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TMI Blog2024 (5) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... be quashed on this grounds itself. Whether Detailed enquiry has been conducted and one of the view legally permissible has been taken? - Hon ble Apex Court in its judgment in the case of CIT vs. Electro House [ 1971 (9) TMI 10 - SUPREME COURT] had held that the CIT before reaching his decision and not before commencing his enquiry is to give the assessee an opportunity of being heard and make or cause to make such enquiry as he deems necessary . We note that in the instant case the learned PCIT before reaching his decision that the documents found, belongs to the assessee had made no enquiry whatsoever. Thus learned PCIT failed to appreciate that before he could have considered the assessment order to be erroneous and prejudicial to the interest of the revenue, he ought to have brought material on record to show that the documents belongs to the assessee and not by merely referring to those very documents which already stood examined by the AO and considering the statement of Shri Satyendra Kumar Sharma, for coming to the conclusion that the documents cannot be said to be belonging to the assessee. AO has taken one of the legally permissible view and made addition in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. Pr. CIT had carried out independent enquiry specifically dealing with the details in his possession, for the issues raised in the show cause notice u/s 263 of the Act. e) that when the AO, based on his observations and examination of records had made addition in the hands of another assessee, the ld. Pr. CIT without revising the assessment order of other assessee, which has been framed by the same Assessing Officer cannot revise the assessment order in the case of the assessee and directing to make the additions as the same would tantamount to double addition. f) that the finding on merit of the ld. Pr. CIT contains various mistakes as the documents referred are not for the assessment year in dispute and some of the documents are not belonging to the assessee. Thus as the order of the AO is neither erroneous nor prejudicial to the interest of revenue, there was no scope for the ld. Pr. CIT to revisit the order of the ld. AO - Therefore, the impugned order u/s 263 is quashed and assessment order framed u/s 153A/143(3) is restored. Assessee appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Year 2015-16 to 2018-19. Therefore, for the sake of convenience, the grounds of appeal for Assessment Year 2015-16 is reproduced below:- "1. For that the grounds hereto are without prejudice to each other. 2. For that the order passed by Id Principal Commissioner of Income-tax (Central), Patna is bad both in law and on facts. 3. For that the order passed by Id Principal Commissioner of Income-tax (Central), Patna is based on presumption, surmise and conjectures. 4. For that the Id Principal Commissioner of Income-tax (Central), Patna passed the order ignoring the fact that all the points which were raised in the notice had duly been examined by the Id AO. 5. For that the order passed by Id Principal Commissioner of Income-tax (Central), Patna is wholly perverse in as much as the same are contrary to and at variance with material available on record. 6. For that in any view of the matter, the order passed by the Id Principal Commissioner of Income-tax (Central), Patna to the extent as aforesaid is bad and therefore fit to be set aside. 7. For that other various grounds which may be urged at the time of hearing." 5. Brief facts of the case are that the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong to the assessee or Hulas Pandey hence we cannot comment on these documents which belong to Satyendra Kumar Sharma. 2. That Mr. Satyendra Kumar Sharma holding PAN BBPPS5340L has issued letter to ADIT(lnv.), Unit-II that documents/books of accounts seized during search on 23.02.2018 Plot No. 2, Pandey Palce, Sararpura Road, Raja Bazar, Patna reffered GIB-01, GIB-05 (only pages Nos. 09,12,13,14,15,16,25,26,27,28,29,30,43,44,45,46,47,48,50,51,52,53 and 54), GIB-06, GIB-07, GIB-08, GIB-09, GIB-10, GIB-11, GIB-12, GIB-13, GIB-14, GIB15 (only ledger page no. 50) and GIB-26 have been maintained and controlled by him in his personal capacity and in his own handwriting. 3. That keeping in view the above fact, the assessment order passed in the case of the assessee was not erroneous so far as prejudicial to the interest of revenue. The reply of the assessee was analyzed with the findings of the search & seizure operation as well as assessment orders in respect of the assessee as well as the case of Satyendra Kumar Sharma." 7. However, the ld. CIT(A) was not satisfied with the contention made by the assessee that all the transactions mentioned in the various seized material are docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the eyes of law for the assessment year in question. 