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TMI Blog2019 (5) TMI 1547X X X X Extracts X X X X X X X X Extracts X X X X ..... bserve that the agreement value was executed @ 26,000/- per sqr. ft. Thus we find merits in the contention of the assessee that there is no question of on money as the agreement value was even higher than the maximum rate which was taken by the DDIT (Inv.), Mumbai to ascertain the amount of on money received by the builder. Moreover, the case of M/s. Runwal Homes Pvt. Ltd. vs. DCIT [ 2017 (12) TMI 1216 - ITAT MUMBAI] A.Y. 2015-16 the issue of on money has been decided in favour of the M/s. Runwal Homes Pvt. Ltd. by deleting the addition on account of on money. In view of the aforesaid facts, we are of the view that the revisionary order passed by the Ld. Pr. CIT(A) is without jurisdiction and has to be quashed on legal issue as well as on merit. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee as to why the assessment order completed under section 143(3) dated 29.12.2017 should not be revised under section 263 of the Act as the same is erroneous and prejudicial to the interest of the revenue. The assessee filed return submission on 27.12.2018 which are reproduced as under: "You have stated in your notice that you have received information from DDlflnv.). It says that Mr. Subodh Runwal- Director of Runwal Homes Pvt. Ltd. has given a statement in search proceeding u/s 132 that he received from me a sum of ₹ 1,14,06,000/- in cash as 'on money' while purchasing a shop in his project. Therefore, you intend to revise my assessment and add the alleged sum of ₹ 1,14,06,000/- as my undisclosed income. I was then a simple salaried person working with H.S.Modak & Co. I have been filing my returns of income very regularly. For the relevant year, it was even assessed u/s 143(3) after a thorough scrutiny. My net taxable income for the relevant year was ₹ 819,91 Q/-. Against this background, the figure of ₹ 1.14 cr in cash as mentioned in your notice is astronomical to me. Even in my dream, I have never seen such kind of cash. I state ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. A.R. assailed the order of Ld. Pr. CITon the ground that as per the CBDT instructions the scope of limited scrutiny can be extended only if the AO noticed that potential escapement of income has exceeded ₹ 10 lakhs and in that case the AO has to covert it into complete scrutiny with the approval by Ld. Pr. CIT. If the AO after considering the submissions and contentions of the assessee does not come to a conclusion of potential escapement the Ld. Pr. CIT can not hold the assessment order as erroneous on the ground that AO ought to have come to a such conclusion by placing reliance on the decision of Sanjeev Kr. Khemka vs. Pr. CIT in ITA No.1361/Kol/2016 A.Y. 2011-12. The Ld. A.R. submitted that the order passed by the AO under limited scrutiny is as per the established procedure and by not converting the limited scrutiny into completed scrutiny as per the wisdom and judgment of the AO. The issue raised by the Ld. Pr. CIT is not part of the assessment order in the limited scrutiny and hence the revision of such order is again beyond the scope of section 263 of the Act. The Ld. A.R. argued that situation is similar to a case where AO makes addition in the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which it is clearly mentioned on the top that it is a limited scrutiny case. Thereafter, the AO after examining the various details and information which was supplied by the assessee in response to various queries by the AO on the purchase of said property framed the assessment under section 143(3) dated 29.11.2017 accepting the returned income without examining the issue of on money. Thereafter the Ld. Pr. CIT exercising the revisionary jurisdiction under section 263 of the Act set aside the said order of the AO by holding the assessment order is erroneous and prejudicial to the interest of the Revenue and directed the AO to make the assessment afresh after carrying on the necessary verification on the issue of receipt of on money of ₹ 1,14,06,000/-. Ld. Dr submitted that the interest of the assessee is not prejudiced as the Pr CIT has given only direction for making assessment afresh after enquiries and therefore if the AO finds merits in the contentions of the assessee there would not be any addition. Therefore the ld DR prayed before the bench to dismiss the appeal of the assessee. 6. After hearing both the parties and perusing the materials before us, we observe from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) of the Act in the present appeals in which he has challenged the validity of expanded order passed u/s 263 of the Act covering the points which are not part of the AIR. The ld. Counsel for the assessee submitted before us that it is open to an assessee in an appeal against the order u/s 263 of the Act which seeks to revise an order passed u/s 143(3) of the Act, to challenge the validity of the expansion of order passed u/s.143(3) of the Act covering the points which are not part of the AIR. In this regard we find that Lucknow Bench of Hon'ble ITAT in the case of Inder Kumar Bachani (HUF) vs ITO 99 ITD 621 (Luck) and ITAT Mumbai 'G' Bench in the case of M/s. Westlife Development Ltd. Vs Principal C.I.T. in ITA NO.688/Mum/2016 have