SMT. SARIKA SRIVASTAVA,AGRA vs. PCIT-1, AGRA, AGRA

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No.56/Agr/2022 Assessment Year: 2012-13

Sarika Srivastava Vs. Pr. CIT, Income-tax-1 1/114-B, Gulab Rai Marg, Delhi Agra. Gate, Agra-282002. PAN : AEOPS8100H (Appellant) (Respondent)

ITA No.57/Agr/2022 Assessment Year: 2012-13

Atul Srivastava Vs. Pr. CIT, Income-tax-1 1/114-B, Gulab Rai Marg, Delhi Agra. Gate, Agra-282002. PAN : AGUPS9179C (Appellant) (Respondent) Assessee by Ms. Ishita Farsaiya, Advocate Department by Sh. Sukesh Kumar Jain, CIT/DR

Date of hearing 27.03.2025 Date of pronouncement 30.04.2025

ORDER Per Annapurna Gupta, Accountant Member:

The present appeals have been filed by different assessees against separate orders passed by the learned Principal Commissioner of Income- tax-1, Agra (in short “PCIT) dated 29.03.2022 under Section 263 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

ITA No.56 & 57/Agr/2022

assessees before us are spouses and the issues raised in the revisionary

order are identical. She contended that common arguments are to be made

in both the cases. Therefore, both the appeals were taken up together for

hearing and are being disposed off by this common consolidated order.

backdrop of identical facts, are being adjudicated by us dealing with the

facts in the case of the assessee, Sarika Srivastava in ITA No.

56/Agr/2022.

“1. That the proceedings initiated under Section 263 of the Income Tax Act, 1961 (the Act) against the Appellant are void ab initio and unsustainable in law. 2. That the Impugned Order dated 29.03.2022 is in violation of the provisions of Section 263 of the Act and passed without considering the facts of the Appellant's case. 3. That the Ld. Pr. CIT, while initiating proceedings under Section 263 of the Act and passing the Impugned Order has failed to appreciate that the Ld. AO in the case of the Appellant passed the Assessment Order dated 31.10.2019 after duly considering all submissions of the Appellant. 4. That the Ld. Pr. CIT while making the order U/S 263 had ignored that the Asstt Order dt. 31-10-2019 had been passed U/S 143(3) read with Sec 148, and there is no escapement of Income as per Reason to Believe recorded by A.O. then no other matter can be subject to examination / verification in reassessment proceedings. Thus the Pr. CIT has erred in imitating proceedings U/S 263.

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the assessee is a Doctor. For the impugned year, A .Y 2012-13, return of

income was e-filed on 14.09.2012 declaring total income of Rs.17,94,720/-.

Thereafter case was opened for scrutiny assessment u/s. 148 of the Act

and assessment completed u/s. 143(3) r.w.s. 147 of the Act accepting the

returned income of Rs.17,94,720/-. It is this assessment order passed u/s.

147 of the Act which has been held to be erroneous causing prejudice to

the interest of revenue by the ld. PCIT in the impugned order before us

passed u/s 263 of the Act.

discrepancies therein, which find listed in his show cause notice

reproduced at page -2 to 8 of the order as under :

“I. In this regard, Notices u/s 263 of the Income Tax Act, 1961 dated 27.10.2021 and 18.11.2021 have been issued calling for certain explanations and documents. However, no compliance has been made till date. II. You are being given further opportunity to explain your case. You are once again requested to submit explanations and documents as called for vide Notice u/s 263 dated 27.10.2021 (copy of which is enclosed). III. I have examined the case record in your case for A.Υ. 2012-13 and on examination of the case record several issues have emerged, which are discussed hereunder:

