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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: D.T. GARASIA & SHRI N. K. PRADHAN
Per D.T. GARASIA, Judicial Member:
:- The above titled appeal has been preferred by the Assessee against the order dated 10.03.2017of the Principal Commissioner of Income Tax (Central)-I, Mumbai [hereinafter referred to as the CIT] relevant to assessment year2009- 10.
The short facts of the case are as under:- “The assessee has filed his return of income in response to the notice u/s.153A of the Act on 10.12.2014 declaring total income at Rs.7,05,70,282/-. The assessment was completed u/s.143(3) r.w.s.153A of the Act on 18.06.2015. The records were called for and the Commissioner was of the view that assessee has credited an amount of Rs.52,21,39,690/- in his capital gain while which reads as under:- S.No. Head Amount 1 Adv. To Cos and others 41,75,65,793 2 Capital credit balance in the firm 9,95,81,999 3 FDs, PF and misc 49,91,897 The Assessing Officer while completing the assessment has failed to examine the issue as to why this amount has not been offered to tax. It is also observed that assessee has claimed deduction in respect of interest paid on ICICI loan at -3232.M.17 A.Y.2008-09 to 2014-15 Rs.11,21,756/- against the income from house property. However, Assessing Officer failed to examine the utilisation of loan and its allowability as deduction while computing the income from house property. During the course of search at the premises of Ms.Priti Milan Mehta, certain pages were seized out of which page 118 to 127 pertain to Swiss Bank Account statement with JP Morgan in the name of the assessee. This particular bank account with JP Morgan was not disclosed by the assessee in his return of income filed u/s.139 or u/s.153A of the Act. The Assessing Officer failed to examine the said mentioned bank account and tax the undisclosed income. The Assessing Officer was given show cause notice and assessee has replied as under:- “3. The assessee submitted his explanation through his authorized representative. The explanation of the assessee is summarized below:-
1. 1. As regards first issue, the assessee stated that these balance in the various companies, firms and PF accounts etc were standing in the name of wife Mrs.Priti Hiranandani. Pursuant to the family arrangement, all these balances were assigned to the assessee during the year under consideration. These facts were clearly evident from the details of capital account already available in the assessment order.
2. The interest was paid on house loans for buying four residential flats situated at Tivoli. These flats were leased out by the assessee during the year under consideration and rental income was offered to tax income from house property. Interest paid on housing was rightly claimed deduction u/s.24(b) of the I.T. Act 1961.
3. As regards bank account with JP Morgan, the assessee denied any connection with such bank account.”
3. After considering the reply the Commissioner was of a view that while completing the assessment u/s.143(3) r.w.s.153A of the assessee, Assessing Officer did not carry out any enquiries on the above issues, the Assessing Officer failed to make the enquiry into amount credited in the capital account lying to the credit of wife Mrs.Priti Hiranandani. The Assessing Officer failed to verify the deed of family arrangement. Therefore, the Assessing Officer also failed to make the enquiry which shows existence of such banks accounts in seized papers, therefore, the CIT has set aside this assessment order with a direction to complete the assessment order afresh after conducting necessary enquiries. AY 2008-09 4. Ground raised by the assessee in AY 2008-09 is as under: “Ground No. 1:- On the facts and in the circumstances of the case and in law, the Hon’ble Principal Commissioner of Income Tax (Central)-I erred in invoking the provisions of Section 263 of the Act -3232.M.17 A.Y.2008-09 to 2014-15 thereby assuming jurisdiction under the said provisions. The Ld. PCIT further erred in holding that the assessment completed in the case of appellant had been made without carrying out necessary enquires into various issues and hence, the assessment order so passed by the learned A.O. u/s. 153A r.w.s 143(3) of the Act dated 18.06.2015 is erroneous and prejudicial to the interest of the revenue. The appellant prays that the order of the Principal CIT u/s. 263 may kindly be quashed and the assessment order of the A.O dated 18.06.2015 may be restored.
Ground No. 2:- On the facts and in the circumstances of the case and in law, the Hon’ble Principal Commissioner of Income Tax (Central)-I erred in holding that the assessment order passed by the Ld. AO u/s. 153A r.w.s 143(3) of the Act dated 18.06.2015 is erroneous and prejudicial to the interest of the revenue and hence set aside the appellant case back to the Ld. A.O. for making a fresh assessment. The appellant prays that the said action of Hon’ble Principal CIT be may kindly be quashed.
Ground No. 3:- On the facts and in the circumstances of the case and in law, the Hon’ble Principal Commissioner of Income Tax (Central)-I erred in holding that the Ld. A.O. has failed to examine Goodwill credited from GuficHira Construction amounting to Rs.3,76,98,585 and setting aside the appellant’s case back to the Ld. A.O. for making a fresh assessment of such issue. The appellant prays that the said action of Hon’ble Principal CIT be may kindly be quashed.
Ground No. 4:- On the facts and in the circumstances of the case and in law, the Hon’ble Principal Commissioner of Income Tax (Central)-I erred in holding that the Ld. A.O. has failed to examine the utilization of loan and allowability of interest amounting to Rs.21,48,340 paid on the same against Income from House Property. Also, the Hon’ble Principal Commissioner of Income Tax (Central)-I has erred in setting aside the appellant’s case back to the Ld. A.O. for making a fresh assessment of such issue. The appellant prays that the said action of Hon’ble Principal CIT be may kindly be quashed.
Ground No. 5:- -3232.M.17 A.Y.2008-09 to 2014-15 On the facts and in the circumstances of the case and in law, the Hon’ble Principal Commissioner of Income Tax (Central)-I erred in holding that the Ld. A.O. has failed to examine the Swiss Bank Account statement with JP Morgan in the name of the appellant and taxing the undisclosed income therein. Also, the Hon’ble Principal Commissioner of Income Tax (Central)-I has erred in setting aside the appellant’s case back to the Ld. A.O. for making a fresh assessment of such issue. The appellant prays that the said action of Hon’ble Principal CIT be may kindly be quashed”.
5. In respect of A.Y.2009-10 to 2013-14 all the issues are similar except the figures.
The learned AR submitted that no incriminating material pertaining to the issues raised by CIT u/s 263 of the Act was found during the course of search that took place in case of assessee. CIT has revised the assessment order passed u/s 143(3) r.w.s. 153A of the Act without revising the approval granted by Addl. CIT. CIT has not applied his mind and not conducted any enquiry before directing the Assessing Officer to decide the issues afresh. The learned AR in respect of no incriminating material pertaining to the issues raised by CIT u/s 263 of the Act was found pertaining to issue raise by the CIT. In this connection learned AR submitted that that search and seizure action took place on 11.03.2014 and the assessee was also covered in this search action. As per the provisions of section 153A of the Act the AO had to re-assess the income of the assessee immediately preceding 6 assessment years. As mentioned above, for the AYs 2008-09, 2010-11 and 2012-13, the return of income was filed and due dates for selecting the respective cases for scrutiny assessment has been passed before the date of search. In AYs 2009- 10 and 2011-12, the return of income was filed and assessment was completed before the date of search. The assessment for such assessment years was therefore non-abated as time limit for issuance of notice was already expired before the date of search.As per the said provisions, the Assessing Officer had no jurisdiction to make additions in respect of non-abated years i.e. years for 5 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 which assessment were completed u/s 143(3) of the Act or time limit for issuing notice u/s 143(2) had expired except if the additions were based on incriminating material found during the course of search. As per the said provisions, the Assessing Officer had no jurisdiction to make additions in respect of non-abated years i.e. years for which assessment were completed u/s 143(3) of the Act or time limit for issuing notice u/s 143(2) had expired except if the additions were based on incriminating material found during the course of search. The learned AR also submitted that no incriminating material was found during the course of search that took place in case of assessee with respect to the above issues at the assessee’s premises. Hence, in absence of incriminating material, the Assessing Officer could not have made any additions on the above issues. The issue is now settled by the decision of the Hon’ble Bombay High Court in case of CIT v. All Cargo Global Logistics Ltd (375 ITR 645) wherein, it has been held that in respect of non-abated years, additions can only be made on the basis of incriminating material found during the course of search pertaining to those additions. The learned AR also submitted thatif the Assessing Officer had no jurisdiction to make additions on the above issues, non-consideration of those issues in the assessment order would not make the assessment order passed u/s 143(3) r.w.s. 153A of the Act erroneous and prejudicial to the interest of Revenue. Hence, the CIT could not have disturbed the said assessment order by exercising jurisdiction u/s 263 of the Act. In support of this contention, the learned AR relied upon the decision of Tribunal in case of Jitendra Mehta v. CIT in dated 24.06.2015 which is at page Nos. 18 to 24 of the paper book. The second decision relied by the assessee is of Shweta Avarsekar v. CIT in ITA No. 3186 and 3187/Mum/2016 dated 01.08.2016 which is at Page nos. 25-43 of the paper book. The AR is also relied upon the decision of Hanspro.com Pvt. Ltd. v. CIT in ITA No. 3573/Mum/2016 dated 31.01.2017 which is at page nos. 44-48 of the paper book. Reliance is also placed on decision of 6 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 Hon’ble Delhi High Court in case of CIT v. Mahesh Kumar Gupta in of 2016 dated 22.11.2016. Therefore, learned AR submitted that in absence of incriminating material was found during the course of search that took place in case of assessee on the above issue, the Assessing Officer could not have made any addition in the order passed u/s 143(3) r.w.s. 153A of the Act. Hence, the CIT had no jurisdiction to revise the assessment order on the ground that the said issue was not considered by the Assessing Officer.
