TMI Blog2023 (2) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... fails in any one of the role as afore-stated, his order will be termed as erroneous. We take note that it is not the case of ld. Principal CIT that AO failed to made any additions/disallowances, the AO conducted sufficient enquiry to examine the debit and credit in the bank statement and he also examined the eligibility to claim deduction under section 10AA of the Act and that is why he disallowed deduction under section 10AA . 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. Therefore, the notices issued for examination of the issues during the assessment proceedings and submission and verification of the same has not been shown to be fallacious. In this connection it is pertinent to mention here that the way in which assessment should be finalized falls in the exclusive domain of the Assessing Officer. Section 142(1) speaks of inqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.08.2012 declaring total income of NIL. Thereafter, assessee`s case was selected for scrutiny and assessment order u/s 143(3) of the Income Tax Act was framed by the assessing officer on 25.03.2015 determining total income at NIL. 4. Thereafter, an information was received from DDIT(Inv.), Unit 7(2), Mumbai that assessee was maintaining a bank account No. 5500111032480 with ING Vysya Bank having credit entry of Rs.70,13,43,319/- and same bank account was not disclosed by the assessee in its Return of income for year under consideration. Further, during the year, the assessee firm claimed exemption u/s 10AA of the Income Tax Act of Rs.87,21,44,414/-. However, as per the information received, exemption u/s 10AA claimed by the assessee firm was disallowed by the assessing officer while passing the assessment order for assessment year 2013-14 and 2014-15. 5. Therefore, the assessee`s case was reopened by issuing the notice u/s 148 of the Income Tax Act and assessment u/s 143(3) r.w.s. 147 was passed on 31.12.2019 by making disallowance u/s 10AA of Rs.87,21,44,414/-. 6. After this, the Learned Principal Commissioner of Income-Tax (in short Ld PCIT ) has exercised his jurisdiction unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is mandatory to disclose all the bank accounts held by the assessee in its Income Tax Return. The assessee also filed its return of income on 14.12.2019, in response to notice issued u/s 148 of the IT. Act. However, the assessee firm has again not disclosed, it's all the bank accounts in the Income Tax Return filed in response to notice u/s 148 of the I.T. Act. Further, the assessee firm argued that all the books of accounts produced before the AO during the course of assessment proceedings. As per the show cause notice issued by the AO dated 09.11.2019, it is found that various notices u/s 142(1) of the I.T. Act were issued to the assessee firm, however, it had remained non-compliant till date 09.11.2019. Thereafter, the assessee firm just filed its reply on electronically, vide its letter dated 24.12.2019, stating various contentions against the proposed addition. The assessee firm has also not filed its Audit Report on e-filing portal of the Department along with its Return of Income. Audited Books of Account was not furnished by the firm during the course of revision proceeding. Therefore, the AO failed to enquiry in respect of credit entries received in its bank accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat as per the show-cause notice issued by the AO dated 09.11.2019, it is found that various notices u/s 142(1) of the I.T. Act were issued to the assessee firm, however, it had remained noncompliant till date 09.11.2019. Thereafter, the assessee firm just filed its reply on electronically, vide its letter dated 24.12.2019, stating various contentions against the proposed addition. The assessee firm also not filed its Audit Report on e-filling portal of the Department along with its Return of Income. Audited Books of Account was not furnished by the firm during the course of revision proceeding. Therefore, the AO failed to make an enquiry in respect of credit entries received in its bank account No.550011032480 with ING Vysya Bank. There is no discussion in the assessment order regarding verification of said bank account with ING Vysya Bank with the books of accounts, as claimed by the assessee. (v) Arguments No.