TMI Blog2022 (4) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... tation on the part of Ld AO, which undoubtedly falls within the sweep of section 263(1) of the Act, and such a case does finds a place within the ration laid by the Hon ble lordship in a celebrated case of Malabar Industrial Co Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] PCIT during the revisionary proceedings made a categorical findings that, the Ld AO after conducting the necessary inquiry in the light of evidential material constituting incriminating seized material, reached the conclusion however has lost the sight while passing the impugned order of assessment without figuring the impugned advance cash payment as unexplained expenditure u/s 69C hence in our considered opinion the conclusion drawn by the Ld PCIT is irresistible. The action of Ld PCIT is perfectly sustainable in law, to the effect holding the order of assessment as erroneous prejudicial to the interest of revenue - Assessee appeal dismissed. - ITA No. 162/NAG/2018 - - - Dated:- 1-4-2022 - Shri Ravish Sood, Judicial Member And Shri Jamlappa D. Battull, Accountant Member For the Assessee : Shri Vijay Chandak For the Revenue : Smt Agnes Thomas ORDER PER JAMLAPPA D. BATTULL, AM; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited company incorporated under the erstwhile Companies Act, 1956 filed its return of income [for short ROI/ITR ] for AY 2014-2015 on 31/10/2014 returned with the total income of ₹5,26,73,840/- which was summarily processed u/s 143(1) of the Act. Subsequently a Search Seizure action u/s 132 of the Act was conducted on 12/02/2015 by the investigation wing at the office premises of Rander Group, consequently the provisions of section 153A were triggered and by a service of notice on 03/09/2015, the appellant called upon to file ITR in pursuance thereof. In response thereto the assessee company e-filed its ITR on 05/07/2016 declaring total income of ₹5,26,73,840/-, considering the same, in the light of incriminating material seized during the course of search seizure operation, the assessment u/s 153A r.w.s. 143(3) of the Act was framed assessing a total income at ₹8,44,43,450/- with multiple additions on account of unexplained cash expenditure and unrecorded cash receipts totalling to sum of ₹3,17,69,610/-. 4.2 Concurring with the findings of the assessing officer, Ld PCIT invoked the revisionary powers vested in him by virtue of section 263(1) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Shrigopal B/5 Farmers/Labours 48,29,403 19,21,961 3 Unaccounted B/5 Personal 29,07,442 29,07,442 4 Recoveries Loose Farmers 15,96,404 15,96,404 5 Ramesh Rander (Director) Mobile Cash receipts 2,50,00,000 2,50,00,000 Total addition u/s 69C 3,17,69,610 6.2. Insofar as the present appeal is concern, our indulgence is restricted to first entry of the aforementioned table and to hit the ball, Ld AR candidly taken us through the relevant incriminating material annexed to the assessment order placed on records. The cash payment totalling to ₹4,43,803/- emerged from the incriminating material inventoried as B/4 were found expended on various heads as tabulated herein bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment as unexplained expenditure u/s 69C on the basis of concluded findings. 6.5. On the basis of aforesaid observation, the Ld PCIT by issue of show cause notice [for short SCN ] dt 18/01/2018 called upon the appellant company to explain as to why the assessments framed in its case should not be revised u/s 263 of the Act, and in reply thereof assessee company first assailed the validity of the jurisdiction and then averred that, considering the submission made during 153A assessment, Ld AO after necessary inquiry into the transactions and due deliberation had framed the assessment, therefore the exercise of revisionary jurisdiction is exiled. On merits of the case, it was also averred by the appellant that, the cash payment made to Subbha Rao was account of labour advance and same was reflected in the wage payment register and ledger maintained which were seized during the search proceedings, and after considering the explanation tendered in the light of said wage register / ledger account, Ld AO accepted the same as duly explained and ousted from addition. This averment of the appellant did persuade the revisionary authority, consequently by an order u/s 263, Ld PCIT he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut is not prejudicial to the revenue or where order is not erroneous but is prejudicial to the revenue, then the recourse to Section 263(1) of the Act fails. 8.3. Albeit the foresaid twin satisfaction drawn from the assessment records may trigger the revisionary jurisdiction, yet such shall not automatically empower the revisionary tax authorities to conclude the revision proceedings without obeying additional dual riders such as; (i) making or causing to be made such enquiry as necessary and (ii) according an opportunity of being heard to the assessee following the principle of natural justice. 8.4. In the light of provision of law, it is of paramount importance to note that, an incorrect assumption of facts or an incorrect application of law or passing an order without application of mind or without applying the principle of natural justice, shall discretely be sufficient to hold the order being erroneous. Albeit the term prejudicial to the interests of the revenue is not at all defined in the Act, but is needs to be understood in its ordinary meaning and it is of wide import and is not confined to mere loss to ex-chequer. 8.5. In the light of ration laid down by H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration. In our view this interpretation is too narrow to merit acceptance. 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 (Emphasis supplied) 10. We find that, the Ld PCIT during the revisionary proceedings made a categorical findings that, the Ld AO after conducting the necessary inquiry in the light of evidential material constituting incriminating seized material, reached the conclusion however has lost the sight while passing the impugned order of assessment without figuring the impugned advance cash payment as unexplained expenditure u/s 69C of the Act, hence in our considered opinion the conclusion drawn by the Ld PCIT is irresistible. We are, therefore applying the ration drawn by Hon ble Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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