In respect of second contention, the learned AR has submitted that CIT has revised the assessment order passed u/s.143(3) r.w.s. 153A of the Act cannot be revised without revising the approval of Addl. CIT. The learned AR also submitted that assessment order passed u/s.143(3) r.w.s.153A of the Act cannot be revised without revising the approval of Addl. CIT. The learned AR also submitted that the assessment order u/s.143(3) r.w.s.153C of the Act was passed after getting approval of Addl. CIT u/s.153D of the Act. It was submitted that the assessment order u/s.143(3) r.w.s.153A of the Act cannot be revise without revising the approval of Addl. CIT. The learned AR for this proposition relied upon the decision of Hon’ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar in I.T.A No.192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT u/s.153D, cannot be subjected to revision u/s.263 of the Act. Therefore, it was submitted that since the CIT has not revised the approval of Addl. CIT in the present case, the CIT could not have revised the order passed by Assessing Officer u/s. 143(3) r.w.s 153A of the Act. In this proposition the CIT has relied upon the decision of:-
1. 1. Hon’ble Allhabad High Court in case of CIT Vs. Dr. Ashok Kumar in ITA No.192 of 2000.
2. Tribunal’s judgement in case of Trinity Infra Ventures Ltd. Vs. DCIT CC 2(1) in ITA No.584-589/Hyd/2015 dated 04.12.2015 3. Tribunal’s judgement in case of Dhariwal Industries Ltd. Vs. CIT in ITA Nos.1108-1113/Pn/2014 dated 23.12.2016.
7 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 8. The learned AR submitted that CIT has no CIT has not conducted any enquiry before directing the Assessing Officer to decide the issues afresh. It was submitted that a show-cause notice dated 09.02.2017 was issued to the assessee wherein, he proposed to revise the assessment orders on certain issues. In reply dated 23.02.2017 to the show cause notice, the assessee filed detailed reply on all the issues raised by the CIT in the show cause notice issued. It was also submitted that taking into account this reply of assessee, it can be concluded that the order of Assessing Officer is not erroneous and prejudicial to the interest of revenue. The learned AR submitted that assessee has filed reply in response to the show cause notice it is the duty of the CIT to make a preliminary enquiry as to why the reply furnished by assessee is not correct. It was also submitted that no reason has been given by the CIT as to why the explanation of the assessee that the order passed by the A.O was not erroneous and prejudicial to the interest of the revenue on this issue on which it was sought to be revised. He has merely stated in the order that Assessing Officer has not called for any details and has not examined the issue and directed the Assessing Officer to examine the issue afresh. Learned AR submitted that as per provisions of section 263 of the Act, powers have been given to CIT to call for details from assessee and provide assessee an opportunity for hearing. It was also submitted that the very purpose of giving CIT the power to call for details and to provide opportunity of hearing to assessee would show that the CIT has to conduct some enquiry u/s.263 of the Act before coming to conclusion that the order passed by Assessing Officer is erroneous and prejudicial to interest of revenue. For this proposition we relied upon the decision of the Hon’ble Delhi High Court in case of CIT v. Delhi Airport Metro Express in of 2017 dated 05.09.2017. The learned AR also relied upon the decision of Tribunal in case of Metacaps Engineering and Mahendra Construction Co v. CIT in ITA No. 2895/Mum/2014 dated 11.09.2017. -3232.M.17 A.Y.2008-09 to 2014-15 9. In respect of undisclosed bank account with JP Morgan, the learned AR submitted that certain documents from Ms. Priti Milan Mehta, the ex-wife of the assessee. In this connection it was pointed out that during the course of search in the premises of Ms. Priti Milan Mehta certain pages were seized out of which page 118 to 127 pertain to Swiss Bank Account statement with JP Morgan in the name of assessee. It was held by CIT that since, this account was not disclosed by the assessee in his return of income the Assessing Officer had not examined the said bank account and the order was erroneous and prejudicial to interest of revenue and he directed the Assessing Officer to examine the issue afresh. In respect of this the learned AR submitted that certain allegedly incriminating documents were found from the search conducted in premises of Ms.Priti Milan Mehta 11.03.2014. It was submitted that Ms.Priti Milan Mehta is ex-wife of assessee. They were divorced on 04.09.2009. It was submitted that the documents were not found from the search conducted in case of assessee. Hence, with respect to the current assessment year, the Assessing Officer would have no jurisdiction to make any addition pertaining to the said bank account since the said document has not be found during the course of search conducted in case of assessee. The learned AR submitted that the Assessing Officer has to assesses the income found during the course of search S. 132 of the Act conducted in case of assessee. On a conjoint reading of section 153A and section 132 of the Act, it is evident that the purpose of section 132 of the Act is to unearth the documents in possession of assessee which have not been disclosed by him in his return of income. He relied upon the decision of Hon’ble Bombay High Court in case of CIT v. All Cargo Global Logistics Ltd (375 ITR 645). The learned AR submitted that as per this decision the incriminating documents should be present in the premises of assessee. It is submitted that Assessing Officer would have jurisdiction to make additions on the basis of those incriminating documents u/s 153A of the Act. As per non-abated years, additions can only be made on -3232.M.17 A.Y.2008-09 to 2014-15 basis of incriminating documents found in case of search of assessee. It was also submitted that if documents were found from search in case of other person then no additions could have been made on the basis of those documents since the same cannot be considered as incriminating documents found from search conducted in case of assessee. The learned AR submitted that in respect of non-abates years two conditions have to be fulfilled. Hence the additions have to be made on the basis of incriminating material and the incriminating material should be found during the course of search in case of assessee and not any other person. In the present case, the document was found during the course of search in the case of third party, hence, the same could not be considered as ‘incriminating document’ found during the course of search. In view of the above, it is submitted that no incriminating document pertaining to the issues revised by the CIT was found during the course of search and hence, the proposition canvassed by assessee earlier would apply to this issue also in case of assessee hence, the Assessing Officer had no jurisdiction to make additions in respect of those issues u/s 143(3) r.w.s 153A of the Act. It was undisputed fact that the documents were seized from the residence of Ms.Priti Milan Mehta. The same fact has also been accepted by the DR vide letter dated 05.01.2018 belonging to DCIT CC-1(2), Mumbai. Learned AR also submitted that the documents belonging to the assessee was found in the premises of third party, assessment in case of assessee should be completed u/s.143(3) r.w.s.153C of the Act. It was submitted that the correct course of action would be that the Assessing Officer of Ms.Priti Milan Mehta should have recorded satisfaction that the said document does not belong to her but belongs to the assessee. After recording the said satisfaction, the Assessing Officer of Ms.Priti Milan Mehta should have forwarded the documents belonging to the assessee to the Assessing Officer in case of assessee. The Assessing Officer in case of assessee should have recorded separate satisfaction that the said document belongs to assessee. The recording of such -3232.M.17 A.Y.2008-09 to 2014-15 satisfaction the Assessing Officer in case of assessee should have completed the assessment u/s 143(3) r.w.s. 153C of the Act. The correct course of action for making addition, if any, on this issue would be making assessment u/s 143(3) r.w.s. 153C of the Act. Hence, the Assessing Officer in case of assessee could not have made this addition while passing the assessment order u/s 143(3) r.w.s. 153A of the Act since this addition could only have been made if the assessment order was passed u/s 143(3) r.w.s. 153C of the Act after following the above mentioned procedure. Since the Assessing Officer could not have made this addition in the assessment order passed u/s 143(3) r.w.s. 153A of the Act, non-consideration of this issue in the assessment order would not make the order erroneous or prejudicial to the interest of assessee.
