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TMI Blog2019 (6) TMI 1608X X X X Extracts X X X X X X X X Extracts X X X X ..... ner as desired by him. Such a course of action of the ld. PCIT is not in accordance with the mandate of the provisions of sec. 263 of the Act. Revenue has argued that the newly inserted Explanation 2(a) to sec. 263 of the Act is applicable on the facts of the present case. Even though there is a doubt as to whether the said explanation, which was inserted by Finance Act 2015 w.e.f. 1.4.2015, would be applicable to the year under consideration, yet we are of the view that the said Explanation cannot be said to have over ridden the law interpreted in JYOTI FOUNDATION [ 2013 (7) TMI 483 - DELHI HIGH COURT] If that be the case, then the ld. PCIT can find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law and order for revision. He can also force the AO to conduct the enquiries in the manner preferred by ld. PCIT, thus prejudicing the independent application of mind of the AO. In our considered view this could not be the intention of the legislature in inserting Explanation 2 to sec. 263 of the Act, since it would lead to unending litigations and there would not be any point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer were not only erroneous but also prejudicial to the interests of the revenue. It is a well established proposition that both the above said conditions are required to be satisfied before invoking the revisional powers given under section 263 of the Act. In the instant case, we are of the view that the ld. PCIT has failed to show that both the conditions exist in the instant case. Accordingly we set aside the revision orders passed by ld. PCIT. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... value cash deposits from different other branches and debits through RTGS and transfer to third parties account were observed. The enquiry concluded that the transactions made into this account are not for any genuine business and are utilised for the purpose of converting cash into banking instrument which is further transferred to various layers to reach the final beneficiary. It is revealed that the amount which have been deposited in the account of Sanjoy Kumar have travelled through various layers symbolised by various companies having no real business and the various amounts have been transferred through bank account to the ultimate beneficiary. In this case, an amount of ₹ 7.25 crore is received from M/s Minaxi Suppliers Private Ltd which is the last stage company prior to the transfer of funds to the beneficiary. Accordingly M/s Minaxi Suppliers Private Ltd's bank account have been utilised for receiving accommodation entries. This information has been perused and it is found that the assessee is a beneficiary of the said accommodation entries. Therefore, I have reason to believe that the assessee has under assessed the tax of ₹ 2,46,42,750/- and has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d true of funds received by the assessee are not explained. From the information it is clear that the total income of the assessee had exceeded the maximum amount which is not chargeable to tax for the year under consideration and the assessee was assessable under the Act. 5. The Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt Ltd has held that Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. In the present case, since the assessee has failed to make true disclosure of its income, which leads to sufficient cause for forming of belief by the undersigned regarding escapement of income during the year unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was the basis for reopening of the assessment. Therefore, the assessment order passed under section 143(3) on 19th December 2016 is erroneous and in so far as it is prejudicial to the interest of revenue. 7. The assessee filed its reply to the show cause notice under section 263 on 22.03.2019. The ld. PCIT extracted the entire reply of the assessee is para - 4 of his order. In the reply to the show cause notice under section 263, the assessee stated that initially the assessment was processed under section 143(1) on 11.01.2016. The case was reopened under section 147 vide notice dated 23.03.2016. The basis of reasons of reopening was that the assessee received a sum of ₹ 7.25 Crore from M/s Minaxi Suppliers Pvt Ltd (MSPL). In the reassessment proceedings the assessee was served notice under section 142(1) with the questionary with specific question related to the nature of transaction with MSPL and the copy of the bank statement was also sought. The assessee vide its reply/ submissions dated 16/12/2016 furnished all the details of MSPL. The assessment was completed under section 143(3) r.w.s. 147 on 29.12.2016 after full verification and enquiry with regard to the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 142(1) dated 13.10.2016 and sought the details of the transactions made with MSPL and that no other information was obtained. The AO has not made any inquiry with regard to source of funds and the genuineness of the transaction. The ld PCIT finally concluded that the assessment order passed under section 143(3) r.w.s. 147 dated 29.12.2016 is erroneous in so far as prejudicial to the interest of revenue and set aside to the file of AO for examination of the genuineness of the transaction and credit received from MSPL. Aggrieved by the order of ld. PCIT the assessee has filed the present appeal before this Tribunal. 