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TMI Blog2022 (7) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding based on the Internal Audit Party report - As it is settled Principle of law by the Three Judges Bench judgment of the Hon'ble Supreme Court in the case of Sirpur Paper Mill Ltd. [ 1970 (4) TMI 4 - SUPREME COURT] that revision made by the Commissioner simply following direction of the Board, which may control exercise of power of officers of department in administrative matters, but not in quasi-judicial matters. In case of judicial matters, the Commissioner should apply his mind and initiate proceedings in accordance with law and not merely carry out directions of the Board. Thus, any order passed pursuant to the directions of the Board is liable to be set aside as Commissioner has not applied his independent judgments in invoking revision proceedings. Respectfully following the above judgments of jurisdictional High Court and judgment of Hon'ble Supreme Court cited (supra) we hold that revision order passed by the Pr. CIT [Central] for the asst. year 2009-10 is not in accordance with law and the same is hereby quashed. We further found the Explanation (2)(a) to section 263(1) of the Act has been inserted w.e.f. 01-06-2015 only. The Ld. Pr. CIT is legally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s arguments are on three folds; viz. (a) there was no incriminating material seized during the course of search, hence the assessment made under section 153A itself is bad in law and the same cannot be revised under section 263 of the Act; (b) the proposed revision of assessment is based on the Tax Evasion Petition (TEP) received by the department and based on the same Revenue Audit Team recommended for the Revision of assessment and Pr. CIT has not formed his own opinion to revise the assessment, therefore, it is not legally valid. (c) invocation of revision under section 263 by the Ld. Pr. CIT is not correct, more so, Explanation 2(a) to section 263(1) of the Act has been inserted w.e.f. 1-6-2015 only, whereas the assessment years involved herein is 2008-09 to 2010-11. 4. First we take up ITA No. 1073/Ahd/2018 (Asst. Year 2009-10): Brief facts of the case is that the assessee is an individual and assessment under section 143(3) r.w.s. 153A of the Act was completed on 30.3.2016 by making an addition of Rs. 19,74,000/- on account of certain cash deposits in the bank. However, it was noticed by the Pr. CIT (Central) that no inquiry was made about the bogus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that for the Asst. Year 2009-10 assessment order passed under section 143(3)/153A dated 30.3.2016 was subject matter of appeal before the Ld. CIT(A)-12, Ahmedabad. The Ld. CIT(A) vide order dated 10.2.2021 deleted the additions made by the AO by holding as follows: 5.6 The fact which may require appreciation at this stage is that even in the assessment order framed u/s. 153A, wherein addition made, there is no reference of any incriminating material. It is therefore submitted that on account of this special and very important factual matrix of this case, the provisions of section 153A are not applicable. To strengthen the aforesaid contention, it is submitted that it is very settled position of law as evident from various decisions of Tribunal as well as High court that Assessing Officer has no jurisdiction to make additions in the order passed u/s. 153A of the Act which are not pertaining to any undisclosed income or seized material when proceedings are closed and attained finality. In support of its contention the appellant strongly relies on the decision of Hon'ble Gujarat High Court in case of CIT Vs. Saumya Construction Pvt. Ltd. (Tax appeal No. 24 of 2016) dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure of Rs. 3,72,45,001/- was bogus expenditure and the same was disallowable as observed by the Ld. Audit officer. Further, this suspicion was examined by the AO during the course of assessment proceedings and that is an addition of Rs. 19,74,000/- was made by the AO on account of cash deposited in various bank accounts. Therefore, it is wrong interpretation that the AO did not examine the entire seized materials and records attributable to the assessment of the assessee. 4. It is very relevant to mention here that the DDIT (Inv) in the finding given for Para-2 has again held that the suspicion No. 2 raised in the TEP was found to partly correct . Similarly, for the third point, the DDIT (Inv) held the suspicion as correct. Here the suspicions have been held as partly correct or correct and it has been only an indication to the AO. Therefore, the Ld. Audit Officer has not interpreted the indication of the DDIT(Inv) in its real spirits. Actually the AO had conducted all necessary verification of facts as mentioned in the report of DDIT(Inv) and thereafter finalised the assessment after making full investigation of all materials facts available and had made relevant add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the interest of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) The order is passed without making inquiries or verification which should have been made 7. Per contra, the Ld. DR appearing for the Revenue has supported the order of the Pr. CIT and argued that revision order is well within the provisions of law and the same is maintainable. 