SHIV VEGPRO PRIVATE LIMITED ,KOTA vs. PCIT-UDAIPUR , UDAIPUR

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"clean_text": "आयकर अपीलीय अधिकरण, जयपुर न्यायपीठ, जयपुर\nIN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,\"B\" JAIPUR\nडा० एस. सीतालक्ष्मी, न्यायिक सदस्य एवं श्री राठौड़ कमलेश जयन्तभाई, लेखा सदस्य के समक्ष\nBEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM\nआयकर अपील सं./ITA. No. 1014/JPR/2024\nनिर्धारण वर्ष / Assessment Years : 2017-18\nShiv Vegpro Pvt. Ltd.,\nSP-3, RIICO Agro Food Park,\nRanpur, Kota .\nबनाम\nVs.\nThe PCIT,\nUdaipur.\nस्थायी लेखा सं./ जीआईआर सं./PAN/GIR No.: AAJCS7629B\nअपीलार्थी / Appellant\nप्रत्यर्थी / Respondent\nनिर्धारिती की ओर से / Assessee by : Shri Mahendra Gargieya, (Adv.) &\nShri Hemang Gargieya (Adv.)\nराजस्व की ओर से / Revenue by : Mrs. Alka Gautam, (CIT-DR)\nसुनवाई की तारीख / Date of Hearing : 19/12/2024\nउदघोषणा की तारीख/ Date of Pronouncement : 28/01/2025\nआदेश/ ORDER\nPER: RATHOD KAMLESH JAYANTBHAI, AM\nThis appeal is filed by the assessee aggrieved from the order\nof the Learned Principal Commissioner of Income Tax, Udaipur\ndated 29.02.2024 [ for short “PCIT”] for the assessment year 2017-\n18. Ld. PCIT passed that order while exercising the power vested\nupon her u/s. 263 of Income Tax Act, 1961 [ for short Act ] while\nexamining the assessment records of the assessee which was\npassed by the National Faceless Assessment Centre on\n15.04.2021.\n2. The assessee has marched this appeal on the following\ngrounds:-\n“1. The Ld. PCIT, Udaipur seriously erred in law as well as on the facts\nof the case in invoking the provisions of S.263 of the Act and therefore,\nthe impugned order dated 29.02.2024 u/s 263 kindly be quashed.\n2. The Id. PCIT, Udaipur seriously erred in law as well as on the facts\nof the case in assuming juri iction u/s 263 by wrongly and incorrectly\nholding that the subjected assessment order passed u/s 147 dated\n15.04.2021 is prejudicial to the interests of the revenue. The\nassumption of juri iction u/s 263 being contrary to the provisions of\nlaw and facts on record, hence, the proceedings- initiated u/s 263\nhence, the impugned order dated 29.02.2024 deserves to be quashed.\n3. Rs.24,14,531/ The Id. PCIT, Udaipur in the impugned order passed\nu/s 263 of the Act, raised an altogether new issue of the alleged\ndisallowance on account of late payment of PF/ESI contributions of\nRs.24,14,531/- u/s 36(1)(va) of the Act. The impugned order thus, to\nthis extent is a nullity being without juri iction and therefore deserves\nto be quashed.\n4. Rs. 63,97,664/-1 The Id. PCIT, Udaipur in the impugned order\npassed u/s 263, raised an altogether new issue of the alleged\ndisallowance u/s 43B(e) of the Act on account of interest payable to\nscheduled banks on bank loan of Rs.63,97,664/-. The impugned order\nthus, to this extent is nullity being without juri iction and therefore\ndeserves to be quashed.\n5. Rs. 21,732/-: The Id. PCIT, Udaipur in the impugned order passed\nu/s 263, raised an altogether new issue of the alleged disallowance u/s\n36(1)(iii) of the Act on account of 5. interest payable for delayed\npayment of TDS of Rs.21,732/-. The impugned order thus, to this\nextent in nullity being without juri iction and therefore deserves to be\nquashed.\n6. Rs.6,35,00,000/-: The Id. PCIT, Udaipur in the impugned order\npassed u/s 263, raised an issue for obtaining new loans during the\nimpugned previous year of Rs.6,35,00,000/-. The impugned order thus,\nto this extent is a nullity being without juri iction and therefore\ndeserves to be quashed.\n7. The appellant prays your honor indulgences to add, amend or alter\nof or any of the grounds of the appeal on or before the date of hearing.”\n3.\nAt the outset of the hearing the bench noted that there was\ndelay of 96 days in filling the present appeal by the assessee. In\nsupport, the assessee filed an application for condonation of delay\npraying therein as under:-\n\"The Humble - Assessee most respectfully begs to submit as under:\n1. That in the aforesaid matter, the Id. PCIT, Udaipur passed the Order\nu/s 263 on dated 29.02.2024 (hereinafter referred as \"impugned\norder\"), Accordingly, the appeal was to be filed on/before dt.\n28.04.2024 however, the same has been filed on dated 29.07.2024.\nThus, the appeal was filed with a delay of 92 days.\n2.1 Reasonable Cause Existed: With regard to the delay, it is humbly\nsubmitted that there did exist a reasonable cause and the delay so\ncaused was completely unintended and bonafide in as much as Shri\nSushil Mittal, employed in the office of the Company and permanent\nemployee of the appellant company namely, M/s SHIV VEGPRO\nPRIVATE LIMITED, Kota, was assigned the task to collect the appeal\nprepared from the counsel at Jaipur, to get it signed and to ensure filing\nof the same in time. Shri Sushil Mittal was fully conversant with the\naffairs of the above assessee in the office of M/s SHIV VEGPRO\nPRIVATE LIMITED, Kota. Shri Sushil Mittal collected the documents\nprepared from the counsel at Jaipur, which were received only a week\nbefore the last date of filing of the appeal.\nIn the meanwhile, because of the marriage of his daughter in the month\nof April, he proceeded on leave. Therefore, he could neither hand over his\nresponsibilities to his colleague nor could inform Shri Sandeep\nKumar Saboo, Director of the company about the documents, including\nthe appeal papers.\n2.2 Although subsequently, Shri Sushil Mittal resumed his duties in the\noffice sometime in the first week of May, 2024, yet however, it did not\noccur to his mind that some appeal papers were to be signed, which\nwere still lying pending with him.\n2.3 It is only thereafter, in the second week of July, 2024 when CA\nDharm Chand Jain, FCA contacted the counsel engaged at Jaipur w.r.t.\nthe status of the appeal (which he believed had already been filed), but\nthen he was informed that the same is yet to be filed and that the\nappeal papers were received by Shri Sushil Mittal for getting them\nsigned. In absence of any persuasion from the side of the Assessee\nand M/s DHARM CHAND JAIN & ASSOCIATES, Chartered\nAccountant, the counsel at Jaipur, already handling a heavy workload,\ninformed the factual position to Shri Dharm Chand Jain. It is only\nthereafter, the Director, Shri Sandeep Kumar Saboo immediately\nenquired Shri Sushil Mittal and asked him to hand over him the\nsubjected documents the appeal set, who thereafter, recollected and\nafter making an extensive search could lay his hand on the appeal\npapers. Upon getting hold of the documents, Shri Sandeep Kumar\nSaboo, promptly signed the papers and thereafter, forwarded the same\nto the counsel at Jaipur without any further delay.\n2.4 Thus, the delay in filing of the instant appeal was not at all\ndeliberate or intentional but arose due to circumstances beyond the\nassessee's control, primarily stemming from the unintended and\nbonafide mistake committed by the Employee working at the Assessee-\nCompany. The Assessee has acted diligently and in good faith\nthroughout this process, taking all necessary steps to rectify the\nsituation and ensure compliance.\n2.5 That the applicant was a layman & not very conversant with the\ncomplex tax laws and due to the circumstances stated above, the delay\nso caused was beyond their control but was bonafide and unintended.\nThe assessee was not going to gain any benefit because of the\ndelayed finding and their conduct was not contumacious.\n3. In support, affidavits of Shri Sandeep Kumar Saboo and Shri Sushil\nMittal are enclosed herewith and marked as Annexure-1 and Annexure-\n2.\n4. Supporting Case Laws: It is submitted that the Hon'ble Supreme\nCourt in the case of Collector, Land & Acquisition v. Mst. Katiji & Others\n(1987) 167 ITR 471 (SC) has advocated for a very liberal approach\nwhile considering a case for condonation of delay. The following\nobservations of the Hon'ble Court are notable:\n\"The legislature has conferred the power to condone delay by enacting\nsection 5 of the Limitation Act 1963 in order to enable the Courts to do\nsubstantial justice to parties by disposing of matters on 'merits. The\nexpression 'sufficient cause' employed by the legislature is adequately\nelastic to enable the Courts to apply the law in a meaningful manner\nwhich sub serves the ends of justice that being the life-purpose of the\nexistence of the institution of Courts. It is common knowledge that this\nCourt has been making a justifiably liberal approach in matters\ninstituted in this Court, But the message does not appear to have\npercolated down to all the other Courts in the hierarchy.\"\nThe said judgment is a leading case on the subject and has a binding\nforce on all the officers subordinate thereto.\nPrayer\nIt is, therefore, humbly prayed that:\na. This application may kindly be allowed by condoning the delay,\ntaking a sympathetic view, in the interest of justice.\nb. Any other order, which this Hon'ble ITAT deems fit and proper, be\nalso passed in favour of applicant assessee.”\nThe assessee also supported the contention so raised in the\napplication with an affidavit so executed by Shri Sandeep Saboo\ndirector of the company. Based on that contention the Id. AR of the\nassessee prayed to condone the delay.\n3.1 On the other hand, Id. DR objected that the reasons\nadvanced are not sufficient to condone the delay.\n3.2 We have heard both the parties and perused the materials\navailable on record. The Bench noted that the reasons advanced\nby the assessee for condonation of delay of 96 days that the\nperson was engaged in the marriage of daughter and thereafter on\nbeing aware the appeal was filed. Looking to the facts stated in the\napplication they are sufficient to condone the delay and it has merit\nbased on the prayer advanced by the assessee. Thus, we concur\nwith the submission of the assessee and condone the delay of 96\ndays in filing the appeals by the assessee in view of the decision of\nHon'ble Supreme Court in the case of Collector, land Acquisition\nvs. Mst. Katiji and Others, 167 ITR 471 (SC) as the assessee was\nprevented by sufficient cause.\n4. The fact as culled out from the records is that M/s Shiv\nVegpro Pvt. Ltd. is a Company engaged in the manufacturing of\nvegetable oil, DOC, High Pro-DOC etc. Assessee filed its Return of\nIncome dated 06/11/2017 with acknowledgement number\n291801621061117 declaring taxable income at Rs. 9,56,12,530/-.\nThe case of the assessee was re-opened for the A.Υ. 2017-18\nconsequent to information received from the Office of the Income\nTax Officer, Ward-4(5)(1), Delhi regarding bogus transactions\nentered into by the assessee during the financial year 2016-17.\nThe scrutiny proceedings were initiated by serving the notice u/s\n148 of the Act dated 17/03/2020.\n4.1 Thereafter, notice u/s 143(2) of the Act was issued to the\nassessee through ITBA on 30.09.2020. Vide letter dated 4/11/2020\nassessee objected to the reopening proceedings-initiated u/s 147\nof the Act. The objections raised by the assessee was disposed of\nby the assessing officer vide Order dated 08.01.2021.\n4.2 The reasons recorded for reopening of the case; to verify the\ngenuniness of the Sales made by the assessee to M/s Kangana\nAgro Products Ltd, was required to be verified about the\ngenuniness of the manufacturing activities of the assessee.\nNotice u/s 142(1) of the Act was issued and served to the\nassessee on 05.02.2021.\n4.3 In response to the above notice the assessee submitted part\nreply only and did not submit any details of Purchases, Sales and\nValuation of Stock etc., which could establish the claim of the\nassessee that its sale is genuine. Although the assessee has\nsubmitted the sale invoices amounting to Rs. 6,93,32,499/- made\nto the party named M/s Kangana Agro Product, no supporting\nevidence of goods actually transported has been submitted. On\nperusal of the sales invoices submitted by the assessee, it is seen\nthat the details of the transporters, GR/LR no, date and time of\nentry, date and time of dispatch are left blank. Hence, it appears\nthat these invoices/documents are self-generated and do not prove\nthe actual movement of the goods allegedly sold to the party M/s\nKangna Agro Products for Rs. 6,93,32,499/-.\n4.4 Shri Sanjay, Proprietor of M/s Kangna Agro Products (PAN:\nEFKPS5346C) in his statement recorded on 11/11/2019 u/s 131(1)\nof the Act mentioned that he was only a helper/cleaner in the\nOffice of Shri Om Prakash and Shri Om Prakash established a\nproprietorship concern called M/s Kangna Agro Products in the\nname of Shri Sanjay. He further stated in his statement that he\nnever did any business from this proprietorship concern, and he\ndid not have any knowledge about the business activities of the\nsaid concern or about the funds credited/debited in the said bank\naccounts of the concern, M/s Kangna Agro Products.\n4.5 Therefore, in Order to verify the actual production of goods\nand the subsequent sale of the same, assessee was asked to\nprovide the complete set of evidentiary document with respect to\nits purchase of raw materials and sale of produced goods. In\nresponse to question no. 3 & 4 raised to the assessee vide notice\nu/s 142(1) of the Act dated 05.02.021 assessee responded as\nbelow:-\n\"3. The purchases of raw material are made both from\ntraders and APMC's agents.\n4. The purchases are made in cash mainly from the farmers\nas well as through cheques.\"\n4.6 The assessee was also asked to submit the purchase\nregister, sales register and item wise valuation of Opening Stock\nand Closing Stock along with the quantity of stock and rates.\nAssessee was also requested to provide necessary proof for rate\ntaken for valuation or calculation done for valuation. However,\nassessee failed to provide the documents called for. Since\nassessee has not given any vital information to prove that the\nsales of Rs. 6,93,32,499/- made to the party M/s Kangana Agro\nProduct are genuine, the Id. AO said that he left with no other\noption than to treat the cash generated of Rs. 6,93,32,499/- out of\nthis bogus sale as unexplained cash credit u/s 68 r.w.s. 115BBE of\nthe Act. The draft assessment order was issued to the assessee\non 24.03.2021. The assessee did not submit any relevant details in\nsupport of its claim in response to the show cause notice issued.