10. In respect of assessment years 2009-10, 2010-11, 2011-12, 2012-13 & 2013-14, the learned AR submitted that all these year are non-abated, therefore no incriminating material was found during the course of search. The CIT cannot revise the assessment order passed u/s.143(3) r.w.s.153A of the Act without revising the approval granted by Addl. CIT and CIT has not applied his mind and not conducted any enquiry before directing the Assessing Officer to decide the issues afresh, therefore, appeal may be allowed.
11. In respect of A.Y.2013-14 and 2014-15, the learned AR submitted that these years are abated, therefore, the learned AR submitted that CIT wasCIT has revised the assessment order passed u/s 143(3) r.w.s. 153A of the Act without revising the approval granted by Addl. CIT. CIT has not applied his mind and not conducted any enquiry before directing the Assessing Officer to decide the issues afresh.
12. The learned DR has also submitted that no incriminating materials pertaining to the issues raised by CIT u/s.263 of the Act was found during the course of search that took place in the case of the assessee. The Ld. DR. has relied upon decision of Jai Steel (India) Ltd. Vs. Asst. CIT [259 CTR 281 (Raj)] wherein it is submitted that the provisions determining the undisclosed -3232.M.17 A.Y.2008-09 to 2014-15 income under the Chapter XIVB with determination of total income under sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment / reassessment proceedings. The assessment proceeding made in the context of de novo incriminating material is found during the course of search, the notice and consequential assessment under section 153A have to be undertaken. The learned DR further relied upon decision of Hon’ble Karnataka High Court in case of Canara Housing Development and Co.and submitted this decision has been considered by the Hon’ble Delhi High Court in case of CIT Vs. Kabul Chawla [380 ITR 573 (Del) and the proposition canvassed inserted during the course of search. The Hon’ble Karnataka High Court has disprove the decision of All Cargo Global Logistics 137 ITD 287 (SB). The learned DR also relied upon the decision of Hon’ble Delhi High Court in case of CIT Vs. Anil Kumar Bhatiaand submitted that Assessing Officer is empowered to assess or reassess the total income which (which includes the disclosed & undisclosed income) of 6 years. In the case of Sanjay AggarwalVs. DCIT, ITAT, Delhi has addition in a search assessment for a A.Y. which is not pending can be made only if incriminating material is found during search. The learned DR is relied upon the decision of Hon’ble Supreme Court in the case of Rajmandir Estates (P.) Ltd. Vs. Pr.CIT [77 taxman.com 285 (SC)] and submitted that the Assessing Officer has completed assessment without holding requisite investigation except for calling for records. Commissioner passed order under section 263 of the Act and opined that this could be a case of money laundering which went undetected due to lack of requisite enquiry into increase and it is non- application of mind of Assessing Officer. The action of 263 of the Act was upheld by the Hon’ble Supreme Court of India. The learned DR also relied upon the decision of Hon’ble Delhi High Court in case of CIT Vs. Ashok Logani [2011] 11 taxmann.com 208 wherein it is held that the Assessing Officer vide passing the order the assessment becomes final and no appeal can 12 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 be filed against the order of Assessing Officer by the revenue department. Limited jurisdiction is given to the CIT to revise such orders, if he finds that the same is prejudicial to the interest of revenue and on the facts of this case, when it is found that there was no proper consideration by the Assessing Officer to the issue at hand, he left many loose ends, then the Commissioner has all the right to pass the order u/s.263 of the Act to make a proper enquiry under the assessment passed u/s.153 r.w.s. 144 of the Act. Moreover, the learned DR has filed two appeal before us. The written submission which reads as under:- “3. To sum up, I would like to bring the following points for your kind consideration: I)(a) In the case of AmbrishManojDhupelia v/s. Dy. C.I.T. in to 5729, 5751 85 5752 (MUM.) of 2016 reported in [2017] 87 taxmann.com 195, the deposit made to all foreign bank a/cs has been confirmed by the jurisdictional ITAT. (b) The matter may be referred to the Spl. Bench because it is paramount importance. Affecting 100 cases of Hirandam Group. II) Section 263 of the Income Tax Act, 1961 is reproduced as under for your ready reference: E.—Revision by the Principal Commissioner or Commissioner Revision of orders prejudicial to revenue. 263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing afresh assessment i [Explanation 2.—For the purposes of this section, it is hereby declared that an orderpassed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assesses, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] It is pertinent to mention here that "Explanation 2" has been amended by Finance Act, 2015 (w.e.f.-01/06/2015). Therefore, if the order u/s. 263 passed either before or after 01/06/2015, the words 'declared' and 'shall be' are remained in the framework -3232.M.17 A.Y.2008-09 to 2014-15 of the Act. Therefore, the intention of the legislature was clear that the Commissioner of Income Tax has the power to make revision of the order of the AO if it is erroneous and prejudicial to the interest of the revenue. III) It is worth mentioning that that the section 263 does not invalidate the order of the Pr. Commissioner of Income Tax.
IV) Reliance is also placed SC decision in the case of C.I.T v/s. Amitabh Bachchan reported in [2016] 69 taxmann.com 170 (SC), wherein the powers of Pr Commissioner of Income Tax has been explained. This is the latest legal position; therefore, the same may be taken note of. V) The various objection raised by the assessee during the course of hearing including issuing of Svrong notices', raised neither before the AO nor Pr. Commissioner of Income Tax, therefore, at this juncture the same may not be entertained. Moreover, the assessee fully co-operated during the assessment as well as revision proceedings. VI) The plea of divorce was never taken before the AO/Pr. CIT-kindly refer to the AO's report in this regard.
VII) Moreover, section 292C of the Income Tax Act, 1961 states as under: Presumption as to assets, books of account, etc. 292C. (1) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under this Act, be presumed— (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are is that person’s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.
(2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, the, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person refereed to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of section 132A had been found in the possession or control of that person in the course of a search under section 132.
In view of the above, the contention of the assessee with regard to new objections being raised now does not hold waters.
In reply to DR’s argument, learned AR submitted that in case of Jay Steel, the said judgment supports the assessee that in case of non-abated years, 14 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 additions can be made only on the basis on incriminating material found during the course of search pertaining to those additions in respect of non-abated years. In respect of Canara Housing Development and Co. and submitted this decision has been considered by the Hon’ble Delhi High Court in case of CIT Vs. Kabul Chawla [380 ITR 573 (Del) has considered. Moreover, in case of Hon’ble Karnataka High Court, the Hon’ble Delhi High Court has considered the decision of Hon’ble Karnataka High Court. Learned AR submitted that the Jurisdictional High Court in case of CIT v. All Cargo Global Logistics Ltd (375 ITR 645) has decided in favour of the assessee and wherein it is held that in case of non-abated additions can only be made on the basis of incriminating material found during the course of search pertaining to those additions. In case of CIT Vs. Ballarpur Industries Ltd. [2017] Tax Pub (DT) 4015 (Bombay High Court / 85 taxmann.com 10) relied by the Assessing Officer. Learned AR submitted that the reason for upheld the CIT u/s.263 of the Act was that the assessing officer had failed to cause inquiry. In the present case, all the details were filed before CIT and the CIT had not applied his mind to the details filed by the assessee. In respect of Bassera Realtors (P.) Ltd. v CIT [163 TTJ 736 (Chandigarh)], the Assessing Officer has not applied his mind. In respect of Hon’ble Delhi High Court in case of CIT Vs. Ashok Logani [2011] 11 taxmann.com 208, learned AR submitted that assessee has filed relevant details before the CIT, no inquiry has been cause before passing order u/s.263 of the Act. In Logani’s case assessee has given explanation before CIT was different which gives impression that there was afterthought on the part of the assessee. Therefore, the matter has set aside before CIT and Assessing Officer for fresh inquiry. The decision of Hon’ble Supreme Court in the case of Rajmandir Estates (P.) Ltd. Vs. Pr.CIT [77 taxman.com 285 (SC)] this issue is purely based on the distinguishable facts which are distinguishable. -3232.M.17 A.Y.2008-09 to 2014-15 14. We have heard the rival contention of both the parties, we find that the assessee is a director in various companies of Hiranandani Group and partner in various firms of the group. A search took place on 11.03.2014 u/s.132 of the Act on Hiranandani Group. The assessee was also covered under the search. Pursuant to the search, the assessee filed a return of income in response to the notice issued u/s 153A of the Act. The Assessing Officer issued certain queries during the course of assessment proceedings and passed assessment orders u/s 153A r.w.s. 143(3) of the Act dated 18.06.2015. The said orders were passed by Assessing Officer after obtaining prior approval of Addl. CIT Range 1 as required under the provisions of S. 153D of the Act. Subsequently the CIT issued show cause notices u/s 263 of the Act. The assessee filed detailed replies in response to the show cause notices and CIT has passed the orders dated 18.06.2015 u/s 263 of the Act wherein it was observed that the orders passed by the Assessing Officer was erroneous and prejudicial to the interest of the revenue on certain issues. Hence, the CIT set aside the assessment orders passed by the Assessing Officer and directed the Assessing Officer to pass fresh orders after conducting necessary enquiries and providing adequate opportunity to the assessee. 15. For going to the merits to the case these are the chronology of events which are tabulated as under:- Sr. Particulars AY 2008-09 AY 2009-10 AY 2010-11 AY 2011-12 AY 2012-13 No. 1. Return of income filed 30.09.2008 29.09.2009 29.09.2010 29.09.2011 28.09.2012 u/s. 139(1) of the Act 2. Date of search 11.03.2014 3. Due date for selecting 30.09.2009 30.09.2010 30.09.2011 30.09.2012 30.09.2013 the case for scrutiny 4. Date of scrutiny Not selected 20.08.2010 Not selected 31.07.2012 Not selected assessment u/s. 143(3) of the Act 16. Short table for issue involves in the years which reads as under:- Sr. Issue Ground No No. A.Y. 08- A.Y. 09- A.Y. 10- A.Y. 11- A.Y. 12-13 A.Y. 13-14 A.Y. 14-15 09 10 11 12 16 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 1. CIT erred in assuming 1 jurisdiction u/s. 263 and holding that assessment completed had been made without carrying out necessary enquires and hence, the assessment order is erroneous and prejudicial to the interest of the revenue. 2. CIT erred in setting aside 2 the assessee’s case back to the Ld. A.O. for making a fresh assessment. 3. Amount received from 3 - - - - - - partnership firm upon retirement 4. Amount credited in - 3 - - - - - capital account 5. Interest waived by HDFC - - 3 - - - - bank 6. Disallowance u/s 24(b) 4 4 4 - - - - of the Act 7. Disallowance of interest - - - 3 3 3 3 u/s 57(iii) 8. Disallowance u/s 14A - - - 4 4 4 4 9. Bank account with JP 5 5 5 5 5 5 5 Morgan 10. Payment made to - - - - - 6 - Kingstar
We have heard the rival contention of both the parties we find that following propositions has been emerged to decided this issue which is as under:- I) No incriminating material pertaining to the issues raised by CIT u/s 263 of the Act was found during the course of search that took place in case of assessee II) CIT has revised the assessment order passed u/s 143(3) r.w.s. 153A of the Act without revising the approval granted by Addl. CIT III) CIT has not applied his mind and not conducted any enquiry before directing the Assessing Officer to decide the issues afresh 17 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 (I) No incriminating material pertaining to the issues raised by CIT u/s 263 of the Act was found during the course of search that took place in case of assessee.
We have heard the rival contention of both the parties and we find that search and seizure action took place on 11.03.2014 and the assessee was also covered in this search action. As per the provisions of section 153A of the Act the AO had to re-assess the income of the assessee immediately preceding 6 assessment years. As return for the AYs 2008-09, 2010-11 and 2012-13, the return of income was filed and due dates for selecting the respective cases for scrutiny assessment had passed before the date of search. In AYs 2009-10 and 2011-12, the return of income was filed and assessment was completed before the date of search. The assessment for such assessment years was therefore non-abated as time limit for issuance of notice was already expired before the date of search. As per the said provisions, the Assessing Officer had no jurisdiction to make additions in respect of non-abated years i.e. years for which assessment were completed u/s 143(3) of the Act or time limit for issuing notice u/s 143(2) had expired except if the additions were based on incriminating material found during the course of search. We find that the issue is settled by the Hon’ble Bombay High Court in case of CIT v. All Cargo Global Logistics Ltd (375 ITR 645) wherein, it is held that in respect of non-abated years, additions can only be made on the basis of incriminating material found during the course of search pertaining to those additions. We find that the Assessing Officer had no jurisdiction to make additions on the above issues, non-consideration of those issues in the assessment order would not make the assessment order passed u/s 143(3) r.w.s. 153A of the Act erroneous and prejudicial to the interest of Revenue. Hence, the CIT could not have disturbed the said assessment order by exercising jurisdiction u/s 263 of the Act.
18 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 19. Further it is observed that in the case of Jitendra Mehta v. CIT in dated 24.06.2015 also, the CIT sought to revise the assessment order passed u/s 153A of the Act on the ground that the Assessing Officer had not examined the issue of depreciation on windmill. However, the year pertaining to which assessment order was passed, being a non-abated year, addition could have been made in case any incriminating material was found during the course of search pertaining to the said addition. It was held by the Hon’ble Tribunal that since no incriminating material was found during the course of search pertaining to the addition, the Assessing Officer could not have made any addition and hence, the CIT cannot term the assessment order as erroneous and prejudicial to interest of revenue. The relevant portion of the order of Hon’ble Tribunal is reproduced below:
“2.4 It was further submitted by Ld. AR that in the latest decision of Hon’ble Bombay High Court dated 21/4/2015 in the case of CIT vs. Continental Warehousing Corporation (NhavaSheva) Ltd. and CIT vs. All Cargo Global Logistics Ltd. in Income Tax Appeal No. 523 of 2013 and in Income Tax Appeal No. 1969 of 2013 respectively has confirmed the view by following the earlier decision of Mumbai High Court dated 29/10/2010 in the case of CIT, Cental Nagpur vs. Murli Agro Products Ltd. in Income Tax appeal No. 36 of 2009 has held that Division Bench in the case of Murli Agro Product Ltd., does not require reconsideration and it has laid down correct principle of law. Ld. AR while contending so has relied upon para 28 and 37 of the said order, copy of which was placed on our record and was also given to Ld. DR. ……………………………………………………………………… ……………………………….
4.We have heard both the parties and their contentions have carefully been considered…Therefore, certainly, this issue is other than the additions based on seized material. If it is so then according to the aforementioned decision of Hon’ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation (NhavaSheva) Ltd. (supra), the 19 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 A.O would not have jurisdiction to bring such issue in the assessment completed u/s. 153A r.w.s. 143(3) and non- consideration thereof in the assessment order would not make the assessment order passed under section 143(3) r.w.s. 153A as erroneous and prejudicial to the interest of Revenue.
4.1. In view of above discussion, we hold that power under section 263 of the Act invoked by Ld. CIT is contrary to the provisions of the statute”. The order of Hon’ble Tribunal in case of ShwetaAvarsekar v. CIT in 20. and 3187/Mum/2016 dated 01.08.2016 wherein a similar issue was involved, the Hon’ble Tribunal held as under:
10. We have heard the rival contentions and perused the material placed before us including the orders of authorities below and judicial decisions relied upon by the parties………We find form the record available before us and from the contentions of both the parties that no incriminating documents were found and seized during the course of search with respect to three loan creditors as mentioned above and therefore the issue which is not backed or supported by any incriminating document found in the search could not be added by the A.O in the assessment which is framed u/s. 143(3) r.w.s. 153A of the Act.
………………………………………………………………………………… ………………..
Finally, in view of the ratio laid down in the above decisions, the ld. AR submitted that the assessment order passed by the A.O under section 143(3) r.w.s. 153A was not erroneous and prejudicial to the interest of the revenue and therefore revisionary powers u/s 263 of the Act were wrongly invoked and exercised by the Commissioner and prayed that the order passed by the Commissioner u/s 263 be set aside and that of A.O be restored by allowing the appeal of the assessee. 9 .….In the case of Continental Warehousing Corporation (Bombay High Court) (supra) in which the Hon’ble Jurisdictional High Court has held the addition can only be made on the basis of incriminating materials found during
11. A close perusal of the above reveal that facts of the assessee’s case are squarely covered by the ratio laid down by the above said judgments referred to hereinabove and we, respectfully following the same, quash the order passed by the Commissioner u/s. 263 of the Act and allow the appeal of the assessee…..
