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TMI Blog2013 (9) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer should have rejected the books of accounts under Section 145 of 1961 Act or could have made proper examination and scrutiny of the same, in whatsoever form those had been produced before him. It is evident by now that no books of accounts maintained in regular course of business and prepared in due discharge of their duties by their Accountant or their C.A, had in fact been produced much-less for examination, as recorded in order of the Assessing Officer – Decided against the Assessee. - ITA No. 44 of 2012 - - - Dated:- 18-9-2013 - Rajive Bhalla And Dr. Bharat Bhushan Parsoon,JJ. For the Appellant : Ms. Radhika Suri, Advocate For the Respondent : Shri Denesh Goyal, Advocate JUDGMENT Dr. Bharat Bhushan Parsoon, J This Income Tax Appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter to be referred to as 1961 Act ), is directed against order dated 16.12.2011 (Annexure A-14) passed by the Income Tax Appellate Tribunal, Amritsar in ITA No. 166/ASR/2010 for assessment year, 2006-2007. Factual Matrix 2. The appellant Society is engaged in construction work. It had filed return for the assessment year 2006-2007 on 15.11.2006. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re completely without jurisdiction as the order passed by the Assessing Officer under Section 143(3) on 3.9.2007 was neither erroneous nor prejudicial to the interest of the revenue, the same having been passed after perusal of books of account on 28.8.2007 as is evident from the order sheets of the assessment proceedings that were placed before the Tribunal, contrary to the ratio of the Apex Court on 243 ITR 83; ii) Whether in facts and circumstances of the case, the Income Tax Appellate Tribunal had failed to consider that the reasons given by the CIT for affirming action under Section 263 were at variance from the reasons given in the show cause notice dated 13.8.2009 and 29.9.2009; and iii) Whether in the facts and circumstances of the case, the order passed by Income Tax Appellate Tribunal is perverse being contrary to material on record? Stand of the appellant/Assessee 7. It is claimed by the appellate that the impugned order is erroneous as also without jurisdiction as assessment for the year 2006-2007 finalized by the Assessing Officer had neither any element of prejudice to the interest of the revenue nor was erroneous in law or on facts. It is claimed that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been placed on 23 DTR 266 (Del)- Commissioner of Income Tax Vs. Ashish Rajpal. Claim of the Revenue. 11. Claim of the revenue, on the other hand, is that there is no disparity between the grounds taken in the show cause notice and the grounds taken in the impugned order of the CIT or of the Tribunal. It is then argued by the revenue that the order dated 3.9.2007 under Section 143(3) of the 1961 Act determining total income of the Assessee at Rs. 3,35,080/- was clearly erroneous and prejudicial to the interest of the revenue as the books of accounts had not been prepared in the regular course of business and were also not completed in discharge of functions of the Accountants of the Assessee. 12. We have heard learned counsel for the parties and with their assistance have gone through the paper book and have perused the material available on the record. Statutory Provision 13. To better appreciate the legal requirements for application of Section 263 of the 1961 Act, this provision is reproduced as below: Revision of orders prejudicial to revenue. 263(1) the Commissioner may call for and examine the record of any proceeding under this Act, and if he considers tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 14. When the matter is closely examined on the canvass of factual matrix punctuated by legal inputs, it is found that in fact there is no dichotomy between reasons and circumstances given in the show cause notice and those detailed in the order of the CIT. Facts of the case vis.a.vis legal requirements 15. It is clear that unnecessary hype has been created by the assessee while referring to order (Annexure A-10) of CIT as also order (Annexure A-14) of I.T.A.T. Claim of the assessee that assessment in the year 2006-2007 had been framed by the Assessing Officer after going through the entire gamut of facts as also books of account and other documents of the assessee, is mis-conceived. In order dated 3.9.2007 passed by the Assessing Officer under Section 143(3) of the 1961 Act, there is mention of examination of books of account, whereas no books of accounts in fact had been produced before the CIT, though ledger and cash book of the relevant year along with some loose documents of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. This was merely an eye wash. Had the books of accounts been made available to the Assessing Officer and had those been actually examined by him, such perfunctory assessment was not to follow. 20. When survey proceedings under Section 133 of the 1961 Act were in progress, certain books of account, documents and loose papers had been taken into possession by the authorities on 27.3.2008 and were sequelly impounded as is disclosed in Annexure A-6. It is a matter of record that the officer who had framed the original assessment (Annexure A-5) had himself conducted the said survey proceedings and had found large scale missing links and gaping holes. 21. During survey proceedings certain account books and documents etc. (Annexure A-6) had been impounded. The authorities were alarmed and were thus on guard. The matter was probed in detail. 22. In the initial questioning during the course of proceedings under Section 133 of the 1961 Act, President of the assessee Society claimed that he along with Secretary of the Society was looking after the accounts. He also maintained that account matters were being looked after by their Accountant and CA and that the transactions were conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of Mattewal Cooperative Society. Hence, the question of any complaint regarding loss of books of account does not arise. 