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TMI Blog2019 (9) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... enuineness. It is not a case that no inquiry was done but it is a case that incomplete inquiry was done. Whether an inquiry was incomplete or complete depends on the person who is examining the transactions. It may be complete for one but may be incomplete for another. As per assessee sufficient inquiry was conducted and all the information relevant thereto was supplied. On the other hand, Ld DR has submitted that the Ld.AO has not inquired about various documents which could prove that the assessee has relinquished his rights in the property. If detailed inquiry has been conducted by the AO and one of the legally permissible view is taken by the AO which may not be revenue favouring, cannot give power to the CIT to assume jurisdiction u/s 263 and to set aside the order of the Ld. AO. In the instant case the assessee had prepared an affidavit on 23.11.2007 duly notarized relinquishing his rights from all the properties jointly held with his father s family. Genuineness of this affidavit has not been doubted by the revenue authorities. In the sale deed assessee has not signed as a seller as has been alleged by the CIT which itself shows that the Ld. CIT has not examined the document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3) r.w.s 263 of the Act, 1961 dated 01.03.2013 & 21.07.2015 respectively framed by ITO, Ahmedabad. 2. The assessee has raised following grounds of appeal in ITA No.839/Ahd/2015. "1. On the facts and in the circumstances of the case, the Ld. CIT erred in assuming his jurisdiction u/s 263 of the I.T. Act, whereas the mandatory conditions for assuming such jurisdiction are totally absent, with the result that the impugned order passed u/s 263 is bad in law. 2. On the facts and in the circumstances of the case, the Ld. CIT erred in arriving at a conclusion without any basis whatsoever to the effect that the assessment order passed by the Assessing Officer was erroneous as well as prejudicial to the interest of the revenue. 3. On the facts and in the circumstances of the case, the Ld CIT erred in cancelling the assessment order passed by the Assessing Officer on officer to make a fresh assessment. 4. On the facts and in the circumstances of the case, the order passed by the Ld. CIT is bad in law since proper opportunity of being heard is not given to the appellant before passing the impugned order. 5. The appellant graves leave to add, alter, amend and/or withdraw any groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of the Act, dated 01.03.2013 is erroneous and prejudicial to the interest of the revenue, as the assessing officer failed to the following two issues: (i) The AO has not made enquiry or called for any explanation in respect of income capital gain alleged to have been earned from sale of jointly owned property situate at Ahmedabad for a sale consideration of ₹ 23,00,000/-. (ii) Frequent cash deposit of ₹ 13,60,000/- in assessee's personal bank account with bank of Baroda were not examined by the Ld. AO. 7. Aggrieved assessee is in appeal before the Tribunal challenging the order u/s 263 of the Act dated 04.02.2015 contending that the Ld. CIT wrongly assumed jurisdiction and impugned order passed u/s 263 is bad in law and liable to be quashed. 8. Ld. counsel for the assessee referring to the paper book running from pages no. 1 to 125 dated 30.11.2016 submitted that sale consideration of ₹ 23,00,000/- was received in respect of sale of immovable property at Nandakunj Cooperative Housing Society at Ahmedabad. This property was purchased during the F.Y. 2000-01 in joint name of assessee's father, assessee's mother, assessee's brother and assessee himself. Dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were sufficient to cover the alleged cash deposits and in these details were examined by the Ld. AO. 11. In support of his contention Ld. counsel for the assessee relied on the judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. Kamal Galani (2018) 95 taxmann.com 261(Gujarat). Reliance was also placed on another judgment of Hon'ble Jurisdictional High Court in the case of Pr. CIT vs. Shree Gayatri Associates (2019) 105 taxmann.com 30 (Gujarat) which was decided in favour of the assessee and the revenue's Special Leave Petition against this order was dismissed by the Hon'ble Supreme Court of India vide order dated 01.03.2019 reported at (2019)106 taxmann.com 31 (SC). 12. Per contra Ld. Departmental Representative (DR) vehemently argued supporting the order of Ld. CIT passed u/s 263 of the Act. She also submitted that the affidavit referred by the assessee was never placed before the Ld. AO. Copy of power of attorney executed by the assessee in favour of his father was also not placed before Ld. AO. The Ld. AO has also not conducted any inquiry about the capital gain offered by the assessee's father and has also not called for the complete chain of documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or] Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-For the purposes of this section, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises Ltd vs. Addl. Commissioner of Income Tax (99 ITR 375). In the case of Sun Beam Auto, the Hon'ble High Court has pointed out a distinction between lack of inquiry and inadequate inquiry. If there is a lack of enquiry, then the assessment order can be branded as erroneous. The following observations of the Hon'ble Delhi High Court are worth to note: "12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore layi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct." 18. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 has laid down a principal which is very irrelevant to adjudicate the issue relating to issue u/s 263 of the Act which reads that "when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two view are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as a erroneous order prejudicial to the interest of the revenue unless the view taken by the ITO is unsustainable". 19. Now facts which needs to be examined are whether the alleged transaction referred by the Ld. CIT in his order u/s 263 of the Act had come for consideration before the Ld. AO or not. 20. As regards the first transaction for the sale consideration of ₹ 23,00,000/- received from sale of immovable property jointly hold by the assessee's family members including his father, mother, brother and asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is examining the transactions. It may be complete for one but may be incomplete for another. As per the Ld. counsel for the assessee sufficient inquiry was conducted and all the information relevant thereto was supplied. On the other hand, Ld DR has submitted that the Ld.AO has not inquired about various documents which could prove that the assessee has relinquished his rights in the property. 27. We observe that the Hon'ble Jurisdictional High Court in the case of Kamal Galani have adjudicated similar type of issue referring to various judgments. The relevant abstract of this judgment of Hon'ble jurisdictional High Court in our view is quite relevant to adjudicate the issue before us. 15. The scope of the Commissioner's power of revision under section 263 has been a matter of judicial consideration on various ocassions. In case of Commissioner of Income Tax vs. Sunbeam Auto Ltd. reported in 332 ITR 167 Division Bench of Delhi High Court observed as under: "12. ... ... ... There are judgements galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed as under: "6. From the above observations made by the Supreme Court, it is clear that the provisions of Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted and incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. The Supreme Court has also made it clear that the phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing C/TAXAP/1376/2007 JUDGMENT Officer and that every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. It was further emphatically stated that 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 Incometax 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer to carry out further inquiries in order to ascertain whether the remittances were genuine or were in the nature of hawala transactions. In the entire order of the Commissioner, we do not find any basis for him to carry such apprehension. His principle thrust was to the C/TAXAP/1376/2007 JUDGMENT effect that assessee did not produce the precise bank details of the foreign remittances even before him. There is nothing on the record to suggest that he called upon the assessee to do so and the assessee failed or refused to do so. 22. All in all, we find no error in the view of the Tribunal reversing view of the Commissioner. The question is thus answered against the Revenue and in favour of the assessee. Tax Appeal is dismissed 28. Similarly in another case of Pr. CIT vs. Shree Gayatri Associates (supra) Hon'ble Jurisdictional High Court dismissed the revenue's appeal observing that "In particular , the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the assessing officer had carried out detailed inquiries which include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at discussion of each and every transaction inquired by the Ld. AO need not be incorporated in the body of assessment order. We agree to this view since the conducting of the assessment proceedings requires calling for information about the statements of affairs of the assessee during the year which includes all the transactions carried out which leads to income or loss arising there from. After receiving the necessary details and documents the Ld. AO examines various transactions. He/she may be satisfied with some of them and not with the others. For the transactions which are found to be satisfactory by the Ld. AO may not be incorporated in the order. It is only the matter which requires addition in hands of assessee needs to be incorporated in detail in the assessment order so as to make it a speaking order. The proceedings are duly mentioned in the order sheet and the documents placed in the case file. They are the conclusive evidence about the correspondence between Ld. AO and the assessee. 31. As regards the alleged cash deposits in bank account held by the assessee and allegation of ld. CIT that the Ld. AO has not inquired with the assessee, we find that all the bank acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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