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TMI Blog2016 (10) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. No adverse inference can be drawn against the assessee on the ground that assessee has failed to prove source of source. Assessee can't be asked to prove source of source. Thus we hold that the impugned order passed by the learned CIT u/s.263 of the I.T. Act is without jurisdiction and not sustainable in the eyes of law. - Decided in favour of assessee. - I.T.A. No. 2481/DEL/2014 - - - Dated:- 6-10-2016 - Shri H. S. Sidhu, Judicial Member And Shri O. P. Kant, Accountant Member Assessee by : Sh. Ved Jain, Adv., Sh. Ashish Chadha, Adv. Department by : Sh . Satpal Gulati, CIT(DR) ORDER Per H. S. Sidhu : JM This Appeal filed by the Assessee is directed against the Order passed by the Ld. Commissioner of Income Tax, Karnal u/s 263 of the Income Tax Act, 1961 (hereinafter referred as the Act) relevant for the assessment year 2009-10. 2. The grounds raised in the Appeal read as under:- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income lax (CIT) under Section 263 of the Act is bad, both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no specific findings have been given on the issue of how the order is erroneous and prejudicial to the interest of Revenue. 12. That the appellant craves leave to add, amend or alter any of the grounds of appeal. 3. The brief facts of the case are that assessee filed his return of income at ₹ 3,63,640/- on 25.9.2009 which was processed u/s. 143(1) of the Income Tax Act, 1961 on 21.1.2011. Later on, the case was selected for scrutiny through CASS as per CBDT s guidelines. Accordingly, a notice u/s. 143(2) was issued on 25.8.2011. Thereafter, statutory notices were issued alongwith questionnaire from time to time. In response thereto, the proceedings were attended by the Counsel of the assessee and the case was discussed with him by the AO. Necessary details as called for from time to time were furnished. Thereafter, the income of the assessee was assessed at ₹ 5,97,550/- thereby making various additions vide assessment order dated 29.11.2011 passed u/s. 143(3) of the Act. Thereafter, a notice dated 24.1.2013 was issued to the assessee by the AO regarding the audit objection raised, whereby the assessee was asked to explain the source of cash deposited in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O to review the order under section 263. It is not the case of no or lack of enquiry. Inadequate enquiry cannot be a subject matter and trigger for invoking the provisions of section 263. To support his contention, Ld. Counsel of the assessee relied upon the following judgments/decisions:- i) Hon ble Jurisdictional High Court in the case of ITO vs. DG Housing Projects Ltd. (2012) 343 ITR 329. ii) Hon ble High Court of Delhi in the case of CIT vs. New Delhi Television Ltd. (2014) 360 ITR 44 (Delhi) iii) ITAT Delhi in the case of Tirupati Infraprojects Pvt. Ltd. vs. Principal CIT in ITA No. 3316/Del/2015 iv) ITAT Delhi in the case of CGG Marine Resources vs. DCIT (2012) 51 SOT 141 (Delhi) 6.1 Ld. Counsel of the assessee further stated that under section 68 of the Act assessee is required to establish the source of cash credit. Assessee is not required to prove source of source. In the present case assesee has established the source. What Ld. CIT is trying to do in 263 proceedings, is to ask assessee to establish source of source, which is not required under section 68. Moreover the issue which is arising is at best against the creditors and not against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee by the AO regarding the audit objection raised, whereby the assessee was asked to explain the source of cash deposited in his bank account. In reply to the said notice, assessee submitted his reply dated 4.7.2013, wherein the assessee duly stated that the said amount was a loan received from his wife which has been duly accounted for in the books of accounts and the details regarding the same were submitted to the AO during the course of assessment proceedings. However, the Ld. CIT disregarded the submissions of the assessee and issued notice u/s. 263(1) of the Act on 9.12.2013, requiring the assessee to show cause as to why the assessment may not be cancelled. In reply to the said notice, assessee submitted its reply dated 14.2.2014, wherein it was stated that the details regarding the unsecured loans received during the year were duly submitted to the AO in the original assessment proceedings u/s. 143(1) of the Act. However, the Ld. CIT ignored the explanation offered by the assessee and set aside the assessment order and directed the AO to make fresh assessment vide his order dated 24.2.2014 passed u/s. 263 of the I.T. Act, 1961 by adjudicating as under:- 2. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use as to why an appropriate order u/s. 263(1) of the I.T. Act may not be passed by cancelling the assessment order passed by the AO on 23.12.2013, requiring the assessee to show cause as to why an appropriate order u/s. 263(1) of the I.T. Act may not be passed by cancelling the assessment order passed by the AO on 23.12.2013. Sh. Viney Goel, CA attended the proceedings and the case was adjourned to 8.1.2014 on the request of the assessee. Again, the case was fixed for 14.2.2014. On 14.2.2014, Sh. Viney Goel, CA attended and filed written reply, which has been considered. The Assessee has mainly contended that all the aspects of the case were examined by the AO before passing the assessment order and the order passed by the AO is not erroneous and prejudicial to the interest of revenue. 4. Thus, from the discussions above, it emerges that in this case substantial income has escaped assessment due to non-application of mind by the AO to the facts of the case, thereby rendering the assessment under consideration erroneous and prejudicial to the interest of revenue. These conditions are satisfied as the impugned assessment order has been passed, without proper investigation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters of fact/mistaken conception or application of law to the given facts are met in the instant case. The AO has completed assessment without carrying out necessary enquiries end investigations to verify the creditworthiness of the creditor. Smt. Sunita Jain (wife of the assessee). This act of omission has resulted in revenue loss of at least over ₹ 25 Lacs, as discussed above. These acts of incorrect appreciation of fact and mistaken conception and application of law have clearly rendered the order of assessment passed by the AO, both erroneous and prejudicial to the interest of revenue in the light of the landmark decisions cited above. 