TMI Blog2021 (10) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... Approval of the Addl. CIT had been received u/s 153 D - Categorically here the orders are not passed even under the instructions of the superior authority or under the direction of the superior authority, but merely an approval was granted by the Joint Commissioner of Income Tax under Section 153D of the Act to pass the orders. Provisions of Section 153D speak about prior approval for assessment in the case of search . They also provide for obtaining the prior approval of the Joint Commissioner for merely passing an order. Therefore, any order passed by the Assessing Officer can be revised under Section 263 of the Act irrespective of the fact that any authority has granted any direction to the Assessing Officer. Natural corollary would be show that all orders of search and seizure passed under Section 153A or under Section 153C of the Act are required to be passed after prior approval of the Joint Commissioner except as provided under Section 154BA(12). Therefore, if the argument of the Ld. AR is to be accepted then in such cases where the assessment has been framed under Section 153A or Section 153C, the same will go out of the ambit of the provisions of Section 263 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, a search seizure action u/s 132 132A of the Act was carried out in the case of the assessee. The Ld. Pr. CIT further noted that the assessee had claimed during the assessment proceedings that this cash of ₹ 2 Crores belonged to his deceased father, Late Sh. Satish Mehta and that the source of this cash was agricultural income of his father which had been duly declared in the father s return of income for Assessment Year 2017-18. The Ld. Pr. CIT also noted that it was the assessee s submissions before the Assessing Officer that the assessee had received 2 Crores in cash after the demise of his father and it was the same cash which had been deposited in assessee s bank accounts and had been seized by the Department. The Ld. Pr.CIT further noted that the Assessing Officer had accepted the assessee s claim that the source of cash found in his possession had been generated through the agricultural activities carried out by the father of the assessee by the Assessing Officer without any enquiry. The Ld. Pr. CIT also noted that the original return of income of assessee s father, which was filed on 08.03.2018, did not disclose any agricultural income and the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of AO is erroneous and prejudicial to the interest of revenue. 3. On the facts and under the circumstances of the case, the order of the AO was void-ab-initio as the same has been passed in pursuance to a mechanical approval of Add CIT u/s 153D and hence the consequential proceedings would also be a nullity. 4. On the facts and under the circumstances of the case and having regard to the fact the draft approvals were sent on the same day when the approval was accorded, would prove beyond doubt that the approval was mechanical approval. 5. On the facts and under the circumstances of the case having regard to the fact that the approving authority has granted a consolidated approval, ignoring the mandatory language and correct PAN number would also prove beyond doubt that the approval was a mechanical approval and hence all proceedings are void ab initio. 6. Without prejudice to the above, on the facts and under the circumstances of the case the CIT has failed to appreciate that the order of the AO has been passed with the approval of the Additional CIT, which orders are not covered in the provisions of section 263 of the Act. 7. On the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, therefore, in such a circumstance orders passed after obtaining approval u/s 153D of the Act cannot be revised u/s 263 of the Act. The Ld. AR also argued that it was not a case of lack of enquiry as was being stated by the Ld. Pr. CIT. It was argued that the Assessing Officer had conducted due enquiry although, the same might not have been in the way the Ld. Pr. CIT would have wanted but this cannot be a reason for passing a revisionary order. The Ld. AR prayed that the impugned order u/s 263 of the Act deserved to be quashed. 4.0 Per contra, the Ld. CIT-DR placed extensive reliance on the order of the Ld. Pr. CIT and while reading out the relevant paragraphs from the impugned order, it was emphasized that the Ld. Pr. CIT had rightly passed the revisionary order as the Assessing Officer had completely failed to enquire into the source and nature of the cash deposit amounting to ₹ 2 Crores and being claimed by the assessee as being agricultural income of his father. 