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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, JM &DR. A.L.SAINI, AM
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM &DR. A.L.SAINI, AM आयकरअपीलसं./ITA Nos.58 & 59/SRT/2021 (िनधा�रणवष� / Assessment Years: (2016-17& 2017-18) (Physical Court Hearing) Hilton Group, Vs. The PCIT (Central), FP 56-57, TP 37, Block No. Surat. 1168/B, Variyav Adajan, Surat- 394 530, Gujarat. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAIFH9885N (Appellant) (Respondent)
आयकरअपीलसं./ITA Nos.60 to 62/SRT/2021 (िनधा�रणवष� / Assessment Years: (2015-16 to 2017-18) Ashokbhai Narshibhai Patel, Vs. The PCIT (Central), D-1002, Swastik Tower, Sarthana Surat. Jakatnaka, Varachha Road, Surat- 395006. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AMFPP6752R (Appellant) (Respondent)
आयकरअपीलसं./ITA Nos.191&192/SRT/2021 (िनधा�रणवष� / Assessment Years: (2016-17& 2017-18) Ramesh Kumar Gordhan Kathiriya, Vs. The PCIT (Central), E-301, Swastik Tower Sarthana, Surat. Jakatnaka, Varachha Road, Surat- 395006. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AJWPK7034P (Appellant) (Respondent)
Assesseeby :Shri Rasesh Shah & P. M. Jagasheth, CA Revenueby :Shri Ritesh Mishra, CIT(DR) सुनवाईक�तारीख/ Date of Hearing :09/12/2021 घोषणाक�तारीख/Date of Pronouncement : 21/01/2022
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: In these seven appeals, group assessees have challenged the correctness of the orders passed by the Learned Principal Commissioner of Income Tax(Central), Surat [“ld.PCIT” in short], under section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2.Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.60/SRT/2021 for assessment 2015-16, in the case of Ashokbhai Narshibhai Patel, have been taken into consideration for deciding the above appeals en masse.
3.The grounds of appeal raised by the assessee in lead case (in ITA No.60/SRT/2021 for AY.2015-16), are reproduced below: “1. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has grievously erred in initiating the proceedings u/s263 of the Act, 1961. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has grievously erred in assuming jurisdiction u/s263 of the Act, 1961. 3. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has erred in violating the principles of natural justice by not mentioning the grounds for initiating action u/s263 of Income Tax Act, 1961 in the show cause notice issued. As such the order passed u/s263 is void ab-initio. The action of the Ld. CIT was wholly unreasonable, uncalled for the bad in law. 4. On the facts and in the circumstances of the case as well as law on the subject, that the order of u/s263 is merely 'change in opinion'. The order u/s 143(3) rws.153A of the Income Tax Act passed by the Ld. AO does not in any way represent erroneous order. The action of the Ld. Pr. CIT was wholly unreasonable, uncalled for and bad in law. 5. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax has grievously erred in assuming that the Assessing Officer had not verified and inquired incriminating documents / evidences found and impounded /seized during the course of search and seizure action u/s 132 of the Act, which was already available with him and Annual
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 financial statement of the assessee during the course of assessment proceeding u/s 143(3) r.w.s 153A of the Income Tax Act, 1961 and not made proper inquiry or verification finalized the order of assessment u/s143(3) rws153A of the I.T. Act is contrary to the fact of the case. 6. On the facts and in the circumstances of the case as well as law on the subject, the entire proceedings are bad-in-law and invalid as assessment order u/s143(3) rws.!53A of the Act for the same year were framed, wherein due inquiry was made. 7. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of Income Tax has grievously erred in setting aside the assessment order framed u/s143(3) r.w.s. 153A of the I.T. Act without pointing out as to how the order is erroneous and prejudicial to interest of revenue. 8. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax has grievously erred in cancelling the order and directing to the AO to make a fresh assessment without pointing out as to how the order is erroneous and prejudicial to interest of revenue. 9. It is therefore prayed that the above proposed proceedings may please be revoked as learned members of the tribunal may deem it proper. 10. Appellant craves liberty to add, alter or delete any ground (s) either before or in the course of the hearing of the appeal.”
4.At the outset, Learned Counsel for the assessee informs the Bench that assessee does not wish to press ground no.3 raised by it in all seven appeals, therefore we dismiss ground no.3 raised by the assessee, as not pressed.
5.The facts necessary for disposal of these appeals are stated in brief. Assessee before us is an Individual. In assessee`s case, the assessment under section 143(3) r.w.s.153A of the Income-tax Act, 1961,for A.Y.2015-16, was framed by the assessing officer on 29.12.2018, by accepting his return of income.
Later, Learned Principal Commissioner of Income Tax, [in short “ld. PCIT”], has exercised his jurisdiction under section 263 of the Income Tax Act, 1961. The ld. PCIT observed that a search and seizure action under section 132 of the Act, was conducted in the case of SRK Group, firm and its related group entities/partners at Surat, on 19.07.2016, along with survey action under section 133A of the Act, at the office premises of the entities and the construction projects carried on by them. In the said operation, a search and seizure action under section 132 of the Act, was
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 carried out in the case of the assessee, at his residential premises. During the course of search and seizure action, in the cases of Shri Manish Sheladiya, Shri Karnlesh Babubhai Bhesania, Shri Jignesh Radadiya, various incriminating documents related to unaccounted income earned by assessee were found and seized/impounded from the business premises of M/s Radhika Builders and M/s Radhika Construction.On account of search and seizure action u/s 132 of the Act carried out in the case of the partners of the firm and survey action in the case of the firm and also on account of various incriminating documents found and impounded/seized in the course of the proceedings, assessee's case was also centralized with the DCIT, Central Circle-3, Surat for coordinated and sustained enquiries along with other group cases. Notice under section 153A was issued by the assessing officer on 20.09.2018. The assessment proceedings were finalized under section 143(3) r.w.s. 153A of the Act on 29.12.2018, accepting the income of Rs.12,21,940/- filed in response to notice u/s153A of the Act.
