VEENA DEVI,MUZAFFARPUR vs. PR.CIT-1, PATNA

The assessee has raised the following grounds of appeal:- “1. For that the order passed U/s 263 of the IT Act by the Ld PCIT, Patna is wrong, illegal, arbitrary & against the fact & circumstances of the case. Assessment Year: 2011-12 Veena Devi 2

For that the order passed under Section 263 of the IT Act revising the order passed U/s 143(3) r.w.s. 147 by the Ld ACIT, Cir -2 (1), Muzaffarpur on 26.12.2018 is wrong, illegal and against the facts and circumstances of the case and should be quashed.

For that the Ld PCIT should have considered the fact that the Assessing Officer has thoroughly examined the books of accounts and documents from each and every corner and discussed the reasons recorded by the AO as such there is nothing erroneous in so far as it is prejudicial to the interest of revenue.

For that the Ld. PCIT should have considered the fact that after through examination of books and relevant documents by the AO no adverse finding recorded on the reasons of opening of reassessment proceeding U//s 147 of the IT Act and no addition was made by the AO as such AO has no juri iction to assess any other income.

For that the Learned PCIT should have appreciated the fact and law that it has been decided by apex court that "if in the course of proceeding U/s 147 of the IT Act 1961, the AO were to come to the conclusion that any income chargeable to tax which, according to his "reason to believe", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact that the AO entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the juri iction to subject to tax any other income chargeable to tax which the AO may find to have escaped assessment and which may come to his notice subsequently in the course of proceeding under section 147. Case Laws:

For that the other grounds, if any, may kindly be heard at the time of hearing.”

At the outset, the ld. Counsel for the assessee submitted that the impugned proceedings u/s 263 of the Act deserves to be quashed because the subject matter of the revisionary proceedings i.e., the assessment order framed u/s 143(3)/147 of the Act dt. 26/12/2018 is in itself not sustainable in law since the issue for which the case of the assessee was reopened, no additions have been made. Reference was made to various judgments referred in the grounds of appeal extracted Assessment Year: 2011-12 Veena Devi 3 (supra). On the other hand, the ld. D/R vehemently argued supporting the orders of the ld. Pr. CIT.

We have heard the rival contentions and perused the material placed before us.

Revisionary proceedings u/s 263 of the Act are in challenge before us. We notice that the assessee is an individual and she declared income of Rs.17,35,550/- in the return for Assessment Year 2011-12 filed on 30/03/2012. The case of the assessee was reopened by issue of notice u/s 148 of the Act, for the following reason:- “1. Nature of Business in a nut shell.

Computation of total income.

It has been noticed that you have jointly purchased a property valuing Rs. 1 Crore, In respect of the said property your amount of share is Rs. 35,91,812/- which was paid to the seller and duly acknowledge by them on 05/06/2010 but the said asset has not been reflected in your Balance sheet for the F.Y 2010-11 relevant to the A.Y 2011-12. You are requested to explain this with supporting evidence documents.

Copy of all Bank Statement.

Cash Book/Cash flow statement.”

Subsequent to the issue of notice u/s 148 of the Act, in the reasons recorded above, assessment proceedings were carried out by serving of notice u/s 143(2) and 142(1) of the Act. In response thereto, the assessee filed complete details as called for by the Assessing Officer including copy of ITR, computation of income, tax audit report, copy of deed of property purchased and bank statement. Statements of the assessee were test checked by the Assessing Officer and considering the facts and submissions, the returned income was accepted and no additions were made on account of reasons for which the case of the assessee was reopened.

Subsequently, the ld. Pr. CIT, called for the assessment records and observed that the Assessing Officer should have examined the Assessment Year: 2011-12 Veena Devi 4 assets and liabilities to ascertain the source of funds. The ld. Pr. CIT further observed that the ld. Assessing Officer completed the assessment without making enquiries on the following issues: “(i) The assessee made total investment of Rs.2,52,25,053/- during the F.Y. 2010- 11 11 relevant to A.Y 2011-12 whereas the fund available for investment during the financial year was Rs. 2,11,17,178/- only. The Assessing Officer failed to examine the source of these excess investment amounting to Rs. 41,07,785/-. (ii) The Assessing Officer failed to examine the introduction of gift of Rs. 22,04,007/- in the capital account from Shri Rajiv Kumar. (iii) The Assessing Officer has not examined income from other sources of Rs. 9,56,088/- and the deduction of Rs. 10,00,187/- claimed u/s 57 of the IT Act.”

