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TMI Blog2021 (8) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment without making any further inquiry, whereas the Ld. Assessing Officer had made specific querry regarding the alleged paper found from the possession of a third party. III. That the Ld. Principal CIT was not justified to hold that the Ld. Assessing Officer failed to verify the genuineness of sundry creditors, whereas no such issue was raised in the Show Cause Notice. 2. The grounds in all the four Appeals are common. Therefore, we are taking the file of Santok Singh Brar I.T. No.206 of 2017 as a lead case. 3. Brief facts: 3.1. A search and seizure under Section 132 of the Income Tax Act was conducted at the premises of M/s Godwin Group of Cases on 09.09.2010. During the course of search, certain documents pertaining to Assesse were found and the said documents were passed on to the Assessing Officer of the Assesse.On the basis of the information and after recording the satisfaction note, the case of the Assesse reopened under Section 153Cread with Section 153A of the Income Tax Act. 3.2. Notice under Section 153C was issued to the Assesse on 28.10.2013 calling upon the Assesse to file the return of income for the assessment year 2010-11. In pursuant to the notice th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usal of the copy the document officially received from your office as per the request, it is submitted that Mr. Amarjit Singh Randhawa was admitted that he is holder of any Power of Attorney on behalf of assesses or has executed any agreement to sell on their behalf. Without prejudge to, above Mr. Amarjit singh Randhawa has denied the execution of any alleged receipt-cum- agreement to sell dated 28.03.2009. vi) From the inspection of the documents in your possession officially allowed by you as per the request of the assesses, we have not found any document either in original or a photocopy signed by the assesses or any GPA document relating to the. assesses, which are being relied upon by you for framing the assessments in the case of the assessee. 4. Keeping in view the submissions made above, it is clear, that no addition/ assessments can be made on account of purported alleged document referred by you in your show cause notice. As there is no document in the possession of IT. Department /your office, which can conclusively proved at the above referred assesses have received a sum more than Rs. 5.5 crores i.e. registered deed value against the sale of the said property. The n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be used against the assesses on that basis. The assesses never executed any agreement to sell dated 28.03.2009 as alleged in your show cause notice. If you have such document which contained the signatures of the assesses, the same may kindly be also provided. However, it is brought to your kind notice that the assesses have themselves executed the sale deed in the capacity of themselves which proves that no such GPA was ever given. v) Your Show Cause Notice has referred to a statement of Sh. Amarjit Singh Randhawa. From perusal of the copy of the document officially received from the Assessing Officer, it is submitted that nowhere Mr. Amarjit Singh Randhawa was admitted that he is holder of any Power of Attorney on behalf of the assesses or has executed any agreement to sell on their behalf. Without prejudice to above, Mr. Amarjit Singh Randhawa has denied the execution of any alleged receipt cum agreement to sell dated 28.03.2009. vi) From the inspection of the documents in the possession of the Ld. Assessing Officer, officially allowed by him as per the request of the assesses, we have not found any document either in original or a photocopy signed by the assesses or any GP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on record which has been signed by the sellers/purchasers alongwith witnesses. Further, there is another document which is minutes of meeting of Board Directors of Great Value infrapromoters Pvt. Ltd wherein the purchasers have authorized their representative to finalize the deal. The Assessing Officer has vide notice under section 142(1) of the Act has asked you to file the details of immovable properties acquired by you. On 16.03.2015, the Assessing Officer confronted you with the information available in his possession i.e. receipt-cum-agreement to sell dated 28.03.2009 and showed his intention to treat sum of Rs. 5. 75 Crore (11.25 crore - 5.50 crore) as unexplained receipts. 5. Thereafter, on 25.03.2015, the Assessing Officer again sent to you a copy of deal entered by Sh. Gurbachan Singh Brar with the Great Value Infrapromoters Pvt. Ltd for sale/purchase of above-referred property for Rs. 11.25 crore. 6. Finally, the Assessing Officer completed the assessment on 30.03.2015 and accepted the income retuned by you. With regard to the issue of receipt of amount of Rs. 5.75 crore over and above the amount of Rs. 5.50 crore received on the sale of above-referred propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and set aside the order to the file of the Assessing Officer for passing a fresh order in accordance with law in respect of the issue discussed regarding verification of genuineness of sundry creditors and also raised in show cause notice u/s 263 of the act after giving sufficient opportunity of hearing to the appellant. The PCIT in paragraph 4 had concluded as under:- "4. I have carefully considered assessee's submissions which are not acceptable on the issue that AO has excepted the submission made by the assessee without making any further enquiry whatsoever before accepting the returned income and before coming to the conclusion that assessee has not received any amount apart from his share in Rs. 5.50crore. AO has simply relied upon whatever submissions have been made by the assessee. The AO should have made independent enquiries from Sh. Amarjit Singh Randhawa as well as from the purchasers of the property regarding the monetary consideration involved in sale/purchase of the property. Proper enquiries conducted would have been resulted into substantial long term capital gain instead of long term capital loss shown by the assessee and accepted by the AO. The AO has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Learned Assessing Officer cannot be termed to be erroneous in as much as prejudicial to the interest of the Revenue as the same was passed after making detailed enquiry as will be clear from bare reading of the assessment order. 4.2 The Learned Assessing Officer has discussed in detail the queries raised and replies furnished by the appellant and after due application of mind and also approval obtained from the Learned Joint Commissioner of Income Tax u/s 153B, framed the assessment by accepting the return of the appellant. 