2022 (5) TMI 603 - AT - Income Tax

Revision u/s 263 - Funds utilized for executing the land deal and providing loan to the third party - Addition u/s 69B as unexplained investment - assessment u/s 153A - HELD THAT - We observed that the issue raised by the Pr CIT in the revisional order is different i.e., two materials were found during search, one is the above issue of land dealings and other one is the loan transaction - Pr.CIT raised the issue of second i.e. loan transaction. With regard to first issue, it reached the finality because of the first appellate order. Therefore, we are in agreement with the Ld AR. Second issue raised by Pr CIT relating to the loan transaction, we observed from the submissions made by the Ld AR that this issue was raised by respective assessing officers in both the assessment proceedings i.e., 153A and 147, assessee has submitted the relevant statement of Mr Deepak Shah, promotor of the Swastik Group who stated that the loan amounts represented funds were belongs to Swastik Group and there is no link with the persons whose names were mentioned in the seized documents, he submitted in reference to the question no 15 put before him. This explanation was submitted before AO in 153A and 147 proceedings, and the respective Assessing Officers accepted the same. In our considered view, from the above facts, it is clear that the allegation of the Pr CIT that the Assessing Officer in framing the assessment under section 143(3) r.w.s. 147 has not taken cognizance of the incriminating material seized during the course of search at the premises of Swastik Group is incorrect. In both the proceedings, the respective AO's has agreed and taken one of the possible view and now Ld Pr CIT cannot impose his another possible view. In order to accept the propositions of the Ld Pr CIT for revision, it is the duty of the Pr CIT to bring on record the relevant material to substantiate the claim that there is a transaction between the assessee and the Swastik Group. In two proceedings conducted by the respective AOs has accepted the stand of the assessee, without there being any material linking the transactions with the assessee and the Swastik Group, the Pr CIT cannot once against direct the AO to further investigate. Hence, the Pr CIT has no jurisdiction to initiate proceedings u/s 263 of the Act, without there being any material or clear finding by him. Thus, the basic premise that cognizance of the seized material was not taken by the Assessing Officer is patently incorrect and the revision action under section 263 of the Act is not proper and hence, the order of the Pr.CIT is set aside and quashed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the reopening of the assessment under section 147.
2. Consideration of incriminating evidence found during search and seizure.
3. Legitimacy of the revision order under section 263 by the Pr.CIT.
4. Delay in filing the appeal and its condonation.

Detailed Analysis:

1. Validity of the reopening of the assessment under section 147:
The assessment for the A.Y. 2011-12 was reopened under section 147 after recording the reasons for reopening. The assessment was completed under section 143(3) read with section 147, determining the total income at Rs. 123,60,510/-. The Pr.CIT observed that the order did not take cognizance of documents found during the Swastik Group search, indicating unrecorded transactions involving the assessee. The Pr.CIT held the order erroneous and prejudicial to the interest of the Revenue for not conducting an inquiry to ascertain the correct income of the assessee.

2. Consideration of incriminating evidence found during search and seizure:
Search and seizure actions were conducted on the Swastik Group and the Cosmos Group, including the residence of the assessee. Incriminating evidence indicated that the assessee had unrecorded transactions with the Swastik Group, including a cash loan of Rs. 6,13,89,930 at 1.50% interest p.a. and a cash payment of Rs. 1.35 crores for land purchase. The assessee denied these transactions, stating that the documents did not belong to him and the names were used by the Swastik Group to reflect their unaccounted income. The Assessing Officer accepted the assessee's explanations and did not make additions for the cash loan but added Rs. 1,35,00,000 as unexplained investment for A.Y. 2013-14.

3. Legitimacy of the revision order under section 263 by the Pr.CIT:
The Pr.CIT issued a revision order under section 263, arguing that the Assessing Officer's order was erroneous for not considering the incriminating documents. The assessee contended that the Assessing Officer had taken cognizance of the documents and the statements of Swastik Group's promoter, who admitted the funds belonged to Swastik Group, not the assessee. The Tribunal observed that the Assessing Officer had indeed considered the seized documents and accepted the assessee's explanations, making the Pr.CIT's revision order under section 263 unwarranted. The Tribunal held that the Pr.CIT could not impose another possible view when the Assessing Officer had already taken one possible view.

4. Delay in filing the appeal and its condonation:
The assessee filed the appeal with a delay of 62 days, citing medical grounds. The Tribunal condoned the delay after considering the medical reasons and the proper affidavit filed by the assessee.

Conclusion:
The Tribunal concluded that the Assessing Officer had duly considered the incriminating evidence and the explanations provided by the assessee. The Pr.CIT's revision order under section 263 was set aside as it was based on an incorrect premise that the Assessing Officer had not taken cognizance of the seized material. The appeal filed by the assessee was allowed, and the order of the Pr.CIT was quashed.