TMI Blog2021 (10) TMI 1291X X X X Extracts X X X X X X X X Extracts X X X X ..... ding ample and adequate opportunities of being heard to the assessee, assessment proceedings have been completed on the basis of the submissions and details collected and in consequence upon the conclusion of proceeding and hearing of evidences, assessment is made by this order . A perusal of show cause notice under section 263 dated 08.03.2021, clearly demonstrate that the ld PCIT identified all the issues which were the subject matter of the notice under section 142(1)and the questionnaire attached thereto, were issued by the assessing officer, except the issue of initiation of penalty 271D/ 271E . PCIT in his show cause notice (SCN) under section 263 has accepted that the AO made detailed questionnaire dated 03.12.2018. And on perusal record and details /evidences available on record, the PCIT noted that AO has not made further inquiry. Thus, the ld. PCIT has not made a case that there was no enquiry or lack of inquiry rather recorded that the AO called detailed inquiry. We find that the ld. PCIT has not specified that what kind of further inquiry was required, when the income disclosed in IDS was duly accepted by higher authority. And the acceptance of IDS was never ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing officer. We find that the assessment of this year (AY2017-2018) the assessment has not been made has been made consequent of survey and not under CASS hence, the said identification of such issue is not misplaced. - Decided in favour of assessee. - ITAT Nos. 88, 89 & 64/SRT/2021 - - - Dated:- 11-10-2021 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Rasesh Shah-CA. For the Revenue : Shri Ritesh Mishra-CIT-DR. Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These three appeals by Assessee are directed against the separate orders of ld. Principal Commissioner of Income Tax [ld. Pr.CIT, Central, Surat passed under section 263 of the Act dated 22.03.2021, for the Assessment Year (AY) 2015-16 2016-17 and dated 25.03.2021 for AY 2017-18. In all appeals, the assessee has raised common grounds of appeal, the ld PCIT revised assessment order on certain common issues except variations of figures, therefore, with the consent of parties, all appeals were clubbed, heard and are decided by a consolidated order to avoid the conflicting decision. The assessee in al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee filed detailed reply. The assessee also furnished relevant details and information as required by the AO. The AO after providing adequate opportunity and hearing the submission of the assessee accepted the return of income filed by assessee. The AO passed the assessment order under section 143(3) r.w.s 153C of the Act after obtaining prior approval of Joint Commissioner of Income Tax (ld. JCIT) Central Range passed the assessment order accordingly on 29.12.2018. 3. So far as AY 2017-18, is concerned the assessee filed return of income under section 139(1) on 31.03.2018 declaring Nil income. The case was selected for scrutiny. The AO recorded that notice under section 143(2) and 142(1) was served on the assessee. The assessee also furnished relevant details and information as required by the AO. The AO after providing adequate opportunity and hearing the submission of the assessee accepted the return of income filed by assessee. The AO passed the assessment order under section 143(3) on 29.12.2018. 4. Subsequently, the assessment order in all three assessment years were revised by ld. PCIT by exercising his power under section 263 vide order dated 22.03.2021in AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvey proceedings, thus, the assessment order passed under section 143(3) r.w.s 153C suffer from lack of application of mind and void-ab-initio deserved to be annulled. The ld.PCIT held that assessment order to be erroneous insofar as prejudicial to the interest of the Revenue and accordingly annulled the same directing the AO to take necessary action for fresh assessment keeping in view the issue of limitation. Aggrieved by the order of the ld. PCIT, the assessee has availed present appeal before this Tribunal. 7. We have heard the submissions of the learned authorised Representative (ld.AR) of the assessee and learned Commissioner of income Tax - Departmental representative (CIT-DR) for the revenue and have gone through the revisions order passed by ld PCIT and the assessment orders passed by AO in all three assessment years. The ld AR for the assessee submits that assessee is a partnership firm engaged in the business of construction and development of housing project. A search and survey action was carried out by the Revenue on assessee and its group on 19.07.2016. On the business premises of assessee, only survey took place. During the course of search proceedings in assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2016-17. Thus, the assessee declared total income of ₹ 4.03 crore for the A.Y. 2015-16 and 2016-17. The disclosure made by assessee was accepted by ld. PCIT vide Form No.4 under Rule 4(5) of IDS, vide receipt No. 339207970201217 dated 20.12.2017. The income declared by assessee under IDS was accepted without any variation or objection. 