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TMI Blog2022 (11) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceedings. In the revisionary proceedings also, assessee asserted to have made all the submissions before the ld. AO on the issues raised by the ld. Pr. CIT vide its submissions dated 11.09.2017 and 21.09.2017. Considering the facts on record and the submissions made by both the parties as elaborately discussed above, we have no hesitation in upholding the revisionary order passed by the ld. Pr. CIT u/s. 263 of the Act. Accordingly, grounds taken by the assessee are dismissed. - ITA No. 389/Kol/2021 - - - Dated:- 2-11-2022 - SHRI SANJAY GARG , JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL , ACCOUNTANT MEMBER Appellant by : Shri Raja Ram Chowdhury Shri Vinay Jalan , FCA Respondent by : Shri Sudipta Guha , CIT , DR ORDER PER GIRISH AGRAWAL , ACCOUNTANT MEMBER : This appeal by the assessee is arising out of the order of Pr. Commissioner of Income-tax 2, Kolkata in DIN Letter number ITBA/COM/F/17/2020-21/1-1027175554(1) dated 29.05.2020 passed under section 263 of the Income-tax Act, 1961 (hereinafter referred to as the Act) against the assessment order passed under section 143(3) of the Act by ITO, Ward 4(4), Kolkata, dated 21.09.2017. 2. Grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subsequently, a proposal was received from the Ld. AO in the office of the Ld. Pr. CIT-2, Kolkata for the review of the assessment order u/s. 263 of the Act. From the perusal of the said proposal of the Ld. AO, Ld. Pr. CIT made a prima facie observation that AO namely ITO, Ward-4(4), Kolkata had failed to take a logical action on the information available with him according to which the impugned assessment is erroneous in so far it is prejudicial to the interest of the revenue. He thus, after going through the assessment records, embarked upon initiating the proceedings u/s. 263 of the Act by issuing notice dated 12.03.2020 noting down the discrepancies as observed by him. The discrepancies observed by him and noted in the show cause notice are extracted as under: The case was selected for Limited scrutiny under CASS primarily on the basis of following parameters: Large increase in investment in unlisted equities during the year. Low income in comparison to high investment On going through the assessment record, it is noticed that: 1. As per the balance sheet, there was no net increase in investment in unlisted equities during the period under scrut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase, sales and closing balance of investment but no such details were available on the record. (ii) Assessee has stated that it has filed its submission dated 21.09.2017 and another submission (undated) both of which are on record but the last date of hearing recorded in the order sheet is of 19.09.2017. Assessment order was passed on 21.09.2017. In this factual background, ld. Pr. CIT observed that when the case was last discussed and heard on 19.09.2017, it is not clear how the submission dated 21.09.2017 and another undated submission found placed in the records were considered for making the assessment. (iii) Assessee has stated that in compliance to the notice issued by Ld. AO, it had filed all the details including those for which the case was selected for limited scrutiny vide letter dated 11.09.2017 and 21.09.2017 and after going through these submissions furnished by the assessee, Ld. AO had formed an opinion on the said issues and passed the assessment order dated 21.09.2017. Relevant extracts from order sheet placed at page 5 and 6 of the paper book are reproduced as under: (iv). Ld. Pr. CIT also observed from the P L Account and submissions of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to be quashed as void ab initio. To buttress his contentions, ld. Counsel placed reliance on the decision of Co-ordinate bench of ITAT, Kolkata in the case of Rupayan Udyog Vs. CIT, ITA No. 1073/Kol/2012 dated 28.11.2018 and referred to para 3 of the said order which is reproduced as under: 3. At the outset itself, assailing the decision of the Ld. CIT exercising his revisional jurisdiction u/s. 263 of the Act the Ld. AR drew out attention the second paragraph of the impugned order which reads as under: 2. Thereafter, the AO vide letter dated 15.04.2008 has sent proposal u/s. 263 of the I. T. Act stating therein that in respect of 10 parties from whom advance of Rs.42,75,375/- was received, no verification could be made about the source of receipt. The AO further stated that in respect of 4 out of aforesaid 10 parties notices were not served and the Inspector returned the notices undeserved and therefore, as per opinion of the AO, the assessment order is erroneous and prejudicial to the interest of revenue and accordingly required to be set aside to frame de novo assessment on receiving direction from the CIT. 10. He also referred to the decision of Co-ordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of limited scrutiny assessment proceedings before the AO. 12. Ld. Counsel also referred to the decision of Co-ordinate Bench of ITAT, Amritsar in the case of Paradise Rubber Industries Vs. PCIT in ITA No. 115/ASR/2020 dated 24.09.2021 relating to the issue of selection of case for limited scrutiny. 