\nTherefore, the assessment was completed on 15.04.2021\nassessing the income at Rs. 16,49,44,849/- as against the\nreturned income of Rs. 9,56,12,350/-.\n5. On culmination of the assessment proceeding Id. PCIT, while\nexercising the power vested upon her as per provision of section\n263 of the Act, called for the records for her examination. While\ndoing so she observed that the AO FAU did not properly the issue\nof;\n[A] Late Payment of PF/ESI Contribution\n[B] (a) New Loans during the year not examined\n(b) Disallowance u/s 43B of the Act\n(c) Disallowance u/s 43B(e) of the Act\n(d) Disallowance u/s 36(1)(iii) or u/s. 37 of the Act\n(e) Disallowance u/s. 35AC(2) of the Act\nTherefore, she noted that due to lack of enquiry and also due to\nincorrect and incomplete appreciation of facts and also the\nincorrect application of law, the assessment order passed u/s 147\nr.w.s. 144B of the Act was found to be erroneous in so far as it was\nprejudicial to the interest of revenue. Therefore, she proposed that\nthe impugned order be suitably be modified / enhanced / cancelled\nby invoking the provisions of section 263 of the Act. Before doing\nso she a notice u/s. 263 of the Act was duly issued on 14.02.2023\nto the assessee for giving opportunity of being heard as well as\nrequiring the assessee to furnish its submission on the issues, as\ncategorically mentioned by her. In compliance to that notice\nassessee filed written submission on 16.06.2023. Ld. PCIT\nconsidered the reply of the assessee and she deal with the each\nissue so as to observed a detailed holding holds that the order of\nthe assessing officer is therefore, liable for revision under clause\n(a) & (b) of the Explanation of (2) of section 263 of the Act. The\nrelevant finding of the Id. PCIT is reiterated herein below:-\n\"8. Considering the above facts, it is held that the order passed by the\nAssessing Officer (FAU) u/s 147 r.w.s. 144B of the IT Act dated\n15.04.2021 is suffering from specific defects, hence, order so passed\nby the AO is erroneous and also prejudicial to the interest of the\nrevenue. The order of the assessing officer is therefore, liable to\nrevision under clause (a) &(b) of the Explanation (2) of section 263 of\nthe Income Tax Act, 1961.\n9. In the light of above discussion, assessment order passed by the AO\nin the case of the assessee is Set-aside (Partly) for fresh assessment\nby the AO on the issues of -\n(A) Disallowance on account of late payment of ESI/PF (Rs.24,14,531/-.\n).\n(B) Disallowance u/s 43B(e) of the Act (Rs.63,97,664/-).\n(C) Disallowance u/s 36 (1)(iii) (Rs.21,732/-);\n(D) New Loans accepted during the year (Rs. 6.35 Crores)\nThe AO is directed to complete the assessment afresh on the above\nmentioned issues/points, keeping in view the observations marked\nherein above.\n9.2 Further, it is also made clear that as the assessment order dated\n15.04.2021 is PARTLY SET-ASIDE, as categorically mentioned above,\nthe Assessing Officer, while framing the Order u/s 263/142(1)/143(3) of\nthe Act, shall take care of the following: -\n(a) While completing the Scrutiny Assessment u/s 147 r.w.s. 144B of\nthe Act, the AO/NaFAC made an addition of Rs.6,93,32,499 u/s 68 of\nthe Act and assessed at Total Income at Rs. 16,49,44,849/-.\n(c) Therefore, the addition on account of Bogus Sales as Unexplained\nCash Credit u/s 68 (Rs.6,93,32,499/-), made vide the Assessment\nOrder Dated 15.04.2021, SHALL NOT BE DISTURBED, and would be\nfree from fresh assessment proceedings.\n(c) The tax shall have to be charged as per Section 115BBE of the Act\nfor the addition already made u/s 68 of the Act, supra.\n10. Thereafter, based on outcome of such enquiries and verification,\nnecessary additions, wherever required, may be made to the total\nincome of the assessee as per law by modifying the assessment order\nu/s 147/144B of the Act dated 15.04.2021. However, the AO is directed\nto ensure that reasonable opportunities of being heard are provided to\nthe assessee before passing such order.”\n6. Feeling dissatisfied with the above finding of the Id. PCIT, the\nassessee preferred the present appeal on the grounds as\nreiterated herein above. Ld. AR, of the assessee vehemently\nargued that the issue which the Id. PCIT raised in her order that too\nin 147 proceeds were time barred and cannot be taken at this\nstage and thus out of the scope the subjected scrutiny before the\nNational Faceless Assessment Unit while passing the order and for\nthat specific notice was issued by the Id. AO applied mind and after\ndue process of law that order was passed making addition\nthereupon. Thus, he relied upon the assessment order and\nsubmitted that there is no flaw in the assessment order and the\nimpugned order u/s 263 of the Act passed by the Id. PCIT needs to\nbe quashed for which he submitted the following written submission\nto counter the order of the Id. PCIT;\nBRIEF FACTS: The appellant is a private limited company engaged in\nmanufacturing of vegetable oil, DOC, High Pro-DOC etc. The appellant\nfiled its ROI u/s 139 of the Act on dated 06.11.2017 declaring total\nincome at Rs. 9,56,12,530/-. The same was processed on date\n16.10.2018 u/s 143(1) of the Act. Thereafter, the case was reopened u/s\n147 by issuing notice u/s 148 dated 17.03.2020, in response to which\nthe appellant filed ROI declaring the same total income.\nThe reassessment was completed after making additions of Rs.\n6,93,32,499/- making additions u/s 68 of the Act on account of\nunexplained credits in the grab of bogus sales and thus, the total income\nwas finally assessed at Rs. 16,49,44,849/- (PB 62-69) vide the order u/s\n143/147 at 15.04.21.\nLater on, the Id. CIT acting u/s 263 issued SCN u/s 263 14.02.2023 (PB\n122-127). In response thereto the appellant filed submissions time to\ntime on dated 21.02.2023 (PB 128), 16.06.2023 and finally on\n13.10.2023 (PB 129-146). The Id. CIT initially raised the following issues:\n1.\n2.\n3.\n4.\n5.\n6.\nLate payment of PF/ESI contributions u/s 43B (Rs. 24,14,531)\nNew Loans taken during the year, not examined (6.35 Crore)\nDisallowance of unpaid sale tax u/s 43B of the Act (Rs,\n5,02,000)\nDisallowance of unpaid interest payable to banks u/s 43B (e) of\nthe Act (Rs. 63,97,664)\nDisallowance u/s 36(1)(iii) or u/s 37 of the Act (Rs 21,732)\nDisallowance u/s 35AC (2) of the Act (Rs. 25,00,000)\nThe Id. CIT after considering the submissions of the assessee started\nher discussion from page 22 para 6 however, not feeling satisfied held\nthe subjected assessment order erroneous and prejudicial to the interest\nof the revenue on in the following words:\n“6. Considering the facts and circumstances of the case and the material\navailable on record, my observations [issue-wise] are as under”. The\ndetails of payment are as such below:-\nXXX\n8. Considering the above facts, it is held that the order passed by the\nAssessing Officer (FAU) u/s 147 r.w.s. 144B of the I T Act dated\n15.04.2021 is suffering from specific defects, hence, order so passed by\nthe AO is erroneous and also prejudicial to the interest of the revenue.\nThe order of the assessing officer is therefore, liable to revision under\nclause (a) &(b) of the Explanation (2) of section 263 of the Income Tax\nAct, 1961.\n9. In the light of above discussion, assessment order passed by the AO\nin the case of the assessee is Set-aside (Partly) for fresh assessment by\nthe AO on the issues of-\n(A) Disallowance on account of late payment of ESI/PF (Rs.24,14,531/-).\n(B) Disallowance u/s 43B(e) of the Act (Rs.63,97,664/-).\n(C) Disallowance u/s 36 (1)(iii) (Rs.21,732/-) ;\n(D) New Loans accepted during the year (Rs. 6.35 Crores).\nThe AO is directed to complete the assessment afresh on the above\nmentioned issues/points, keeping in view the observations marked\nherein above.\n9.2 Further, it is also made clear that as the assessment order dated\n15.04.2021 is PARTLY SET-ASIDE, as categorically mentioned above,\nthe Assessing Officer, while framing the Order u/s 263/142(1)/143(3) of\nthe Act, shall take care of the following: -\n(a) While completing the Scrutiny Assessment u/s 147 r.w.s.144B of\nthe Act, the AO/NaFAC made an addition of Rs.6,93,32,499 u/s 68 of\nthe Act and assessed at Total Income at Rs.16,49,44,849/-.\n(c) Therefore, the addition on account of Bogus Sales as Unexplained\nCash Credit u/s 68 (Rs.6,93,32,499/-), made vide the Assessment Order\nDated 15.04.2021, SHALL NOT BE DISTURBED, and would be\nfree from fresh assessment proceedings.\n(c) The tax shall have to be charged as per Section 115BBE of the Act\nfor the addition already made u/s 68 of the Act,supra.\n10. Thereafter, based on outcome of such enquiries and verification,\nnecessary additions, wherever required, may be made to the total\nincome of the assessee as per law by modifying the assessment order\nu/s 147/144B of the Act dated 15.04.2021. However, the AO is directed\nto ensure that reasonable opportunities of being heard are provided to\nthe assessee before passing such order.”\nHence this appeal\nSubmissions:\nThe impugned order passed u/s 263 is completely beyond the scope of\nS. 263 of the Act on various grounds, as discussed herein below.\n1. Legal Position on Sec.263 – Judicial Guideline: Before proceeding, we\nmay submit as regards the judicial guideline, in the light of which, the\nfacts of this case are to be appreciated.\n1.1 The pre-requisites to the exercise of juri iction by the\nCommissioner u/s 263, is that the order of the Assessing Officer is\nestablished to be erroneous in so far as it is prejudicial to the interest of\nthe Revenue. The Commissioner has to be satisfied of twin conditions,\nnamely (i) The order of the Assessing Officer sought to be revised is\nerroneous; and(ii) it is prejudicial to the interests of the Revenue. If any\none of them is absent i.e. if the assessment order is not erroneous but it\nis prejudicial to the Revenue, Sec.263 cannot be invoked. This provision\ncannot be invoked to correct each and every type of mistake or error\ncommitted by the Assessing Officer; it is only when an order is\nerroneous as also prejudicial to revenue's interest, that the provision will\nbe attracted. An incorrect assumption of the fact or an incorrect\napplication of law will satisfy the requirement of the order being\nerroneous. The phrase 'prejudicial to the interest of the revenue' has to\nbe read in conjunction with an erroneous order passed by the AO. Every\nloss of Revenue as a consequence of the order of the AO cannot be\ntreated as prejudicial to the interest of the Revenue. For example, if the\nAO has adopted one of the two or more courses permissible in law and it\nhas resulted in loss of revenue, or where two views are possible and AO\nhas taken one view with which the Commissioner does not agree, it\ncannot be treated as an erroneous order prejudicial to the interest of the\nRevenue, unless the view taken by the AO is totally unsustainable in\nlaw. Kindly refer Malabar Industrial Co. Ltd. v/s CIT (2000) 243 ITR 83\n(SC).\n1.2 Also kindly refer CIT v/s Max India Ltd. (2007) 295 ITR 282 (SC)\nwherein it is held that:\n\"The phrase \"prejudicial to the interests of the Revenue\" in S. 263 of the\nIncome Tax Act, 1961, has to be read in conjunction with the expression\n\"erroneous\" order passed by the Assessing Officer. Every loss of\nrevenue as a consequence of an order of the Assessing Officer cannot\nbe treated as prejudicial to the interests of the Revenue. For example,\nwhen the Assessing Officer adopts one of two courses permissible in law\nand it has resulted in loss of revenue, or where two views are possible\nand the Assessing Officer has taken one view with which the\nCommissioner does not agree, it cannot be treated as an erroneous\norder prejudicial to the Revenue, unless the view taken by the Assessing\nOfficer is unsustainable in law.\"\nRatio of these cases fully apply on the facts of the present case in\nprinciple.\n2.Beyond the scope of enquiry contemplated u/s 263 on facts and in law:\nThe law is well settled that the reopening of reassessment as\ncontemplated u/s 147 of the Act is for a specific purpose of assessing\nthe escaped income and therefore, the AO, in the reassessment\nproceedings can assess only those item of income which have escaped\nassessment and find place in the reasons to believe but the income not\nbeing a part of the reasons recorded cannot be considered in the\nreassessment proceedings and also therefore, cannot be subject matter\nof revisionary proceedings u/s 263 of the Act. The facts are not disputed\nthat in this case, the Assessment Order passed u/s 147 dt. 15.04.2021\nhas been subjected to revision u/s 263 by the Ld. CIT. A Notice u/s 148\nwas issued on 17.03.2020 for A.Y. 2017-18 under consideration, and\nreasons to believe are recorded as communicated to the appellant by\nthe AO vide his letter dt. 01.10.2020. For a ready reference the same are\nbeing reproduced hereunder:\n“The information was received from the office of Income Tax officer,\nWard 45(1), Delhi vide his letter no. ITBA/AST/F/17/2019-\n20/1021883746(1) dated 07/12/2019 that during the assessment\nproceedings Sh. Sanjay Prop. Kangna agro Products stated in his\nstatement which was recorded on oath u/s 131 of the IT Act 1961 that he\nwas working as helper / cleaner in the office of Shri Om Prakash and\nShri Om Prakash established prop. Concern namely M/s Kangna Agro\nProducts in his name and also opened various banks accounts of this\nproprietorship concern. It was also informed that Sh. Sanjay stated in his\nstatement that he never did any business from this proprietorship\nconcern and he did not having any knowledge about the business\nactivities of the said concern or about the funds credited / debited in the\nsaid bank accounts of the firm. During the enquiry it was also observed\nthat (i) the fund credited through cash deposit / cheque /transfer / RTGS\nand followed by immediate transfer to other accounts (ii) numerous\nround figures transactions occurred; (iii) No physical existence of the\nconcers as verified through filed enquiry;(iv) no ITR, audit report filed in\nspite of having substantial sales and purchase transactions (e) the bank\naccount holder did not have any knowledge about the bank . Apart from\nthis, it is seen that all the credits and transfers in the bank statements\nwere found in the round figures of lakhs of rupees, this shows Sh.