10. The assessee apart from making the above submissions, has filed written submissions running into 50 pages for all the impugned Assessment Years along with a paper book containing 565 pages, the index of which is reproduced below:- 10.1. Per contra the ld. D/R vehemently argued supporting the order of the ld. Pr. CIT and also stated that various seized material referred in the impugned order clearly indicates that they all belong to the assessee company and there is no discussion about these seized documents in the assessment order nor any specific details have been called for by the ld. Assessing Officer with regard to these documents. He further submitted that the ld. Assessing Officer has not carried out any enquiry with respect to the seized material found during the course of search at the assessee's premises and, therefore, the ld. Pr. CIT was justified in invoking the revisionary powers and holding the assessment order of the ld. Assessing Officer dt. 27/12/2019 as erroneous and prejudicial to the interest of the revenue. 11. We have heard rival contentions and perused the material placed before us. Search and sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer is erroneous in so far as it is prejudicial to the interest 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 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 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons for the formation of his belief that action u/s 263 is required on a particular order of the 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 ld. Pr. CIT taken u/s 263. 14. 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 sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthoritative 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 the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment order is "erroneous". The said finding will be correct, if the CIT had examined and verified the said transaction himself and given a finding on merits. As held above, a distinction must be drawn in the cases where the Assessing Officer does not conduct an enquiry; as lack of enquiry by itself renders the order being erroneous and prejudicial to the interest of the Revenue and cases where the Assessing Officer conducts enquiry but finding recorded is erroneous and which is also prejudicial to the interest of the Revenue. In latter cases, the CIT has to examine the order of the Assessing Officer on merits or the decision taken by the Assessing Officer on merits and then hold and form an opinion on merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. In the second set of cases, CIT cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not." 18. In the light of the above, we would like to examine the fact of the instant case. Before us, the first contention made by the ld. Counsel for the assessee is that the impugned revisionar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order or in case required can suggest certain changes in the said assessment order finally grants approval. Only after receiving such approval u/s 153D of the Act, the ld. Assessing Officer passes the final assessment order u/s 153A r.w.s. 143(3) of the Act. In short, the assessment order u/s 153A of the Act is incomplete without the approval u/s 153D of the Act. Now, whether action of the ld. Pr. CIT of assuming jurisdiction u/s 263 of the Act holding only the order u/s 153A of the Act is erroneous so far as prejudicial to the interest of the revenue and not the order u/s 153D of the Act, as erroneous insofar as prejudicial to the interest of the revenue, can be held to be justified. 19. Before us, the ld. Counsel for the assessee, has referred to plethora of decisions whether the revisionary order u/s. 263 of the Act has been quashed, where only the order u/s 153A of the Act is revised without revising order u/s 153D of the Act. 20. Reliance is placed on the following judicial pronouncements: i. Smt. Abha Bansal v. Principal Commissioner of Income-tax [2021] 132 taxmann.com 231 (Delhi - Trib.) - "9.4 It is evident from the plain reading of the *-- aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to the Judgment of the Hon'ble Allahabad High Court as reproduced above. In the totality of the facts and circumstances of the case and following the decisions referred to above, we are of the view that the Learned PCIT was not having jurisdiction to proceed under section 263 of the I.T. Act, 1961 in the matter in issue and as such the Order passed by the Learned PCIT is nullity and void ab initio. We therefore, decide this issue in favour of the assessee. ii) Surendra L. Heera Nandani v. Pr.CIT [IT Appeal No.3226/Mum./2017 etc., date. 14-2-2018] 28. Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl. CIT u/s.l53D of the I.T. Act, therefore respectfully following the above-mentioned decisions of the Coordinate Benches o the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s.263 of the I.T. Act in the instant case since the same has been passed with the approval of the Addl. CIT U/S.153D of the I.T. Act. We respectfully following the decision of ACIT Vs. Dr. Ashok Kumar, ITA 192 of 2000. We find that in the instant case the original approval 25 ITA No3226- 3232 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal in the case of Ch. Krishna Murthy vs. ACIT, C.C. 3, Hyderabad in ITA No. 766/Hyd/2012 dated 13.02.2015 and also the decision of Lucknow Bench of ITAT in the case of MehtabAlam 288/Luck/2014 dated 18.11.2014 in support of this contention. He has also placed reliance upon the decision of Hon'ble Allahabad High Court in the case of CIT vs. Dr. Ashok Kumar in I.T. Appeal No. 192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT under section 153D, cannot be subjected to revision under section 263 of the I.T. Act. In view of the above decision also, we hold that the revision order under section 263 of the I.T. Act is not sustainable. 