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Similarly, Plot No. 64 in Triveni Royal Farms, Village Artauni, Tehsil & District, Agra having Area of 1279.23 Sq. Metres for which sale consideration was disclosed at only Rs. 31,66,500/-, the minimum rate as per the Stamp Valuation Authority was Rs. 57,57,000/-. Thus, the actual valuation for both these plots sold was Rs. 1,16,65,000/- (Rs. 59,08,000 plus Rs. 57,57,000/-), whereas the sale consideration received as per the Sale Deed is only Rs. 54,16,600/- (Rs. 22,50,100/- plus Rs. 31.66,500/-). Thus, the value of the 2 plots sold by the Assessee as co-owner u/s 50C of the Income Tax Act, 1961 amounts to Rs. 1,16,65,000/-, but the sale consideration received has been disclosed at only Rs. 54,16,600/- by the 2 co-owners i.e. Dr. Sarika Srivastava and her husband Dr. Atul Srivastava. As per the provisions of Section 50C, the value adopted by the Stamp Valuation Authority was deemed to be the full value of the consideration received as a result of the transfer and thus, the difference of Rs. 62,48,400/- (Rs. 1,16,65,000/- less Rs. 54,16,600/-) was to be brought to tax. Half share of the Assessee as co-owner of the properties amounted to Rs. 31,24,200/- and this amount i.e. the difference between the Sale Consideration disclosed as per the Sale Deed and the full value of the consideration received u/s 50C amounting to Rs. 31,24,200/- in the hands of the Assessee was to be brought to tax u/s 48 of the Income Tax Act, 1961. This Income was neither brought to tax nor any inquiry was made during assessment proceedings. 1.2 In an attempt to evade the provisions of law and to deliberately mislead the Revenue Authorities, the Assessee has falsely stated that the value u/s 50C of the Properties sold was Rs. 27,08,300/- which was not only false (the correct figure was Rs. 58,32,750/-, being more than double of that disclosed by the Assessee), but also a deliberate attempt was made to evade Income chargeable to tax. 2. The Assessee has claimed deduction u/s 54F of the Income Tax Act, 1961 amounting to Rs. 16,06,618/- as per Computation of Income filed along with Return. No proof of Construction/purchase of Residential 4 | P a g e

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House or the quantum of investment in the same is available on record, and hence excess deduction has been allowed. Not only the deduction was wrongly allowed but also no inquiry was done during the Assessment proceedings u/s 147 of the Income Tax Act, 1961.

"4. Copy of bank statements of all the account for the concerned year and source of all the cash deposits made during the year." 3.1 Another Notice u/s 142(1) was issued by the DCIT, Circle 2(1)(1), Agra on 23.07.2019 and as per point no. 4 of the Annexure to the Notice u/s 142(1) dated 23.07.2019 again required the Assessee to comply as under:

"4. Copy of bank statements of all the account for the concerned year and source of all the cash deposits made during the year."

3.2 Despite the repeated requirements u/s 142(1), the Assessee did not file the statement of Bank Accounts for all the year and filed the copy of Bank Account statements for a very short period i.e. 05.12.2011 to 24.12.2011 for HDFC Bank, Sanjay Place, Agra. Perusal of the Balance Sheet as on 31.03.2012 of the Assessee Dr. Sarika Srivastava shows that the details of Cash & Banks have been given in Schedule "D" from which it can be seen that the Assessee had in addition to bank account at HDFC Bank, a Bank Account No. 7398 at State Bank of India and a Bank Account No. 9865 in Punjab National bank along with FDRs in SBI and HDFC Bank. However, the Assessee did not file any statement of the account at State Bank of India & PNB and filed the Bank Statement for a very short period in December, 2011 for the HDFC Bank Account. Thus, the Assessee deliberately evaded furnishing the Bank Account statements.

It is further very surprising to note that the Assessing Officer did not make any inquiry on this issue despite the blatant non-compliance by the Assessee and completed the Assessment at Returned Income without any verification of the Bank Account and without any proper inquiry.

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2,50,000/- only have been disclosed in the Balance Sheet. The AO did not make inquiry in to the fact as to how the rest of the units worth Rs. 3,00,000/- have been disclosed.

ITA No.56 & 57/Agr/2022

office on or before 24.03.2022(on any working day) or you may file e-reply to the email ID agra.pcitl@incometax.gov.in or on e-filing portal. In case you wish to be heard personally, you or your duly authorized Representative may attend my office on 23.03.2022 at 03.30 P.M. In case of non-compliance, it will be presumed that you have nothing to say in your case and the case will be decided on merits on the basis of documents available on record.”

are as under :

(1) . That despite records revealing stamp duty value of 2 properties sold

by the assessee during the year exceeding the actual consideration

received, the AO failed to invoke section 50C of the Act, while

assessing capital gains earned on the said transaction, and make

addition of the excess of the stamp duty value to the actual

consideration received.

