2019 (3) TMI 681 - AT - Income Tax

Revisional jurisdiction u/s 263 of CIT or Pr. CIT - whether the assessment order is erroneous in so far as prejudicial to the interest of Revenue? - Re-look at the orders or proceedings of the lower authority to effect correction - addition u/s 68 - assessee claimed to have obtained loan from one Anubhav Vinimay but creditworthiness/genuineness of the transactions of the lender was never verified/examine by the AO and even in the loan confirmation documents, the address of the lender is not mentioned and further the assessee company neither filed the return of income of M/s Anubhav Vinimay Pvt. Ltd. nor the bank statement - HELD THAT - Assessing Officer while framing the assessment made no discussion with the claim of the assessee and simply framed the assessment in a slip shot manner. Such an approach of the Ld. Assessing Officer cannot be appreciated. Thus, it is clear that the assessment order was passed without verification, application of mind, consequently, it is erroneous as well as prejudicial to the interest of the Revenue, consequently, the revisional jurisdiction was rightly invoked. Ld. Pr. CIT observed that the Ld. Assessing Officer should have made enquiries/verification, to satisfy himself with respect to the creditworthiness of the lender and genuineness of the transactions before framing the assessment, thus, the ld. Assessing Officer was directed to pass fresh assessment order after providing due opportunity of being heard to the assessee. Even in the direction by the Ld. Pr. Commissioner to the Assessing Officer is not going to cause any prejudice to the assessee because the direction has been issued to the Ld. Assessing Officer to examine the genuineness of the loan and after providing due opportunity of being heard to the assessee, the assessment be reframed. The assessee is at liberty to substantiate its claim, thus, we don t find any infirmity in the impugned order, resultantly, the appeal of the assessee is without any merit, consequently, dismissed. - decided against assessee.

Issues Involved:
1. Invocation of revisional jurisdiction under Section 263 of the Income Tax Act, 1961.
2. Examination of evidence and genuineness of transactions.
3. Application of legal precedents and case laws.
4. Assessment order being erroneous and prejudicial to the interest of Revenue.
5. Standard operating procedure not followed by the Assessing Officer.

Detailed Analysis:

1. Invocation of Revisional Jurisdiction under Section 263 of the Income Tax Act, 1961:
The assessee challenged the order dated 08/08/2018 by the Principal Commissioner of Income Tax, Mumbai, invoking revisional jurisdiction under Section 263 of the Income Tax Act, 1961. The Principal Commissioner issued a show cause notice dated 28/06/2018 questioning the assessment framed under Section 143(3) and the assessee responded with written submissions. The Commissioner found the assessment order to be erroneous and prejudicial to the interest of Revenue due to lack of proper inquiry and verification by the Assessing Officer.

2. Examination of Evidence and Genuineness of Transactions:
The assessee claimed that necessary evidence and details were submitted to the Assessing Officer, proving the genuineness of the transactions. However, the Revenue argued that certain documents, such as the loan confirmation and bank statements, were not filed before the Assessing Officer. The Tribunal noted that the Assessing Officer did not verify the source of the ?2 crore loan and there was no mention of such an examination in the assessment order.

3. Application of Legal Precedents and Case Laws:
The assessee relied on several case laws, including CIT vs Kwality Steel Suppliers Complex, CIT vs Dwarkadhish Investment Pvt. Ltd., and CIT vs Vikas Polymers. However, the Tribunal found these cases inapplicable to the present appeal as the facts differed significantly. The Tribunal also referred to other cases such as Narayn Tatu Rane vs Income Tax Officer and Arvee International vs Addl. CIT, which supported the Revenue's position that the assessment order was framed without proper inquiry and application of mind.

4. Assessment Order Being Erroneous and Prejudicial to the Interest of Revenue:
The Tribunal emphasized that an assessment order passed without proper inquiry and verification is considered erroneous and prejudicial to the interest of Revenue. The Tribunal cited various judicial pronouncements, including the Hon'ble Apex Court's decision in Rajmandir Estates Pvt. Ltd. and CIT vs Amitabh Bacchan, which supported the invocation of revisional jurisdiction under Section 263 when the assessment order lacks proper inquiry.

5. Standard Operating Procedure Not Followed by the Assessing Officer:
The Tribunal noted that the Assessing Officer did not follow the standard operating procedure by failing to verify the genuineness and source of the loan. The assessment was framed in a slipshod manner without proper application of mind, leading to the conclusion that the assessment order was erroneous and prejudicial to the interest of Revenue.

Conclusion:
The Tribunal upheld the invocation of revisional jurisdiction under Section 263 by the Principal Commissioner, directing the Assessing Officer to re-examine the genuineness of the loan transaction and provide the assessee with an opportunity to substantiate its claim. The appeal of the assessee was dismissed, and the order was pronounced in the open court.

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