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TMI Blog2022 (4) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... dered. Thus, at the time of completion of re-assessment proceedings on 29.12.2018 (undisputedly, the reassessment was getting time barred on 31.12.2018), the Assessing officer, after duly considering the explanation offered by the assessee and the documents furnished in this regard, arrived at one of the possible views which could be taken in the present case. It is our considered opinion that the Assessing officer, after duly calling for required information and after duly considering the explanations and evidences before him, reached a conclusion which was a possible view to be taken by him and he cannot be faulted for not having waited for a response from NSEL which was not forthcoming even after two reminders. AO took a view which was legally plausible and possible at that point of time. Subsequent information could be a basis for initiating new re-assessment proceedings but not the basis for a revisionary proceedings u/s. 263 of the Act. Therefore, the exercise of revisional jurisdiction by the Ld. PCIT is without any justification. As far as the alternate plea of the assessee challenging the re-assessment proceedings is concerned, we are not inclined to go into the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng instance of failure on the part of the Assessing officer, namely, that the assessment order had been completed without due verification of the issue of alleged out of books of account sale of goods amounting to ₹ 10.75 crores. The Ld. PCIT concluded that the assessment order was prima facie erroneous and prejudicial to the interest of Revenue. The Assessing officer was directed to make proper verification and inquire into the information received from NSEL to check out of the books sale of goods. The Ld. PCIT also issued directions that detailed inquiries should be conducted on the issue since information in response to notice u/s. 133(6) of the Act had been received from NSEL. Accordingly, the assessment order passed u/s. 143(3)/147 of the Act was cancelled with a direction to pass an order afresh keeping in view the observations made by the Ld. PCIT. 2.2. Against this order passed u/s. 263 of the Act, the assessee has now approached this Tribunal challenging the proceedings u/s. 263 of the Act on the following grounds:- 1. That order dated 12.3.2021 u/s. 263 of the Act by learned Principal Commissioner of Income Tax, Rohtak has been made without satisfying the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Pr. Commissioner of Income Tax had a different opinion and that too, without having established in any manner that, view adopted by the learned Assessing Officer was an impossible view. 2.5 That the learned Pr. Commissioner of Income Tax has also failed to appreciate that, u/s. 263 of the Act. an order of assessment cannot be set-aside to simply to make further enquiries and thereafter pass fresh order of assessment and as such, impugned order is contrary to law and hence, unsustainable 2.6 That while passing the order u/s. 263 of the Act the learned Principal Commission of Income Tax cannot travel beyond the show cause notice and therefore findings and observation and also the material relied upon not referred in the show cause notice but made part of the order could neither in law and nor on fact be made a basis to assume jurisdiction u/s. 263 of the Act; and thus order on this ground alone deserve to be quashed as such. 3. That the learned Principal Commissioner of Income Tax has framed the impugned order without granting sufficient opportunity to the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder:- 2. The assessment record for the period under consideration was called upon and examined. On such examination, it has been noticed that your case was reopened on the basis of information received from National Spot Exchange Ltd. (NSEL) that you have made out of books sale of goods of ₹ 10.75 crore during the period under consideration. To confirm the above information requisition u/s. 133(6) was issued by the AO on 20.12.2018. As the reply from NSEL was not received before the completion of assessment, the AO accepted your claim. 3. The desired information confirming the transaction of out of book sale has been received from the NSEL after the completion of assessment i.e. on 10.01.2019. Therefore, the assessment order has been completed before the due verification of the issue involved. 4.1. The Ld. AR also drew our attention to the copy of the reasons recorded for the purpose of reopening vide dated 6.8.2018. The same are also being reproduced here-in under for a ready reference:- Brief facts of the case that assessee firm has filed its Income-tax Return for the Asstt. Year 2014-15 on 20.11.2014 showing income of Rs. (-) 6,71,72,289/- Assessment u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue; iv) The A.O. should have made proper verification and inquired into the information received from NSEL to check the out of book sale of goods. Detailed inquiries should also be conducted on the issue since information in response to notice u/s. 133(6) has been received from NSEL. The out of books sales should be added back to the assessee's income after conducting inquiries and bringing evidences on record. 4.3. The Ld. AR, thereafter, submitted that the Assessing officer had made the proper enquires vide notice dated 27.8.2019 (placed on paper book) on the solitary issue under consideration and the assessee had, thereafter, filed the detailed reply along with annexures vide reply dated 12.12.2018. It was submitted that even in the assessment order it had been duly mentioned that the books of account along with bills and vouchers had been produced by the assessee which were also checked by the Assessing officer. The Ld. AR also drew our attention to the office note forming part of the assessment order. For a ready reference, this office note is being reproduced herein under:- Brief facts of the case are that information received from the National Spot Excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heck out of books sale of goods and that detailed enquiry should be conducted on the issue since the information in response to notice u/s. 133(6) of the Act had been received from NSEL. Referring to these directions, the Ld. AR submitted that the Ld. PCIT should have come to such conclusion only after conducting necessary inquiries himself before passing the order u/s. 263 of the Act and that directions for making further inquiries could not have been given to the Assessing officer even before the Ld. PCIT made any inquires himself. It was submitted that, therefore, the order passed u/s. 263 of the Act was bad in law and deserved to the set aside. 