The assessee further relied on the decision of jurisdictional High Court in the case of Murli Agro Products Ltd (supra) wherein it has been held that where no material was unearthed during search or during proceedings initiated under section 153A showing that certain relief in form of deduction was wrongly allowed to assessee, the A.O while passing the order u/s 143(3) r.w. section 153A cannot invoke jurisdiction under section 263 on ground that assessment order passed under section 153A, read with section 143(3) was erroneous or prejudicial to interest of revenue. Since we have quashed the order passed by the Commissioner u/s 263 in the appeal bearing on the ground that no incriminating material was found during the search action and therefore, the assessment which was already completed and has attained finality could not be disturbed by exercising jurisdiction by Commissioner u/s 263 for the Act...” (emphasis supplied) In case of Hanspro.com Pvt. Ltd. v. CIT in ITA No. 3573/Mum/2016 21. dated 31.01.2017, the Hon’ble Tribunal held as under:
“3. ….Thus, the Ld. A.O had no jurisdiction to examine the loan of Rs. 35 lakhs received by the assessee from M/s STI Products Pvt. Ltd. The legal position is now well settled in this regard by the judgment of Hon’ble Bombay High Court in the case of All Cargo Global Logistics 374 ITR 645 (Bom) and judgments of Hon’ble Delhi High Court in the case of GurvindersinghBawavs DCIT 386 ITR 483 (Del) and CIT vs Kabul Chawla 380 ITR 573 (Del). -3232.M.17 A.Y.2008-09 to 2014-15 4. Under these circumstances, when the A.O himself did not have the jurisdiction to examine the said loan, then how the lad. Principal CIT can take a view that non examination of loan by the A.O made the assessment order as erroneous and prejudicial to the interest of Revenue. It is noted by us that the legal position has also been clarified in this regard by the co-ordinate bench of Mumbai Bench in the case of Jitendra Mehta (supra) by observing as under….
5. This view has been followed by Mumbai Bench of the Tribunal in the case of Mrs.ShwetaAvarsekar v. DCIT (supra). Thus, from the facts of this case and legal discussion as made above, it is clear that the assessment order passed by AO cannot be held to be erroneous or prejudicial to the interest of the Revenue for the reason as has been mentioned by Ld. Principal CIT. We find that the impugned order u/s 263 is contrary to law and facts and, therefore the same is hereby quashed”
The decision of the Hon’ble Delhi High Court in case of CIT v. Mahesh Kumar Gupta in of 2016 dated 22.11.2016 wherein the Assessing Officer had passed the order u/s 153A of the Act in respect of non- abated year. The CIT sought to revise the order passed by Assessing Officer on the ground that the Assessing Officer had not made any addition u/s 2(22)(e) of the Act. It was submitted that no incriminating material was found during the course of search with respect to the said issue and hence, no addition could have been made by the Assessing Officer in his order. The Hon’ble Tribunal accepted the plea of appellant. On appeal to the High Court, the Hon’ble Court upheld the order of the Hon’ble Tribunal and held as under: “3. The ITAT concluded based upon the materials available that the search and seizure operations did not yield any fresh material warranting addition under Section 153A of the Act, and therefore, could not clothe the CIT with the authority to add an amount on the basis of a fresh appraisal of the existing materials that formed part of the original assessment. -3232.M.17 A.Y.2008-09 to 2014-15 4. ….The CIT, therefore, had opportunity to exercise his powers as it were on the basis of returns as filed originally and validly under Section 263 of the Act.
In the circumstances in the absence of any material disclosing that the issue of deemed dividend had been willfully derived or had been deemed or otherwise withheld from the assessment an addition under Section 153A was warranted – based on the proposition taught by this Court in judgment dated 28.08.2015 in ITA 707/2014 titled: CIT vs Kabul Chawla. Therefore, we concur with the ITAT’s opinion in this regard.”
In view of the above, we hold that since no incriminating material was found during the course of search that took place in case of appellant on the above issue, the Assessing Officer could not have made any addition in the order passed u/s 143(3) r.w.s. 153A of the Act. Hence, the CIT had no jurisdiction to revise the assessment order on the ground that the said issue was not considered by the Assessing Officer.
Therefore, in view of the decision, we are of the view that no incriminating material was found during the course of search, the Assessing Officer can make any addition u/s 143(3) r.w.s. 153A of the Act. Hence the CIT has under jurisdiction to revise the assessment on the ground that issue was not considered by the Assessing Officer. (II) CIT has revised the assessment order passed u/s 143(3) r.w.s. 153A of the Act without revising the approval granted by Addl. CIT
We find that assessment order u/s.143 r.w.s.153A of the Act was passed after getting approval of ACIT as per provisions of section 153D of the Act. We find that the order u/s.143A r.w.s. 153 of the Act cannot revise without revising the approval of ACIT. We find that as per the decision of Hon’ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar in I.T. Appeal No.192 of 2000 wherein it is held that the assessment order approved by the 23 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 ACIT u/s.153D of the Act cannot subject to revision u/s.263 of the Act.The learned DR could not file any evidence to show that such permission was revised by ACIT in present case, therefore, CIT cannot revise the order passed by AO u/s.153 of the Act. As per section 153A of the Act.
Tribunal in case of Trinity Infra ventures Ltd v. DCIT CC 2(1) in dated 04.12.2015 wherein, the Hon’ble Tribunal has held that the assessment order passed u/s 143(3) r.w.s. 153A of the Act cannot be revised without revising the approval of Addl. CIT: 5.4. The Ld. Counsel for the assessee has further submitted that the assessment under section 143(3) read with section 153C was passed after getting approval of Addl. CIT under section 153D of the I.T. Act and therefore such an assessment cannot be revised without revising the directions of the Addl. CIT under section 153D of the I.T. Act. The Ld. Counsel for the assessee, has relied upon the decisions of this Tribunal in the case of Ch. Krishna Murthy vs. ACIT, C.C. 3, Hyderabad in ITA No. 766/Hyd/2012 dated 13.02.2015 and also the decision of Lucknow Bench of ITAT in the case of MehtabAlam 288/Luck/2014 dated 18.11.2014 in support of this contention. He has also placed reliance upon the decision of Hon’ble Allahabad High Court in the case of CIT vs. Dr. Ashok Kumar in I.T. Appeal No. 192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT under section 153D, cannot be subjected to revision under section 263 of the I.T. Act. In view of the above decision also, we hold that the revision order under section 263 of the I.T. Act is not sustainable. Accordingly, we allow the grounds of the assessee”.
Hon’ble Tribunal in case of Dhariwal Industries Ltd v. CIT in dated 23.12.2016 wherein, the Hon’ble Tribunal held as under: 9. Referring to the decision of the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. Vs. DCIT vide ITA Nos. 584 to 589/H/2015 order dated 04-12- 2015 for A.Yrs. 2005- 06 to 2010-11 he submitted that the Tribunal in the said decision, following various decisions 24 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 including the decision of Hon’ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar vide Income Tax Appeal No.192/2000 order dated 06-08-2012, has held that assessment order approved by the Addl.CIT u/s.153D cannot be subjected to revise u/s.263 of the I.T. Act.
We have considered the rival arguments made by both the sides, perused the orders of the AO and the Ld.CIT and the paper book filed on behalf of the assessee. 14. We find merit in the above submission of the Ld. Counsel for the assessee. We find the Lucknow Bench of the Tribunal in the case of MehtabAlam Vs. ACIT vide to 294/Lkw/2014 order dated 18-11-2014 while deciding an identical issue has observed as under. 14.1 We find the Hyderabad Bench of the Tribunal in the case of CH. Krishna Murthy Vs. ACIT vide ITA No.766/Hyd/2012 order dated 13-02-2015 following the decision of the Lucknow Bench of the Tribunal in the case of MehtabAlam (Supra) held that CIT is not justified in assuming jurisdiction u/s.263 when the order has been passed in terms of section 153D of the Act. 14.2 We find the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. (Supra) had an occasion to decide an identical issue and it held that the assessment order approved by the Addl.CIT u/s.153D cannot be subject to revision u/s.263 of the I.T. Act. The relevant observation of the Tribunal at Para 5.4 of the order reads as under.
Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl.CIT u/s.153D of the I.T. Act, therefore, respectfully following the above-mentioned decisions of the Coordinate Benches of the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s.263 of the I.T. Act in the instant case since the same has been passed with the approval of the Addl.CIT u/s.153D of the I.T. Act. We respectfully following the decision of ACIT Vs.Dr. Ashok Kumar, ITA 192 of 2000. We find that in the instant case the original approval 25 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 was granted by Addl. CIT and this assessment order is cannot be revise without approval of Add. CIT. (III) CIT has not conducted any enquiry before directing the Assessing Officer to decide the issues afresh 29. It has been submitted by the Learned AR that a show-cause notice dated 09.02.2017 was issued to the appellant wherein, the CIT proposed to revise the assessment orders on certain issues. In reply dated 23.02.2017 to the show cause notice, the appellant filed detailed reply on all the issues raised by the CIT in the show cause notice issued. It was held by the CIT that taking into account the reply of appellant, it can be concluded that the order of Assessing Officer is not erroneous and prejudicial to the interest of revenue. 30. It is submitted by the Learned AR that the CIT, in his order, merely noted that the appellant has filed reply in response to the show cause notice. It is submitted that the CIT has not caused any preliminary enquiry as to why the reply furnished by appellant is not correct. It is further submitted that no reason has been given by the CIT as to why the explanation of the appellant that the order passed by the A.O was not erroneous and prejudicial to the interest of the revenue on this issue on which it was sought to be revised. He has merely stated in the order that Assessing Officer has not called for any details and has not examined the issue and directed the Assessing Officer to examine the issue afresh. 31. It is submitted that as per provisions of S. 263 of the Act, powers have been given to CIT to call for details from appellant and provide appellant an opportunity for hearing. It is submitted that the very purpose of giving CIT the power to call for details and to provide opportunity of hearing to appellant would show that the CIT has to conduct some enquiry u/s.263 of the Act before coming to conclusion that the order passed by Assessing Officer is erroneous and prejudicial to interest of revenue. It is submitted that the CIT has to apply his mind to the replies filed by appellant during the course of -3232.M.17 A.Y.2008-09 to 2014-15 proceedings u/s.263 of the Act and after due application of mind he may proceed to direct the Assessing Officer to decide the issue de-novo. 32. The learned DR has relied upon following decisions in support of his arguments that since the Assessing Officer has not conducted any enquiry, the order passed by Assessing Officer is erroneous and prejudicial to interest of revenue: i. CIT v. Ballarpur Industries Ltd. [2017 TaxPub (DT) 4015 (Bom- HC) / 85 taxmann.com 10] ii. Bassera Realtors (P.) Ltd. v CIT [163 TTJ 736 (Chandigarh)] iii. SubhlakshmiVanijya P. Ltd. v CIT (155 ITD 171) iv. CIT v Ashok Logani [347 ITR 22 (Del)] v. Rajmandir Estates (P.) Ltd. v Pr.CIT [77 Taxmann.com 285 (SC)] vi. Intas Pharmaceuticals Ltd. v DCIT [148 ITD 26 (Ahd).
In reply to DR’s argument, learned AR submitted that in case of CIT v. Ballarpur Industries Ltd. the order passed by the CIT u/s. 263 of the Act was upheld for the reason that the assessing officer had failed to cause inquiry. It was not a case where all details were filed before CIT and the CIT had not applied his mind to the details filed by appellant. Similarly the case of SubhlakshmiVanijya P. Ltd. v CIT and CIT v Ashok Logani and Rajmandir Estates (P.) Ltd. v Pr.CIT and Intas Pharmaceuticals Ltd. v DCIT the order passed by the CIT u/s. 263 of the Act was upheld for the reason that the assessing officer had failed to cause inquiry. It was not a case where all details were filed before CIT and the CIT had not applied his mind to the details filed by appellant. In the case of Bassera Realtors (P.) Ltd. v CIT is the Hon’ble Tribunal held that the CIT had analysed the documents furnished before him and thus, the Hon’ble Tribunal rejected the contention raised by the appellant that CIT had not examined anything.
Further, the Ld. DR vide letters dated 11.01.2018 and 24.01.2018 observed that Explanation 2 has been amended by Finance Act 2015 w.e.f. -3232.M.17 A.Y.2008-09 to 2014-15 01.06.2015. Therefore, if the order u/s.263 passed either before or after 01.06.2015, the words “declared” and “shall be” are remaining in the framework of the Act. Therefore, the intention of the legislature was clear that the Commissioner of Income-tax has the power to make revision of the order of the AO if it is erroneous and prejudicial to interest of Revenue. In this connection, it was pointed out by the Ld. AR that though there is an amendment in the provisions of section 263 of the I.T.Act, but the basic ingredients of the provisions remains the same. The Ld. CIT has not conducted any inquiry in the matter and simply set aside the order. The amendment in the provisions of section 263 of the Act therefore has no impact in the appellant’s matter. 35. The Ld. DR has also relied on the judgment of Hon’ble Mumbai Tribunal in the case of AmbrishManojDhupelia vs. Dy. CIT, Mumbai 87 Taxmann.com 195 (Mumbai- Trib.) where the issues involved in this appeal were decided on merit. In the appellant’s case, the issues are being agitated on the basis of legality of provisions of section 263 of the Act. The ratio of this judgment has therefore no applicability in the appellant’s case. 36. The DR further relied on the judgment of Hon’ble Supreme Court in the case of CIT vs. Amitabh Bachchan (2016) 69 taxmann.com 170 (SC). In respect of this judgment, the Hon’ble Supreme Court has held that before passing 263 order by Commissioner, the proper and reasonable opportunity of being heard should be given to the appellant. In this connection, it is pointed out that the appellant had not raised the issue of not allowing proper and reasonable opportunity to the appellant in the matter before passing the order u/s.263. Thus, the ratio of this judgment has also therefore no applicability to the facts of the appellant’s case. 37. We have heard the rival contention of both the parties and we find that u/s.263 of the Act, power has been given to CIT to call for details of the assessee and provide assesse with an opportunity of hearing. The CIT has 28 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 power to call for details and to provide opportunity of hearing to the assessee would show that CIT has to conduct some enquiry u/s.263 of the Act. Before coming to the conclusion that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue, we are of the view that the CIT has to apply his mind to the reply filed by the assessee during the course of proceeding u/s.263 of the Act and after due application of the mind he may proceed to direct the decide an issue denovo. The Hon’ble Delhi High Court in case of CIT v. Delhi Airport Metro Express in of 2017 dated 05.09.2017, the Hon’ble Court has held as under: “9. It is seen, in the order dated 30th March, 2016, the PCIT has proceeded by setting out the contents of SCN and the contents of reply given by the Assessee. It appears that no inquiry, as such, was undertaken by the PCIT to come to conclusion that the original assessment order was erroneous and prejudicial to the interests of the Revenue.
For the purpose of exercising jurisdiction under Section 263 of the Act, the conclusion that the order of the A.O is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimal inquiry. In fact, if the PCIT is of the view that the A.O did not undertake any inquiry, it becomes incumbent on the PCIT to conduct such inquiry.
In the considered view of the Court, this can hardly constitute the reasons required to be given by the PCIT to justify the exercise of jurisdiction under Section 263 of the Act. In the context of the present case if, as urged by the Revenue, the Assessee has wrongly claimed depreciation on assets like land and building, it was incumbent upon the PCIT to undertake an inquiry as regards which of the assets were purchased and installed by the Assessee out of its own funds during the AY in question and, which were those assets that were handed over to it by the DMRC. That basic exercise of determining to what extent the depreciation was claimed in excess has not been undertaken by the PCIT.
12. Mr. Asheesh Jain then volunteered that the PCIT had exercised the second opinion available to him under 29 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 Section 263(1) of the Act by sending the entire matter back to the A.O for a fresh assessment. That option, in the considered view of the Court, can be exercised only after the PCIT undertakes an inquiry himself in the manner indicated hereinbefore. That is missing in the present case.(emphasis supplied)”
The order passed by the CIT the above case was dated 31.03.2016 and hence the amendment made on 01.06.2015 in Explanation 2 of Section 263 of the Act was very much available on that day. The Hon’ble Tribunal in case of Metacaps Engineering and 39. Mahendra Construction Co v. CIT in dated 11.09.2017 held as under: 13. ……However, we find that the CIT without pointing out any infirmity in the reply/explanation of the assessee, and as to why the same could not be accepted had rather hushed through the matter and concluded that the assessment order passed by the A.O was found to be erroneous and prejudicial to the interest of the revenue.