-5 of assessee: The assessee firm further argued that an appeal has been filed against the re-assessment order dated 31.12.2019 passed by the AO before the CIT(A). Observation of ld PCIT: Appellate proceedings and the revision proceedings u/s 263 of the I.T. Act is distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order was framed under section 143(3) r.w.s 147 of the Act dated 28.12.2019. In the reassessment proceedings, the Assessing Officer has raised mainly two issues, first is undisclosed bank account and second is deduction under section 10AA of the Act. During the reassessment proceedings, the assessee has submitted the information regarding the undisclosed bank account and the information regarding deduction under section 10AA of the Act. The Assessing Officer has examined both the issues which were the subject matter of reassessment proceedings and disallowed the deduction of the assessee under section 10AA of the Act to the tune of Rs.87,21,44,415/-. During the reassessment proceedings, the assessee submitted its reply in respect of these two issues viz: first is undisclosed bank account of ING Vysya Bank and second is deduction / exemption under section 10AA of the Act. The Assessing Officer issued notices under section 142(1) of the Act calling the details regarding the amounts shown in ING Vysya Bank and the explanation about the deduction under section 10AA of the Act and in response to these notices, the assessee submitted its reply. 13. The ld Counsel stated that since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t verify the credit entries, therefore the object for which the reassessment proceedings were initiated have not been fulfilled and therefore the ld. PCIT has rightly exercised his jurisdiction under section 263 of the Act. 16. About claim of deduction under section 10AA of the Act to the tune of Rs.87,21,44,414/-, the Ld. DR pointed out that the assessment order was framed on dated 31.12.2019 and the Ld. PCIT exercised his jurisdiction under section 263 of the Act and notice under section 263 of the Act was issued by the ld. PCIT on 11.01.2022, however, ld. PCIT was not informed neither by the assessee nor by the Assessing Officer that assessee has filed the appeal before the ld. CIT(A) in respect of disallowance under section 10AA of the Act and therefore the ld. PCIT has rightly exercised the jurisdiction under section 263 of the Act. The Ld. DR for the Revenue, to substantiate its plea relied on the judgment of Co-ordinate Bench of ITAT, Chennai in the case of Kumar Rajaram vs ITO, 67 taxmann.com 110 (Chennai Trib.) wherein it was held as follows: 14. We have carefully gone through the aforesaid observations. Adopting one of the courses permissible in law necessarily requires t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e light of the applicable law. However, in the case before us, the AO has not at all examined as to whether only one view was possible or two or more views were possible and hence, the question of his adopting or choosing one view in preference to the other does not arise. The aforesaid observations of the Hon'ble Supreme Court do not, in our view, help the assessee; and rather they are against the assessee. 15. In the case of Padmasundara Rao v. State of Tamil Nadu [2002] 255 ITR 147 (SC) the Hon'ble Supreme Court has held that : ' ... There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morrin in Harrington v. British Railways Board [1972] 2 WLR 537 (HL) circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases.... Therefore, the observations of the Hon'ble Supreme Court in Malabar Industrial Co. Ltd's case (supra) on which reliance has been placed by the learned counsel cannot be read in isolation. The judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iders to be prejudicial to the interest of the Revenue. The CIT has also been empowered to invoke his revisional jurisdiction under s. 264 at the instance of the assessee also. The line of difference between ss. 263 and 264 is that while the former can be invoked to remove the prejudice caused to the State the latter can be invoked to remove the prejudice caused to the assessee. The provisions of s. 263 would lose significance if they were to be interpreted in a manner that prevented the CIT from revising the erroneous order passed by the AO, which was prejudicial to the interest of the Revenue. In fact, such a course would be counter-productive as it would have the effect of promoting arbitrariness in the decisions of the AOs and thus destroy the very fabric of sound tax discipline. If erroneous orders, which are prejudicial to the interest of the Revenue, are allowed to stand, the consequences would be disastrous in that the honest taxpayers would be required to pay more than others to compensate for the loss caused by such erroneous orders. For this reason also, we are of the view that the orders passed on an incorrect assumption of facts or incorrect application of law or witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity consumption was there which support that actually any activities were carried out during the year. You have submitted the Bills of electricity but that also shows that electricity consumption as per trading account was only Rs.59,426/- meaning thereby less than Rs.5,000/- for month. 2. In the above background you were required to show cause that why the exemption claimed u/s 10AA may not be treated as non-genuine and to be disallowed. The complete reply is still pending. 