5.0 We have heard the rival submissions and have also perused the material on record. The facts in the case are not in dispute. There was a seizure of cash by the Police in the case of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility to file such documents. The Bench also required the assessee to show us a copy of questionnaire issued by the Assessing Officer while examining the issue of ₹ 2 Crores being claimed by the assessee as agricultural income of his father. However, the Ld. AR again expressed his inability to provide a copy of such questionnaire. Thus, although it is the claim of the assessee that the Assessing Officer had carried out proper enquiries regarding the impugned issue, there is nothing on record to demonstrate and establish that proper enquiry had been conducted by the Assessing Officer. A perusal of the assessment order also shows that the Assessing Officer has discussed the issue in a very cryptic manner by just stating that he has examined the documents and the lease deed of land and has found it in order and that the statement of Sh. Vijay Kumar has been recorded u/s 131 of the Act. Thus, apparently and admittedly from the record before us, the assessee has failed to demonstrate that proper enquiry was made by the Assessing Officer during the course of assessment proceedings and that such enquiry had been duly responded to by the assessee in a proper manner in form of docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o enlighten the Bench on the same. Even the lease deed of the land, which the assessee is claiming to have been taken on lease from Sh. Vijay Kumar of Mundra, Gujrat has not been placed before us and, therefore, we cannot but come to a conclusion that the entire claim of the assessee regarding the impugned amount belonging to the father of the assessee as agricultural income has no edifice to stand on and is rather more of an after thought when the seizure of cash by the Police Authorities during the demonetization came to the light of the Income Tax Department. 5.5 The Ld. Pr. CIT, in paragraph -8 of the impugned order has raised 10 points which have not been examined by the Assessing Officer before reaching the conclusion that impugned amount of ₹ 2 Cores belonged to the father of the assessee as his agricultural income. The issues pointed out by the Ld. Pr. CIT in para 8 of the impugned order are being reproduced herein under for a ready reference:- 1. The assessing officer has failed to call report from the state authorities to ascertain the genuineness of the agricultural activities undertaken during the year under consideration or prior/subsequent to it on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y from the assessee regarding the impugned amount. The observations of the Ld. Pr. CIT that nothing was found in the case record also supports this view. Further the failure of the assessee to submit any kind of documentary evidences before us again strengthen this view. Therefore, in our considered opinion, this is a case where the Assessing Officer did not make any enquiry whatsoever and simply accepted the return of income filed by the assessee. .herein mentioning by the assessee that he has carried out the necessary enquiries and called for the required documents and has examined them would not absolve the Assessing Officer from the duty cast upon him as there is nothing in the case records which could suitably lend credence to the statement of the Assessing Officer as well as the claim of the assessee that the Assessing Officer had made adequate enquiries and that the assessee duly responded to such queries. Even the statement recorded u/s 131 of the Act of Sh. Vijay Kumar as mentioned in the assessment order, was not produced before us to substantiate the veracity of the Assessing Officer in the assessment order as well as the claim of the assessee of that having been done. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order was made for each assessment year ... No evidence whatsoever was produced in respect of the money- lending business done ... No names were given as to the parties to whom the loans were advanced In Tara Devi Aggarwal v. Commissioner of Income-tax also the Income-tax officer, Howrah , while remarking that the source of income of the assessee was income from speculation and interest on investments stated that neither the assessee was able to produce the details and vouchers of the speculative transactions made during the accounting year nor was there evidence regarding the interest received by the assessee from different parties on her investments. Notwithstanding these defects the Income Tax Officer did not investigate into the various sources but assessed the assessee on a total income of ₹ 9,037. The inquiries made by the Commissioner revealed that the assessee did not reside or carry on business at the address given in the return. The Commissioner was also of the view that the Income-tax Officer was not justified in accepting the initial capital, the sale of ornaments, the income from business, the investments etc., without any inquiry or evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Hon ble Delhi High Court after considering the ratio of its earlier decisions including its decision in the case of ITO vs DG Housing Projects Ltd. 345 ITR 153 held as under: 36. As far as Section 263 is concerned, we have examined the said Section in depth and detail in ITO Vs. D G Housing Projects Ltd. decided on 1st March, 2012, in ITA No. 179/2011 and observed as under:- 10. Revenue does not have any right to appeal to the first appellate authority against an order passed by the Assessing Officer. Section 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expressiono ..prejudicial to the interest of the Revenue is of wide import and is not confined to merely loss of tax. The term erroneous means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. 11. The Assessing Officer is both an investigator and an adjudicator. If the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y enquiry or evidence whatsoever, the order is erroneous and prejudicial to the interest of the Revenue. After reference to these two decisions, the Delhi High Court observed:- These two decisions show that it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard 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. 14. The aforesaid observations have to be understood in the factual background and matrix involved in the said two cases before the Supreme Court. In the said cases, the Assessing Officer had not conducted any enquiry or examined evidence whatsoever. There was total absence of enquiry or verification. These cases have to be distinguished from other cases (i) where there is enquiry but the findings are incorrect/erroneous; and (ii) where there is failure to make proper or full verification or enquiry. 15. In the case of Commissioner of Income Tax v. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del), Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. (See Parashuram Pottery Works Co. Ltd. v. 1TO [1977] 106 ITR I (SC) at page 10) ... From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings ITA No. 591/200S and connected matters 33 recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the Cl'T and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law. In some cases possibly thoitgh rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for afresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue. 5.9 In view of foregoing discussions, we are inclined to hold that the present case is squarely covered in favour of the revenue by the decisions of Hon ble Jurisdictional High Court of Delhi in the case of Gee Vee Enterprises vs. ACIT (supra) and CIT vs. Nagesh Knitwears P. Ltd. (supra) as in the present case, the AO did not raise any query of make any inquiry pertaining to the claim of expenses submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA Nos.288 to 294/Lkw/2014 order dated 18-11-2014 (iv) Hon ble Pune ITAT in M/s BU Bhandari Schemes cs. PCIT, ITA no. 634-641 / Pune/ 2018, dated 14.11.2018 (v) Hon ble Pune ITAT in Vishwa Infraways (P) Ltd., vs., CIT (Central), ITA No. 596/Pune/2015 6.2 We have carefully considered the above plea of the assessee. The assessee has relied heavily mainly on the decision of the Hon ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar[ INCOME TAX APPEAL No. - 192 of 2000 dated 06.08.2012. We have carefully considered the above decision. The Hon ble High Court in that decision upheld the order of the Co-ordinate Bench quashing the 263 order passed by the Ld. CIT as per para No. 8 wherein it has been held that the Tribunal has found that the assessee had sufficiently explained the retraction of his statement given on 12.12.1994 and the Ld. CIT could not point out as to whether the Assessing Officer had failed to work out the amount of concealed income correctly. Hon ble High Court further held that the Assessing Officer had made the addition on estimate basis for all the assessment years and there was no material indicating suppression of receipts. Therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under:- 5.1 The other relevant point to be noted is that CIT set aside the assessment order on the basis of incorrect reasons. As pointed out by the learned counsel, there was no material found during search about suppression of receipts for a.y. 1991-92 to 1994-95 nor the learned D.R. Was able to point out any such material which might have been ignored by the AO while framing the assessment and thus the vary basis for passing the impugned order goes away. The CIT also failed to point out as to why the AO failed to work out the amount of concealed income correctly, rather the AO had made the additions on estimate basis for all the assessment years though there was no seized material indicating suppression of receipts for these assessment years and for a.y. 1995-96 the material found at the time of search had been analysed after necessary enquiries and assessment had been framed accordingly. 