TMI Blog2021 (9) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order passed by the AO u/s 153A/143(3), as erroneous. There was as such no allegation of no enquiry or lack of enquiry or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O. s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. The main allegation of ld PCIT in his order under section 263, was that assessing officer has not made further inquiry. It means inquiry has been made by the assessing officer. The ld Counsel at this juncture submitted before the Bench that there is no end of further inquiry, the assessing officer whenever needed made further inquiry also. It is the domain of the assessing officer to decide, whether further inquiry is needed or not in a particular case. After getting the documents and information from the assessee, during the assessment proceedings, the assessing officer has examined the documents and evidences and applied his mind, and he made further inquiry also whenever he thinks fit that further inquiry is necessary and then framed the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctitious 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 - Decided in favour of assessee. - ITA Nos. 69-71/SRT/2021 & ITA No. 98/SRT/2017, 85 to 87/SRT/2021 & ITA No. 99/SRT/2021, 79-80/SRT/2021, 77-78/SRT/2021, 72-73/SRT/2021, 81-84/SRT/2021 & ITA Nos. 95-96/SRT/2021 - - - Dated:- 30-9-2021 - Shripawan Singh, Judicial Member And Dr. A.L. Saini, Accountant Member For the assessee : Shri Rasesh Shah, CA. For the Revenue : Shri Ritesh Mishra, CIT (DR). ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned twenty-four appeals filed by different assessees, pertaining to different assessment year are directed against the separate order passed by the Learned Principal Commissioner of Income Tax(Central), Surat [in short the ld. PCIT ], under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 28.03.2021 30.03.2021. In all these appeals, the assessees have challenged correctness of the order passed by the learned Principal Commissioner of Income Tax(C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nducted in the case of SRK Group, firm and its related group entities/partners at Surat on 19.07.2016 along with survey action under section133A of the Act at the office premises of the entities and the construction projects carried on by them. In this operation, search was also carried out in the case of the assessee, at his residential premises, on 18.07.2016. On account of search and seizure action u/s 132 of the Act carried out in the case of the partners of the firm and survey action in the case of the firm and also on account of various incriminating documents found and impounded/seized in the course of the proceedings, assessee s case was also centralized with the DCIT, Central Circle-3, Surat for coordinated and sustained enquiries in along with other group cases. On going through the assessment order, assessment record and related seized documents/impounded documents, statements given by various persons it has been noticed by the ld PCIT that the assessment made by the Assessing Officer, dated 29-12-2018 is erroneous in so far as it is prejudicial to the interest of revenue and accordingly a show cause notice under section 263 of the Act dated 16-03-2021, was issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n all the above referred sale deeds are Shri Vallabhbhai Bhurabhai Paghdal (PAN: ADIPP4123C), Shri Harsukhbhai Vallabhbhai Bhanderi (PAN: AKKPB2636F) and Shri Bhaveshbhai Dhirubhai Paghadar (PAN: AMJPP2990F) and the sellers of these properties were ShriGovindbhai Bhagwanbhai Vekaria and Shri Maganbhai Bhagwanbhai Vekaria. Registration no. Date of registration Sale consideration shown in sale deed Stamp duty paid (Rs) KMJ/10397/2013 12.09.2013 6000000 295000 KMJ/8505/2014 09.07.2014 09.07.2014 682000 KMJ/8513/2014 09.07.2014 6957000 341000 KMJ/12439/2014 22.09.2014 11934000 585000 Total 38808000 1903000 Further, Annexure AS-84 (Page no. 7 backside) seized from flat no. E-203 contained a Sauda Chhitti in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the case of the partnership firm and land owners were open before him simultaneously. The share of investment on your part is 1/3rd of the amount, which works out to ₹ 5,50,66,667/-. The year wise bifurcation of the payments made is as follows: A.Y Total cash payment (Rs) 1/3rd share (Rs) 2014-15 82500000 27500000 2015-16 68510120 22836707 2016-17 14189880 472990 Total 165200000 55066667 6.2 It is also observed that the documents and evidences seized during the course of search revealed that the assessee group had made unaccounted cash payments of ₹ 11,38,00,000/- (apart from the payments featuring in the sale deeds) to the land owners, in respect of purchase of pieces of land bearing block nos. 518, 519 and 522A of Kathor village, Tal: Kamrej, Dist: Surat. The Registered Sale Deeds in respect of these lands shows the name of purchasers as featuring in all the above referred sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (Rs.) 2014-15 81425910 27141970 2015-16 5524090 1841363 2016-17 26850000 8950000 TOTAL 113800000 37933333 In spite of having all the above incriminating documents found and seized during the course of search proceedings, the Assessing Officer has not examined these factual aspects nor the Assessing Officer has examined the source of advancing the deposits/loans by the assesse to M/s. Amrut Sarovar. In any manner, this amount cannot be said to be advanced out of the disclosure of ₹ 60 lacs made in IDS, 2016. Thus, the Assessing Officer has erred in completing the assessment without proper verification or enquiries in respect of the source of cash payment of ₹ 5,50,66,667/- and ₹ 3,79,33,333/- by the assesse. It is also seen that