9. We have heard the submissions of the ld. authorised representative (AR) for the assessee and the ld. departmental representative (DR) for the revenue and also perused the order of ld. PCIT and the material on record with the assistance of the ld. AR and ld. DR very carefully. The ld AR for the assessee submits The ld. PCIT erred in revising the order of the A.O. without assigning any specific discerning reasons as to why and how such assessment order was erroneous as well as prejudicial to the interests of revenue. The ld. PCIT was not justified on the facts in settin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 143(3) rws 147 dated 28.12.2018 are filed on record. It was submitted by ld AR for the assessee that the order passed by assessing officer is not erroneous, which was passed after detail inquiry. Even if inadequate inquiry, that would not itself give the occasion to the ld PCIT to revise the assessment merely the ld PCIT has different opinion. In support of his submission the ld AR for the assessee relied on the following case laws; (i) Small wonder Industries Vs CIT (ITA No. 2464/M/2013) dated 24,02.2017, (ii) M/s Poseidon Shipping Agency Vs PCIT (ITA No.2446/M/2018 dated 14.12.2018, (iii) Amira Pure Foods Pvt Ltd Vs PCIT (ITA No. 3205/Del/2017) dated 29.11.2017, (iv) Care view Investment & Trading Pvt Ltd Vs CIT (ITA 53/M/2012 dated 31.10.2013, (v) CIT Vs Gabriel India ( 203 ITR 108 Bom), (vi) CIT Vs Development Credit Bank Ltd ( 323 ITR 206 Bom), (vii) CIT Vs Max India (295 ITR 282 SC), (viii) CIT Vs Sunbeam Auto Ltd ( 332 ITR 167 Delhi), (ix) CIT Vs Vikas Polymers (341 ITR 537 Delhi), (x) CIT Vs Arvind Jewellers (259 ITR 502 Guj), (xi) Malabar Industrial Company Vs CIT (243 ITR 83 SC), (xii) Mehta Trading Vs CIT ( ITA No. 2838/M/2013 dated 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed at the hand of assessee. 14. On the contrary the ld. DR for the revenue supported the order of ld. PCIT. The ld. DR for the revenue submits that the AO passed the assessment order under section 143(3) r.w.s. 147 dated 29.12.2016, without examining the details of the transactions made with MSPL and that no other information with regard to source of funds and the genuineness of the transaction of funds received from MSPL was examined. The assessment order is silent about the transaction of MSPL. The ld. DR submits that the order passed by the assessing officer in certainly erroneous as well as prejudicial to the interest of revenue. The ld. DR for the revenue also argued that the newly inserted Explanation 2(a) to sec. 263 of the Act is applicable on the facts of the present case as the AO failed o make required investigation. 15. We have considered the rival submissions of the ld. representative of the parties and also deliberated on various case laws relied by ld. PCIT in the impugned order as well as by ld. representatives of the parties. We have noted that initially the return of income was processed under section 143 (1) on 11 January 2012. The assessment was reopened u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2018, the assessee has again furnished the following documents: (a) Copy of Incorporation Certificate of MSPL. (b) Copy of PAN of MSPL. (c) Memorandum of Article of MSPL, (d) Article of Association (e) Income Tax Return for A.Y. 2010-11 of MSPL (f) Balance-sheet, Profit & Loss Account with schedule for A.Y. 2011-12 (g) Director's Report of MSPL, (h) Auditor's Report of MSPL, (i) Assessment Order for A.Y. 2010-11 & 2012-13 of MSPL, (j) Copy of Affidavit dated 18.12.2018 from MSPL confirming Joint Venture Contribution with Artline Properties Pvt. Ltd. for the period 01.04.2010 to 31.03.2011 for genuineness of transaction. 18. No further information was received by the assessee about the outcome of second re-opening of the assessment. We have noted that the ld. PCIT in his order has stated that A.O. dropped the proceeding on 28.12.2018 under section 152(2). It was further noted by ld. PCIT that the only assessment order for reckoning is order dated 29.12.2016. After considering the reply of the assessee the ld. P CIT has taken the view that the assessing officer has completed the assessments without making proper enquiries with regard to the transaction with MSPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsection (1) of section 263 of the Act is in the nature of supervisory direction and can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the CIT to exercise the power of revision under this sub section viz (i) the