7.On going through the assessment order, assessment record and related seized documents/impounded documents, statements given by various persons it had been noticed by ld PCIT, that assessment made by the Assessing Officer, dated 29-12- 2018 is erroneous in so far as it is prejudicial to the interest of revenue and accordingly a show cause notice under section 263 of the Act, dated 16-03-2021, was issued to the assessee. The relevant para of the show cause notice is reproduced as under:
"On perusal of the case records and details/evidences available on records, it is observed the Assessing Officer has failed to carry out proper enquiries or verification in respect of the following issues: On perusal of various incriminating documents seized from the your residence and residence of Shri Manish Sheladiya, Shri Kamlesh Babubhai Bhesania, Shri Jignesh Radadiya and impounded from the business premises of M/s. Radhika Builders and M/s, Radhika Construction, it has been observed that the same has not been properly examined by the then Assessing Officer. The details of the above said documents are as under: ForA.Y.2015-16 Annexure BS-87 seized from the residence of Shri Manish Sheladiya, located at Flat no. E-203, Swastik Towers, Sarthana Jakatnaka, Surat, reveals that Shri Ashok N Patel has advanced cash loans of Rs. 2,00,000/- and Rs. 2,00,000/- on 22.10.2014 and 01.11.2014, repectively, to M/s. Amrut Sarovar. The above amount of Rs.4,00,000/- so advanced in
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 cash by Shri Ashok Patel is unaccounted. The AO may consider adding this amount of Rs.4,00,000/- to the total income of Shri Ashok Narshibhai Patei in A.Y. 2015-16. The A.O. has not examined the source of making such advance/loan in cash as assessee has not furnished such details/evidence. The seized document clearly mentions that loan was advanced by assessee on which interest has also been paid from time to time. In spite of having the above incriminating documents/evidences on record and also having gone through the same, the Assessing Officer has not carried out proper verification on enquiries on the same. This shows lack of application of mind and lack of enquiries while finalizing the assessment proceedings.”
In response to the above show cause notice, the assessee submitted that all the details called by the AO has been duly submitted and the same was accepted by the AssessingOfficer. During the course of assessment proceedings complete details and explanation in respect of the impounded material was submitted which has been duly considered by the Assessing Officer before finalizing the assessment. Therefore, none of the above conditions are satisfied in this case. It is further submitted that there is difference between lack of inquiry and inadequate inquiry and it is only in cases of lack of enquiry that the PCIT can exercise his revisional jurisdiction. It is submitted that the Id. AO has exercised his quasi-judicial power in accordance with law and arrived at a conclusion after making due enquiries and verification in respect of the entries found in the documents seized / impounded. Thus, the issue has been adequately enquired and dealt upon and then passed order u/s. 143(3) r.w.s. 153A of the Act accepting return of income. Hence the question of having a contrary view as against one of the legal, valid and fully dealt upon issued by the Id AO based on the law and the judicial pronouncements does not arise. It has been requested to quash the proposed proceedings u/s. 263 of the Act. 9. However, ld PCIT rejected the contention of the assessee and held that AO has completed the assessment on 29.12.2018 accepting the return income on the basis of submissions made and details collected. This shows that assessment order has been made in haste and assessing officer did not apply his mind. Therefore, ld PCIT held that assessment order in the case of the assessee for AY.2015-16, passed
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 on 29-12-2018 u/s 143(3) r.w.s. 153A of the Act, is erroneous in so far as it is prejudicial to the interest of revenue. 10. Aggrieved by the order of the Ld. PCIT, the assessee is in appeal before us
Shri Rasesh Shah and Shri P. M. Jagasheth, Learned Counsels for the assessee, plead that Co-ordinate Bench of ITAT, Surat, in the case ofShri Bhavesh D. Paghdal and others, in ITA Nos.69 to 87 and 95 to 99/SRT/2021, order dated 30.09.2021 has quashed the twenty four orders passed by ld PCIT under section 263 of the Act. These present seven assessees are part of the said group appeals and there is no difference in facts and issues raised by ld PCIT under section 263 of the Act.Since the similar, identical and connected issues have been adjudicated by the Coordinate Bench in ITA Nos.69 to 87 and 95 to 99/SRT/2021, therefore, these seven appeals under consideration are squarely covered by the judgment of the Coordinate Bench. Both the ld Counsels further argue that in case of main partners, namely: Radhika Construction, Radhika Infrastructure and Radhika Corporation, this Tribunal has already quashed the orders passed by the PCIT under section 263 of the Act.Therefore, both the learned Counsels pray the Bench thatqueries and issues raised by ld PCIT are common and identical, hence orders passed by ld PCIT may be quashed.
12.On the other hand, Learned Departmental Representative (ld. DR) for the Revenue argues that there was no further inquiry made by the Assessing Officer in the course of assessment proceedings on the points raised by the Commissioner and, therefore, invoking of section 263 was quite justified.The ld. DR submitted that ld. PCIT has passed the speaking order and narrated the facts in para no.7.4, 7.5 and 7.6 of the revision order under section 263 of the Act, therefore the revision order passed by the ld. PCIT may be upheld.
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 PCIT and other materials brought on record. We find merit in the submission of ld Counsels and note that various issues raised by ld PCIT, in these present seven appeals, have been examined and adjudicated by the Coordinate Bench in the group case of Shri Bhavesh D. Paghdal and others, in ITA Nos.69 to 87 and 95 to 99/SRT/2021, order dated 30.09.2021, thus these seven appealsare squarely covered by the aforesaid order of the Tribunal.We see no reasons to take any other view of the matter than the view so taken by the Coordinate Bench of this Tribunal in ITA Nos.69 to 87 and 95 to 99/SRT/2021 (assessees own group cases). In this order, the Tribunal has inter alia observed as follows:
“10. We have heard both the parties and carefully gone through submissions put forth on behalf of assessee along with documents furnished and the case laws relied upon and perused the facts of the case including the findings of the Ld. PCIT and other materials brought on record. First of all, we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is there existing before the Pr. CIT to exercise his power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedents laid down by the Hon’ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer’s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer’s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon’ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. “prejudicial to the interest of the revenue’’ has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue “unless the view taken by the Assessing Officer is unsustainable in law”.
