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TMI Blog2022 (1) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided by the learned counsels, which was to the effect that the lack of inquiry by the Assessing Officer was not the basis formulated by the Commissioner to invoke the jurisdiction u/s 263 of the Act. It is pertinent to mention here that there was as such no allegation of no enquiry or lack of enquiry or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O. s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. Therefore, the notices issued for examination of the issues during the assessment proceedings and submission and verification of the same has not been shown to be fallacious. In this connection it is pertinent to mention here that the way in which assessment should be finalized falls in the exclusive domain of the Assessing Officer. Section 142(1) speaks of inquiry before assessment and gives immense power to the A.O. for conducting enquiry. Therefore, the A.O. u/s 142(1)(ii) (iii) can ask the assessee almost any information which he think necessary for passing assessment and even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction u/s263 of the Act, 1961. 3. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has erred in violating the principles of natural justice by not mentioning the grounds for initiating action u/s263 of Income Tax Act, 1961 in the show cause notice issued. As such the order passed u/s263 is void ab-initio. The action of the Ld. CIT was wholly unreasonable, uncalled for the bad in law. 4. On the facts and in the circumstances of the case as well as law on the subject, that the order of u/s263 is merely 'change in opinion'. The order u/s 143(3) rws.153A of the Income Tax Act passed by the Ld. AO does not in any way represent erroneous order. The action of the Ld. Pr. CIT was wholly unreasonable, uncalled for and bad in law. 5. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax has grievously erred in assuming that the Assessing Officer had not verified and inquired incriminating documents / evidences found and impounded /seized during the course of search and seizure action u/s 132 of the Act, which was already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with survey action under section 133A of the Act, at the office premises of the entities and the construction projects carried on by them. In the said operation, a search and seizure action under section 132 of the Act, was carried out in the case of the assessee, at his residential premises. During the course of search and seizure action, in the cases of Shri Manish Sheladiya, Shri Karnlesh Babubhai Bhesania, Shri Jignesh Radadiya, various incriminating documents related to unaccounted income earned by assessee were found and seized/impounded from the business premises of M/s Radhika Builders and M/s Radhika Construction.On account of search and seizure action u/s 132 of the Act carried out in the case of the partners of the firm and survey action in the case of the firm and also on account of various incriminating documents found and impounded/seized in the course of the proceedings, assessee's case was also centralized with the DCIT, Central Circle-3, Surat for coordinated and sustained enquiries along with other group cases. Notice under section 153A was issued by the assessing officer on 20.09.2018. The assessment proceedings were finalized under section 143(3) r.w.s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In response to the above show cause notice, the assessee submitted that all the details called by the AO has been duly submitted and the same was accepted by the Assessing Officer. During the course of assessment proceedings complete details and explanation in respect of the impounded material was submitted which has been duly considered by the Assessing Officer before finalizing the assessment. Therefore, none of the above conditions are satisfied in this case. It is further submitted that there is difference between lack of inquiry and inadequate inquiry and it is only in cases of lack of enquiry that the PCIT can exercise his revisional jurisdiction. It is submitted that the Id. AO has exercised his quasi-judicial power in accordance with law and arrived at a conclusion after making due enquiries and verification in respect of the entries found in the documents seized / impounded. Thus, the issue has been adequately enquired and dealt upon and then passed order u/s. 143(3) r.w.s. 153A of the Act accepting return of income. Hence the question of having a contrary view as against one of the legal, valid and fully dealt upon issued by the Id AO based on the law and the judicial pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld PCIT and other materials brought on record. We find merit in the submission of ld Counsels and note that various issues raised by ld PCIT, in these present seven appeals, have been examined and adjudicated by the Coordinate Bench in the group case of Shri Bhavesh D. Paghdal and others, in ITA Nos.69 to 87 and 95 to 99/SRT/2021, order dated 30.09.2021, thus these seven appealsare squarely covered by the aforesaid order of the Tribunal.We see no reasons to take any other view of the matter than the view so taken by the Coordinate Bench of this Tribunal in ITA Nos.69 to 87 and 95 to 99/SRT/2021 (assessees own group cases). In this order, the Tribunal has inter alia observed as follows: 10. We have heard both the parties and carefully gone through submissions put forth on behalf of assessee along with documents furnished and the case laws relied upon and perused the facts of the case including the findings of the Ld. PCIT and other ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unsustainable in law . 