\nSanjay is not doing any actual business except to transfer in and transfer\nout the funds for others. On the basis of above facts the ITO, Ward-\n45(1), Delhi concluded that M/s Kangna Agro Products is bogus concern\nand was not doing any genuine business activities during the relevant\nyear.\nIt was also informed by the office of ITO, Ward-45(1), Delhi that M/s Shiv\nVegpro Pvt. Ltd. has taken accommodation entry of Rs. 6,93,32,499/- in\nthe FY 2016-17 from M/s Kangna Agro Products which is the bogus\nconcern and was not doing any genuine business activities during the\nrelevant year.\"\nA bare perusal of the reasons shows that the AO reopened the\nassessment u/s 147 for specific reasons being M/s Shiv Vegpro Pvt. Ltd.\nhas taken accommodation entry of Rs. 6,93,32,499/- in the FY 2016-17\nfrom M/s Kangna Agro Products which is the bogus concern and was not\ndoing any genuine business activities during the relevant year. The AO\nthus, having recorded specific reasons, could not have enquired into and\nexamined any issue other than those already recorded in the reasons to\nbelieve, as above. A specific amount was categorically mentioned of the\nescaped income being Rs.6,93,32,499/- based on certain items beyond\nwhich, the AO was not supposed to have gone in as much as the entire\nassessment was not thrown open before him. Hence, consequently AO\nwas supposed to complete the assessment u/s 147/148 of the Act as per\nreason to believe only. Also when no other escaped income came to his\nnotice during re-assessment proceedings.\nThe issues raised now by the Ld. CIT in the captioned SCN u/s 263\nbeing failure of the AO in making various disallowances/additions were\nnot part of the reasons to believe. In other words, the captioned SCN\ndoes not touch/not even whisper anything stated in the reasons to\nbelieve based on which only, the proceedings u/s 147 was initiated\nhence, such issues are beyond the scope of 263 and therefore, the\nproceedings may kindly be dropped.\n3. Supporting Case Laws:\n3.1In case of CIT vs. Alagendran Finance Ltd, (2007) 211 CTR (SC) 69,\nthe Hon'ble Supreme Court, while dealing with more or less an identical\nissue of revisionary power exercised under s. 263 of the Act in respect of\nan assessment order passed under s. 143(3) r/w s. 147 of the Act, has\nheld in the following manner:\n“15. We, therefore, are clearly of the opinion that keeping in view the\nfacts and circumstances of this case and, in particular, having regard to\nthe fact that the CIT exercising its revisional juri iction reopened the\norder of assessment only in relation to lease equalization fund which\nbeing not the subject of the reassessment proceedings, the period of\nlimitation provided for under sub-s. (2) of s. 263 of the Act would begin to\nrun from the date of the order of assessment and not from the order of\nreassessment. The revisional juri iction having, thus, been invoked by\nthe CIT beyond the period of limitation, it was wholly without juri iction\nrendering the entire proceeding a nullity.\"\n3.2CIT v. Bharti Airtel Ltd. [2013] 37 taxmann.com 218/218 Taxman 112\n(Mag.) (Delhi), wherein:\n“33. This decision in Alagendran Finance Ltd. (supra) has been followed\nby the Delhi High Court in Bharti Airtel Ltd. (supra) wherein also\nreassessment order dealt with the issue of non-deduction of tax at source\non payment of interest to ABN Amro Bank, Stockholm Branch. Second\naddition was made on account of ESOP expenses. Subsequently\nCommissioner of Income-tax issued order under section 263 for failure to\ndeduct tax at source under section 194H on three air time provided to\ndistributors and under section 194J on roaming charges paid to other\nnetwork operators. These issues were different from the subject matter of\nreassessment order. The Delhi High Court held that the subject matter is\ndifferent since the Commissioner has found error in regular assessment\norder, hence limitation shall commence for regular assessment order.”\n3.3 In Ashok Buildcon Ltd. Vs. ACIT (2010) 325 ITR 574 (Bom.) (DC),\nheld that:\n\"Section 263, read with section 147, of the Income-tax Act, 1961\nRevision - Of orders prejudicial to interest of revenue - Assessment year\n2004-05 - Whether where an assessment has been reopened under\nsection 147 in relation to a particular ground or in relation to certain\nspecified grounds and subsequent to passing of order of reassessment,\njuri iction under section 263 is sought to be exercised with reference to\nissues which did not form subject of reopening of assessment or order of\nreassessment, period of limitation provided for in section 263(2) would\ncommence from date of order of assessment and not from date on which\norder of reassessment has been passed - Held, yes\nSection 147 of the Income-tax Act, 1961 - Income escaping assessment -\nGeneral - Whether where assessment is sought to be reopened only on\none or more specific grounds and reassessment is confined to one or\nmore of those grounds, original order of assessment would continue to\nhold field, save and except for those grounds on which a reassessment\nhas been made under section 143(3) read with section 147 - Held, yes\nFact: For the relevant assessment year, the assessee's original order of\nassessment under section 143(3) dated 27-12-2006 was sought to be\nreopened on 6-3-2007 solely on the basis that the benefit of section 72A\nhad been wrongly allowed to the assessee. In the order of reassessment,\nthat was passed on 27-12-2007, the claim made by the assessee with\nreference to the provisions of section 72A was disallowed. On 30-4-2009,\nthe Commissioner issued the impugned notice under section 263 on the\nground that the assessment order passed on 27-12-2007 was erroneous\nand prejudicial to the interests of the revenue. The assessee challenged\nsaid notice contending that though, in form, the Commissioner had\nsought to revise the order dated 27-12-2007 which was passed on a\nreassessment made under section 143(3) read with section 147, in\nsubstance and in essence, what was sought to be revised was the\noriginal order of assessment dated 27-12-2006 and since in respect of\nthat order, the period of limitation for exercising the revisional powers had\nexpired on 31-3-2009 having regard to the provisions of section 263(2),\nthe notice issued on 30-4-2009 was barred by limitation.”\n3.4 Chhabra Syncotex (P) Ltd. Vs. Assistant Commissioner Of Income\nTax ITA No. 239/Jp/2018 (DC)\n“If the exercise of revision juri iction under s. 263 in respect of issues\nwhich formed subject-matter of reassessment after the original\nassessment was reopened, the commencement of the limitation would\nbe with reference to the order of reassessment, but if the CIT has\nexercised the juri iction under s. 263 on an issue which was not\nsubject-matter of reassessment, then the limitation would reckon from\nthe original assessment order passed under s. 143(3) and not from the\nreassessment order. Even if an order of assessment is reopened, the\nwhole proceedings would start afresh but it would not disturb the issues\nwhich were not subject-matter of reopening of the assessment and even\nnot falling under the purview of Expln. 3 to s. 147. Therefore, for the\npurpose of limitation under s. 263(2), if the juri iction under s. 263 is\ninvoked on an issue which was not subject-matter of reassessment, then\nthe limitation would reckon from the original assessment order and not\nfrom the reassessment order.”\nAccordingly, the proceedings-initiated u/s 263 deserves to be quashed.\n4. Alternatively, and without prejudice to above our submissions on\nmerits are as under:\nOn the issues raised by the Ld. CIT in the SCN, u/s 263 of the Act, on\nthe remaining four issues narrated at page 29 of the impugned order, the\nfollowing submissions were made before her and being reproduced\nherein for a ready reference: -\n4.1.1 (A) Disallowance on account of late payment of ESI/PF\n(Rs.24,14,531/-).\n“4.1 At the outset it is submitted that it is not disputed fact though the\nassessee could not deposit the amount of PF and ESI on the due date\nspecified in the related Act, but all the contributions were duly deposited\nbefore the due date (as evident from the table given hereunder) of filing\nof return u/s 139(1). Hence, the same are fully allowable. The original\ndue date for filing of ROI was 31.09.2017 which was extended to\n31.10.2017.\nPayment of Employees State Insurance (ESI)\nS.No.\nMonth of\nDeduction\nAmount Paid\nDue Date of\nPayment\nThe\nactual\ndate of\npayment\n1.\nAugust, 2016\nRs. 38,263/-\n21-Sep-16\n26-Sep-\n16\n2.\nOctober, 2016\nRs. 38,263/-\n21-Nov-16\n22-Nov-\n16\n3.\nNovember, 2016\nRs. 37,272/-\n21-Dec-18 30-Jan-17\n4.\nDecember, 2016\nRs. 45,810/-\n21-Jan-19\n31-Jan-17\n5.\nJanuary, 2017\nRs. 52,449/-\n21-Feb-19\n06-Mar-\n17\n6.\nFebruary, 2017\nRs. 51,546/-\n21-Mar-19\n24-Mar-\n17\nPayment of Employees Provident Fund (PF)\nS.No.\nMonth of\nDeduction\nAmount Paid\nDue Date of\nPayment\nThe\nactual\ndate of\npayment\n1.\nApril, 2016\nRs. 2,74,365/-\n15-May-16\n16-May-\n16\n2.\nAugust, 2016\nRs. 26,028/-\n15-Sep-18\n16-Sep-\n16\n3.\nSeptember,2016\nRs. 2,98,842/-\n15-Oct-18\n19-Oct-16\n4.\nOctober, 2016\nRs. 2,98,842/-\n15-Nov-18\n21-Nov-\n16\n5.\nNovember, 2016\nRs. 2,95,941/-\n15-Dec-18\n06-Feb-\n17\n6.\nDecember, 2016\nRs. 3,21,421/-\n15-Jan-19\n03-Feb-\n17\n7.\nJanuary, 2017\nRs. 3,22,118/-\n15-Feb-19\n21-Feb-\n17\n8.\nFebruary, 2017\nRs. 3,13,371/-\n15-Mar-19\n24-Mar-\n17\n4.2 Settled legal position in favor of the assessee covered issue: It is\npertinent to note that at the relevant point of time that is on 15.04.2021,\nwhen the re-assessment order (subjected to revision) was passed, the\nlaw was well settled by the various decisions of Hon'ble Rajasthan High\nCourt, Hon'ble Supreme Court and various other tribunals including the\nHon'ble Jaipur bench juri ictional ITAT as under:\n4.2.1 In CIT vs. Manglam Arts (2017) 398 ITR 594 (Raj HC) it was held\nthat\n“Mr. Mathur has also contended that regarding second issue with regard\nto ESI and PF, however, the same is covered by the decision of this\nCourt in the case of CIT vs. State Bank of Bikaner & Jaipur D.B. IT\nAppeal No. 177 of 2011 decided on 6th Jan., 2014, wherein it has been\nheld as under\n\"Thus, we are of the view that where the PF and-or EPF, CPF, GPF etc.,\nif paid after the due date under respective Act but before filing of the\nreturn of income under s. 139(1), cannot be disallowed under s. 43B or\nunder s. 36(1)(va) of the IT Act.\"\n4.2.2 It is submitted that the issue is now no more res-Integra in as much\nas the Hon'ble Rajasthan High Court has already taken a view that\nemployer and employees contributions both, if paid before the due date\nu-s 139 no disallowance can be made u-s 36(1)(v)(a) r-w s. 2(24)(x) and\ns. 43B. In the case of CIT vs. SBBJ (2014) 363 ITR 70 (Raj), it was held\nthat:\n“Where PF and-or EPF, CPF, GPF etc., if paid after due date under\nrespective Act but before filing of return of income u-s. 139(1), could not\nbe disallowed u-s. 43B or u-s. 36(1)(va). Substantial question of law\nanswered against revenue and in favour of assessee. Revenue's appeal\ndismissed.\"\n4.2.3 Similarly in the case of CIT vs. Jaipur Vidyut Vitran Nigam Ltd.\n(2014) 363 ITR 307 (Raj) it was held that:\n“If the amount has been deposited on or before the due date of filing the\nreturn u-s 139 then the amount cannot be disallowed u-s 43B or u-s\n36(1)(va) of the Act. In instant case the entire amount was deposited by\nthe respondent-assessee at least on or before the due date of filing of\nthe returns under Section 139 thus no disallowance could be made u-s\n43B or section 36(1)(va). No substantial question of law arises out of the\nimpugned orders of the ITAT. Commissioner of Income Tax vs. M-s\nState Bank of Bikaner & Jaipur (D.B. Income Tax Appeal No.177-2011);\nCommissioner of Income Tax vs. Jaipur Vidyut Vitaran Nigam Ltd. (D.B.\nIncome Tax Appeal No.189-2011), followed.\"\n4.2.4The Hon'ble ITAT, Jaipur Bench has also followed the same view in\nthe case of ACIT v-s M-s Anil Special Steel Industries Ltd., Jaipur (2014)\n52 TW 189 (JP) Para 4 & 7 of its order. Similarly, in M/s K.S.\nAutomobiles Pvt. Ltd. vs ITO in ITA No. 1184 (JP), Zuberi Engineering\nCompany vs. DCIT (2019) 197 TTJ (Jp) 659 and Hon'ble Apex court in\nthe case of CIT vs. Alom Extrusions Ltd. (2009) 227 CTR 417 (SC) also\nheld so.\n5. The above decisions were binding upon the AO even if the\ndepartment might have filed SLP in absence of any stay granted over\nthe operation of the said judgments. Thus, the AO was bound to have\nfollowed the law of the land. Hence he took a possible view and\ncommitted no error.\n6. Alternatively, it is well settled law that if decisions of non-Juri ictional\nHigh Courts are in conflict with each other than decision favorable to\nassessee must be followed. Kindly refer CIT v. Vegetable Products Ltd.\n[1972] 88 ITR 192 (SC) Hon'ble Supreme Court has laid down a\nprinciple that “if two reasonable constructions of a taxing provision are\npossible, that construction which favour the assessee must be adopted.\nThis principle has been consistently followed by the various authorities\nas also by the Hon'ble Supreme Court itself. Accordingly, therefore, the\nAO committed no error in following on of the possible views.\n7.1 Further, there is no mistake apparent in the subjected Order u/s 147\ndated 15.04.2021 in as much as the Hon'ble Supreme Court had passed\nthe subjected Order on 12.10.2022 in the case of Checkmate (2022) 329\nCTR (SC) 1 i.e. much later to the subjected_order_u/s 147. Thus, the\naforesaid decision was not available on the day when Ld. AO passed the\nsubjected Order on 15.04.2021. Therefore, the Ld. AO has committed\nno mistake because the Apex Court decision was not available before\nhim. It is not the case that the adjudication of the assessment is still\nopen, before Ld.AO after the availability of the Apex Court decision.\n7.2 Moreover, it is also well settled that retrospective amendment cannot\nbe invoked to make addition by way of adjustment and intimation u/s\n143(1) of Income Tax Act. This view was taken by the Hon'ble Supreme\nCourt in the case of CIT vs. Hindustan Electro Graphites Ltd.