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Before: SHRI G. D. AGRAWAL & SHRI CHANDRA MOHAN GARG
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal has been filed by the assessee against the order of the Principal CIT-3,(Pr. CIT) New Delhi dated 20/10/2016 passed u/s 163 of the Income Tax Act, 1961 (For short the Act).
In this appeal, although the assessee has raised as many as six grounds but except Ground No.1, other grounds are argumentative and supportive to the main ground which are reads as follows:-
“1. The memorandum of appeal must be in triplicate and should be accompanied by two copies (at least one of which should be a certified copy) of the order appealed against, two copies of the relevant order of the [Assessing Officer], two copies of the grounds of appeal before the first appellate authority, two copies of the statement of facts, if any, filed before the said appellate authority, and also- a) in the case of an appeal against an order levying penalty, two copies of the relevant assessment order; b) in the case of an appeal against an order u/s 143(3) read with Section 144A, two copies of the directions of the [Deputy Commissioner] u/s 144A; c) in the case of an appeal against an order u/s 143(3) read with Section 144B, two copies of the draft assessment order and two copies of draft assessment order and two copies of the directions of the [Deputy Commissioner] u/s 144B; d) in the case of an appeal against an order u/s 143 read with section 147, two copies of the original assessment order, if any.”
We have heard argument of both the sides and carefully perused the relevant material placed on record of the Tribunal inter-alia impugned assessment order dated 31/3/2016, order under challenge passed u/s 263 of the Act and paper book of the assessee consisting of 43 pages.
The Ld. Counsel of the assessee submitted the Principal CIT-(Pr.
CIT) has erred in passing the impugned order as he has not assumed jurisdiction u/s 263 of the Act for revising the order where as the mandatory conditions for assuming such jurisdiction are totally absent.
The Ld. Counsel vehemently pointed out that the Principal CIT-(Pr. CIT) erred in arriving at a conclusion which is without any basis whatsoever to the effect that the assessment order passed by the A.O was erroneous as well as prejudicial to the interest of Revenue and observing that the Assessing Officer held u/s 143(3) read with Section 147 of the Act has passed without making adequate enquiries. The Ld. Counsel also contended that the Principal CIT-(Pr. CIT) is not justified in cancelling the assessment order and directing the A.O to reframe the assessment after verifying the correct amount of addition requires to be made on account of unexplained investment where as the surroundings circumstances as well as documents placed on record clearly established the real facts of the issue. The Ld. Counsel lastly submitted that the Principal CIT-(Pr. CIT) was not correct in coming to a conclusion that investment made in foreign entity belong to the appellant and the same has been owned by the appellant.
The Ld. Counsel further drawing our attention towards order of ITAT SMC Bench Delhi dated 12/8/2017 in the assessee’s own Appeal for Assessment Year 2008-09 in submitted that allowing the appeal of the assessee. The Tribunal has remanded the appeal to the file of the CIT(A) that the direction to decide the same afresh after providing due opportunity of being heard to the assessee and to decide the appeal on merits and to pass a speaking order, keeping in view the judgment of Hon'ble Supreme Court.
The Ld. Counsel further submitted that in this order, the Tribunal has also directed the assessee to produce all the documents/evidence before the CIT(A) to substantiate her case on the issue of unexplained investment. Therefore, if the A.O is allowed to frame another assessment order in pursuant to the order of Principal CIT-(Pr. CIT) u/s 263 of the Act then it would amount to a parallel double proceeding harassing the assessee. Therefore, the impugned order may kindly be set aside.
Replying to the above, the Ld. CIT D R strongly supported the action of the Principal CIT-(Pr. CIT) and submitted that there was no adequate enquiry by the A.O on the issue of unexplained investment.
Hence, the order has to be held as erroneous and prejudicial to the interest of Revenue and thus, the impugned assessment order dated 31/3/2016 was rightly revised of assuming valid jurisdiction.
