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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI AMARJIT SINGH
O R D E R PER : AMARJIT SINGH (AM)
This is an appeal filed by the Assessee against the order of the Principal Commissioner of Income-tax-1, Mumbai (hereinafter Ld.PCIT) dated 24/03/2021 pertaining to assessment year 2011-12.
The Assessee has raised the following grounds of appeal:-
2 ITA 437/Mum/2022 “1. On the facts and circumstances of the case and in law, the assessment order passed by the Ld. A.O. is not erroneous order in anyway and also not prejudicial to the interests of Revenue, the action of learned Pr. CIT u/s 263 is wholly unreasonable and bad in law, which may kindly be quashed.
2. On the facts and circumstances of the case and in law, the learned PCIT erred in solely relying upon the information furnished by the investigation wing to the Ld. A.O. for reopening the case, without considering the documents filed by the appellant during the course of reopening assessment proceedings, which after due verification by Ld. A.O. during the course of reassessment proceedings were found correct and formed an opinion that no addition is to be made.”
The facts in brief are that return of income declaring loss of Rs.42,393/- was filed on 27/09/2011. Thereafter, the case of the assessee was reopened on the basis of information received from the ADIT(Inv), Unit 4(1) vide letter dated 16/03/2018 that in the case of Shri Sunil Tatkare Group it was revealed that Shri Sunil Tatkare and his family members have income from illegal source and amassed huge wealth. It was further reported that assessee had received unsecured loan to the amount of Rs.1,82,00,000/- from the group companies of Shri Sunil Tatkare group, namely, M/s Multiventure Financial Services Pvt Ltd and M/s Prakhyat Infraproject Pvt Ltd. Therefore, the case of the assessee was reopened on the basis of aforesaid information by issuing of notice under section 148 of the Act on 28/03/2018. The Assessing Officer called for various details vide issue of notice under section 143(2)and 142(1) and finalized the assessment at the returned income filed by the assessee. Subsequently, the Principal CIT, Mumbai-1 reiterated in his order that information was received in the case of Shri Sunil Tatkare group from the Investigation Wing which revealed about obtaining unsecured loan from the group concerns of Shri Sunil Tatkare. The Ld.PCIT stated that Assessing Officer had ignored the findings of the Investigation Wing and 3 ITA 437/Mum/2022 accepted the assessee’s submission without carrying out any investigation or enquiries regarding the genuineness of the loan transaction and creditworthiness of the loan creditors. Therefore, a showcause notice under section 263 of the Act was issued on 12/02/2021 asking the assessee that financials of the aforesaid two companies revealed that they have not engaged in any genuine business and the Assessing Officer failed to invoke the provisions of section 68 of the Act. Therefore, Ld.PCIT stated that he proposed to set aside the order passed by the Assessing Officer under section 263 of the Act. However, the Ld.PCIT stated that nothing was heard from the assessee, therefore, he particularly stated that during the course of investigation carried out by the Investigation Wing in the case of Shri Sunil Tatkare group, it was established that the companies from whom assessee has taken unsecured loan were not genuine. The Ld.PCIT accordingly held that the assessee company has failed to prove the creditworthiness and genuineness of the loan transaction. The Ld.PCIT further stated that Assessing Officer has neither examined this issue nor brought any evidence on record to verify whether the said transaction were genuine or not. Therefore, the Ld.PCIT, after applying Explanation 2 to section 263 of the Act held that the order passed by the Assessing Officer was passed without making enquiries or verification which should have been made and the Assessing Officer was directed to frame the assessment afresh after giving due opportunity of hearing to the assessee.
During the course of appellate proceedings before us, the Ld.Counsel vehemently contended that impugned issue of obtaining loan of Rs.82 lakhs from M/s Multiventure Financial Services Pvt Ltd and M/s Prakhyat Infraproject Pvt Ltd was fully verified by the Assessing Officer and the case of the assessee was already reopened on this specific information and during the course of re- 4 ITA 437/Mum/2022 assessment proceedings, the Assessing Officer issued a number of notices under section 142(1) and assessee had also filed the details and explanation during the course of re-assessment proceedings as per the copies of these documents placed in the paper book. The Ld.Counsel further submitted that after reopening the assessment on the specific issue mentioned by the Ld.PCIT in his order under section 263, the Assessing Officer has accepted the explanation of the assessee and passed order under section 143(3) read with section 147 of the Act. Therefore, the action of the Ld.PCIT to say that order passed without any enquiry or verification, is not justified. On the other hand, Ld.DR supported the order of Ld.PCIT.
