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TMI Blog2016 (7) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... ples of consistency of approach when the facts and circumstances are similar. (iii) Thus, when the Assessing Officer has taken a plausible view after thorough application of mind and after making detailed enquiry, the learned CIT cannot substitute his view by assuming jurisdiction u/s.263 of the I.T. Act. - Revision order u/s 263 quashed - Decided in favour of assessee - I.T.A. Nos. 3132 to 3136/DEL/2014 - - - Dated:- 8-7-2016 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Assessee : Sh. Surinder Mahajan, CA and Sh. Samir Mahajan, CA For The Department : Smt. Sunita Kejriwal, CIT(DR) ORDER PER H.S. SIDHU : JM These five Appeals filed by the Assessee are directed against the separate Orders passed by the Ld. Commissioner of Income Tax (Central), Kanpur u/s 263 of the Income Tax Act, 1961 (hereinafter referred as the Act) relevant for the assessment years 2005-06 to 2009-10. Since the issues involved in these appeals are common and identical, therefore, these appeals were heard together and are being disposed of by this common order for the sake of convenience, by dealing with ITA No. 3132/Del/2014 (AY 2005-06). 2. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. The assessee filed its return u/s. 153A after taking into account the income from on money and after claiming deduction of expenses against such income. The assesee further claimed deduction u/s. 80IB against the additional income from on money shown in the return. The total income was assessed by the AO at ₹ 1,75,86,210/- while making disallowance u/s. 40A(3) amounting to ₹ 62,04,510/- and denying deduction u/s. 80IB on additional on money income amouting to ₹ 18,43,552/- vide his order dated 22.7.2011 passed u/s. 153A/143(3) of the I.T. Act, 1961. Against the aforesaid assessment order dated 22.7.2011, assessee appealed before the Ld. CIT(A) who vide his impugned order allowed the claim of deduction u/s. 80IB made by the assessee, but upheld the disallowance made u/s. 40A(3) by the AO. Aggrieved with the Ld. CIT(A) s order, both Assessee and Revenue went in appeal before the ITAT, Delhi wherein the ITAT has confirmed the action of the Ld. CIT(A) with regard to allowance of deduction u/s. 80IB and restored back to the AO on the issue of disallowance u/s. 40A(3). 4. Subsequently the assessee received a show cause notice u/s. 263 of the Act dated 14.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 446 (P H) b. CIT vs. Unique Auto Belts (P) Ltd. 30 DTR 231 (P H) 6.2 It was further stated that suppression of sales unearthed during search and seizure operations can be calculated only to the extent of the seized material and relied upon the following case laws:- a. Fort Projects (P) Ltd. Vs. DCIT (2012) 145 TTJ 0340 (Kolkata Tribunal) b. J.B Education Society vs. ACIT (2014) 98 DTR 347 (Hyderabad Tribunal) 6.3 Ld. AR of the assessee further stated that every erroneous order cannot be the subject matter of revision unless it is prejudicial to the interest of revenue as well. In this regard, he placed reliance upon the following decisions:- a. Malabar Industrial Co. Ltd. (243 ITR 83(SC b. CIT vs. Green World Corp. (314 ITR 81 (SC c. CIT vs. DLF (350 ITR 555 (Del 6.4 It was the further contention that if an AO acting in accordance with law makes a certain assessments, the same cannot be branded as erroneous by CIT simply because according to him the order should have been written more elaborately in view of the following case laws:- a. CIT vs. Arvind Jewellers (2003) 259 ITR 502 (Guj) b. CIT vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) 476 : (1999) 236 ITR 469 (SC) d. CIT vs. Shalimar Housing and Finance Ltd. (2009) 320 ITR 157 (MP HC) 6.7 Lastly, Ld. AR of the assessee stated that Show cause notice u/s 263 of the Act dated 14.03.2014 was received by the Assessee only at 5 PM on Friday, 21st March 2014. Date of hearing was fixed on 25.03.2014 in Kanpur. However, the Ld. CIT was not available in Kanpur on 25.03.2014. Any order passed without affording an opportunity to the assessee to represent its case is void ab initio and to support his version, he placed reliance on the following case laws. a. Swadeshi Cotton Mills Company Ltd. vs. Union ofIndia 51 ITC 210, 255 (SC); b. Gandhi vs. Union ofIndia AIR 1978 SC 597; c. Smt. Kanti Khare vs. Kali Prasad Asthan AIR 1983 All 45; d. Monga Metals (P) Ltd. vs. ACIT (2000) 67 TTJ (ALL) 247 7. On the other hand, Ld. CIT(DR) controverted the various submissions and arguments advanced by the Ld. AR of the Assessee. She has strongly relied upon the impugned Order passed u/s. 263 by the Ld. CIT and has invited our attention to the various findings recorded by the learned CIT in his impugned order. The learned CIT(DR) has stated that AO while completin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IB(10). The accounts were also audited u/s 142(2A) and report was submitted on 26.05.2011 by the auditor. During search operation incriminating documents marked as Annexure D-6, D-7, D-10 and D-11 were found at the corporate office of M/s Surya Merchants Ltd and were seized. These documents contained entries/information pointing out that on money on sale of flats was received in addition to the sale proceeds recorded in regular books of account The income from on money ( was not disclosed in the regular books of account Subsequently, special audit u/s 142(2A) was also ordered and audit report was submitted on 26.05.2011. The assessing officer has assessed income from sale of flats/shops at ₹ 94,91,330/- as per computation of income, in the concluding para of the order, whereas as per para 8 of the order, it is held that net addition on account of incriminating documents comes to ₹ 7314792/-. Para 8 of the order is as under: During the search several documents were found and seized from which it was evident that the assessee was receiving on money one sale of flats/shops. During assessment proceedings, notice u/s 142(1) dated 08.10.2010 was served on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85/-. There is also no discussion in the assessment order about the findings of the audit report u/s. 142(2A) of the I.T.Act. thus, the issue has not been properly examined by the AO and therefore the assessment order u/s. 153A/143(3) dated 22.8.2011 is erroneous and prejudicial to the interests of the revenue. In this respect you are hereby allowed an opportunity of being heard and therefore, required to attend my office at 7/81-B, Tilak Nagar, Kanpur on 25.03.2014 at 11.30 AM either in person or by a representative duly authorized in writing in this behalf and show cause as to why assessment order for the year under consideration should not be revised as per provisions of section 263 of the Income Tax At, 1961. 