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TMI Blog2021 (10) TMI 1291X X X X Extracts X X X X X X X X Extracts X X X X ..... r No. 1, 3 & 4): "1.On the facts and in circumstances of the case as well as law on the subject, the learned Pr.CIT has erred in passing the order u/s. 263, although the assessment order passed u/s.143(3) r.w.s 153C of the I. T. Act, 1961 was neither erroneous nor prejudicial to the interest of the revenue. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr CIT has erred in passing ex-parte order under section 263 without providing reasonable opportunity to the assessee. It was practically impossible to file reply in bulk cases of group in short time when the proceedings u/s 263 was initiated at the fag end of limitation period in the month of March, 2021. The first notice u/s 263 was issued only on 08.03.2021. 3. It is therefore prayed that above order passed by Pr. CIT u/s. 263 may please be quashed or modified as your honours deem it proper. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 2. Brief facts of the case are that the assessee is a partnership firm. There is four partners in firm namely Ashok Narshibhai Patel, Kamlesh Babubhai Bhesaniya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed separate show cause notices under section 263 of the Act dated 08.03.2021. In the show cause notice, the ld. PCIT identified following common issues; * (i) Non-verification of cash loan received ( in AY 2015-16, 2016-17 & 2017-18), * (ii) Non-verification of cash paid ( in AY 2015-16, 2016-17 & 2017-18), * (iii) Understatement of income of the project ( in AY 2015-16, 2016-17 & 2017-18), * (iv) Non-initiation of penalty under section 271D of the Act ( in AY 2015-16, 2016-17 & 2017-18), * (v) Non-verification of unsecured loan ( in AY 2015-16, 2016-17 & 2017-18) * (vi) Non-verification of claim of expenses and liability ( in AY 2015-16, 2016-17 & 2017-18), * (vii) Non-mentioning reference of seized document/evidence in the satisfaction note under section 153C of the Act (in AY 2015-16, 2016-17), * (viii) Non-disallowance under section 40A(3) ( in AY 2015-16, 2016-17 & 2017-18), * (ix) non verification of CASS (in AY 207-18 only) 5. The ld. PCIT recorded that the assessee was given opportunity of being heard on 12.03.2021 and on 18.03.2021, however, the assessee neither attended the hearing nor filed written submission in respect of proposed revisions proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ika Construction, Radhika Corporation, Radhika Infrastructure, AmrutSarovar and Shyam Textile Park all are engaged in construction and development of various projects. On the basis of material found in the course of search and survey action, the assessee prepared books of accounts. The books of accounts so prepared were produced during the course of assessment proceedings. Before issuing the notice under section 153C of the Act, the assessee made disclosure under income disclosure scheme (IDS) 2016. The ld AR for the assessee filed the following bifurcation of amount disclosed in IDS; Name of firms Discloser amount AY's Radhika Construction Rs. 3.50 Crore 2015-16 Rs. 53 Lakhs 2016-17 Total (1) Rs. 4.03 Crore Amrut Sarovar Rs. 2.05 Crore 2014-15 Rs. 1.55 Crore 2015-16 Rs. 1.90 Crore 2016-17 Total (2) Rs. 5.50 Crore Satyam Textile Park Rs. 5.00 Crore 2016-17 Total (3) Rs. 5.00 Crore Radhika Corporation Rs. 1.00 Crore 2016-17 Total (4) Rs. 1.00 Crore Radhika Infrastructure Rs. 1.70 Crore 2015-16 Rs. 1.80 Crore 2016-17 Total (5) Rs. 3.50 Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015-16, 2016-17 & 2017- 18), the ld AR for the assessee submits that in the show cause notice and in the order under section . 263 raised the issue that cash loan received in all these three years were not verified by the assessing officer. In fact, the very issue has been raised by the assessing officer in the show case notice in Para 3 issued on 07.12.2018 (copy of which is placed at Page No 70 to 80 of the Paper Book) . The assessing officer in the show cause notice has tabulated the amount of alleged cash loan taken by the assessee, mentioning the date, amount, name of the party and financial year. The total of this table has been mentioned by the assessing officer at Rs. 16,09,44,705/-. This includes the amount of Rs. 7,62,09,970/-. Similarly, the details of alleged cash loan repaid of Rs. 3,06,83,700/- were tabulated by the assessing officer in the show cause notice as per Annexure "AF-3" and accordingly, the amount of Rs. 14,89,60,365/- was mentioned as total of various entries which includes the amount of Rs. 3,06,83,700/- for A.Y. 2015-16. The assessee, filed a detailed reply in response to show cause notice and the transactions reflected in Annexure "AF-3" were explained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asset as per seized material -cash -bank Rs. 1,63,52,481/-Rs. 50,000/- Rs. 94,77,177/- --- Rs. 2,58,29,658/- Rs. 50,000/- Rs. 1,64,02,481/- Rs. 94,77,177/- Rs. 2,58,79,658/- C Net profit % Unaccounted booking advances for entire project Net profit @ 15% Rs. 23,28,40,000/ Rs. 3,49,26,000/- Rs. 1233345737/- Rs. 23,69,550/- Rs. 1,57,97,000/- Rs. 3,72,95,550/- D Net profit Residential 258027Sq ft X Rs. 100/- Per sq feet Commercial 6394 sq ft X Rs. 200 per sq feet Rs. 2,58,02,700/- Rs. 12,78,800/- -- Rs. 2,70,81,500/- Higher of ABC&D Rs. 3,75,95,374/- Income disclosed in IDS Rs. 4,03,00,000/- 13. It was submitted that the amount of Rs. 4,30,00,000/- includes the declaration of Rs. 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 satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecured loan in all three subject assessment years as mentioned by the PCIT in the show cause notice and revision order. The ld AR for the assessee submitted that the issue was raised in notice under section. 