order should be erroneous and (ii) by virtue of the order being erroneous prejudice must have been caused to the interest of the revenue. And order cannot be termed as erroneous unless it is not in accordance with law. If ITO Act in accordance with law makes certain assessment; the same cannot be branded as erroneous by the CIT simply because according to him, the order should have been written more celebratory. This section does not visualise a case of substitution of the judgement of the CIT for that of the ITO, who passed the order, unless the decision is held to be erroneous. This is may be visualised where the ITO while making the assessment examines the accounts, makes enquiries, applied his mind to the facts and circumstances of the case and determine the income either by accepting the accounts for by making some estimate himself. The CIT on perusal of records, may be of opinion that the estimate made by the of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing officer had applied his mind or not, it was the prerogative of the AO to draft his order, and if he failed to record certain finding the assessee could not be penalised. Therefore, what has to be ascertained is, whether assessing officer had investigated the issue and applied his mind to the whole record. In this behalf it is noted that AO had asked the assessee to submit the purchase date in respect of purchase of land at village Tugalkabad was and that assessee in response thereto had supplied requisite details and submitted a copy of high court decision in relation to the award of compensation, etc. The Tribunal therefore came to the conclusion that the complete detail filed before the AO and he applied his mind to the relevant material and facts, although such application of mind is not discernible from the assessment order. The tribunal held that the Commissioner in proceedings under section 263 also had all these details and materials available before it, but had not able to point out defects conclusively in the said material, for arriving at a conclusion that particular income had escaped assessment on account of non-application of mind by the assessing officer. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Incometax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where the Income tax officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income tax officer. That would not vest the Commissioner with power to examine the accounts and determine the income himself at a higher figure. It is because the Income tax officer has exercised the quasi judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the said explanation, which was inserted by Finance Act 2015 w.e.f. 1.4.2015, would be applicable to the year under consideration, yet we are of the view that the said Explanation cannot be said to have over ridden the law interpreted by Hon'ble Delhi High Court, referred above. If that be the case, then the ld. PCIT can find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law and order for revision. He can also force the AO to conduct the enquiries in the manner preferred by ld. PCIT, thus prejudicing the independent application of mind of the AO. In our considered view this could not be the intention of the legislature in inserting Explanation 2 to sec. 263 of the Act, since it would lead to unending litigations and there would not be any point of finality in the legal proceedings. The Hon'ble Supreme Court has held in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 that there must be a point of finality in all legal proceedings and the stale issues should not be reactivated beyond a particular stage and the lapse of time must induc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his inferences. He has also not shown that the view taken by him is not sustainable in law. Thus, we are of the view that the ld. PCIT has passed the impugned revision orders only to carry out fishing and roving enquiries with the objective of substituting his views with that of the AO. Hence we are of the view that the ld. PCIT was not justified was not correct in law in holding that the impugned assessment orders were erroneous. 30. In view of the foregoing discussions, we are of the view that the ld PCIT has failed to show that the impugned assessment orders passed by the assessing officer were not only erroneous but also prejudicial to the interests of the revenue. It is a well established proposition that both the above said conditions are required to be satisfied before invoking the revisional powers given under section 263 of the Act. In the instant case, we are of the view that the ld. PCIT has failed to show that both the conditions exist in the instant case. Accordingly we find merit in the contentions of the assessee that the revision orders passed by ld. PCIT for the year under consideration are beyond the scope of sec. 263 and hence not valid. Accordingly we set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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