In response to the showcause notice u/s 263 of the Act, mentioning the above stated issues, the assessee filed the detailed reply on 09/02/2021 stating that complete details of fixed assets have been filed and the purchases referred in the reasons recoded for reopening, stands duly disclosed. It was also claimed that since the reopening proceedings have itself become bad since no additions have been made for the reasons for which it was reopened, the same cannot be the subject matter of the revisionary proceedings and, therefore, the revisionary proceedings in itself are void.

However, the ld. Pr. CIT was not satisfied and he held the order of the Assessing Officer dt. 26/12/2018 as erroneous insofar as it was prejudicial to the interest of the revenue and directed that the Assessing Officer should make enquiries and verifications regarding the following issues:- “7. For the above referred reasons and the facts on record, I deem it fit to cancel and set-aside the assessment order u/s. 143(3)/147 of the IT Act, 1961 passed by the AO, without making enquiries and verification which should have been made on the following issues: Assessment Year: 2011-12 Veena Devi 5 (i) The assessee made total investment of Rs. 2,52,25,053/- during the F.Y 2010-11 relevant to A.Y 2011-12 whereas the fund available for investment during the financial year was Rs. 2,11,17,178/- only. The Assessing Officer failed to examine the source of these excess investment amounting to Rs. 41,07,785/-. (ii) The Assessing Officer failed to examine the introduction of gift of Rs. 22,04,007/- in the capital account from Shri Rajiv Kumar. (iii) The Assessing Officer has not examined income from other sources of Rs. 9,56,088/- and the deduction of Rs. 10,00,187/- claimed u/s 57 of the IT Act. Accordingly, the assessment order passed u/s. 143(3)/147 of the I.T. Act, 1961 dated 26.12.2018 is cancelled and set-aside with direction to the AO to frame the assessment de novo by making fresh enquiries, investigation and verification regarding the issues referred to above and finalize assessment in accordance with provision of law.”

We notice that so far as the legal issue raised by the assessee challenging the validity of the impugned proceedings, we find merit for the reason that in the reasons recorded for reopening the case of the assessee by issuing notice u/s 148 of the Act, the only issue was regarding disclosure of property valued at Rs.35,90,812/- in the balance sheet for the FY 2010-11 whereas the issue referred in the showcause notice u/s 263 of the Act are other than the issue of purchase of property of Rs. 35,90,812/-. Since the Assessing Officer has carried out the reassessment proceedings only for the purpose of examining the disclosure of purchase of assets at Rs.35,90,812/- and on being satisfied, he concluded the assessment. It was not required on the part of the Assessing Officer to carry out the assessment proceedings on other issues. Therefore, since the addition has not been made for the reasons recorded for reopening, the reassessment proceedings have itself become invalid and thus, cannot be a subject matter for invoking the provisions of Section 263 of the Act. On this Assessment Year: 2011-12 Veena Devi 6 legal ground itself, the assessee succeeds and the impugned proceedings are quashed.

Even otherwise, on the merits of the case, we notice that the assessee vide its reply dt. 25/10/2018 in response to the notice issued u/s 142(1) of the Act in the course of reassessment proceedings, has given complete details of the fixed assets which total to Rs. 2,78,51,261/- and further details have been given about the properties purchased during the year along with the copies of the banks account. The Assessing Officer has also observed in the assessment order dt. 26/12/2018 that assessee has filed complete details of the copy of the deed of property purchased, bank statement, tax audit report etc.. It shows that the detailed enquiry has been conducted by the Assessing Officer on the issues for which case of the assessee was reopened and thus, the assessment order dt. 26/12/2018 cannot be said to be erroneous and prejudicial to the interest of the revenue as the Assessing Officer has examined the issue and taken a permissible view according to the law. Thus, even on merits also, the assessee deserves to succeed. Hence, we quash the order passed u/s 263 of the Act and allow the grounds of appeal raised by the assessee.

In the result, appeal of the assessee is allowed.

""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील / The CIT(A)- ( ) 5. िवभागीय "ितिनिध अिधकरण अपीलीय आयकर , , पटना /DR,ITAT, Patna, 6. गाड" फाईल /Guard file. आदेशानुसार/ BY ORDER,