(2) . The assessee was found to have been allowed claim of deduction

/exemption of its capital gain u/s. 54F of the Act amounting to

Rs.16,06,618/- without any proof / evidence of eligibility of the same.

He noted no enquiry conducted by the Assessing Officer with respect

to the same.

(3) That despite the AO asking the assessee to file copies of all bank

statements, the same were not filed by the assessee and the AO

ignored the said fact. 8 | P a g e

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(4) . That even on the issue for which jurisdiction to assess u/s 147 of the

Act was assumed by the AO complete inquiry was not conducted.

Learned PCIT noted that the case of the assessee was reopened for

examining the source of investment in mutual funds of

Rs.50,00,000/-. He noted from the records that the assessee while

explaining the source of investments, highlighted four payments for

the limited period from 05.12.2011 to 24.12.2011 amounting in all to

Rs.25,00,000/-, but no enquiry or investigation was made with

respect to the same by the Assessing Officer.

(5) . Ld. PCIT also noted that there were several cash deposits in bank

and despite the fact that queries had been raised for explaining the

source, the same was not examined by the Assessing Officer.

(6) . PCIT also noted that while the assessee had bought units of Kotak

Floater Fund worth Rs.5.50 lacs. However, in the balance sheet,

units worth Rs.2.5 lacs only were disclosed and the Assessing

Officer did not make any enquiry into the fact as to how rest of the

units of Rs.3.00 lacs had been disclosed.

(7) . He further noted the assessee to have shown long term capital gain

on sale of land in Profit and loss account, but no enquiry was made

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by the Assessing Officer with respect to the same nor were deeds of

purchase and sale of the land available on record. The assessee was

also noted to have sold a portion of “Land TIBCO” and no sale deed

was available on record.

(8) . Learned PCIT noted that the only reply filed to explain the source of

investment in the mutual funds stated the assessee to have made

the investment in the period December, 2011 and Feb. 2012.

However, copy of the bank account for February, 2012 was not filed

by the assessee.

Ld. PCIT accordingly noted that many queries raised by the AO were

un-answered / not completely answered yet the Assessing Officer

had accepted the returned income of the assessee as also several

claims /issues were allowed without being examined.

that there was no error in the order of the AO since the assessee had

explained to the satisfaction of the AO that there was no escapement of

income vis a vis source of investment in mutual funds remaining

unexplained, for which reason the case of the assessee was reopened. It

was pointed out to the Ld.PCIT that the assessee had explained to the AO

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that the said investments were duly reflected in her Balance Sheet and the

source of investment therein therefore duly disclosed. That therefore there

was no question of escapement of income and the proceedings initiated by

the AO were therefore invalid and needed to be dropped.The assessee

pointed out to ld. PCIT,that despite stating so, ld. Assessing Officer did not

drop the proceedings but completed the assessment though without

making any addition to the returned income. She pointed out to the ld. PCIT

that from the contents of assessment order it is evident that the reasons to

believe recorded by the Assessing Officer failed. That it is settled

proposition of law that if no addition had been made by the Assessing

Officer in the assessment order on the basis of the reasons recorded,

notice u/s. 148 becomes invalid and no addition can be made on any other

income.

stating that the issue for which reopening was resorted to was clearly not

enquired by the Assessing Officer and therefore, proposition of law relied

upon by the assessee could not be applied in the present case. The

relevant findings of the ld. PCIT at para 5 to 9 of his order read as under :

“The reply filed by the Assessee has been considered along with the submissions by her learned Counsel. On consideration of the entire facts of the case including departmental record, ITBA Portal etc. the following conclusions are drawn: 11 | P a g e