4.6. It was also submitted that the impugned order was based on highly vague and cryptic observations which do not satisfy the statutory pre condition contained in section 263 of the Act, in as much as, the response and the documents filed by the assessee were not duly considered by the Ld. PCIT and the Ld. PCIT had simply observed that the Assessing officer had not conducted the requisite inquires/investigation. It was submitted that it was apparent that the impugned order have been passed in a hasty manner without due application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int of finality in legal proceedings. 4.9. In an alternative plea, which has been taken by the assessee vide ground No. 4 of the appeal, the Ld. AR submitted that neither the initiation of proceedings u/s. 147 of the Act, nor the order of assessment u/s. 143(3)/147 of the Act was in accordance with law and, therefore, the impugned order passed u/s. 263 of the Act was also void-ab-initio. It was submitted that the plea challenging the proceedings u/s. 147 of the Act can be raised even in subsequent proceedings and reliance was placed on numerous judicial precedents in this regard which form the part of the written submissions and have been placed on record. 4.10 The Ld. AR summed up the argument by submitting that the conditions which were pre-requisite for enabling the Ld. PCIT to invoke his jurisdiction u/s. 263 of the Act were not satisfied in the instant case. It was submitted that as per settled law, there should be positive material with the Ld. PCIT to consider objectively and not subjectively that the order of the Assessing officer was erroneous. The Ld. AR submitted that if all the necessary particulars have been furnished before the Assessing officer and he had appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was not found recorded as sales in the books of account. It is the assessee's submissions that the assessee had given adequate explanation in this regard and during the course of re-assessment proceedings had submitted voluminous documents running into 176 sheets to demonstrate that all the sales through NSEL had been accounted for in the books of account. This is duly evidenced by copies of the documents filed before the Assessing officer during the closure of re-assessment proceedings. It was also pointed out by the assessee before the Assessing officer during the course of re-assessment proceedings that an FIR had been lodged by Mr. Pankaj Ramnaresh Saraf against NSEL and members of NSEL as NSEL had started to fault in discharging their payment obligations from July 2013 onwards. It was also submitted before the Assessing officer that during that time the NSEL had conducted physical verification of stock at warehouses located in different parts of the country and after such verification, the assessee had received email 6.9.2013 from the NSEL demanding ₹ 10.75 crores. It was also submitted that after the receipt of this e-mail, the company had been continuously c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner to pass orders u/s. 263 of the Act, merely because he has a different opinion in the matter. It was further held by the Hon'ble Delhi High Court that if any Assessing 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. 6.3. Similar were the observation of the Hon'ble Delhi High Court in the case of ITO Vs. DG Housing Projects Ltd. [2012] 343 ITR 329 (Del). In this case, the Hon'ble Delhi High Court went on to observe that in case where there is in-adequate inquiry but no lack of inquiry, the CIT must give and record a finding that the order/enquiry made is erroneous and that this can happen only if an inquiry and verification is conducted by the CIT. The Hon'ble Delhi High Court in the case of ITO Vs. DG Housing Projects Ltd. (supra) also held that in most cases of alleged 'inadequate inquires' it will be difficult to hold that the order of the Assessing officer, who had conducted enquiries and had acted as a Investigator, is erroneous, without the CIT conducting verification/inquiry hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessing officer, after duly calling for required information and after duly considering the explanations and evidences before him, reached a conclusion which was a possible view to be taken by him and he cannot be faulted for not having waited for a response from NSEL which was not forthcoming even after two reminders. In our considered view, the Assessing officer took a view which was legally plausible and possible at that point of time. Subsequent information could be a basis for initiating new re-assessment proceedings but not the basis for a revisionary proceedings u/s. 263 of the Act. Therefore, on an overall view of the facts of the case, we are of the considered opinion that the exercise of revisional jurisdiction by the Ld. PCIT is without any justification. As far as the alternate plea of the assessee challenging the re-assessment proceedings is concerned, we are not inclined to go into the same as we have already held the proceedings u/s. 263 of the Act to be bad in law. Accordingly, we set aside the order passed u/s. 263 of the Act and allow the appeal of the assessee. 7. In the final result, the appeal of the assessee stands allowed. Order pronounced on 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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