TMI Blog2021 (6) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... also submitted before us an affidavit which is placed at page no.53 of the paper book wherein assessee has mentioned the additional income and stated that he had declared additional income for the current financial year. PCIT has not brought any material to justify the alleged income of ₹ 210 crores.Thus, we note that allegation made by the ld PCIT is based merely on suspicion and conjecture. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the assessing officer did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. AO has examined other issues raised by ld PCIT, such as returned income, the pre-survey period and post -survey expenses and sundry creditors for land development and land leveling expenses. In the conclusion, we are of the view that none of the reasons set out by the ld PCIT for invoking the jurisdiction under section 263 of the Act are sustainable. The impugned order of ld PCIT has to be quashed for the reason that order of the assessing officer sought to be revised in the impugned order was neither erroneous nor prejudicial to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the learned AO to frame a fresh assessment in the case of the Assessee despite the fact that the learned AO had thoroughly examined the additional income disclosed by the Assessee in the return filed subsequent to survey proceedings. 7. The learned CIT erred in fact and in law in directing the AO to frame a fresh assessment in the case of the Assessee despite the fact that the AO had thoroughly examined the material which was impounded during the course of survey. 8. The learned CIT erred in fact and in law in directing the AO to frame a fresh assessment in the case of the Assessee merely on the basis of assumptions, surmises and conjectures. 9. The learned CIT erred in fact and in law in not appreciating the submissions and evidences submitted by the Assessee during the course of the revision proceedings. 10. The learned CIT erred in fact and in law in holding that income of ₹ 207.90 crores had escaped assessment and consequently directing the AO to frame a fresh assessment. 11. The learned CIT erred in fact and in law in holding that income of ₹ 207.90 crores had escaped assessment merely on the basis of assumptions and presumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed was accepted by the assessing officer. 4. After that, Learned Principal Commissioner of Income Tax ( ld PCIT) has exercised his jurisdiction under section 263 of the Act. From the assessment records and survey statements, the ld PCIT observed that disclosure made at ₹ 2,10,00,000/- ( in short 2.10 crores) by the assessee in the return of income filed was accepted by the assessing officer without application of mind. As per ld PCIT, the said disclosure should be read by the assessing officer at ₹ 210,00,00,000/- ( ( in short 210 crores). Therefore, ld PCIT has pointed out that in the assessment order the assessing officer should have made addition to the tune of 210 crores instead of 2.10 crores. The ld PCIT also observed that assessing officer has not examined that though assessee had declared ₹ 2,10,00,000/- in the survey proceedings, the returned income was only ₹ 2,11,99,030/-, which means apart from the disclosure in the survey proceedings, the assessee had a mere ₹ 1.99 lacs as regular income for the year. The assessing officer has not examined the pre-survey period and post -survey period, the land development and land leveling expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . no reasonable person will write/jot-down 4 lacs (4L). This is completely absurd and the AO has caused serious damage to the cause of revenue by not considering this and other documents/data back-up impounded during the course of survey. It is another matter that this illogical and unjustifiable interpretation placed on the figures mentioned in the said annexure have not been questioned by the survey team, it was the duty of the AO to go through the documents impounded during the course of survey which included this important note book having huge implications about the quantum of unaccounted-for income of the assessee. The assessee's AR in its submissions made vide letter dated 12.03.2018, did not make any submissions about the reasons for such illogical and unjustifiable interpretation about the contents of this annexure/document and instead contended that the survey team had accepted the said interpretation. (iii)He also supplied the copy of the AO's letter dated 15.12.2016 asking about the contents of two documents i.e. BF/2-page no. 2 and BF/6 page no. 13 and assessee's reply vide letter dated 19.12.2016 along with the copy of the affidavit dated 05.10.2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment and land leveling expenses. Therefore, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue, hence order passed by the ld PCIT under section 263 of the Act may be quashed. 9. On the other hand, Shri S.T. Bidari, ld.CIT-DR, for the Revenue argued that amount written in the diary found during the survey has been interpreted by the ld PCIT in accordance with the language mentioned in the said diary by the assessee himself. Learned DR explained the Bench by taking the same example, as mentioned above in this order, and stated that assessee had himself written in the diary the figure, say, 400 Lacs, which means 4 crores only. The Learned DR, therefore argued that when assessee himself saying, by writing in diary in his handwriting, without any pressure by the department, that for example, he received 400 lacs, which can be interpreted by an ordinary person, as 4 crores only. Therefore, a written figure by the assessee in his diary should be relied and accepted by the assessing officer, which the AO has failed to do so. Apart from this, the Learned Departmental Representative submitted written submission before the Bench, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the year, but no details of the parties or details of work done by the parties were furnished nor called for by the Id AO. During the assessment proceedings, the Id AO has not verified these aspects as evident from the records placed before the Id PCIT in the proceedings u/s 263. The Id PCIT had brought this to the notice of the assessee, but the assessee could not furnish satisfactory explanation nor could it demonstratet that these issues were properly explained before the Id AO in the assessment proceedings. 