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TMI Blog2024 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has received a sum from the Bank Account - There is no dispute that assessment was reopened for escapement of income of Rs. 15,00,000/-. No addition was made of this item. Commissioner has not categorically recorded in the show-cause notice that acceptance of Rs. 15,00,000/- is erroneous at the end of the ld. Assessing Officer. His show-cause notice just reflects all narrative of facts. Nowhere analytical examination for forming belief that AO has failed to conduct a particular enquiry qua loan of Rs. 15,00,000/- from M/s. Rupali Financial Consultants (P) Ltd. He simply observed that apart from this loan, there are other unsecured loan transaction, which remained to be examined and if no error is being found qua acceptance and genuineness of the loan from M/s. Rupali Financial Consultants (P) Ltd., no other issue could be examined. The ld. Commissioner has erred in travelling in that area. Unsecured loan received from various loan creditors - Observation of the ld. Commissioner would reflect that he was taking note of the fact only from the accounts of the assessee. Thus such aspect should have been examined at the first step when scrutiny assessment was made. It canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder to explain the delay, the assessee has filed an application. The application reads as under:- BEFORE THE INCOME TAX APPELLATE TRIBUNAL KOLKATA In the matter of: Vrinda Engineers (P) Ltd . Appellant vs. PCIT, Central -1, Kolkata .Respondent In the matter of: An application for condonation of delay in filing appeal before the Hon ble Tribunal against the 263 order of the Ld. PCIT, dated 28.03.2022 for A.Y: 2012-13. 1. That an assessment was completed u/s 143(3)/147 vide an order dated 30.09.2019 passed by DCIT, Central Circle-1 (1), Kolkata for A.Y 2012-13 wherein the AO assessed the income as per the returned income. 2. That meanwhile the Ld. PCIT initiated 263 proceedings and passed an order u/s 263 dated 28.03.2022 against the said assessment order 143(3)/147 considering the same as erroneous and prejudicial to the interest of Revenue. 3. That your petitioner approached its regular tax consultant to seek advice on receipt of order passed under section 263. He suggested your petitioner to participate in the subsequent assessment proceedings pursuant to the revision order u/s 263 and to pursue appellate remedy, if any advers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal is time barred by more than 500 days. The assessee should be vigilant about prosecuting its income-tax litigation before appropriate forum and this ignorance of the procedure cannot be a ground to condone the delay. 5. With the assistance of the ld. Representatives, we have gone through the record carefully. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Honble High Court as well as before the Honble Supreme Court, then, Honble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reipublicae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is al ways deliberate. This Court has held that the words sufficient cause under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [A IR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala f ides or it is not put forth as part of a dilatory strategy the court must show utmos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter ld. Commissioner exercised the powers under section 263. It could not challenge this impugned order before the Tribunal under an impression that outcome of 263 in the assessment order could be challenged simultaneously. In other words, the assessee was of the view that while challenging assessment passed under section 147 r.w.s. 263, the assessee could take the grounds on order passed u/s 263 could be challenged. We are of the view that it is a bonafide procedural misconception based on its regular Tax Consultant s advice and this parallel proceeding in same assessment year repeatedly may give rise of some confusion. By making an appeal time barred, assessee will not gain anything. It cannot adopt as a delaying strategy for litigating with the Department. Therefore, we condone the delay in filing the appeal and proceed to decide the appeal on merit. 11. The solitary grievance of the assessee is that ld. Commissioner has erred in taking cognizance under section 263 and setting aside the second reassessment order dated 30.09.2019. Before adverting to the show-cause notice issued under section 263, we deem it appropriate to take note of brief facts. 12. The assessee has f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, it was observed that huge amount was deposited in the aforesaid accounts through chuque/RTGS from different companies and immediately transferred to various entitles/companies on the same day or next day. To verify the transactions, summons were issued u/s 131 of the Act, to M/s Rupali financial consultants Pvt. Ltd but the summons was returned back unserved with postal remarks not known Incomplete address . Reportedly, after analysis of financial statement of M/s Rupali financial consultants Pvt. Ltd., it was found that the company has either low or nil turnover and very meagre profit after tax. In view of the above, it was inferred that bank account of M/s Rupali financial consultants Pvt. Ltd. was used for providing accommodation entries to beneficiary companies. It is also observed that fund was transferred to bank accounts of Rupali financial consultants Pvt. Ltd from the bank accounts of Hariom Suppliers Pvt. Ltd., M/s Swampushpa Vanijya Pvt. Ltd, which are also shell/paper companies. Reportedly, M/s Rupali Financial i consultants Pvt. Ltd. is a shell company, which is controlled and managed by entry operator Shri Ravi Newatia. During the year under consideration, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (P) Ltd./2021-22/ Dated :03.03.2022 To The Principal Officer M/s. Vrinda Engineers (P) Ltd. 181/B, Chittaranjan Avnue, Kolkata-700007 Sir, Sub: Proceedings under section 263 of the Income Tax Act,1961 for the assessment year 2012-13.. .matter regarding. The assessment proceedings for the assessment year 2012-13 in the case of your company was completed under section 147/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide order dated 30.09.2019 determining total income at Rs. 1,59,17,180/-. 