-facie erroneous and also pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to Rs. 3,00,00,000/- during the year in respect of one organization namely, Bioved Research Society of 252A/4A. Om Gayatri Nagar, Tellargang, Allahabad - 211004 (UP). As per the assessee's explanation and other related materials available on record, the exemption claimed by the assessee appears to be justifiable to the extent of Rs. 3,76,25,000/- whereas the AO has also allowed the balance amount of exemption claimed by the assessee to the tune of Rs. 1,48,75,000/- at the time of assessment, which was prima facie not admissible to the assessee. As per the submission, the assessee has stated that exemption of one and three fourth times of Rs. 3 crores, amounting to Rs. 5,25,00,000/- was rightly claimed by the assessee because the expenditure was incurred in respect of such institute of scientific research which was approved and specified by notification in the Official Gazette by the Central Government. But the available case records prima facie indicate that the AO has omitted to properly appreciate and examine the supportive details and evidences before allowing the exemption to the tune of Rs. 1,48,75,000/- at the time of assessment. Therefore, the apparent omission on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properly appreciate and examine the supportive details and evidences before accepting the assessee's claim of expenditure on 'Loss and damage' of Rs. 4,00,00,000/- at the time of assessment. Therefore, the apparent omission on the part of the AO to properly examine the issue clearly renders the assessment order erroneous in so far as it is prejudicial to the interest of revenue. (v) As per the statement of accounts, the assessee has further claimed to have made payments of Rs. 8,40,68,190/- to M/s. Core Mineral & Rs. 1,05,28,110/- to M/s. Rajat Minerals as 'Incentive on sales' during the year. However, as per the related materials available on records. It is observed that the AO has allowed the expenses on account of incentive on sales amounting to a total of Rs. 9,45,96,300/- (being Rs. 8,40,68,190/- plus Rs. 1,05,28,110/-) at the time of assessment without considering supportive evidences thereof, which indicates that the admissibility of the expenditure during the year was not properly examined. As per the submission, the assessee has contended that during the assessment proceedings, the confirmation of M/s. Core Minerals and M/s. Rajat Minerals along with the relevant materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. The mere fact that the assessee has complied with the requisition made by the AO during assessment does not itself vitiate the action u/s 263. Consequently, in exercise of the jurisdiction conferred by section 263 of the Act, the said order of assessment u/s 153A/143(3) dated 28.12.2016 passed by the AO is cancelled. The Assessing Officer is directed to pass a fresh assessment order and recomputed the assesse's income after making proper enquiries on above lines discussed in paragraphs aforesaid, and after giving the assessee due opportunity of being heard." 6. Aggrieved by the second 263 order of Ld. PCIT, the assessee is in appeal before us. 7. The Learned Counsels, Shri M.K. Choudhary and Shri Devesh Podder, appearing on behalf of the assessee submitted before us that in assessee`scase the original assessment order u/s 153A/143(3) was passed by Ld. AO on dated 28.12.2016. The said assessment order was duly cancelled by CIT, Central, Patna vide his order u/s 263 dated 29.12.2017 and ld PCIT directed the assessing officer to make fresh assessment order. Thereafter, notice u/s 142(1) along with fresh questionnaire was issued to the assessee and third party enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case laws relied upon, and perused the fact of the case including the findings of the ldPCIT and other materials brought on record.First of all, we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is there existing before the ldPr. CIT to exercise his power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedents laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer's order is in viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.2016, which were furnished by the assessee during the original assessment proceedings, the copy of notice u/s 142(1) of the Act is reproduced below for ready reference: "Sub: Income Tax assessment in your case AY 2012-13 notice u/s 142(1) reg. Following details / explanations / clarifications may be furnished on or before 01.07.2016 at 11.30 AM. Please note that all questions are required to the replied in the same order of questions by mentioning the serial number of questions. With respect to the above, you are requested to furnish the following details: (1) Brief note on nature of business and business activities carried on during the relevant previous year. Please state the Pvt. Ltd. companies in which you are share holder/director (alongwith the