ROOP SINGH TANWAR,DEWAS vs. THE CIT, UJJAIN

आदेश / O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by revision-order dated 13.03.2019 passed by learned Pr. Commissioner of Income-Tax, Ujjain [“Ld. PCIT”] u/s 263 of Income-tax Act, 1961 [“the Act”], which in turn arises out of assessment-order dated 15.12.2016 passed by learned ITO-1, Dewas [“Ld. AO”] u/s 147 read with 143(3) for Assessment-Year [“AY”] 2009-10, the assessee has filed this appeal on the grounds mentioned in Appeal-Memo.

Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 3. The Registry has informed that this appeal has been filed after a delay of about 241 days and therefore time-barred. Ld. AR submitted that the assessee has filed a condonation-application supported by a duly-sworn affidavit, seeking condonation of delay. Ld. AR submitted that the assessee had been suffering from high blood pressure and heart illness and was undergoing medical treatment. The assessee has also filed medical documents/reports of Neema Hospitals Pvt. Ltd. in support. It is further averred in the affidavit that the son of appellant had also expired earlier due to an accident as a consequence of which the assessee had been suffering from mental and physical troubles. Ld. AR submitted that the delay in filing appeal has occurred due to such onerous circumstances and not because of any lethargy, negligence or mala fide intention of assessee. Ld. AR submitted that by making delay in filing appeal, the assessee does not stand to derive any benefit, rather he is suffering. Placing reliance upon the decision of Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387, Ld. AR prayed to take a judicious view qua the assessee, condone delay and proceed with appeal. We have perused the material produced before us and find sufficient merit in the condonation-application. Ld. DR did not demonstrate any objection. Accordingly, the delay is condoned and the appeal is proceeded for hearing.

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 reason mentioned in the show-cause notice dated 26.02.2019 issued by him u/s 263:

“In this case, Notice u/s 148 was issued on 23.3.2016. In compliance, the assessee filed return of income on 05.12.2016 declaring total income of Rs.1,27,200/-. The assessment was completed u/s 143(3)/147 on 15.12.2016 by the AO (ITO-1, Dewas) at the returned income which is considered erroneous and prejudicial to the interest of revenue for the following reasons:-

On perusal and examination of records, it is notices that the assessee has deposited cash of Rs.21,00,000/- in the saving bank account. However, on going through the record, it is further noticed that-

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 assessee. Ld. PCIT further observed that since the section 263 has been amended and Explanation 2, as reproduced below, had been introduced therein, the assessment-order is deemed to be erroneous and prejudicial to the interest of revenue if the same had been passed without inquiries or verification which should have been made:

“Explanation 2 – “For the purpose 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 prejudicial to the interest of 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) …. (d) …” Ld. PCIT was of the opinion that in the present case, Ld. AO has not carried out the inquiry/verification which he should have done and hence the assessment-order is to be deemed as erroneous in so far as it is prejudicial to the interest of revenue. Finally, Ld. PCIT passed revision-order on 13.03.2019 whereby the assessment-order was set aside and the Ld. AO was directed to re-examine the issue.

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 impugned sale-transaction, viz. (i) Sale-deed dated 28.03.2008 which showed consideration of Rs. 10,00,000/-; and (ii) Sale-Agreement which showed receipt of consideration of Rs. 21,00,000/-. Ld. AR submitted that the actual receipt was Rs. 21,00,000/- from the buyers as per Sale- Agreement, although the Sale-Deed was made at Rs. 10,00,000/- at the desire of buyer. Ld. AR carried us to the following papers placed in the Paper-Book filed by him in support of these facts:

(i) Page No. 19 of the Paper-Book - Annexure to Notice u/s 143(2) dated 05.12.2016 wherein the Ld. AO raised following query to the assessee, is placed:

“3. You are also required to explain the source of cash deposit in your saving bank account maintained with the bank”. (ii) Page No. 20 of the Paper-Book – Following reply dated 15.12.2016 filed by the assessee to Ld. AO in response to above query, is placed:

“Further to above, I have to give explanation regarding deposit in my bank account during the F.Y.2008-09 detailed as below: 1. That agricultural land situated at vill. Nizamdi, Tahsil & Dist. Dewas M.P. (which is Approx. 32 Kms away from Dewas, as per photocopy of google map given as per Ann.3) in the name of my wife Smt. Kamla Bai was sold on 28 march 2008 for a sum of Rs.10,19,500/- (MV) and sale value Rs.10,00,000/- (as per photocopy of sale deed given as per Ann.4) but actual sale value was Rs.21,00,000/- as decided between the buyers named Gajraj Singh S/o Uday Singh, Pappu Singh S/o Uday Singh and Viraj Singh S/o Uday Singh all r/o vill Nizamdi, Tehsil & Dist. Dewas M.P. and seller as per copy of agreement for sale given as per Ann.5. So the actual sales consideration was Rs. 21,00,000/- but as per the will of the buyer, registration for sale value for Rs. 10,00,000/- only was done. Photocopy of sale deed is given as per Ann.4.