[2000] 243\nITR 0048 (SC), wherein the view of Hon'ble Kolkata High Court in of\nModern Fibotex India Ltd. & Anr. Vs. DCIT & Ors.[1995] 212 ITR 0496\n(Calcutta) was approved. Same view was taken by the Hon'ble Madhya\nPradesh High Court in the case of CIT vs. Satish Traders [2001] 247 ITR\n0119 (Madhya Pradesh).\nAlternatively, if the deduction claimed is not found allowable u/s\n36(1)(va) r/w 2(24) (10), the same has be considered u/s 37(1) of the\nAct in as much as intention of the legislature is not to completely\ndisallow the entire amount forever or for never ever time to come, which\nis against the very concept of real income. The gross receipt cannot be\ntaxed unless the expenditure incurred by assessee businessmen to earn\nthe same, are not allowed merely on technicalities. The default, if any,\nmade by the assesse (if assumed so) in deposit of the PF/ESI therefore\nthe due dates as prescribed under the laws, has already been made\npunishable under relevant Act, where under there are suitable provisions\nfor imposition of penalty and compensating the government by the levy\nof interest. Therefore, in addition thereto, making disallowance under\nIncome Tax Act and creating demand cannot be the legislative intent.\nThe above provisions of 36(1)(va) nowhere prohibits the allowability u/s\n37(1), which is a residuary category. Even in the case of Checkmate\n(Supra) there is no prohibition if the assessee is allowed u/s 37(1) of the\nAct. This contention is duly supported by the case of Trupti Enterprises\n(P) Ltd. Vs. DCIT (2022) 36 NYPTTJ 1280 (Cuttack).”\n4.1.2 The Ld. CIT dealt with this issue at page 22 onwards, as under: -\n“(A) Disallowance on account of Late Payment of PF/ESI Contributions\n(Rs.24,14,531)\n(i) The assessee failed to make the payments of certain amounts\ncollected from the employees as provident fund/ESI contribution within\nthe prescribe time. The statutory auditors have reported in from 3CD that\nfollowing amounts of PF/ESI contributions of employees were not\npaid/deposited by the assesse within the prescribed time of relevant\nstatues of PF/ESI.\nX\nX\nX\n(ii) This amount of Rs.24,14,531/- was legally disallowable in terms of\nsection 36(1)(va) r.w.s 2(24)(x) of the Income Tax Act, 1961.\n(iii) However, while finalizing the assessment on 15/04/2021, no such\ndisallowance is made by the FAO. In this regard, the recent judgement\nof Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd\n[2022] 143 Taxman.com178 is important to be referred to and relied\nupon, according to which the above is disallowable.\n(iv) It has resulted into under assessment/computation of income by\nRs.24,14,531/-, which is found to be erroneous in so far as it is\nprejudicial to the interest of revenue.”\n4.1.3 Our Submissions before CIT:\nA bare reading of the relevant part of the impugned order shows that the\nLd. CIT very purportedly ignored our legal objections raised in the Para\n7.1 and 7.2 hereinabove, wherein, it was specifically pointed out that the\nsubject reassessment order subjected to revision passed on 15.04.2021\nwhereas the Checkmate (Supra) decision came one and a half year later\nthereto i.e. 12.10.2022. Therefore, the CIT could not have found any\nfault in the assessment order or could neither held as the subject\nreassessment as erroneous nor prejudicial to the revenue interest. On\nthis is aspect the law is well settled that if the AO has followed the\nbinding decisions of the juri ictional High Courts and the juri ictional\nTribunals on the relevant date i.e. 15.04.2021 even though such binding\ndecision has been reversed by the apex court at a later point of time (as\nhappened in this case) then too, the Ld. CIT cannot held the assessment\norders as erroneous as held in the following cases:\n(I)CIT vs. G.M. Mittal Stainless Steel (P.) Ltd. [2003] 130 Taxman 67/263\nITR 255 (SC) (DPB 53-56)wherein it was held:\n“In the instant case, the Commissioner had not recorded any reason\nwhatsoever for coming to the conclusion that the Assessing Officer was\nerroneous in deciding that the power subsidy was capital receipt. Given\nthe fact that the decision of the juri ictional High Court was operative at\nthe material time, the Assessing Officer could not be said to have erred\nin law. The fact that the instant Court had subsequently reversed the\ndecision of the High Court would not justify the action of the\nCommissioner in treating the Assessing Officer's decision as erroneous.\nThe power of the Commissioner under section 263 must be exercised on\nthe basis of the material that was available to him when he exercised the\npower. At that time, there was no dispute that the issue whether the\npower subsidy should be treated as capital receipt had been concluded\nagainst the revenue. The satisfaction of the Commissioner, therefore,\nwas based on no material, either legal or factual, which would have\ngiven him the juri iction to take action under section 263. [Para 5]”\n(II) Also relied CIT, LTU, Bangalore vs. Canara Bank [2021] 123\ntaxmann.com 207 (Karnataka).\nSince the AO acted in accordance with the law as interpreted by the\njuri ictional HC, ITAT which prevailed on the date of the passing\nassessment order and continued even when Sec.263 order was passed\nhence, no fault can be found in his action and in particular, proceeding\nu/s 263 cannot be invoked in such a case.\n(III) Further, it was held in the case of PCIT vs. SPPL Property\nManagement (P.) Ltd. [2023] 151 taxmann.com 103 (Calcutta) that\nwhere Assessing Officer had followed decision of juri ictional High\nCourt which held field in relevant assessment year relating to PF\ncontribution received from employees but not deposited to concerned\naccount within due date and completed assessment on said basis,\nassessment could not be held to be prejudicial to interest of revenue.\n(IV) In Shri Keshoraipatan Sahkari Sugar Mills Ltd. Vs. Principal\nCommissioner Of Income Tax (2023) 223 TTJ (Jp) 922\n“Revision—Erroneous and prejudicial order—Lack of proper enquiry—\nAO allowed deduction under s. 80P(2)(d) on the interest income\nreceived by the assessee from co-operative bank—He has examined the\nissue which is evident from the finding recorded in the assessment\norder-AO has taken a plausible view—There is no lack of enquiry on\nthe part of the AO and he has applied his mind and allowed the claim to\nthe assessee-Principal CIT did not place on record any apparent error\non the part of the AO to substantiate that the order passed by the AO is\nprejudicial to the interest of Revenue—She has not pinpointed any\nenquiry which was required to be made but not made by the AO—When\nthe AO has conducted the required enquiry, the order passed by the AO\ncould not be said to be erroneous and prejudicial to the interests of the\nRevenue-So long as the action of the AO cannot be said to be lacking\nbona fides, his action in accepting the explanation of the assessee\ncannot be faulted merely because it could have been lawful to make\nmore detailed inquiries or because he did not write specific reasons for\naccepting the explanation—Non-mentioning of these reasons did not\nrender the assessment order \"erroneous and prejudicial to the interest of\nthe Revenue\"—Hence, the impugned revision order is vacated”\n4.2 B)Disallowance of unpaid interest payable to banks u/s 43B (e) of\nthe Act (Rs. 63,97,664):\n4.2.1 “11.1 In Para 4(d) of the SCN it is alleged that the interest\nexpenditure of Rs.63,97,664/- was incurred by the assessee but was not\npaid before the due date mentioned u/s 139(1) and hence was\ndisallowable u/s 43B under clause (e) and also there was no mention of\nthe amount of interest in the tax audit report under clause 26(i)(B)(a) of\nform 3CD.\n11.2 However, the bare perusal of the related papers shows that such\nallegation is completely factually incorrect in as much as from the\nperusal of the ledger account of the interest (PB 95) together with the\nbank statement of CC A/c no. 61171287200 (PB 96-119), it is very clear\nthat every month bank itself makes the deduction of interest from the CC\nA/c which is debited in the Books of accounts. Therefore, it is completely\nincorrect to say that the interest expenditure though claimed but was not\npaid. Reference to note 23 to financial statements (PB 17-28) is also\nrelevant. Since the assessee has been making payments in this manner\nthat the bank itself making the deduction of interest from the CC\naccount, it was not a case of any amount remaining outstanding as on\n31.03.2017. Hence, it is not a case of making payment after the end of\nthe previous year and before the due date of filing ITR u/s 139(1).\nMoreover, clause 26(i)(B)(a) (PB 37) speaks of the payment of the\nstatutory dues only and apparently does not include outstanding interest\npayment to the bank relating to clause (e) of section 43B of the Act.”\n4.2.2 The Ld. CIT dealt with this issue at page 24 onwards, as under: -\n“C) Disallowance u/s 43B(e) of the Act (Rs.63,97,664/-)\n(i)As per Note 23 to Balance-sheet, the assessee has incurred an\nexpenditure of Rs.63,97,664/- as interest payable to scheduled banks on\nbank loans. As per clause (e) of section 43B of the Act, any sum payable\nby the assessee as interest on any loan or advance from Scheduled\nBank, if not paid before the due date of filing of ITR u/s 139(1) of the Act,\nwas disallowable.\n(ii) Further, In clause 26(i)(B)(a) of audit form 3CD, there was no mention\nof the amount of Interest of Rs.63,97,664/- incurred and payable during\nthe year and which has been paid before the due date of filing of ITR u/s\n139(1).\n(iii) In absence of any details of payment of this amount, it could only be\ninferred that it was not paid before the due date u/s 139(1) of the Act and\nthe same should have been disallowed u/s 43B(e) of the Act.\n(iv) In this regard, the assessee replied that the ledger account of the\ninterest together with the bank statement of CC A/c no. 61171287200,\nclearly reveals that every month bank itselfmakes the deduction of\ninterest from the CC A/c which is debited in the Books of accounts.\nTherefore, it is completely incorrect to say that the interest expenditure\nthough claimed but was not paid. Reference to note 23 to financial\nstatements are also relevant. Since the assessee has been making\npayments in this manner that the bank itself making the deduction of\ninterest from the CC account, it was not a case of any amount remaining\noutstanding as on 31.03.2017. Hence, it was not a case of making\npayment after the end of the previous year and before the due date of\nfiling ITR u/s 139(1). Moreover, clause 26(i)(B)(a) speaks of the payment\nof the statutory dues only and apparently does not include outstanding\ninterest payment to the bank relating to clause (e) of section 43B of the\nAct.\n(v) The reply of the assessee is not fully acceptable and requires further\nverification. The AO, while finalizing the fresh assessment shall take\nnote to this point/issue as per direction marked at Para No. 9 below.”\n4.2.3 Our Submissions:\nAs evident from the bare reading of the order of Ld. CIT that she did not\nrevert the factual contention raised before her and nothing remained\npayable so Section 43 B (e) could not be invoked. Further, Section 263\nwas invoked merely stating that the issue requires further evidence.\nOnce the relevant details were before the Ld. CIT she should have\ndecided the issue on merit instead it sending back to AO. Section 263\ncan only be invoked only if thereis a fault and there is an error and it was\nfor the CIT to have demonstrated some error.\nOtherwise also he has not suggested what further inquiries could and\nshould have been made in the admitted facts and circumstances of the\npresent case.\n4.3 C) Disallowance u/s 36(1)(iii) or u/s 37 of the Act (Rs.21,732):\n4.3.1“12. In Para 4(e) of the SCN it is alleged that as per clause 34(c) of\nform 3CD (PB 40-41), the auditors have reported payment of interest of\nRs. 21,732/- on account of the delayed payment of TDS. It is alleged that\nthe same is not allowable expenditure u/s 36(1)(iii) or u/s 37 of the Act\nwhich otherwise should have been disallowed. It is submitted that firstly,\nsuch an interest is not of penal natureand it is merely of compensatory\nnature. There is no allegation nor any finding with evidence that such\ninterest was of penal nature. Even a reference to the relevant provision\nof Sec.201 of the Act doesn't speak of any such interest of penal nature.\nSuch contention is also supported by various case laws.”\n4.3.2 The Ld. CIT dealt with this issue at page 25 onwards, as under: -\n“(D) Disallowance u/s 36(1)(iii) or u/s 37 of the Act (Rs.21,732/-)\n(i) As per clause 34 (c) of form 3CD, the auditors have reported that the\nassessee have incurred an interest amount of Rs.21,732/- for delayed\npayment of TDS. This interest was not an allowable expenditure u/s\n36(1)(iii) or u/s 37 of the Act. Hence, the same should have been\ndisallowed but during the assessment proceedings FAO has not been\ndisallowed.\n(ii) The reply of the assessee is not acceptable as the Interest on\naccount of late payment of TDS was not an allowable expenditure u/s\n36(1)(iii) of the Act.\n(iii) Since no such addition on account of disallowance u/s 36(1)(iii) of\nthe Act had been made by the AO, while completing the assessment on\n15/04/2021, the income has been found to be under computed/assessed\nby this amount of Rs.21,732/-, which was erroneous and prejudicial to\nthe interest of Revenue.\"\n4.3.3 Our Submissions:\nAs evident from the impugned part of the Ld. CIT that that did not have\napplied the mind that the interest was not of the penal nature nor she\nattempted to counter such filing. Therefore, it was a mere suspicion\nand/or non-application of mind and thus Section 263 was wrongly\ninvoked.\n4.4 D) New Loans taken during the year (Rs. 6.35 Crores):\n4.4.1 “8. No enquiries w.r.t. fresh loan of Rs. 6.35 Crores: It is alleged in\npara 4(a) that the AO did not examine the issue of fresh loan of Rs.6.35\ncrores which remained unexplained and in particular the account\nreceived from M/s Advani Pvt. Ltd. having the maximum of Rs. 1.05\ncrores for not having PAN and therefore, identity was doubtful.\nIn this connection it is submitted that the Ld. AO did make enquiries by\nissuing a letter dated 01.03.2021, which was duly replied by the\nassessee vide its letter dated 12.03.2021 para 22 (PB 55) that\nconfirmations can be submitted later on. At the same time the tax audit\nreport clause 31(a) (PB 38) contains the details of loan or deposit\namount exceeding the limit specified in sec.269SS taken or accepted\nduring the previous year. It was only a slip of pen that the PAN in case\nof Advani Pvt. Ltd. could not be mentioned. The apparent and admitted\nfacts are the receipt of the amount as also repayment, were made\nthrough banking channels. Even interest of Rs. 78,860/- was also paid\nthrough Cheque and TDS of Rs. 7,886/- was also deducted. Thus, all\nthe requisite details which prove the identity of the creditor, capacity of\nthe creditor as also the genuineness of the transactions were already\navailable on record, when he passed the subjected Assessment Order.\nConfirmation of ledger account duly signed by the said creditor bearing\ncomplete name, address and PAN is enclosed (PB 77). Similar\nconfirmation in case of all the creditors are also enclosed (PB 70-80).\nHowever, there is nothing on record to show anything contrary thereto.\nSome of the other creditors are old and are coming from preceding\nyears as their opening balances are available in their ledger accounts.\nIn most of the cases closing balances are there which means the\naccount was carried forward in next AY 2018-19. Nothing wrong was\nfound hence the assessment was rightly completed.”\n4.4.2 The Ld. CIT dealt with this issue at page 26 onwards as under: -\n“(F) Inadequate Examination/Verification of ‘New Loan During the Year\n(Rs.6.35 Crore): - \n(a) The clause 31(a) of Tax Audit report contains the details of loan or\ndeposit amount exceeding the limit specified in sec. 269SS taken or\naccepted during the previous year.\n(b) The a/c confirmations of respective parties have been filed during the\nrevisional proceedings u/s 263 of the Act. Further, the PAN of M/s\nAdvani Pvt. Ltd., having the maximum outstanding/closing balance of\nRs.1.05 Crores has been furnished (PAN-AACCA1895Q).\n(c) Perusal of respective confirmation-ledger reveals that the receipt of\namount and also the repayment, were made through banking channels.\nInterests were also paid through Cheque and TDS, applicable was also\ndeducted. Confirmations of ledger account duly signed by the said\ncreditor bearing complete name, address and PAN. Further, it was\nnoticed that some of the other creditors are old and are coming from\npreceding years as their opening balances are available in their\nrespective ledger accounts. In most of the cases, closing balances are\nthere which means that the account was carried forward in next AY (i.e.\nAY 2018-19).\n(c) The reply of the assessee is not fully acceptable and requires further\nverification, particularly the third part verification etc. so as to examine\nthe Identity, Genuineness of transaction and also the Creditworthiness of\nrespective Creditors. The AO, while finalizing the fresh assessment shall\ntake note to this point/issue as per direction marked at Para No.9 below.\n4.4.3 Our Submissions: Here also the Ld. CIT was completely failed\nto point out any mistake or error except that the issue needs\nverification and all the relevant details were made available to her.\n5. Suspicion is not a good basis for revision: The CIT cannot invoke\nsection 263 merely based on suspicion and exploring the possibility\nof some income, merely making reference to the impounded\ndocument, alleging not considered, unless demonstrated showing\nsome income, cannot be a good basis. This so-called appraisal\nreport is not evidence by itself and a merely internal document\nmaking a prima facie opinion on the impounded documents by\nsomeone other than the AO and therefore, can't be said to be\nbinding upon AO. The CIT even did not mention the amount of\nincome escaping Kindly refer the case of CIT vs. Trustees of\nAnupam Charitable Trust [1987] 31 Taxman 335 /167 ITR 129\n(Raj.) wherein it was held as under:\n“The error envisaged by section 263 was not one which depended on\npossibility or the guess work but it should be actually an error either of\nfact or law. Unless the Commissioner categorically says that there was\nsome income from speculative business which could not qualify for\ndeduction much less exemption under section 11, it cannot be said that\nthere was any error in the order of the ITO relating to the assessment\nyear 1971-72. This error was not relevant to the assessment year 1975-\n76\".\nIn the case of Abdul Hamid v. Income-tax Officer [2020] 117\ntaxmann.com 986 (Gauhati - Trib.)it was held that only probability and\nlikelihood to find error in assessment order is not permitted u/s 263.\n4.5 E) Tax charged u/s 115 BBE of the Act\n4.5.1 Where the show cause dated 03.10.2023 (PB 143-144), the Ld.\nCIT also raised the issue of application u/s 115 BBE as under-:\n“However, in connection with the queries raised vide Notice dated\n14.02.2023 vis-à-vis your reply filed on 16.06.2023, on further\nexamination of assessment records, it was found that the FAO/AO, while\nfinalizing the assessment proceeding u/s 147 of the Act, in your case for\nthe impugned A.Y on 15.04.2021, made an addition of Rs.6,93,32,499/-\nu/s 68 r.w.s 115BBE of the Act. This addition of Rs.6,93,32,499/- was\nmade by the FAO by way of treating the sales made to M/s Kangna Agro\nProducts as non-genuine and bogus and hence, held that the same was\nonly an accommodation entry. In para 7 of the assessment order, the\nFAO has held that since the assessee has not given any vital information\nto prove that the impugned sales of Rs.6,93,32,499/- made to the party\nM/s Kangna Agro Product were genuine, hence, added the same by\ntreating this sales as bogus u/s 68 of the I.T. Act, 1961. However, in\ncomputation sheet of assessed income and tax payable, issued by the\nFAO, with the assessment order, the tax had been charged by the FAO\nat normal rates in place of charging the same at special rates of tax as\nper Section 115BBE of the Act. As such the computation of total income\nas well as charging of tax on this issue is observed to be incorrect and\nerroneous and require to be suitably modified/rectified.”\nHowever, the fact of aforementioned SCN is not mentioned in the\nSection 263 order.\nThereafter, in the Impugned Order, the Ld. CIT also directed the AO to\napply special tax rate as under:\n“(c) The tax shall have to be charged as per Section 115BBE of the Act\nfor the addition already made u/s 68 of the Act, supra.”\nAt the outset, it is submitted that the Ld. CIT was not justified in directing\nAO to apply S. 115BBE for more than one reasons, submitted\nhereunder, which shows that the CIT acted beyond juri iction hence,\nthis part of the Order deserves to be quashed.\n5. Submissions w.r.t Application of S. 115BBE:\n5.1 At the outset, it is submitted that S.115BBE specifically refers to\nthe income which are of the nature as referred in S. 68 ,69 ,69A of\nthe Act being the income from other sources. Therefore, subjected\nincome has essentially to be classified u/s 14 of the Act as income\nfrom other sources and that is possible only when the income is not\ncapable of being classified under any other head being income from\nsalary, house property, capital gain, business or profession. The\nrelevant provision is reproduced hereinbelow :\n1.\nS. 115BBE\"(1) Where the total income of an assessee,\nincludes any income referred to in section 68, section 69, section\n69A, section 69B, section 69C or section 69D and reflected in the\nreturn of income furnished under section 139; or 2. determined by\nthe Assessing Officer includes any income referred to in section 68,\nsection 69, section 69A, section 69B, section 69C or section 69D, if\nsuch income is not covered under clause (a), the income-tax payable\nshall be the aggregate of— 1. the amount of income-tax calculated\non the income referred to in clause (a) and clause (b), at the rate of\nsixty per cent; and 2. the amount of income-tax with which the\nassessee would have been chargeable had his total income been\nreduced by the amount of income referred to in clause (i).] (2)\nNotwithstanding anything contained in this Act, no deduction in\nrespect of any expenditure or allowance [or set off of any loss] shall\nbe allowed to the assessee under any provision of this Act in\ncomputing his income referred to in clause (a) [and clause (b)] of\nsubsection (1).\"\n5.2 A combined reading of S. 14 with S. 56 of the Act makes is\nevidently clear that for the assessment of an income it must have to\nbe classified under four heads of income as enumerated u/s 14 and\nif it doesn't fall under any specific head of income as per item A to E\nof S. 14, such income has to be assessed under the residuary head\nof income i.e. item F of S. 14. Therefore, income added u/s 68 or 69\netc. has to be given a specific head in terms of S. 14.\n5.3 The Hon'ble Supreme Court in case of Karanpura Development Co\nLtd vs. CIT [1962] 44 ITR 362 (SC) held that these heads are in a sense\nexclusive to one another and income which falls within one head cannot\nbe brought to tax under another head. Further, the Hon'ble Supreme\nCourt in case of Nalinikant Ambalal Mody v CIT [1966] 61 ITR 428, has\nheld that whether an income falls under one head or another is to be\ndecided according to the common notions of practical man because the\nAct does not provide any guidance in the matter. Of course, lot of judicial\nprecedents are available to a taxpayer to arrive at a conclusion about\ndetermination of appropriate head of income.\n5.4 The scheme of sections 68, 69, 69A, 69B and 69C provides that in\ncases where the nature and source of investments or acquisition of\nmoney, bullion or expenditure incurred are not explained at all, or not\nsatisfactorily explained, then, the value of such investments and money,\nor value of articles not recorded in the books of accounts or the\nunexplained expenditure may be deemed to be the income. In view of the\nabove, it can be said that for triggering section 115BBE what is relevant\nis whether income remains disclosed or undisclosed or explained or\nunexplained. If the income is disclosed or explained as mandated by the\nlaw, then same would be taxable in the ordinary manner. On the other\nhand, if the income is undisclosed or unexplained then the provisions of\nsection 115BBE may be triggered depending upon the facts involved in\neach of the cases. The moment a satisfactory explanation is provided\nabout nature and source then the source would stand explained and\ntherefore, the income would be computed under the appropriate head of\nincome as per the provisions of the Act.\n5.5 On perusal of the Finance Minister's speech and Explanatory\nMemorandum (2), it is clear that the legislative intent behind introduction\nof section 115BBE was to curb the generation and use of unaccounted\nmoney and tax the same at the highest rate.\nHowever, in this case, the only regular source of income of the assessee\nin A.Y. 2019-20 was the real estate business (and the connected\nancillary activities/services thereto). The assessee was in receipt of the\nprofit on the purchase and sale of properties and also\ncommission/brokerage income and consultancy income relating to the\nreal estate business. There is no other known or unknown source of\nincome, neither stated by the assessee nor by the department.\n5.6 In the present case, the Ld. CIT herself narrated and admitted that\nthe fact that the subjected amount of Rs 6.93 crores, was the sales made\nto M/s Kangna Agro Products but was treated as Bonus, etc, which is\ntreated as an accommodation entry. The Ld. CIT also referred to Para 7\nof the subjected assessment order and finally addition u/s 68 of the Act.\nThese admittedly facts that the amount of sales declared by the\nassessee in the accounts. Thus, the amount subjected to emanated from\nthe regular business activity of the assessee of manufacturing and\nextracting of vegetable oil, doc, etc. The net profit arising from this\ntransaction was also undisputedly included in the audited P&L account\nand the ROI. Thus, this subjected amount, pertained to the declared\nbusiness activity/ source only. Therefore, such amount could not be\nconsidered as income from other sources and was to be classified. Even\nthe Ld. CIT in the impugned order did not direct the AO that such income\nshould be assessed under the income from other sources. There is no\nother known or unknown source of income, neither stated by the\nassessee nor so found by the department.\n5.7 In these circumstances, the only inescapable conclusion is that the\nsubjected income was nothing but business income from the disclosed\nbusiness activity of the assessee. Therefore, “merely to levy more tax, is\nan illegal and unjustified attempt to invoke 115BBE” which is not clearly\napplicable on the facts of the present case.\n5.8 Interestingly, in the impugned order at Page 7, the AO himself has\nmade the additions u/s 68 r.w.s 115 BBE of the Act. Therefore, the\nallegation and finding of the Ld. CIT is factually incorrect that the FAO\nhas charged the tax at normal rates only. The AO has invoked the\nSection 115BBE of the Act but committed a clerical error in not\ncomputing the special tax in accordance therewith. At the best it could be\na case of rectification but not at all a case of revision. Therefore, the\nproper course should have been a rectification u/s 154 of the Act (though\nnot conceding) instead of invoking Section 263. In this regard kindly refer\nto the case of CIT vs. Amitabh Bachchan [2016] 286 CTR (SC) 113,\nwherein it is held that:\n“9. Under the Act different shades of power have been conferred on\ndifferent authorities to deal with orders of assessment passed by the\nprimary authority. While Section 147 confers power on the Assessing\nAuthority itself to proceed against income escaping assessment, Section\n154 of the Act empowers such authority to correct a mistake apparent on\nthe face of the record. The power of appeal and revision is contained in\nChapter XX of the Act which includes Section 263 that confer suo motu\npower of revision in the learned C.I.T. The different shades of power\nconferred on different authorities under the Act has to be exercised within\nthe areas specifically delineated by the Act and the exercise of power\nunder one provision cannot trench upon the powers available under\nanother provision of the Act. In this regard, it must be specifically noticed\nthat against an order of assessment, so far as the Revenue is concerned,\nthe power conferred under the Act is to reopen the concluded\nassessment under Section 147 and/or to revise the assessment order\nunder Section 263 of the Act. The scope of the power/juri iction under\nthe different provisions of the Act would naturally be different. The power\nand juri iction of the Revenue to deal with a concluded assessment,\ntherefore, must be understood in the context of the provisions of the\nrelevant Sections noticed above. While doing so it must also be borne in\nmind that the legislature had not vested in the Revenue any specific\npower to question an order of assessment by means of an appeal.”