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TMI Blog2015 (10) TMI 2588X X X X Extracts X X X X X X X X Extracts X X X X ..... RANO JAIN, ACCOUNTANT MEMBER Appellant by: Shri Tej Mohan Singh Respondent by: Shri Manjit Singh O R D E R PER BHAVNESH SAINI,JM This appeal by assessee is directed against the order of Ld. Commissioner of Income Tax-II , Chandigarh dated 21.03.2013 for assessment year 2008-09 under section 263 of the Income Tax Act. 2. Briefly the fact of the case are that return of income was filed by assessee on 28.07.2008 declaring income of ₹ 1,75,400/- and assessment under section 143 (3) was completed on 16.12.2010 at an assessed income of ₹ 7,00,400/-. From the perusal of the assessment record, it was noted that there was an AIR information in the case of the assessee which revealed that during the period under consideration, assessee had made investments in Mutual Funds amounting to ₹ 29 lacs. Further, the assessee himself admitted of having made total investment in shares and Mutual Funds in a sum of ₹ 58.3 lacs approx. The details are as under : 1.Mutual Funds ₹ 51 Lacs approx. 2.Shares ₹ 6.30 Lacs approx. 3.IPOs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue and relied upon decisions of Hon'ble Supreme Court in the cases of Rampyari Devi Saraogi V CIT 67 ITR 84 and Malabar Industries Co. Ltd. 243 ITR 83. The ld. CIT issued show cause notice under section 263 of the Income Tax Act on 31.01.2013 as to why the assessment order be not set aside. The assessee requested for copies of the document submitted during the course of assessment proceedings which were provided to the assessee. The assessee filed written statement which ld. CIT(Appeals) have discussed in the impugned order. 3.2 Sale of Properties (A) House No. MIG 8131, Sector 10, Ambala City The assessee submitted that the house was allotted to Mrs. Neeraj Sehgal vide allotment letter dated 26.09.1993. Owner has paid ₹ 50,930/-. The owner has spent about ₹ 20.000/-to make it livable and paid the balance installment of ₹ 2236/- per month for 13 years. Accordingly the indexed cost of acquisition has been calculated and accepted by the Assessing Officer. A copy of the allotment has been furnished. The owner is a sister-in-law of the assesses who has sold it on her behalf. All relevant papers were produced before the Assessing Officer during assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Vijay Kumar Arora. As per Mukhtiarnama dated 26.04.2006, the allottee Sh. Vijay Kumar Arora has Grante dright of the said flat to the assessee including possession, construction, transfer in own name or in the name of any other person, or to sell the property etc. These documents indicated involvement of the assessee in purchase sale of the property. It was also noted that as per allotment letter, ₹ 9,14,450/- was paid to Amritsar Improvement Trust, Amritsar in instalments. The assessee claimed payment of one instalment of ₹ 1,46,250/- but he is totally silent about the source of payment of remaining installments. Further, taking in account these installments and amount claimed to have been paid to the original allottee at ₹ 2,00,000 , his payments prior to 10.07.2006 itself works out at ₹ 5,29,450/- and further taking in account the payment of ₹ 1,46,250 through his bank account, his cost comes at ₹ 6,75,700. But assessee claimed sale consideration of ₹ 5,00,000/- only, therefore, cost is improbable. Further, no document of the creditworthiness of the purchaser and genuineness of transactions were filed. The Assessing Officer, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. in 1981. He left the job in I992 and got about 2 Lac rupees on account his full final settlement of accounts on account of gratuity, PF etc. Then he worked in Steel Strips Wheels Limited, Mohali, Vardhman Baddi. After serving for 5 years in 3 companies he got ₹ 4 lac rupees as his gratuity, PF leave encashment etc. then he worked with BPL, Sahibabad U.P. for six years and got rupees 4 lac on account of gratuity, PF ESI etc. His wife has also taken a loan of ₹ 7 lacs form her P.F.. These funds were invested prudently by the assessee from time to time and this amount was placed in the shape of FDR which were encashed from time to time. The assessee filed cash-flow statement before Assessing Officer which is self-explanatory for all the entries in the bank account of the assessee. While framing the assessment, Assessing Officer has applied his mind to cash-flow statement and assessee has explained the availability of the funds. 