percentage of share holding in such companies) and partnership firm in which you are partner. Also state the details of proprietorship concern. (2) Also furnish a copy of hard copyITR and Tax Audit Report. Also furnish a copy of partnership agreement, if any. Also furnish the copies of development agreement entered into. (3) Complete address with tel. no. of all the premises from which business is being done (including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower Ltd. reg. the same. (8) Give the complete address and PAN of "Vedika Organic" to whom you have claimed to have paid "Sample testing fees" during the year. (9) On perusal of the P&L account, it is seen that you have debited and amount of Rs. 3,00,00,000/- as donation to Bioved Research Society. This society has confirmed having received only Rs. 1,50,00,000/- from you. Your claim is thus disproved. Donation is not an expense incidental to business. You are hence directed to explain as to why it should be allowed to be debited. You are also directed to furnish copy of 80G certificate if any, in such cases. (10) From the impounded documents, and as corroborated by the statement of Mr. Samar Das Gupta, it is seen that he has incurred an expense of Rs. 86,30,170/- in cash on receipt of such cash from you. You are required to explain the nature and source of such cash with you. You are also directed to substantiate the claim on the basis of cash book. (11. Furnish address of the following companies in whose shares you have invested: (i) Accent Developers & Promoters Pvt. Ltd. (ii)RishabCommodeal Pvt. Ltd. (iii) Shri ArihantCommodeal Pvt. Ltd. (iv) Shri Mahavir Commod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er chapter VIA. (28) Please furnish the details of exempt income earned and expenses incurred for earning same. Also furnish the detail documentary evidence of LTCG claimed. Also furnish the computation of STCG & LTCG, if any. (29) Please furnish the evidence of TDS done on interest paid in lieu of unsecured loan. (30) Please furnish the detail evidence of secured loan received. Please furnish the evidence of TDS done on interest paid on same (NBFC). (31) Please furnish details of unsecured loan taken in the format given below, also furnish the copies of confirmation. Sl. No. Name & complete address of person from whom unsecured loan received PAN Amount & mode Date of receive Balance as on 31.3.2012 (32) Please state whether credit sales to P/L account on net basis or gross basis. (33) Please furnish the details of short term loans and advances given and investment in shares, along with explanation reg. source of such investments. (34) Please furnish detail of sundry debtors in the format given below: Sl. No. Name & complete address of person from whom goods sold PAN Amount & mode Date of selling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Amount debited to profit and loss account of Rs. 3,00,00,000/- as donation to Bioved Research Society. (vii) Expenses incurred of Rs. 86,30,170/- , by the statement of Mr. Samar Das Gupta. (viii).Advances recoverable of Rs. 96,79,129/- shown in balance sheet. (ix).Details of sundry debtors of Rs. 51,87,35,951/-. (x).Details of purchases of Rs. 65,33,41,701/-. (xi)Compensation paid to employees of Rs. 2,17,23,268/-. (xii).Proof of service tax of Rs. 6,89,59,617/- paid during the year. (xiii). "Advertisement" expense along with proof of TDS on the same. (xiv). "Other expenses" of Rs. 45,13,68,375/-. (xv).Amount debited of Rs. 6,86,000/- as donation. (xvi).Proof of TDS deducted,fixed assets details, short/long term capital gain. (xvii) Balance sheet, profit and loss account, bank statement etc. The assessee submitted the documents and details, as mentioned above, during the original assessment proceedings u/s 153A/143(3) of the Act in response to notice under section 142(1) of the Act. During the original assessment proceedings(before first 263 order), the Assessing Officer has examined and discussed with the assessee the above figures along with documents and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1081057218 696180874 1388863944 1371798854 0 Incentive on sales 26724112 0 145692391 945996300 0 Percentage of incentive 2.50% 0 10.50% 6.90% 0 On perusal of above table it is very apparent that there is neither any consistency nor any rational in giving the substantial amount as incentive on sales. During the course of search and seizure operation and post search enquiry, Core Minerals in his submission dated 19.09.2014 denied to have received any incentive from M/s. Padam Kumar Jain. In view of the above facts, your claim of expenses under the head incentive on sales payment is not genuine. It is apparent that you have concealed your income by way of bogus expenses in form of incentive of sales given to aforesaid buyers in order to evade taxes. You are requested to show cause as to why expenses claimed under the head incentive on sales totaling amounting to Rs. 9,45,96,300/- should not be disallowed and added to the total income for the year under consideration. 