Taking note of the aforesaid dictum of law laid down by the Hon’ble Apex Court, let us examine in each case whether assessing officer has raised query during the assessment stage and assessee has submitted reply with documentary evidences during the assessment proceedings and these documentary evidences have been examined by the assessing officer. We will take each case of the assessee to see whether assessing officer has applied his mind and have examined the various issues raised by the ld PCIT in his order under section 263 of the Act: (1).(a)In case of Shri Vallabhabhai B. Paghdal, we note that in ITA No.81/SRT/2021, for AY 2012-13, the assessee has submitted documents regarding unaccounted investment of Rs.37,00,000/- in relation to Block No.387 of Morthan, Olpad area. The same is part of AO`s show cause notice vide para-no.5.1.We note that assessee has submitted the reply to the Assessing Officer during the assessment stage, vide paper book page nos.97 to 126. (b)In case of ITA No.82/SRT/2021, for AY 2013-14, the issue to exercise the jurisdiction u/s 263 of the Act was non-verification of cash payment, investment and cash withdrawal. Apart from this, the issue relating to investment of Rs.55,00,000/- in BMW Car. We note that the cash payment and investment and source of
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 investment of Rs.55,00,000/- in BMW Car have been adequately explained by the assessee in response to reply of notice u/s 142(1) of the Act. Therefore, order cannot be erroneous on this count. (c ).In respect of ITA No.83/SRT/2021, for AY 2014-15, the main issue raised by the Ld. PCIT in his order passed u/s 263 of the Act was payment of purchase of land, in Block 514, 515,516/1 and 516/2 of Rs.2.75 crores of Khator village. The second issue raised by the Ld. PCIT was payment of purchase of land Block No.518, 519 and 522A of Rs.2,71,41,970/- of Khator village. In addition to this, Ld.PCIT has raised the issue about non-verification of cash loan advance to partnership firm and validity of disclosure under IDS. We note that all issues were questioned by the Assessing Officer during the assessment stage, by way of notice u/s 142(1) of the Act and assessee has replied the same during assessment proceedings. (d).In ITA No.84/SRT/2021, for AY 2015-16, we note that Ld. PCIT has raised the issue regarding payment for the purchase of land in Block No.514, 515, 516/1 & 516/2 of Rs.2,28,36,707/- of Khator village and payment for purchase of land in Block No.518, 519 & 522A of Rs.18,41,363/- of Khator village. The Ld. PCIT also raised the issue about the non-verification of Annexure-BS-39 and 87 and income disclosed under IDS. Undisclosed capital gains on sale of land and validity of disclosure under IDS were also raised by the Ld. PCIT. We note that during the assessment stage, the Assessing Officer issued show-cause notice u/s 142(1) of the Act and assessee has submitted its reply during the assessment stage. Therefore, assessee has submitted each evidence before the Assessing Officer, and AO has examined the same. (e)In respect of ITA No.95/SRT/2021,for AY 2016-17, the Ld PCIT has raised the issue regarding cash payment of booking of plot at Rs.9.50 lakh and undisclosed capital gains on acquisition of land which was transferred by assessee on book value. The Ld. PCIT has also raised the issue regarding deduction u/s 57 of the Act, validity of disclosure made under IDS, gift from wife of Rs.10 lakh, interest on reward on compulsory acquisition of land of Khator village, increase in value of Khator land in AY 2017-18, payment for the purchase of land, Block No.514, 515, 516 of Rs.47,29,960/- relating to Khator village etc. The Ld PCIT also raised the issue relating to non-verification of source of loan of Rs.9,89,000/- to M/s Amrut Sarovar. The ld Counsel explained that these issues raised by Ld. PCIT were examined by the Assessing Officer, as the Assessing Officer has issued the notice u/s 142(1) of the Act and assessee submitted his reply in response to Notice u/s 142(1) of the Act which is placed at paper book page 58 and 87 regarding cash payment of booking of plot. The other relevant evidences are placed at paper book page nos. 105 and 58 respectively. Therefore, we note that assessee has submitted each and every evidence before the Assessing Officer on the issue raised by the Ld. PCIT. (f) In respect of ITA No.96/SRT/2021 for AY 2017-18, the Ld. PCIT has raised the issue mainly for cash payment of booking of plot of Rs.9,50,000/- which is placed at paper book page 104 and PB page 139. About the undisclosed capital gains due to conversion of capital asset to stock-in-trade, Ld. Counsel for the assessee submits that same has been transferred on book value, therefore it does not attract capital gain. About the increase in relation to Khator land in AY 2017-18, Ld. Counsel for the assessee submits before us that the transfer was made on book value, therefore there is no addition on account of capital gains. Hence, we note that assessee has submitted the relevant documentary evidences before AO, therefore, order passed by Assessing Officer should not be erroneous. (2). (a) In respect of Shri Navinchandra G Topia in ITA No.74/SRT/2021, for AY 2015-16, we note that the Ld. PCIT has raised the issue relating to source of loan advance to firm of Rs.50 lakh on 05.04.2014 and source of advance to firm of Rs.3 crores on 12.12.2014 and source of loan advance to firm of Rs.3 crore on 01.01.2015.We note that about source of loan advance to firm the Ld. Counsel for the assessee demonstrated that the issue has been examined by the Assessing Officer vide paper book pages 92 and 63 respectively. The source of advance to firm of Rs.3 crore has also been examined by the Assessing Officer vide paper book page 89 and 61 respectively. During the assessment stage, the Assessing Officer has raised the query and assessee has submitted the reply along with documentary evidences. (b)In respect of ITA No.75/SRT/2021,for AY 2016-17, Ld. PCIT has raised the issue mainly for understatement of income of Rs.7,96,86,000/-. Ld. PCIT also raised the issue relating to source of loan advanced to firm of Rs.10 lakh and Ld. PCIT also observed that Assessing Officer has not initiated penalty proceedings u/s 269SS and 269TT of the Act. The ld Counsel has submitted the relevant evidences before the Bench, vide paper book page 89 and paper book page nos. 8 to 11 of the paper book submitted by the assessee. The Ld. Counsel for the assessee also explained that the booking advance has been received by the assessee on business account therefore no penalty should be levied, as the booking advance is part of the business receipts of the assessee which has been duly explained by the assessee during the assessment stage, vide paper book pages 89 and 61 respectively.
