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TMI Blog2023 (10) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... st of the issues have not been addressed by the assessee - HELD THAT:- A copy of the order sheet has been filed wherein also AO has firstly referred to the date of issuing notice u/s 142(1) - Thereafter, a reply has been filed by the assessee on 14/07/2017 and on the very same day assessee was asked to produce the books of accounts and other bills and vouchers. Then on 19/07/2017, the A/R of the assessee appeared and submitted the documents which were filed on record and also produced the books of accounts, bills and vouchers etc., which were test checked and returned back to the assessee and finally on 25/07/2017, case was completed as assessed. From the reply given by the assessee we notice that the complete detail of the unsecured loan taken from M/s. Aakansha Tradevin Pvt. Ltd. has been filed along with copy of the income tax return which clearly contradicts the finding of the ld. Pr. CIT stating that no evidence of filing the return of income of M/s. Aakansha Tradevin Pvt. Ltd., is available on record. Similarly, all the remaining issues including TDS mismatch has also been duly addressed. AO has raised specific queries to all of the issues referred in the show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice u/s 263 of the Act on its registered e-mail id [email protected] and same was the situation for the service for the impugned order u/s 263 of the Act which was also never served upon the assessee on its registered e-mail id. Further the assessee company was also unaware about the subsequent proceedings initiated giving effect to the order passed u/s 263 of the Act, as again there was no service of the same on the e-mail id of the assessee. The assessee came to know about the impugned order only when it received the demand letter dt. 14/11/2022 for Assessment Year 2015- 16 on its e-mail id and thereafter the relevant papers in relation to the above matter were handed to the tax consultant. Under these given facts and also in view of the decision of this Tribunal in the case of Shri Mohan Chandra Das vs. PCIT in ITA No. 766/Kol/2022; Assessment Year 2014-15; order dt. 18/04/2023, the ld. Counsel for the assessee prayed that the delay be condoned and the appeal be admitted for adjudication on merits. 2.1. On the other hand, the ld. D/R, opposed the request and submitted that the delay outside the Covid period is also huge and the reasons cited by the ld. Counsel for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 7. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under: Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant the court shall compensate the opposite party for his loss. 8. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach. 9. In light of the above, if we examine the explanation of the assessee then, it would reveal that basically the delay has occurred because the assessee was completely unaware of the appellate proceedings and the assessee did not have any malafide intention to cause the delay. Therefore, cumulative setting of all these factors would suggest that there is no deliberate delay at the end of the assessee because the assessee was not going to gain anything from delaying this appeal. It is also pertinent to note that the Hon ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra) has observed that period of delay does not matter. It is the quality of the explanation. If some valid reason is there, then any period can be condoned. In this case delay was cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails and explanations submitted by the assessee that the original assessment was completed u/s. 143(3) of the Act on 25/07/2017 accepting the genuineness of the impugned loan transaction and alleged discrepancy in receipts between the return of income and Form 26AS. 5. That, the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/ or rescind any or all of the above grounds. 11. Brief facts as culled out from the record is that assessee is a Private Limited company and is engaged in the business of warehousing of tea chests. Income of Rs. 60,34,350/- declared in the e-return filed on 30/09/2015. Case selected for scrutiny followed by serving of notices u/s 142(1) of the Act requiring the assessee to file various details and also notices u/s 143(2) of the Act duly served upon the assessee. Books of accounts, bills and vouchers were produced and examined on test check basis. Assessment completed and the returned income was accepted. Subsequently, the ld. Pr. CIT called for the assessment records and after examining the records issued the following show cause notice u/s 263 of the Act, dt. 12/03/2020, stating the following issues:- On examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order of the Assessing Officer dt. 25/07/2017 is erroneous insofar as it was prejudicial to the interest of the revenue. 12. Aggrieved, the assessee is now in appeal before the Tribunal. 13. The ld. Counsel for the assessee submitted that all the issues raised in the show cause notice u/s 263 of the Act already stands addressed by the assessee in reply to the questionnaire issued u/s 142(1) of the Act by the Assessing Officer. Reference was made to the paper book dt. 27/02/2023 containing 63 pages wherein it has been stated that the reply of the assessee u/s 142(1) of the Act was filed enclosing therewith all the relevant details which has been thoroughly examined by the Assessing Officer. Further he submitted that it is not the case of no enquiry or incomplete enquiry and in view of the settled judicial precedents, wherein it has been consistently held that where the issue raised in the show cause notice u/s 263 of the Act has already been examined by the Assessing Officer by conducting detailed enquiry and a legally permissible view has been taken then, on such issues revisionary proceedings cannot be initiated. 