2. On examination of the relevant records, it is noticed that a survey under section 133A of the Act was conducted against your company on 01.03.2017 02.03.2017 by the Investigation Wing, Kolkata. In course of the survey operation, statement of Sri Jitendra Kumar Saraogi, one of the directors of your company was recorded under section 131 of the Act. Sri Saraogi in his statement admitted to have paid brokerage @1.5% to 2% and part interest @1.5% to 2% in cash from unaccounted funds to the broker in respect of unsecured loans arranged by the finance brokers. 3. In course of the reassessment proceeding, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en an assessment, where assessment has been framed under section 143(3) of the Income Tax Act, and four years have expired from end of A.Y. In other words, ld. Assessing Officer will be precluded to take action under section 147 after expiry of four years from the end of A.Y., unless the assessee failed to declare its income fully and truly. The basic condition is that ld. Assessing Officer has to pinpoint the failure of the assessee in disclosing the details of its income fully and truly, which has attributed to escapement of assessment qua those incomes. A perusal of the show-cause notice issued under section 148, nowhere ld. Assessing Officer has alleged this aspect. He only made reference to Explanation 2C(i) of the Income Tax Act, but it is to be appreciated that in this case, not only scrutiny assessment has been passed but thereafter assessment was reopened and no adverse view was taken by the ld. Assessing Officer. For reopening the assessment second time, ld. Assessing Officer ought to be very categorical as to which detail was not disclosed by the assessee fully and truly. He submitted that this aspect is totally missing. 18. Ld. Counsel for the assessee further submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means no other item of loan or any other issue could be further enquired. For buttressing his proposition, he relied upon three decisions, namely (i) Hon ble Bombay High Court in the case of CIT vs.- Jet Airways reported in 331 ITR 236, (ii) Hon ble Delhi High Court in the case of Ranbuxy Laboratories reported in 336 ITR page 136 and (iii) Hon ble Gujarat High Court in the case of Md. Juned reported in 353 ITR page 172. All these three Hon ble High Courts are unanimous on the point that expression in section 147 would be construed in a way that if addition on a point for which assessment is being reopened is not made, then, no other addition would be made. The ld. Counsel for the assessee further contended that the ld. Commissioner in this impugned order did not doubt the veracity of acceptance of loan amounting to Rs. 15,00,000/- from M/s. Rupali Financial Consultants (P) Limited by the ld. Assessing Officer in the reassessment order. He was of the view that apart from the small transaction, there were other unsecured loan transactions, which ought to have been examined. its other transactions could have either been examined in the original assessment order. In case addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. [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 1 st 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 Off icer 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 at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1 st day of June, 1988, the powers of the Commissioner under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of this information is not discernable in the reasons recorded by the ld. Assessing Officer on second occasion, whereas the first reassessment order was passed on 07.12.2018. This reassessment order also talks about DDIT (Information) based upon the search upon the Mundra Group. Therefore, the reasons are totally vague about the source of information. What is the exact information and when it was transmitted to the ld. Assessing Officer and if it relates to before the earlier two assessment orders, i.e. scrutiny assessment as well the first reopening, then, where is the fault of the assessee. A perusal of the reasons further indicates that ld. Assessing Officer has not made out any case within the proviso attached to section 147 of the Income Tax Act. In other words, ld. Assessing Officer has not highlighted which information or details was not declared by the assessee fully and truly in its accounts. Therefore, we are of the view that this reopening is not sustainable and if this reopening is not sustainable, then notice of 263 could not be issued. It is observed that since no addition was made by the ld. Assessing Officer, therefore, there was no occasion to challenge its reop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsecured loan had the obligation to examine the genuineness of all the unsecured loans shown to have been received by your company during the financial year 2011-12 . The above observation of the ld. Commissioner would reflect that he was taking note of the fact only from the accounts of the assessee. Thus such aspect should have been examined at the first step when scrutiny assessment was made. It cannot be put off for waiting reopening of assessment in 2019 so that exercise under section 263 would be carried out in 2022. This aspect has been examined by the Hon ble Supreme Court in the case of CIT vs.- Alagendran Finance Limited reported in 293 ITR 1 (SC). The brief facts in that case are that the assessee i.e. Alagendran Finance Limited was incorporated under the Indian Companies Act. It filed its returns for A.Ys 1994-95, 1995-96 and 1996-97 on 23.11.1994, 27.11.1995 and 26.11.1997 respectively. The ld. Assessing Officer has passed the assessment order in all these three years on 27.02.1997, 12.05.1997 and 30.03.1998 in A.Y. 1994-95, 1995-96 and 1996-97 respectively. In these orders, one of the issue was lease equalisation fund and this claim of the assessee was accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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