\n6. Judicial Guideline: The Hon'ble Rajasthan High Court, ITAT Jaipur and\nvarious other courts have held that where the additional income/\nundisclosed income declared during the course of survey is relatable to\nsome business activity then it cannot be considered to be income from\nother sources and consequently S. 115BBE cannot be invoked.\n6.1 The Hon'ble Ahmedabad Tribunal in case of Chokshi Hiralal\nMaganlal vs DCIT (ITA No. 3281/Ahd/2009 AY 2004-05 dated 5 August\n2011) held that for invoking deeming provisions under sections 69, 69A,\n69B & 69C there should be clearly identifiable investment or asset or\nexpenditure (i.e. in our understanding not connected with business so as\nto make convenient to invoke aforesaid sections). In case source of\ninvestment or asset or expenditure is clearly identifiable and has no\nindependent existence of its own where a case arises to claim that it\ncannot be separated from business then first ‘what is to be taxed is the\nundisclosed business receipt. Only on failure of such exercise, it would\nbe regarded as taxable under section 69 on the premises that such\nexcess investment or asset or expenditure is unexplained and\nunidentified, satisfying the mandate of the law.\n6.2 The Hon'ble Rajasthan High Court in case of CIT vs Bajargan\nTraders [ITA No. 258/2017 dated 12/09/2017] has held that when the\nassessee is dealing in sale of food grains, rice and oil seeds and the\nexcess stock which is found during survey is stock of rice then, it can be\nsaid that investment in procurement of such stock of rice is clearly\nidentifiable and related to the regular business stock of the assessee.\nTherefore, the investment in the excess stock is to be brought to tax\nunder head “business income" and not under the head income from other\nsources.\n6.3 In case of Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018\nfor AY 2014-15 dated 25 May 2018), the Jodhpur Tribunal applying the\nproposition of law laid down by the Hon'ble Rajasthan High Court in the\nBajargan Traders (supra), held that the “lower authorities were not\njustified in taxing the surrender made on account of excess stock and\nexcess cash found U/s 69 of the Act and accordingly held that there is no\njustification for taxing such income U/s 115BBE of the Act. In view of the\nfacts & circumstances, judicial guidelines and the statutory provisions,\nthe additional income declared during survey of Rs. 76,00,000/- cannot\nbe subjected to S. 115BBE of the Act”.\n7.1 In the ROI itself, as stated in the SCN u/s 263, the subjected\nadditional income of Rs 76 Lakh was declared as income from business\nand profession. With regard to the source of such additional income, the\naforesaid detailed submission on its own clarified the source/ nexus with\nthe real estate business WHICH the assessee was carrying on at that\npoint of time. Thus, AO made full enquiries and applied his mind which,\nhe was supposed to do as contemplated by law. Based thereon, he took\nhis own decision which cannot be interfered with.\n7.2 In fact, the AO was not even entitled to change the head of income\non his own. Kindly refer the Hon'ble Supreme Court in case of Karanpura\nDevelopment Co Ltd vs. CIT [1962] 44 ITR 362 (SC) held that these\nheads are in a sense exclusive to one another and income which falls\nwithin one head cannot be brought to tax under another head. Further, the\nHon'ble Supreme Court in case of Nalinikant Ambalal Mody v CIT\n[1966] 61 ITR 428, has held that whether an income falls under one head\nor another is to be decided according to the common notions of practical\nman because the Act does not provide any guidance in the matter. Of\ncourse, lot of judicial precedents are available to a taxpayer to arrive at a\nconclusion about determination of appropriate head of income.\n8. No error when AO acted in accordance with binding decisions:\nIn addition, the legal position and the judicial guideline through the\nvarious decisions of Hon'ble Rajasthan High Court and ITAT Jaipur, is\nwell settled. The AOacted in accordance with the judicial guideline and\nthe ratio laid in the cases of:\na. CIT vs Bajargan Traders [2024] 466 ITR 397\nb. Chokshi Hiralal Maganlal vs DCIT (ITA No. 3281/Ahd/2009 dated\n05.08.2011/ (2011) 45 SOT 349).\nc. Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018 for AY 2014-\n15 dated 25 May 2018).\nand applying the same on the facts of the case in hand, decided that the\nprovisions of S.115BBE were not applicable and hence did not therefore\napply high rate of tax.\n9. (F) Clause (a) of Explanation 2 of S. 263 wrongly invoked:\n9.1 The Id. CIT stated that\n“7. As per the amended provision i.e., clause (a) of Explanation 2 of\nSection 263, an order passed by the Assessing Officer shall be deemed\nto be erroneous in so far as it is prejudicial to the interests of revenue, if\nin the opinion of Principal Commissioner or Commissioner, the order is\npassed without making inquiries or verification which should have been\nmade; Further, as per clause (b) to Explanation 2 of Section 263 says\nabout “if the order is passed allowing anyrelief without inquiring into the\nclaim\". It reads as under:-\n(Amendment of section 263 w.e.f 01.06.2015).\nX\nX\nX\n7.2 In reaching such conclusion, I rely on the following judicial rulings:\n9.2 Submissions:\n9.3.1Even the amendment (Expl. 2(a)) does not confer blind powers: It is\nheld that despite there being an amendment, enlarging the scope of the\nrevisionary power of the Id. PCIT u/s 263 to some extent, it cannot justify\nthe invoking of the Expl. 2(a) in the facts of the present case. Before\nreferring to that Explanation, one has to understand what was the true\nmeaning of the Explanation in the context of application of mind by a\nquasi-judicial authority.\nIn the case of PCIT vs. Shreeji Prints (P.) Ltd.[2021] 130 taxmann.com\n294 (SC), decision of Gujarat High Court is affirmed the ITAT Order as\nunder:\n\"17 We thus find merit in the plea of the assessee that the Revisional\nCommissioner is expected show that the view taken by the AO is wholly\nunsustainable in law before embarking upon exercise of revisionary\npowers. The revisional powers cannot be exercised for directing a fuller\ninquiry to merely find out if the earlier view taken is erroneous particularly\nwhen a view was already taken after inquiry. If such course of action as\ninterpreted by the Revisional Commissioner in the light of the Explanation\n2 is permitted, Revisional Commissioner can possibly find fault with each\nand every assessment order without himself making any inquiry or\nverification and without establishing that assessment order is not\nsustainable in law. This would inevitably mean that every order of the\nlower authority would thus become susceptible to section 263 of the Act\nand, in turn, will cause serious unintended hardship to the tax payer\nconcerned for no fault on his part. Apparently, this is not intended by\nthe Explanation. Howsoever wide the scope of Explanation 2(a) may be,\nits limits are implicit in it. It is only in a very gross case of inadequacy in\ninquiry or where inquiry is per se mandated on the basis of record\navailable before the AO and such inquiry was not conducted, the\nrevisional power so conferred can be exercised to invalidate the action of\nAO. The AO in the present case has not accepted the submissions of the\nassessee on various issues summarily but has shown appetite for inquiry\nand verifications. The AO has passed after making due enquiries issues\ninvolved impliedly after due application of mind. Therefore,\nthe Explanation 2 to section 263 of the Act do not, in our view, thwart the\nassessment process in the facts and the context of the case.\nConsequently, we find that the foundation for exercise of revisional\njuri iction is sorely missing in the present case.\n18 In the light of above facts and legal position, we are of the considered\nview that the AO had made detailed enquiries and after applying his mind\nand accepted the genuineness of loans received from GTPL and PAFPL,\nwhich is also plausible view. Therefore, we find that twin conditions were\nnot satisfied for invoking the juri iction under section 263 of the Act. The\ncase laws relied by the Id. CIT(D.R.) are distinguishable on facts and in\nlaw hence, by the Id. Counsel as well and we concur the same hence not\napplicable to present facts of the case. Therefore, in absence of the\nsame, the Id. CIT ought to have not exercised his juri iction under\nsection 263 of the Act. Therefore, we cancel the impugned order under\nsection 263 of the Act, allowing all grounds of appeal of the Assessee.\"\n9.3.2 In Narayan Tatu Rane v. ITO, (2013) 7 NYPTTJ 1493 (Mum), it\nwas held that newly inserted. Explanation 2(a) to S. 263 does not\nauthorize or give unfettered powers to Commissioner to revise each and\nevery order, if in his (subjective) opinion, same has been passed without\nmaking enquiries or verification which should have been made. As\nsubmitted above here also the AO having already applied its mind\n(directly or indirectly), the assessment order was not erroneous.\n9.4Other Supporting Case Laws on S. 263:\n9.4.1 Kindly refer to CIT v/s Rajasthan Financial Corporation (1996) 134\nCTR 145 (Raj). held that:\n\"Once AO has made enquiries during the course of assessment\nproceedings on the relevant issues and the assessee has given detailed\nexplanation by a letter in writing and the Assessing Offer allowed the\nclaim being satisfied with the explanation of assessee, the decision of the\nAO cannot be held to be erroneous simply because in his order not make\nan elaborate discussion in that regard.”\n9.4.2 In CIT v/s Ganpat Ram Bishnoi (2005) 198 CTR (Raj) 546 held that\nfrom the record of the proceedings, in the present case, no presumption\ncan be drawn that the AO had not applied its mind to the various aspects\nof the matter. In such circumstances, without even prima facie laying\nfoundation for holding that assessment order is erroneous and prejudicial\nto interest in any matter merely on spacious ground that the AO was\nrequired to make an enquiry, cannot be held to satisfy the test of existing\nnecessary condition for invoking juri iction u/s 263. Juri iction u/s 263\ncannot be invoked for making short enquiries or to go into the process of\nassessment again and again merely on the basis that more enquiry\nought to have been conducted to find something.\n9.4.3 In Gabriel India Ltd. [1993] 203 ITR 108 (Bom), law on this aspect\nwas discussed in the following manner (page 113): “ . . . From a rending\nof sub-section (1) of section 263, it is clear that the power of suomotu\nrevision can be exercised by the Commissioner only if, on examination of\nthe records of any proceedings under this Act, he considers that any\norder passed therein by the Income-tax Officer is erroneous in so far as it\nis prejudicial to the interests of the Revenue”. It is not an arbitrary or\nunchartered power, it can be exercised only on fulfilment of the\nrequirements laid down in sub-section (1). The consideration of the\nCommissioner as to whether an order is erroneous in so far as it is\nprejudicial to the interests of the Revenue, must be based on materials\non the record of the proceedings called for by him. If there are no\nmaterials on record on the basis of which it can be said that the\nCommissioner acting in a reasonable manner could have come to such a\nconclusion, the very initiation of proceedings by him will be illegal and\nwithout juri iction. The Commissioner cannot initiate proceedings with a\nview to starting fishing and roving enquiries in matters or orders which\nare already concluded. Such action will be against the well-accepted\npolicy of law that there must be a point of finality in all legal proceedings,\nthat stale issues should not be reactivated beyond a particular stage and\nthat lapse of time must induce repose in and set at rest judicial and\nquasi-judicial controversies as it must in other spheres of human activity.\n9.4.4 In Elder IT Solutions (P.) Ltd. vs CIT [2015] 59 taxmann.com 232\n(Mumbai - Trib.), it was held that:\n“18. In the case in hand, there is no dispute that the AO called for\nfinancial details of these companies and also examine the parties in\norder to satisfy himself about the genuineness of the transaction.\nTherefore, on the basis of the record available before him, the AO\naccepted the claim of the assessee. The Commissioner has not found\nany fault with the details and records filed by the assessee in support of\nthe claim but has cited the reasons that the AO has not conducted the\nproper enquiry. When the entire record was available with the\nCommissioner then he ought to have given a concluding finding that the\nview taken by the AO is contrary to the law as well as facts emerging\nfrom the records. However, the Commissioner has not given any such\nfinding and restored the matter to the record of the AO which is not\npermissible as per the provisions of section 263 when the AO has\nconducted the enquiry and allowed the claim of the assessee on the\nbasis of the examination of the record as well as the parties in person.