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TMI Blog2022 (12) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... ofar prejudicial to the interest of revenue. We make our observation that the learned PCIT has not invoked the explanation 2 of section 263 of the Act in the show cause notice about the same. Therefore, the opportunity with respect to the explanation 2 of section 263 of the Act was not afforded to the assessee. PCIT erred in taking the re-course of such provisions while deciding the issue against the assessee. Secondly, PCIT has also not specified the nature and the manner in which the enquiries which should have been conducted by the AO in the assessment proceedings. Thus, in the absence of any specific finding of the learned PCIT with respect to the enquiries which should have been made, we are not convinced by his order passed under section 263 of the Act. In view of the above and after considering the facts in totality, we hold that there is no error in the assessment framed by the AO under section 143(3) of the Act, causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned PCIT is not sustainable - Appeal of assessee allowed. - ITA No. 85/Rjt/2022 - - - Dated:- 24-8-2022 - SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s expenses amounting to Rs. 15,55,005/- and Rs. 8,92,640/- in the year under consideration in AY 2012-13, in the name of M/s Nehal Construction and M/s Harsh Construction respectively. Therefore the AO reopened the assessment for year under consideration under section 147 of the Act and issued notice u/s 148 of the Act to the assessee. 3.4 In response to the notices issued by the AO, the assessee submitted the copy of ITR, Computation of income, copy of bill, service tax paid details with challan, TDS deduction detail along with form 26AS of the parties to prove the genuineness of the transaction. The AO after considering the details filed by the assessee accepted the return income and completed the assessment for the year under consideration. 4. The PCIT on examination of the case records of the assessee, found that during the year under consideration assessee had claimed expenses of Rs. 24,47,645/- against the bill issued by M/s Nehal Construction and M/s Harsh Construction. However these firms admitted that they issued bogus bills for the AY 2013-14. However, the AO had not properly verified the claim of the assessee in respect of bogus expenses claim which have to be disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 263 of the Act. 7) The explanation 2 of the section 263 of the Act was inserted from the finance Act 2015 w.e.f. 01-06-2015 applicable to AY 2016-17. Thus the reference to such explanation is also not helpful to the PCIT. 4.2 However, the ld. PCIT after considering the assessment records and submission of the assessee observed that in view of the past history of the above mention two parties who have admittedly provided the bogus purchase bills to the assessee. The AO ought to have examined the movement of goods, quantitative stock position, including the inward and outward of the materials and the other point to judge the veracity of the purchases shown through them. But he has failed to do so. However none of the above verification has been carried out by the AO while completing the assessment proceeding. Therefore it is clear that the assessment has been completed without conducting any inquiry/ verification or incorrect application of law tantamount to erroneous order which is prejudicial to the interest of Revenue. Thus the PCIT accordingly invoked the provision of section 263 read with explanation 2 of the Income Tax Act. 5. Being aggrieved by the order of the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f inquiries to be made by the Assessing Officer. It is Assessing Officer s prerogative to make inquiry to the extent he feels proper. The Commissioner of Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various Hon ble High Courts in this regard. 8.2 The Hon ble Delhi High Court in the case of CIT Vs. Sunbeam Auto 332 ITR 167 (Del.), made a distinction between lack of inquiry and inadequate inquiry. The Hon ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry. The relevant observation of Hon ble Delhi High Court reads as under: 12. .. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made further inquires rather than accepting the explanation. Therefore, it cannot be said that it is a case of lack of inquiry . 8.3 The Hon ble Bombay High Court in case of Gabriel India Ltd. [1993] 203 ITR 108 (Bom), discussed the law on this aspect in length in the following manner: The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng certain unaccounted income. The Assessing Officer completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revised order under section 263 on ground that Assessing Officer had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's on-money transactions and Tribunal, thus, set aside the revised order passed by Commissioner. The Hon ble High Court upheld Tribunal's order. The Hon ble Supreme Court while dismissing the SLP filed by the Department held as under:- We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee against such notices. Notice dated 17.09.2019 1. You are required to submit proof for the income admitted by two parties namely M/s. Nehal Construction and M/s. Harsh Construction received from assessee M/s. ICC Projects Pvt . Ltd. with P L accounts, ITR balance sheet for A.Y. 2012-13 along with bank statements. 2. You are requested to furnish the above details on or before 19.09.2019 vide online eassessment facility. Bhuvaneswary Jeevanandham ACIT, CIR-1, G DHAM Reply dated 18-09-2019 From: M/s ICC Projects Pvt. Ltd, Shop N. 6 to 10, Golden Point, Plot No. 31, Sector-08, Tagore Road, Gandhidham (Kutch) PAN:AACC1489E 18th September, 2019. To, The Deputy Commissioner of income Tax, Gandhidham Circle, Gandhidham. Respected Medam, Re: Notice u/s. 142(1) of the Income-tax Act, 1961 dated 17.09.2019 . Sub: Re-Assessment proceedings for A.Y. 2012-13 . We have been served with a notice u/s 142(1) of the Act dated 17.09.2019 requiring us to submit proof for the income admitted by two parties namely M/s Nehal Construction and M/s Harsh Constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sound position and in the meantime, there was survey at home, I was frightened and could not give proper replies to questions. In fact, I am proprietor of Nehal construction and maintain regular books of accounts and filing income tax returns. In FY 2012- 13 due to my indifferent health I did not do any work but in past years I did civil and labour contract work in the name of M/s Nehal Construction. Q.4 Since how many years did you work as proprietor of Nehal Construction? Ans. Since last 6-7 years I am working as proprietor of Nehal Construction and maintained all the books of accounts which are produce before you. Q. 5 Explain the work done by Mehul Construction. Ans. My firm M/s Mehul construction is carrying the civil work, civil earth work, labour work. I do the work under supervision of my husband Ishwarbhai Hadiya. Q. 6 Do you want to say anything more? Ans. Sir, I once again state that my statement dated 03.11.2012 was recorded under my indifferent mental and physical health and the replies were given under pressure and without verification and reconciliation. I do not want to say anything more. - We attached herewith copy of stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been charged and paid by the Nehal Construction in its the bills raised. The facts of AY 2013-14 were quite different. 5.0 Further, the principle of res-judicata does not apply to income tax proceedings, where a fundamental aspect permeating through different assessment years has been found as a fact in an earlier period, it would not at all be proper to allow the position to be changed in a subsequent year. In the absence of any change in the circumstances, the department should have felt bound itself by the previous decision. However, it would have been a difference case where the facts are not identical. In this regard we draw your attention to the decision of the Hon'ble Supreme Court in Bharat Sanchar Nigam Ltd. v. Union of India (282 ITR 273) where it has been categorically observed as under (Emphasis supplied): Res judicata does not apply in matters pertaining to tax for different assessment years because res judicata applies to debar courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -contractor for the AY 2012-13. 11.0 We also attached herewith copy of Quarterly Form No.16 issued by us to the above said contractor for the AY 2012-13. 12.0 We also attached herewith copy of bills issued by the subcontractor for the year under consideration. 13.0 We also attached copy of income ledger from the books of sub-contractor showing income from ICC Projects Pvt Ltd for the AY 2012-13. 14.0 In view of the above the proceedings may kindly be finalised on merits. However, if your honour requires any further details, the same shall be furnished on hearing from you. Thanking You, Yours Sincerely, Authorised signatory, M/S. ICC Projects Private Limited 8.9 From the above it is revealed it is not the case that the AO has not made any enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of the bogus bill issued by the above mention two parties. It is not the case of that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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