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Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘D’ MUMBAI
Before: Shri Joginder Singh, & Shri Rajesh Kumar
आदेश / O R D E R Per Joginder Singh (Judicial Member) This bunch of six appeals is by the different assessees challenging the invocation of revisional jurisdiction u/s 263 of the Income Tax Act, 1961 (hereinafter the Act) of the Pr.
Commissioner of Income Tax for assessment orders passed u/s 153A r.w.s 143(3) of the Act. First, we shall take up the appeal in the cases of Mr. Devang Gandhi (ITA No.3747/Mum/2016) for Assessment Year 2008-09.
During hearing, Shri Rakesh Joshi, ld. counsel for the assessee, contended that assessment had already been completed u/s 153A r.w.s 143(3) of the Act and during assessment proceedings, the ld. Assessing Officer asked the assessee to explain the source of capital introduction, which was replied vide letter dated 28/01/2014, therefore, the assessment was framed after due application of mind,
ITA No. 3747/Mum/2016 3 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel therefore, the revisional jurisdiction u/s 263 of the Act was not justified. Reliance was placed upon the decision in the case of CIT vs Murli Agro Products (2014) 49 taxman.com 172 (Bom.). It was also contended that the assessment order is not erroneous. Reliance was also placed upon the decision in CIT vs Gabriel India Ltd. 203 ITR 108 (Bom.) and Malalbar Industrial Co. Ltd. vs CIT 243 ITR 83 (SC). In reply, the ld. CIT-DR strongly defended the invocation of revisional jurisdiction by contending that the decision from Hon'ble jurisdictional High Court in the case of Murli Agro is dated 29/10/2010, which is the after insertion of Explanation-2 i.e. on 01/06/2015, thus, not applicable to the facts of the present appeal. The remaining cases relied upon by the ld. counsel by the assessee were also claimed to be on different facts. Reliance was placed upon the decision of the Tribunal in the case of Anuj Jayendra Shah vs Pr. CIT (2016) (67 taxman.com 38) (Mum. Trib.) and M/s Crompton Greaves Ltd. vs CIT (ITA No.1994/Mum/2013 and order dated 01/02/2016. A query was raised by the Bench whether the letter dated 28/01/2014, addressed to the Assessing Officer has been considered in ITA No. 3747/Mum/2016 4 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel the assessment order, the ld. counsel for the assessee, fairly agreed that no discussion has been made with respect to this letter by the Assessing Officer.
So far as, the appeals in the cases of M/s Dev 2.1.
Steel (ITA No.3748 to 3752/Mum/2016) are concerned, the argument of the Ld. counsel for the assessee was that there was a search in the Unity Infrastructure with respect to accommodation entries, it was explained that the Ld. Assessing Officer added at the rate of 2% against the proposed addition at the rate of 5% by the Investigation wing. Thus, section 263 of the Act cannot be invoked. It was also pleaded that the appeal of the assessee on the same issue is pending before the Ld. Commissioner of Income Tax (Appeal), therefore, revisional jurisdiction cannot be invoked for which reliance was placed upon the decision in the case of COMMISSIONER OF WEALTH-TAX v. SAMPATHMAL CHORDIA, EXECUTOR TO THE ESTATE OF LATE NENI KAVUR BAI 256 ITR 440 (Mad.). It was also pleaded that appraisal report was not confronted to the assessee for which reliance was placed upon the decision of the Pune
ITA No. 3747/Mum/2016 5 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel Bench of the Tribunal in Orient (Goa) Ltd. vs DCIT (1998) 66 ITD 479 (Pune). In reply, the Ld. CIT-DR contended that the facts of the are squarely covered by the decision of Gauhati High Court COMMISSIONER OF INCOME-TAX v.DAGA ENTRADE P. LTD. (327 ITR 467)(Gau.), order dated 17/02/2009, by contending that there was enough incriminating material against the assessee for which our attention was invited to para 10.1 of the assessment order and also the statement recorded by the Department, wherein, it was specifically admitted that bogus transactions were transacted. Our attention was also invited to explanation-1(c) to section 263 of the Act by canvassing that the decision of the Hon'ble Madras High Court is dated 01/11/2001, which is prior to insertion of Explanation w.e.f. 01/06/2015. Plea was also raised that the Ld. Assessing Officer has not followed the instructions issued by the Board and there is violation of such guidelines.