8.1. We have given our thoughtful consideration to the facts of the case; perused material available on record and the Paper Book filed by the assessee. It is not disputed that in the Asst. Year 2009-10, assessment was completed under section 143 read with section 153A of the Act which was subject matter of appeal before the Ld. CIT(A). After verifying the details, the Ld. CIT(A) deleted additions made by the AO on the ground that no seized material was found during the course of search relating to the assessee. This issue is no more res integra as the Hon'ble jurisdictional High Court in the case of Pr. CIT Vs. Saumya Construction P. Ltd., 81 taxmann.com 292 (Guj) has held as follows: 18. In this case, it is not the case of the appellant that any incriminating material in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 8.2. Respectfully following the above judgment of the jurisdictional High Court, we find that assessment order dated 30.3.2016 passed u/s. 153A is confined only to the Returned Income, in other words, original assessment order is reiterated. As against this assessment order, the Ld. Pr. CIT could not initiate revision proceedings under section 263 of the Act on the ground that order passed by the AO is erroneous and prejudicial to the interest of the Revenue since the basic assessment itself is invalid in law. This view is supported by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in Swaminarayan Society , and therefore the revision order passed by the Pr. CIT has no legs to stand. 8.5. Thus, we find that the Ld. CIT has initiated Revision proceeding based on the Internal Audit Party report only, which is not maintainable in law following jurisdictional High Court in the case of N.K. Roadways P. Ltd. v. Income-tax Officer (OSD) reported in [2015] 63 taxmann.com 342 (Gujarat) wherein it was held that 'where Assessing Officer had considered issue relating to taxability of interest in detail at the time of assessment, action of reopening solely at behest of audit party without any independent belief while recording reasons would surely make reassessment vulnerable'. Further it is settled Principle of law by the Three Judges Bench judgment of the Hon'ble Supreme Court in the case of Sirpur Paper Mill Ltd. Vs. Commissioner of Wealth-tax reported in [1970] 77 ITR 6 (SC) that revision made by the Commissioner simply following direction of the Board, which may control exercise of power of officers of department in administrative matters, but not in quasi-judicial matters. In case of judicial matters, the Commissioner should apply his mind and ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evision order passed under section 263 of the Act for the Asst. Year 2010-11 is also quashed. 11. Now let us take ITA No. 1072/ahd/2018 for the Asst. Year 2008-09: The assessee filed his Return of Income for the assessment year 2008-09 on 1.6.2009 declaring total income at Rs. 6,17,790/-. The return was selected for scrutiny assessment and the total income was determined at Rs. 6,57,360/- by the AO on 27.12.2010. Thereafter a search under section 132 of the Act was carried out in the group cases of Dharmadev Group on 15.10.2013 and during the course of search certain incriminating documents were seized pertaining to the assessee regarding various cash deposits in the bank account. Accordingly notice under section 153A of the Act was issued and asked the assessee to file return of income. In response to the notice and based on the reply and details filed by the assessee, the Ld. AO accepted the returned income of Rs. 6,17,790/- and passed assessment order under section 143(3) rws 153A of the Act on 30.3.2016. 11.1. On perusal of the record by the Ld. Pr. CIT, it was noticed the assessee's wife late Shushilaben H. Thakkar has received Rs. 24,46,500/- on sale of land bearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirer conducted by the AO before the assessment order was passed was proper and adequate inquiry so as not to render/consider the assessment order erroneous and prejudicial to the interest of the revenue. 3. Explanation (2) to section 263(1) was inserted by the Finance Act 2015 w.e.f. 01-06-15. The order cannot be branded as erroneous as explanation (2) falls outside the given purview of scope of clauses (a) to (c) is required to be seen. 4. We are relying on the judgment of the Judicial Authority in support of our submission. i. Srinivasan vs. ACIT (2013) 29 taxmann.com 279 (Madras). ii. CIT vs. Smt. Annapoornamam Chandrashekhar (2012) 17 taxmann.com 120 (Karnataka). iii. Narayan Tatu Rane vs. ITO (2016) 70 taxmann.com 227. iv. Amira Pure Foods Pvt. Ltd. Vs. Pr. CIT (ITAT Delhi dated 04-12-2017. v. CIT vs. Anit Kumar Sharma (2011) 335 ITR 83 (Delhi). 5. In the case of the Assessee, the co-operative Housing Society is a separate distinct entity. He being a secretary of the Society cannot be responsible and liable for any of the activity under his individual capacity. He is representative of the society which is separate entity. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . PCIT erred in not considering application of sec. 68 of the Act? 12. The Ld. Counsel for the assessee submitted that for the Asst. Year 2008-09, original assessment under section 143(3) was completed on 27.12.2010 and search assessment made under section 143(3) r.w.s. 153A of the Act, the Ld. AO has accepted the declared income of Rs. 6,17,790/- without making any addition, since there was no seized material found during the course of search. The Ld. Counsel for the assessee further brought to our attention to Page Nos. 24 and 25 of the Paper Book wherein the Ld. DCIT vide letter dated 13-03-2018 submitted his report to the Pr. CIT(Central) on the Revenue Audit Objection as follows: .... In this regard, it is very relevant here to submit that any income received or accrued or arisen to Late Sushilaben Hiralal Thakkar or received by Hiralal D. Thakkar on behalf of Late Sushilaben H Thakkar can be taxed in the hands of Shri Hiralal Thakkar in his capacity as Legal heir only. It can't be taxed in his individual capacity. Both status as per provisions of section 2(31) of the Act, are distinct and separate. Therefore, objection raised by the audit is not acceptable. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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