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TMI Blog2024 (2) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the ld. AO is erroneous and prejudicial to the interest of the revenue what material he relied - He relied on the same material on which the ld. AO has already applied his mind. In the proceeding before the ld. PCIT the assessee in his reply submitted the profit / loss derived by the assessee and the figures reported in the PCIT notice is same in the assessment order and in the reply to the assessee. On issue no. 1 the ld. PCIT noted that The AO accepted the version of the assessee without properly examining and verifying the ITS details with transactions in the ledger account maintained by the broker and from the bank statement. , and on issue no. 2 he observed that The AO is directed to verify the sales from the ledger account in the books of broker and from the BSE/NSE. As regards claim of the assessee in respect of transactions carried out by other parties by utilizing the PAN of the assessee, the AO is directed to carry out necessary verifications from such other parties and from BSE/NSE. Thus, the bench noted that on both the issue the ld. PCIT has not pointed that how the order is erroneous and prejudicial to the interest of the revenue. He merely aims to make inquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is illegal and squarely covered by the order of this Hon'ble Bench. 2. That the order passed by the Principal Commissioner of Income Tax, Bikaner is illegal and against the law. 3. That the order passed by the PCIT is against the judicial decorum and discipline because the order of the Hon'ble Tribunal/Hon'ble High Court is binding upon the PCIT was not followed, referred during the course of hearing, as such, the order passed is illegal. 4. The Principal Commissioner of Income Tax should have considered the judgment of Jurisdictional High Court delivered in the case of Shri Ganpatram Bishnoi wherein after reviewing the case of M/s. Malabar Industries Limited, the Jurisdictional High Court delivered the judgment. 5. That the action of the PCIT in respect of the setting aside is illegal and against the law because the assessment was completed in accordance with law and is neither erroneous nor prejudicial to the interest of revenue and there was no lack of inquire 6. That none of the condition of 263 of Income Tax Act is applicable in the case of the assessee. The Assessing Authority completed the assessment after conducting thorough enquiry, applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of Rs. 58,780/-. Thereafter, the case was reopened u/s 147/148 and notice u/s 148 was issued on 09.11.2016 and the assessment under section 147/143(3) of the Income Tax Act, 1961 was completed by the Assessing Officer, on 14.12.2017 on declared income of the assessee. 5. On culmination of assessment proceeding, ld. PCIT on examination of records noted that the assessment order dated 14.12.2017 having been found to be erroneous in so far as it is prejudicial to the interests of the revenue so, a show cause notice u/s 263 of the IT Act, 1961 was issued to the assessee on 10.10.2019 by the ld. PCIT and served on the assessee. In compliance to the show cause notice u/s 263 of the IT. Act, no reply was filed by the assessee. Another notice fixing the date of hearing was issued on 14.11.2019. Further opportunities to file submissions were provided vide notice dated 06.01.2020 and 31.01.2020. On 11.02.2020 & 05.03.2020 assessee filed a written reply. The reply filed by the and information/details available on the records have been considered carefully and there on the ld. PCIT observed that; Issue/Point 1:- The assessee Shri Gaurav Purohit filed his ITR for the AY 2011-12 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, accepted the submission of the assessee. The AO should have verified each and every such transaction claimed to be carried out by other parties/companies/persons on PAN of the assessee with the broker of the assessee and from the BSE/NSE. The AO is directed to verify the sales from the ledger account in the books of broker and from the BSE/NSE. As regards claim of the assessee in respect of transactions carried out by other parties by utilizing the PAN of the assessee, the AO is directed to carry out necessary verifications from such other parties and from BSE/NSE. Based on the above observation on the above issue PCIT opined that the order of the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue and considering the Explanation 2 to section 263(1) w.e.f 01.06.2015 and relying on the finding in the case of M/s Gee Vee Enterprises 99 ITR 375 (Delhi High Court)[1995] It was held that the Assessing officer (AO) is not only an adjudicator but also an investigator, and failure of the AO to conduct the required inquiring and accepting the statement of the assessee without due verification renders the order erroneous in so far as it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S WAS 96378284/- AND SALES IS 95770045/-, TOTAL COMES TO 192148329/-, THE AMOUNT MENTION IN THE REASON. IF WE ARE ARRIVING AT THE PROFIT OR LOSS THE TOTAL PURCHASES IS 96378284/- AND SALES IS 95770045 IF CALCULATING THE GAIN SAME COMES TO NEGATIVE. IN THE OTHER WORDS THERE IS A LOSS OF Rs. 608239/-, THIS FACT WAS ALSO MENTION IN THE REPLY. THE ASSEE ALSO EXPLAINED IN RESPECT OF INTRA DAY TRANSACTION AS SUCH CAPITAL GAIN IS NOT CALCULATED. It wall be worthwhile to draw your attention towards the provision of 263 of IT Act, All is being reproduce here under: E-Revision by the Principal Commissioner or Commissioner Revision of orders prejudicial to revenue. 