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TMI Blog2022 (8) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. See SHRI NIRAV MODI [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] As in the present case series of facts prove beyond doubt that the ld. AO has conducted a detailed enquiry about the issue of alleged transaction of the assessee with M/s. Pushkar Trading and Holding Pvt. Ltd. and after examining the documents filed by the assessee, AO was satisfied that the assessee has not entered into any bogus/accommodation entry/transaction with this party and there is no element of undisclosed income and further, the transaction was not of Rs.60,00,000/- but it was transaction of Rs.30,00,000/- as the loan received on 13.10.2010 and the same amount repaid on 25.11.2010. We are of the considered view that the order of the AO dated 30.11.2018 cannot be termed as erroneous and prejudicial to the interest of the Revenue on the basis of this issue of the alleged transaction with M/s. Pushkar Trading and Holding Pvt. Ltd. S.K. Hawala Scam - Copies of bank statements were filed which were examined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons recorded. We, therefore, hold that ld. Pr. CIT erred in invoking the jurisdiction u/s 263 of the Act and thus the impugned proceedings are quashed and the reassessment order is restored. Appeal of assessee allowed. - I.T.A. No.: 270/Kol/2021 - - - Dated:- 6-4-2022 - Sri Aby T. Varkey, Judicial Member And Sri Manish Borad, Accountant Member For the Assessee : Sh. S.K. Tulsiyan, Adv. And Ms. Puja Somani For the Revenue : Md. Ghayas Uddin, CIT (D/R) ORDER PER MANISH BORAD, ACCOUNTANT MEMBER: This appeal filed by the assessee pertaining to the Assessment Year (in short AY ) 2011-12 is directed against the order of ld. Pr. Commissioner of Income-tax, Kolkata-2 [in short ld. Pr. CIT ] dated 26.03.2021 vide Appeal No. ITBA/REV/F/REV5/2020-21/1031806468(1) which is arising out of the assessment order framed u/s 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 30.11.2018 by ITO, Ward-4(4), Kolkata. 2. At the outset the ld. Counsel for the assessee submitted that there is a delay of 92 days in filing of the appeal. This delay was stated to be neither deliberate nor intentional but was due to the COVID-19 pandemic prevailing at that time. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f reopening and hence jurisdiction invoked u/s. 263 of the Act was beyond the sanction of law. 5. That, on the facts and in the circumstances of the case, the impugned order passed by the Ld. Principal Commissioner of Income Tax, Kolkata-2 is perverse and is liable to be quashed. 6. That the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds. 4. Brief facts of the case as on records are that the assessee is a private limited company and engaged in the business of manufacturing of UPVC pipes and fittings. Income of Rs.16,62,450/- declared in the return of income on 26.08.2011. The case was selected for scrutiny and assessment u/s 143(3) of the Act was passed on 31.03.2014 wherein addition of Rs.29,22,851/- was made on account of unexplained investment. Subsequently, notice u/s 148 of the Act was issued to the assessee on 31- 03-2018 on the ground that the assessee company is beneficiary of unaccounted money of Rs.60,00,000/-received from M/s. Pushkar Trading and Holding Pvt Ltd. Copy of the notice issued u/s 148 of the Act and copy of the reasons recorded is enclosed at page 1-3 of the paper book. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of assessment proceedings, on examination of records, it is observed that your company s name was appeared in the case of S.K.Hawala Scam and you are one of the beneficiary who has taken benefit of Rs. 10,00,000/- during the financial year 2010-11. 4.2. The assessee filed detailed written submission in support of the information asked by the ld. AO with regard to the transaction with M/s. M/s. Pushkar Trading and Holding Pvt. Ltd. and, further, the assessee denied to have entered into any transaction in the alleged S.K. Hawala Scam and also stated that it is not beneficiary to alleged benefit of Rs.10,00,000/-. Considering the assessee s submissions and explanations, re-assessment proceedings were completed and no additions were made on both the issues raised for the re-opening. 4.3. Thereafter, ld. Pr. CIT invoked the revisionary powers u/s 263 of the Act by issuing notice dated 23.02.2011 alleging that the order u/s 147 r.w.s. 143(3) of the Act dated 30.11.2018 is erroneous and prejudicial to the interest of the Revenue. Relevant extract of the show cause notice u/s 263 of the Act is reproduced below: Whereas the undersigned had called for and examined the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of Rs. 10,00,000/-. In support of its claim, Assessee Company submitted an affidavit before notary public, Kolkata 24 Parganas along with bank statement maintained with State Bank of India, 39, Shakespeare Sarani Branch, Kolkata, (A/c No. 10502871178 Punjab National Bank, Cotton Street Branch (A/c No. 0089002100114242). On examination of the bank statements provided by the Assessee Company during the course of assessment proceeding, no such transaction with S.K. jain apparently could be found by the A.O. During the course of assessment proceedings, assessee company was requested to explain each credit entry of Rs. 10,00,000/- reflected in the bank statement of State Bank of India, 39, Shakespeare Sarani Branch, Kolkata by the A.O. but in absence of any incrimination document in record regarding alleged transaction of Rs.10,00,000/- made by the Assessee Company in relation to S.K. Jain Hawla Scam no detail enquiry was made by the A.O before passing of the order. Further on examination of assessment records, it is observed that Assessee Company had received share application money of Rs.2,85,67,000/- from various entities during the F.Y. 2010-11 relating to A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act dated 31-03-2014. 7. Appellate order dated 28-07-2016. 8. Notice issued u/s 142(1) of the Act dated 19-07-2018 and the reply filed by the assessee during reassessment proceedings. 9. Notice issued u/s 142(1) of the Act dated 07-09-2018 and the reply filed by the assessee during reassessment proceedings. 10. Relevant bank statement of the assessee evidencing transactions with M/s Pushkar Trading and Holding Pvt Ltd and confirmation of accounts received by the party. 11. Objection filed by the assessee and disposal order by AO. 12. Reply filed by the assessee dated 22-10-2018. 13. Notice issued u/s 142(1) of the Act dated 05-10-2018 w.r.t. S K Hawala Scam and reply filed by the assessee. 