Heard both sides, perused the materials on record. Ld.PCIT has passed order under section 263 of the Act on 24th March, 2021 and set aside the issue of obtaining loan from two entities of Tatkare group to the file of the Assessing Officer as discussed (supra), in this order. In this regard it is observed that the re- assessment under section 143(3) read with section 147 of the Act was already finalized in the case of the assessee on 31/12/2018 specifically on the basis of information received from the Investigation Wing vide letter dated 6/03/2018 which was also referred by the Ld.PCIT in his order under section 263 of the Act. In the aforesaid re-assessment order, the Assessing Officer had categorically mentioned about the modus operandi adopted by Shri Sunil Tatkare and his family members about earning income from illegal sources as revealed from the Investigation carried out in their cases and categorically stated that assessee had received unsecured loan to the amount of Rs.82 lakhs from M/s M/s Multi Venture Financial Services Pvt Ltd and Rs. 1 crore from M/s Prakhyat Infraproject Pvt Ltd and utilized these funds in acquiring immovable properties and advancing 5 ITA 437/Mum/2022 interest free loans and advances to various parties. We find that the same facts were also reiterated by the Ld.PCIT in his order passed under section 263 of the Act.
We have perused the copies of notices issued under section 142(1) of the Act and copies of information furnished by the assessee in response to such notices placed in the paper book filed by the assessee. On perusal of the same, it is noticed that assessee was asked vide notice under section 142(1) dated 13/1/2018 to furnish the confirmation of loan creditors alongwith bank statement, ITR copy of loan creditors, etc. In response, the assessee has filed the required details, which the Assessing Officer has verified. We have also perused the copy of notice under section 142(1) issued on 08/10/2018 placed in the paper book wherein as per serial Nos.10 & 11 of the Annexure, the Assessing Officer had specifically called for the party-wise details of loan advances alongwith ledger copies and nature of transaction carried out. In response, the assessee vide letter dated 01/11/2018 has filed the details and explanation pertaining to the impugned loan amount of Rs.1.82 crores and submitted that the same was taken as a business advance from the said two parties. Thereafter, the Assessing Officer had again issued notices under section 142(1) of the Act on 13/11/2018 and asked specific details about the impugned advances of Rs.1.82 crores and has also asked the assessee to furnish the confirmation letters from the loan creditors with bank statement, ITR copy and balance-sheets, etc. The assessee had furnished details vide letters dated 15/11/2018 and 07/12/2018 alongwith party-wise details of loan and advances, etc. The assessee had also filed copies of ITRs, balance- sheets, P&L Account and ledger of these parties as placed at pages 62-87 of the 6 ITA 437/Mum/2022 paper bookbefore the Assessing Officer. The Ld. Counsel has also referred a number of judicial pronouncements, which are as under:-
1. 1. CIT vs Gabriel India Ltd – (1993) 71 Taxmn 585 (Bom) 2. CIT vs Krishna Capbox (P) Ltd – (2015) 60 taxmann.com 243 (All) 3. CIT vs R.K. Construction Co.- 313 ITR 65 (Guj) 4. Grasim Industries Limited vs CIT – 188 taxmann.com 327 (Bom) 5. CIT vs Fine Jewellery (India) Ltd – 372 ITR 303 (Bom) We have perused these judicial pronouncements.
7. In the case of CIT vs Gabriel India Ltd (supra), the Hon’ble jurisdictional Bombay High Court held that ITOs order could not be held to be erroneous simply because in his order he did not make an elaborate discussion.
8. In the case of CIT vs Krishna Capbox (P) Ltd (supra), the Hon’ble Allahabad High Court has held that where Assessing Officer passed assessment order after certain queries from assessee, mere non discussion or non mention thereof in assessment order could not lead to an assumption that Assessing Officer did not apply his mind, invoking of revision proceedings under section 263 on said ground was not justified.
9. In the case of CIT vs R.K. Construction Co (supra), the Hon’ble Gujarat High Court held that where Assessing Officer has taken a particular view on the basis of evidence produced before him, it is not open for the Commissioner in revisional proceedings under section 263 to take a different view on the same material.
10. In the case of Grasim Industries Limited vs CIT (supra), the Hon’ble jurisdictional Bombay High Court held that where Assessing Officer had taken a possible view and therefore, Commissioner was not justified in exercising powers under section 263 of the Act.
7 ITA 437/Mum/2022 11. In the case of CIT vs Fine Jewellery (India) Ltd (supra), the Hon’ble jurisdictional Bombay High Court, as referred above, has held that since the Assessing Officer had made specific enquiry on this issue during assessment proceedings and nature of expenditure was explained by the assessee and view taken by the Assessing Officer was a possible view, the order of Assessing Officer could not be set aside in exercise of powers under section 263 of the Act.
In the light of above facts and findings and after perusal of the materials on record, it is evident that assessee has provided all the details, which have been called for by the Assessing Officer during the course of re-assessment proceedings under section 143(3) read with section 147 of the Act carried out in the case of the assessee on the specific issue of obtaining loan amount as discussed (supra). However, the Ld.PCIT could not controvert these facts that once the assessee had made complete compliance to the query raised by the Assessing Officer upon the impugned issue by furnishing all the details called for and the Assessing Officer has made a possible view on the basis of submission made, then what sort of verification is required to be made by the Assessing Officer.
After considering the above facts and finings, we find that decision of Ld.PCIT in treating the order under section 143(3) read with section 147 dated 13/12/2018 as erroneous and prejudicial to the interest of the revenue is not justified. Therefore, we set aside the order passed under section 263 of the Act and allow the appeal filed by the assessee.