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TMI Blog2017 (8) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... return in this case was filed on August 16, 2012 declaring an income at Rs. 8,03,140. The assessment was completed under section 153A read with section 143(3) of the Income-tax Act,1961 (in short "the Act") vide order dated February 25, 2013 determining the total income at Rs. 11,53,142. Thereafter the learned Principal Commissioner of Income-tax (Central), Ludhiana issued a show- cause notice under section 263 of the Act dated January 8, 2015, which is reproduced in the impugned order, in which the learned Principal Commissioner of Income-tax noted that the assessee had purchased 3150 shares of M/s. Pragati Nirman Pvt. Ltd. for a consideration of Rs. 1,22,85,000 at Rs. 3,900 per share. The learned Principal Commissioner of Income-tax noted that the search under section 132 of the Act was carried out on October 30, 2006 on the following group of cases : (1) Narain and company group of cases (2) Rajinder Puri group of cases (3) Gulati group of cases (4) H. S. Chadha group of cases (5) VTC group of cases 4. The learned Principal Commissioner of Income-tax pointed out that during the course of search certain documents were found and seized at the residence of Shri Surinder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate per share found in the course of search. Thereafter the learned Principal Commissioner of Income-tax relied upon his order passed in the case of M/s. Gopal Castings (P.) Ltd. for the assessment year 2006-07 in the proceedings initiated under section 263 of the Act and for the reasons discussed in the said order, held the order passed by the Assessing Officer in the present case also as erroneous in so far as it was prejudicial to the interests of the Revenue. The learned Principal Commissioner of Income-tax set aside the order of the Assessing Officer with the direction to make fresh assessment de novo after properly examining the facts of the case and the relevant legal provisions and conducting proper enquiry. 5. The assessee is in appeal before us challenging the aforesaid order passed under section 263 of the Act. During the course of hearing before us, the learned counsel for the assessee at the outset pointed out that the order passed under section 263 of the Act in the case of Gopal Castings (P.) Ltd., which had been heavily relied upon by the learned Principal Commissioner of Income-tax in the present case had been set side by the Income-tax Appellate Tribunal in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Surinder Gulati, it is very clear that the applicant name is not mentioned anywhere in the documents to prove the receipt of consideration in cash from the applicant. It is pertinent to mention that the in the statement of Sh Surinder Gulati he clearly admit that he sold the shares of Pragati Nirman Private Limited at Rs. 3,900 per share and no extra consideration was received. On the basis of documents found from the third party premises, in which the applicant name is not mentioned anywhere, no adverse inference can be taken in this regard." 7. The learned counsel for the assessee pointed out that it is evident from the above that all necessary enquiries relating to the transaction of shares purchased of M/s. Pragati Nirman Pvt. Ltd. were made during the assessment proceedings and the Assessing Officer being satisfied with the reply filed by the assessee in this regard had formed a reasonable opinion and made no addition on account of the same. The learned counsel for the assessee stated that it is evident from the above that the Assessing Officer had duly applied his mind on the issue and had formed an opinion. The learned counsel for the assessee contended that in such circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irstly, we find that the learned Principal Commissioner of Income-tax had assumed jurisdiction under section 263 and passed the impugned order relying heavily on the reasonings given in the case of Gopal Castings (P.) Ltd. on an identical set of facts and circumstances. The said order in the case of Gopal Casings (P.) Ltd. as has been pointed out to us by the learned counsel for the assessee has been set aside by the Income-tax Appellate Tribunal in the order passed in I. T. A. No. 430/Chd/2015 dated April 29, 2016. In the said order the Income-tax Appellate Tribunal held the proceedings under section 263 to be unjustified and unreasonable because all the seized material which formed the basis of the addition made was found by the Income-tax Appellate Tribunal to have been duly considered by the Assessing Officer. It was further found by the Income-tax Appellate Tribunal that no evidence was found against so as to connect with the addition on the merits. The Income-tax Appellate Tribunal also found that the addition made on account of difference in purchase price of M/s. Pragati Nirman Pvt. Ltd. made in the case of Shri Ashish Singha had been deleted by the Tribunal vide its order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch was recorded under section 132(4) of the Income-tax Act which is also reproduced in his assessment order as above. The seized paper along with small blue diary marked 'Raymond' were confronted to him in which he has admitted that the diary was written in his hand writing and belongs to him. He has also explained the abbreviations contained in the seized paper but none of the abbreviations were having any link or connection with the assessee. In answer to one of the questions, while referring to the seized paper, he has explained that these are estimates and the actual fact remained that he has received money at Rs. 3,900 per share. Shri Surinder Gulati did not make any allegation against the assessee in respect of shares purchased by the assessee. The seized paper as referred in his assessment order have been reproduced in which, on certain shares the value have been shown at Rs. 3,900 as well as in another paper, the same rate is mentioned against the total shares of 3258 and in the third seized paper, the total sale proceeds of 3258 shares have been considered by the Assessing Officer in a sum of Rs. 2.13 crores. This sale consideration was divided by 3258 shares and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable when the seized paper is recovered from the third party and not from the assessee. We are fortified in our view by the order of the Income-tax Appellate Tribunal Ahmedabad Bench in the case of Sheth Akshay Pushpavadan v. Deputy CIT [2010] 130 TTJ (UO)(Ahd) 42. Once the seized papers were not found reliable in the case of Shri Surinder Gulati from whose possession the same were recovered, there is nothing left for consideration against the assessee. 