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TMI Blog2023 (2) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... And Shri T. R. Senthil Kumar, Judicial Member For the Assessee : Ms. Nupur Shah, A.R. Shri Dhiren Shah, A.R. For the Revenue : Shri Sudhendu Das, CIT D.R ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the assessee against the order of the Learned Principal Commissioner of Income Tax, Ahmedabad-4, dated 25/03/2020 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2015-16. 2. The Ld. AR at the outset brought to our notice that there is a delay in filing the appeal by the assessee for 343 days which is falling during the covid-19 period, therefore, the same should be condoned. On the other hand, the Ld. DR did not raise any objection on the condonation of delay in filing the appeal by the assessee. Accordingly, we condone the delay in filing the appeal by the assessee in pursuance to the judgment of Hon ble SC in the case of Cognizance for Extension of Limitation, In reported in 125 taxmann.com 151 where it was held as under: 2. In cases where the limitation would have expired during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee discharged the onus cast under section 68 of the Act. Thus, the AO after considering the submission and application of mind was satisfied with the genuineness of loan credit. Therefore, there is no error in the order of the AO in this regard as the AO has taken one of the possible view. The assessee further submitted that the order of the AO can be held as erroneous insofar prejudicial to the interest of Revenue if the order is passed without adhering the provisions of law or passed without making prudent inquiry. Both these conditions are not applicable in the order passed by the AO in case of the assessee. It was also submitted that in case of SN Shah HUF, all the necessary details such as confirmation, bank statement showing transfer of money and ITR were furnished and on the strength of such details, the AO was satisfied. Therefore, the order of the AO cannot be held erroneous merely for the reason that the creditor party declared meagre income. Likewise, in case of Shivalik Co-operative housing society, the ledger copy and confirmation along with bank statement were furnished before the AO from which it can perused that the account of Shivalik Co-operative is a running ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Coop. Hsg. Society maintained with Dena Bank revealed that there were credit entries of the same amounts or totaling to the same amounts which have been transferred to the account of the assessee. No copies of ITR-V, statement of total income, profit loss account, balance-sheet etc. have been called for by the A.O. by either issuing summons u/s 131 of the Act or calling information u/s 133(6) of the Act. It is also necessary to verify the constitution of this Co-op. Hsg. Society and to find out as to whether the Chairman Secretary of this Co-op. Hsg. Society are the family members of the assessee and the administration of this society had been retained by them even after completion of the housing project and handing over the possession to the members. Thus, the A.O. has been found to have not carried out the required inquiries in relation to these loan transactions. 3.6 The A.O. has also failed to intimate the above-mentioned loan transactions to the concerned AOs for taking necessary actions at their end and he himself has wrongly satisfied about the genuineness of these loan transactions. 3.7 Considering all these facts and circumstances of the case as appraise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid order and after considering the facts and circumstances of the case as discussed above. The assessment order passed u/s 143(3) of the Act dated 06.12.2017 is held to be erroneous and prejudicial to the interests of the revenue. The A.O. is accordingly directed to make the assessment de-novo after carrying out the necessary inquiries as caused to be made and mentioned above. 7. Being aggrieved by the order of the learned PCIT, the assessee is in appeal before us. 8. The learned AR before us filed a paper book running from pages 1 to 114 and contended that one of the reason for selection of limited scrutiny assessment in the case of appellant was to verify the unsecured loan. The appellant during the assessment proceeding furnished all the necessary details about the credit of unsecured loan during the assessment proceedings. The learned AR in support of his contention drew attention on pages 74 and pages 77 to 101 of the paper book where the notice under section 142(1) of the Act and reply of assessee along with documentary evidences were placed. Thus, the learned AR contended that there cannot be said that the assessment order is erroneous and causing prejudice to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 controversies as it must in other spheres of human activity. 14. The Mumbai ITAT in the case of Sh. Narayan TatuRane Vs. ITO, I.T.A. No. 2690/2691/Mum/2016, dt. 06.05.2016 examined the scope of enquiry under Explanation 2(a) to section 263 in the following words:- 20. Further clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled 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 question of law arises. Tax Appeal is dismissed 16. The Supreme Court in the another recent case of Principal Commissioner of Income-tax-2, Meerut v. Canara Bank Securities Ltd[2020] 114 taxmann.com 545 (SC), dismissed the Revenue s SLP holding that 263 proceedings are invalid when AO had made enquiries and taken a plausible view in law, with the following observations: Having heard learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a loss without any income in profit Loss A/c. (5) No entry in schedule Asset and liabilities. (6) Mismatch in sales turover reported in audit report and ITR. (7) High turnover reported Service tax return compared to ITR and assessee has deposited large amount of cash saving bank account. (8) Large interest expenses relatable to exempt income (u/s.14A) (9) Gross interest shown in schedule OS of ITR is less than interest receipts reported in 26AS. A fresh opportunity is being granted due to change of incumbent. The case is fixed for hearing on 25.06.2017 at 10.30 AM at the above office address. You are requested to submit all the above said details duly indexed called for on the same date. Non/parties compliance of the notice u/s.142(1), may render you liable for penalty u/s.271(1)(b) of the Act. Further, please file the submission in a proper file/box file /spiral binding. It may kindly be noted that if your case is represented through Authorized Representative (AR) no submission will be accepted in dak/otherwise unless it is provided along with authority letter duly signed by the assessee as per provision mentioned u/s.288(2). 18.1 In resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 263 of the Act, 1961 is made applicable. The Tribunal observed that the PCIT has not mentioned in the show cause notice to invoke the Explanation 2 of section 263 of the Act 1961. Therefore, by invocation of Explanation in the order without confronting the assessee and giving an opportunity of being heard to the assessee is not appropriate and sustainable in law. 21. Before parting it also necessary to take the note of the finding of the ld. PCIT that the learned PCIT in his order passed under section 263 of the Act has observed certain facts as detailed below: i. The assessee has filed the details of the loan given by the aforesaid entities. ii. The karta of the HUF is father of the assessee. PAN of the HUF was also furnished. iii. There were other loan transactions between the father and the son in the personal capacity. iv. The amount of loan received by the assessee have been transferred to other parties. To this effect, no business purpose was established. v. The assessee is maintaining running account with the society. 21.1 From the above observation of the learned PCIT, it seems that all the details were available or in the knowledge of the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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