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TMI Blog2024 (8) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... and the substantial questions of law formulated by this Court goes in favour of Revenue. - Hon ble Mr. Justice Rongon Mukhopadhyay And Hon ble Mr. Justice Deepak Roshan For the Appellant : Mr. R. N. Sahay , Sr. S. C. Mr. Anurag Vijay , AC to Sr. SC For the Respondent : Mr. Jalisur Rahman , Advocate ORDER Per : Deepak Roshan J. Heard learned counsel for the parties. 2. The instant appeal is directed against the order dated 20.02.2019 passed by the Income Tax Appellate Tribunal, Ranchi Bench, Ranchi (hereinafter to be referred as the Tribunal) in ITA No. 138/ Ran 2018 for the period AY 2013-14; whereby the learned tribunal has allowed the appeal of the Assessee and set aside the order of learned Commissioner dated 22.03.2018 passed under Section 263 (1) of the Income Tax Act, 1961 (hereinafter to be referred as the Act). 3. The brief fact of the case is that the respondent Assessee is the sole proprietor of M/s RK Trader who filed her return of income for in the AY 2013- 14 showing a total income of Rs. 10,36,390/-. Subsequently, the case of the respondent was selected for scrutiny and accordingly notice under Section 143 (2) and 143 (1) of the Act was issued on 03.09.2014 and 08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order passed under Section 263 of Income Tax Act by CIT, though the Assessing Officer, had not carried the verification and inquiry as to the creditworthiness of the two depositors in particular as was also required under Explanation-2 to Section 263 of Income Tax Act, 1961 introduced with effect from 1st June, 2015. (ii) Whether on the facts and circumstances of the case and in law learned Income Tax Appellate Tribunal was justified in holding that the Assessing Officer had duly verified the genuineness of unsecured loans? (iii) Whether the observations of learned Income Tax Appellate Tribunal that the Assessing Officer had formed an opinion as to the creditworthiness and of the depositors and genuineness of the transaction are perverse? 5. Learned counsel for the revenue assailed the impugned judgment on following grounds: a) The Learned ITAT is not justified in quashing the order u/s 263 of the Act dt. 22/27.03.2018 without appreciating the fact that the Assessing Officer had failed to examine the genuineness of unsecured loans despite the fact that the case was selected under CASS for the reason large increase of unsecured loans and the assessing officer passed the order u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the interests of the Revenue. If one of them is absent if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to Section 263(1) of the Act. 7. Having heard learned counsel for the parties and after going through the relevant records of the case and the impugned order passed by the ITAT it appears that the learned tribunal based its judgment due to the fact that during the scrutiny proceeding the AO issued notice under Section 142 (1) of the Act and he has also made a query with regard to source and details of introduction of capital with evidence and the said reply has been duly complied by the Assessee and since the AO passed the assessment order, may be without dealing the said issue, but it can be safely presumed that the AO has duly applied his mind for verification of loan obtained by the Assessee from various relatives. For brevity relevant part of the impugned order is quoted herein below: 13. ......... During the scrutiny proceedings, the AO issued notice u/s 142(1) of the Act, 1961 dated 8th May 2015 and again on 9 July, 2015 where the AO has specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the interest of the Revenue. We are aware of the fact that the Assessing Officer's role while framing an assessment is not only an adjudicator. The AO has a dual officer s role while framing an assessment is not only an adjudicator. The AO has a dual role to dispense with i.e. he is an investigator as well as an adjudicator; therefore, if he fails in any one of the role as afore-stated, his order will be termed as erroneous. We note that in the assessee s case under consideration, the AO had examined the each and every detail and applied his mind very carefully in respect of every issue explained by us in the above paras. Therefore, on this finding of fact by us, in above noted para Nos. 11 to 14 of this order, we cannot term the assessment order passed by the AO u/s 143(3) dated 03.12.2015 as erroneous and prejudicial to the interest of the revenue. 15. In any event we note that the Assessing Officer has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue the said decision of the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of the revenue as held by Hon'ble Supreme Court in Mala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under Section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. Thus, we see that by way of amendment, if the original order of assessment is passed without making inquiries or verification which should have been made, it will be deemed to be erroneous in so far as it is prejudicial to the interest of the Revenue. 9. In the instant case, during the course of examination of the records, it has been noticed by the commissioner that there is huge rotation of money amongst relatives without payment of receipts of interest. The Assessee has raised loans from the relatives aggregating to Rs.6,75,08,220/-. Financial dealing amongst the relatives/group firms/companies appeared to be transformation of income in the hands of recipient of loans from the capital advance by others. The learned commissioner has further observed that independent verification of such transaction had not been done by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above backdrop, it is evident that the assessment order dated 03.12.2015 is erroneous and prejudicial to the interests of revenue within the meaning of section 263 of the Act and accordingly the said order is set aside with a direction to pass assessment order afresh after making proper enquiries and necessary investigation on the issue mentioned above. 11. After going through the order passed under Section 263 it appears that the learned CIT after complying with the twin conditions, remitted the case to the AO with specific direction to pass a fresh assessment after making proper enquiry and investigation on the issue. It is also evident that pursuant to the order of remand a fresh assessment order has also been passed by the AO under Section 143 (3) read with Section 263 of the IT Act for the relevant assessment year assessing the total income as Rs.2,62,78,410/-. Thus, prima facie it appears that there was a loss of revenue as in the first assessment order the total income assessed by the assessing officer was only Rs.11,56,390/-. It further transpires from the 1st assessment order dated 03.12.2015 that the issue of source and details of introduction of capital has not at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. In the light of the above discussion, the total income of the assessee is calculated as under: Total income as declared by the assessee : Rs.10,36,390/- Add: Addition on account of Office Expenses as discussed above : Rs. 50,000/- Add: Addition on account of Travelling Expenses as discussed above. : Rs. 70,000/- Total Income :Rs. 11,56,390/- Assessed u/s 143(3) of the IT Act, 1961 at a total income of Rs. 11,56,390/- Charged interest u/s 234A, 234B 234C as per Rule. Issued D.N., challan and copy of the order to the assessee. Thus, by conjoint perusal of 1st assessment order and the order passed under Section 263 it is evident that the CIT has categorically observed that one Rajesh Chourasia has declared income of Rs. 4,25,598/- only for the relevant assessment year and thus, prima facie on the basis of return of income the creditworthiness of advancing such huge amount of loan has not been established by the Assessee. 13. The learned ITAT in its order at para 14 has held that the Assessee has produced relevant materials and offered explanation in pursuance of the notice issued to him and after considering those materials and explanation, the AO has come to a definite conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by her from different parties on her investments. Notwithstanding these defects he did not investigate into the various sources but assessed the appellant on a total income of Rs 9037. Thereafter, on June 7, 1963, the Commissioner by a notice under Section 33-B of the Act required the assessee to show cause on or before June 25, 1963, why appropriate orders should not be passed under that section in respect of Assessment Year 1960-61 as the enquiries revealed that the assessee neither resided nor carried on any business from the address given in the return, that the Income Tax Officer was not justified in accepting the initial capital, the sale of ornaments, the income from business, the investments, etc. without any enquiry or evidence whatsoever and that the order of assessment was erroneous and prejudicial to the interests of revenue. In response to the aforesaid notice, the assessee showed cause on June 24, 1963 and after considering the objections of the assessee, the Commissioner passed an order cancelling the assessment for 1960-61 and directing the Income Tax Officer to make a fresh assessment according to law after making enquiries with regard to the jurisdiction and the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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