taken a view that when an Assessment order passed u/s 147 of the Act was illegal the Ld.CIT cannot invoke the jurisdiction u/s 263 of the Act against such void or non-est order. In the second decision cited the Hon'ble Mumbai bench of the Tribunal has specifically framed the following questions :- "1.Whether the assessee can challenge the validity of an assessment order during the appellate proceedings pertaining to examination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion emanating from the AIR. Admittedly, the assessee has claimed to have filed an appeal before Ld. CIT(A) challenging the jurisdiction exceeded by the AO while framing the assessment order u/s 143(3) of the Act. We find that the impugned issue being legal in nature and goes to the root of the matter therefore we are inclined to proceed with this issue first by holding that, from the above submission and after examining of the records, we find that the Ld. CIT in his impugned order u/s 263 of the Act has exceeded his jurisdiction while holding the order of AO as erroneous in so far prejudicial to the interest of Revenue. In view of the above we hold that the ld. CIT has in his order u/s. 263 of the Act exceeded the jurisdiction by holding the order of AO as erroneous in so far as prejudicial to the interest of Revenue on those items which are not emanating from the AIR. Thus, we are inclined to adjudicate only those matters which are emanating from the AIR as discussed above. 4.2 The assessment was framed by AO for the A.Y. 2011-12 under section 143(3) of the Act vide order dated 29.03.2014 after making certain additions/ disallowances to the total income of assessee. Subsequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption u/s10(38) of the Act was claimed. However the Ld. CIT after considering the submission of assessee has held the order of AO is error and prejudicial to the interest of Revenue by observing as under:- "I have carefully considered the issues with specific reference to the relevant assessment records as well as written submission furnished by the A/R. The AO has not taken cognizance of the following issues, despite being apparent from record:- (1) Addition of ₹ 4 lakhs only was made against total cash deposit of ₹ 17,56,000/- without taking any explanation from the assessee. (2) The balance deposits in another account with HDFC, Porvorim, Goa was not considered in assessment. (3) Interest income from all savings accounts and FDRs was not considered at the time of assessment. (4) Submission of assessee regarding explanation of credit card payment of ₹ 3,76,225/- was partly accepted in assessment without proper verification. (5) Although a salaried person, the assessee's bank account reflect huge transactions/transfer entries, which required further investigation. (6) Long term capital gain of ₹ 19,74,763/- was not properly verified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore allegation so made is bad in law and void ab-initio. (5) For that on the facts & in the circumstances of the case L'd Pr. CIT was not justified in initiating proceeding u/s. 263. (6) For that your petitioner craves the right to put additional grounds and/or to alter/amend/modify the present grounds before or at the time of hearing." The ld. AR before us filed two paper books which are running from pages 1 to 27 and 28 to 31. The ld. AR before us submitted that the necessary enquiries were made by the AO at the time of assessment. Thus the order of the AO cannot be held erroneous and prejudicial to the interest of Revenue on account of non enquiry whereas the ld. DR vehemently supported the order of the ld. CIT. 5. We have heard the rival contentions & perused the materials available on record. From the foregoing discussion, we find that order of AO has been treated erroneous and prejudicial to the interest of revenue on the ground that proper enquiry was not made by the AO. Therefore, Ld. CIT held that the order of AO is erroneous and prejudicial to the interest of revenue. However, after examining the order of Authorities Below and other relevant records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry has been conducted by the AO at the time of assessment proceedings. The AO has taken conscious view after considering the facts and circumstances of the case and giving proper opportunity to the assessee. Thus, the view expressed by AO in the form in his assessment order cannot be replaced with the view of Ld. CIT u/s 263 of the Act. In holding so, we find support and guidance from the judgment of Hon'ble jurisdictional High Court in the case of CIT vs. M/s. J.L. Morrison (India) Ltd.(ITA No 168 of 2011) in GA No 1541 of 2012 dated 15.05.2014, wherein it was held as under:- "By sections 3 and 4, the Indian Income-tax Act, 1922, imposes a general liability to tax upon all income. But the Act does not provide that whatever is received by a person must be regarded as income liable to tax. In all cases in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision." We also rely on the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Max India Limited reported in 295 ITR 282 wherein it was held as under : "When the CIT passed the impugned order under s. 263, two views ..... X X X X Extracts X X X X X X X X Extracts X X X X
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