142(1) issued on 03.12.2018. In reply to this notice, assessee vide letter, copy of which is placed at Page 62 to 64 of the paper book submitted the details of unsecured loans were under compilation and the same would be furnished shortly. Thereafter, assessee furnished the details as called for. The finding of the PCIT that assessing officer has not called for such details / confirmation and nor the assessee has submitted the same is wrong. Further it is submitted that in the course of search and survey action conducted in various cases of the group assessee, no evidences were found indicating that assessee received any bogus 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. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails of expenses incurred, copy of which are also filed on record. During the search and survey action conducted in various cases of group, no evidence was found indicating that assessee debited bogus expenses or credited bogus liability. Further it is case of completed assessment for AY 2015-16 & 2016-17 as submitted earlier and so no adverse inference can be drawn for matter disclosed in the audited accounts as per the decisions of various superior courts. 18. So far as AY 2017-18 is concerned, the ld AR for the assessee submits that return of income was not filed prior to search and survey action as it was current year of the search and survey action. Accordingly, all the materials found in the course of search / survey action conducted in cases of the group were incorporated in the audited accounts 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld PCIT raised this issue that the item under the CASS were not verified by the assessing officer. The ld AR for the assessee submits that the assessment of the present case has not been made under CASS but the assessment has been made consequent survey hence, the said query is not relevant. The assessee is response to the notice under section 263 made exhaustive submission in reply dated 23.03.2021 before PCIT. The PCIT didn't make any comment or direction on this issue on order passed under section 263. 22. The ld.AR submits that when the IDS declaration was made, notice under section 153C of the Act was not issued for first two assessment years and therefore, proceedings were not pending. The IDS declaration was accepted by ld. PCIT and therefore, the AO or supervision ld. JCIT could 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 norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaring the income under IDS, the assessee in fact paid more tax than the tax payable as per normal provision. The assessing officer is not competent to disregard the IDS declaration which was accepted by the PCIT. It is not the case of PCIT that assessee has made any misrepresentation of any facts in IDS declaration. The declaration under IDS was neither revoked nor the tax paid by the assessee, was refunded to it. It is well settled that the whole suppressed gross receipts cannot be taxed, only profit element embedded in such receipts can be estimated. Assessee's declaration at 15% of the gross receipts was most reasonable which was accepted by the assessing officer considering the nature of business of the assessee. 26. Although as per Circular No 25 of 2016 issued by 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. [Tax Appeal No. 828 of 2019] (Guj) 11. CIT vs. Nirav Modi [390 ITR 0292 (Bom. HC)] 12. CIT vs Gabriel India Ltd. [203 ITR 108(Bom) 13. Moil Ltd. vs CIT [ 81 taxmann.com 420 (Bom. HC)] 14. CIT vs. Fine Jewellery India Ltd. [55 texmann.com 514 ] (Bom 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. VishwaInfrawaysPvt. Ltd vs. CIT [ ITA 596,597 & 599/Pun/2015 ] 28. SreeAlankar vs. PCIT [ ITA no. 108/CTK/2018 ] (CTK Trih.) 29. JRD Tata Trust t vs. DCST [12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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. PCIT, then it would not be justified in interfering in the approval granted by Range head for framing assessment order; therefore, there is no reason for setting aside the assessment order for the subject assessment years. 30. We have considered rival submission of the parties and have gone through the order of authorities below. We have also perused the documents filed by the assessee on record. Further we have deliberated on the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e '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 Vs Gabriel India Ltd (233 ITR 108 Bom /71 Taxman 585) held that the power of suo motu revision under subsection (1) of section 263 is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; and (ii) by virtue of the order being erron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 incorrect or incomplete interpretation a lesser tax than what was just has been imposed. Therefore, in order to exercise power under section 263(1) there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the revenue and that it must be an order which is not in accordance with the law or which has been passed by the ITO without making any enquiry in un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossible 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 and it is not the case of the Commissioner that the view taken by Assessing Officer is not permissible in law, Commissioner cannot invoke his jurisdiction under section 263 of the Act. (emphasis added by us) 16. The Hon'ble Delhi High Court in CIT Vs Vikas Polymers (341 ITR 537 Delhi) held that it is a pre-requisite that the Commissioner must give reasons to justify the exercise of suo motu revisional powers by him to reopen a concluded assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, 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, 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 questioned by Board or other superior authority then PCIT. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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