2.2. We have considered the rival submissions and perused the material available on record. Before adverting further, we are expected to analyze section 263 of the Act,
ITA No. 3747/Mum/2016 6 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel therefore, it is reproduced hereunder for ready reference and analysis:-
(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 a fresh assessment. [Explanation 1.]—For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,— (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include— (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner undersection 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. [Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is ITA No. 3747/Mum/2016 7 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel
prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,— (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 assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.—In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 2.5. If the aforesaid section is analyzed, it speaks that before invoking the revisional jurisdiction, the assessment order should be erroneous as well as prejudicial to the interest of Revenue. It is also noted that Explanation-2 was inserted by the Finance Act, 2015 w.e.f. 01/06/2015. Sub- clause (a) says that if the order is passed without making enquiries or verification, which should have been made the ITA No. 3747/Mum/2016 8 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel order shall be deem to be erroneous in so far as it is prejudicial to the interest of the Revenue.
2.6. Now, we shall analyze, the facts in the light of various decisions in favour and against the assessee.
However, these cases can be applied to the peculiar facts of each case. The decision in Rampyari Devi Saraogi vs CIT 67 ITR 83 (SC), Malabar Industrial Company vs CIT (243 ITR 83 (SC), Swaroop Vegetables Products Industries Ltd. vs CIT 187 ITR 412 (All.), Raj laxmi Mills Ltd. 121 ITD 343 (SB)(ITAT)(Chennai) and SRM Systems and Software Pvt. Ltd. 2010-TIOL-646-HC-MAD-IT throws light on the issue.
Similarly, CIT vs Infosys Technologies Ltd. 341 ITR 293 and CIT vs Jawahar Bhattacharya Ji 341 ITR 434 (Gauh.-FB) was decided, considering the particular facts. It is also noted that in Kapil Ratan Associates vs CIT (2015) 55 taxman.com 60 (Mum. ITAT) order dated 14/01/2015, identically, supports the case of the Revenue. We have perused these orders and considered the ratio laid down therein. Likewise, the Hon'ble Calcutta High Court in Rajmandir Estate Pvt. Ltd. vs Pr. CIT (2016) 70 taxman.com 124 (Cal.) order dated 13/05/2016 and the ratio laid down therein supports the ITA No. 3747/Mum/2016 9 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel case of the Revenue. It is noteworthy that while coming to a particular conclusion, Hon'ble Calcutta High Court considered following judicial pronouncements:- i. CIT v. Calcutta Discount Co. Ltd. [1973] 91 ITR 8 (SC) (para 3), ii. Sumati Dayal v. CIT [1995] 214 ITR 801/80 Taxman 89 (SC) (para 4), iii. CIT v. Nova Promoters & Finlease (P.) Ltd. [2012] 342 ITR 169/206 Taxman 207/18 taxmann.com 217 (Delhi) (para 4), iv. CIT v. Durga Prasad More [19711] 82 ITR 540 (SC) (para 6), v. CIT v. Precision Finance (P.) Ltd. [1994] 208 ITR 465/[1995] 82 Taxman 31 (Cal.) (para 6), vi. ITO v. DG Housing Projects Ltd. [2012] 343 ITR 329/212 Taxman 132 (Mag.)/[2012] 20 taxmann.com 587 (Delhi) (para 7), vii. DIT v. Jyoti Foundation [2013] 35 ITR 388/219 Taxman 105/38 taxmann.com 180 (Delhi) (para 7), viii. CIT v. Steller Investment Ltd. [1991] 192 ITR 287/59 Taxman 568 (Delhi) (para 8), ix. CIT v. Sophia Finance Ltd. [1994] 205 ITR 98/70 Taxman 69 (Delhi) (FB) (para 8), x. CIT v. Divine Leasing & Finance Ltd. [2008] 299 ITR 268/[2007] 158 Taxman 440 (Delhi)(para 8), xi. Lotus Capital Financial Services Ltd. v. ITO [IT Appeal No. 479 (Kol.) of 2011] (para 8), xii. CIT v. Lotus Capital Financial Services (P.) Ltd. [ITAT No. 125 of 2012] (para 8), xiii. CIT v. Dataware (P.) Ltd. [ITAT No. 263 of 2011] (para 8),