2.3 The Ld PCIT has found that the Id AO .has not made necessary inquiries and verifications regarding Capital introduced by the partners and loans purported to be received by the assessee firm. 2.4 The Id. PCIT, noticed that the assessee claimed to have received advances for plots. No agreements in support of the said advances were found nor furnished by the assessee- firm. Further, the Id PCIT found that most of the advances had no co -relation to the size of the plot and in some cases, they have been returned without paying any interest after 2-3 years. Most of the deposits have been received in cash. It was also evidenced that most of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notings denote advances received for the plots. ( ref Ans to Q No. 11 in statement dated 30.09.2013), but no co- relation of an advance to any specific plot, or of size of plot to the amount. The rationale of making notings is to create a record to aid memory and to prevent possible misunderstanding in future, same applies to unaccounted transactions too. The assessee has not mentioned name or the plot number or size of plot in the notings, hence, his statement does not explain or corroborate the notings. The Id A O has not examined this aspect, and he has merely gone by statement. 2.6.4 The above impounded pages do not mention names of the persons from whom the above monies have been received. Hence, no cross verification was possible. Any names provided later on are mostly convenient after thought. Even otherwise, the Id AO has not summoned or examined any of the persons from whom above monies are received. This is a gaping hole in the investigation and assessment proceedings. Evidently, IdAO has not made efforts to ascertain relevant facts regarding true nature of above transactions and the quantum involved. 2.6.5 The assessee firm has admitted and canvassed durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls 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 make 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 therein are assumed to be correct. We derive support for the proposition as stated above from the decision of the Hon ble Delhi High Court in the case of Gee Vee Enterprises 99 ITR 375 (Del). 12. Since in the present case, ld PCIT has exercised jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnaire and conducted thorough inquires. (vide paper book Pg. No. 59). After examination of the books of accounts, evidences and details submitted by the assessee, the AO passed the assessment order on 20.12.2016 u/s 143(3) of the Act, assessing the total income at ₹ 2,14,30,830/-. ( paper book Pg. No. 62-67). The additional income of ₹ 2.10 crores was accepted by the assessing officer after verifying these documents and evidences. We note that Ld. PCIT interpreted figure of 200L mentioned in notebook impounded during survey as 200 Lakhs and so on and consequently estimated the income of the assessee at ₹ 210 crores instead of 2.10 crores as declared by the assessee during survey. We note that Id. PCIT has not pointed out any discrepancy in the financial statements of the assessee and has accepted the same and he has also not disputed the statement of JKD in which he had explained the entries made in the long book. The ld PCIT has made the interpretation of 200L as 200 Lakhs and so on despite the fact the issue was already verified by the survey team itself during the survey proceedings and assessing officer has also examined the same during the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou received these advances? Answer:Above shown land is of my partnership frim M/s. Rudra Developers and this advances, I have received under this firm. Question-15:Whether above ₹ 2,10,00,000 advances received by you, has been accounted in your regular books of account? Answer:No, madam ₹ 2,10,00,000 advances received by me during April-2013 to September-2013 are not accounted in my regular books of account. This money has been received by us as on money , and received by us as an income over and above regular income of our firm. I am willingly declaring this income as undeclared income for the accounting year 2013-14, received over and above regular income. I will not claim any type of expenditure or any deduction. We will pay at regular time, the tax liability over this undeclared income of ₹ 2,10,00,000. Madam, I want to tell you again that, this undeclared income of ₹ 2,10,00,000, I am declaring in my firm M/s.Rudra Developers for the accounting year 2013-14 as an undeclared income over the regular income. 15. From these above questions and answers, it is evident that assessee has explained the survey team about the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... butted, that evidence against him by holding that it was a receipt of an income nature. The very words an undisclosed source show that the disclosure must come from the assessee and not from the department. In cases of high denomination notes. Where the business and the state of accounts and dealings of the assessee justify a part of a particular sum in high denomination notes, the assessee prima facie reasonably have been kept in high denomination notes. Before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The department cannot by merely rejecting unreasonably a good explanation. Convert good proof into no proof. It is within the range of these principles that such cases have to be decided. (emphasis supplied). (b)Udhavdas Kewalram vs. CIT [1967] 66 ITR 462 (SC) It is for the income-tax authorities to prove that a particular receipt is taxable. In deciding whether an item of receipt is taxable as income, the Tribunal may consider the evidence in the light of the statements made by the assessee, his conduct and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. The ld. PC1T has not brought any material to justify the alleged income of ₹ 210 crores.Thus, we note that allegation made by the ld PCIT is based merely on suspicion and conjecture. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the assessing officer did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. The assessing officer has examined other issues raised by ld PCIT, such as returned income ₹ 2,11,99,030/-, the pre-survey period and post -survey expenses of ₹ 1.19 Crores and sundry creditors for land development and land leveling expenses. In the conclusion, we are of the view that none of the reasons set out by the ld PCIT for invoking the jurisdiction under section 263 of the Act are sustainable. The impugned order of ld PCIT has to be quashed for the reason that order of the assessing officer sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any lack of inquiry that the assessing officer ought to have made in the given facts and ci ..... 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