9911796707
TMI Blog2024 (8) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2015-16 is treated as "lead" case. The assessee in its appeal has raised the following grounds of appeal:- "1. On facts and in circumstances of the case as well as law on the subject, the learned Pr.CIT has erred in passing the order us/ 263, although the assessment order passed u/s 147 r.w.s. 144B of the I.T. Act, 1961 was neither erroneous nor prejudicial to the interest of the revenue. 2. On the facts and circumstances of the case as well as law on the subject, the learned Pr.CIT has erred in giving direction to Assessing Officer in para N.6.1.2 of the revision order to make the addition of Rs. 93,11,587/ by treating the same as unexplained. 3. On the facts and circumstances of the case as well as law on the subject, the learned Pr.CIT has erred in setting aside the order passed u/s. 147 r.w.s. 144B with a direction to the Assessing Officer as per para no. 8 of the revision order to pass fresh assessment order after taking into consideration, the issues as maybe considered together with the issues discussed in order. Accordingly, PCIT has erred in set in aside the assessment order making it wide open instead of restricting the issues raised in show cause notice. 4. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that assessee is beneficiary of accommodation entry of Rs. 93,11,587/- from Shri Saileshbhai Parshottambhai Patel, proprietor of Maruti Enterprises. Since assessee failed to prove genuineness of the above transactions by not submitting any documentary evidence, the above amount of Rs. 93,11,587/- was required to be treated as unexplained income of assessee. However, the AO has not considered this point and passed the assessment order accepting the returned income of assessee. Thereafter, the Ld.PCIT issued show-cause notice u/s 263 of the Act which is at pages 4 and 5 of his order. In the said show-cause notice, the Ld.PCIT has observed that assessee is beneficiary of accommodation entry to the tune of Rs. 93,11,587/- from Shir Saileshbhai P Patel, proprietor of Maruti Enterprises. Since assessee failed to prove genuineness transaction by submitting any documentary evidence, the amount of Rs. 99,11,587/- was required to be treated a unexplained and it should have been added to the total income of the year under consideration. However, AO has not made the addition and accepted the returned income of Rs. 2,07,944/-. The reply of the assessee to the show-cause notice is at para-4.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es; but AO accepted the explanation though assessee failed to prove genuineness of above transactions. Regarding the second limb, the Ld.PCIT held that revenue has lost lawful tax of Rs. 28,77,281/- on income of Rs. 93,11,587/-. The Ld.PCIT also relied on the decision of Hon'ble Supreme Court in case of CIT vs. Paville Projects Pvt. Ltd. 149 taxmann.com 115 (SC). He has also relied on the decisions in the following cases (i) CIT vs. Nagesh Knirtwears Pvt. Ltd. and Others (2012) 345 ITR 135 (Del) (ii) ITO vs. D. G. Housing Projects Ltd. in ITA No.179/2011 dated 01.03.2012 and (iii) Gee Vee Enterprises vs. ACIT (1975) 99 ITR 375 (Del). In view of the above facts and the decisions, he held that order of the AO u/s 147 r.w.s. 144B of the Act is erroneous insofar as it is prejudicial to the interests of revenue. Accordingly, he set aside the order with a direction to AO to pass fresh assessment order after taking into consideration the issues discussed in his order. Aggrieved by the order of Ld.PCIT, the assessee has filed present appeal before the Tribunal. 4. The Ld. AR of the assessee strongly objected the order of Ld.PCIT and submitted paper book containing pages 1 to 60. He has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/- which is factually incorrect because the assessee had transactions of Rs. 36,38,356/- and Rs. 9,84,089/- only for AY 2015-16 and 2016-17 respectively with M/s Maruti Enterprise, proprietor Shri Salishbhai P Patel. Hence, the Ld.PIT has not applied his mind while issuing notice u/s 263 of the Act. The AO considered the detailed reply of assessee vide letter dated 22.10.2021 and he has given detailed findings at page-3 of the assessment order. If no addition is sustainable on the basis of reasons recorded, other addition cannot be made as held by Hon'ble Bombay High Court in case of Jet Airways (supra) and Hon'ble jurisdictional High Court in case of CIT vs. Mohmed Juned Dadani 84 CCH 64 (Guj). Even otherwise, the order passed u/s 147 r.w.s. 144B of the Act is not valid because there was no nexus between the information coming to the AO and formation of belief that income has escaped assessment. The nature and amount of transaction of assessee with Shri Shalishbhai P Patel is not indicated even in the report of FIUIND and therefore, in the reasons recorded. For this, Ld.AR of the assessee relied on case laws: (i) Ganga Saran & Sons vs. ITO 130 ITR 1 (SC) (ii) ITO vs. Lakhmani Mew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms/persons as per final report of FIUIND in the case of Shri Chiragkumar B. Patel and others-STR No.10265868 from in the report it is clearly written that these entities are paper concern engaged in providing accommodation entries to various unrelated concerns. No under-lying business activities are carried out by these concerns and there are entities in the bank of respective concerns relating to various day to day expenses of the business. During the assessment year under review it has been unearthed that the impugned assessee has entered into various transactions with Shri Chiragkumr B. Patel to the tune of Rs. 93,11,587/-. The nature, purpose and source of such transactions remained unexplained on part of the assessee. 