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 Uday Singh All r/o vill Nizamdi, Tehsil & Dist . Dewas M.P. and seller as per copy of agreement for sale given as per Ann.5.” (iii) Page No. 21 of the Paper-Book – A copy of the certificate dated 15.12.2016 given by Smt. Kamla Bai (asessee’s wife) confirming the factum of having received Rs. 21,00,000/- from sale of rural agricultural land and having deposited in assessee’s bank account filed to Ld. AO, is placed.

(iv) Page No. 25 to 29 of the Paper-Book – Copy of Sale-deed dated 28.03.2008 of the impugned land is placed which shows sale- consideration of Rs. 10,00,000/- filed to Ld. AO, is placed.

(v) Page No. 30 to 32 of the Paper-Book – Copy of Sale-Agreement dated 02.02.2008 of the impugned land is placed which shows sale consideration of Rs. 21,00,000/- filed to Ld. AO, is placed.

“�करण म� �दनांक 05.12.2016 को �नधा�रती �ी �प �संह तंवर एवं सी.ए. �ी अशोक महाजन उपि�थत हुए एवं नो�टस धारा 148 के �ल�खत जवाब ��तुत �कया गया जो�क �रकाड� पर रखा गया है । �नधा�रती �वारा �दनांक 05.12.2016 को अपनी आयकर �ववरणी दा�खल क� गयी है । �ववरणी अनुसार करदाता क� आय �. 1,27,200/- दशा�ई गई है । करदाता �वारा अपनी आय वेतन एवं अ�य ��ोत� से बताई गई है । �करण म� सुनवाई हेतु अगल� �दनांक 15.12.2016 �नयत क� गई ।

�करण म� �नयत �दनांक को �नधा�रती क� ओर से सी.ए. �ी अशोक महाजन उपि�थत हुए । उनके �वारा �ल�खत उ�तर ��तुत �कया गया एवं �नधा�रती के ब�क खाते म� जमा रा�श से संबं�धत �प�ट�करण एवं �माणप� ��तुत �कया गया िजसे �रकाड� पर रखा गया । �करण म� चचा� क� गई । 11. With aforesaid submissions, Ld. AR strongly contested that during the course of assessment-proceeding, not only the Ld. AO has made enough enquiry with respect to the source of cash-deposit but also the assessee has

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 filed a detailed reply accompanied by all evidences. Ld. AR submitted that it is after a careful consideration of the reply filed by assessee that the Ld. AO was aptly satisfied about the source of cash-deposit and such a fact is very much apparent from the assessment-order itself. Ld. AR, therefore, argued that in such a situation, Ld. PCIT is not justified in invoking the revision- action u/s 263.

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 10,00,000/- when the actual sale was for Rs. 21,00,000/- is not appreciable, yet confining ourselves to the litigation involved in present appeal as to whether the assessee had an explainable source for cash deposit of Rs. 21,00,000/- or not, we find that the assessee is able to explain the same and the Ld. AO has taken a plausible view of the explanation of assessee after due enquiry.

“5. The learned AR before us filed a paper book running from pages 1 to 157 and contended that all the necessary details about the advances received from the parties, sales shown in the financial statement and details of the service tax returns were filed during the assessment proceedings. The learned AR further contended that the assessment was framed by the AO after considering the necessary details and verification and application of mind. The learned AR in support of his contention drew our attention on pages 151 to 153 of the paper book where the copy of the notice under section 142(1) of the Act was placed. Likewise, the learned AR also drew our attention on pages 154 to 157 of the paper book where the reply of the assessee in response to the notice issued under section 142(1) of the Act was placed. Thus, the learned AR contended that there cannot be said that the assessment order is erroneous and causing prejudice to the interest of Revenue in the given facts and circumstances on account non-verification. 6. On the contrary, the learned DR before us contended that reconciliation of the amount shown in the service tax return and financial statement was not available before the AO during the assessment proceedings. Accordingly the learned DR vehemently supported the order of the learned PCIT. 7. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case relates whether the assessment order has been passed by AO without making inquiries or verification with respect to the difference in the figures as discussed above

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 and hence the assessment is erroneous insofar prejudicial to the interest of the Revenue. Thus, requiring revision by Pr. CIT u/s 263 of the Act. 7.1 An inquiry made by the Assessing Officer, considered inadequate by the Commissioner of Income Tax, cannot make the order of the Assessing Officer erroneous. In our view, the order can be erroneous if the Assessing Officer fails to apply the law rightly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the Assessing Officer. It is Assessing Officer’s prerogative to make inquiry to the extent he feels proper. The Commissioner of Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various Hon’ble High Courts in this regard. 7.2 Delhi High Court in the case of CIT Vs. Sunbeam Auto 332 ITR 167 (Del.), made a distinction between lack of inquiry and inadequate inquiry. The Hon’ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry. The relevant observation of Hon’ble Delhi High Court reads as under: “12. ….. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between “lack of inquiry” and “inadequate inquiry”. If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of “lack of inquiry”, that such a course of action would be open. ——— From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. 15. Thus, even the Commissioner conceded the position that the Assessing Officer made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the Commissioner was that the Assessing Officer should have made further inquires rather than accepting the explanation. Therefore, it cannot be said that it is a case of ‘lack of inquiry’.” 7.3 The Hon’ble Bombay High Court in case of Gabriel India Ltd. [1993] 203 ITR 108 (Bom), discussed the law on this aspect in length in the following manner: “The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity. 7.4 The Mumbai ITAT in the case of Sh. Narayan Tatu Rane Vs. ITO, I.T.A. No. 2690/2691/Mum/2016, dt. 06.05.2016 examined the scope of enquiry under Explanation 2(a) to section 263 in the following words:- “20. Further clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. In our considered view, this provision shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr. CIT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO vis-à-vis its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order,