3. Further on going through the partners detail it has been ascertained that Shri Ramesh Kumar Kadel has introduced Rs.50,76,00,000/- during the year which requires proper verification regarding the sum so credited in the Firm. Kindly produce the bank account of partner with copy of ITR, Balance sheet, Bank statement along with the narration of debit and credit entries of amount appearing in the bank account of Shri Ramesh Kumar kadel account. 4. Your attention is further drawn to the information received from the Directorate of Revenue Intelligence Mumbai that they had received information from credible sources regarding overvaluation of rough diamonds. The DRI conducting the investigation in M/s Ramesh Tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PROCEEDINGS U/S. 142(1) OF THE I.T. ACT, 1961 FOR THE A/Y. 2013-14 IN THE CASE OF NYA INTERNATIONAL. SURAT. PAN: AAFHN 1681M REF: Show Cause Notice No. ITBA/AST/F/17/2019-20/1021622366(1) dated 04.12.2019 We are in receipt of your Show cause notice dated 04.12.2019. In this connection, we state and submit the following details: The assessee firm had filed the return of income on 01.08.2012 declaring total income at Rs. Nil after claiming deduction of Rs.87,21,44,414/- u/s 10AA of the Act. Your good self in para no. 4 of the show cause notice has mentioned that your good self had asked the assessee firm to furnish details vide notice dated 16.10.2019. In this connection we would like to state that the assessee firm had already submitted all the details mentioned in the notice dated 16.10.2019 during the time of original assessment proceedings. After duly considering all the details on record the order u/s 143(3) of the Act was passed on 28.03.2015 by accepting the income disclosed by the assessee. Further, as per the provisions of section 10AA of the Act, the assessee firm, being an entrepreneur, as referred to in Section 2(j) of the Special Economic Zone Act, 2005 having its unit u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm is maintaining a bank account with ING Vysya bank bearing account number 550011032480 and there is a total credit of Rs.70,13,43,319/- in the said bank account. In this connection we would like to state that the details of the ING Vysya bank account was duly mentioned in the financials of the company and the Return of Income filed for assessment year 2012-13 the same can be verified from the details furnished during the time of original assessment proceedings. From the above it is crystal clear that the assessee firm is eligible for deduction u/s 10AA of the Act. Hope the above will satisfy you, if you require any further clarification or information, we shall be glad to furnish the same on hearing from you. 22. The assessing officer has also issued show cause notice dated 09.11.2019, wherein Assessing Officer (vide para 4, of show cause notice), asked the assessee to file bank advice for payment and relevant extract of bank statement. 23. The assessee also submitted the acknowledgement of return of income which is placed at page no. 48, the assessee also submitted audit report and audited financial report which is placed at page nos. 51 to 74 of the paper book. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 147 of the Act, as the reasons were recorded by AO based on the copy of the said bank statement. Therefore, entries in the said bank statement were examined by the AO in the reassessment proceedings and AO has applied his mind also. 26. We are aware of the fact that the Assessing Officer s role while framing 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 take note that it is not the case of ld. Principal CIT that AO failed to made any additions/disallowances, the AO conducted sufficient enquiry to examine the debit and credit in the bank statement and he also examined the eligibility to claim deduction under section 10AA of the Act and that is why he disallowed deduction under section 10AA of the Act. 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 pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled 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. The conclusions arrived at as a result of enquiries cannot be tinkered with in the revision proceedings. The conclusions being drawn up as a result of enquiry is a highly subjective exercise 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- -vis that of the Commissioner, cannot render an order erroneous and prejudicial to the interest of the revenue. 9. Viewed in this perspective, and having noted that the Commissioner has subjected the assessment order mainly on the ground that the Assessing Officer did not reach the right conclusions as a result of his enquiry, the impugned revision order is indeed unsustainable in law. It is not a case in which adequate enquiries has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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