14. Notice issued during original assessment proceedings and reply filed by the assessee. 15. Audited Accounts for the year. 5.1. During the course of proceedings before us, the ld. Counsel for the assessee submitted that since ld. AO has not made any addition with respect to the issue raised in the reasons recorded, the proceedings u/s 147 r.w.s. 143(3) of the Act ceased to survive. For this proposition, reliance was placed on the judgment of Hon ble Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of the contention that the assessee failed to discharge the onus to prove the identity and creditworthiness of the cash creditors to advance money and the genuineness of the transaction. It was prayed that the assessment order passed u/s 143(3)/147 of the Act dated 30.11.2018 may be held as erroneous and prejudicial to the interest of the Revenue. 7. We have heard rival contentions and perused the records placed before us. The assessee has raised various grounds of appeal contending that the impugned order u/s 263 of the Act is without jurisdiction, against law and liable to be quashed. 8. We find that the assessee s case for AY 2011-12 was firstly assessed u/s 143(3) of the Act vide order dated 31.03.20104. Thereafter, notice u/s 148 of the Act was issued for one reason that the assessee company is the beneficiary of unaccounted money of Rs.60,00,000/- taken in the form of accommodation entry from M/s. Pushkar Trading and Holding Pvt. Ltd. In the course of re-opening proceedings another issue relating to an alleged transaction of Rs. 10,00,000/- with S.K. Jain Hawala Scam was taken up by the AO. Ld. AO was satisfied with the submissions and made no addition. Ld. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. 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 ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO 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 ITO is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ua non for exercise of such power. On a perusal of the material brought on record and the order passed by the CIT it is perceptible that the said authority has not kept in view the requirement of s. 263 of the Act inasmuch as the order does not reflect any kind of satisfaction. As is manifest the said authority has been governed by a singular factor that the order of the AO is wrong. That may be so but that is not enough. What was the sequitur or consequence of such order qua prejudicial to the interest of the Revenue should have been focused upon. That having not been done, in our considered opinion, exercise of jurisdiction under s. 263 of the Act is totally erroneous and cannot withstand scrutiny. Hence, the Tribunal has correctly unsettled and dislodged the order of the CIT. [Emphasis supplied] 9.5. In the light of the provisions of section 263 of the Act and a settled position of law, powers u/s 263 of the Act can be exercised by the Pr. Commissioner/Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and also prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second set of cases, CIT cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not. 10. On examination the facts of the instant case in light of the above stated principles based on various judgments and decisions referring hereinabove as well as those referred to by ld. Counsel for the assessee and the Revenue firstly, it is to be examined that whether ld. AO conducted the enquiry in relation to the issue raised in the show cause notice issued by the ld. Pr. CIT. As far as the issue of taking accommodation entry of Rs.60,00,000/- from M/s. Pushkar Trading and Holding Pvt. Ltd., we find that this was the issue on the basis of which re-assessment proceedings were initiated and a specific notice was given to the assessee. On receiving the notice u/s 142(1) of the Act dated 19.07.2018 on the alleged accommodation entry of Rs.60,00,000/- taken from M/s. Pushkar Trading and Holding Pvt. Ltd. the assessee filed detailed submission on 02.08.2018 which is placed on record at page 28 29 of the paper book and again submission given on 10.09.2018 placed at page 30 to 34 and enclosing therein the copy of bank stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he records it cannot be said that it is a case of no enquiry or incomplete enquiry and therefore, there is no room for ld. Pr. CIT to assume jurisdiction u/s 263 of the Act on this issue. 12. Now, we take up the third issue mentioned by the ld. Pr. CIT in the alleged show cause notice that the ld. AO did not make any enquiry in respect of the share application money of Rs.2,85,67,000/- received in the financial year 2010-11. 12.1. As far as this issue is concerned firstly we observe that the alleged proceedings are against the order of the ld. AO u/s 143(3) r.w.s. 147 of the Act dated 30.11.2018. This re-assessment proceeding was carried out for the specific reasons recorded attached to the notice issued u/s 148 of the Act. No addition has been made on the issues mentioned in the reasons recorded which in itself precludes the ld. AO from making any other addition in view of the ratio laid down by Hon ble Bombay High Court in the case of Jet Airways (I) Ltd. (supra) wherein it has been held that If after issuing a notice u/s 148 of the Act, the ld. AO accepts the contentions of the assessee and holds that the income for which he had initially formed a reason to believe that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 and it is not a share application money. Secondly, the increase in share capital is only Rs.17,60,000/-. Thirdly, as far as share application money is concerned there is an increase of Rs.4,22,40,000/-. None of these three facts seem to have been examined by ld. Pr. CIT before issuing the show cause notice. Even otherwise, all these details were placed before ld. AO and these form part of the financial statement for which replies were filed in regular course of proceedings itself (as stated by the ld. Counsel for the assessee). Thus, in view of the ratio laid down by Hon ble Delhi High Court in the case of D.G. Housing Projects Ltd. (supra) since ld. Pr. CIT has not examined the issue on merit before holding the order of the AO as erroneous and prejudicial to the interest of the Revenue, the proceedings carried out u/s 263 of the Act deserves to be quashed. 13. We, therefore, under the given facts and circumstances of the case and respectfully following the judgments referred herein above, are of the considered view that out of the three issues raised in the show cause notice u/s 263 of the Act, in two issues ld. AO has conducted complete enquiry during re-assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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