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18
(c) In respect of ITA No.76/SRT/2021 for AY 2017-18, we note that Ld. PCIT has raised the issue about repayment of loan and interest to the tune of Rs.28,96,730/- and receipt of interest of Rs.23,500/-. The Ld. PCIT has also noted that AO had not initiated penalty u/s 269SS of the Act. We note that assessee has submitted the relevant documentary evidence in respect of repayment of loan and interest, vide paper book 90 and 62.Theld Counsel has also explained receipt of interest of Rs.23,500/- which is placed at paper book page no. 62. Therefore Ld. Counsel for the assessee submits that assessee has submitted relevant documentary evidences during the assessment stage, in response to notice u/s 142(1) of the Act. Therefore, order passed by the Assessing Officer should not be erroneous. (3) (a).In respect of Shri Mukesh A Moradiya, in ITA No.78/SRT/2021, for AY 2017-18, we note that Ld. PCIT has raised the issue regarding non-verification of transaction of sale of Rs.7,96,86,000/- along-with other co-owners. The Ld. PCIT also observed that cash deposit of Rs.8.50 lakh in HDFC bank has not been examined by the Assessing Officer. The Ld. Counsel for the assessee submits that for AY 2016-17, assessee has submitted the relevant documentary evidence before the Assessing Officer which is placed at paper book 50, 37 and 44 and page 62 respectively. Therefore, Assessing Officer has examined each documentary evidence submitted by the assessee. (b) In respect of ITA No.77/SRT/2021, for AY 2016-17, we note that Ld. PCIT has raised the issue regarding non-verification of transaction of sale of Rs.7,96,86,000/- along-with other co-owners. Ld. PCIT has also raised the issue for cash deposit of Rs.14,08,000/- in HDFC bank. The Ld. Counsel for the assessee submits before us that cash deposit in HDFC bank is a part of regular books of account and it is getting reflected in the cash book of the assessee. Therefore, this issue has been examined by the Assessing Officer. The assessee also submitted the relevant documentary evidence regarding sale of Rs.7,96,86,000/- along-with other co-owners vide paper book page 50, 37, 44 and 62 respectively. Therefore, Assessing Officer has examined the issue during the assessment stage. (4)(a)Regarding Shri Amita Kamlesh B Bhensania in ITA No.80/SRT/2021 for AY 2017-18, the Ld. PCIT has raised the issue about investment of Rs.1,59,84,800/- in Mangal Murti Complex and payment for purchase of land Block 494 at Kamrej. The Ld. PCIT has also raised the issue about non-verification of cash loan of Rs.4,63,475/- as per Annexure A1 and B1 respectively. The Ld. PCIT also observed that Assessing Officer has not verified the sale of Rs.66,66,666/- along-with other co-owners. The Ld. PCIT also noted that Assessing Officer has not initiated penalty u/s 271D of the Act. We note that about investment in Mangal Murti Complex, the assessee submitted the relevant evidences which are placed at paper book page 85, 58, 26 and 60 and paper book page 41 submitted by assessee. In respect of payment for purchase of land in Block 494, we note that assessee has submitted relevant documentary evidence which is placed at paper book page 41, and in respect of non-verification of cash loan of Rs.4,63,475/- as per Annexure A1 and B1, the assessee has submitted the relevant documentary evidence before the Assessing Officer which is placed at paper book 95 and 65. About the non-verification of transaction of sale of Rs.66,66,666/- alongwith other co-owners, the assessee has submitted the relevant documentary evidences. The Ld. Counsel for the assessee also submits that there should not be any penalty u/s 271D of the Act as all the transaction made by the assessee were relating to business and therefore no penalty should be levied. (b).In ITA No.79 and 99/SRT/2021, for AY 2016-17 the Ld. PCIT has raised the issue about payment for purchase of 22 bighas of land at Rajkot of Rs.52,25,000/- along-with other co-owners. The Ld.PCIT has also raised the issue about non-verification of transaction of sale of Rs.7,96,86,000/- along-with other co- owners. The Ld. Counsel for the assessee submits that assessee has submitted the relevant documentary evidences during the assessment stage which is placed at paper book 85, 39 and 59 respectively. During the assessment stage, the Assessing Officer has examined these issues, therefore order passed by the Assessing Officer should not be erroneous. (5). (a)In respect of Shri Bhavesh D Paghdal, in ITA No. 98/SRT/2021, for AY 2017-18 the Ld. PCIT has raised the issue about unsecured loan of Rs.13,52,87,926/- and interest payment of Rs.73,48,375/- thereon. The Ld. PCIT also raised the issue about capital introduction of Rs.1,00,55,167/- in SRK group. The Ld. PCIT also noted that there should be capital gains due to conversion of capital assets into stock-in-trade. We note that assessee has submitted the relevant documentary evidences before the Assessing Officer in respect of unsecured loan and interest thereon and in respect of capital introduce in SRK group, which is placed at paper book page no. 123. The Ld. Counsel for the assessee submits that in respect of capital gains due to conversion of capital asset into stock-in-trade, the conversion was made on the book value, therefore there should be any capital gains tax, as the capital gains tax may arise when the stock-in-trade is sold. Therefore, Ld. Counsel for assessee submits that assessee has submitted documentary evidences during the
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 assessment stage and Assessing Officer has examined the same and taken the possible view. Therefore, assessment order passed by the Assessing Officer should not be erroneous. (b)In respect of ITA No.71/SRT/2021, for AY 2016-17, the Ld. PCIT has raised the issue relating to payment for purchase of land, Block No.514, 515, 516/1 and 516/2 of Rs.47,29,960/- of Kathor village and payment for purchase of land for Block No.518, 5119 & 522A of Rs.89.50 lakh of Kathor village. The Ld. PCIT also noted that assessee has not explained the source of investment of Rs.2,85,333/- and Rs.2,99,166/- in Block No.411 and 406 respectively in village Hathoda, Mangrol. The ld Counsel has submitted the relevant documentary evidences during the assessment stage, which is placed at paper book page no. 82 and 240 respectively. We note that the issue relating to purchase of land in Kathor village is a common issue in all the appeals, wherein the assessee has explained with documentary evidences before the Assessing Officer during the assessment stage. Therefore, order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the revenue. (c) In respect of ITA No.70/SRT/2021, for AY 2015-16, the Ld PCIT has raised the issue about payment for purchase of land, Block No.514, 515 &516 of Rs.2,28,36,707/- of Kathor village and payment for purchase of land Block No.518, 519 and 522A of Rs.18,41,363/-.The PCIT also raised the issue relating to source of investment of Rs.27.50 lakh in land at Block No.318, 319 and 324 at Kholvad village with co-owners Harsukh Bhanderi. We note that Ld. PCIT has also raised the issue about cash loan of Rs. 2 lakh and also noted that Assessing Officer has not initiated the penalty proceedings u/s 271D of the Act. The Ld Counsel for the assessee explained before the Bench that the issue relating to purchase of land at Kathor village, is a common issue in all the appeals and Ld. PCIT has raised this common issue in all the appeals, however assessee has explained with documentary evidences before the Assessing Officer and explained the source of investment in respect of Kathor village. The Ld. Counsel for the assessee also explained the unaccounted cash loan of Rs.2 lakh. The Ld Counsel states that since the transaction was in the course of business and these were explained before the Assessing Officer. Therefore, there is no question of initiating penalty u/s 271D of the Act. (d) In respect of ITA No.69/SRT/2021, for AY 2014-15, the Ld. PCIT has raised the issue about purchase of land, Block No.514, 515 & 516/1 & 516/2 at Rs.2.75 crores of Kathor village. The Ld. PCIT also raised the issue regarding payment for the purchase of land, Block No.518, 519 and 522A of Rs.2,71,41,970/- situated at Kathor village. The Ld. PCIT noted that there was cash receipt of Rs.1.05 crore and payment of Rs.3 crores made to Shri Govindbhai Vekariya, which, as per Ld. PCIT has not been examined by the Assessing Officer. The Ld. Counsel for the assessee submits that all the transactions relating to purchase of land at Kathor village and cash receipt of Rs.1.05 crores and payment of Rs.3 crore to Shri Govindbhai Vekariya have been explained properly during the assessment stage by submitting relevant documentary evidences. Therefore, the order passed by the Assessing Officer should not be erroneous. (6) (a) In respect of Jigneshkumar D Radadiya, in ITA No.97/SRT/2021, for AY 2015-16, the ld PCIT observed that there is cash loan and expenses, which were not examined by the assessing officer. The Ld. Counsel for assessee submits that cash loan and expenses were duly supported by the documentary evidences which were submitted by the assessee before the Assessing Officer. This cash loan and expenses partly explained by assessee as a part of sale of mango. The Assessing Officer made adequate inquiry during the assessment stage and assessee has submitted the relevant documentary evidences before the Assessing Officer. (7) In respect of Harsukhbhai Vallabhai, in ITA Nos.85,86,87/2021, the same issues were raised by the ld PCIT which are duly examined by the assessing officer. In respect of Kapil Kumar in ITA No.72,73/2021, the same issues were raised by the ld PCIT which are duly examined by the assessing officer. Therefore, Ld Counsel for the assessee submits that order passed by the Assessing Officer should not be erroneous.