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The Assessee's entire reply revolves around the Hon'ble Maharashtra High Court decision in the case of CIT v/s Jet Airways [331 ITR 236] as quoted by the Assessee that "if no addition had been made by A.O. in Asstt Order on basis of such reasons recorded. Then in such circumstance the Notice U/S 148 becomes invalid then no additions can be made for any other income." However, no relief can be given to the Assessee on the basis of the above decision as it has been clearly enumerated in the Point 5 and Point 8 of the Notice u/s 263 dated 17.03.2022 that the Reason recorded u/s 148 of the Income Tax Act, 1961 i.e. Issues regarding investments in Mutual Funds had not been properly inquired into and verified by the Assessing Officer during the course of assessment proceeding, and these are to be examined for which directions have to be issued u/s 263 and hence, the issues forming the basis of reason recorded are itself to be examined. Accordingly, the Notice u/s 148 does not become invalid even if the principle laid down in the decision of Jet Airways (Supra) is applied. Hence the argument by the learned Counsel does not in any way affect the proceedings u/s 263, b. The Assessee's contention that the A.O. made no addition on basis of Reason to believe hence, the AO was not legally empowered to make any addition for any other Income does not stand as Point 3 of the Reasons recorded u/s 148 of the Income Tax Act, 1961 clearly mentions that the Assessee had Cash Deposits to be explained, which was entirely left to be inquired into during the course of assessment proceedings. The Hon'ble Supreme Court in Rampyari Devi Saraogi vs. CIT (1968) 67 ITR 84 (SC) and Tara Devi Agarwal vs. CIT (1973) 88 ITR 323 (SC) held that "...where Assessing Officer has accepted a particular contention/issue without any enquiry or evidence whatsoever, Order w/s 263 in the case of Sarika Srivastava the order is erroneous and prejudicial to the interest of the Revenue". 7. I have carefully examined the material available on the record and find that the Order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue and hence suitable order under section 263 is to be passed.

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above. Therefore, the Assessment Order passed u/s 143(3) r.w.s. 147 dated 31.10.2019 by the Assessing Officer in your case for A.Y. 2012-13 is hereby modified (partly set aside) with the directions to the Assessing Officer to examine the issues as mentioned in Para 1 to Para 8 of Notice u/s 263 dated 17.03.2022 (appearing in Para 3 of this Order) and to pass an Order accordingly after affording reasonable opportunity of being heard to the Assessee.”

under :

(1) . There was no finding of any error by the ld. PCIT.

(2) . Once the Assessing Officer was satisfied in proceedings u/s 147 of

the Act, no proceedings u/s 263 of the Act can be resorted to. In this

regard she relied upon the decision of Calcutta High Court in PCIT vs.

Karan Polymers Pvt. Ltd.

(3) . Once proceedings u/s 147 of the Act have taken place, no

proceedings u/s. 263 of the Act can happen. Reliance was placed on

the order of ITAT, Ahmedabad in Hiren Kumar Lavjibhai Kanani (ITA

No. 522/Ahd/2024) and of Hon’ble Allahabad High Court in Meerut

Roller Flour Mills (P) Ltd. vs. CIT (2019) 110 taxmann.com 170

(Allahabad).

discrepancies and errors in the order of the Assessing Officer in the show

cause notice issued u/s 263 of the Act and there is no need to reiterate the

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same. That it was a clear case of no enquiry by the AO on the issues raised

in the assessment and the order was rightly held by the ld. PCIT to be

erroneous causing prejudice to the Revenue in terms of the provisions of

Explanation 2A to section 263 of the Act. He further contended that there is

no bar on the Assessing Officer for exploring other issues in reassessment

proceedings other than for which the reassessment was resorted to.

through the records and perused the case laws.

