PUSHKAR CORPORATION,AHMEDABAD vs. THE PR.CIT, CENTRAL, AHMEDABAD

आदेश/O R D E R

PER PRADIP KUMAR KEDIA - AM:

[Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 2 -

2. The grounds of appeal raised by the assessee read as under:

“1. Order U/s of the Act passed by the Ld. Pr. Commissioner of I. Tax, Central, Ahmedabad is bad and illegal. 2. The Ld. Pr. Commissioner of I. Tax, Central, Ahmedabad has erred in law and on facts while passing order U/s 263 of the Act in considering that the order passed by Ld.A.O. is erroneous & prejudice to the interest of revenue.”

4. To adjudicate the grievance of the assessee, the relevant facts are noted as follows:

4.1 The assessee filed its return of income for AY 2012-13 in question on 28.08.2012 declaring total income at Rs.32,50,130/-. A notice under s. 143(2) of the Act was issued on 08.08.2013 and the return filed by the assessee was subjected to scrutiny assessment. In the assessment order, it was noticed that a search and survey action was conducted on Sarkar Group under s.132/133A of the Act. Subsequently, search and survey proceedings were also conducted on Soham Group as well. Apart from these facts, the assessment order does not state anything else of any relevance. The income offered by the assessee was accepted as such by a non-descript and brief order.

4.2 The assessment order so framed by the AO under s.143(3) of the Act was sought to be modified by the PCIT in the proceedings under s.263 of the Act. A show cause notice dated 04.12.2015 was issued to the assessee in this regard alleging the aforesaid assessment order to be erroneous and [Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 3 - prejudicial to the interest of the Revenue. The relevant portion of the show cause notice is reproduced hereunder:

No.CIT(C) I/Tech/263/PC/2015-16 Date: 04/12/2015

To: The Principal Officer, MIs. Pushkar Corporation. 27, Nakshatra Arcade, IOC Road, Chandkheda, Ahmedabad Sir,

Sub: Notice u/s. 263 of the I T Act in your case for AY 2012-13 - Giving an opportunity of being heard – regarding

Please refer to the subject mentioned above.

3. On perusal of the seized documents and case records the following discrepancies have been found:

3.1 During the course of P.O. revocation at the office of Soham Group a loose paper file containing pages nos. 1 to 242 was found, annexed as Annexure A-2 and seized during the search. This loose paper contained details of the Purchase and sale documents of lands by the assesses. Page no 242 of the loose paper is scanned and reproduced below:-

[Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 4 -

3.2 The above chart is found and seized from the office premises of Shri Narendra Jivanlal Patel who is one of the partners of the assessee firm. The chart indicates the total parcel of land purchased by the assessee and respective sale. It can be seen from the chart that four parcels of land bearing survey nos.315,318,389/1 and 316 having a total area of 38243 Square Metres i.e 45,738 Square Yards was purchased by the assessee. Out of this the plots bearing survey no.389/1 is split into two final plots bearing P.P.No.167/1 and 167/2. Further, survey nos. 315 & 318 together have been split into two final plots bearing P.P. no.89/1 and 89/2. These land parcels were sold at the following price by the assessee:

S.No. Particular Area (Sq Area (Sq Buyer Date of consideration s mtrs) Yds) registration as per the of sale registered sale deed deed F.P. 89/1 M/s 1 of 3,764 4,502 Rameshwar 23-Oct-10 Rs 2,25,00,000 S. No 31 5 at 2 F.P. 90 of 2,914 3,485 M/s Siddhi 3-Nov-10 Rs.1,80,00,000 s. No 316 Vinayak at Jundal Devlopers 3 F.P. 89/2 5,220 6,245 M/s Kunjan 19-May-11 Rs3,50,00,000 OF S. No Corporatio 318 at n Jundal 4 F. P. 3,500 4,185 M/s Soham 19-Oct-11 Rs.2,75,00,000 167/2 of Housing S. No. corporation 389/1 at Jundal

3.3 From the residences of Shri Sarkar (Partner of the assessee firm) a loose paper evidencing unaccounted cash transactions was seized vide page number 42 of annexure A-1 to the panchnama dated 12/13-07-2013. The scanned image of the said loose paper is reproduced below:

[Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 5 -

3.4 After in depth investigation of Page No. 42, the actual picture is clear that on this page three different land transaction details are written and in each figure ‘000’ have been omitted. This facts is confirmed on verifying the copies of Sale deeds with the figures mentioned in the loose paper. For example the figure noted with narration ‘dastavej’ on seized paper is 22500 which as per the document No.6482/2011 date 29/3/2011 was found to be actually 22500000. The three instances recorded on the left hand side are as under:-

(i) Mavajibhai 4502 (land sq.yd.) x 20.8 (rate of land i.e. 20,800)

A 4502 x 20,800 Sale Consideration as per Rs.9,36,41,600 market rate.