\nWe further note that the assessee has also filed the bank statements of\nthese companies showing the transaction of payment of share premium\nas well as loans to the assessee. The transactions were also reflected in\nthe return of income filed by these companies, therefore, in any case if\nthe Department has any doubt about the genuineness of arranging the\nfunds by these share applicant companies, the enquiry and investigation\nshould have been conducted in those cases as held by the hon'ble Delhi\nHigh Court in the case of Lovely Exports (P.) Ltd. (supra) which has been\nconfirmed by the hon'ble Supreme Court by dismissing the special leave\npetition filed by the Department.”\n9.4.5 In case of Rajmal Kanwar v. CIT-I [2017] 82 taxmann.com 119\n(Jaipur - Trib.)it was held that orders prejudicial to interest of revenue\nAssessment year 2011-12 - Where AO had made sufficient enquiries,\nconsidered survey records and surrender made by assessee and after\nconsidering submissions of assessee completed assessment\nproceedings under section 143(3), assessment order could not be held to\nbe an erroneous order which was prejudicial to interest of revenue.\nIn view of the above submissions and the Judicial Guideline, the\nimpugned order passed u/s 263 deserves to be quashed.\n10. Notice u/s 263 barred by limitation:\n10.1 At the outset, it is submitted that S. 263(2) of the Act provides that\nno order would be made in exercise of the powers conferred u/s 263(1)\nof the Act after the expiry of two years from the end of the financial year\nin which the order is sought to be revised was passed.\n10.2 It can't be denied that the matter relating to the examination of the\n(1) Late payment of PF/ESI contributions u/s 43B, (2) New Loans during\nthe year, (3) Disallowance of unpaid sale tax u/s 43B of the Act, (4)\nDisallowance of unpaid interest payable to banks u/s 43B (e) of the Act,\n(5) Disallowance u/s 36(1)(iii) or u/s 37 of the Act and (6) Disallowance\nu/s 35AC (2) of the Act (hereinafter referred as the “new issues /\naspects”), have the subject matter of the re-assessment order dated\n15.04.2021(PB 62-69) passed u/s 143(3)/148 of the Act [which is\npresently being sought to be revised by the Id. CIT u/s 263] in as much\nas the AO before making that assessment order, proceeded to form his\nreason to believe as to escapement on the basis of the specific\ninformation w.r.t the appellant company.\n10.3 In fact and in law, this particular issue stood concluded long back,\nwhen the first assessment order / Intimation Order was passed u/s\n143(1) on dated 16.10.2018 when the assessment was completed by\nmaking additions/disallowances of Rs. 15,21,810/- on account of\nproperty rent, unexplained cash credit (Rs. 1,00,000/- by Sh. Maha\nChand Jain) and disallowance of legal & professional, office,\nconsultancy, garden development expenses.\nSince these new issue/aspects arose in the very first assessment /\nintimation order u/s 143(1) dated 16.10.2018 only, wherein no such\naddition was made, thus any error, assuming if any (though not\nconceding but alternatively only), could have been found in that\nassessment order itself and limitation has to be reckoned only with\nreference to the such first assessment / intimation order dated\n16.10.2018 and not w.r.t the re-assessment order dated 15.04.2021\npassed u/s 143(3)/148 of the Act wrongly subjected to revisionary\nproceedings. The very first assessment / intimation order dated\n16.10.2018, still hold water and could not be said to have merged with\nthe re-assessment order dated 15.01.2024.\nAccordingly, reckoning the limitation from the end of the financial year\ni.e. on 30.03.2019, the period of two years has already expired on\n31.03.2021, hence the impugned order u/s 263 clearly stands barred by\nlimitation.\n10.4. Otherwise also, the AO/CPC was supposed to have passed the\nintimation within 9 months from the end of the financial year in which\nROI as filed. In this case ROI was filed on 06.11.2017. Therefore,\nreckoning the period of 9 month from the end of the financial year (i.e.\n30.03.2018), had already expired on 31.12.2018 and assuming that the\nintimation was passed on the last date that is on 31.12.2018 and\nthereafter reckoning the permissible period for initiating proceeding u/s\n263 which is again two year end from the relevant financial year, (i.e.\n31.03.2019), the following period of two years thereafter had already\nexpired on 31.03.2021. Thus, the limitation had already expired on\n31.03.2021 whereas the impugned order has been passed on\n14.02.2023i.e. much later to the limitation.\n10.5. Supporting Case Laws: For this proposition kindly refer the\nfollowing:\n10.5.1. In Chhabra Syncotex (P) Ltd. Vs. ACIT [ITA No. 239/Jp/2018];\n(Supra – Re. Para 3.4) (DC)\n10.5.2. CIT vs. Larc Chemical Limited [2014] 368 ITR 655 (Bombay) is\nthe direct decision on the present context, wherein, it was held that (DC\n):\n\"12. We have considered the rival submissions. It is not disputed that\nsave and except the issue of non-genuine purchases all other issues\ndealt with by the Commissioner of Income-tax in the order dated March\n30, 2009, were not a subject matter of the assessment order passed on\nJune 28, 2006, under section 143(3)/147 of the Act. All the other issues\non which the Commissioner of Income-tax is seeking to exercise the\njuri iction under section 263 of the Act were concluded by virtue of an\nintimation under section 143(1) of the Act which admittedly was done\nbeyond a period of two years prior to the notice dated March 17, 2009,\nissued under section 263 of the Act. Section 263(2) of the Act provides\nthat no order would be made in exercise of the juri iction under section\n263(1) of the Act after the expiry of two years from the end of the\nfinancial year in which the order sought to be revised was passed. It is\nan admitted position that the Commissioner of Income tax has not\nexercised the revisional juri iction in respect of the order/intimation\npassed section 143(1) of the Act within two years of it being passed.\nTherefore, exercise of juri iction on those issues under section 263 of\nthe Act is time barred as held by this court in CIT v. Anderson Marine &\nSons (P.) Ltd. [2004] 266 ITR 694/139 Taxman 16. Moreover, in view of\nthe decision of the apex court in the matter of Alagendran Finance Ltd.'s\ncase (supra) as well as our court in the matter of Ashoka Buildcon Ltd.'s\ncase (supra) the juri iction under section 263 of the Act cannot be\nexercised on issues which were not subject matter of consideration while\npassing the order of reassessment under section 143(3)/147 of the Act\nbut a part of an assessment done earlier under the Act.”\n10.5.3 In CIT vs Anderson Marine & Sons (P.) Ltd. 266 [ITR 694] 139\nTaxman 16 (Bombay) (DC) :\n“Section 263, read with section 143, of the Income-tax Act, 1961\nRevision - Of orders prejudicial to interests of revenue -Assessment year\n1999-2000 - Whether acceptance or acknowledgement of return filed by\nassessee and intimation sent forpurpose of section 143(1) is an\nassessment and, therefore, in nature of an order - Held, yes - Whether\nsending intimation beinga decision of acceptance of self-assessment is\nin nature of order passed by Assessing Officer for purpose of section\n263 Held, yes Whether, therefore, Commissioner can exercise\njuri iction under section 263 in respect of assessment under\nsection143(1) as applicable after 1-4-1989 - Held, yes”\n10.5.4 In CIT vs. Rajkumar Deepchand Phade [249 ITR 520] 116\nTaxman 783 (Bombay) : (DC\n)\n“4. In the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 831,\nthe Apex Court has laid down twopre-requisites for exercise of\njuri iction by the Commissioner suo motu, viz., that the order of the\nAssessingOfficer was erroneous and, secondly, that the order of the\nAssessing Officer was prejudicial to the interest ofthe revenue. In the\nlight of the said judgment, it is clear that merely because an order is\npassed under section143(1) by the Assessing Officer, is no bar for the\nCommissioner to invoke section 263. In the present matter, the above\nfacts clearly show that the assessee claimed deduction in respect of the\ninterest amount paid to the trust on the goodwill during the assessment\nyears 1986-87 to 1988-89 whereas under the partnership deed, the\ngoodwill amount was payable by incoming partners and, therefore, no\namount was payable by the firm as and by way of interest for the liability\nof the goodwill and, therefore, the firm was not entitled to claim any\ndeduction in respect of the interest paid to the trust. Under the order of\nthe Assessing Officer, the relevant facts have not been examined. The\norder of the Assessing Officer was erroneous. The order of the\nAssessing Officer was prejudicial to the interest of the revenue.”\n10.5.5. Further in the case of L.G. Electronics India (P.) Ltd. Vs PCIT\n(2016) 388 ITR 135/ 290 CTR 283 (Allahabad) (PB 23 to 29)(DC\n),\nthe original assessment was passed at total income of Rs.\n5,83,91,17,790/- on dated 21.10.2011 wherein an addition on account of\nsales tax subsidy of Rs. 61,00,79,579/- was made. Thereafter, the case\nwas reopened and reassessment was completed vide order dated\n26.03.2015 by making a further disallowance of Rs. 1,38,95,995/- u/s\n40(a)(ia) of the Act (and the total reassessed income of Rs.\n5,97,80,77,790/-). However, this was followed by a notice u/s 263 with\nreference to the reassessment order passed u/s 143(3) r.w. 147 of the\nAct dated 26.03.2015 on the ground that a further amount of sales tax\nsubsidy of Rs. 20,58,34,234/- accrued due to scheme of Maharashtra\nGovernment was not taxed as revenue receipt (this subsidy was in\naddition to the sales tax incentive received by the assessee of Rs.\n61,00,79,579/- from UP Government). In this factual context, the\ncontention of the assessee (in Para 14) was that in the original\nassessment, the sales tax subsidy accrued to assessee from\nMaharashtra Government was treated as capital receipt and no addition\nwas made therefore, the limitation u/s 263(2) of the Act was to be\nreckoned with reference to the original assessment order passed on\n31.10.2011 and not w.r.t. the reassessment order passed dated\n26.03.2015, relying upon certain decisions.\n10.5.6CIT v. Bharti Airtel Ltd (Supra Para 3.3) (DC )\n10.5.7 In Ashok Buildcon Ltd. Vs. ACIT (Supra Para 3.4) (DC)\n10.5.8 In CIT vs. ICICI Bank Ltd. (2012) 343 ITR 74/252 CTR 85 (Mum),\nheld that (DC ):\n\"Section 263 of the Income-tax Act, 1961 Revision Of orders\nprejudicial to interest of revenue - Assessment year 1996-97 - Whether\nwhere juri iction under section 263 is sought to be exercised with\nreference to an issue which is covered by original order of assessment\nunder section 143(3) and which does not form subject-matter of\nreassessment, period of limitation of two years under section 263(2)\nmust necessarily begin to run from order under section 143(3) - Held,\nyes [In favour of assessee]”\n10.5.9 In CIT vs. Alagendran Finance Ltd. (Supra Para 3.1) (DC 1-7)\n10.5.10 In Indira Industries Vs. Pr. CIT. 305 CTR (Mad) 314: 169 DTR\n(Mad) 171 (2018) (DC), held that:\n\"3(xviii) We therefore have no hesitation in holding that the reckoning\ndate qua the impugned notice for the purpose of s. 263(2) of IT Act is not\nthe date of reassessment being 30th Dec., 2016, but the date of\nscrutinizing the assessment i.e., 25th Feb., 2015.\n3(xix) As would be evident from the narration of facts and discussion\nsupra, the impugned notice is dt. 16th Aug.,2017 and is therefore, clearly\nbeyond two years when reckoned from 25th Feb., 2015.\n3(xx) Therefore, the assessee before us was clearly entitled to succeed\non the second point raised before the learned Single Judge.”\n11. It is further submitted that, any contrary interpretation/view, shall\nrender the limitation provisions u/s 263(2) of the Act as completely\nnugatory or purposeless and shall confer blind and unfettered power\nupon the revenue and the Id. CIT may disturbed the finality of the orders,\none way or the other, which can never be the intention of the legislature.\nThe Hon'ble courts have always held that the provisions relating to\nlimitations must be construed very strictly in as much as permitting the\nreopening of a concluded matter has the effect of unsettling the rights\nand obligations of the parties at any moment of time.\n12. Even Otherwise (alternatively,and without prejudice to the other\ncontentions and arguments), assuming, the AO had passed an\nassessment order u/s 143(3), prior to the subjected reassessment order,\neven then this revision u/s 263 would have been barred by limitation\nsince as per Section 153(1) [prevailing at that time], the said order was\nto be passed within 21 months from the from the end of the assessment\nyear in which the income was first assessable. The time chart is as\nfollows:\nS.No.\nParticulars (A.Υ. 2017-18)\nDate\nA.\nLast date of relevant A.Υ.\n31.03.2018\nB.\nLimitation u/s 153(1) – 21 months\n31.12.2019\nC.\n(+) Limitation as per Section 263(2)\n2 years\nD.\nLast date of passing Revision Order u/s 263\n31.12.2021\nHence, the impugned SCN u/s 263 and the resultant order kindly be\ndeclared as barred by limitation.\n6.1 In support of the grounds so raised the Id. AR appearing on\nbehalf of the assessee has also placed reliance on the written\nsubmission on 05.11.2024 which is extracted herein below:-\n\"1. That in the aforesaid matter, the Id. PCIT, Udaipur passed the Order\nu/s 263 on dated 29.02.2024 (hereinafter referred as “impugned order”),\nAccordingly, the appeal was to be filed on/before dt. 28.04.2024\nhowever, the same has been filed on dated 29.07.2024. Thus, the\nappeal was filed with a delay of 92days.\n2.1 Reasonable Cause Existed:With regard to the delay, it is humbly\nsubmitted that there did exist a reasonable cause and the delay so\ncaused was completely unintended and bonafide in as much as Shri\nSushil Mittal, employed in the office of the Company and permanent\nemployee of the appellant company namely, M/s SHIV VEGPRO\nPRIVATE LIMITED, Kota, was assigned the task to collect the appeal\nprepared from the counsel at Jaipur, to get itsigned and to ensure filing\nof the same in time. Shri Sushil Mittal was fully conversant with the\naffairs of the above assessee in the office of M/s SHIV VEGPRO\nPRIVATE LIMITED, Kota. Shri Sushil Mittalcollectedthe documents\nprepared from the counsel at Jaipur, which were received only a week\nbefore the last date of filing of the appeal.