11. Taking note of the aforesaid dictum of law laid down by the Hon ble Apex Court, let us examine in each case whether assessing officer has raised query during the assessment stage and assessee has submitted reply with documentary evidences during the assessment proceedings and these documentary evidences have been examined by the assessing officer. We will take each case of the assessee to see whether assessing officer has applied his mind and have examined the various issues raised by the ld PCIT in his order under section 263 of the Act: (1).(a)In case of Shri Vallabhabhai B. Paghdal, we note that in ITA No.81/SRT/2021, for AY 2012-13, the assessee has submitted documents regarding unaccounted investment of ₹ 37,00,000/- in relation to Block No.387 of Morthan, Olpad area. The same is part of AO`s show cause notice vide para-no.5.1.We note that assessee has submitted the reply to the Assessing Officer during the assessment stage, vide paper book page nos.97 to 126. (b)In case of ITA No.82/SRT/2021, for AY 2013-14, the issue to exercise the jurisdiction u/s 263 of the Act was non-verification of cash payment, investment and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khator village, increase in value of Khator land in AY 2017-18, payment for the purchase of land, Block No.514, 515, 516 of ₹ 47,29,960/- relating to Khator village etc. The Ld PCIT also raised the issue relating to non-verification of source of loan of ₹ 9,89,000/- to M/s Amrut Sarovar. The ld Counsel explained that these issues raised by Ld. PCIT were examined by the Assessing Officer, as the Assessing Officer has issued the notice u/s 142(1) of the Act and assessee submitted his reply in response to Notice u/s 142(1) of the Act which is placed at paper book page 58 and 87 regarding cash payment of booking of plot. The other relevant evidences are placed at paper book page nos. 105 and 58 respectively. Therefore, we note that assessee has submitted each and every evidence before the Assessing Officer on the issue raised by the Ld. PCIT. (f) In respect of ITA No.96/SRT/2021 for AY 2017-18, the Ld. PCIT has raised the issue mainly for cash payment of booking of plot of ₹ 9,50,000/- which is placed at paper book page 104 and PB page 139. About the undisclosed capital gains due to conversion of capital asset to stock-in-trade, Ld. Counsel for the assessee sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 23,500/-. The Ld. PCIT has also noted that AO had not initiated penalty u/s 269SS of the Act. We note that assessee has submitted the relevant documentary evidence in respect of repayment of loan and interest, vide paper book 90 and 62.Theld Counsel has also explained receipt of interest of ₹ 23,500/- which is placed at paper book page no. 62. Therefore Ld. Counsel for the assessee submits that assessee has submitted relevant documentary evidences during the assessment stage, in response to notice u/s 142(1) of the Act. Therefore, order passed by the Assessing Officer should not be erroneous. (3) (a).In respect of Shri Mukesh A Moradiya, in ITA No.78/SRT/2021, for AY 2017-18, we note that Ld. PCIT has raised the issue regarding non-verification of transaction of sale of ₹ 7,96,86,000/- along-with other co-owners. The Ld. PCIT also observed that cash deposit of ₹ 8.50 lakh in HDFC bank has not been examined by the Assessing Officer. The Ld. Counsel for the assessee submits that for AY 2016-17, assessee has submitted the relevant documentary evidence before the Assessing Officer which is placed at paper book 50, 37 and 44 and page 62 respectively. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were relating to business and therefore no penalty should be levied. (b).In ITA No.79 and 99/SRT/2021, for AY 2016-17 the Ld. PCIT has raised the issue about payment for purchase of 22 bighas of land at Rajkot of ₹ 52,25,000/- along-with other co-owners. The Ld.PCIT has also raised the issue about non-verification of transaction of sale of ₹ 7,96,86,000/- along-with other co-owners. The Ld. Counsel for the assessee submits that assessee has submitted the relevant documentary evidences during the assessment stage which is placed at paper book 85, 39 and 59 respectively. During the assessment stage, the Assessing Officer has examined these issues, therefore order passed by the Assessing Officer should not be erroneous. (5). (a)In respect of Shri Bhavesh D Paghdal, in ITA No. 98/SRT/2021, for AY 2017-18 the Ld. PCIT has raised the issue about unsecured loan of ₹ 13,52,87,926/- and interest payment of ₹ 73,48,375/- thereon. The Ld. PCIT also raised the issue about capital introduction of ₹ 1,00,55,167/- in SRK group. The Ld. PCIT also noted that there should be capital gains due to conversion of capital assets into stock-in-trade. We note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated the penalty proceedings u/s 271D of the Act. The Ld Counsel for the assessee explained before the Bench that the issue relating to purchase of land at Kathor village, is a common issue in all the appeals and Ld. PCIT has raised this common issue in all the appeals, however assessee has explained with documentary evidences before the Assessing Officer and explained the source of investment in respect of Kathor village. The Ld. Counsel for the assessee also explained the