the order passed u/s. 147 of the Act. It is also a fact on record that re-

assessment was resorted to for the reason that the assessee was noted to

have made investments in the mutual funds to the tune of Rs.50.00 lacs,

source of which was unexplained and the Assessing Officer had reason to

believe that the income to this extent had escaped assessment. Perusal of

the copy of the reasons recorded by the AO placed before us at P.B 2-3 of

the Paper Book reveal the aforesaid fact. The Ld. PCIT has recorded

several issues which remained to be inquired into by the AO despite

records revealing that they called for further inquiry as noted above at para

of our order above, including the issue for which reopening was resorted to

by the AO. 14 | P a g e

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it was satisfactorily explained to the AO that there was no escapement of

income and therefore there was no error in the order vis a vis the said issue

and as a consequence thereof since the basis for assuming jurisdiction

u/s 147 of the Act by the AO had failed , he had no jurisdiction to inquire

into other issues. That therefore both on the issue for which reopening was

resorted as also other issues noted by the Ld. PCIT , there was no error in

the order of the AO for not conducting adequate inquiries with respect to

the same.

that where the basis for assuming jurisdiction u/s 147 of the Act fails no

addition can be made on any other issues.He however finds the said

proposition not applicable in the present case since , as per the Ld. PCIT,

the AO’s order was erroneous in accepting assesses explanation on the

issue for which reopening was resorted. As per the Ld. PCIT therefore it

was not a case where there was no escapment of income as noted by the

AO in his reasons recorded.

assesses explanation to the AO regarding the source of investment in

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mutual funds was a reasonable and plausible explanation, that therefore

whether the AO had rightly accepted the same and made no addition on

account of it and that therefore as a consequence the AO had no

jurisdiction to consider any other issue in the reassessment proceedings.

letter filed to the ld. PCIT that the assessee had communicated to the

Assessing Officer during the assessment proceedings that the investment

in mutual funds was reflected in her balance sheet and therefore, could not

be said to be from undisclosed sources. That accordingly, there was no

escapement of income.

in this explanation of the assessee of the investments being from disclosed

sources having being accounted for in her books of accounts and disclosed

in her Balance Sheet. Even the Ld. DR was unable to point out any infirmity

in the same before us. Also, we find the explanation of the assessee to be

reasonable, plausible and logical that when the investment is disclosed in

the Balance Sheet of the assessee, it goes without saying that the source

of investment in the same stands duly accounted for and also disclosed.

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There is no case, we agree with the Ld. Counsel for the assessee, of such

investments being from undisclosed sources.

that the issue has not been properly inquired into by the AO during

reassessment proceedings and despite the assessee filing evidence of

source of part of investment through banking channels AO accepted entire

investments as duly explained.. We do not find any merit in the same.

When the investment is duly disclosed in the Balance Sheet of the

assessee, the source thereof also stands accounted for and reflected in the

balance sheet. It is not that the investment is from sources outside the

books of the assessee. There is no question of the same being from

undisclosed sources and no need therefore for the AO to make any

inquiries vis avis the source of the same.

making no addition on account of the income which he believed had

escaped assessment.

stating that the reopening was resorted to not only for the source of

investments in mutual fund being from unexplained sources but also on 17 | P a g e

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account of cash deposits in the bank account of the assessee. But this we

find is factually incorrect. As noted by us at para13 of our order above, we

have perused the contents of the reasons for reopening recorded by the

AO, copy of which was placed before us at P.B 2-3 and we have noted that

the belief of escapement of income of the AO was only on account of

source of investment in mutual funds. Therefore this basis of the Ld. PCIT

for rejecting assesses contention is we find based on incorrect appreciation

of facts and is therefore without any merit.

proposition of law that where the belief of escapement of income fails no

other addition can be made by the AO, we agree with the Ld.Counsel for

the assessee that there was no error in the order of the AO for not having

inquired into other issues noted by the Ld. PCIT.

the order of the Assessing Officer, vis a vis issue for which reopening was

resorted to, making no addition on account of investment in mutual funds

and also with respect to the other issues. It is clear that the Assessing

Officer could not have made any enquiry with respect to the same on

account of settled proposition of law accepted by the Ld.PCIT also. The

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errors noted by the ld. PCIT, we hold, clearly fall beyond the scope of

enquiry of the Assessing Officer during the reassessment proceedings. The

order of the ld. PCIT is therefore held to be not sustainable in law and is

accordingly set aside.

Order pronounced in the open court on 30.04.2025.

Sd/- Sd/- (SUNIL KUMAR SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30.04.2025 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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