ITA No. 3747/Mum/2016 10 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel xiv. CIT v. Roseberry Mercantile (P.) Ltd. [G.A. No. 3296 of 2010, dated 10-1-2011] (para 8), xv. CIT v. Sanchati Projects (P.) Ltd. [ITAT No. 140 of 2011] (para 8), xvi. CIT v. Samir Bio-Tech. (P.) Ltd. [2010] 325 ITR 294 (Delhi) (para 8), xvii. CIT v. Kamdhenu Steel & Alloys Ltd. [2014] 361 ITR 220/[2012] 206 Taxman 254/19 taxmann.com 26 (Delhi) (para 8), xviii. CIT v. Dwarkadhish Capital (P.) Ltd. [2011] 330 ITR 298/[2010] 194 Taxman 43 (Delhi) (paras 9, 10), xix. CIT v. Kinetic Capital Finance Ltd. [2013] 354 ITR 296/[2011] 202 Taxman 548/14 taxmann.com 150 (Delhi) (paras 9, 10), xx. Zafa Ahmad & Co. v. CIT [2013] 214 Taxman 440/30 taxmann.com 267 (All.) (paras 9, 10), xxi. Anil Rice Mills v. CIT [2006] 282 ITR 236/[2005] 149 Taxman 313 (All.) (paras 9, 10), xxii. CIT v. Five Vision Promoters (P.) Ltd. [2016] 380 ITR 289/236 Taxman 502/65 taxmann.com 71 (Delhi) (para 11), xxiii. CIT v. Gabriel India Ltd. [1993] 203 ITR 108/71 Taxman 585 (Bom.) (para 12), xxiv. Hari Iron Trading Co. v. CIT [2003] 263 ITR 437/131 Taxman 535 (Punj. & Har.) (para 12), xxv. CIT v. Leisure Wear Exports (P.) Ltd. [2012] 341 ITR 166/[2011] 202 Taxman 130/11 taxmann.com 54 (Delhi) (para 13), xxvi. Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC) (para 14), xxvii. Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC) (para 14), xxviii. Reliance Jute & Industries Ltd. v. CIT [1979] 120 ITR 921/2 Taxman 417 (SC) (para 15),
ITA No. 3747/Mum/2016 11 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel xxix. Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262 (SC) (para 15), xxx. CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167/[2010] 189 Taxman 436 (Delhi) (para 16), xxxi. Grindlays Bank Ltd. v. ITO [1978] 115 ITR 799 (Cal.) (para 17), xxxii. Vijay Mallya v. Asstt. CIT [2003] 131 Taxman 477 (Cal.) (para 17), xxxiii. CIT v. J.L. Morrison (India) Ltd. [2014] 366 ITR 593/225 Taxman 17 (Mag.)/46 taxmann.com 215 (Cal.) (para 17), xxxiv. Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83/109 Taxman 66 (SC) (para 18), xxxv. CIT v. Max India Ltd. [2007] 295 ITR 282/166 Taxman 188 (SC) (para 18), xxxvi. CIT v. Maithan International [2015] 375 ITR 123/231 Taxman 381/56 taxmann.com 283 (Cal.) (para 20), xxxvii. CIT v. Navodaya Castles (P.) Ltd. [2014] 367 ITR 306/226 Taxman 190/50 taxmann.com 110 (Delhi) (para 20), xxxviii. CIT v. N.R. Portfolio (P.) Ltd. [2013] 214 Taxman 408/29 taxmann.com 291 (Delhi) (para 20), xxxix. CIT v. Active Traders (P.) Ltd. [1995] 214 ITR 583/[1993] 69 Taxman 281 (Cal.) (para 20), xl. CIT v. Jawahar Bhattacharjee [2012] 341 ITR 434/209 Taxman 174/24 taxmann.com 215 (Gau.) (FB) (para 20) and xli. Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC) (para 27).
2.7. So far as, the cases in favour of the assessee, like CIT vs Nirav Modi (2016) 71 taxman.com 272 (Bom.) is concerned, the factual finding is that the Assessing Officer
ITA No. 3747/Mum/2016 12 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel after making proper and detailed enquiries took a particular view, whereas, in the present appeal proper enquiry was not made by the Assessing Officer, therefore, this judicial pronouncements may not help the assessee. Similar is the position in other cases, which are different on facts.
2.8. We have also perused the assessment order, which is a subject matter of revisional jurisdiction u/s 263 and the impugned order passed by the ld. Pr.
Commissioner. Admittedly, an incorrect assumption of fact or an incorrect application of law would satisfy the requirement of order being erroneous u/s. 263 of the Act.