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquries or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant.” 7.5 The Hon’ble Supreme Court in recent case of Principal Commissioner of Income-tax 2 v. Shree Gayatri Associates*[2019] 106 taxmann.com 31 (SC), held that where Pr. CIT passed a revised order after making addition to assessee's income under section 69A in respect of on-money receipts, however, said order was set aside by Tribunal holding that AO had made detailed enquiries in respect of such on-money receipts and said view was also confirmed by High Court, SLP filed against decision of High Court was liable to be dismissed. The facts of this case were that pursuant to search proceedings, assessee filed its return declaring certain unaccounted income. The Assessing Officer completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revised order under section 263 on ground that Assessing Officer had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's on-money transactions and Tribunal, thus, set aside the revised order passed by Commissioner. The Hon’ble High Court upheld Tribunal's order. The Hon’ble Supreme Court while dismissing the SLP filed by the Department held as under:- “We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. No question of law arises. Tax Appeal is dismissed”. 7.6 The Supreme Court in the another recent case of Principal Commissioner of Income-tax-2, Meerut v. Canara Bank Securities Ltd [2020] 114 taxmann.com 545 (SC), dismissed the Revenue’s SLP holding that 263 proceedings are invalid when AO had made enquiries and taken a plausible view in law, with the following observations: “Having heard learned counsel for the parties and having perused the documents on record, we see no reason to interfere with the view of the Tribunal. The question whether the income should be taxed as business income or as arising from the other source was a debatable issue. The Assessing Officer has taken a plausible view. More importantly, if the Commissioner was of the opinion that on the available facts from record it could be conclusively held that income arose from other sources, he could and ought to have so held in the order of revision. There was simply

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 no necessity to remand the proceedings to the Assessing Officer when no further inquiries were called for or directed” 7.7 From an analysis of the above judicial precedents, the principle which emerges is that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Assessing Officer adopts one of the course permissible in law and it has resulted in loss of revenue; or where two views are possible and the Assessing Officer has taken one view with which the Commissioner of Income- tax does not agree, it cannot be treated as an erroneous order causing prejudice to the interests of the Revenue unless the view taken by the Assessing Officer is unsustainable in law, or the AO has completely omitted to make any enquiry altogether or the order demonstrates non-application of mind. 7.8 Now in the facts before us, in the case of the assessee the AO during the course of assessment proceedings, made enquiries on this issue and after consideration of written submissions filed by the assessee and documents / evidence placed on record, framed the assessment under section 143(3) of the Act without making the addition of the amount as note above. This fact can be verified from the notice under section 142(1) of the Act by the AO and submission in reply of the assessee against such notice. XXX 7.9 From the above it is revealed that it is not the case that the AO has not made any enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of cash deposited during the demonization period. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the AO had made enquiries and after consideration of materials placed on record accepted the genuineness of the claim of the assessee. 7.10 At this juncture, it is also important to note that the learned PCIT in his order passed under section 263 of the Act has made reference to the explanation 2 of section 263 of the Act. It was attempted by the learned PCIT to hold that there were certain necessary enquiries which should have been made by the AO during the assessment proceedings but not conducted by him. Therefore, on this reasoning the order of the AO is also erroneous insofar prejudicial to the interest of revenue. In this regard, we make our observation that the learned PCIT has also not specified the nature and the manner in which the enquiries which should have been conducted by the AO in the assessment proceedings. Thus, in the absence of any specific finding of the learned PCIT with respect to the enquiries which should have been made, we are not convinced by his order passed under section 263 of the Act.”

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10 15. Clearly, therefore, it is discernible that during assessment-proceeding, the Ld. AO raised queries on the issues pointed out by Ld. PCIT; the assessee made replies / submissions; and those submissions were duly accepted by Ld. AO who had taken a plausible view on the issue. Therefore, in the light of above decision in ITAT, Rajkot Bench, the assessment-order cannot be termed as erroneous-cum-prejudicial.

Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 06/12/2022.

Sd/- Sd/-

(CHANDRA MOHAN GARG) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore �दनांक /Dated : 06.12.2022 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY

Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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Roop singh Tanwar ITA No.52/Ind/2020 Assessment year 2009-10

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