SMT. SHRUTI RAHUL MANE,,SANGLI vs. PRINCIPAL COMMISSIONER OF INCOME-TAX : 1,,

Shri C.H. Naniwadekar appearing on behalf of the assessee submitted that the assessee purchased agricultural land admeasuring 2.26 R at Sangli on 11-10-2010 vide purchase deed No. 3661/10 for consideration of Rs.36 lakhs. No return of income was filed by the assessee for the impugned assessment year. On the basis of AIR information, the Assessing Officer issued notice u/s. 148 on 06-06-2012 to the assessee. In response to the said notice, the assessee filed return of income on 22.02.2013 declaring total income of Rs.12/- from other source and Rs.2,00,000/- from agriculture. During assessment proceedings the assessee was asked to explain source of funds for purchase of land. The assessee explained that for purchase of land she borrowed money from four persons. All the four persons were closely related to the assessee. The hand loans were taken from : i. Rohit Ashok Mane, brother in law Rs.5,01,600/-; ii. Rahul Ashok Mane, husband Rs.15,00,000/-; iii. Swapnil Suresh Sawant, brother Rs.4,00,000/-; and iv. Suresh Shankar Sawant, father Rs.11,00,000/-.

On the other hand Mrs. Kesang V. Sherpa representing the Department vehemently defended the impugned order. The ld. DR submitted that a perusal of statements of assessee and the lenders would show contradictions. The Assessing Officer has failed to conduct proper enquiries qua the source of funding for purchase of agricultural land by the assessee. Hence, the assessment order is erroneous and prejudicial to the interest of revenue. The ld. DR further submitted that the provisions of

Controverting the submissions advanced by DR, the ld. AR submitted that in the first place the Assessing Officer has made proper enquiries and verifications qua the transaction of purchase of agricultural land and hand loans taken by assessee to finance the said purchase. Secondly, the amendment to section 263 would not apply to the assessment year under appeal. The amendment is prospective in nature and would be effective from 01-06-2015. The date of passing of order u/s. 263 is not relevant. The relevant factor is the assessment year. In support of his contentions the ld. AR placed reliance on the following decisions : i. Reliance Money Infrastructure Ltd. Vs. Pr. Commissioner of Income Tax in ITA No. 3259/Mum/2017 for assessment year 2012-13 decided on 06-10-2017; ii. M/s. Arun Kumar Garg HUF Vs. Pr. Commissioner of Income Tax in ITA No. 3391/Del/2018 for assessment year 2014-15 decided on 08-01-2019.

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. It is a well settled law that the Pr. Commissioner of Income Tax/Commissioner of Income Tax cannot invoke revisional jurisdiction u/s. 263 unless twin conditions of „erroneous order‟ and „prejudicial to the interest of revenue‟ are satisfied. Both these conditions have to be read together. It is also a well settled law that where the enquiries have been made by the Assessing Officer even though they are inadequate, the provisions of section 263 cannot be invoked. Lack of enquiry and inadequate enquiries are on different pedestal. The revisional jurisdiction can certainly be invoked where the Assessing Officer has failed to conduct enquiries/verifications at all.

In the instant case a perusal of assessment order reveals that the Assessing Officer had issued questionnaire along with the notice u/s. 142 to the assessee on 28-06-2013. The assessee has replied to the questionnaire giving details of persons and the source of hand loans advanced by them to the assessee for purchase of land. Substantial loans have been given to the assessee through cheque. The details of the loans are duly recorded in the assessment order. The Assessing Officer has issued summons u/s. 131 to Shri Swapnil Suresh Sawant one of the lenders of the assessee and recorded his statement on oath. All the lenders are closely related to the assessee and have supported the assessee by filing confirmations and affidavits. The Assessing Officer after conducting enquiries came to the conclusion that the source of investment in land has been duly explained by the assessee and hence, no addition was made. The order of Assessing Officer may be prejudicial to the interest

In so far as the contention of the Department that since the impugned order has been passed after the amendment, therefore, amended provisions of section 263 would apply, we do not find favour with this contention. The amendment to section 263 by the Finance Act, 2015 is effective from 01-06-2015 and does not operate retrospectively. Thus, the amended provisions of section 263 would have no bearing on the assessment year under appeal i.e. assessment year 2010-11. Merely for the reason that the order u/s. 263 has been passed after the amendment would not bring the assessment year 2010-11 within the ambit of amended provisions of section 263 of the Act.

The Mumbai Bench of Tribunal in the case of Reliance Money Infrastructure Ltd. Vs. Pr. Commissioner of Income Tax (supra) while dealing with the issue on retrospective applicability of section 263 in turn has relied on the Tribunal decision in the case of Narayan Tatu Rane V/s. Income Tax Officer, Ward 27(1)(1), Mumbai reported in (2016) 70 taxmann.com 227 (Mum), and has held the provisions of section 263 amended by Finance Act, 2015 does not operate retrospectively.

Thus, in view of the facts of the case and decisions discussed above, we hold that the Pr. Commissioner of Income Tax exceeded his jurisdiction in invoking revisional powers. The Assessing Officer has passed the assessment order after conducting reasonable enquiries. Hence, the impugned order is set aside and the appeal of assessee is allowed.

In the result, the appeal of assessee is allowed.