TMI Blog2020 (10) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by him was erroneous in sofar as it was prejudicial to the interests of the revenue. We therefore do not find any infirmity in the order passed by Pr.CIT and the same is upheld. - Decided against assessee. - ITA No.1376 to 1379/Bang/2019 - - - Dated:- 20-10-2020 - Shri A.K Garodia, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri Rajeev C Nulvi, Advocate For the Revenue : Shri Dilip Reddy, Standing Counsel to Dept. (DR) ORDER PER BENCH : Present appeals has been filed by assessee against separate order dated 26/03/2019 passed by Ld.Pr.CIT (Central) for assessment years under consideration on following grounds of appeal. At the outset, it is submitted that, grounds raised by assessee in all years under consideration are identical and similar. Therefore, for sake of convenience, we are reproducing grounds raised by assessee for assessment year 2011-12 which are as under: ITA No.1376/Bang/2019 1. The order of the learned Principal Commissioner of Income Tax (Central) passed u/s 263 of the Income Tax Act, 1961 in so far as against the Appellant, is opposed to the law, equity, weight of evidences, prob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Principal Commissioner of Income Tax (Central) erred in revising the order of the Assessing Officer u/s 263 of the Income Tax Act, 1961 without appreciating the fact that transactions are genuine, parties are identifiable and the payments were made in cash for business expediency on banking holidays and after banking hours. 10. For these and other reasons which may be adduced at the time of the hearing the Appellant prays before this Honourable Bench to anul the order by Principal Commissioner of Income Tax (Central) u/s 263 of the Income Tax Act, 1961 for substantial cause of justice. 11.The appellant craves leaves, to add, to alter, to amend and to delete any other grounds at the time of hearing. 2. At the outset, Ld.AR submitted that, present appeals are filed with a delay of 13 days. It has been submitted in affidavit dated 06/06/2019 by assessee that, delay was caused, since assessee was busy with getting admission to MBBS course, for which he required approval from Medical Council of India. He was therefore not available to preset the appeals in time before this Tribunal. He submitted that, it was unintentional, and prayed for condonation of delay by 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 11, the Appellant craves leave for admission of below mentioned grounds: 12. The learned Principal Commissioner of Income Tax (Central) has grossly erred in revising the order passed by the Assessing Officer for not making the proper enquiries and verification which should have been made for the information available on record during the course of assessment which is against clause (a) of explanation 2 to Section 263(1) of the Income Tax Act, 1961. The said clause (a) of explanation 2 to Section 263(1) of the Income Tax Act, 1961 is made applicable from 01.06.2015 i.e. w.e.f A.Y 2016-17. 13. On the facts and circumstances of the case, The learned Principal Commissioner of Income Tax (Central) has erred in revising the order only on the ground that the Assessing Officer failed to make proper enquiry in respect of information available on record subsequent to date of search. The said failure for revision was effective from 01.06.2015 by introducing clause (a) of explanation 2 to Section 263(1) of the Income Tax Act, 1961. 6. Ld.AR submitted that legal plea raised is challenging application of Explanation 2 (a) to section 263 (1) of the Act to present case by L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-15, Ld.AO made addition on account of receipts from sale of land sold during the year as business income. 11. Against additions so made, assessee preferred appeal before Ld.CIT(A). Ld.CIT(A), vide order dated 12/07/2018 deleted addition on the ground that, there was no incriminating material. Ld.CIT(A) observed as under: 5. The additional ground Nos. 5 6 are on the question of law wherein it Is argued that the additions made were not based on the Incriminating documents or material found during the course of search. The A.R of the Appellant relied on the Jurisdictional Karnataka High Court judgement in the case CIT Vs Lancy Construction 383 ITR 168 and ITAT Bangalore judgement in the case of GMR Sports Pvt. Ltd. Vs DCIT In ITA 1754/6ANG/2016 wherein it has been held that if it is found that no incriminating material was found during the course of search then the proceeding Initiated by the A.O u/s 153A of the Income Tax Act, 1961 are not valid . The A.R of the Appellant has also relied on the following case laws. a. Commissioner of Income Tax Vs Continental Wearhousing Corporation 374 ITR 645 (Bombay). b. Commissioner of Income Tax Vs Anil Kumar Bhatis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n purchase of the properties was available before Your Honour only through our letter dated 15/11/2016 but not during the course of search. Such information or document were not found and seized in the premises of the Appellant. When there is no such document or evidence was not found during the course of search then the assessment