6. The ld. CIT, on perusal of the cash-flow statement submitted by the assessee before Assessing Officer noted that though assessee has withdrew cash from the bank, even though he was having sufficient cash in hand and without any need, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee after issuing query letters and considering the reply of assessee as well as material on record. He has submitted that CIT did not apply mind to the assessment record and merely on the basis of audit objection raised by the Audit Party, issued notice under section 263 of the Act, therefore, the impugned order is bad in law. He has relied upon order of ITAT Chandigarh Bench in the case of Jaswinder Singh Vs CIT-II in ITA 690/2010 dated 09.03.2012, copy of the order is placed on record in which the Tribunal followed the decision of jurisdictional Hon'ble Punjab Haryana High Court in the case of CIT V Sohana Woollen Mills 296 ITR 238 for quashing the order under section 263 of the Act. He has submitted that assessee filed cash-flow statement also before Assessing Officer to explain availability of the source of making investments in Mutual Funds and shares which was correctly accepted by Assessing Officer. He has submitted that even if Assessing Officer passed brief order, it is not subject to revision under section 263 of the Act and relied upon decision of Hon'ble Punjab Haryana High Court in the case of Hari Iron Trading Co. V CIT 263 ITR 437. The ld. counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussion with regard to assessment of the assessee, assessee offered an amount of ₹ 5,25,000/- to tax on account of deposit in the bank account. The Ld. Commissioner of Income Tax in the impugned order, on perusal of the assessment record noted that there was an AIR information in the case of assessee which revealed that during the year under consideration, assessee had made investments in Mutual Funds amounting to ₹ 29 lacs. It is, therefore, clear from these facts that the case of the assessee was selected for scrutiny assessment on the basis of AIR information received with regard to investments made by assessee in Mutual Funds etc. The ld. counsel for the assessee submitted that CIT did not apply mind to the record of the case and merely on audit objection, initiated proceedings under section 263 of the Act. Copy of the audit objection is filed at page 63 of the Paper Book which contained the date of audit for assessment year under appeal on 09.03.2011. 9 (i) The Audit Party recorded major audit objection and similar facts have been recorded in the audit objection with regard to AIR information received in respect of investments made by assessee in Mutual Funds an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l action in the matter. These facts, therefore, clearly show that the CIT-II Chandigarh, on receipt of the audit objection, has initiated the proceedings under section 263 of the Act. 10. The ITAT Chandigarh Bench in the case of Jaswinder Singh V CIT-II Chandigarh in ITA 690/2010 vide order dated 09.03.2012 decided the similar issue in favour of the assessee. The findings of the Tribunal in para 19 to23 of this order are reproduced as under : 19. Our attention was drawn by the learned A.R. for the assessee to the audit objection raised in the present case and the main contention of the assessee was that there was no independent application of mind by the Commissioner of Income Tax. Second plea of the assessee in this regard was that the audit objections were not record for invoking jurisdiction under section 263 of the Act. The Commissioner of Income Tax while exercising his jurisdiction under section 263 of the Act is empowered to call for and examine the record of any proceedings under the Act and where he thinks that the order passed by the Assessing Officer was both erroneous and prejudicial to the interest of Revenue, he may after giving an opportunity of hearing to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority, while making the assessment, or the authority empowered to rectify a turnover, which had escaped assessment, has acted without jurisdiction, revisional jurisdiction could have been exercised. Emphasised the Supreme Court, in the case of Sirpur Paper Mill Ltd. v. CWT [1970] 77 ITR 6 , that while exercising power, the Commissioner must have an unbiased mind and decide the dispute according to the procedure which is consistent with the principles of natural justice and cannot permit his mind to be influenced by the dictation of another authority. The relevant observations made by a three-judge Bench of the Supreme Court, in the case of Sirpur Paper Mill Ltd. [1970] 77 ITR 6, read as follows (page 7): In exercise of the power the Commissioner must bring to bear and unbiased mind, consider impartially the objections raised by the aggrieved party, and decide the dispute according to procedure consistent with the principles of natural justice ; he cannot permit his judgment to be influenced by matters not disclosed to the assessee, nor by dictation of another authority. 22. Similar view has been taken by the Calcutta High Court in Jeewan Lal (1929) Ltd. Vs. Addl. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the assessee and against the revenue by the above judgement. The impugned order under section 263 of the Act is, thus, wholly unjustified and is liable to be quashed because the proceedings under section 263 have been initiated on mere audit objection. 12. It is not in dispute that the issue before the Assessing Officer at assessment stage was with regard to source of investments under Mutual Funds and shares. The CIT also noted in the impugned order that during the assessment proceedings, the source of the above investments were explained to be from sale of three house, three cars and loan of ₹ 9.92 lacs. The assessee also offered Rs.; 5,25,000/- for the purpose of taxation. The ld. counsel for the assessee filed copies of all the queries raised by the Assessing Officer, replies filed by assessee and documents filed before Assessing Officer at the assessment stage in the Paper Book. PB-5 is the notice of Assessing Officer dated 9/10.08.2010 addressed to the assessee in which the Assessing Officer asked the details of bank accounts maintained by assessee in his name as well as in the name of his family members and copies of all bank accounts alongwith narration of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e investment in shares and mutual funds. PB 36 to 40 is the details of investments in mutual fund filed before Assessing Officer. PB 41 to 43 is the sale agreement dated 01.10.2007 between Smt. Neeraj K. Sehgal through assessee with Smt. Shamsher Kaur with (PB-44) affidavit of Smt. Shamsher Kaur affirming that ₹ 5 lacs have been given to assessee for sale of the property in question. PB-45 to 47 is the agreement to sell dated 10.07.2007 between assessee and Shri Didar Singh with affidavit of Shri Didar Singh affirming that sale consideration of ₹ 5 lacs have been given to the assessee. PB 48 to 52 is the copy of the sale agreement dated 10.01.2008 between assessee and Smt. Reeta Sethi with affidavit giving ₹ 5.35 lacs to the assessee. PB 53 to 54 is statement of account with M/s Master Capital Services, PB- 55 to 62 are the payment receipts, copy of RC of sale of cars by assessee to the purchaser and affidavit of the purchaser affirming payments given to the assessee. All these documents were filed at assessment stage. PB-80 is affidavit of Shri Bhupesh Sehgal affirming giving loan of ₹ 9.92 lacs through banking channel.Except the affidavit of Shri Bhupesh S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer ha taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law. 12(iii)The Hon'ble Punjab Haryana High Court in the case of CIT V Deepak Mittal 324 ITR 411 held as under : Change of opinion by reappraising the evidence is not within the para-meters of revisional jurisdiction of the Commissioner under section 263 of the : Act, 1961. Held, dismissing the appeal, that the Tribunal had found that the Assessing Officer had given a categorical finding that the assessee was engaged in the process of manufacturing of products and accordingly he had granted concession under section 80-IB. The claim of the assessee had been found to be genuine. The Assessing Officer had also examined the various workers of the assessee and then recorded the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 263 was wholly jus- tified. The Tribunal found that the defence on the part of the Commissioner factually incorrect and contrary to record. On the question whether or not discussion of the queries and reply received from the assessee, in the assessment order, was necessary, the Tribunal held that once inquiry was made, a mere non-discussion or non- mention thereof in the assessment order could not apply his mind or that he had not made inquiry on the subject and this would not justify interference by the Commissioner by issuing notice under section 263. The Tribunal allowed the assessee's appeal. On appeal: Held, dismissing the appeal, that though the Revenue sought to re-argue before the court that no inquiry had been made by the Assessing Officer with respect to the queries set up in the notice issued under section 263, when his attention was drawn to the order passed by the Tribunal recording contrary findings, he could not place anything to show that the findings recorded by the Tribunal were perverse or contrary to the record. 14. Further, as regards to unexplained loan of ₹ 9.92 lacs received from Shri Bhupesh Sehgal, the assessee in his reply before Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or mistake made by the Assessing Officer, making the order unsustainable in law. An order of remit cannot be passed by the Commissioner to ask the Assessing Officer to decide whether the order was erroneous. Held, dismissing the appeal, that inquiries were certainly conducted by the Assessing Officer. It was not a case of no inquiry. The order under Section 263 itself recorded that the Director felt that the inquiries were not sufficient and further inquiries or details should have been called for. The enquiry should have been conducted by the Director himself to record the finding that the assessment order was erroneous. He should not have set as and directed the Assessing Officer to conduct the inquiry. 15. Considering the above discussion, it is clear that CIT initiated proceedings under section 263 of the Act on mere audit objection. The Assessing Officer has made enquiry with regard to investments in shares and mutual funds at assessment stage and assessee vide his reply dated 07.12.2010 offered the amount for taxation on account of capital gains. Therefore, it is not a case of no enquiry on capital gains by Assessing Officer. Therefore, the reasons given by the CIT in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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