263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears 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 Court. Explanation. In computing the period of limitation for the purposes of sub- section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. From the perusal of above you will observe that for acquiring jurisdiction us 263 of the IT Act there must be fulfillment of twin conditions. Order must be erroneous as well as should be prejudicial to interest of revenue. Further in case of the assessee there is no lack of inquiry also, the assessing officer also verified the entire fact required to be verified for the purpose of finalizing the assessment. In case of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer is marked as Annexure-B and reply of said notice is enclosed as marked-C. In these circumstances the assessment is nighters erroneous or prejudicial to interest of revenue. It is therefore humbly prayed that the proceeding initiated may kindly be drop. As regards the notice issued by your good self dated 10.10.2019. It is submitted as under parawise. As regard para 1 of your Notice mentioned in respect of the fact that the survey was conducted and in the course of survey, Shri Jai Kishan Poddar in the statement recorded u/s. 131 of I.T. Act, admitted that the Companies are bogus companies and the entries in question are accommodating entries. The DDI investigated and pointed out the list of the bogus companies as per the record. During the year under consideration, the Assessing Officer received the intimation regarding bogus transaction amounting to Rs. 9.57,83,040/- as sale and received Rs. 9,63,56,782/- as bogus purchase. In this connection, it is submitted that it is in between the party alleged to be bogus party and between the departments. The assessee in course of assessment proceeding denied the transaction and admitted that only commission was received and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 of I.T. Act. The procedure adopted by the assessing officer is in accordance with the law as well as per the judicial pronouncement. As regard para 3 of your Notice, it is submitted that your good self has alleged that the assessee in part 'A' of Profit & Loss Account, receipt of Rs. 1,25,28,01,832/- represent the transaction not related to himself but the other share transactions were not related to him. This explanation was accepted without any investigation. Your good self observed that THIS IS THE OPINION OF YOUR GOOD SELF AND BASES OF TAKING THE ACTION U/S 263 OF IT ACT. In this connection I want to draw your attention that in the reply submitted by the assessee dated nil in response to reply of notice 142(1) of IT Act dated 05.12.2017 reply of query no 5 it has been categorically express and explain that this amount was mention by the then authorize representative which was not in my knowledge. At the time of submitting the original return the turnover was mention which was in fact not my transaction and this fact was clarified to the assessing officer in course of assessment proceeding. The assessing officer accepted the income from commission which was show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para that if two views are possible and out of two views, one view has been taken by the Income-tax Officer, in that case the order cannot be called as erroneous and prejudicial to the revenue. In this respect your kind attention is invited towards the following in case of Commissioner of Income Tax Vs. DLF Power Ltd. (Del) Reported in 229 CTR Page No. 27 the relevant portion is being reproduced here under: 229 CTR Page No. 27 "If two views are possible and the view taken by the AO was plausible one that would not provide sufficient ground for the CIT to assume jurisdiction under section 263 merely because, he had a different view." Further I want to invite you kind attention in case of Grasim Industries Ltd. Vs. Commissioner of Income Tax (Bombay) reported in 321 ITR Page No. 92 the relevant portion is being reproduced here under: 321 ITR Page No. 92. "Assessing Officer cannot be treated as prejudicial to the interest of the Revenue, for example when an DCIT adopted one of the courses permissible ill law and it has resulted in loss of revenue, or where two views are possible and the DCIT has taken one view with which the Commissioner does not agree, it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o such enquiries has not been made in the order of the assessment, but the same is apparent from the record of the proceedings, in the present case, without anything to say how and why the enquiry conducted by the Assessing Officer was not in accordance with law, the invocation of jurisdiction by the CIT was unsustainable. As the exercise of jurisdiction by the CIT is founded on no material, it was liable to be set aside. Jurisdiction under section 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something." The judgment of Hon'ble Rajasthan High Court is based on the basis judgment given by the Hon'ble Supreme Court in case of Malabar