B As per Document No.6482/2011 date 29/3/2011 the sale consideration of said land mentioned in document. Rs.2,25,00,000

C On money Amount ( A-B) Rs.7,11,46,000 D Less: expenses Rs. 61,46,000 Net On Money amount received in cash (C-D) Rs.6,50,00,000 (ii) Manubhai 3485 (land sq.yd.) x 20 (rate of land i.e. 20,000) A 3485 x 20,000 Sale Consideration as Rs.6,97,00,000 per market rate.

B As per Document No. 22936/2010 date 14/12/2010 the sale consideration of said land mentioned in document. Rs. 1,80,00,000 C On money Amount ( A-B) Rs.5,17,00,000

D Less: Dalali cash Rs. 3,50,000 Net On Money amount received (C-D) Rs.5,13,50,000 (iii) 6245 (land sq.yd.) x 23.5 (rate of land i.e. 23,500) A 6245 x 23,500 Sale Consideration Rs.14,67,57,500 as per market rate

B As per Document No.9610/2011 date 19/05/2011 the sale consideration of said land mentioned Rs. 3,50,00,000 in document.

C On money Amount ( A-B) Rs.11, 17,57,500 [Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 6 -

4.4 In response to the show cause notice, the assessee filed reply which was capsuled by the PCIT in para 6 of its order as under:

“6. A notice u/s. 263 of the I T Act was issued upon the assessee on 4.12.2015, asking the assessee to show cause as to why the assessment order passed by the AO should not be revised as it was both erroneous and prejudicial to the interest of revenue. Since no response carne forth, another opportunity was given vide notice dated 31.12.2015. Shri Mahesh Chhajed, C.A. & A.R, attended on 21.01.2016 and submitted the explanation, contending as under:- a. That the proposed revision is based on mere surmises and without any evidence on record. b. That during the course of search/survey, no evidence was found regarding receipt of on-money by the assessee. c. That the land has been sold much above the jantri price and also above the comparable sale instances. d. That 73% of the partners of the assessee firm are 100% partners in Kunjan Corporation. Therefore, there cannot be any earning of self out of self. e. That the evidence being rough notings on a chit so relied upon by the Revenue is merely a dumb document. f. That Shri Sarkar had categorically stated during the course of search, in his statement recorded u/s. 132(4) of the I T Act that the Right Hand side notings of the seized document is in his handwriting and the handwriting on Left Hand side at page no.42 is not his, but he also expressed ignorance as to why the contents on the said page has been written. The contents in the hand writing of the Shri Sarkar are nothing but mere jottings. g. That the legislature, in its wisdom has enacted section 50C as per which, the full value of consideration for the purpose of section 48 and section 28 shall be deemed as is assessed by the Stamp Valuation authority for the purpose of payment stamp duty. h. The AO as well as the Investigation Wing has not brought anything on record to prove that on money has changed hands. 6.1 The assessee has also relied upon various judicial pronouncements challenging the proposed revision of the assessment order u/s.263 of the IT Act. The judicial decisions so relied upon by the assessee, is being considered separately.”

4.5 The PCIT however was not impressed by the pleadings of the assessee. As per para 7 of its revisional order, the PCIT noted broadly as under: [Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 8 - 4.6 The transactions recorded in the loose sheet are relatable and connected to the actual transactions and the entries noted in the loose sheets are obvious and speaking which reveals large scale involvement of on-money/cash money in the land transactions and therefore such seized documents were not dumb documents per se. The PCIT noted that the AO has not ventured into any inquiry whatsoever in respect of impugned transactions recorded in loose papers seized and completed the assessment under s.143(3) of the Act mechanically and perfunctorily. The PCIT accordingly set aside and cancelled assessment order and directed the AO to look into the factual aspects and finalize the assessment after considering the evidence surfaced in search proceedings and pass a fresh assessment order in accordance with law.

5. Aggrieved by the aforesaid direction of the PCIT under s. 263 of the Act, the assessee preferred appeal before the Tribunal.

5.1 The learned AR for the assessee reiterated various submissions made before the PCIT as noted in its order and pointed out that the jurisdiction assumed by the PCIT is not proper. It was further contended by the learned AR for the assessee that the order passed under s.143(3) of the Act (which is subject matter of revision) itself is not sustainable in law and the correct course of action open to the AO was to pass order under s.153C r.w.s. 153A of the Act in view of search in group cases. The learned AR for the assessee also contended that the assessment order is neither erroneous nor prejudicial to the interest of the Revenue. The learned AR relied upon several judicial pronouncements to support its contention that where the AO has wrongly assumed jurisdiction under s.143(3) of the Act instead of Section 153C of the Act, the original order stood invalid and consequently, the revisional order passed under s.263 of the Act based on such order is also void ab initio. The learned AR referred to the decision of Hon’ble Karnataka High Court in the case of Canara Housing Development Company vs. DCIT (2014) 49 taxmann.com 98 (Karnataka) to support such proposition. The learned AR also referred to host of judicial precedents to claim that the AO was not entitled to make any additions on [Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 9 - the basis of dumb document and consequently, the order passed by the AO cannot be said to be erroneous and prejudicial to the interest of the Revenue.

