TMI Blog2024 (5) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue on the ground of lack of enquiry, which, in our view, is a general observation and no specific observation has been made in respect of any of the details or evidence furnished by the assessee and as to why the ld. Pr. CIT was not satisfied about such details/replies furnished by the assessee. Simply because the ld. Pr. CIT felt that the Assessing Officer should have made further enquiries on the same issue or that the case was to be examined from some another angle, the same, in our view, cannot be a valid ground to set aside the assessment order. If such an action is allowed by the ld. Pr. CIT in his revision jurisdiction then, there would be no end to litigation and there would not be any finality to the assessment. The Explanation 2 to Section 263(1) of the Act does not give unbridled powers to the ld. Pr. CIT to simply set aside the assessment order by saying that the Assessing Officer was required to make further enquiries without pointing out as to what was lacking in the enquiries made by the Assessing Officer and why the ld. Pr. CIT was not satisfied with the reply and ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany had approached him in second week of January 2023 and that the appeal form 36 and grounds of appeal were also prepared and duly got signed from the said Shri Deep Kishan Saraf and that he had further directed his office staff, Shri Mrinal Kar Chowdhury to deposit the appeal fees and file the appeal before this Tribunal. It has been further deposed that on 25th February 2023, he suffered severe back pain and swelling in legs due to falling in bathroom and was advised bed rest for a month and could not attend the official work and further that he was under bona fide belief that the appeal of the assessee had been filed by his office staff in time. Later on, on asking of the assessee, the status of appeal was checked then he came to know that the appeal was not filed. The assessee was informed about this and the assessee further immediately contacted the present CA, Shri A. K. Tibrewal and filed the appeal. Similar averments have been made in the affidavit of Shri Deep Kishan Saraf, Director of the assessee company. The ld. Counsel for the assessee, therefore, has submitted that the delay in filing the appeal was not intentional but doe to aforesaid circumstances and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 4.1. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N. Balakrisknan vs. M. Krishnamurtky (supra). It reads as under: Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s . 4.2. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the condonation of delay, then such reasons are to be construed with a justice oriented approach. 5. In the light of above, let s examine the facts of the present case. The stand of the assessee is that their tax consultant, Sh. Mukesh Gupta did not communicate the notices received by him from the office of ld. CIT(A). Therefore, they could not prosecute their remedy before the first appellate authority and similarly, he has not communicated the order of ld. CIT(A) as well as prepared the appeal further. It is pertinent to observe that no litigant would gain anything by making an appeal time barred. Therefore, such a step can never be taken at the end of the assessee to delay the disposal of the appeals. The demand has already been raised against the assessee and it is an adverse order against it unless it is deleted, no benefit would be there to the assessee. Therefore, to our mind, it was not adopted as a strategy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shree Jawala Consultants Pvt. Ltd were not doing any real business and was only acting as intermediaries from providing accommodation entries to beneficiaries through layering of funds. Therefore, the sum of Rs. 80 lakhs received by the assessee company from M/s Swiss Progressive Product Pvt. Ltd. is nothing but own unaccounted income of the assessee routed through the aforesaid jamakharchi/shell company. The A.O, during the assessment proceedings, should have added the amount of Rs. 80 lakhs received by the assessee from the aforesaid jamakharchi/shell company. Considering the above, the assessment order is erroneous so far as it is prejudicial to the interest of revenue. Accordingly, the assessment order is required to be revised. 6.1 In reply to the notice issued by the ld. Pr. CIT, the assessee made the submissions before the Pr. CIT which have been reproduced from para 4 onwards in the order of the Pr. CIT, which are extracted as under: 4. The assessee had submitted, vide its letter dated 28.12.2022 along with the letter dated 17/02/2021, that: The assessee company is a NBFC Company. During the previous year relevant to the Assessment Year 2012-13, the Assessee Company had iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished all details and documents and evidences to explain the source of the share application money received by it from Swiss . A copy of the Notice issued u/s. 142(1) of the Act and the copy of reply by Assessee with all Annexures is enclosed for ready reference. 