The phrase “prejudicial to the interest of the Revenue” u/s. 263, has to be read in conjunction with the expression “erroneous” order by the Assessing Officer. Every loss of Revenue as a consequence of assessment order cannot be termed as prejudicial to the interest of Revenue, meaning thereby, “prejudice” must be prejudice to the Revenue administration. At the same time, if another view is possible, revision is not permissible. Our view is fortified by the decision from Himachal Pradesh Financial Corp. (186
ITA No. 3747/Mum/2016 13 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel Taxmann 105)(HP), Bismillah Trading Co. (248 ITR 292)(Ker.) and CIT vs. Green World Corpn. (314 ITR 81)(SC).
For invoking revisional jurisdiction u/s. 263 of the Act, the assessment order must contain grievous error which is subversive of the administration of Revenue. Further, exact error must be disclosed by the Commissioner as was held in CIT vs. G.K. Kabra (211 ITR 336)(AP). Section 263 of the Act enables the Commissioner to have a re-look at the orders or proceedings of the lower authority to effect correction, if so needed, particularly, if the order is erroneous and prejudicial to the interest of the Revenue. The object of the provision is to raise revenue for the state and section 263 is enabling provision conferring jurisdiction upon the Commissioner to revise the order. The provision is intended to plug the leakage of the revenue by the erroneous and prejudicial order. Our view find support from the ratio laid down in following decisions:- i. CIT vs Infosys Technologies ltd. (2012) 341 ITR 293 (Karn.), ii. CIT vs Jawahar Bhattacharyaji (2012) 341 ITR 434 (Guwahati) (FB), iii. CIT vs Leisure wear Exports Ltd. (2012) 341 ITR 166 (Del.),
ITA No. 3747/Mum/2016 14 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel iv. CIT vs Triveni Engineering Works Ltd. (2011) 336 ITR 366 (Del.), v. R.A. Himmatsinghka & Company vs CIT (2012) 340 ITR 253 (Pat.) vi. CIT vs Rajeev Agnihotri (2011) 332 ITR 608 (P & H), vii. CIT vs DLF Ltd. (2013) 350 ITR 555 (Del.), viii. CIT vs Gabreal India Ltd. (1993) 203 ITR 108, 114 (Bom.), ix. Malabar Industrial Company Ltd. vs CIT (2000) 243 ITR 83 (SC), x. Nabha Investments Pvt. ltd. vs UOI (2000) 246 ITR 41 (Del.), xi. Bismillah Trading Company Ltd. vs IO (2001) 248 ITR 292, 308 (Kerala), xii. Paul Mathews & Sons vs CIT (2003) 263 ITR 101, 113 (Kerala), xiii. CIT vs Seshasayee Paper & Boards Ltd. (2000) 242 ITR 490, 500 (Mad.), xiv. Rayon Silk Mills vs CIT 221 ITR 155 (Guj.)
2.9. In the light of the aforementioned judicial pronouncements, now we shall analyze the facts of the case of Shri Devang Gandhi (ITA No.3747/Mum/2016). It is noted that the Ld. Assessing Officer framed assessment without making required enquiries/investigation in terms of explanation-2 to section 263 of the Act. The Ld.
Assessing Officer completed assessment vide order dated
28/02/2014 u/s 153A r.w.s. 143(3) of the Act determining the total income at Rs.6,28,300/-. It is noticed that the assessee introduced capital amounting to Rs.55 lakh in the ITA No. 3747/Mum/2016 15 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel firm M/s Dev Steel. The Ld. Assessing Officer did not mention in the assessment order with respect to source of funds, which were introduced as capital in M/s Dev Steel.
The source of fund and its genuineness is never discussed in the assessment order. Though there is mention of letter dated 28/01/2014 but the genuineness and source of funds were not examined as even there is not whisper of the letter in the assessment order. This factual matrix was fairly agreed by the ld. counsel for the assessee before this Tribunal. Even otherwise, it has to be kept in mind whether the assessment order is erroneous or prejudicial to the interest of Revenue. Certainly, the introduction of capital by the assessee and its genuineness requires investigation and deliberation and it has to be spelt out in the assessment order, which has not been done. Even the information received from the Investigation Wing was not properly investigated.
The Ld. Assessing Officer simply accepted the claim of the assessee mechanically without application of mind. Totality of facts, clearly indicates that even in the impugned order, the ld. Assessing Officer was directed to frame the ITA No. 3747/Mum/2016 16 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel assessment denovo after making necessary enquires and investigation after ascertaining necessary facts and that to after providing due opportunity to the assessee. Thus, no grievance is caused to the assessee, because the assessee is at liberty to contest the observation made by the ld.