5. I have carefully considered the submissions mode on behalf of the assesses but these are devoid of any merit. Undisputedly. no evidence was produced to prove the source of detail of cash into the bank accounts find also credit worthiness of the parties referred to above. Therefore, the onus of proving the credit worthiness of the creditors which is an essential ingredient of section 68 of the I.T. Act has not been discharged by the assessee. The assessee has no doubt filed affidavits confirming the advance of money received from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct understanding of the fact one need to be read the agreement date as 01-12-2008 in entirety. As per the agreement executed the assessee has sold the land and has handed over the possession also. The buyer has got the request to get it registered in his name and the seller is bound to get the same registered. Thus in terms of section 2(47) of the Income Tax Act read with section 53A of the Transfer of Property Act, the property got transferred on 01-12-2008, when agreement was executed into and possession handed over to the buyer in consequent to the sale agreement. The seller (Mrs. Sunita Rani) has duly declared the capital gain arising on such transfer under the agreement dated 01-12-2008 in AY 2009-10 as is evident from her statement and accepted as such. The Audit Party and CIT has failed to appreciate the agreement and provisions of Income Tax Act and indulging into surmises and conjectures have ignored the agreement and on the basis of GPA executed later on 18-11-2009 has held that previous agreement is after thought ignoring the very fact that return by Mrs. Suntia Rani declaring the capital gain was filed on 31-03-2010 much before the AO initiated enquiry on 28-10-2010. Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the AO, that the cash deposits made were on account of loan received from the wife on the assessee, Smt. Sunita Jain. In order to prove the source of funds available with the wife of the assessee, an Affidavit was filed by Smt. Sunita Jain confirming the unsecured loan given to the assessee and further giving details and documentary evidences with regard to the source of funds available with her along with her income tax return and computation clearly declaring capital gain. Thus in our considered opinion, the AO during assessment proceeding has examined this issue. It is not a case where AO has not applied his mind. The AO, after obtaining the details and other evidences, was satisfied and hence accepted the contention of the assessee. It is important to note that issue was a cash credit under section 68 talks about satisfaction of the AO. Thus AO being satisfied after the reply, the CIT cannot sit on the judgment of AO to review the order under section 263. It is not the case of no or lack of enquiry. Inadequate enquiry cannot be a subject matter and trigger for invoking the provisions of section 263. In order to support our aforesaid view, we draw support from the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where per se further investigation was required. Commissioner in his order, as noticed above, has been tentative and hesitant and did not decide whether the claim under section 80HHF has been rightly allowed by the Assessing Officer. He has noted the stand of the assessee, before him and before the Assessing Officer, but refrained from forming any opinion as to whether the acceptance of the claim by the Assessing Officer was erroneous or not. Power of review under section 263 can be invoked only if the order is erroneous and for this the Commissioner must record the reason that the order was erroneous and the claim under section 80HHF was wrongly allowed. Once the said claim under section 80HHF was considered and examined by the Assessing Officer, Commissioner cannot set aside the order without recording contrary finding. This will be contrary to section 263. The Commissioner had used the expressions 'erroneous and prejudicial to the interest of revenue' but did not cite any reason or ground for the said conclusion. Use of the words without elucidation indicates that the said observation are presumptive or a suspicion and mere repetition of words but this does not sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee to the extent of his proving the source whom which he has received the cash credit. The High Court held that the AO had ample 'freedom' to make inquiry not only into the source(s) of the creditor, but also of his (creditor's) sub-creditors and prove, as a result, of such inquiry, that the money received by the Assessee, in the form of loan from the creditor, though routed through the subcreditors, actually belongs to, or was of, the assessee ,himself. Thereafter, the High Court, on a harmonious construction of Section 106 of the Evidence Act and Section 68 of the Act, held as under: What, thus, transpires from the above discussion is that while Section 106 of the Evidence Act limits the onus of the Assessee to the extent of his proving the source from which he has received the cash credit, Section 68 gives ample freedom to the Assessing Officer to make inquiry not only into the sources of the creditor, but also of his (creditor's) subcreditors and prove, as a result, of such inquiry, that the money received by the Assessee, in the form of loan from the creditor, though routed through the subcreditors, actually belongs to, or was of, the Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up a presumption against the Assessee whenever unexplained credits are found in the books of accounts of the Assessee. It cannot but be gainsaid that the presumption is rebuttable. In refuting the presumption raised, the initial burden is on the Assessee. This burden, which is placed on the Assessee, shifts as soon as the Assessee establishes the authenticity of transactions as executed between the Assessee and its creditors. It is no part of the Assessee's burden to prove either the genuineness of the transactions executed between the creditors and the sub-creditors nor is it the burden of the Assessee to prove the credit worthiness of the sub-creditors. 14. In Modi Creations Pvt. Ltd. (supra) this Court negatived the case of the Revenue that the onus was on the Assessee to prove the source of the sub-creditor. It was observed as under: 14. With this material on record in our view as far as the Assessee was concerned, it had discharged initial onus placed on it. In the event the revenue still had a doubt with regard to the genuineness of the transactions in issue, or as regards the credit worthiness of the creditors, it would have had to discharge the onus which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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