2.2 The Assessing Officer conducted enquiry and issued Notices u/s 133(6) of the Act to Swiss as well as other two share subscribers for verification of the assessee company's transaction with them. All the three subscribers including the said Swiss complied to the said Notices issued by the Assessing Officer u/s 133(6) of the Act and confirmed that they had subscribed to the share capital of the assessee company issued at premium. They explained the source of the said subscription of shares. In support of the genuineness of the transactions, they submitted various documents and evidences. M/s Swiss also furnished the copy of the assessment order dated 11.03.2014 passed in their case u/s 143(3) of the Act to show that the source of their investment in the share capital of the assessee company was accepted in their case. On perusal of the said assessment order it would be seen that the source of their investment in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar facts and circumstances of this case. The assessee company relies on the following judgments which inter alia include the judgments of Hon ble Supreme Court and Jurisdictional Calcutta High Court. a) CIT vs. Lovely Products Pvt. Ltd. [2008] 216 ITR 195 (SC) b) CIT vs. Dataware Pvt. Ltd. ITAT No.263 of 2011 GA No.2856 of 2011 c) CIT vs. Roseberry Mercantile (P) Ltd. ITAT No.241 of 2010 G.A No.3296 of 2010 6.2 However, the ld. Pr. CIT did not get satisfied with the above reply of the assessee and held that the order of the Assessing Officer passed u/s 147 r.w.s. 143(3) of the Act was erroneous and prejudicial to the interest of revenue because there was a report of the investigation wing that the assessee had received accommodation entry from M/s Swiss Progressive Products Pvt. Ltd and that It was, therefore, unaccounted income of the assessee. He, therefore, set aside the assessment order passed u/s 147 r.w.s 143(3) of the Act and restored the matter to the file of the Assessing Officer to frame the assessment afresh. The entire discussion of the ld. Pr. CIT running from para 5 till end is reproduced as under: From the submission of the assessee company it is observed that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o section 263(1) reads as under: Explanation 2- for the purpose 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 interest of the revenue, if, in the opinion of the Chief Commissioner or Principal Commissioner or Commissioner, - a) The order is passed without making enquiries or verification which should have been made 5.1 Hon'ble Delhi High Court in the case of GEE VEE Enterprise vs. Addl. CIT reported in 99 ITR 375, 386 (Del) has held that the CIT may consider the order of the Assessing Officer to be erroneous not only if it contain some apparent error of reasoning or of law or of fact on the face of it but also because the Assessing Officer has failed to make enquiries which are called for in the circumstances of the case and it is an order which simply accepted what the assessee has stated in his return of income on the said issue. It is not necessary for the CIT to make further enquiries before cancelling the assessment order. The Commissioner can regard the order erroneous on the ground that the Assessing Officer should have made further enquiries. 5.2 Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rong with the order if all the facts stated therein are assumed to be correct. 6. The Hon'ble ITAT, Kolkata was pleased to restore the case back to the file of the Pr. CIT for de-novo consideration and also to consider the objection raised by the assessee [on law as well as factual] and thereafter, to decide whether to proceed with the action u/s. 263 of the Act in accordance with the law. The Hon'ble ITAT also directed the assessee to file written submission/ objection and supporting documents, if advised to do so in the de-novo proceedings before the undersigned and the case was restored back to the file of the Pr. CIT to decide afresh after hearing the assessee in accordance to law. Having regard to the facts and circumstances of the case and in the light of the aforesaid decisions of Hon'ble Supreme Court and Hon'ble High Court and as per direction of the Hon'ble ITAT, and in accordance with the amendment made in Section-263 of the Act, I hold that the impugned assessment order dated 18/03/2019 passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue. I further hold, after giving the assessee an opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. also responded to the notice issue u/s 133(6) of the Act and duly filed confirmation and evidences before the Assessing Officer copies of which have been placed at pages 60 to 91 of the paper-book. Apart from that, the assessee also furnished details and evidences relating to the share application money received from other two entities namely M/s Shree Jawala Consultants Pvt. Ltd. and M/s Tulsi Rolling Flour Mills Pvt. Ltd. The Assessing Officer after examining all the details and evidences furnished by the assessee accepted the transaction as genuine. 