Commissioner. Our view is fortified by the decision in Indian Textile vs CIT (157 ITR 112) (Mad.), Gee Vee
Enterprises vs Addl. CIT (99 ITR 375)(Del.), Thalibai F Jain vs ITO 101 ITR 1 (Karn.) and CIT vs HPFC 186 Taxman 105
(HP), CIT vs Pushpa Devi 164 ITR 639 (Patna). We are aware that before the Ld. Commissioner invokes the revisional jurisdiction u/s 263 of the Act, he should get satisfied that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue.
Hon’ble Gujarat High Court in CIT vs M. M. Khambatbala
198 ITR 144 (Guj.) even went to the extent that revisional powers can be exercised even if the issue is debatable. The Hon’ble jurisdictional High Court in CIT vs Gabriel India
Ltd. (1993) 203 ITR 108 (Bom.) concluded that powers u/s 263 cannot be exercised for starting fishing and roving enquiries. For making a valid order u/s 263(1), it is ITA No. 3747/Mum/2016 17 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel essential that the Commissioner has to record an express finding that prejudice has been caused to the interest of the Revenue. Our view find support from the ratio laid down in Bhargwa Engineering Corporation vs CIT (1996)
134 taxation 493, 494 (All.), CIT vs Digvijay Traders (1997) 137 CTR (MP) 224, CIT vs Regional Agro Industrial Development Cooperative Society Ltd. (1998) 143 taxation
293 (Kerala), CIT vs Agarwal Enterprises (1998) 100 taxman 360 (All.) and CIT vs Kailash Apartment Pvt. Ltd.
(200) 243 ITR 795 (Del.). Totality of facts, clearly indicates that the assessment order has been framed without full enquiries, therefore, the ld. Pr. Commissioner justifiably invoked revisional jurisdiction.
The Hon'ble Apex Court in Rajmandir Estates Pvt.
Ltd. (2017) 77 taxman.com 285 (SC), wherein, there was lack of requisite enquiry into increase of share capital and non-application of mind, the Commissioner was held to be justified in invoking the revisional jurisdiction, which is reproduced hereunder:-
“Section 68, read with section 263 of the Income-tax Act, 1961 - Cash credit (Share application money) - Assessment year 2009-
ITA No. 3747/Mum/2016 18 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel
10 - During relevant year, assessee-company had increased its share capital by issuing 7.93 lakhs shares of Rs.10 each at a premium of Rs.390 - Assessing Officer completed assessment without holding requisite investigation except for calling for records - Commissioner passed order under section 263 and opined that this could be a case of money laundering which went undetected due to lack of requisite enquiry into increase of share capital including premium received by assessee and non- application of mind - High Court by impugned order held that since assessee with an authorised share capital of Rs.1.36 crores raised nearly a sum of Rs.32 crores on account of premium and chose not to go in for increase of authorised share capital merely to avoid payment of statutory fees was an important pointer necessitating investigation and thus, Commissioner was justified in treating assessment order erroneous and prejudicial to interest of revenue - Whether special leave petition filed against impugned order was to be dismissed - Held, yes [Para 2] [In favour of revenue]”
Even otherwise, the ld. Commissioner has merely directed the Assessing Officer to make proper enquiries and after affording opportunity to the assessee decide in accordance with law, therefore, principally; the assessee should not feel aggrieved, because, if the assessee is in a position to explain the factual matrix, no grievance will be caused to the assessee. At the same time, the mandate of Article 265 of Constitution of India is to levy and collect due taxes. It is also noted that the scope of revisionary jurisdiction u/s 263 has been widened by the explanation-
1 (C) inserted by the Finance Act, 1989 and Explanation-2 inserted by the Finance Act 2015 w.e.f. 01/06/2015. As ITA No. 3747/Mum/2016 19 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel
per sub-clause(a) to Explanation-2, the order was to be
passed after making enquiries or verification which should have been made and further sub-clause (c), the order has not been made in accordance with any order, direction or instruction issued by the Board u/ s119 of the Act. The Ld. Assessing Officer mechanically accepted the claim of the assessee and even there is no whisper in the assessment order with respect to unexplained cash credit/genuineness and the source of the capital introduced in M/s Dev Steels. Even the Hon'ble Apex Court in a land Mark Decision in Malabar Industrial Co. Ltd. vs
CIT (supra) has held that it the Assessing Officer has accepted the entry in the statements of accounts, filed by the tax payer, without making any enquiry, the said order shall be deemed to be erroneous in so far as prejudicial to the interest of Revenue. So far as the decision from Hon'ble jurisdictional High Court in the case of Murli Agro Products
Ltd. is concerned, this order is dated 29/10/2010, wherein, there was nothing on record to suggest that any material was unearthed during search or during proceedings initiated u/s 153A showing that certain relief
ITA No. 3747/Mum/2016 20 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel in the form of deduction was wrongly allowed to the assessee, therefore, is on different facts. It is also noted that this order from Hon'ble jurisdictional High Court is prior to insertion of Explanation -2, which is w.e.f.