13. Per contra, Ld. CIT, DR referred to the observations made by the Ld. Pr. CIT and the discrepancies pointed out in respect of noting made in order sheet of the assessment proceedings and the submission made by the assessee in the assessment proceedings. He submitted that it is evident from the records so also as claimed by the assessee that it has made all the submissions before the AO vide letter dated 11.09.2017 and 21.09.2017 whereas discussion and hearing of the case was concluded on 19.09.2017. Thus, there was no occasion for the Ld. AO to consider and take into account the submissions made by the assessee vide letter dated 21.09.2017 for passing the assessment order on 21.09.2017 itself. Ld. CIT, DR further pointed out that the submissions made and as claimed by the assessee vide letter dated 21.09.2017 are vital in respect of the two issues for which the case was sele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 263 of the Act is passed. In such cases, the order of the AO will be erroneous because the order passed is not sustainable in law and the said finding must be recorded by CIT who cannot remand the matter to the assessing officer to decide whether the findings recorded are erroneous. 14.1.2. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/enquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the AO, making the order unsustainable in law. 14.1.3. In some cases, possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the AO had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the AO to conduct further enquiries without a finding that the order is erroneous, the condition or requirement which must be satisfied for exercise of jurisdiction u/s 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y furnished by the assessee on the show cause notice issued by the Ld. Pr. CIT u/s. 263(1) of the Act, he carefully considered the facts of the case and the submissions made by the assessee and made several observations as noted in para 6 of the impugned order specifically pointing out the discrepancies vis- -vis noting in the order sheet of the assessment proceedings and the submissions claimed to have been made by the assessee in the assessment proceedings to demonstrate that AO has not done verification on the issues for which the case was taken up for scrutiny and has passed the order without applying his mind to the material on record. 14.4. On the case law relied on by the Ld. Counsel in Rupayan Udyog (supra), we note that the Ld. AO himself has expressed his opinion that the assessment order is erroneous and prejudicial to the interest of revenue since no verification could be done about the source of receipt of advance and, therefore, is required to be set aside to frame de novo assessment on receiving direction from the Ld. Pr. CIT. On the decision of Hon ble Jurisdictional High Court of Calcutta in the case of Sinhotia Metals Minerals Pvt. Ltd. (supra), we note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [emphasis supplied by us by underline] 14.6.2. Also, in the same written submission, reply in reference to S/No:12, assessee submitted that it is producing the books of accounts of the year for verification. The relevant para is reproduced as under We are enclosing herewith Form no 26AS for your record and perusal and submit that all the income on which TDS is deducted as per Form no 26AS are accounted for in the books of accounts of the assessee company and can be verified from the Profit loss account for the year ended 0n 31st March, 2015 relevant to assessment year 2015-16 of the assessee company. We also producing the books of accounts of the year under consideration before you for verification at the time of hearing. [emphasis supplied by us by underline] 14.6.3. There is no entry in the order sheet of the assessment proceedings of the above submission of 21.09.2017 wherein assessee has claimed to produce bills, vouchers and books of accounts for verification at the time of hearing. The last entry is on 19.09.2017 wherein it is recorded that the case was discussed and heard under the signatures of both, the ld. AO and the Authorized Representa ..... 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