3 & 4. Analysis of information collected / received & Enquiries as sequel to information collected / received: Information has been analyzed and has been consciously considered. The database of this office has also been peruse. From the information on hand, it has surfaced that keeping in view the annual income of Rs. 2,07,944/- only shown by the impugned assessee raises serious questions about his creditworthiness and genuineness of the transaction involving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the re-opening proceedings initiated u/s 147 r.w.s 148 of the Act are bad in law and void ab initio and liable to be quashed in view of the following reasons: (i) It is humbly submitted that the assessee had filed a true ad correct retry of income and had shown all the income from all the sources which were earned by him during the year. (ii) It is not true that the assessee has made the huge transactions through his undisclosed sources to the tune of Rs. 93,11,587/- and it is also not true that the assessee has entered into such with Shri Chiragkumar B. Patel. The assessee is engaged in the business of chemical trading and shown all the genuine transactions of sales and purchase in its books of accounts. The assessee has not carried out any business activities with Shri Chiragkumar B. Patel and has not obtained any accommodation entries from the said person. (iii) In the copy of FIU--IND report, provided to the assessee it is gathered that Shri Chiragkuamr B. Patel was the proprietor of M/s Mahavir Sales Corporation and it is evident from the name of the parties with whom the said Mahavir Sales Corporation had done business as mentioned in the report the name of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered view on the subject issue. The AO cannot be said to have not applied his mind because in the assessment order itself he has observed that he had considered the details and documents and reply of assessee. However, the Ld.PCIT has invoked jurisdiction u/s 263 by issuing notice u/s 263 of the Act and passed an order directing the AO to pass fresh assessment order after giving opportunities of being heard to assessee. 6.3 Let us now discuss the scope and ambit of Section 263 of the Act. A bare reading of the section reveals that the Ld.PCIT can call for and examine the record of any proceedings under the Act and if he considers that any order passed by the AO is erroneous in so far as it is prejudicial to the interests of the revenue, he may after giving opportunity of hearing and after making or causing to be made such inquiry as he deems necessary, pass such order as the circumstances of the case justify. For ready reference, section 263 of the Act reproduced below: "263. (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or] Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction with Shri Sailashbhai P Patel. Thus, the AO has duly considered the issue, applied his mind and taken a considered view. 6.5 The submission of the Revenue is that while passing the assessment order, the AO did not consider the aspect especially as to whether the assessee has explained the transaction with Shri Sailashbhai P Patel. In this regard, it may be stated that the case of assessee was reopened to examine the transaction with Shri Chiragkumar B Patel. The jurisdiction to verify and to bring to tax was in respect of transaction with Shri Chiragkumar B Patel which is evident from the reasons for reopening. The AO could not have examined the transaction with Shri Sailashbhai P Patel if no adverse view is taken on Shri Chiragkumar B Patel. As per the provisions of u/s 147 of the Act, the AO is required to assess or re-assess the income in respect of issue which escaped assessment and such issue which comes to his notice subsequently in course of the proceedings u/s 147 of the Act. The word used is "and" and not "or" Therefore, to expand the scope of inquiry and to make addition of another issue, it is necessary to make addition in respect of original issue, which is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment was re-opened but no addition was made in respect of the issue on which the case was re-opened. In other words, returned income was accepted in the order u/s 147 r.w.s. 144B of the Act. The assessment was sought to be revised by the Ld.PCIT u/s 263 of the Act on a different issue on the ground that AO had not made inquiries on the same thereby making his order erroneous and prejudicial to the interest of the Revenue. The ITAT held that AO having not made any addition on issue of reopening, he could not have made addition of some other issue. The Tribunal therefore, held that once re-assessment order per se framed by the AO is not sustainable in the eyes of law, any revision order passed thereon u/s 263 seeking to revise such unsustainable order deserves to be quashed. The Tribunal relied on the decision of Hon'ble Delhi High Court in case of CIT vs. Software Consultants in A No.914 of 2010 dated 17.01.2012. The facts of the present case are similar to the case of Smt. Daya Rani (supra) and we find no reasons to deviate from the finding of ITAT Delhi. The order of the Ld.PCIT is not sustainable in view of the factual and legal positions stated hereinabove and the precedents ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