01/06/2015 and the order from the Hon'ble High Court is dated 29/10/2010. Thus, this decision may not help the assessee. The decision dated 30/12/2015 in the case of Anuj Jayendra Shah vs Pr. CIT (2016) (67 taxman.com
38)(Mum. Trib.), relied upon by CIT-DR squarely covers the order of the Ld. Pr. Commissioner, wherein, the genuineness of gift was not examined with respect to identity, creditworthiness and capacity of the donor.
Likewise the decision in the case of M/s Crompton Greaves vs CIT (ITA No.1994/Mum/2013), order dated 01/02/2016 further supports the case of the Revenue. As mentioned earlier, the Ld. Pr. Commissioner while invoking the revisional jurisdiction has not thrust upon his view and merely asked the Ld. Assessing Officer to make fresh investigation/enquiry and to provide due opportunity to the assessee. Therefore, no grievance should be caused to the assessee as the intent of section 265 of Constitution of ITA No. 3747/Mum/2016 21 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel
India is to levy and collect due taxes. Thus, we find no infirmity in invoking the revisional jurisdiction by the ld.
Pr. Commissioner.
So far as, the appeals in the case of M/s Dev Steels are concerned, a search action u/s 132 of the Act was carried at the office premises of M/s Unity Infra Projects Ltd. (hereinafter UIL) on 10/02/2012 along with the Directors of the company and other related concerns. It was found that UIL claim to have made purchases steel from the assessee firm. Therefore, survey action u/s 133A of the Act was carried out at two premises belonging to the assessee.
Statement of Shri Devang Gandhi, partner of the assessee firm was recorded on oath, wherein, he specifically tendered of issuing accommodation bills to UIL. During search, in the case of UIL, the documents belonging to the assessee firm were also seized. As per purchase bills, the assessee firm also alleged to have made purchases from M/s Scana Color India Ltd. and the details of transport vehicle/Lorry No. were not mentioned in the bill. The sale corresponding to the purchases, wherein, also such numbers were not mentioned. The mode of payment through cheque or cash
ITA No. 3747/Mum/2016 22 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel were also not mentioned. Vide Panchnama dated 11/02/2012, certain incriminating documents were seized.
Shri Devang Gandhi was asked to prove the genuineness of the sales by the assessee firm to UIL and in question no.7 to the statement, he was asked to substantiate the purchases made from certain parties, wherein, he confessed that he is unable to substantiate the purchases made from such parties and there was no actual receipt of goods and there was accommodation entries only and the sale entries were booked in the name of UIL. The relevant portion of the statement is available on record. The Ld. Assessing Officer while making the assessment worked out the commission at the rate of 2% on the sales, (shown by way of accommodation bills). The DDIT(Inv.) in his appraisal report suggested for computing the commission in providing accommodation bills at the rate of 5% and the Ld. Assessing Officer without assigning any reason differed with the suggestion and adopted the rate at 2%. Without going into the merits of the adoption of rates, we are of the view that the Ld. Assessing Officer was judiciously expected to examine the facts in the light of the provision of the Act and ITA No. 3747/Mum/2016 23 TO 3752/Mum/2016 Shri Devang Gandhi & M/s Dev Steel further to investigate/examine the factual matrix. It is also noted that by the impugned order, the Ld. Commissioner of Income Tax (Appeal) considering explanation-2 to section 263 (by the Finance Act 2015) directed the Ld. Assessing Officer to make necessary enquiry/investigation and after ascertaining the facts reframe the assessment with further direction to provide opportunity to the assessee. So far as, the cases relied upon by the Ld. counsel for the assessee are concerned, considering the totality of facts, we are of the view that these are on different facts, therefore may not help the assessee. Thus, considering the factual matrix and the judicial pronouncements, we don’t find any infirmity in the impugned order, consequently, we affirm the revisional jurisdiction invoked by the Ld. Pr. Commissioner.
Finally, all the appeals are dismissed.
This order was pronounced in the open court on 24/11/2017.