We are aware of the fact that Assessing Officer’s role while framing an assessment is not only an adjudicator. The AO has a dual role to dispense with i.e. he is an investigator as well as an adjudicator; therefore, if he fails in any one of the role as afore-stated, his order will be termed as erroneous. We note that in these group cases, the assessing officer has issued notice under section 142(1) of the Act and in response to notice under section 142(1) of the Act, the assessee has submitted documents and evidences which were examined by the assessing officer and while examining the assessing officer has applied his mind also. On this finding of fact by us, we cannot term the assessment order passed by the AO u/s 153A/143(3), as erroneous.
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 13.It is pertinent to mention here that there was as such no allegation of ‘no enquiry’ or ‘lack of enquiry’ or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O.’s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. The main allegation of ld PCIT in his order under section 263, was that assessing officer has not made further inquiry. It means inquiry has been made by the assessing officer. The ld Counsel at this juncture submitted before the Bench that there is no end of further inquiry, the assessing officer whenever needed made further inquiry also. It is the domain of the assessing officer to decide, whether further inquiry is needed or not in a particular case. After getting the documents and information from the assessee, during the assessment proceedings, the assessing officer has examined the documents and evidences and applied his mind, and he made further inquiry also whenever he thinks fit that further inquiry is necessary and then framed the assessment under section 143(3) r.w.s. 153A of the Act.
We note that notices issued by assessing officer under section 142(1) of the Act, for examination of the issues during the assessment proceedings and submission of documents and evidences by assessee and verification of the same by assessing officer have not been shown and demonstrated by ld PCIT, to be fallacious. In this connection it is pertinent to mention here that the way in which assessment should be finalized falls in the exclusive domain of the Assessing Officer. Section 142(1) of the Act speaks of inquiry before assessment and gives immense power to the Assessing Officer for conducting enquiry. Therefore, the Assessing Officer, under section 142(1)(ii) and (iii) of the Act, can ask the assessee almost any information which he things necessary for passing assessment and even if Ld. PCIT has such results of enquiries, the resultant order cannot be subjected to revision proceedings. Therefore, the very initiation of proceeding u/s 263 of the Act by the Ld. Pr. C.I.T. is in violation of the settled position in law. When the conditions precedent for invoking revisional power u/s 263 of the Act on the facts and in the circumstances of the case are not fulfilled in the case of the assessee, the subsequent action in passing the order u/s 263 on such invalid proceeding becomes null and void. Reliance is placed on the following decisions, the ratios of which are totally applicable to the facts of the assessee’s case: (1) Smt. Juthika Kar vs. ITO [I.T.A. No.1128/Kol/ 2009, dated 16.5.2012] “8. With the leave and consent of my learned brother, however, I may add a few words to my learned brother’s analysis of Hon’ble Delhi High Court’s judgment in the case of Gee Vee Enterprises (supra). Undoubtedly, as noted by their Lordships in that case, an Assessing Officer cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. In such a case, revision proceedings can indeed be initiated and there seems to be no serious controversy in this respect. The fine point, however, one must bear in mind is the distinction between adequate enquiries not having been conducted and the result of such enquiries not having been dealt with by way of a speaking order or not having resulted in the conclusion that could be, in the wisdom of a person other than the Assessing Officer, more appropriate. Here is a case in which sufficient enquiries were conducted. As learned brother has rightly noted, the Assessing Officer called for specific details, confirmations and even copies of bills. It could not, therefore, be said that sufficient enquiries were not conducted. However, what is opinion formed as a result of these enquiries is something which is in exclusive domain of the Assessing Officer, and even if Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. The conclusions arrived at as a result of enquiries cannot be tinkered with in the revision proceedings. The conclusions being drawn up as a result of enquiry is a highly subjective exercise and as to what is appropriate conclusion is something on which perceptions vary from person to persons. These variations in the perceptions of the Assessing Officer vis-à-vis that of the Commissioner, cannot render an order erroneous and prejudicial to the interest of the revenue. 9. Viewed in this perspective, and having noted that the Commissioner has subjected the assessment order mainly on the ground that the Assessing Officer did not reach the right conclusions as a result of his enquiry, the impugned revision order is indeed unsustainable in law. It is not a case in which adequate enquiries has not been carried out.” [Emphasis given] (2) CIT vs. J.L. Morrison (India) Ltd. (2014) 366 ITR 593 (Cal) “85. Whether the assessment order dated March 28, 2008, was passed without application of mind is basically a question of fact. The learned Tribunal has held that the assessment order was not passed without application of mind. The records of the assessment including the order-sheets go to show that appropriate enquiry was made and the Assessee was heard from time to time. In deciding the question the court has to
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 bear in mind the presumption in law laid down in section 114 clause (e) of the Evidence Act : “that judicial and official acts have been regularly performed.” 86. Therefore, the court has to start with the presumption that the assessment order dated March 28, 2008, was regularly passed. There is evidence to show that the Assessing Officer had required the Assessee to answer 17 questions and to file documents in regard thereto. If the A.O. cannot be shown to have violated any form prescribed for writing an assessment order, it would not be correct to hold that he acted illegally or without applying his mind.” [Emphasis given]
We note that section 263 of the Act speaks of revision of orders prejudicial to revenue. As per the said section and various judicial precedents including those of Hon’ble Apex Court in the cases of Malabal Industrial Co. Ltd. vs. CIT (243 ITR 83) and CIT vs. Max India Ltd. (295 ITR 282), in order to invoke provisions of section 263 of the Act, twin conditions need to be satisfied exhaustively, viz. first, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. Such occasions arise when the A.O. while passing assessment order u/s 143(3) r.w.s 153A did not have called for such information/ documents from the assessee to frame the assessment and did not consider the same before completing the assessment. Once the A.O. conducts enquiry as deem fit to complete the assessment u/s 143(3) r.w.s.153A and takes a possible view on such enquiry and consideration of facts and explanation of the assessee, in that case, jurisdiction to invoke provisions of section 263 does not lie. As stated above, during the course of the scrutiny assessment proceeding, the assessee furnished full details of land at Khator village, investments, amount advanced and amount received, balances shown in ledger accounts and books of accounts, details of capital gains, trading activities, party-wise break-up of debit and credit entries/balances of sundry debtors and creditors, audited books of account, notes of the financial statements, , bank details, quarterly VAT returns etc., which were as well filed before the Ld. Pr. C.I.T. during 263 proceeding. The A.O. also raised further queries to establish genuineness of sales, purchases, advances received and paid, investments in land, gift, cash deposit in bank out of assessee`s own fund, debtors and creditors etc, during the year. Considering all these facts and hearing the A.R. of the assessee on various dates, the impugned assessment order under section 143(3) r.w.s.153A was passed by the assessing officer. Therefore, the order so passed by the assessing officer is based on reasonable and plausible view, which cannot be termed as erroneous. 