21. From going through the above decisions, wherein it has been consistently held that without revising the approval u/s 153D of the Act, the ld. Pr. CIT cannot revise the assessment order u/s 153A of the Act. Even in case of Surendra L. Heera Nandani (supra) it was held that ld. Pr. CIT has no power to revise the order u/s 263 of the Act since the same has been passed with the approval of the Addl. CIT u/s 153D of the Act. 22. Therefore, in the light of the above decisions, so far as the first limb of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich belonged to the assessee company have been examined, queries have been raised by issuing questionnaire. Detailed reply has been received along with necessary documents and after recording all these facts in the assessment order, ld. Assessing Officer has completed the assessment. So, it is not a case of no enquiry. However, it may be a case that intense enquiry as referred by the ld. Pr. CIT in the impugned order might not have been conducted but that cannot give power to the ld. Pr. CIT to revise the assessment order because the ld. Assessing Officer has conducted reasonable enquiry and taken one of the legally permissible view under the Act. 23. Further, the ld. D/R failed to rebut this fact that the ld. Assessing Officer is not the only person who is involved in completing the assessment and along with him, the ld. JCIT is also part of the assessment proceedings because once the draft assessment order is prepared by the ld. Assessing Officer, he/she has to approach the Joint Commissioner for prior approval, who again examines the seized material with the draft assessment order framed by the ld. Assessing Officer and after being satisfied, either suggests necessary changes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts or contents so stated would have to be proved by admissible evidence i.e. by the evidence of those persons who can vouchsafe for the truth of the facts in issue. Further reliance is placed on the following judicial pronouncements: i. Mohammed Yusuf vs. D. &Ors., AIR 1968 (Bom.) 112. ii. CIT vs. S M Aggarwal, 293 ITR 43 (Del.) 26. Further it is brought to our notice that huge addition has been made in the hands of other assessee, namely, Shri Satyendra Kumar Sharma, who has owned various documents seized during the course of search and has stated to that even some documents are in his own hand writing. The ld. Assessing Officer of the assessee is also the ld. Assessing Officer of Shri Satyendra Kumar Sharma and has framed the assessments in both the cases and after being satisfied with the documents and replies filed before him, he made the addition in the hands of Shri Satyendra Kumar Sharma. This asserts the fact that the ld. Assessing Officer has taken one of the legally permissible view and made addition in the hands of the person, he was of the believe, to be subjected to addition. Therefore, the ld. Counsel for the assessee succeeds on the second plea that ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e' explanation which was in respect of the advances made to M/s Broadson Commodities Pvt. Ltd. The assessee in response to said notice had duly explained the same, vide its response dated 24-12-2019 a copy of which has been placed at page 28 to 364 of the PB-I, wherein at para 18 the alleged discrepancy had duly been explained (at page 76-79). Further, on perusal of the said response which is running into 337 pages, we note each of the issues had been duly explained. Thus, we note that the Learned CIT while revising the order under section 263 has completely overlooked the assessee's response as also the order sheet entries made by ld. Assessing Officer in the assessment file of the assessee. We note that the Learned CIT has also overlooked that the Learned ACIT had examined Shri Baban Singh, Director, of M/s Broadson Commodities Pvt Ltd under section 133(6)/131 of the Act which is evident from the Order Sheet entry dated 25/12/2019 of the assessment file. 31. We find that the learned PCIT has failed to appreciate that the learned AO in given circumstances had framed the assessment with proper application of mind by making necessary enquiry and examining the seized materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Courts (referred supra) that revisionary power u/s 263 of the Act cannot be exercised. b) even otherwise, without revising the order u/s 153D of the Act, and finding them to be erroneous and prejudicial to the interest of the revenue, revisionary powers cannot be invoked for the assessment order framed u/s 153A/143(3) of the Act after getting approval u/s 153D of the Act. c) that when the ld. Assessing Officer has conducted detailed enquiry, examined the seized records, made necessary observations in the assessment order, referred to various statements filed by the assessee and having taken one of the legally permissible view, then in such circumstances, the revisionary powers cannot be exercised just on the ground that adequate enquiry has not been done. d) that revisionary proceedings cannot be held to be justified unless ld. Pr. CIT had carried out independent enquiry specifically dealing with the details in his possession, for the issues raised in the show cause notice u/s 263 of the Act. e) that when the Assessing Officer, based on his observations and examination of records had made addition in the hands of another assessee, the ld. Pr. CIT without revising the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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