2. On examination of details filed by you it is seen that you have claimed expenses of Rs. 2,31,97,746/- under the head mines development expenses. From impounded documents bearing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars of assets shown therein. d. Information as to whether the above noted undisclosed income has any nexus with any of the receipts / payments mentioned in the seized documents. You are requested to furnish the above details, explanations and documents duly identified on 14.12.2018. Notice u/s 142(1) is enclosed for your compliance, it may be noted that time and date of hearing must be strictly adhered to and no request for adjournment would be entertained. Please note that failure to comply with the terms of the above notice, penalty u/s 271(1)(b) of the Income tax Act, 1961 may be (in addition to tax, if any payable) imposed for a sum of ten thousand rupees for each such failure." We note thatwhile making the second assessment order u/s 143(3) r.w.s.263 of the Act, the following issues were examined by the assessing officer: (i).Incentive on sales totaling amounting to Rs. 9,45,96,300/- (ii).Expenses of Rs. 4,00,00,000/- under the head Loss & Damage. (iii). Section 14A disallowance Rs. 1,06,955/- (iv).Expenses under different heads Rs. 6,05,900/- (v). Disallowance of Donation Rs. 2,00,000/-. It may be noted that assessee submitted details of first two expenses but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Charge 9,60,000.00 Free plantation & D.G. Set 7,20,000.00 The ledgers of the above mentioned expenses along with relevant documentary evidence has been attached herewith for your reference. We would like to inform you that the agreement between the assessee and M/s. Orient Resources has been entered during the year 2013 and before that no transactions has been taken place between both the parties. As regard the payment of Rs. 9,60,000.00 to Mr. Niraj Sharma we would like to bring to your notice that Mr. Niraj Sharma is a mining engineer which is a very high qualification, moreover there is shortage of mining engineers in our county. He is the authorized agent of the assessee as per the MMDR Act, where the assessee is required to appoint a technical person as its agent for all its departmental work. Mr. Niraj Sharma is responsible for complete operations of mines which includes mining, shifting of over burden, stacking, trench cutting, blasting and many more technical works which can only be performed by a very technically competent and qualified person. Therefore, the supervision charges of Rs. 960000.00 paid to him is reasonable and justified. 3. As required in para 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 153A/143(3) of the Act. It is important to note here that ld PCIT has not exercised his jurisdiction u/s 263 of the Act to revise the assessment order framed by the assessing officer u/s 143(3)r.w.s.263 dated 31.12.2018 which was framed by assessing officer in pursuance of direction given by his first 263 order. That is, ld PCIT has exercised his jurisdiction under section 263 of the Act to revise the original assessment order u/s 153A/143(3) of the Act dated 28.12.2016, which was cancelled by him by his first 263 order dated 29.12.2017. At this juncture, ld Counsel submits before us that ld PCIT cannot exercise his jurisdiction twice under section 263 of the Act to revise the same original assessment order framed by assessing officer u/s 153A/143(3) dated 28.12.2016, especially when the ld PCIT had himself cancelled the assessment order u/s 153A/143(3) dated 28.12.2016, by his first 263 order dated 29.12.2017. The ld Counsel pointed out that one must also keep in mind the conceptual difference between power to review and power to re-assess, the ld PCIT has no power to review its own order, however, in assessee`s case, it is tantamount to review of its own order by the ld PCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see under section 154 of the Act. Therefore, when the remedy is available under the Act to correct the apparent mistake on the face of the record by using section 154 of the Act, there is no necessity to exercise the jurisdiction under section 263 of the Act. For remaining expenses, ld counsel submit before us that these expenses were examined by the assessing officer in the original assessment order u/s 153A/143(3) of the Act dated 28.12.2016 and in the second assessment order passed by assessing officer u/s 143(3) r.w.s. 263 of the Act in pursuance of direction given by ld PCIT in first 263 order, therefore, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue. 18. We note that finality in the legal proceedingsis a must.There must be a point of finality in all legal proceedings and the stale issues should not be re-activitated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it is must in other spheres of human activity. For that we rely on the judgment of the Hon'ble Supreme