16. We note that during the scrutiny assessment the AO issued notice u/s 142(1) of the Act, on various occasion, which is placed in the paper book filed by the assessee, which will give a clear picture about enquiries made by the A.O. during the scrutiny assessment proceeding and replies made and documents filed by the assessee. Notice issued by the assessing officer under section 142(1) contains more than twenty pages and replies of the assessee is more than hundred pages, hence, for the sake of brevity, the notice under section 142(1) issued by the assessing officer and replies made by the assessee are not reproduced in this order, however, we have gone through the contents of the notice under section 142(1) of the Act and replies filed by the assessee before the assessing officer and noticed that assessing officer asked the queries on various items of return of income filed by the assessee and in turn, the assessee has submitted documents, evidences and written submissions before the assessing officer. On the above facts, therefore, the allegation of the Ld. Pr. C.I.T. in his show cause notice u/s 263 that “AO has passed the impugned assessment order without making further enquiries” does not come within the purview of twin conditions contained in section 263 of the Act. The Ld. Pr. C.I.T. by setting aside the assessment order has allowed the Ld. A.O. to reopen the concluded issue, which was adjudicated upon after detailed enquiry. This course of action on the part of Ld. Pr. C.I.T. is not permissible u/s 263 of the Act. It is a settled position in law that the proceedings u/s 263 cannot be initiated by the Ld. Pr. C.I.T. merely in his supervisory capacity. Before invoking the powers u/s 263 of the Act, it is necessary for him to demonstrate that the A.O. had committed a patent error which resulted in prejudice to the revenue. On the contrary, where the Ld. A.O. has conducted enquiries and after due consideration of the facts and circumstances of the case backed by relevant details/documents, he comes to a conclusion, then it is not open to the Ld. Pr. C.I.T. to invoke revisionary jurisdiction. The power envisaged u/s 263 of the Act in setting aside an assessment is large and wide, but that cannot be exercised to allow the A.O. to make up the deficiency of his case. We note that Coordinate Bench of I.T.A.T., Kolkata in the case of Plastic Concern vs. ACIT [61 TTJ 87 (Cal) has held that mere possibility of gathering more material to prove the claim of the assessee wrong would not make the concluded assessment erroneous so long as the ld. A.O. had acted judiciously and conducted enquiries in the course of assessment proceedings.
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 17. We note that after deep enquiry and considering the explanation of the assessee vis-a-vis the details/documents submitted, the Ld. A.O. accepted the documents and evidences and items as shown in the books of account of the assessee. That being so, the inference of the Ld. Pr. C.I.T. in support of his invoking jurisdiction u/s 263 of the Act that the “AO has passed the impugned assessment order without making further enquiries” is totally unfounded, baseless and beyond the facts of the case, as explained above and was based on the expectation of a fishing and roving enquiry, wrongly treated on par with lack of enquiry, which is different from inadequate enquiry, so that even on this ground, revision was not justified, as held by the Hon`ble Bombay High Court in the case of CIT vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom). 18. We note that Ld. Pr. C.I.T. on analysis of assessment records derived satisfaction for issuing the impugned show-cause notice u/s 263 of the Act. The expression ‘record’ as used in section 263 of the Act is comprehensive enough to include the whole record of evidence on which the original assessment order is based. At the same time, if any information asked for by the assessing authority from the assessee or from others to whom he referred the matter during the course of assessment proceeding was not received but received subsequent to the completion of the assessment, in that situation the assessment order passed without receiving such report may appear to be erroneous within the meaning of section 263 of the Act. In the case of the assessee under consideration, there is no denying the fact, as detailed above and acknowledged in the assessment order u/s 143(3) r.w.s 153A, that in response to notices u/s 143(2)/142(1) and further requisitions made during the course of assessment proceeding, the A/R of the assessee appeared from time to time and produced/ submitted necessary details/documents as per requisitions in relation to the issues raised by the Ld. Pr. C.I.T., which were examined by Assessing Officer. Therefore, it is the appraisal of the same records which are already with the Ld. A.O. and the Ld. Pr. C.I.T. took a different view than adopted by the A.O. on the same set of facts, which is not permissible u/s 263 of the Act. In the above circumstances, the view taken by the A.O. was one of the possible views and the assessment order passed by him could not be held to be erroneous and prejudicial to the interests of revenue. For that we rely on the decision of Hon’ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd. [(2010) 189 Taxman 436 (Del)] .Further, it was settled by Hon`ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] (supra), wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s 263 of the Act. In other words, the Ld. Pr. C.I.T. on the same set of facts and evidences on record was of the opinion that the A.O. should have made further inquiry, and he should have taken the stand which the Ld. Pr. C.I.T. hinted in the impugned order u/s 263 of the Act. This is not permissible under law. For better appreciation, the relevant portion of the judgment in the case of Malabar Industrial Co. Ltd. vs. CIT (supra) is quoted below : “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 Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law”. 19. We note that the Ld. Pr. C.I.T. by invoking his jurisdiction u/s 263 of the Act is giving another opportunity to the Assessing Officer to re-examine and to verify again the same documents and evidences, which is not permissible. Hon’ble Bombay High Court in the case of Ranka Jewellers vs. Addl. CIT (328 ITR 148) relying on the decisions of Hon’ble Supreme Court in the cases of Malabar Industrial Co. Ltd. vs. CIT (supra) and CIT vs. Max India Ltd. [(2007) 295 ITR 282 (SC)], has held that once the issue was considered by the A.O., the remedy of the revenue could not lie in invoking of the jurisdiction u/s. 263 of the Act. Therefore, the order of the Ld PCIT was definitely outside the purview of section 263 of the Act. As noted above, the exercise aimed at ascertaining the correct income of the assessee has been fulfilled by the Ld. A.O. by exercising his quasi-judicial functions vis-a-vis passing the assessment order u/s143(3)r.w.s 153A of the Act. Therefore, certainly it is not a case wherein adequate enquiries at the assessment stage were not carried out or assessment was made in haste. However, what is an opinion formed as a result of these enquiries and verification of the materials is something which is in exclusive domain of the Assessing Officer, and even if Ld. Pr. Commissioner does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. For that we rely on the decision of the Coordinate Bench of I.T.A.T., Kolkata in the case of Smt. Juthika Kar vs. ITO [I.T.A. No.1128/Kol/ 2009, dated 16.5.2012 ], wherein it has been held as under (relevant portion) :-