Industries reported in 243ITR 83. The Assessing Officer took the possible view out of two. In this connection, I want to draw your kind attention towards judgment of Hon'ble Rajasthan High Court delivered in the case of Principal CIT vs. Om Rudra Priya Holiday Resort (P) Limited-311 CTR page 935. it is also stated that the order passed by the Income-tax Officer is in accordance with the law. Neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal is binding too also. You will therefore, observed that the order passed by the Income Tax Officer is not prejudicial in the interest of revenue. Your Kind attention is further invited towards the judgment of the jurisdictional High Court reported in 198 CTR pages 546 Commissioner of Income Tax Vis Ganpat Ram Bishnoi. In this case the Hon'ble Jurisdictional High Court observed which are being reproduced as under:- "A.O. had not applied hi mind to the various aspect of the matter Once enquiry in fact has been conducted and the A.D. has reached a particular conclusion, Though the reference to such enquiry has not been made in the order of assessment, the invocation of jurisdiction by the CIT is not sustainable Same liable to be set aside." The ratio of the judgment is applicable in toto. You are therefore requested that proceeding initiated may kindly be dropped Your Kind attention is further invited towards the judgment of the jurisdictional High Court reported in 233 ITR page 649- Commissioner of Income Tax Vis Shiv Hari Madhu Sudan. In this case the Hon'ble Jurisdictional High Court observed which are being reproduced as under:- "To sum-up, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n passed by the Assessing Officer by taking his own correct legal view. With due respect the condition as laid down in the provisions as well as judicial pronouncement is very clear that the case of the assessee is not covered under u/s 263 of IT. Act as alleged. It is therefore requested that the proceeding initiated may kindly be drop. It will be worthwhile to submit here that the above judgment referred in support of contention is having the nature of binding judgment/order. You are therefore humbly requested that following the binding nature judgment proceeding may kindly be drop. It is therefore humbly prayed that proceedings initiated may kindly be dropped. It is also submitted that this submission may kindly be consider as reply as written submission of your notice. Hope you will consider the request and drop the proceedings. Thanking you" 6.1 To support the various contentions so raised in the written submission and in support of the oral arguments, a paper book filed containing following documents/ records: S. No. Particulars Page No. 1 Copy of show cause notice issued u/s 263 of the Act 1-3 2 Copy of reply in response to show cause notice 4-19 3 Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action and the same is reiterated herein below: The fact that the assessee has on being asked clearly explained the nature and details of the transaction by submitting the necessary evidence and the content of the reply is also filed in the assessee's paper book page 22-23 and the revenue did not contradict the figure which the assessee has replied, and the figures referred in the notice of the PCIT. Thus, it is clear that the ld. AO raised the issue, asked for the details and applied his mind while passing the assessment order. Even in the proceeding u/s. 263 the ld. PCIT did not bring anything on record that how the order of the ld. AO is erroneous and prejudicial to the interest of the revenue what material he relied?, He relied on the same material on which the ld. AO has already applied his mind. In the proceeding before the ld. PCIT the assessee in his reply submitted the profit / loss derived by the assessee and the figures reported in the PCIT notice is same in the assessment order and in the reply to the assessee. On issue no. 1 the ld. PCIT noted that " The AO accepted the version of the assessee without properly examining and verifying the ITS details with transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs, then the primary reason to believe that income of the assessee had escaped assessment fails and such re-assessment cannot be treated as a valid order in the eyes of law. The same is to be declared as void ab initio. Reliance in this regard was rightly placed on the decision of the Hon'ble Jurisdictional High Court in the case of Jet Airways reported in 331 ITR 236. When an assessment framed by the Id. AO is unsustainable in the eyes of law, the said invalid and illegal order cannot be subject matter of section 263 proceedings. On this count also, the revision order passed by the Id. PCIT u/s.263 of the Act deserves to be quashed. 4.2. In view of the aforesaid observations, we have no hesitation in quashing the revision order passed by the Id. PCIT u/s.263 of the Act for more than one reason as detailed supra. Accordingly, the grounds raised by the assessee are allowed." Considering the above discussion so recorded on facts and respectfully following above findings of the Co-ordinate Bench we considered the grounds raised by the assessee and we quash the order of the ld. PCIT as the same is not in accordance with the provision of section 263 of the Act. 9. In the result ..... 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