5.2 In the last it is also relevant fact that the AO was fully alive about the facts of the case and that is why he got necessary approval of Addl. Commissioner before completing the assessment orders for all the assessment years and once that is not disputed by the Revenue than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT under Section 263 of the Act. 6.4 We find that the Hon ble Punjab Haryana High Court had an occasion to consider the issue in Osho Forging Ltd. Vs. CIT , 410 ITA 198 (Punjab Haryana). The following issue were therefore the Hon ble Courts Consideration:- ''( i ) Whether the Ld. Tribunal committed gross illegality in remanding the matter back to the CIT to decide it on merit though no mandatory prior approval/permission was obtained by the Assessing Officer under Section 153D? ( ii ) Whether in the absence of prior approval/permission the assessment order passed by Assessing Officer is null and void? ( iii ) Whether in fact and circumstances of the case, the action of the ld. Tribunal passing the impugned order dated 02.01.2017 Annexure-A7 is legally sustainable in the eyes of law?'' 6.5 In that case the Ld. CIT passed an order under Section 263 of the Act in the case of search assessment passed under Section 153A of the Income Tax Act (it is mandatory to pass any order under Section 153A/153C with the approval of the Joint Commissioner of Income Tax as provided u/s 153D of the Act ). In para Nos. 8 -11 the Hon ble High Court he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuation of earlier proceeding which was duly approved. Even otherwise there is no question of seeking an approval from the Joint Commissioner or the Additional Commissioner Officer lower in rank than Commissioner for complying with the directions given by the Commissioner. 6.6 Thus it emerges that :- i. Assessment order dated 24th December, 2010 was passed under Section 153A read with Section 143(3) of the Act after obtaining approval under Section 153D of the Act. The approval was vide letter dated December 24, 2010. Thereafter the said order was taken up in revision; ii. The approval under Section 153D was not set aside; iii. Section 153D of the Act is only applicable for passing an assessment order or re-assessment order; iv. Even otherwise there is no question of seeking an approval from the Joint Commissioner or the Addl. Commissioner, an officer lower in rank than the Commissioner for complying with the direction given by the Commissioner. 6.7 Thereafter, in para No. 14 it upheld the assessment order passed under Section 263 of the Act framed under Section 143(3) of the Act pursuant to the direction of the Commissioner without obtaining the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief Commissioner or Chief Commissioner or Principal] Commissioner or] Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter 41 of any appeal 42 [filed on or before or after the 1st day of June, 1988 41 ], the powers of the *43 [Principal Commissioner or] Commissioner under this sub-section shall extend 42 [and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.] 44 [Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal 45 [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is that authority which is to apply its independent mind and arrive at its own conclusion without being influenced by any other authority, much less the higher authority. Unfettered discretion lies in the Commissioner of Income Tax to pass orders under Section 263 of the Act. He is supposed to examine the records produced before him to arrive at a conclusion whether the assessment order passed by the AO suffers from infirmities and needs to be revised under Section 263 of the Act. The parameters which are laid down in Section 263 of the Act need to be fulfilled in exercising such a discretion. It is the Commissioner who has to satisfy himself, on the basis of available records, that in a given case the conditions stipulated under Section 263 of the Act are satisfied. In arriving at this conclusion, he is not to be controlled even by a higher authority. Likewise, the higher authority is not to interfere with the independence of his unfettered discretion which is statutorily conferred upon the Commissioner. 6.14 Thus, even the authority above PCIT and CIT cannot deprive the powers of the revision and thus there is no reason that lower authority exercising powers granted to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Joint Commissioner of Income Tax under Section 153D of the Act to pass the orders. Provisions of Section 153D speak about prior approval for assessment in the case of search . They also provide for obtaining the prior approval of the Joint Commissioner for merely passing an order. Therefore, the decision of the Hon ble Supreme Court clearly lays down that any order passed by the Assessing Officer can be revised under Section 263 of the Act irrespective of the fact that any authority has granted any direction to the Assessing Officer. 6.17 Therefore, natural corollary would be show that all orders of search and seizure passed under Section 153A or under Section 153C of the Act are required to be passed after prior approval of the Joint Commissioner except as provided under Section 154BA(12). Therefore, if the argument of the Ld. AR is to be accepted then in such cases where the assessment has been framed under Section 153A or Section 153C, the same will go out of the ambit of the provisions of Section 263 of the Act and such a view is directly contrary to the decision of the Hon ble Supreme Court in T .N .Civil Corporation Vs. CIT 260 ITR 82, Hon ble Punjab Haryana Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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