Placing rejoinder the above submission, the Ld. Counsel of the assessee appellant submitted that there was sufficient enquiry on the issue of unexplained investment. Therefore, assessment order cannot be termed as erroneous and prejudicial to the interest of Revenue. However, on being asked by the Bench the Ld. Counsel of the assessee submitted that the assessee is ready to abide the order of the Tribunal and to participate in the appellate proceedings before the CIT(A) in pursuant o the Tribunal order.
On careful consideration of rival submissions, we are of the view that when the quantum appeal is pending before the Ld. CIT(A) in pursuant to the directions of the tribunal and the assessee is participating therein as per directions of the Tribunal then if the A.O is further allowed to reframe assessment order in pursuant to the order of the Principal CIT-(Pr. CIT), u/s 263 of the Act. Then, certainly, it would amount to double proceedings. It is a peculiar situation of this case that on the other hand, the Tribunal has directed the Ld. CIT(A) to decide the appeal on merits on the issue of unexplained investment by order dated 17/8/2017 and subsequently, the Principal CIT-(Pr. CIT) proceeded to revises the amount assessment order u/s 263 of the Act by alleging the assessment order as erroneous and prejudicial to the interest of Revenue. In the present case, when we carefully perused the impugned assessment order dated 31/3/2016 then we clearly observe that the Assessing Officer has considered the issue of investment of USD 50,000/- and enquiries has also been made on the issue. From the concluding paragraphs 13 to 15 of the assessment order, we observe that the A.O has also made protective addition pertaining to the investment of USD 50,000/- on 13/8/2017 by observing that the said amount will be added on substantive basis in the hands of Shri Rajni Kant Verma, the husband of the assessee and the A.O of Shri Verma will be informed so that necessary proceedings against him. The main controversy picked up by the Principal CIT-(Pr. CIT) for revising the order was that the A.O should have make addition on the issue on substantive basis not as protective basis.
So far as conclusion drawn by the A.O in the impugned assessment order is concerned. We refrain to make any comment on merits on the order of the A.O. However, from perusal of the order and documents filed by the assessee before A.O which have also been placed before us in the shape of paper book. WE are satisfied, that the A.O not only picked up the issue of investment of 50,000/- USD but also made enquiries on the issue and after taking record explanation and documents filed by the.
The A.O made addition of same amount on protective basis in the hands of the assessee intimating the A.O of Shri Verma i.e. husband of the assessee asking him to take appropriate action in this regard in the case of Shri Verma. In this situation, we decline to accept contention of the Principal CIT-(Pr. CIT) that the order is erroneous and prejudicial to the interest of revenue. As when there is adequate enquiry and the A.O has made addition on protective basis in the hands of the assessee and further directed the A.O her husband to take appropriate action in the case of assessee’s husband wherein substantial addition was to be made then the conclusion drawn by the Assessing Officer of the present assessee cannot be alleged as erroneous and prejudicial to the interest of Revenue.
In view of foregoing discussion, we reach to a logical conclusion that the order passed by the A.O was not erroneous and prejudicial to the interest of revenue and thus we hold that the Principal CIT-(Pr. CIT) was not having valid jurisdiction u/s 263 of the Act for revising the impugned assessment order. At his juncture, we also find it appropriate to refer ratio of the decision of Hon'ble Supreme Court in the case of Malabar Industries Company Ltd. Vs. CIT 109 Taxman. 66 (SC) wherein their lordship held that the Commissioner u/s 263 of the Act cannot revise the assessment order merely because he is not agree to the conclusion drawn by the A.O which is substantial and out of two possible views.
In the present case, on the orders of aforegoing discussion, no hesitation to held that the Principal CIT-(Pr. CIT) proceeded to revise the assessment order u/s 263 of the Act without any justified reasoning and valid basis. Therefore, impugned order of Principal CIT-(Pr. CIT) is not sustainable and the same is bad in law and hence we quash the same.
Before we part with the order we find it necessary and appropriate to direct the Principal CIT-(Pr. CIT) to pass the appropriate order in pursuant to the order of the Tribunal dated 17/8/2017 (Supra) after allowing due opportunity of being heard to the assessee and directing him to decide the appeal earliest possible.
In the result, the appeal of the assessee is allowed.