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 “8……However, what is opinion formed as a result of these enquiries is something which is inexclusive domain of the Assessing Officer, and even if Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. The conclusions arrived at as a result of enquiries cannot be tinkered with in the revision proceedings. The conclusions being drawn up as a result of enquiry is a highly subjective exercise and as to what is appropriate conclusion is something on which perceptions vary from person to persons. These variations in the perceptions of the Assessing Officer vis-a-vis that of the Commissioner, cannot render an order erroneous and prejudicial to the interest of the revenue.” 20. The aforesaid position gets further strength from the decision of Hon’ble jurisdictional High Court in the case of CIT vs. J.L. Morrison (India) Ltd. (2014) 366 ITR 593 (Cal), the relevant finding of which is applicable to the facts of the present assessee is quoted below : “85. Whether the assessment order dated March 28, 2008, was passed without application of mind is basically a question of fact. The learned Tribunal has held that the assessment order was not passed without application of mind. The records of the assessment including the order-sheets go to show that heard from time to time. In deciding the question the court has to bear in mind the presumption in law laid down in Section 114 clause (e) of the Evidence Act: “that judicial and official acts have been regularly performed. 86. Therefore, the court has to start with the presumption that the assessment order dated March 28, 2008, was regularly passed. There is evidence to show that the Assessing Officer had required the assessee to answer 17 questions and to file documents in regard thereto. If the Assessing Officer cannot be shown to have violated any form prescribed for writing an assessment order, it would not be correct to hold that he acted illegally or without applying his mind. ” [Emphasis given]”
It is a settled position in law that provisions of section 263 of the Act do not permit substituting one opinion by another opinion. Therefore, the order of the Ld. Pr. C.I.T. cannot be sustained on the principle of ‘erroneous’ nature of the order of the A.O., as it is not erroneous. Further, in the instant case, to reiterate, there was no allegation by the Ld. revenue authorities that the evidences produced were fictitious or invented, thus accepted the authenticity of the same. Such an order cannot be called erroneous and prejudicial to interests of revenue only because the A.O. made the assessment without discussing such details therein, as held by the Coordinate Bench of ITAT Kolkata in the case of Chroma Business Ltd. vs. DCIT (2004) 82 TTJ 540 (Cal).Further support in this connection is taken from the decision of Hon’ble Delhi High Court in the case of CIT vs. Vikas Polymers (2012) 341 ITR 537 (Del). Relevant part of the observation in this regard reads as under: " This is for the reason that if a query is raised during the course of scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer was reflected in the assessment order, that would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision." [Emphasis supplied]
21.According to the decision of Coordinate Bench of I.T.A.T., Hyderabad in the case of Manisha Agri Biotech P. Ltd. vs. CIT (2014) 36 ITR (Trib.) 42 -, wherein it was held as follows: “The respondent had no different or new material to take a different view from the one taken by the Assessing Officer and the reasons given by him to reopen the assessment and sustain the revision are totally unacceptable. The respondent is not vested with any power under section 263 to initiate proceedings for revision in every case and start re-examination and fresh enquiries in matters which have already been concluded under the law.” 22. Coming to the expression in Explanation -2 to section 263 of the Act. The ld PCIT has stated in his order that he has power to exercise the jurisdiction under section 263 of the Act in the four circumstances mentioned therein. The said explanation states that “if in the opinion of the Ld. CIT”, it must be the considered opinion of the CIT which is based on the correct facts and in accordance with the principles of law. It cannot be an arbitrary opinion bereft of facts or law. 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 Commissioner to revise each and every assessment order. The applicability of the clause is thus essentially contextual. It has to be the opinion of a prudent person properly instructed in law. The Hon’ble Supreme Court in Maneka Gandhi
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 Vs. Union of India reported in 1978 AIR (SC) 597 has laid down the law that a public authority should discharge his duties in a fair, just and reasonable, manner and the principle of due process of law was recognized by the Hon’ble Supreme Court. Therefore, the opinion of the Ld. CIT has to be in consonance with that of the well settled judicial principles and cannot be arbitrarily made discarding the judicial precedent on the subject. The opinion of the Ld. Pr. CIT has to be reasonable and that of a prudent person instructed in law and which founded on the correct facts borne out from records. The CIT’s opinion should be based on objective consideration of material facts and not on his subjective notions of the facts wrongly presumed or inferred by him. Moreover, it has to be kept in mind that an Explanation to substantive section should be read as to harmonize with and clear up any ambiguity in the main section and should not be so construed as to widen the ambit of the section conferring powers or authority larger than what is envisaged in the principal provision. It is so held by the Hon’ble Supreme Court in Bihta Cooperative Development Cane Marketing Union Ltd. Vs. Bank of Bihar, AIR 1967 SC 389 and M/s. Oblum Electrical Industries Pvt. Ltd., Hyderabad vs. Collector of Customs, Bombay - AIR 1997 SC 3467 at page 3471 and also see Justice G. P. Singh, Principal of Statutory Interpretation 234 Lexus 2016. It has to be kept in mind that while the Commissioner is exercising his revisional jurisdiction over the assessment order, he has to exercise his power in an objective manner and not arbitrarily or subjectively since he is discharging quasi-judicial powers vested in him while doing so. Thus, according to us, Explanation (2) inserted by the Parliament u/s 263 cannot override the main section i.e. section 263(1) of the Act. The Ld. CIT can exercise his revisional jurisdiction in the event the assessment order is erroneous as well as prejudicial to the interest of the Revenue as discussed above and not otherwise. 