7.1 A perusal of the impugned order of the ld. Pr. CIT u/s 263 of the Act would reveal that the ld. Pr. CIT in the impugned order has not discussed about a single document or explanation furnished by the assessee during the reassessment proceedings u/s 147 of the Act. The ld. Pr. CIT has set aside the reassessment order passed u/s 147 of the Act solely on the ground that the information was received from Investigation Wing that the assessee has received an accommodation entry from M/s Swiss Progressive Products Pvt. Ltd. It is pertinent to mention here that the reopening of the assessment was also done on the basis of same informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make such an enquiry as he deems necessary. The words as he deems necessary , in our view, do not mean that the Ld. Pr. CIT is left with a choice either to make or not to make an enquiry. As per the relevant provisions of section 263, it was incumbent upon the Ld. Pr. CIT to make or cause to make such an enquiry. So far as the words as he deems necessary are concerned, the said words suggest that the enquiries which are necessary to form a view as to whether the order of the Assessing Officer is erroneous and prejudicial to the interest of Revenue? Once a point wise reply was given by the assessee, then a duty was cast upon the Ld. Pr. CIT to examine the reply of the assessee and form a prima-facie opinion as to whether the order of the Assessing Officer was erroneous so far as it was prejudicial to the interest of Revenue. We further note that the Ld. Pr. CIT did not raise any query as to what enquiries were made by the Assessing Officer before proceeding to pass the assessment order in question. The opinion of the Commissioner that the Assessing Officer had not made proper enquiries or verifications should be based on his objective satisfaction and not a subjective satisfacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 19.06.2023 while analysing the provisions of section 263 of the Act has considered various case laws, the relevant part of the order of the Coordinate Bench of the Tribunal is reproduced as under: 10.1. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue - Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC) . [Emphasis Supplied] 11.1. Hon ble Apex Court in the case of CIT vs. Max India Limited as reported in 295 ITR 0282 has held that: 2. At this stage we may clarify that under para 10 of the judgment in the case of Malabar Industrial Co. Ltd. (supra) this Court has taken the view that the phrase prejudicial to the interest of the Revenue under s. 263 has to be read in conjunction with the expression erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, when the ITO adopted 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 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 ITO is unsustainable in law. 11.2. Hon'ble Madhya Pradesh High court in the case of CIT vs. Associated Food Products (P) Ltd as reported in 280 ITR 0377 has held that: 10. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the judgment of Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi, [2016] 71 taxmann.com 272 (Bombay). 12.1. This view is further supported by the decision of the Hon'ble Gujarat High Court in the case of Shri Prakash Bhagchand Khatri in Tax Appeal No. 177 with Tax Appeal No.178 of 2016, wherein the Hon'ble Gujarat High Court was seized with the following substantial question of law: Whether the Tribunal is right in law and on facts in upholding the order passed by the CIT under section 263 of the Act on merits and still storing the issue of allowability of deduction under section 54 of the Act to the file of Assessing Officer even though the working of allowability of deduction under section 54F is available in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the AO called for interference and revision. In the instant case, for example, the CIT has observed in the order passed by him that the assessee has not filed certain documents on the record at the time of assessment. Assuming it to be so, in our opinion, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were I.T. assessees and the unsecured loan taken from M/s Stutee Chit Finance (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee. 64. Since in the instant case the A.O. after considering the various submissions made by the assessee from time to time and has taken a possible view, therefore, merely because the DIT does not agree with the opinion of the A.O., he cannot invoke the provisions of section 263 to substitute his own opinion. It has further been held in several decisions that when the A.O. has made enqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 13.2. Apart from above stated broader principles, one more principle needs to be added in view of the judgment of Hon ble Delhi High Court in the case of ITO vs. D.G. Housing Projects Ltd. [2012] 343 ITR 329 (Delhi) that the ld. CIT has to examine and verify the issue himself and give a finding on merits and form an opinion on merits that the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Relevant extract is reproduced below: In the present case, the findings recorded by the Tribunal are correct as the CIT has not gone into and has not given any reason for observing that the order passed by the Assessing Officer was erroneous. The finding recorded by the CIT is that order passed by the Assessing Officer may be erroneous . The CIT had doubts about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final one, without scrutinising the nature of enquiry or verification carried out by the A.O vis- -vis its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquires or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant. 11. At this stage, the ld. counsel has placed reliance on the decision of the jurisdictional Calcutta High Court in the case of PCIT vs. Usha Polychem India (P) Ltd repor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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