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

The Registry has pointed out that there is a delay of eighteen (18) days in filing of this appeal in time before the Tribunal. The assessee has filed a petition for condonation of delay stating the reasons of delay. After perusing the same, we find that the assessee was prevented by sufficient cause from filing the appeal in time before the Tribunal. Hence, the delay is condoned and the appeal is admitted.

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.

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 jurisdiction to assess any other income.

Dy CIT v. Takshila Education Society [2016] 378 ITR 520 (Patna HC) 2. CIT v Shri Ram Singh [2008] 306 ITR 343 (Raj HC) 3. Ranbaxy Laboratories Ltd. v CIT [2011] 336 ITR 136 (Delhi HC) 4. CIT v Jet Airways (1) Ltd [2011] 331 ITR 236 (Bom HC) 5. CIT v Dr Devendra Gupta [2011] 336 ITR 59 (Raj HC) 6. ACIT v Bharat Inftel Ltd [2015] 42 CCH 374 (Del Trib) 7. Martech Peripherals (P) Ltd v DCIT [2017] 81 taxmann.com 73 (Mad) 6. For that the other grounds, if any, may kindly be heard at the time of hearing.”

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.

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.

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. 7.1. 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/-.

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. 8.1. 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:

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