24. Upon further questioning, this President of the Assessee Society conceded that the appellant was conducting its business only through one Bank Account with Central Cooperative Bank in the name of the Society. When questioning became grilling, this President of the Assessee Society undertook to produce all the books of accounts in the office of the Income Tax Officer but then never produced the same. 25. After going through the record, what-so-ever was available, the questioning continued but nothing qua existence of proper books of accounts and their verification emerged except for the sweeping assertion made by him that proper income had been shown in the returns. Relevant question and answer on this aspect is as below:- Q.No. 30 In the light of various discrepancies shown to you, please explain if whether you want to offer any comments regarding understatement of your income from April, 2002 to financial year 2007-08. Ans: I have consulted other partners Shri Sukhbir Singh and Shri Jatinder Singh and after consulting them we are of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 10-A (3) should have been applied. 30. Reaction of the Assessing Officer to these observations of the CIT was found in his communication of 3.3.2008 (Annexure A-10), wherefrom, it is clear that payments of more than Rs. 20,000/-at one point of time had also been made in cash even though it was not legally permissible. 31. Yet, another communication (Annexure A-10) was sent to the CIT (proper channel) by the Assessing Officer in this matter regarding assessment year 2006-07, wherein he had made it clear that he was not in favour of the CIT exercising powers of Revision in this case. Notwithstanding such tough stand emerging from the Assessing Officer, the CIT took a bold step and proceeded with the case for Revision under section 263 of the Act. Legal aspects 32. Questions which arise for answer are, as to whether an error of Assessing Officer, resulting in incorrect assessment on facts or incorrect application of law will be sufficient to label an order of Assessing Officer to be erroneous? In other words, whether an order of the Assessing Officer would be termed as erroneous merely because facts or law applicable to those, have not been appreciated properly by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself not sufficient for a supervisory officer to exercise power of Revision. In addition, there has to be some material to satisfy the Commissioner that the tax lawfully imposeable was not imposed or had been imposed on the lesser side than what was actually to be imposed. To put it simply, to invoke the provisions of Section 263 of the Act, the supervisory officer must have sufficient material to come to a conclusive finding that order of Assessing Officer is prejudicial to the interest of the revenue in addition to being erroneous in nature and character. 38. By no means, the Commissioner is empowered to exercise jurisdiction under Section 263 of the Act to serve interest of the revenue when there is no error in the order and the said order cannot be termed as erroneous. In jurisprudential tone, when power flowing from a statute is exercised then compliance with conditions for its application, is a must. No power can be allowed to be used in a capricious, arbitrary or whimsical manner. It must abide by the sanction of law under which it has to operate. In short, fresh determination under Section 263 of the 1961 Act under the orders of the Commissioner would be possible only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been impounded on 27.3.2008 (Annexure A-6) during survey proceedings under Section 133-A of the Act, the Assessee was handicapped to put up its case effectively and thus entire exercise by the revenue under Section 263 of the 1961 Act, was a farce. This plea has no merit. Consistent case of the appellant is that computer backup of all the books/accounts whatever the Assessee had, was available with them. In this backdrop, mere impounding of books of accounts vide Annexure A-6 and their retention with the authorities vide Annexure A-12 had caused no prejudice to the appellant in conduct of proceedings under Section 263 of the 1961 Act. 41. Plea of the appellant that contents of show cause notice under Section 263 of the 1961 Act and the findings arrived at by the Commissioner on conclusion of these proceedings are divergent again is mis-founded. In other words, contention that case of the authorities in the show cause notice (Annexure A-9) had no match and synchronization with the findings arrived at by the Commissioner is wrong. Case of the authorities in the show cause notice (Annexure A-9) commenting upon erroneous nature of earlier order of the Assessing Officer is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Order. Even during the revision proceedings before CIT or in the further proceedings before the ITAT or in this Court, the appellant assessee has not been able to negate the plea of the revenue that neither proper books of accounts had been produced before the Assessing Officer nor examination and scrutiny of whatsoever documents and papers were available, was done. 45. No hype can be created by the assessee claiming that the ledger and cash books for the assessment year 2006-07 interalia were found at the premises of the assessee in Survey Proceedings and thus the Assessee was genuine. Without corresponding bills or vouchers those books of accounts found during Survey were of no significance. Plea of the Assessee thus fails. 46. CIT, Amritsar had rightly come to a firm finding that the assessment framed by the Assessing Officer on 20.12.2007 as also later under Section 143(3) of 1961 Act, both were erroneous and prejudicial to the interest of the revenue as the Assessing Officer had not made requisite inquiry with regard to the aspect of maintenance of proper books of accounts while completing the assessment. There is no infirmity in the order of ITAT as well, as it had ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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