Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DIVISION BENCH’B’, CHANDIGARH
Before: SMT. DIVA SINGH & SHRI B.R.R. KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’B’, CHANDIGARH
BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER
ITA No.1324/Chd/2017 Assessment Year: 2013-14
M/s Mahakali Developers & Vs. Pr. CIT Resorts(P) Ltd. , SCO-50 Aaykar Bhawan 1st Floor, Leela Bhawan Complex Patiala Patiala-147001
PAN No. AABCM6353Q
(Appellant) (Respondent)
Assessee By : Sh. Ashok Goyal Revenue By : Sh. Manu Malik
Date of hearing : 21/03/2018 Date of Pronouncement : 27/03/2018
ORDER PER B.R.R. KUMAR A.M.
The present appeal has been filed by the Assessee against the order of the Ld. Pr. CIT, Patiala dt. 20/07/2017.
In the present appeal Assessee has raised the following grounds:
That learned CIT has erred in setting aside order of AO u/s 263 of the IT Act that, AO failed to verify/examine/investigate the genuineness of the unsecured loans when adequate enquiries were made & on that basis genuineness was accepted. 2. That learned CIT has erred in setting aside order of AO u/s 263 of the IT Act on the ground that AO did not bother to make independent enquires as per provision of income tax with regard to the genuineness of the investment when the same was verified & enquired to the satisfaction of AO as per law. 3. That learned CIT has erred in setting aside order of AO u/s 263 of the IT Act that facts are covered by explanation 2 to sec 263 of the IT Act when order was passed after enquires & not without enquires as clear from the proceedings. Hence it is prayed that order passed u/s 263 of the IT Act may be declared as null & void.
The first issue relates to non verification of unsecured loans by the
Assessing Officer as alleged by the Ld. Pr. CIT.
The Ld. AR brought to our attention the notice of the Ld. Pr. CIT dt.
19/06/2017 wherein the Ld. Pr. CIT alleged that the amounts received of Rs.
30.00 Lacs from M/s Shivali Mahajan and Rs. 2,50,000/- received from Shri. Vinod
Mahajan have not been verified by the Assessing Officer.
The Ld. AR has also brought to our attention the notice under section
142(1) issued by the Assessing Officer. While going through the questionnaire, we
observe that wide Question No. 5 in the Annexure-I to the notice, the Assessing
Officer has clearly sought the details of the unsecured loans in a tabular form.
The details called for are the loans as on 31/04/2012, as on 31/03/2013, loans
squared up and taken during the year, interest paid, TDS deducted and mode
of transaction.
We also find that the assessee has furnished the required details of advance
received, TDS deducted before the Assessing Officer which have been duly
examined. The same could be deciphered from the confirmation of accounts of
M/s Shivali Mahajan which includes the amount received and also the details of
the interest paid and the TDS deducted. Relevant fair copy of the Bank
Statement has also been submitted by the assessee before the Assessing Officer.
Similarly, the confirmation of accounts of Shri. Vinod Mahajan and the details of
interest paid, TDS deducted along with the bank statement are found to be
available on record. The loans have been duly examined and re-examination of
the same in the proceeding under section 263 cannot be justified.
The second issue relates to non verification of genuineness of the
investment under the head ‘Buildings Office Site’. The Ld. Pr. CIT held that the
Assessing Officer failed to enquire / verify / investigate about the complete
details with regard to genuineness of the investment.
The Ld. AR brought to our notice Question No. 17 in the Annexure-I to the
notice, which mentions “Furnish details and bills amount exceeding Rs. 50,000/-
in respect of additions to fixed assets”. Further vide the Question No. 22 the
Assessing Officer has sought the details of addition made in fixed assets i.e;
office at site amounting to Rs. 66,10,765/- It was also brought to the notice that
the replies given by the assessee vide the point no. 17 of the submission made
by the assessee which reads ‘ details of addition to fixed assets alongwith the
copies of the bills are enclosed’ and also vide point no. 22 ‘ addition to office
site has been included in details at S.No. 17’ was mentioned which goes to lead
that the details have been duly furnished by the assessee contrary to the
observation of the Ld. Pr. CIT.
Ld. DR relied on the order of the Ld. Pr. CIT and also judgment of Hon’ble
Supreme Court in the case Malabar Industrial Company Ltd. Vs. CIT reported at
243 ITR 83 (SC) and case of Gee Vee Enterprises Vs. Addl. CIT & Ors 99 ITR 375
(Del) the Hon’ble Delhi High Court have held in that not making an inquiry
warranted on the fact of a case will make the assessment order erroneous.
Similar view has been taken by the Hon’ble Madras High Court in the case of
K.A. Ramswamy Chettiar & Anr Vs. CIT 220 ITR 657 (Mad.). Moreover, the facts of
the case are squarely covered by Explanation 2 of Sec. 263, which is inserted
w.e.f 01/06/2015. It reads as under:-
“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 the revenue, if, in the opinion of the Principal Commissioner or Commissioner:- a) The order is passed without making inquiries or verification which should have been made; b) The order is passed allowing any relief without inquiring into the claim;
c) The order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or d) The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of assessee or any other person.” We find that this not acceptable as the Assessing Officer has made due enquiries with regard to loans as well as fixed assets.
Hon’ble high court of Bombay in the case of Commissioner Of Income- Tax vs Gabriel India Ltd. (1993) 203 ITR 108 (Bom) held under similar facts and circumstances that : “263. Revision of orders prejudicial to Revenue. - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income- tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.
(2) No order shall be made under sub-section (1) -
(a) to revise an order of reassessment made under section 147, or
(b) after the expiry of two years from the date of the order sought to be revised. . . .
From a reading of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is "erroneous in so far as it is prejudicial to the interests of the Revenue". It is not an arbitrary or unchartered power. It can be exercised only on fulfilment of the requirements laid down in sub-section (1). 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.”
From the above discussion it is hereby held that the due inquiries have been
conducted by the Assessing Officer and hence the order of the Ld. Pr. CIT cannot be
upheld as it could not be proved that the assessment order is erroneous or prejudicial to
the interest of the Revenue in the given circumstances.
In the result appeal of the assessee is allowed.
Order pronounced in the open court.
Sd/- Sd/- (DIVA SINGH) (B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 27/03/2018 AG Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR