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TMI Blog2017 (6) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... ings are not sustainable in the light of the ratio of the decision of the Hon'ble Delhi High Court in the cases of Jyoti Foundation (2013 (7) TMI 483 - DELHI HIGH COURT) and D.G. Housing Projects Ltd. (2012 (3) TMI 227 - DELHI HIGH COURT ). Thus, we are inclined to hold that the Commissioner has wrongly invoked the provisions of section 263 of the Act for issuing notice and passing the impugned order. - Decided in favour of assessee. - ITA Nos. 1009 to 1011/Ind/2014 - - - Dated:- 24-4-2017 - Shri C.M. Garg, Judicial Member, And Smt. Annapurna Gupta, Accountant Member For The Appellant : Shri Neeraj Jain For The Respondent : Shri Sushil Kumar ORDER PER SHRI C.M. GARG, JM These appeals have been directed by the assessee against the consolidated order of the learned CIT (Central), Gurgaon, dated 27.3.2014 passed under section 262 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) 2. There is a delay of 174 days in filing these appeals and as such these appeals are barred by limitation. 3. Before us, applications for condonation of delay in filing these appeals for the assessment years, under consideration, have been filed on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peared before CIT (A) on my behalf. I was under a bonafide belief that the appeal has been filed by the counsel. However, subsequently, in and around March, 2012, I received the penalty order U/s 271(1) (c). At that time, I got the knowledge that the quantum appeal has not been filed by the earlier counsel. Thereafter, I collected my records from the old counsel and engaged new counsel and consequently the appeal before Hon ble Income Tax Appellate Tribunal was filed. 4. The assessee has also filed an affidavit of Sh. N. K. Bansal, the C.A who was noting after the case before the Ld. CIT(A) along him Sh. Himanshu Goel, CA, stating as under:- I, Naresh Kumar Bansal S/o Sh. Mani Ram Bansal R/oD-503, Wembley E State, Rosewood city, Sector-49, Gurgoan, Haryana, CA by profession do hereby solemnly declare and affirm as under:- 1. That I have been looking after the income tax matters of Sh. Daya Ram Mittal S/o Sh. Bishamber Dayal Mittal R/o House No.77, Block H- 4/5, Suvidha Kunj Pitampura, New Delhi. 2. That for the A.Y. 2006-07, 1 had been looking after the income tax assessment and appeal matter before CIT(A) along-with C.A. Himanshu Goel. That after the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing appeal before the Tribunal and he was under bonafide belief that appeal has been filed and this fact came to his notice when (the assessee) received penalty order u/s 271 (1) (c) of the Act. 8. On careful consideration of above rival submissions of both the sides, we are of the view that the prayer for condonation of delay falls with the ambit of the ratio of the order of the Tribunal in the case of Gregory Nicholas V/s ACIT (supra) where in para 8, referring to the order of the ITAT Mumbai in the case of Priyanka Chopra vs ACIT in ITA No. 4045/Mum/2009 dated 10/12/2010, it has been noted that the mistake on the part of the counsel may in certain circumstances be taken into account in dealing in delay. 9. In the present case, the assessee as well as his earlier counsel have filed their affidavits supporting the sufficient cause and no rebuttal have been filed against these affidavits, hence, firstly we note that there is no general proposition that mistake of counsel itself is always a sufficient cause. This question when posed to the courts is always a question whether the explanation and reason for delay was bonafide or was a mere device to cover anulterior p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, following the above order of the B-Bench of the Delhi Tribunal, hold that the assessee has succeeded in establishing a bonafide sufficient cause as a result of which delay was caused in filing these appeals before the Tribunal within the limitation period. We, therefore, condone the delay involved in these appeals and admit the same for hearing on merits. 6. Before us, both the parties agreed that all the grounds involved in these appeals are identical. We, therefore, for the sake of brevity, reproduced grounds of appeal taken by the assessee in ITA No. 1009/Ind/2014 :- 1. That the ld. CIT is not justified in not giving the proper opportunity of hearing, which is against the natural justice and the order passed by CIT be quashed. 2. That the ld. CIT is not justified in issuing the notice u/s 263 and also not justified in passing the order u/s 263 3. That the assessment made by ld. A.O. is not erroneous and also not prejudicial to the interest of the revenue and the order passed by ld. CIT u/s 263 is bad in law. 7. Briefly stated, the facts giving rise to this appeal are that a search operation under section 132 of the Income tax Act, 1961 (in short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e premises of Shri Ashok Mittal. Finally, the assessment orders for all the three years dated 25.8.2011 were set aside and the assessments for all the three years were restored to the file of the Assessing Officer. Now, the aggrieved assessee is before the Tribunal with the grounds as reproduced hereinabove. GROUND NO.1 9. We have heard the arguments of both the sides and carefully perused the relevant material placed on record of the Tribunal. The learned AR submitted that the Commissioner was not justified in not giving proper opportunity of hearing to the assessee which is against the principle of natural justice and, therefore, the order passed by the Commissioner be quashed. Replying to the above, the learned DR drew our attention to para 4 of the impugned order and submitted that on 11.2.2014 the assessee through his counsel sought adjournment which was allowed for 14.3.2011 and on the date fixed, neither the assessee nor his authorised representative attended the proceedings nor any written submissions or application for adjournment were filed. Therefore, the Commissioner was quite justified in passing the impugned order as the case was going to be barred by limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see further submitted that during the assessment proceedings of Shri Ashok Mittal, the case was referred to special auditor who submitted his report on 25.6.2011 after raising query with regard to papers of R.D. Property Consultants to Shri Ashok Mittal and considering his reply to such query. In the reply filed by Shri Ashok Mittal to the special auditor, he stated that he has no connection with such alleged party, R.D. Property Consultants, and he provided the addresses of the said six persons and the address of Dimple was the same as that of Shri Ramesh Mittal i.e. house no. 515, Sector 16, Panchkula. 12. The learned counsel for the assessee further submitted that subsequently Shri Ashok Mittal filed an application before the Income Tax Settlement Commission on 28.3.2011 and alleged papers of R.D. Property Consultants were duly examined in the case of Shri Ashok Mittal by the Assessing Officer, special auditor, Income Tax Settlement Commission and the Commissioner. The learned counsel for the assessee further submitted that the Assessing Officer issued summons u/s 131(1) of the Act to 5 persons, namely, R.D. Property Consultants, Dimple , Rajinder, Rajiv Kumar and Budh Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nership deed or any other relevant document, they are not in a position to frame their opinion on the constitution of R.D. Property Consultants. The learned counsel for the assessee further drew our attention to para 2 pages 14 and 15 of the assessee s paper book and submitted that after verification and examination of the relevant documents from all angles it was opined by the special auditor that total cash credits of ₹ 8,84,36,200/- in the trial balance are unexplained cash credits chargeable to tax under section 68 of the Act. However, this computation of undisclosed income pertains to R.D. Property Consultants and the same may be assessed in the case of relevant assessee after finding out the constitution of this firm i.e. R.D. Property Consultants. 14. The learned counsel for the assessee strenuously pointed out that the Commissioner during the course of proceedings before the Income Tax Settlement Commission filed the report under rule 9 of Income Tax Settlement Commission (Procedure) Rules, 1997 on 26.3.2012 in which these papers of R.D. Property Consultants had been considered. The learned counsel for the assessee further submitted that the Commissioner in his rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the case of Shri Ashok Mittal by the Assessing Officer of the assessee as both the Assessing Officer are the same, by the special auditor, by the Commissioner in his report submitted to the Settlement Commission and by the Settlement Commission also separately. Therefore, it cannot be held that the Assessing Officer has not examined the issue properly. 16. On the issue of directions by the Commissioner to the Assessing Officer in the concluding part of the impugned order, the learned counsel for the assessee submitted that from para 6 of the impugned order it is clear that in the opinion of the Commissioner, the said issue has been examined earlier and now it needs to be re examined. The learned counsel for the assessee submitted that even after passing the impugned order u/s 263 of the Act, the Commissioner was not definite regarding the ownership and constitution of R.D. Property Consultants and for invoking the provisions of section 263 of the Act. He submitted that the error should not depend upon possibility or guess work but should be actually an error which is discernible from the assessment record and the order under revision. The learned counsel for the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al auditor and there was nothing adverse in the special auditor s report, which was also considered by the Settlement Commission then it cannot be alleged that the Assessing Officer did not conduct any inquiry on the alleged documents relating to R.D. Property Consultants. The learned counsel for the assessee further submitted that that if alleged documents of R.D. Property Consultants were part of the assessment record of Shri Ashok Mittal then the inquiry conducted by the same Assessing Officer during the assessment proceedings in the case of Shri Ashok Mittal was sufficient and there was no requirement of further inquiry during the assessment proceedings in the case of the present assessee i.e. Shri Ramesh Mittal. The learned counsel for the assessee vehemently contended that the revenue cannot kill the assessee by twin-edged sword by alleging contradictory allegation viz. firstly alleging that there was no inquiry by the Assessing Officer during the assessment proceedings of Shri Ramesh Mittal on the seized documents pertaining to R.D. Property Consultants and secondly by alleging that the inquiries conducted by the Assessing Officer in the case of Shri Ashok Mittal cannot be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed to make appropriate orders. The learned counsel also pointed out that the Hon ble Delhi High Court in the case of ITO v.s D.G. Housing Project Limited reported as 343 ITR 329 [Del], it was held that if there is no finding that order of the AO is erroneous and prejudicial to the interest of Revenue by way of making independent inquiry by the CIT, the revision of such order u/s 263 of the Act on the basis of bald and baseless allegations is not permitted. The learned counsel further submitted that the order of Hon ble Bombay High Court in the case of Nirav Modi has attained finality as the SLP of the department has been dismissed by Hon ble Supreme Court on 14.12.2016 copy of the said order of the Hon ble Apex nCourt has also been placed on record. 18. The learned CIT DR replying to the above submissions submitted that from a bare reading of the assessment order dated 25.8.2011 it is clear that the Assessing Officer has not made any examination or inquiry in regard to the documents relating to R.D. Property Consultants which were found during the course of search proceedings in the case of Shri Ashok Mittal. The learned CIT DR further submitted that that these documents w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Jyoti Foundation (supra) when the CIT without conducting any inquiry regarding alleged wrong opinion and findings arrived by the AO on merits directly jumped to a conclusion and himself decide that the order is erroneous then the reversionary power u/s 263 of the Act cannot be invoked and the CIT A is duty bound to conduct necessary inquiry before reversionary order under the said provision is passed. The ld. Counsel vehemently contended that in the present case without making any inquiry such power u/s 263 of the Act has been invoked by the CIT without assuming valid jurisdiction to revise the reassessment order passed u/s 143(3) r.w.s 153A of the Act, therefore impugned order of CIT and consequent proceedings in pursuance thereto may kindly be quashed. 20. On careful consideration of the above rival submissions and after respectful and diligent consideration of all the decisions and orders, cited at bar by both the parties, first of all, we note that the CIT issued following show cause notice u/s 263 of the Act on 21.1.2014 (copy at pages 36 and 37 of the assessee s paper book) :- The assessment order u/s 153A(1)(b) r.w.s. 143(3) of I.T. Act, 1961 dated 25.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt your explanation with regard to the proposed action. Please note that your explanation must be supported by satisfactory documentary evidences corroborating your contentions. The date of compliance is fixed for 11.02.2014, you may attend my office at Udyog Vihar, Phase-V, Gurgaon wither personally or through a representative duly authorized by you for this purpose. 21. It is trite that an order can be revised only and only if twin conditions of error in the order and prejudice caused to the Revenue co-exist. 22. The subject of revision under section 263 has been vastly examined and analyzed by various Courts including that of Hon ble Apex Court. The revisional power conferred on the CIT vide section 263 is of vide amplitude. It enables the CIT to call for and examine the records of any proceeding under the Act. It empowers the CIT to make or cause to be made such an inquiry as he deems necessary in order to find out if any order passed by Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The only limitation on his powers is that he must have some material(s) which would enable him to form a prima facie opinion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view under with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under the law. (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the CIT, while exercising his power under section 263, is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. (vii) The Assessing Officer exercise quasi-judicial power vested in him and if he exercise such power in accordance with law and arrives as a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. (viii) The CIT, before exercising his jurisdiction under section 263, must have material on record to arrive at a satisfaction. 23. If the Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order for the three years and thereafter he held that the order is erroneous and prejudicial to the interest of the revenue, which requires intervention u/s 263 of the Act. From the relevant operative part of paras 5 and 6 of the impugned order it is also discernible that after mentioning the facts which were stated in the notice u/s 263 of the Act and without making any inquiry himself, the Commissioner jumped to the conclusion that on the basis of statement of Shri Ashok Mittal the impugned amount of credit entry was neither properly investigated nor taken into account in computing the total income of Shri Ashok Mittal. The Commissioner further held that from a perusal of assessment record of the assessee for three years it was also transpired that the issue was not even confronted to the assessee and such an omission to inquire into substantial issue makes the assessment order erroneous and prejudicial to the interest of the revenue, which issue was neither inquired into nor any conclusion was drawn by the Assessing Officer in respect of credit entries in the name of Dimple which wa alias of the assessee. The Commissioner without making any inquiry himself proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaining to that entity. 26. At this juncture, we may point out that admittedly and undisputedly the Assessing Officer of Shri Ashok Mittal and Shri Ramesh Mittal is the same who framed the assessment orders u/s 153A read with section 143(3) of the Act for the entire group including Shri Ashok Mittal and Shri Ramesh Mittal as a result of the outcome of search and seizure operation. We may point out that if the contention of the learned DR is accepted that the Commissioner is validly eligible to see the assessment record of Shri Ashok Mittal and Shri Ramesh Mittal while invoking the provisions of section 263 of the Act then we cannot nignore that the Assessing Officer made inquiries regarding the documents found in the name of R.D. Property Consultants. From pages 1 to 5 of the assessee s paper book it is clear that the Assessing Officer issued summons under section 131(1) of the Act to 5 persons including R.D. Property Consultants and Dimple . Further from pages 16 to 19 of the assessee s paper book it is also discernible that the Assessing Officer issued requisition u/s 142(1) of the Act on 25.7.2011 wherein in clause (vi) it was specifically asked from Shri Ashok Mittal that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he report of Commissioner placed before the Commission under rule 9 of Settlement Commission Rules. At this juncture, it is also relevant to take note of the special audit report filed under section 142(2A) of the Act in the case of Shri Ashok Mittal (assessee s paper book pages 6 to 15). It is vivid that the special auditor in his report after detailed deliberation submitted the following facts :- 1. First of all, the assessee has denied the ownership of whole of the documents and trial balance seized which refers to a concern M/s R.D. Property consultants. Further, we also carried out verification of constitution of M/s R.D. Property Consultants. No bank accounts, pan card, Income tax particulars, partnership deed or any other relevant document came to our notice. In the absence of all this information, we are not in a position to frame our opinion on the constitution of M/s. R.D. Property Consultants. The undisclosed income on account of documents pertaining to M/s R D Property Consultants may be assessed in the hands of relevant assessee. 27. In view of the above, we have no hesitation to hold that the special auditor reported the Settlement Commission that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of Malabar Industrial Company Ltd. Vs. CIT (Supra), as relied upon by the learned Commissioner, in the case of no inquiry or lack of inquiry by the AO the CIT is validly empowered to invoke provision of section 263 of the Act, but for assuming valid jurisdiction the CIT is duty bound to show that there was lack of inquiry or no inquiry by the AO. In the present case the CIT is alleging against the AO the allegations of lack of inquiry by way of expecting from the AO to consider the assessment records of Shri Ashok Mittal wherein the same Assessing Officer has conducted inquiry on the issue and the report of special auditor and the Commissioner which was submitted before the Settlement Commission was also a part of that record wherein even the constitution of R.D. Property Consultants entity could not be discovered despite several efforts and the Settlement Commission dismissed at the threshold the recommendation of the Commissioner requesting to make the addition u/s 68 of the Act pertaining to the impugned credit entries shown in the seized documents in the name of R.D. Property Consultants. In this situation, if the contention of the learned DR is consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of twin conditions viz. the Assessment Order should be erroneous and prejudicial to the Revenue. By erroneous is meant contrary to law. Thus, this power cannot be exercised unless the CIT is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the Revenue. Thus where there are two possible views and the Assessing Officer has taken one of the possible views, no occasion to exercise powers of Revision, can arise. Nor can Revisional power be exercised for directing a fuller inquiry to find out if the view taken is erroneous, when a view has already been taken after inquiry. This power of Revision can be exercised only where no inquiry as required under the law is done. It is not open to enquire in cases of inadequate inquiry. Firstly, the Revenue contends that the exercise of powers under Section 263 of the Act is justified as in this case, as no inquiry in respect of the gifts received during the subject years was done by the Assessing Officer for the Assessment orders for Assessment Years 200708 and 2008 09. This according to the Revenue is evident from the Assessment Orders dated 31 December, 2009 and 30 th December, 2010 which does not even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to indicate that the evidence produced is not reliable and the Assessing Officer was satisfied with the same, then it is not open to the CIT to exercise his powers of Revision without the CIT recording how and why the order is erroneous due to not examining the donors. Thus, this objection to the impugned order by the Revenue is also not sustainable. It was next submitted that no enquiry was done by the Assessing Officer to find out whether the donor Mr Deepak Modi (father) had received money from M/s. Chang Jiang as claimed. Nor any inquiry was done to find out whether the sister had in fact earned amounts on account of Foreign Exchange Transactions as claimed by her. We find that this enquiry of a source of source is not the requirement of law. Once the Assessing Officer is satisfied with the explanation offered on inquiry, it is not open to the CIT in exercise of his revsional powers direct that further enquiry has to be done. At the very highest, the case of the Revenue is that this is a case of inadequate inquiry and not of no enquiry. It is well settled that the jurisdiction under Section 263 of the Act can be exercised by the CIT only when its a case lack of enquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case, the order passed by the Assessing Officer is not perse erroneous and further the CIT has not given any reasons to conclude that the order is erroneous. In fact, he directs the Assessing Officer to find out whether the order is erroneous by making further enquiry. This the decision of the Delhi High Court in DG Housing Projects Ltd., (supra), clearly negates. In the above view, the decision of Delhi High Curt in DG Housing Projects Ltd., (supra) would not assist the Revenue in the present facts. 33. In view of above, it is the dicta of Hon ble High Court of Bombay, which has been upheld by Hon'ble Supreme Court, wherein it has been held that the AO having raised queries and on perusal of the evidence furnished, he was satisfied with regard to the genuineness of the gifts [as per facts of that case], then revision by the CIT was not valid, therefore, their Lordships held that power of revision u/s 263 of the Act can be exercised where no enquiry as required under the law is done. It was also held that it is not open to enquire in cases of inadequate enquiry. In the present case, as we have noted above, if the assessment record of Shri Ashok Mittal is taken into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then he should have made inquiries himself. From the last operative para 6 of the impugned order it is clear that after making the allegations on the basis of assessment record of Shri Ashok Mittal and ignoring the inquiry conducted by the Assessing Officer in that case, the inquiry conducted by the Settlement Commission by way of calling special auditor report and the report from the Commissioner, the Commissioner proceeded to invoke the provisions of section 263 of the Act only on the basis of statement of Shri Ashok Mittal without examining the same himself. As per the ratio of the decision of the Hon'ble Delhi High Court in the case of Jyoti Foundation (supra) as relied upon by the learned counsel for the assessee, wherein it was held that in cases of wrong opinion by the AO the CIT has to come to a conclusion and himself decide that order is erroneous by conducting necessary inquiry, if required and necessary, before the order under section 263 of the Act is passed but in the present case, Commissioner has not conducted any such inquiry as per mandate of section 263 of the Act to show the order of the Assessing Officer is not sustainable and without conducting any further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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