10.(ii) The assessee in addition to the above also explained that when the statement of Shri Surinder Gulati was also recorded in the case of Shri Madan Gulati, he has not supported the case of the Revenue in his statement. He has also explained in the statement that Rs. 80 lakhs was surrendered on account of dealing with the Varanasi party which has also no connection with the assessee. The assessee also filed the profit and loss account of PNPL to show that there was a very little profit in their case and that property was leasehold held by them and that revaluation of the shares shows the lesser amount as against the purchase consideration declared by the assessee would clearly support the case of the assessee that the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the learned Commissioner of Income-tax (Appeals). The contention of the learned Departmental have no force that when one transaction is conducted at the same rate, the same rate should be applied in other cases. In view of the above, we do not find any merit in the Departmental appeal. The same is accordingly dismissed.' 13.(i) Following the findings of the Tribunal in the cases of Ashish Singla (supra), there would be no justification to proceed with the proceedings under section 263 of the Act and no purpose would serve to uphold the order of the learned Principal Commissioner under section 263 of the Income-tax Act, particularly when the Departmental appeal in the case of the assessee has already been dismissed by the Tribunal confirming the deletion of the additions on the merits by the learned Commissioner of Income-tax (Appeals). 14. Considering the above discussion and in the light of various orders referred to above, we are of the view that the proceedings under section 263 are clearly beyond the competence of the learned Principal Commissioner of Income-tax and the whole proceedings are unjustified and unreasonable, therefore, the impugned order could not be sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 263 of the Act by the learned Commissioner of Income-tax only if it satisfies the twin conditions of being erroneous as well as prejudicial to the interests of the Revenue. In the present case, we find no error in the order of the Assessing Officer. Our view gets strengthen by the judgment of the hon'ble apex court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC), wherein it was held as under (headnote) : '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 has 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. The said view has also been held in a judgment of the hon'ble jurisdictional Punjab and Haryana High Court in the case of CIT v. Indo German Fabs (I. T. A. No. 248 of 2012, dated December 24, 2014), in the following words : 'Section 263 of the Act confers power to examine an assessment order so as to ascertain whether it is erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of difference of opinion, the learned Commissioner of Income-tax cannot invoke the jurisdiction under section 263 of the Act. This view also get supported by the landmark judgment of the hon'ble Bombay High Court in the case of CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom). 15. It is a matter of fact that the Assessing Officer being an adjudicating officer has to form an opinion on the basis of evidence, which he has duly done. If the learned Commissioner of Income-tax on the same set of evidence forms an opinion, it being a question of fact, does not given him jurisdiction to revise the same under section 263 of the Act. This is certainly a case of difference of opinion between the Assessing Officer and the Commissioner of Income-tax. The only contention of the Commissioner of Income-tax seems that the Assessing Officer should have made further enquiries/investigation, which he has not done. However, for assuming jurisdiction under section 263, one has to keep in mind the distinction between lack of inquiry and inadequate enquiry. If there was an enquiry, even inadequate, that would not by itself give occasion to the Commissioner of Income-tax to pass order under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that once the particular issues have been decided in favour of the assessee by the Income-tax Appellate Tribunal, even if in earlier assessment years, how the Commissioner of Income-tax can infer that the same view having been taken by the Assessing Officer in subsequent assessment year, is erroneous. This is totally against the principles of judicial discipline and binding precedent. It is the spirit of law that the view taken by a higher authority is binding on all the lower authorities. The view taken by the Income- tax Appellate Tribunal is binding on the Assessing Officer as well as the Commissioner of Income-tax (Appeals) and even on the Commissioner of Income-tax, assuming jurisdiction under section 263 of the Act. Even if at the time of passing the order, the Assessing Officer did not have the benefit of the order of the Income-tax Appel late Tribunal in the earlier years, the Commissioner of Income-tax, while assuming jurisdiction under section 263 had the benefit of the same. Therefore, the order was binding on the Commissioner of Income-tax. 11. Since the issues have been settled by the Income-tax Appellate Tribunal and the same view has been taken by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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