We have given a thoughtful consideration to the order passed by the CIT and are unable to persuade ourselves to uphold the same. We find that as per the mandate of Sec. 263, a statutory obligation is cast upon the CIT to afford an opportunity of being heard to the assessee, before an order passed by the A.O is revised in exercise of the revisional jurisdiction vested with him under the said statutory provision. The underlying purpose of affording of such an opportunity of being heard to the assessee is to give an opportunity to him to explain as to how the order passed by the A.O on the issues on which the same is sought to be revised by the CIT, is not erroneous and prejudicial to the interest of the revenue. We are of the considered view that the very purpose of affording of an opportunity of being heard to the assessee, on the issues on which the order passed by the A.O is sought to be revised by the CIT would be lost and rendered otiose, in case the -3232.M.17 A.Y.2008-09 to 2014-15 reply of the assessee explaining as to why the order sought to be revised is not erroneous and prejudicial to the interest of the revenue is not judicially deliberated upon by the CIT. We are of the considered view that it is obligatory on the part of the CIT to consider the reply of the assessee in respect of the issues on which the order of the A.O is sought to be revised by him. ……. We though are not oblivious of the fact that the view that an order passed by the A.O is found to be erroneous and prejudicial to the interest of the revenue remains within the exclusive realm of the wisdom of the CIT, but then the legislature by contemplating an opportunity of being heard to the assessee, can thus safely be held to have presupposed due application of mind by the revisional authority before revising the order passed by the A.O. We are of the considered view that the CIT after receiving the reply/objections of the assessee in respect of the issues on which the order of the A.O is sought to be revised, in all fairness, is required to deliberate on the same, and thereafter on the basis of logical reasoning conclude as to whether in the backdrop of the reply/explanation of the assessee can the order of the A.O be characterized as both erroneous and prejudicial to the interest of the revenue. …. We are afraid that in the case of the present assessee, though the CIT had placed on record the reply of the assessee in respect of the issues on which the order passed by the A.O was sought to be revised and had also referred about the same in the body of his order passed under Sec. 263, however, neither any reason had been given by the CIT, nor it can be gathered from the impugned order, as to why the explanation of the assessee that the order passed by the A.O was not erroneous and prejudicial to the interest of the revenue on the issues on which it was sought to be revised, was not found to be acceptable. …We are of the considered view that in the backdrop of the explanation/objections filed by the assessee during the course of revisional proceedings in respect of certain issues on which the CIT -3232.M.17 A.Y.2008-09 to 2014-15 had sought to revise the order passed by the A.O under Sec. 143(3), the CIT had failed to point out as to how the order of the A.O was found to be “erroneous”. We are of the considered view that in the absence of clear observations of the CIT as to how the order of the A.O after considering the explanation/objections filed by the assessee was found to be erroneous in respect of the said respective issues, thus, can safely be held to have failed the fundamental requirement for valid assumption of jurisdiction as per the mandate of law. We find our aforesaid view to be supported by the judgment of the Hon’ble High Court of Delhi in the case of CIT Vs. Vikas Polymers (2012) 341 ITR 537 (Del). 40. Accordingly, we hold that the CIT has to conduct minimal inquiry by examining the details filed by appellant and after due application of mind on the details and replies filed by appellant has to come to a conclusion that the order passed by Assessing Officer is erroneous and prejudicial to the interest of revenue. (IV) Specific contention for Ground No 5 i.e.Undisclosed bank account with JP Morgan 41. Apart from the contention raised above, further specific submissions have been made by the appellant as certain documents were seized from the residence of Ms.Priti Milan Mehta, the ex-wife of appellant. In this connection, it is pointed out that during the course of search at the premises of Ms.Priti Milan Mehta, certain pages were seized out of which page 118 to 127 pertain to Swiss Bank Account statement with JP Morgan in the name of appellant. It was held by CIT that since, this account was not disclosed by appellant in his return of income the Assessing Officer had not examined the said bank account and the order was erroneous and prejudicial to interest of revenue and he directed the Assessing Officer to examine the issue afresh. 42. It is submitted by the Learned AR that certain allegedly incriminating documents were found from the search conducted in premises of Ms.PritiMilan -3232.M.17 A.Y.2008-09 to 2014-15 Mehta 11.03.2014. It is submitted that Ms.Priti Milan Mehta is ex-wife of appellant. They were divorced on 04.09.2009. It is submitted that the documents are not found from the search conducted in case of appellant. Hence, with respect to the current assessment year, the Assessing Officer would have no jurisdiction to make any addition pertaining to the said bank account since the said document has not be found during the course of search conducted in case of appellant. 43. It is further submitted that as per S. 153A of the Act, the Assessing Officer has to assesses the income found during the course of search S. 132 of the Act conducted in case of appellant. On a conjoint reading of S. 153A and S. 132 of the Act, it is evident that the purpose of S. 132 of the Act is to unearth the documents in possession of appellant which have not been disclosed by him in his return of income. The purpose of S. 153A of the Act is to tax the income from those documents which have not been disclosed by appellant. At this stage, it would be relevant to refer to the judgment of the Hon’ble Bombay High Court in case of CIT v. All Cargo Global Logistics Ltd (375 ITR 645) wherein it was held as under:
“31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. The Special Bench in that regard held as under :
"48. The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case…..
The provision contained in section 132 (1) empowers the officer to issue a warrant of search of the premises of a person where any one or more of conditions mentioned therein is or are satisfied, i.e. - (a) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced, (b) summons or notice has been or 33 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 might be issued, he will not produce the books of account or other documents mentioned therein, or (c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word "incriminating document". Clauses (a) and (b) of section 132(1) employ the words "books of account or other documents". For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account….”From the above extract of the decision, it is clear that the purpose of search is to unearth incriminating documents in possession of appellant. It means that the incriminating documents should be present in the premises of appellant. It is submitted that Assessing Officer would have jurisdiction to make additions on the basis of those incriminating documents u/s 153A of the Act. Hence, it is submitted that, in respect of non-abated years, additions can only be made on basis of incriminating documents found in case of search of appellant. It is submitted that if documents are found from search in case of other person then no additions could have been made on the basis of those documents since the same cannot be considered as incriminating documents found from search conducted in case of appellant. 44. It can be inferred from the above decision that to make addition u/s 153A of the Act in respect of non-abated years, two conditions have to be fulfilled; i) The additions have to be made on the basis of incriminating material and; ii) the incriminating material should be found during the course of search in case of appellant and not any other person. 45. In the present case, the document was found during the course of search in the case of third party, hence, the same could not be considered as ‘incriminating document’ found during the course of appellant’s search. In view of the above, it is submitted that no incriminating document pertaining to the -3232.M.17 A.Y.2008-09 to 2014-15 issues revised by the CIT was found during the course of search and hence, the proposition canvassed by appellant earlier would apply to this issue also in case of appellant hence, the Assessing Officer had no jurisdiction to make additions in respect of those issues u/s 143(3) r.w.s 153A of the Act. At this juncture, it has been submitted by the Ld. DR that if any document belonging to appellant is found in premises of third party, assessment in case of appellant should be completed u/s 143(3) r.w.s. 153C of the Act. 46. We have heard the rival contentions. It is undisputed fact that the documents were seized from the residence of Ms.Priti Milan Mehta. The same fact has also been accepted by the DR vide letter dated 05.01.2018 belonging to DCIT CC-1(2), Mumbai. 