9. The ld AR for the assessee submits that the AO issued notice under section 153C of the Act on 29.11.2018 requiring the assessee to file return of income for the A.Y. 2011-12 to 2016-17 within 5 days of service of notice. In response to notice under section 153C of the Act, the assessee filed its return of income for the A.Y. 2015-16 206-17 declaring Nil income. The AO thereafter issued notice under section 142(1) of the Act. In the notice under section 142(1) dated 07.12.2018, the AO required various details on various issues. The ld.AR submits that copy of notice under section 142(1) is filed on record. The assessee filed its detailed reply. The copy of detailed reply filed by the assessee before AO is also placed on record. The AO after considering the various submissions and evidence furnished by the assessee passed the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he customers on cancellation of booking. The relevant details were provided in the reply field in response to show cause notice. The assessing officer, after being satisfied, did not draw any adverse inference and accepted the same, thus the assessing officer took reasonable, plausible and legally sustainable view. 12. On the third issue identified by ld PCIT, which relates to understatement of income of the project ( in all AY 2015-16, 2016-17 2017-18), the ld AR for the assessee submits that ld PCIT in the show cause notice observed that the assessing officer has merely accepted submission of disclosure made in IDS without making any efforts to verify the same and making any correlation between the figures and the specific booking. The assessee in its reply /submission for A.Y. 2017-18 before PCIT stated that he has duly accounted each and every entry in the impounded material and furnished the books of accounts of all the unaccounted transactions wherein the entire unaccounted sale value received in cash as also all the unaccounted cash expenses have been recorded. Copy of the reply filed by the assessee in AY 2017-18 is placed on record. Further, the assessee stated that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the amount of ₹ 4,30,00,000/- includes the declaration of ₹ 3,50,00,000/- for A.Y. 2015-16. In the show cause notice issued by the same assessing officer on 07.12.2018, he raised specific issue that assessee collected amount in cash against booking receipts for F.Y. 2014-15 to 2016-17 of the said notice, the assessee filed satisfactory reply stating that the said transactions were duly covered in the income offered under IDS for the year ended 31.03.2016 in the form of Receivables and Payables as at the year end. Accordingly, assessing officer has duly considered the issue. The ld AR for the assessee submits that the jurisdictional Gujarat High court in various decision held that only net profit of suppressed receipts is required to be estimated as income. The rate of 15% is most reasonable in the construction project, particularly when in course of search and survey operation, no unexplained investment or unexplained expenditure were detected. The reliance is places on decision of Gujarat High Court in case of Abhishek Corporation [I.T. Reference No 15 of 2003] pronounced on 07.11.2014, in which other decision of the Gujarat High Court were cited. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan or accommodation entry. Assessee field the original return of income on 22.09.2015 for AY 2015-16 and on 25.03.2017 for AY 2016-17 and therefore, it is a case of unabated assessment as the time limit for issue of notice under section 143(2) has already expired for AY 2015-16 2016-17, when notice under section 153C was issued on 29.11.2018. Accordingly, even otherwise no addition can be made for the loan reflected in the books of accounts as per the following decision of Courts. * PCIT vs Saumya Construction [ 81 taxmann.com 292] (Guj HC) * CIT vs Gurinder Singh Bawa [386 ITR 0483] (Bombay HC) * CIT vs Continental Warehousing Corp. Ltd [58 taxmann.com 78] (Bom) * CIT vs Kabul Chawla [ 93 CCH 0210] (Del HC) * CIT v/s Meeta Gutgutia [395 ITR 0296] (Del HC) * CIT v. Lancy Constructions [383 ITR 168] (Kar. HC) 16. For AY 2017-18, the ld AR for the assessee submits that the total figure of ₹ 3,19,49,323/- mentioned in the notice under section 