Court in the case of Parashuram Pottery Works Co. Ltd. vs. ITO (1977) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld examine third time said sales incentive expenses of Rs. 9,45,96,300/-. Since these expenses have already been scrutinized and examined by the assessing officer twice, that is, in the original assessment u/s 153A/143(3) of the Act dated 28.12.2016, and in the second assessment order passed by the assessing officer u/s 143(3) r.w.s. 263 of the Act. Now, the ld PCIT is directing again to the assessing officer by way of his second 263 order to examine these expenses again, we note that if this is allowed under section 263 of the Act, then there would not be any finality in the legal proceedings/ assessment proceedings in the assessee`s case, and this attitude of the Department is tantamount to do harassment to the assessee which is against the principle of natural justice and the main object of section 263 of the Act. 19. We note that assessee made the compliances of all the notices issued by assessing officer under section 142(1) of the Act. During the course of original assessment proceedings u/s 153A/143(3) of the Act, the assessee submitted books of accounts, Balance Sheet, profit and loss account, details of various expenses as asked by AO, details of creditors/debtors etc.W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At the same time, if any information asked for by the assessing authority from the assessee or from others to whom he referred the matter during the course of assessment proceeding was not received but received subsequent to the completion of the assessment, in that situation the assessment order passed without receiving such report may appear to be erroneous within the meaning of sec.263 of the Act. In the case of the assessee, there is no denying the fact, as detailed above and acknowledged in the assessment order u/s.153A/ 143(3) dated 28.12.2016, that in response to notices u/s. 142(1) and further requisitions made during the course of assessment proceeding, the A/R of the assessee appeared from time to time and produced/ submitted necessary details/documents as per requisitions in relation to the issues raised by the Ld. Pr. C.I.T., which were examined by Assessing Officer. Therefore, it is the appraisal of the same records which are already with the Ld. A.O. and the Ld.Pr. C.I.T. took a different view than adopted by the A.O. on the same set of facts, which is not permissible u/s. 263 of the Act. In the above circumstances, the view taken by the A.O. was one of the possible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law". 22. We note that the Ld. Pr. C.I.T. by invoking his jurisdiction u/s. 263 (Second 263 order) of the Act is giving another opportunity to the Ld. A.O., which is not permissible. Hon'ble Bombay High Court in the case of RankaJewellers vs. Addl. CIT (328 ITR 148) relying on the decisions of Hon'ble Supreme Court in the cases of Malabar Industrial Co. Ltd. vs. CIT (supra) and CIT vs. Max India Ltd. [(2007) 295 ITR 282 (SC)], has held that once the issue was considered by the A.O., the remedy of the revenue could not lie in invoking of the jurisdiction u/s. 263 of the Act. Therefore, the order of the Ld. C.I.T. was definitely outside the purview of section 263 of the Act. As noted above, the exercise aimed at ascertaining the correct income of the assessee has been fulfilled by the Ld. A.O. by exercising his quasijudicial functions vis-a-vis passing the original assessment order u/s.153A/143(3) of the Act, dated 28.12.2016. Therefore, certainly it is not a case wherein adequate enquiries at the assessment stage were not carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer cannot be shown to have violated any form prescribed for writing an assessment order, it would not be correct to hold that he acted illegally or without applying his mind. " [Emphasis given]" 23. It is a settled position in law that provisions of sec. 263 of the Act do not permit substituting one opinion by another opinion. Therefore, the order of the Ld. Pr. C.I.T. cannot be sustained on the principle of 'erroneous' nature of the order of the A.O., as it is not erroneous. Further, in the instant case, to reiterate, there was no allegation by the Ld. revenue authorities that the evidences produced were fictitious or invented, thus accepted the authenticity of the same. Such an order cannot be called erroneous and prejudicial to interests of revenue only because the A.O. made the assessment without discussing such details therein, as held by the Coordinate Bench of ITAT Kolkata in the case of Chroma Business Ltd. vs. DCIT (2004) 82 TTJ 540 (Cal).Further support in this connection is taken from the decision of Hon'ble Delhi High Court in the case of CIT vs. Vikas Polymers (2012) 341 ITR 537 (Del). Relevant part of the observation in this regard reads as under : " This is for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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