POONAM AGARWAL,PUNE vs. PRINCIPAL COMMISSIONER OF INCOME-TAX -4, PUNE

Heard both the parties. Case file perused.

The assessee has raised the following substantive grounds in the instant appeal :

“The learned PCIT-4, Pune erred in law and on facts in assuming jurisdiction u/s 263 of the ITA, 1961 on the analogy that the order passed u/s 2 ITA.No.185/PUN./2021 Mrs. Poonam Agarwal, Pune. 143(3) of the ITA, 1961 dated 21/09/2017 was erroneous and prejudicial to the interest of the revenue; by invoking Explanation-2 of section 263 of the ITA, 1961. The learned PCIT-4, Pune ought to have appreciated that Explanation-2 was inserted w.e.f. 01/06/2015, and the same was not applicable to AY 2015-16.

2. The learned PCIT-4, Pune erred in law and on facts in not appreciating the fact that all the details/ information relating to the transaction of purchase/ sale of shares of M/s. Golden Legand Leasing and Finance Ltd., which were called for by the learned AO; were submitted during the scrutiny proceeding u/s 143(3) of the ITA, 1961, and were duly verified by the learned AO. As such the order u/s 143(3) of the ITA, 1961 is neither erroneous nor prejudicial to the interest of the revenue.

The learned PCIT-4, Pune erred in law and on facts in treating the transaction as colorable device to evade taxes, merely because appellant's share

Both the learned representatives at this stage invited our attention to the PCIT’s detailed revision discussion terming the Assessing Officer’s regular assessment dated 21.09.2017 as an erroneous one causing prejudice to the interest of the Revenue as follows :

Mr. Fadke vehemently argued during the course of hearing that the PCIT herein has erred in law and on facts in exercising his impugned revision jurisdiction thereby invoking Explanation-2 of the Act inserted in the Finance Act, 2015 w.e.f. 01.06.2015 whereas we are in assessment year 2015-16 only. We find no merit in the assessee’s instant arguments since the issue herein is not of the assessment year once the clinching aspect for the purpose of invoking the foregoing statutory Explanation is not that of the assessment year but the assessment itself which is framed after 01.06.2015. We further observe that although the assessee has invited our attention to the Assessing Officer’s detailed discussion in his assessment order dated 29.01.2017 as well as the scrutiny proceedings right from sec.143(2) notice dated 25.07.2016 onwards, it emanates from the case records that the assessing authority herein had merely called for details which stood duly replied by way of share transaction particulars, de-mat statement and the alleged specific enquiry of five persons with bank statement etc. We are of the opinion that such mere filing of such documentary evidence hardly amounts to the Assessing Officer having carried-out adequate inquiry(ies) once he was performing the twin roles of investigator as well as adjudicator as held in Gee Vee Enterprises vs. Addl. CIT [1975] 99 ITR 375 [Del.] as well as CIT vs. Godavaridevi Saraf [1978] 113 ITR 589 [Bom.]. Hon’ble apex court’s landmark decision in 18 ITA.No.185/PUN./2021 Mrs. Poonam Agarwal, Pune. Malabar Industrial & Co. Ltd., vs. CIT [2000] 243 ITR 3 (SC) has settled the law long back that Assessing Officer’s action not making such enquiries during the course of scrutiny indeed attracts both these limbs of his assessment being erroneous as well as prejudicial to interests of the Revenue, simultaneously.

This assessee’s appeal is dismissed in above terms.