during the period relevant to Asst. Year 2014-15, out of the total cash payments, the share of the assessee for these lands comes to ₹ 2.75 Crores and ₹ 2.71 Crores respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during the course of search proceedings or which were available on records. It is, therefore, evident that the assessment in your case was completed by accepting the returned income without making due inquiries and verification in respect of the entries found in the documents seized/impounded during the course of search and survey proceedings respectively, it was mandatory on the part of the Assessing Officer to ascertain all the facts of the case on the basis of material available with him and also considering the submissions made by you before reaching a final conclusion especially in a case where seized/impounded documents/materials are available with him. It is a fact that the Assessing Officer has taken an effort to analyse the materials available with him and issued a detailed questionnaire and issuing a final show cause notice. Failure on the part of the Assessing Officer to carry out further verification/enquiries or computing the total income as per the provisions of the Act, as discussed above, shows that the assessment order passed by the Assessing Officer was erroneous in.so far as prejudicial to the interest of the revenue. 8. Section 263 of the Act empowers t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd decided in such appeal. 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 [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 has not been passed in accordance with any decision which is prejudicial to the assesses, rendered by the jurisdictional High Court or Supreme Court in the case of the assesses or any other person. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. 9. Keeping in view of the above facts and circumstances of the case and also in view of the provisions of Section 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has passed order u/s 143(3) r.w.s 153A of the Act. Therefore order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of revenue. He further contends that in order to invoke the provision of Section 263 of the Act, twin condition needs to be satisfied, first the order sought to be revised should be erroneous and secondly it should be prejudicial to the interest of revenue. Such occasion arises when the Assessing Officer while passing assessment order u/s 143(3) r.w.s.153A did not have called for such information / documents from the assessee to frame the assessment and did not consider the same before completing the assessment. Once Assessing Officer conducts inquiry as deemed fit to complete the assessment u/s 143(3) r.w.s.153A of the Act and takes a possible view on such inquiry and consideration of facts and explanation of the assessee, in that case, the provision of Section 263 of the Act does attract. Therefore, he prays the Bench that order passed by the ld PCIT may be quashed. 9. On the other hand,Shri Ritesh Mishra, CIT(DR), for the Revenue vehemently submitted that Ld. PCIT has passed a reasoned and speaking order stating that order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is prejudicial to the interest of the revenue. The Hon ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. prejudicial to theinterest of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . 11. Taking note of the aforesaid dictum of law laid down by the Hon ble Apex Court, let us examine in each case whether assessing officer has raised query during the assessment stage and assessee has submitted reply with documentary evidences during the assessment proceedings and these documentary evidences have been examined by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d validity of disclosure under IDS were also raised by the Ld. PCIT. We note that during the assessment stage, the Assessing Officer issued show-cause notice u/s 142(1) of the Act and assessee has submitted its reply during the assessment stage. Therefore, assessee has submitted each evidence before the Assessing Officer, and AO has examined the same. (e) In respect of ITA No.95/SRT/2021,for AY 2016-17, the Ld PCIT has raised the issue regarding cash payment of booking of plot at ₹ 9.50 lakh and undisclosed capital gains on acquisition of land which was transferred by assessee on book value. The Ld. PCIT has also raised the issue regarding deduction u/s 57 of the Act, validity of disclosure made under IDS, gift from wife of ₹ 10 lakh, interest on reward on compulsory acquisition of land of Khator village, increase in value of Khator land in AY 2017-18, payment for the purchase of land, Block No.514, 515, 516 of ₹ 47,29,960/- relating to Khator village etc. The Ld PCIT also raised the issue relating to nonverification of source of loan of ₹ 9,89,000/- to M/s Amrut Sarovar. The ld Counsel explained that these issues raised by Ld. PCIT were examined by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not initiated penalty proceedings u/s 269SS and 269TT of the Act. The ld Counsel has submitted the relevant evidences before the Bench, vide paper book page 89 and paper book page nos. 8 to 11 of the paper book submitted by the assessee. The Ld. Counsel for the assessee also explained that the booking advance has been received by the assessee on business account therefore no penalty should be levied, as the booking advance is part of the business receipts of the assessee which has been duly explained by the assessee during the assessment stage, vide paper book pages 89 and 61 respectively. (c) In respect of ITA No.76/SRT/2021 for AY 2017-18, we note that Ld. PCIT has raised the issue about repayment of loan and interest to the tune of ₹ 28,96,730/- and receipt of interest