5.2 The learned DR for the Revenue, on the other hand, relied upon the order passed by the PCIT under s.263 of the Act. It was further pointed out that at the time of issuance of notice to the assessee under s.153C of the Act on 13.11.2015, the order dt. 30.03.2015 under s.143(3) of the Act was already passed and therefore such order was valid and sustainable in the eyes of law.

6.1 Supervisory jurisdiction vested under Section 263 of the Act enables the concerned PCIT/CIT to review the records of any proceedings and order passed therein by the AO. It empowers the Revisional Commissioner concerned to call for and examine the records of another proceeding under the Act and if he considers that any order passed therein by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue, then he may (after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary), pass such order thereon as the circumstances of the case justify, including the order enhancing or modifying the assessment or cancelling the assessment and directing afresh assessment. Thus, the revisionary powers conferred on the PCIT/CIT under s.263 of the Act are of very wide amplitude with a view to address the revenue risks which are objectively justifiable.

6.2 In the facts and circumstances of the case, the substantive issue that emerges for adjudication is whether the PCIT under the umbrella of revisionary powers is entitled to upset the finality of assessment proceedings before the AO where the AO has allegedly committed error in [Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 10 - passing assessment order without proper verification and inquiry of documents found and seized in the course of search in group cases of assessee. It is the case of the PCIT that certain seized documents giving rise to inference of involvement of suppression in the sale price of land parcels as well as involvement of unaccounted cash money were remained to be considered while framing assessment. The PCIT also observed that the AO has not made any inquiry or verification which should have been made facts and circumstances of the case.

6.3 In so far as lack of inquiry on the transactions found to be recorded in the seized paper relatable to the assessee firm, we find that the controversy is plain and simple and is not capable of any debate. A bare reading of the assessment order shows no reference whatsoever to the loose paper seized. The seized documents were found to be relatable and connected to the assessee. A part of the transactions recorded in the loose papers were subjected to assessment in AY 2011-12. It was thus incumbent upon the AO to at least state as to how the transactions found to be unrecorded from the drastic action of search are not liable to be assessed. The assessee has also failed to show that relevant enquiries were actually carried out by AO while framing assessment. On the conspectus of the facts and circumstances narrated by the PCIT, we are of the view that AO has totally failed to make any inquiry on such vital documents and merely accepted the return of income perfunctorily and without application of mind. This is not to say that the claim of the assessee on merits is incorrect or otherwise. The pertinent question here is whether when there is no or total absence of inquiry on certain entries discovered and relatable to the assessee which has a bearing on ultimate taxable income of the assessee, is it open to the PCIT to invoke jurisdiction under s.263 of the Act or not. The answer to this question is clearly in affirmative. In these circumstances, the order passed by the AO in discharge of its quasi judicial functions is clearly erroneous and prejudicial to the interest of the revenue as noted. [Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 11 - 6.4 We may notice here that the assessee has challenged the validity of order passed under s.143(3) of the Act for the first time before us. However the question before us is the correctness of the action of the PCIT on an order passed which continues to hold field as on date. The validity of assumption of jurisdiction under s. 153C instead of Section 143(2)/143(3) of the Act sought to be raised requires factual examination and legal analysis of several factual aspects. We, at this stage, and in these proceedings are not equipped to look into such complex aspects on altogether new facts referred for the first time. Such question may be relevant only in regular proceedings, if suitably challenged.

6.5 It may be pertinent to observe that the proceedings under s.143(2) of the Act would abate only upon valid assumption of jurisdiction under S. 153C of the Act. Stringent pre-requisites have been prescribed under s.153A/153C of the Act for completion of assessment by taking resort to such provisions. In the absence of a valid and maintainable notice demonstrated to be subsisting under s. 153C of the Act during the pendency of assessment proceedings in revision, it does not lie in the mouth of the assessee to take a plea of non-maintainability of assessment order under revision by supervisory authority and take shelter of judgment of Hon’ble Karnataka High Court Canara Housing Development Company (supra) to escape the assessment proceedings altogether. The judgment in Canara Housing Development Company (supra) was rendered in the context of Section 153A of the Act where it was prima facie demonstrable on facts without any efforts that the assessment which was subject matter of revision was not sustainable in law. No examination of facts was needed unlike the proceedings under s. 153C of the Act which is dependent on many conditions and satisfaction of competent officers and bears many altogether different trappings. Looking from a different angle, any proceedings (unless abated) under the Act can be subject matter of revisional proceedings under s. 263 of the Act. Thus, unless it is known that the proceedings under s.143(3) of the Act stood invalidated, the PCIT/CIT is empowered to exercise powers conferred under s.263 of the Act. The determination of validity and jurisdiction of regular assessment [Pushkar Corporation vs. Pr.CIT] AY 2012-13 - 12 - is thus in altogether sphere. Hence, at the threshold, the conclusion of the PCIT of the order being erroneous and prejudicial to the interest of the Revenue cannot be faulted where the correctness of the objection raised on behalf of the assessee has not been tested in any other proceedings at all. In the result, we do not find any force in the appeal of the assessee. Resultantly, appeal of the assessee stands dismissed.

This Order pronounced in Open Court on 26/07/2019

Sd/- Sd/- (MADHUMITA ROY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 26/07/2019 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।