\nIn the meanwhile, because of the marriage of his daughter in the month\nof April, he proceededon leave. Therefore, hecould neither handoverhis\nresponsibilities to his colleague nor couldinform Shri Sandeep Kumar\nSaboo, Director of the companyabout the documents, including the\nappeal papers.\n2.2Although subsequently, Shri Sushil Mittalresumed his duties in the\noffice sometime in the first week of May, 2024, yet however, it did not\noccur to his mind that some appeal papers were to be signed, which\nwere still lying pending with him.\n2.3It is only thereafter, in the second week of July, 2024 when CA\nDharm Chand Jain, FCA contacted the counsel engaged at Jaipur w.r.t.\nthe status of the appeal (which he believed had already been filed), but\nthen he was informed that the same is yet to be filed and that the\nappeal papers were received by Shri Sushil Mittalfor getting them signed. In\nabesence of any persuasion from the side of the Assessee and M/s\nDHARM CHAND JAIN & ASSOCIATES, Chartered Accountant, the\ncounsel at Jaipur, already handling a heavy workload, informed the\nfactual position to Shri Dharm Chand Jain. It is only thereafter, the\nDirector, Shri Sandeep Kumar Saboo immediately enquired Shri Sushil\nMittal and asked him to hand over him the subjected documents – the\nappeal set, who thereafter, recollected and after making an extensive\nsearch could lay his hand on the appeal papers. Upon getting hold of the\ndocuments, Shri Sandeep Kumar Saboo, promptly signed the papers\nand thereafter, forwarded the same to the counsel at Jaipur without any\nfurther delay.\n2.4Thus, the delay in filing of the instant appeal was not at all deliberate\nor intentional but arose due to circumstances beyond the assessee's\ncontrol, primarily stemming from the unintended and bonafide mistake\ncommitted by the Employee working at the Assessee-Company.\nAssessee has acted diligently and in good faith throughout this process,\ntaking all necessary steps to rectify the situation and ensure compliance.\n2.5 That the applicant was a layman & not very conversant with the\ncomplex tax laws and due to the circumstances stated above, the delay\nso caused was beyond their control but was bonafide and unintended.\nThe assessee was not going to gain any benefit because of the\ndelayed finding and their conduct was not contumacious.\n3. In support, affidavits of Shri Sandeep Kumar Saboo and Shri Sushil\nMittal are enclosed herewith and marked as Annexure-1 and Annexure-\n2.\n4. Supporting Case Laws: It is submitted that the Hon'ble Supreme Court\nin the case of Collector, Land & Acquisition v. Mst. Katiji & Others (1987)\n167 ITR 471 (SC) has advocated for a very liberal approach while\nconsidering a case for condonation of delay. The following observations\nof the Hon'ble Court are notable:\n\"The legislature has conferred the power to condone delay by enacting\nsection 5 of the Limitation Act 1963 in order to enable the Courts to do\nsubstantial justice to parties by disposing of matters on 'merits'. The\nexpression 'sufficient cause' employed by the legislature is adequately\nelastic to enable the Courts to apply the law in a meaningful manner\nwhich sub serves the ends of justice-that being the life-purpose of the\nexistence of the institution of Courts. It is common knowledge that this\nCourt has been making a justifiably liberal approach in matters instituted\nin this Court. But the message does not appear to have percolated down\nto all the other Courts in the hierarchy.\"\nThe said judgment is a leading case on the subject and has a binding\nforce on all the officers subordinate thereto.\"\n6.2 The Id. AR of the assessee also filed a detailed paper book\nin support of the contention so raised in the written submission on\n14.10.2024 and the index of the document submitted are as\nunder:-\nS. No.\nParticulars\nPage\nNo.\n1.\nCopy of acknowledgement of ITR filed along with its\n1-5\ncomputation for AY 2017-18.\n2.\nCopy of audited financial statements for AY 2017-18.\n6-30\n3.\nCopy of Tax Audit form 3CA-3CD for AY 2017-18.\n31-43\n4.\nCopy of notice u/s 142(1) dated 16.02.2021 along with its\nreply filed on dated on 23.02.2021 before AO\n44-50\n5.\nCopy of notice u/s 142(1) dated 01.03.2021 along with its\nreply filed on dated 12.03.2021 before AO\n51-61\n6.\nCopy of Assessment Order dated 15.04.2021 passed u/s 147\n62-69\n7.\nCopies of Confirmations of accounts from the Loan Creditors.\n70-80\n8.\nCopies of Receipts of service tax payments for AY 17-18.\n81-94\n9.\nCopy of Ledger statement of Interest paid to the schedule\nbank.\n95\n10.\nCopy of relevant extracts of Bank Statement of CC A/c\n96-119\n11.\nCopy of form 58A filed in support of the deduction claimed u/s\n35AC.\n120-121\nCopy of notice u/s 263 of PCIT dated 14.02.2023\n12.\n122-127\n13.\nCopy of reply of filed in response to notice dated 14.02.2023\nalongwith Acknowledgement (same was filed for notice dated\n03.10.2023)\n128-142\nCopy of notice u/s 263 of PCIT dated 03.10.2023\n14.\n143-145\n15.\nCopy of acknowledgement of response filed for notice dated\n03.10.2023\n146\n6.3 The Id. AR of the assessee also filed an another paper book\non 11.11.2024 on the decision referred in support of the contention\nso raised in the written submission and the index of the judicial\ndecision relied upon are as under:-\nS.No.\nPARTICULARS\nPg. No.\n1.\nCIT vs. Alagendran Finance Ltd, (2007) 211 CTR (SC) 69\n1-7\n2.\nCIT v. Bharti Airtel Ltd. [2013] 37 taxmann.com 218/218\nTaxman 112(Mag.) (Delhi)\n8-9\n3.\nAshok Buildcon Ltd. Vs. ACIT (2010) 325 ITR 574(Bom.)\n10-15\n4.\nChhabra Syncotex (P) Ltd.vs AO (2019) TTJ (Jp) 77\n16-37\n5.\nPCIT vs. SPPL Property Management (P.) Ltd. 151\ntaxmann.com 103 (Calcutta)\n37A-40\n6.\nCIT vs Bajargan Traders 86 taxmann.com 295 (Rajasthan)\n41-43\n7.\nCIT vs. Larc Chemical Limited [214] 368 ITR 655(Mum)\n44-47\n8.\nCIT vs Anderson Marine & Sons (P.) Ltd.266 [ITR 694] 139\nTaxman 16 (Bombay)\n48-52\n9.\nCIT vs. Rajkumar DeepchandPhade[249 ITR 520] 116\nTaxman 783 (Bombay)\n53-55\nL.G. Electronics India (P.) Ltd. Vs PCIT (2016) 388 ITR 135/\n10. 290 CTR 283\n56-64\n11.\nCIT vs. ICICI Bank Ltd. (2012) 343 ITR 74/252 CTR 85\n65-68\n12.\nIndira Industries Vs. Pr. CIT 305 CTR 314(Mad)\n69-74\n7.\nThe Id. AR of the assessee in addition to what has been\nstated in the written submission vehemently argued that the action\nof the Id. PCIT exercising the juri iction beyond two year is not\npermitted, as the ITR was filed 06.09.2017, intimation u/s. 143(1)\nwas issued on 16.10.2018 and notice us/. 148 was issued on\n17.03.2020 and that assessment order was passed on 15.04.2021.\nThe issues on which the PCIT is seeking to exercise the\njuri iction u/s. 263 of the Act were concluded by virtue of an\nintimation dated 16.10.2018 issued u/s. 143(1) of the Act which\nadmittedly was done beyond a period of two years prior to the\nnotice dated 14.02.2023 issued u/s. 263 of the Act. To drive home\nto this contention the Id. AR of the assessee relied upon the\ndecision of the CIT vs. Larc Chemical Limited [ 368 ITR 655\n(Bombay) ]. The Id. PCIT raising the issue which was not part of\nthe notice u/s. 148 and the reasons recorded there under. The Id.\nAO has already applied the mind on the issue that was raised and\nthe assessment to that has already been completed. In the notice\nissued u/s. 148 the reason to believe was alleged bogus sales and\nthe Id. AO examined that aspect and finalized the assessment.\nThus, the PCIT exercising its revisional juri iction reopened the\norder of assessment only in relation to the subject of reassessment\nproceedings, the period of limitation provided for under sub.s.(2) of\nsection 263 of the Act would begin to run from the date of order of\nassessment and not from the order of the re-assessment. Thus,\naction of the Id. CIT(A) is illegal and PCIT's order was silent on that\nissue even though the assessee raised that aspect of the matter\nbefore her. Even the reason advanced by the Id PCIT partly was\nalso not forming part of the show cause notice.\n8. Per contra, the Id. DR supported the order of the Id. PCIT\nand submitted that the assessee while passing the order u/s. 263\nof the Act PCIT has dealt with all the submission and objections\nraised by the assessee. The contention that the order u/s. 148\ncannot be revised is incorrect appreciation of the fact and the Id.\nPCIT can revise all the orders and therefore, she supported the\norder of the Id. PCIT.\n9. In the rejoinder to the arguments of the Id. DR, Id. AR of the\nassessee submitted that the Id. PCIT has invoked the clause (a) &\n(b) of the Explanation (2) of section 263 of the Income Tax Act,\n1961 whereas the same was not part of the show cause notice\nissued to the assessee and on that aspect of the matter he relied\nupon the written submission so filed.\n10. We have heard both the parties and perused the materials\navailable on record. Vide ground no. 1 & 2 the assessee\nchallenges the order of the Id. PCIT on the technical ground stating\nthat the PCIT has erred in law as well as on facts in invoking the\nprovision of section 263 of the based on the set of the facts of the\ncase of the assessee and therefore, he prayed that the same being\nillegal and bad in law required to be quashed. The brief facts\nrelated to the issue are that in this case the assessee filed the\noriginal return of income on 06.09.2017 the said return was\nprocessed and an intimation u/s. 143(1) was issued on\n16.10.2018. Thereafter, notice u/s. 148 was issued on 17.03.2020\nand that re-opened assessment order was passed on 15.04.2021.\nThe issues on which PCIT is seeking to exercise the juri iction\nu/s. 263 of the Act were concluded by virtue of an intimation dated\n16.10.2018 issued u/s. 143(1) of the Act which admittedly was\ndone beyond a period of two years prior to the notice dated\n14.02.2023 issued u/s. 263 of the Act. The bench noted that the\nissue raised by the assessee in this appeal has already been\ndecided by the our own Hon'ble Juri iction High Court in the case\nof Chambal Fertilisers and Chemicals Ltd. Vs. PCIT [ 170\ntaxmann.com 543 (Rajasthan) wherein the Hon'ble Court held as\nunder;\n2. The question which arise for consideration in the present case is\nwhether the period of limitation for passing under Section 263 of the\nIncome Tax Act, 1961 has to be reckoned from the date of original\nassessment order or from the date of reassessment order.\n3. The Supreme Court in the aforesaid decision in the case of\nCommissioner of Income Tax(supra) has held as follows:-\n\"3. At the outset, it is required to be noted and it is not in dispute\nthat, as such, the Commissioner exercised powers under Section\n263 of the Act with respect to the issues which were not covered in\nthe re-assessment proceedings. Therefore, the issues before the\nCommissioner while exercising the powers under Section 263 of\nthe Act relate back to the original Assessment Order and, therefore,\nthe limitation would start from the original Assessment Order and\nnot from the Reassessment Order. We are fortified with our view by\nthe decision of this Court in the case of Commissioner of Income\nTax, Chennai v. Alagendran Finance Ltd. (2007) 7 SCC 215. As\nobserved and held by this Court in the aforesaid decision, once an\nOrder of Assessment is re-opened, the previous order of\nassessment will be held to be set aside and the whole proceedings\nwould start afresh but the same would not mean that even when\nthe subject matter of re-assessment is distinct and different, the\nentire proceedings of assessment would be deemed to have been\nre-opened. Meaning thereby, only in a case where the issues\nbefore the Commissioner at the time of exercising powers under\nSection 263 of the Act relate to the subject matter of re-\nassessment, the limitation would start from the date of Re-\nassessment Order. However, if the subject matter of the re-\nassessment is distinct and different, in that case the relevant date\nfor the purpose of determination of period of limitation for exercising\npowers under Section 263 of the Act would be the date of the\noriginal Assessment Order.\"\n4. In view of the aforesaid authoritative pronouncement, it is clear that for\nthe purposes of exercising powers under Section 263 of Income Tax Act,\n1961, the period of limitation for passing the order has to be reckoned\nfrom the date of original assessment order and not from the date of\nreassessment order.\n5. The aforesaid legal position is not disputed by learned counsel for the\nrespondents.\n6. In view of the above, the notice impugned cannot be sustained in law\nand, therefore, the same is set aside being without juri iction and\nbarred by limitation.\n7. The petition is accordingly allowed.\nThe issue decided by our High Court has also been confirmed by\nthe apex court vide order dated 03.01.2025 wherein the SLP filed\nby the revenue was dismissed. Thus, the issue goes in favour of\nthe assessee and the revenue did not brought any contrary\ndecision we respectfully following the ration decided held that the\norder of the PCIT was barred by limitation as prescribed under the\nAct and thereby we considered the ground no. 1 and 2 raised by\nthe assessee. Ground no. 3 to 6 are on the merits of the disputes,\nsince we have considered the appeal of the assessee on technical\ngrounds the grounds on merits becomes educative in nature.\nGround no. 7 being general does not require our finding.\nIn the result, the appeal filed by the assessee is allowed.\nOrder pronounced in the open Court on 28/01/2025.\n \n(डा० एस. सीतालक्ष्मी )\n(Dr. S. Seethalakshmi)\nन्यायिक सदस्य /Judcial Member\nजयपुर / Jaipur\nदिनांक/ Dated:- 28/01/2025\n*Santosh\n \n( राठौड़ कमलेश जयन्तभाई )\n(Rathod Kamlesh Jayantbhai)\nलेखा सदस्य / Accountant Member\nआदेश की प्रतिलिपि अग्रेषित / Copy of the order forwarded to:\n1.\n2.\n3.\n4.\n5.\n6.\nअपीलार्थी / The Appellant- Shiv Vegpro Pvt. Ltd., Kota.\nप्रत्यर्थी / The Respondent- PCIT, Udaipur.\nआयकर आयुक्त / CIT\nआयकर आयुक्त / CIT(A)\nविभागीय प्रतिनिधि, आयकर अपीलीय अधिकरण, जयपुर/DR, ITAT, Jaipur.\nगार्ड फाईल / Guard File {ITA No. 1014/JPR/2024}\nआदेशानुसार / By order\nसहायक पंजीकार / Asst.