4.3 The Ld. AR had submitted that the alleged document was not found from the possession of the appellant and it does not bear the signatures of either of the appellant. The alleged document is only a photocopy and despite the request of the appellant, original has never been made available. The Ld. AR had submitted that no addition can be made on the basis of photocopy of the document more particularly when the document did not bear the signature of the Assesse. For the abovesaid proposition the Assesse rely upon the decision in the following matter: 370 ITR page 285 (Delhi) Pepsico India Holdings Private Limited vs ACIT. 281 ITR page 428 (P&H) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies or verification which should have been made. The Ld. AR relied upon the following judgments: * Judgment of the Hon'ble Income Tax Appellate Tribunal, Mumbai Bench "B" in the case of Narayan Tatu Rane Vs. Income Tax Officer, Ward 27(1)(1), Mumbai reported at [2016] 70 taxmann.com 227 (Mumbai-Trib). * Judgment of the Hon'ble Income Tax Appellate Tribunal, Delhi "A" Bench in the case of M/s Amira Pure Foods Pvt. Ltd. Vs. the Principal Commissioner of Income Tax, Central Gurgaon bearing ITA No. 3205/Del/2017. * Judgment of the Hon'ble Delhi High Court in the case of the Principal Commissioner of Income Tax Vs. Gabriel India Ltd. reported at [1993] 203 ITR 108 (Bombay) * Judgment of the Hon'ble Income Tax Appellate Tribunal, Delhi Bench "C", New Delhi in the case of Indian Farmers & Fertilizers Cooperative Limited Vs. the Principal Commissioner of Income Tax-11 bearing ITA No. 2487/Del/2016. * Principal Commissioner of Income Tax-01, New Delhi Vs. Brahma Centre Development Pvt. Ltd. in ITA Nos. 116/2021 and 118/2021 dated 05.07.2021. 4.6 Lastly it was submitted that in the case of Shri Amarjeet Singh Randhawa and Smt. Amandeep Kaur the reopening were made under Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case of adequate enquiry the PCIT, in the Show Cause Notice also mentioned that the enquiries were made by the Assessing Officer. However, he has mentioned that more enquiries were required to be made. The explanation 2 Section 263 provide that the order would be erroneous and prejudicial in the interest of Revenue if the order was passed without making enquiries or verification which should have been done. 6.4 However, in the present case, the enquiries and verification were made by the Assessing Officer Assesse mentioned hereinabove. However, despite that the PCIT had mentioned that the enquiry should have been made from Shri Amarjeet Singh Randhawa as well as from the purchaser of the property regarding the monitoring consideration involved in the sale purchase of the property. In our view, the conclusion of the PCIT was erroneous as no addition can be made on the basis of dumb document namely the photocopy of the Agreement to Sell which did not bear the signature of the Assesse. 6.5 Further, in paragraph 4 of the CIT, it is mentioned that the two cases were assessed at Chandigarh and the amount was added back which was also confirmed by CIT Appeal. In our view this finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted and considered in the financial statements of the company and was adjusted against the project expenditure. The very fact that pursuant to the scrutiny when the Ld. Assessing Officer proposed charging the interest amount received to tax, the very same explanation was offered by the assessee and was accepted by the Assessing Officer. We are, therefore, of the considered opinion that it is not a case of no enquiry and as a matter of fact, it was specifically brought to the notice of the Ld.Assessing Officer that the interest earned was adjusted against the project expenditure. 13. Further, it is an admitted fact that in this case, the business of the assessee was commenced in this case, unlike the facts in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra). The Mumbai Bench of Tribunal while noticing the decision of jurisdictional High Court in the case of CIT vs. Sunbeam Auto Ltd, 332 ITR 167 and the case of Nagesh knitwear Pvt. Ltd., 355 ITR 135 observed that the Explanation- 2 to section 263 inserted by Finance Act, 2015 w.e.f. 01.04.2015 would not impact the assessment earlier to 2014-15 and such a decision was followed by the Delhi Bench of Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, is necessary and while scrutinising the record the Court has to keep in mind the difference between lack of enquiry and perceived inadequacy in enquiry. Inadequacy in conduct of enquiry cannot be the reason based on which powers under Section 263 of the Act can be invoked to interdict an assessment order. The observations made in this behalf, by the Division Bench of this Court, in Commissioner of Income-tax vs. Sunbeam Auto Ltd., [2010] 189 Taxman 436 (Delhi)/[2011] 332 ITR 167 (Delhi) being apposite, are extracted hereafter. "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 Signature Not Verified Digitally Signed By:VIPIN KUMAR RAI Signing Date:06.07.2021 10:30:10 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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. [See : Parashuram Pottery Works Co. Ltd. v. ITO[1977] 106 ITR 1 (SC) at page 10]. ****** From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot 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 Income-tax 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 Signature Not Verified Digitally Signed By:VIPIN KUMAR RAI Signing Date:06.07.2021 10:30:10 either by accepting the accounts or by making some estimate himself. The Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax, [2000] 109 Taxman 66 (SC)/[2000] 243 ITR 83 (SC) and CIT vs. Max India Ltd., (2007) 295 ITR 282 (SC)] Signature Not Verified Digitally Signed By:VIPIN KUMAR RAI Signing Date:06.07.2021 10:30:10 11.1. Therefore, the error should be one that is not debatable or a plausible view. Section 263 of the Act invests a power of revision in a superior officer and therefore, by the very nature of the power, does not allow for supplanting or substituting the view of the AO. The appreciation of material placed before the AO is, exclusively within his domain which cannot be interdicted by a superior officer while exercising powers under Section 263 of the Act only on the ground that if he had appraised the said material, he would have come to a different conclusion. [See Parashuram Pottery Works Co. Ltd. v. ITO, [1977] 106 ITR 1 (SC)]" 6.10 Respectfully following the decision of Delhi High Court in the matter of Brahma Centre Development Private Limited, ITA No.116 of 2021 be quash order passed under Section 263 in the case of the Assesse. 7. In the light of the above, the order passed by the PCIT under Section 263 was without any jurisdiction and accordingly we quashed the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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