142(1) dated 07.12.2018 includes alleged amount of loan ₹ 1,93,03,903 /- against various entries relating to A.Y. 2017-18 as per Annexure AF-2. Similarly the total figure of ₹ 5,73,85,425/- mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while filing the return of income. The assessing officer did not find any defects in the books of accounts produced before him. Even PCTI also did not point out any irregularity in the audited accounts filed in the course of assessment proceedings. The tax audit reports along with financials are filed at Page No. 85 to 103 of the Paper book. The amount received and payments made in cash were duly considered in form of receivables and payables in the accounts for the year ended on 31.03.2016. The assessing officer specifically raised the query in the notice issued under section 142(1) regarding the amount collected in cash of ₹ 71,26,102/- in F.Y. 2016-17. The assessing officer, thus after considering the reply and the evidences of the assessee passed the assessment order by taking a reasonable, legally sustainable and plausible view. 19. On seventh issue which relates to not reference of the seized documents and evidences in the satisfaction note under section 153C, identified by ld PCIT, in his show cause notice (in AY 2015-16 2016-17), the ld AR for the assessee submits that submits that even when no reference was made, the assessing officer verified all the seized ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not reject the IDS declaration. The IDS declaration was not made by misrepresentation of fact and therefore, it was perfectly invalid. The certificate issued by the ld. PCIT was not revoked and the tax paid under IDS was not refunded. Hence, IDS cannot be questioned at this stage, which is otherwise valid. The assessee declared more income in IDS and paid more tax than the tax payable under normal provision of the Act. 23. The ld AR for the assessee submits that the transaction reflected in impounded material were duly accounted on day to day basis by preparing books of accounts and the P L account and balance sheet and all ledgers were filed before the assessing officer. It is submitted that the entire impounded material stands explained and no adverse cognizance can be taken in respect thereof since an income of ₹ 4.03 Crore stands offered under IDS which is much above the income reflected in the impounded material. 24. The ld.AR for the assessee submits that assessment in AY 2015-16 2016- 17 case is completed under section 143(3) r.w.s 153C of the Act after taking prior approval of ld. JCIT and no revision of such order is permissible as has been held by various Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT, assessee is not required to give information regarding the source of income, assessee disclosed the source of income at the time of assessment by incorporation all the entries of impounded / seized materials in the books of accounts. The assessee also filed the calculation in support of declaration filed under IDS at the time of filing the declaration as well as in the course of assessment proceeding. The survey and search actions is ultimate weapon with the department to unearth the black money. In this case, the survey actions were conducted in case of firms and search actions were conducted in the case of the partners of the firms. Even after these actions, the discrete inquiry was made by the assessing officer and the assessments were made in the group cases on the basis of incriminating materials impounded / seized in course of search / survey action. In the course of these actions, no unexplained valuables were found. Accordingly, assessments were framed considering all these facts and circumstances of the case and therefore, they are not liable for revision. Accordingly, it is a case of sufficient and proper inquiry made by the assessing officer. The ld PCIT did not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HC) 15. Anil kumar Sharma [335 ITR 0083] (Delhi HC) 16. ITO vs. DG Housing Projects Limited [343 ITR 329](Dei HC)] 17. CIT vs. Sunbeam Auto Ltd. [189 Taxman 0436 (Del.)] 18. PCIT vs. Delhi Airport Metro Express Pvt. Ltd. [ITA No. 705/2017(Del 19. CIT V/s. Vika Polymers [341 ITR 537] (Delhi HC) 20. CIT vs Ganpat Ram Bishnoi [296 ITR 0292] (Raj HC) 21. CIT vs. Jain Constructions Co [257 ITR 0336] (Raj HC) 22. CIT vs. Kelvinator of India Ltd. [ 256 ITR 1 ](Dei. HC) 23. CIT vs. Sr. Suresh G. Shah [ 289ITR 110 ]( Guj. HC ) 24. CIT vs. Parmanand M. Patel [ 278 ITR 3 ]( Guj. HC ) 25. CIT vs. Abhishek Corporation [ IT Ref. No. 15 of 2003 ] ( Guj. HC ) 26. R.Srinivasan vs. DCIT [ 29 taxmann.com 279 ]( Mad. HC) 27. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for upholding the order of ld. PCIT. 29. In rejoinder submission, the ld.AR of the assessee submits that on careful perusal of show cause notice under section 263 of the Act issued by the ld. PCIT, it is clearly discernible that the ld. PCIT identified issues only on the basis notice issued by AO under section 142(1) of the Act. No new issues are identified by ld. PCIT. The ld. PCIT has not made any enquiry of his own before holding that assessment order is erroneous or erroneous and insofar as prejudicial to the interest of the Revenue on any of the issue. The ld. PCIT has not specified as to what kind of information or further details or questionnaire or effort was required to be made by AO. The AO before accepting the submission of assessee obtained prior approval of Range Head. The approval granted by Range head is in accordance with law. No deficiency is pointed out by ld.PCIT in the approval granted by Range head. In absence of any finding as to how the order on particular issue is erroneous, the revision order under section 263 of the Act is not allowable. The ld.AR of the assessee reiterated that if the validity of approval granted by Range head is not disputed by ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 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 in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it 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. (* underline by us) 32. The Hon ble Bombay High Court in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher than the one determined by the ITO. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the revenue. But that by itself will not be enough to vest the Commissioner with the power of suomoturevision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer and that 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. It was further emphatically stated that when an ITO adopts one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. 34. The Hon'ble Jurisdictional High Court in Aryan Arcade Ltd., vs PCIT (2019) 412 ITR 277 (Gujarat) held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not valid. (emphasis added by us). Further, Hon'ble Madras High Court in CIT Vs Mepco Industries Ltd., (2007) 207 CTR 462 (Madras) held that when two views are possible on an issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in non- speaking order. It is not the case of ld PCIT that the AO is not authorised (empowered) to accepted the return of income in nonspeaking order. We have seen that the AO while passing the assessment order recorded that the Authorized representative of the assessee vide various order sheet entries have furnished the relevant details and information called for. After affording ample and adequate opportunities of being heard to the assessee, assessment proceedings have been completed on the basis of the submissions and details collected and in consequence upon the conclusion of proceeding and hearing of evidences, assessment is made by this order . A perusal of show cause notice under section 263 dated 08.03.2021, clearly demonstrate that the ld PCIT identified all the issues which were the subject matter of the notice under section 142(1)and the questionnaire attached thereto, were issued by the assessing officer, except the issue of initiation of penalty 271D/ 271E . The ld PCIT in his show cause notice (SCN) under section 263 has accepted that the AO made detailed questionnaire dated 03.12.2018. And on perusal record and details /evidences available on record, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) held that if the AO has adopted one of the course permissible in law, which resulted in loss of revenue or where two view is possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as erroneous order prejudicial to the interest of revenue unless view taken by the AO is not sustainable in law. At the cost of repetition, we may note that the ld PCIT neither in his show cause notice nor in ultimate / final order has held that the order passed by the AO is unsustainable in law. So far as nonverification of CASS (only issue in AY 207-18 only), we find that the ld PCIT raised this issue that the item under the CASS were not verified by the assessing officer. We find that the assessment of this year (AY2017-2018) the assessment has not been made has been made consequent of survey and not under CASS hence, the said identification of such issue is not misplaced. 38. In view of the aforesaid discussions, we are of the considered view that the ld PCIT was not justified in subjecting the assessment order for all three years to revision proceedings by taking view that the AO has not made further inquiry, therefore we quash the revision order (s) in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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