unaccounted cash loan of ₹ 2 lakh. The Ld Counsel states that since the transaction was in the course of business and these were explained before the Assessing Officer. Therefore, there is no question of initiating penalty u/s 271D of the Act. (d) In respect of ITA No.69/SRT/2021, for AY 2014-15, the Ld. PCIT has raised the issue about purchase of land, Block No.514, 515 516/1 516/2 at ₹ 2.75 crores of Kathor village. The Ld. PCIT also raised the issue regarding payment for the purchase of land, Block No.518, 519 and 522A of ₹ 2,71,41,970/- situated at Kathor village. The Ld. PCIT noted that there was cash receipt of ₹ 1.05 crore and payment of ₹ 3 crores made to Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quiry or lack of enquiry or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O. s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. The main allegation of ld PCIT in his order under section 263, was that assessing officer has not made further inquiry. It means inquiry has been made by the assessing officer. The ld Counsel at this juncture submitted before the Bench that there is no end of further inquiry, the assessing officer whenever needed made further inquiry also. It is the domain of the assessing officer to decide, whether further inquiry is needed or not in a particular case. After getting the documents and information from the assessee, during the assessment proceedings, the assessing officer has examined the documents and evidences and applied his mind, and he made further inquiry also whenever he thinks fit that further inquiry is necessary and then framed the assessment under section 143(3) r.w.s. 153A of the Act. 14. We note that notices issued by assessing officer und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has rightly noted, the Assessing Officer called for specific details, confirmations and even copies of bills. It could not, therefore, be said that sufficient enquiries were not conducted. However, what is opinion formed as a result of these enquiries is something which is in exclusive domain of the Assessing Officer, and even if Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. The conclusions arrived at as a result of enquiries cannot be tinkered with in the revision proceedings. The conclusions being drawn up as a result of enquiry is a highly subjective exercise and as to what is appropriate conclusion is something on which perceptions vary from person to persons. These variations in the perceptions of the Assessing Officer vis- -vis that of the Commissioner, cannot render an order erroneous and prejudicial to the interest of the revenue. 9. Viewed in this perspective, and having noted that the Commissioner has subjected the assessment order mainly on the ground that the Assessing Officer did not reach the right conclusions as a result of his enquiry, the impugned revision order is indeed unsustainable in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land at Khator village, investments, amount advanced and amount received, balances shown in ledger accounts and books of accounts, details of capital gains, trading activities, party-wise break-up of debit and credit entries/balances of sundry debtors and creditors, audited books of account, notes of the financial statements, , bank details, quarterly VAT returns etc., which were as well filed before the Ld. Pr. C.I.T. during 263 proceeding. The A.O. also raised further queries to establish genuineness of sales, purchases, advances received and paid, investments in land, gift, cash deposit in bank out of assessee`s own fund, debtors and creditors etc, during the year. Considering all these facts and hearing the A.R. of the assessee on various dates, the impugned assessment order under section 143(3) r.w.s.153A was passed by the assessing officer. Therefore, the order so passed by the assessing officer is based on reasonable and plausible view, which cannot be termed as erroneous. 16. We note that during the scrutiny assessment the AO issued notice u/s 142(1) of the Act, on various occasion, which is placed in the paper book filed by the assessee, which will give a clear pict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . had acted judiciously and conducted enquiries in the course of assessment proceedings. 17. We note that after deep enquiry and considering the explanation of the assessee vis-a-vis the details/documents submitted, the Ld. A.O. accepted the documents and evidences and items as shown in the books of account of the assessee. That being so, the inference of the Ld. Pr. C.I.T. in support of his invoking jurisdiction u/s 263 of the Act that the AO has passed the impugned assessment order without making further enquiries is totally unfounded, baseless and beyond the facts of the case, as explained above and was based on the expectation of a fishing and roving enquiry, wrongly treated on par with lack of enquiry, which is different from inadequate enquiry, so that even on this ground, revision was not justified, as held by the Hon`ble Bombay High Court in the case of CIT vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom). 18. We note that Ld. Pr. C.I.T. on analysis of assessment records derived satisfaction for issuing the impugned show-cause notice u/s 263 of the Act. The expression record as used in section 263 of the Act is comprehensive enough to include the whole reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Malabar Industrial Co. Ltd. vs. CIT (supra) is quoted below : The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. 