23. Conclusion: We note that main grievance of Learned Counsel is that most of the issues raised by the ld PCIT in his order under section 263 of the Act, are covered by the disclosure made by the assessee firm in IDS, 2016 in respect of net profit from “on money” transactions, therefore further additions should not be made in the hands of assessee-firm and in the hands of partners and other individuals. The said transactions have been again repeated by the ld PCIT in his order under section 263 of the Act, therefore, it is tantamount to impose tax on the same income twice, which is not the intention of the Income Tax Act. We note that Hon’ble Supreme Court in ITO Vs. CH. Atchaiah (1996) 218 ITR 239 (SC) has held that the income should be assessed on the right person, right year and it should be on the right income. From the aforesaid decision of the Hon’ble Supreme Court only the right person and the right person alone is liable to be taxed and not the wrong person. The same income should not be taxed twice. Therefore, we are of the view that jurisdiction exercised by the ld PCIT u/s 263 of the Act in not in accordance with law.We note that in assessee`s case under consideration, sufficient enquiries were conducted by assessing officer. The Assessing Officer called for specific details, confirmations and even copies of bills, copies of agreements, books of accounts, and seized material etc. It could not, therefore, be said that sufficient enquiries were not conducted. However, what is opinion formed as a result of these enquiries is something which is in exclusive domain of the Assessing Officer, and even if Ld PCIT has such results of enquiries, the resultant order cannot be subjected to revision proceedings. The conclusions arrived at as a result of enquiries cannot be tinkered with in the revision proceedings. The records of the assessment go to show that appropriate enquiry was made and the Assessee was heard from time to time. Where another view is possible, revision is not permissible. The ITO, while passing an order of assessment performs judicial function. Section 263 provides for a revisional power. It has its own limitations. An order can be interfered with suo motu by the said authority not only when an order passed by the assessing officer is erroneous but also when it is prejudicial to the interests of the revenue. Both the conditions precedent for exercising the jurisdiction under section 263 are conjunctive. The scope of provisions of section 263(1) is in the nature of supervisory jurisdiction and same can be exercised only if the circumstances specified therein, viz. (1) the order is erroneous and (2) by virtue of the order being erroneous, prejudice has been caused to the interest of the revenue, exist. An order of assessment passed by an ITO, therefore, it should not be interfered with only because another view is possible- CIT v. Green World Corporation (2009) 181 taxman 111(SC). If in given facts and circumstances of a case, two views are possible and one view has been adopted by assessing officer, then that view alone would not be sufficient to exercise powers under section 263 by Commissioner-CIT v. Gokuldas Exports (2011) 33 ITR 214 (Kar.). Assessment Order, in any case, cannot be revised on the ground that the deeper enquiry ought to have been made or proper exercise was not done while making the assessment [Sunil Kumar Rastogi vs. CIT, 406 ITR 306].An order cannot be said to be erroneous only because A.O. has written a brief order without details - CIT v. Goyal171 ITR 698, CIT v. Gabriel India 203 ITR 108. It would be evident from the above given facts that the assumption of jurisdiction u/s 263 by the Ld. Pr. C.I.T. and consequential direction to the A.O. to impose his own understanding on the issue in question resulted in almost no change in follow-up action by the A.O. Therefore, it goes to establish that the proceeding u/s 263 and order passed thereupon was totally uncalled for in the case of the assessee and that
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 being so, the impugned order u/s 263 of the Act of the Ld. Pr. C.I.T. should be quashed as per law. Thus, based on the above discussion on assessee`s facts as well as on various precedents applicable to assessee’s facts, we are of the view that revisionary jurisdiction exercised by the Ld. Pr. C.I.T. u/s 263 of the Act was not in tune with the facts and evidences on record duly explained to the Ld. A.O. and verified by him and that being so the order passed u/s 263 of the Act on such erroneous stand is liable to be quashed. Therefore, we quash the order of the ld. PCIT u/s 263 of the Act.”
As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in assessees own group cases and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench. We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the judgment of the Coordinate Bench in assessees own group cases (supra), the order passed by ld PCIT under section 263 of the Act should be quashed.
Before parting, we may also refer to an argument put-forth by both the Learned Counsels that in case of main partners, namely: (i) Radhika Construction (vide ITA No.88,89&64/SRT/2021), (ii) Radhika Infrastructure (vide ITA No.66,67 &68/SRT/2021), and (iii) Radhika Corporation, (vide ITA No.65/SRT/2021), this Tribunal has already quashed the orders passed by the PCIT under section 263 of the Act. Therefore, these seven appeals are also covered in favour of assessee by the judgments of the Tribunal in case of main partners (supra).
Before parting, we would like to deal with the main contention raised by ld CIT-DR for the Revenue. According to ld. CIT-DR there was no further inquiry made by the Assessing Officer in the course of assessment proceedings on the points raised by the Commissioner and, therefore, invoking of section 263 was quite justified. On this point, we find enough potency in the rebuttal provided by the learned counsels, which was to the effect that the lack of inquiry by the Assessing Officer was not the basis formulated by the Commissioner to invoke the jurisdiction u/s 263 of the Act. It is pertinent to mention here that there was as such no allegation of ‘no enquiry’ or ‘lack of enquiry’ or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O.’s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18 facts and documents. Therefore, the notices issued for examination of the issues during the assessment proceedings and submission and verification of the same has not been shown to be fallacious. In this connection it is pertinent to mention here that the way in which assessment should be finalized falls in the exclusive domain of the Assessing Officer. Section 142(1) speaks of inquiry before assessment and gives immense power to the A.O. for conducting enquiry. Therefore, the A.O. u/s 142(1)(ii) & (iii) can ask the assessee almost any information which he think necessary for passing assessment and even if Ld. Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. Therefore, the very initiation of proceeding u/s. 263 of the Act by the Ld. Pr. C.I.T. is in violation of the settled position in law. Therefore, in our view, the plea of the learned CIT-DR does not help the case of the Revenue in as much as what is required to be examined, at this stage is the validity of assumption of jurisdiction by the Commissioner u/s 263 of the Act on the basis of the error and prejudice brought out by him. The efficacy of the action of the Commissioner has to be tested only with respect to the basis adopted by him and cannot be further supplemented by the Revenue on any other new point. Thus, we find no merit in the submissions put forth by the learned CIT-DR, which is hereby rejected. 17. Respectfully following the above binding precedents, we uphold the contention of the assessee and we quash these seven orders of ld. PCIT. 18. In the result, appeals filed by the assessees in ITA Nos.58 & 59/SRT/2021, 60 to 62/SRT/2021 and 191 & 192/SRT/2021 are partly allowed. A copy of the instant common order be placed in the respective case file(s).
Order is pronounced on 21/01/2022 by placing result on Notice Board.
Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat �दनांक/ Date: 21/01/2022 SAMANTA
ITA.58 & 59/SRT/2021, 60 to 62/SRT/2021 & 191 & 192/SRT/2021 A.Ys. 2015-16 to 2017-18
Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy //
Assistant Registrar/Sr. PS/PS ITAT, Surat