13.1. So far as the issue raised by the ld. Pr. CIT r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. 16.1. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) has laid down following ratio with regard to provisions of section 263 of the Act: There can be no doubt that the provision 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue 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 Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income-tax Officer 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 Income-tax Officer 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 so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. RampyarideviSaraogi v. CIT (1968) 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal V. CIT (1973) 88 ITR 323 (SC) . 25. In Max India Ltd. (3 Supra), reiterated the view in Malabar Industrial Co.Ltd. (2 Supra) and observed that every loss of Revenue as a consequence of an order of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. 27. In Sunbeam Auto Ltd.( 5 Supra), the Delhi High Court held that the Assessing Officer in the assessment order is not required to give a detailed reason in respect of each and every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new versions which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted; that to do so is to divide one argument into two and multiply the litigation. It held that cases may be visualized where the Income Tax Officer while making an assessment examines the accounts, makes inquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the account or by making some estimate himself; that the Commissioner, on perusal of the record, may be of the opinion that the estimate made by the Officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income Tax Officer; but that would not vest the Commissioner with power to reexamine the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue recourse cannot be had to sec. 263 (1) of the Act. b) 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 Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income-tax Officer 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 Income-tax Officer is unsustainable in law. c) To invoke suomotu revisional powers to reopen a concluded assessment under sec. 263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of Income tax Officer vs. DG Housing Projects Ltd 343 ITR 329 (Delhi), has held as follows:- Revenue does not have any right to appeal to the first appellate authority against an order passed by the Assessing Officer. S. 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression prejudicial to the interest of the Revenue is of wide import and is not confined to merely loss of tax. The term erroneous means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equate investigation , it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It may be noticed that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT. Nothing bars/prohibit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly making disallowance/addition in this regard. 18. Now, we have to first see whether these issues were raised by the Assessing Officer during the course of assessment proceedings u/s 143(3) of the Act. The details of the same are available on paper book page no. 7 and the same is extracted below:- Particulars of Accounts and/or documents required 1. Short resume of all business activities along with full addresses of all business premises, godowns, branch office etc. 2. Copies of Income Tax Return, acknowledgement of return. Tax Audit Report for the A.Y. 2015-16 and relevant Profit and Loss Account and Balance Sheet. 3. Names of all the Directors with complete address, telephone number, PAN and copies of their I.T. return for A.Y. 2015-16 along with relevant Profit and Loss Account and Balance Sheet. 4. Names and complete addresses, telephone number, PANs of all the share holders along with their shareholding. Also mention the percentage of shareholdings. 5. Details of all Bank accounts maintained alongwith all Bank Statement for the F.Y. 2014-15. 6. Details in connection i) Unsecured loans from persons who have not filed their Retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has firstly referred to the date of issuing notice u/s 142(1) of the Act. Thereafter, a reply has been filed by the assessee on 14/07/2017 and on the very same day assessee was asked to produce the books of accounts and other bills and vouchers. Then on 19/07/2017, the A/R of the assessee appeared and submitted the documents which were filed on record and also produced the books of accounts, bills and vouchers etc., which were test checked and returned back to the assessee and finally on 25/07/2017, case was completed as assessed. 20. From the reply given by the assessee extracted (supra) on 14/07/2017, we notice that the complete detail of the unsecured loan taken from M/s. Aakansha Tradevin Pvt. Ltd. has been filed along with copy of the income tax return which clearly contradicts the finding of the ld. Pr. CIT stating that no evidence of filing the return of income of M/s. Aakansha Tradevin Pvt. Ltd., is available on record. Similarly, all the remaining issues including TDS mismatch has also been duly addressed. Thus, we find that the ld. Assessing Officer has raised specific queries to all of the issues referred in the show cause notice u/s 263 of the Act and they have be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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