which has been completed and which has not been abetted. The Assessing Officer has no jurisdiction to interfere the completed assessment u/s 153A of the Income Tax Act, 1961. The Karnataka High Court. in case of CIT Vs Lancy Constructions 380 ITR 168 held that any incriminating evidence found during the course of search is a pre condition to enable the Assessing Officer to interfere in the completed assessment u/s 153A of the Income Tax Act, 1961. In view of the above stated judgment, Delhi and Bombay High Court judgment which are supporting the view of the Karnataka High Court judgment, the addition on account of section 40A(3), the information regarding this made available during the course of assessment cannot be made basis for the addition in the order u/s 143(3) r.w.s 153C r.w.s 153A of the Income Tax Act, 1961. Further the' Bombay Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prejudicial to the assessee, rendered by the jurisdictional High Court or, Supreme Court in the case of the assessee or any other person. In view of the said explanation as for clause a and also as stated by Your Honour in the show cause notice, the order passed without making inquiries or verification which should have been made. In the Appellant's case, in view of the Karnataka High Court' judgment in case of CIT Vs Lancy Constructions 380 ITR 168, the scope of the addition is restricted only to make additions on the basis of the incriminating materials/documents found during the course of search. Hence, the Assessing Officer adopted and followed the Jurisdictional High Court judgment and passed the order without making general disallowances such as u/s 40A(3), 40(a)(ia) of the Income Tax act, 1961 which could have been made in order passed u/s 143(3) and 147 of the Income. Tax Act, 1961. Such order is not an erroneous order as he has followed the Jurisdictional High Court judgment. 4. In CIT Vs Parmanand M Patel (2005) 278 ITR 3 (Guj) held that it is well settled that once an appeal has been preferred against an order of assessment, the entire assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments were made through cheque and others through cash. The payment in cash more than ₹ 20,000/- might have been paid on banking holiday or after banking hours. Such cash payments are falls under the ambit of Rule GDD(j) of Income Tax Rules, 1962. The said payments cannot be exigible u/s 40A(3) and also such payments might have been paid by,'the assessee by cash during the business expediency. Due to paucity of time the assessee could not able to provide the date and time of payment before Your Honour, as Your Honour directed us to file reply within four days of the receipt of show cause notice. ii. The Hon'ble I.T.A,T, Delhi Bench in case of Prime Infra Developers Pvt Ltd Vs I.T.O in ITA No.7144/Del/2017 dated 27-06- 2018 held that 'It was noted that assessee-company had made advance payment for purchase of various land to farmers as a token money for execution Of deal on Sunday, i.e., day which was public holiday for banks. see-company had no option but to make immediate payment due to business expediency and thus covered by proviso to section 40A(3). Payment was made on 0510812012, i.e., 'Sunday' which was not disputed by AO as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment u/s 153A of the Act and therefore, there is no error committed by the AG in this regard requiring revision u/s 263 of the Act. The proposition laid out by the assessee is examined by the Hon ble Karnataka High Court once again the recent order dated 8th January 2019 in the case of PCIT (Central) vs GMR energy Ltd in ITA nos.358/359/360 of 2018 wherein it is held as under : '5. Learned counsel for the Revenue contends that the Tribunal has committed an error in relying on the judgment in Lan.cys case, He contends that the Hon'ble Court in the case of CAIVARA HOUSING DEVELOPMENT COMPANY V/s. DCIT reported in 274 CTR 122 (KARNA7AXA) has laid down the law with regard to the same. We have considered the said judgment. At para-1 0 of the said Order, it is narrated as follows: Para 10 - :.....The condition precedent for application of Section 153A is there should be a search under Section 132. Initiation of proceedings under Section 15311 is not dependent on any undisclosed income being unearthed during such search. 6. Therefore., the position of law is quite clear. The Tribunal was of the view that the latest judgment in the case of COMMISSIO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly, failure on the part of the AO to do so, makes the order erroneous. Secondly, the argument that the assessment order got merged with the CIT(A) order on account of assessee's appeal and therefore the PCIT has no jurisdiction to take up revision proceedings is not a correct proposition that the issue under consideration wa not part of the proceedings before CIT(A). The law is clear on this issue that proceedings u/s 263 can always be taken up on matters which are not subject matter of appeal. The merger of the assessment order with that of the CIT(A) order is only to the extent of issues raised in the assessment order and not beyond. 