10. In response to the aforesaid show cause notice, assessee filed its reply dated 25.3.2014 and the contents thereof are reproduced hereunder:- It is submitted that the above captioned notice was received by the assessee on Friday, the 21st of March, 2014 at 5 PM. A copy of track record obtains from the website of postal department as an evidence of the receipt of the said notice is enclosed as Annexure-A directing us to appear before you on 25.03.2014 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 10 illustrated examples aggregated to ₹ 4.09 Crores whereas it aggregated to ₹ 2.64 Crores in the revised agreement forms. However, in para 8 of the assessment order, the AO has found from the seized documents and from the chart submitted by the assessee that the total on- money came to ₹ 32,71,36,984/- out of which amount of ₹ 5,68,80,271/- pertains to A.Y. 2005-06. It is submitted that the above figure of ₹ 5,68,80,271/- is based on exact figures found by the AO based on all the seized documents including 0-6,D-7, D-I0 D-l1. Thus, the very exercise of making an interpolation based on 10 examples can have no validity when the entire on- money has been taken into consideration by the AO after going through all the seized documents. That the total on-money for all the years put together amounts to ₹ 32,71,38,984/- out of which on-money of ₹ 5,68,80,271/- pertains to A.Y. 2005-06 will be clear from the statements placed at Annexure-B. 4. In the above captioned notice, you have also mentioned that there is also no discussion in the assessment order about the findings of the audit report U/S 142(2A) of the Act. Thus, the issue has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer had been the subject matter of any appeal [filed on or before or after the 15t day of June, 1988] the powers of the Commissioner under this sub-section shall extend [and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.] The assessee himself has stated in para no. 4 (Page No.2 ) of his reply that it is submitted that a perusal of the audit report u/s 142(2A) of the Act clearly shows that the special auditor only examined the original books of accounts and not the seized books as would be clear from Annexure-C. Therefore the Audit Report u/s 142(2A) of the Act is not all relevant as far the determination of total amount of on-money is concerned. (7) From the above, it is obvious that the AO while completing the assessment has not taken into account the seized documents and has not correctly taken into account undisclosed income. From the documents which was established that the assessee has been receiving 'on money' on the sale of flats and this 'on money' was to be computed on the basis of the documents seized during the course of search. It is further seen that the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue-recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase prejudicial to the interest of the Revenue is not an expression of art and is not defined in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance uls 40A(3), the Ld. CIT(A), vide his letter dated 27.11.2012 directed the Ld. A.O to send a remand report after verifying the aforesaid expenditure from the seized documents. Vide remand report dated 24.01.2013, the Ld. A.O. had reported that the payments made under rule 6 DD has been verified from the seized material and date of payments have been found correct . Since denial of deduction uls 80IB with regard to 'on money' profits was a subject matter of appeal, therefore, fulfillment of all conditions including validation of computation of the profits from 'on money' transactions for deduction uls 80IB was a subject matter of appeal before Ld. CIT(A). Hence, the action of the Ld. CIT is against the law laid down by the Hon ble Gujarat High in the case of CIT vs. Nirma Chemical Works (P) Ltd (2009) 309 ITR 67 wherein the following has been observed vide para no. 7 as under:- 7. On behalf of the assessee it was contended that once the issue of deduction under Section 80I of the Act had been considered by the Assessing Officer and the matter carried in Appeal before the Commissioner (Appeals) the assessment order would merge with the order of the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as regards relief under Section 80I of the Act, issue regarding eligibility under the said provision could not be divorced and treated independent of the quantum. It was further submitted that in the next decision the question was in relation to deduction under Section 80I of the Act and the Court had followed the principle laid down in case of CIT v. Shashi Theatre Pvt. Ltd. (Supra). g) That the Show cause notice u/s 263 of the Act dated 14.03.2014 was received by the Assessee only at 5 PM on Friday, 21st March 2014. Date of hearing was fixed on 25.03.2014 in Kanpur. However, the Ld. CIT was not available in Kanpur on 25.03.2014. It is a settled law that any order passed without affording an opportunity to the assessee to represent its case is void ab initio. h) That the arguments advanced by the Ld. DR in the preceding paragraphs is not tenable in the eyes of law, keeping in view of the facts and circumstances of the present case, because in the case notice u/s. 142(1) alongwith detailed questionnaire was issued by the AO requiring the assessee to explain seized documents and reply thereof was filed by the assessee which was duly considered by the AO. The AO also consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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