of ₹ 23,500/-. The Ld. PCIT has also noted that AO had not initiated penalty u/s 269SS of the Act. We note that assessee has submitted the relevant documentary evidence in respect of repayment of loan and interest, vide paper book 90 and 62. The ld Counsel has also explained receipt of interest of ₹ 23,500/- which is placed at paper book page no. 62. Therefore Ld. Counsel for the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences which are placed at paper book page 85, 58, 26 and 60 and paper book page 41 submitted by assessee. In respect of payment for purchase of land in Block 494, we note that assessee has submitted relevant documentary evidence which is placed at paper book page 41, and in respect of non-verification of cash loan of ₹ 4,63,475/- as per Annexure A1 and B1, the assessee has submitted the relevant documentary evidence before the Assessing Officer which is placed at paper book 95 and 65. About the non-verification of transaction of sale of ₹ 66,66,666/- alongwith other co-owners,the assessee has submitted the relevant documentary evidences. The Ld. Counsel for the assessee also submits that there should not be any penalty u/s 271D of the Act as all the transaction made by the assessee were relating to business and therefore no penalty should be levied. (b). In ITA No.79 and 99/SRT/2021, for AY 2016-17 the Ld. PCIT has raised the issue about payment for purchase of 22 bighas of land at Rajkot of ₹ 52,25,000/- along-with other co-owners. The Ld. PCIT has also raised the issue about non-verification of transaction of sale of ₹ 7,96,86,000/- alongwith other co-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained with documentary evidences before the Assessing Officer during the assessment stage. Therefore, order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the revenue. (c). In respect of ITA No.70/SRT/2021, for AY 2015-16, theLd PCIT has raised the issue about payment for purchase of land, Block No.514, 515 516 of ₹ 2,28,36,707/- of Kathor village and payment for purchase of land Block No.518, 519 and 522A of ₹ 18,41,363/-. The PCIT also raised the issue relating to source of investment of ₹ 27.50 lakh in land at Block No.318, 319 and 324 at Kholvad village with co-owners Harsukh Bhanderi. We note that Ld. PCIT has also raised the issue about cash loan of ₹ 2 lakh and also noted that Assessing Officer has not initiated the penalty proceedings u/s 271D of the Act. The LdCounsel for the assessee explained before the Bench that the issue relating to purchase of land at Kathor village, is a common issue in all the appeals and Ld. PCIT has raised this common issue in all the appeals,however assessee has explained with documentary evidences before the Assessing Officer and explained the source of investment in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessment is not only an adjudicator. The AO has a dual role to dispense with i.e. he is an investigator as well as an adjudicator; therefore, if he fails in any one of the role as afore-stated, his order will be termed as erroneous. We note that in these group cases, the assessing officer has issued notice under section 142(1) of the Act and in response to notice under section 142(1) of the Act, the assessee has submitted documents and evidences which were examined by the assessing officer and while examining the assessing officer has applied his mind also. On this finding of fact by us, we cannot term the assessment order passed by the AO u/s 153A/143(3), as erroneous. 13. It is pertinent to mention here that there was as such no allegation of no enquiry or lack of enquiry or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O. s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. The main allegation of ld PCIT in his order under section 263, was that assessing officer has not made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Gee Vee Enterprises (supra). Undoubtedly, as noted by their Lordships in that case, an Assessing Officer cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. In such a case, revision proceedings can indeed be initiated and there seems to be no serious controversy in this respect. The fine point, however, one must bear in mind is the distinction between adequate enquiries not having been conducted and the result of such enquiries not having been dealt with by way of a speaking order or not having resulted in the conclusion that could be, in the wisdom of a person other than the Assessing Officer, more appropriate. Here is a case in which sufficient enquiries were conducted. As learned brother has rightly noted, the Assessing Officer called for specific details, confirmations and even copies of bills. It could not, therefore, be said that sufficient enquiries were not conducted. However, what is opinion formed as a result of these enquiries is something which is in exclusive domain of the Assessing Officer, and even if Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. Such occasions arise when the A.O. while passing assessment order u/s 143(3) r.w.s 153A did not have called for such information/ documents from the assessee to frame the assessment and did not consider the same before completing the assessment. Once the A.O. conducts enquiry as deem fit to complete the assessment u/s 143(3) r.w.s.153A and takes a possible view on such enquiry and consideration of facts and explanation of the assessee, in that case, jurisdiction to invoke provisions of section 263 does not lie. As stated above, during the course of the scrutiny assessment proceeding, the assessee furnished full details of land at Khator village, investments, amount advanced and amount received, balances shown in ledger accounts and books of accounts, details of capital gains, trading activities, party-wise break-up of