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, for example, 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 . 19. We note that the Ld. Pr. C.I.T. by invoking his jurisdiction u/s 263 of the Act is giving another opportunity to the Assessing Officer to re-examine and to verify again the same documents and evidences, which is not permissible. Hon ble Bombay High Court in the case of Ranka Jewellers vs. Addl. CIT (328 ITR 148) relying on the decisions of Hon ble Supreme Court in the cases of Malabar Industrial Co. Ltd. vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Tribunal has held that the assessment order was not passed without application of mind. The records of the assessment including the order-sheets go to show that heard from time to time. In deciding the question the court has to bear in mind the presumption in law laid down in Section 114 clause (e) of the Evidence Act: that judicial and official acts have been regularly performed. 86. Therefore, the court has to start with the presumption that the assessment order dated March 28, 2008, was regularly passed. There is evidence to show that the Assessing Officer had required the assessee to answer 17 questions and to file documents in regard thereto. If the Assessing Officer cannot be shown to have violated any form prescribed for writing an assessment order, it would not be correct to hold that he acted illegally or without applying his mind. [Emphasis given] It is a settled position in law that provisions of section 263 of the Act do not permit substituting one opinion by another opinion. Therefore, the order of the Ld. Pr. C.I.T. cannot be sustained on the principle of erroneous nature of the order of the A.O., as it is not erroneous. Further, in the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorize or give unfettered powers to the Commissioner to revise each and every assessment order. The applicability of the clause is thus essentially contextual. It has to be the opinion of a prudent person properly instructed in law. The Hon ble Supreme Court in Maneka Gandhi Vs. Union of India reported in 1978 AIR (SC) 597 has laid down the law that a public authority should discharge his duties in a fair, just and reasonable, manner and the principle of due process of law was recognized by the Hon ble Supreme Court. Therefore, the opinion of the Ld. CIT has to be in consonance with that of the well settled judicial principles and cannot be arbitrarily made discarding the judicial precedent on the subject. The opinion of the Ld. Pr. CIT has to be reasonable and that of a prudent person instructed in law and which founded on the correct facts borne out from records. The CIT s opinion should be based on objective consideration of material facts and not on his subjective notions of the facts wrongly presumed or inferred by him. Moreover, it has to be kept in mind that an Explanation to substantive section should be read as to harmonize with and clear up any ambiguity in the main sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer called for specific details, confirmations and even copies of bills, copies of agreements, books of accounts, and seized material etc. It could not, therefore, be said that sufficient enquiries were not conducted. However, what is opinion formed as a result of these enquiries is something which is in exclusive domain of the Assessing Officer, and even if Ld PCIT has such results of enquiries, the resultant order cannot be subjected to revision proceedings. The conclusions arrived at as a result of enquiries cannot be tinkered with in the revision proceedings. The records of the assessment go to show that appropriate enquiry was made and the Assessee was heard from time to time. Where another view is possible, revision is not permissible. The ITO, while passing an order of assessment performs judicial function. Section 263 provides for a revisional power. It has its own limitations. An order can be interfered with suo motu by the said authority not only when an order passed by the assessing officer is erroneous but also when it is prejudicial to the interests of the revenue. Both the conditions precedent for exercising the jurisdiction under section 263 are conjuncti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt the aforesaid findings of the Coordinate Bench. We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the judgment of the Coordinate Bench in assessees own group cases (supra), the order passed by ld PCIT under section 263 of the Act should be quashed. 15. Before parting, we may also refer to an argument put-forth by both the Learned Counsels that in case of main partners, namely: (i) Radhika Construction (vide ITA No.88,89 64/SRT/2021), (ii) Radhika Infrastructure (vide ITA No.66,67 68/SRT/2021), and (iii) Radhika Corporation, (vide ITA No.65/SRT/2021), this Tribunal has already quashed the orders passed by the PCIT under section 263 of the Act. Therefore, these seven appeals are also covered in favour of assessee by the judgments of the Tribunal in case of main partners (supra). 16. Before parting, we would like to deal with the main contention raised by ld CIT-DR for the Revenue. According to ld. CIT-DR there was no further inquiry made by the Assessing Officer in the course of assessment proceedings on the points raised by the Commissioner and, therefore, invoking of section 263 was quite justified. On this poi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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