ITO, WARD-6(1)(1), AHMEDABAD, AHMEDABAD vs. PARULBEN RAJUBHAI TRIVEDI , AHMEDABAD

(Assessment Year: 2013-14) Income Tax Officer, Vs. Parulben Rajubhai Trivedi, Ward-6(1)(1), 301, Amulya Apartment, 17, Ahmedabad Prakashnagar Society, Maninagar, Ahmedabad-380008 [PAN No.ADOPT3852E] (Appellant) .. (Respondent) Shri Rignesh Das, Sr. DR Appellant by : Respondent by: Shri Biren Shah & Shri Gulab Thakor, A.Rs. Date of Hearing 07.10.2024 Date of Pronouncement 23.10.2024 O R D E R

PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:

“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 4,37,06,334/- made u/s. 68 of the Act.

2. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary.

3. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored.”

ITO vs. Parulben Rajubhai Trivedi Asst.Year –2013-14 - 2– However, Principal CIT later discovered that the assessee had purchased land for which her claimed share was Rs. 4,37,06,334/-, financed through unsecured loans. The assessment was therefore set aside by Principal CIT on the ground that it was erroneous and prejudicial to the interest of the Revenue, due to the lack of verification regarding the creditworthiness of the loan providers. Following the directions of Principal CIT in the 263 order, the Assessing Officer asked the assessee to provide details regarding the loans, but the assessee failed to respond adequately. Inquiries by AO revealed that the primary source of the funds for the land purchase was a loan from Smt. Kirtiben Patel, who, in turn, claimed to have sourced the funds from another party. Investigations into Kirtiben Patel's financial background indicated she lacked the creditworthiness to extend such a substantial loan. The assessee's response, which included supporting documents and judicial citations, was found unconvincing to the Assessing Officer. Accordingly, the Assessing Officer added the loan amount of Rs. 4,37,06,334/- to the income under Section 68 of the Income Tax Act, with separate penalty proceedings being initiated for providing inaccurate particulars of income.

“5. I have carefully considered the relevant and material facts on record, in respect of these grounds of appeal, as brought out in the assessment order and submissions made during appeal proceedings. The assessment order dated 26.12.2018, which is subject matter of this appeal, was passed in pursuance to the revisional order dated 26.03.2018 passed under section 263 by the Pr. CIT, Ahmedabad-6. The appellant had preferred an appeal against the said revisional order under section 263 before Hon'ble ITAT, Ahmedabad. The Hon'ble ITAT, Ahmedabad vide order dated 28.03.2019 passed in in appellant's own case for Assessment Year 2013-14 has quashed the revisional order and allowed the appeal of assessee. The operating part of the judgment is reproduced as under, - "8.7 In the context of the issue involved, we a/so take note of the decision rendered by Hon'ble Bombay High Court in the case of CIT vs. Nirav Modi 390 ITR 292 (Bom.) where in somewhat similar circumstances, the decision of the Tribunal to cancel the order passed under section 263 of the Act was upheld. Thus, driven by the precedent, where the inquiry of 'source of source' is not found to be the requirement of law, the alleged inadequacy in this respect should not be fastened on the assessee. Notwithstanding, any doubt in the capacity of the lender would ordinarily invite action against the lender who is shown to have received money through banking channel from other source prior to its lending and is also a regular tax assessee. Therefore, the prejudice contemplated under section 263 of the Act, if any, is qua the lender and not the assessee.

9. We are also alive to clause (a) of Explanation (2) to Section 263 of the Act inserted by Finance Act, 2015 w.e.f. 01.06.2015 which seeks to clarify that the order passed by the lower authorities to be erroneous in so far as prejudicial to the interest of the Revenue in the event of absence of inquiry which should have been made. The aforesaid clause only provides for situation where inquiries or verifications should be made by reasonable and prudent officer in the context of the case. Such clause cannot be read to authorize or give unfettered powers to the Revisional Commissioner to revise each and every type of mistake in an order. The applicability of the clause is thus essentially contextual. As observed in the preceding paras, even if inquiry with regard to source of source is omitted to be carried out, the provisions of Section 68 of the Act cannot be automatically fastened on the assessee. No objective material has been brought on record to implicate the assessee per se. Thus, seen from any angle, the assessment order passed under section 143(3) of the Act cannot be frustrated in the circumstances. Revisional order thus requires to be quashed and set aside." 5.1 In view of the above, there remains no basis to sustain the additions made by the AO in the fresh assessment order, which is subject matter of this appeal; as the revisional order under section 263 itself stands quashed by the Hon'ble ITAT, Ahmedabad vide order dated 28.03.2019 (Supra). Therefore, the Jurisdictional Assessing Officer (JAO) is hereby directed to delete all the additions made in the fresh assessment order dated 26.12.2018.

6. In the result, the appeal of the Department is dismissed. This Order pronounced in Open Court on 23/10/2024