debit and credit entries/balances of sundry debtors and creditors, audited books of account, notes of the financial statements, , bank details, quarterly VAT returns etc., which were as well filed before the Ld. Pr. C.I.T. during 263 proceeding. The A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue. On the contrary, where the Ld. A.O. has conducted enquiries and after due consideration of the facts and circumstances of the case backed by relevant details/documents, he comes to a conclusion, then it is not open to the Ld. Pr. C.I.T. to invoke revisionary jurisdiction. The power envisaged u/s 263 of the Act in setting aside an assessment is large and wide, but that cannot be exercised to allow the A.O. to make up the deficiency of his case. We note that Coordinate Bench of I.T.A.T., Kolkata in the case of Plastic Concern vs. ACIT [61 TTJ 87 (Cal) has held that mere possibility of gathering more material to prove the claim of the assessee wrong would not make the concluded assessment erroneous so long as the ld. A.O. had acted judiciously and conducted enquiries in the course of assessment proceedings. 17. We note that after deep enquiry and considering the explanation of the assessee vis-a-vis the details/documents submitted, the Ld. A.O. accepted the documents and evidences and items as shown in the books of account of the assessee. That being so, the inference of the Ld. Pr. C.I.T. in support of his invoking jurisdiction u/s 263 of the Act that the AO has passed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s 263 of the Act. In other words, the Ld. Pr. C.I.T. on the same set of facts and evidences on record was of the opinion that the A.O. should have made further inquiry, and he should have taken the stand which the Ld. Pr. C.I.T. hinted in the impugned order u/s 263 of the Act. This is not permissible under law. For better appreciation, the relevant portion of the judgment in the case of Malabar Industrial Co. Ltd. vs. CIT (supra) is quoted below : The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise and as to what is appropriate conclusion is something on which perceptions vary from person to persons. These variations in the perceptions of the Assessing Officer vis-a-vis that of the Commissioner, cannot render an order erroneous and prejudicial to the interest of the revenue. 20. The aforesaid position gets further strength from the decision of Hon ble jurisdictional High Court in the case of CIT vs. J.L. Morrison (India) Ltd. (2014) 366 ITR 593 (Cal), the relevant finding of which is applicable to the facts of the present assessee is quoted below : 85. Whether the assessment order dated March 28, 2008, was passed without application of mind is basically a question of fact. The learned Tribunal has held that the assessment order was not passed without application of mind. The records of the assessment including the order-sheets go to show that heard from time to time. In deciding the question the court has to bear in mind the presumption in law laid down in Section 114 clause (e) of the Evidence Act: that judicial and official acts have been regularly performed. 86. Therefore, the court has to start with the presumption that the assessment order dated Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the law. 22. Coming to the expression in Explanation -2 to section 263 of the Act. The ld PCIT has stated in his order that he has power to exercise the jurisdiction under section 263 of the Act in the four circumstances mentioned therein. The said explanation states that if in the opinion of the Ld. CIT , it must be the considered opinion of the CIT which is based on the correct facts and in accordance with the principles of law. It cannot be an arbitrary opinion bereft of facts or law. The aforesaid clause only provides for situation where inquiries or verifications should be made by reasonable and prudent officer in the context of the case. Such clause cannot be read to authorize or give unfettered powers to the Commissioner to revise each and every assessment order. The applicability of the clause is thus essentially contextual. It has to be the opinion of a prudent person properly instructed in law. The Hon ble Supreme Court in Maneka Gandhi Vs. Union of India reported in 1978 AIR (SC) 597 has laid down the law that a public authority should discharge his duties in a fair, just and reasonable, manner and the principle of due process of law was recognized by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome twice, which is not the intention of the Income Tax Act. We note that Hon ble Supreme Court in ITO Vs. CH. Atchaiah (1996) 218 ITR 239 (SC) has held that the income should be assessed on the right person, right year and it should be on the right income. From the aforesaid decision of the Hon ble Supreme Court only the right person and the right person alone is liable to be taxed and not the wrong person. The same income should not be taxed twice. Therefore, we are of the view that jurisdiction exercised by the ld PCIT u/s 263 of the Act in not in accordance with law. We note that in assessee`s case under consideration, sufficient enquiries were conducted by assessing officer. The Assessing Officer called for specific details, confirmations and even copies of bills, copies of agreements, books of accounts, and seized material etc. It could not, therefore, be said that sufficient enquiries were not conducted. However, what is opinion formed as a result of these enquiries is something which is in exclusive domain of the Assessing Officer, and even if Ld PCIT has such results of enquiries, the resultant order cannot be subjected to revision proceedings. The conclusions arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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