47. If any document belonging to appellant is found in premises of third party, assessment in case of appellant should be completed u/s 143(3) r.w.s. 153C of the Act. Hence, the correct course of action would be that the Assessing Officer of Ms.Priti Milan Mehta should have recorded satisfaction that the said document does not belong to her but belongs to the appellant. After recording the said satisfaction, the Assessing Officer of Ms.Priti Milan Mehta should have forwarded the documents belonging to the appellant to the Assessing Officer in case of appellant. Further, the Assessing Officer in case of appellant should have recorded separate satisfaction that the said document belongs to appellant. Subsequent to recording of such satisfaction the Assessing Officer in case of appellant should have completed the assessment u/s 143(3) r.w.s. 153C of the Act. The correct course of action for making addition, if any, on this issue would be making assessment u/s 143(3) r.w.s. 153C of the Act. Hence, the Assessing Officer in case of appellant could not have made this addition while passing the assessment order u/s 143(3) r.w.s. 153A of the Act since this addition could only have been made if the assessment order was passed u/s 143(3) r.w.s. 153C of the Act after following the above mentioned procedure. Since the Assessing Officer could not have made this addition in the -3232.M.17 A.Y.2008-09 to 2014-15 assessment order passed u/s 143(3) r.w.s. 153A of the Act, non-consideration of this issue in the assessment order would not make the order erroneous or prejudicial to the interest of appellant. In view of the same, we hold that the CIT would have no power to invoke jurisdiction u/s 263 of the Act. In respect of A.Y.2009-10:- 48. In respect of A.Y.2009-10, we find that this year is non-abated year therefore, our finding is similar as discussed above. We find that in A.Y.2009- 10 the search and seizure took place on 11.03.2014. Assessee was covered in the search action. As per provisions of section 153 of the Act, AO has to reassess the income of the assessee immediately preceding six years. The assessee’s return was assessed u/s.143 of the Act. The assessment year therefore non-abated as the assessment was concluded u/s.143(3) of the Act before date of search. Since no incriminating material was found during the course of search that took place in the case of assessee on the issues involved the AO could not have made any addition in respect of A.Y. passed u/s.143(3) r.w.s. 153 of the Act. the CIT has no jurisdiction to revise the issue on the ground that particular issue was not considered by AO. We also held that since the CIT has not revise the approval in the present case the CIT should not have revise the order u/s.143(3) r.w.s. 153 of the Act. We also held that CIT has to conduct minimal inquiry by examining the detail filed by the assessee after due application of mind on the detail reply filed by the assessee has to come to conclusion that order passed by the AO is erroneous and prejudice in the interest of revenue. We also rely upon our above discussion on forgoing paragraphs. 49. In respect of undisclosed bank account with JP Morgan, we find that the document was found from the premises of Mrs. Priti Milan Mehta, on 11.03.2014 ex-wife of the assessee. They were divorced on 04.09.2009, therefore the document did not found from the assessee hence the AO has no jurisdiction to make an addition pertaining to the said bank account since the -3232.M.17 A.Y.2008-09 to 2014-15 said documents was not found during the course of search conducted in case of the assessee. Therefore AO could not have made addition while passing the order u/s.143(3) of the Act since the addition have been made if the assessment order passed u/s.143(3) r.w.s. 153C of the Act. Since the AO has not made this addition in the assessment order u/s.143 r.w.s153 of the Act. Non consideration of this issue would not make the order erroneous and prejudicial to the interest of revenue. Hence CIT has no jurisdiction to invoke the jurisdiction u/s.263 of the Act. In respect of A.Y.2010-11 50. We find that the search took place on 11.03.2014 as per the provision of section 153 of the Act AO has to re-assess the income for 6 assessment years. In A.Y.2010-11 the assessment of 2010-11 the return was filed on 20.09.2009. The assessment was completed u/s.143(3) of the Act. Therefore, it is non- abated year. In respect of 2011-12& 2012-13:- 51. This both years are non-abated year, therefore, our finding is as per the above discussion foregoing paragraphs In respect of 2013-14 & 2014-15 52. These two A.Y.’s are abated year. Learned AR and learned DR has relied upon the argument taken for earlier years. The purpose of search is to unearth incriminating documents in possession of assessee. It means that the incriminating documents should be present in the premises of assessee. Assessing Officer would have jurisdiction to make additions on the basis of those incriminating documents u/s 153A of the Act. Hence, additions can only be made on basis of incriminating documents found in case of search of assessee. If documents are found from search in case of other person then no additions could have been made on the basis of those documents since the same cannot be considered as incriminating documents found from search conducted in case of assessee. -3232.M.17 A.Y.2008-09 to 2014-15 53. In the present case, the document was found during the course of search in the case of third party, hence, the same could not be considered as ‘incriminating document’ found during the course of assessee’s search. In view of the above, no incriminating document pertaining to the issues revised by the CIT was found during the course of search and hence, the proposition canvassed by assessee earlier would apply to this issue also in case of assessee hence, the Assessing Officer had no jurisdiction to make additions in respect of those issues u/s 143(3) r.w.s 153A of the Act.It is undisputed fact that the documents were seized from the residence of Ms.Priti Milan Mehta. The same fact has also been accepted by the DR vide letter dated 05.01.2018 belonging to DCIT CC-1(2), Mumbai. 54. At this juncture, if any document belonging to assessee is found in premises of third party, assessment in case of assessee should be completed u/s 143(3) r.w.s. 153C of the Act. Document belonging to assessee was found during the course of search conducted in premises of Ms.Priti Milan Mehta. Hence, the correct course of action would be that the Assessing Officer of Ms.Priti Milan Mehta should have recorded satisfaction that the said document does not belong to her but belongs to the assessee. After recording the said satisfaction, the Assessing Officer of Ms.Priti Milan Mehta should have forwarded the documents belonging to the assessee to the Assessing Officer in case of assessee. Further, the Assessing Officer in case of assessee should have recorded separate satisfaction that the said document belongs to assessee. Subsequent to recording of such satisfaction the Assessing Officer in case of assessee should have completed the assessment u/s 143(3) r.w.s. 153C of the Act. The correct course of action for making addition, if any, on this issue would be making assessment u/s 143(3) r.w.s. 153C of the Act. Hence, the Assessing Officer in case of assessee could not have made this addition while passing the assessment order u/s 143(3) r.w.s. 153A of the Act since this addition could only have been made if the assessment order was passed u/s -3232.M.17 A.Y.2008-09 to 2014-15 143(3) r.w.s. 153C of the Act after following the above mentioned procedure. Since the Assessing Officer could not have made this addition in the assessment order passed u/s 143(3) r.w.s. 153A of the Act, non-consideration of this issue in the assessment order would not make the order erroneous or prejudicial to the interest of assessee. In view of the same, the CIT would have no power to invoke jurisdiction u/s 263 of the Act. 55. We find that incriminating documents were found from the search conducted in the premises of Mrs. Priti Milan Mehta on 11.03.2014. Mrs. Priti Milan Mehta, ex-wife of the assessee, they were divorced on 04.09.2009. The documents were not found from the search conducted in the case of assessee. Hence in both the assessment years the AO has no jurisdiction to make the addition pertaining to said bank account since the document has been not found during the course of search conducted in the case of the assessee. The AO could not have made any addition in the order passed u/s.143 r.w.s.153A of the Act. Therefore, the AO in case of assessee could not have made this addition while passing the order u/s.143(3) r.w.s.153. of the Act. Since the addition could have made if the order is passed u/s.143(3) r.w.s.153C of the Act. Since the AO could not have made this addition in respect of assessment order passed u/s.143(3) r.w.s.153 of the Act. Hence CIT has no jurisdiction to invoke section 263 of the Act. Therefore we are of the view that no inquiry was conducted by CIT setting aside the order of AO. Therefore order passed u/s.263 of the Act is bad in law. 56. Hon’ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar in I.T. Appeal No.192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT under section 153D, cannot be subjected to revision under section 263 of the I.T. Act. 57. We respectfully following the decision of Hon’ble Allahabad High Court and various Tribunal decisions, we are of the view that DR could not filed any evidence to show the CIT has not revise Addl. CIT in the present 39 ITA No3226-3232.M.17 A.Y.2008-09 to 2014-15 case, therefore, we are of the view that the CIT could not revise the order passed by the CIT u/s.153A of the Act. We also hold that since in all these assessment year then the CIT has not revise the approval of CIT in the present case. The CIT could have not revise the order passed by AO u/s.143 r.w.s.153 of the Act as per above discussion by us.
The next contention regarding that no enquiry was conducted by CIT before deciding the issue afresh. We also held that in all these assessment years CIT has to conduct minimal inquiry by examining the details by the assessee and after due application of mind on the details and reply filed by the assessee has to come to conclusion that order passed by the AO is erroneous and prejudicial to the interest of revenue. We also relied on the decision and discussion on the foregoing paragraph of our orders. We find that u/s.263 of the Act, power given to CIT for call for details of the assessee and provide assessee an opportunity of hearing. The CIT has power to call for details and to provide opportunity of hearing to the assessee would show that CIT has to conduct minimal enquiry by examining the detail filed by the assessee and after due application of mind by details and reply filed by the assessee has to come to conclusion that order passed by the AO is erroneous and prejudicial to the interest of the revenue. As per the decision of Hon’ble Delhi High Court in case of CIT v. Delhi Airport Metro Express in of 2017 dated 05.09.2017. We respectfully following the decision, we are of the view that CIT is failed to the fundamental requirement of valid presumption of jurisdiction as per mandate of law. Therefore, we allow the appeal of the assessee.
In the result all the appeals for A.Y.2008-09, 2009-10, 2010-11, 2011- 12, 2012-13, 2013-14 and 2014-15 of the assessee Allowed.