10. As regards the various case laws cited by the assessee, the decisions in those cases were rendered having regard to the facts of the said cases and not otherwise: All the said decisions arc duly considered and noted that the issue in the said cases is whether the provisions of section 40A(3) are correctly applied in the given set of facts, whereas in the present case, the AO has neither collected any facts nor conducted any enquiry and therefore never examined the issue in the light of the applicability of the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been made in accordance with any order, direction or instruction issued by the Board under section 119; or d. the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 18. Ld.AR vide written submission submitted that, as per clause (a) of Explanation 2 to Section 263(1) of Income Tax Act, 1961, order passed by Ld.AO shall be deemed to be erroneous in so far as prejudice to the interest of the revenue, if in opinion of LD.Pr.CIT, the order is passed without making an enquiry or verification which should have been made . 19. He submitted that, Explanation 2 is applicable from 01/06/2015 and in assessee's case, assessment years involved are 2011-12, 201213, 2013-14 2014-15. He thus submitted that Explanation 2 is not applicable. It was submitted that for lack of proper enquiry or verification by Ld.AO while farming assessment, based on information available on record, cannot be considered as erroneous in so far as it is prejudicial to the interest of revenue. He thus submitted that, even on this score Ld.Pr.CIT ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fic issue picked up by Ld.Pr.CIT in 263 proceedings. 22. Ld.Standing Counsel submitted that, additional ground raised by assessee does not have any relevance in present facts of the case. He submitted that, if powers of Ld.Pr.CIT to review an assessment order in which no enquiry was carried out by assessing officer, is construed to be available from 01/06/2015, then all proceedings initiated byLd.Pr.CIT prior to the amendment on similar situation will have to be considered as null and void. Referring to principals laid down by Hon ble Supreme Court in case of Malabar Industries (supra), and various other decisions, under sec.264(1) Ld.Standing Counsel submitted that, assessment passed prior to 1/6/2015 could be considered as erroneous and prejudicial to the interest of revenue, where no enquiry is made by Ld.AO. He submitted that insertion of Explanation 2 is merely clarification to sec.264(1). 23. He thus vehemently supported impugned order by submitting that, Ld.AO in years under consideration did not verify/enquire payments made in cash, claimed as expenditure by assessee. We have perused submissions advanced by both sides in light of records placed before us. 24. De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, Ld.AR placed reliance on following decisions vide paper book filed on 24/09/2020 before this Tribunal: a. CIT Vs Lancy Constructions 383 ITR 168 Karnataka High Court b. CIT Vs Continental Ware Housing Corporation 374 ITR 645 Bombay High Court c. CIT Vs Gurinder Singh 386 ITR 483 Bombay High Court d. CIT Vs Kabul Chawla 380 ITR 573 Delhi High Court e. Raju J Soomaney Vs ACIT in ITA No.347114um/2014 Mumbai ITAT f. Kolkata ITAT 'C' Bench in case of Krishna Kumar Singhania Vs Dy. CIT LT(SS) Appeal No. 104 to 112 (Kol) of 2017 author of judgment Sri. N.V. Vasudevan 3M M. g. Indore ITAT in case of Omprakash Gupta Vs ACIT IT(SS)A.No.277 to 2811Ind/2017, 283 to 2871Ind/2017 h. Delhi Bench ITAT in case of ACIT Vs SMC Power Generation Ltd in ITA No.33951Del/2015 CO No.4361DeI/2015 i. Mumbai ITAT 'E' Bench in case of Dy.CIT Vs Sopariwala Exports in ITA No.3037, 3038, 3040 and 3077/Mum/2014 j. ITAT Amritsar Bench, Jalandhar Camp in case of Sanjana Mittal Vs Dy CIT in ITA No.487/Asr/2018 J k. Prime Infra Developers Pvt Ltd Vs ITO in ITA No.7144/Del/2017 dated 27-06-2018 l. Sri Laxmi Satranarayana Oil Mills vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even in case of Rajeesh exports Ltd vs Ld.Pr.CIT(supra) there is a categorical observation by this Tribunal that, Ld. AO in original assessment prior to search had adjudicated this issue. In the present facts of the case Ld.AR has not brought anything on record to establish any verification/enquiries by Ld.AO on the issue of huge cash payments for years under consideration, either in sec. 143(3) r.w.s 153A proceedings or original assessment order passed by Ld.AO u/s143(3) of the Act. 30. In the present facts of the case, provisions of 263 are invoked by Ld.Pr.CIT alleging that, no enquiry/verification was conducted by Ld.AO, in respect of expenditure incurred in cash and applicability of provisions of section 40A(3), is discernible from assessment records. 31. Further in case of H. Nagaraja vs CIT (supra) relied by Ld.AR, this Tribunal quashed proceedings under section 263, as it was a case of inadequate enquiry by Ld.AO on alleged issues therein. In facts before us, Ld.Pr.CIT initiated proceedings under section 263, wherein no enquiry was conducted by Ld.AO, as was discerned by him from assessment records. 32. In decision relied on by Ld.AR of Hon ble Bombay High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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