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TMI Blog2024 (8) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. AO should have examined whether any interest was paid on these loans obtained and whether TDS was deducted thereon. No such enquiry was made in the course of assessment and the documents and the evidences furnished in the course of assessment proceeding were accepted by the AO on their face value without any verification. It is, thus, evident from the above facts that the AO had not conducted proper enquiries in respect of the investment in the properties and, therefore, the order of the AO was rightly treated as erroneous and prejudicial to the interest of the revenue by the Ld. Pr. CIT. It is a trite law and a well settled position that non application of mind or wrong assumption of facts or incorrect application of law by the A.O. will make the order erroneous and pre-judicial to the interest of revenue. Therefore, we do not find anything wrong with the assumption of jurisdiction u/s 263 of the Act by the Ld. Pr. CIT as the order of the AO was erroneous and pre-judicial to the interest of revenue - Decided against assessee. - Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member For the Appellant : Shri S. N. Soparkar, Sr. Advocate An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Principal CIT erred in arriving at a conclusion that there was a complete failure on part of Ld. AO to examine source of funds for purchase of immovable property as well as creditworthiness of lenders on the ground that the creditworthiness and genuineness of the transactions with lenders namely Infinity International and Horizon Finvest is not proved as per norms of section 68 of I.T. Act. 4. On the facts and in the circumstances of the case, the learned Principal CIT erred in cancelling the assessment order passed by the Assessing Officer on 29.11.2017 u/s. 143(3) of the IT. Act and directing the Assessing Officer to frame assessment afresh. 5. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 5. Shri S. N. Soparkar, Ld. Sr. Advocate appearing for the assessee submitted that the issue of investment in property was examined by the AO in detail in the course of assessment proceeding. The assessee has filed a paper book containing 174 pages and the Ld. Sr. Counsel has taken us through the said paper book. He has drawn our attention to various notices issued by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot paid any interest on the loans taken for the purpose of acquisition of the property and consequently, there was no deduction of TDS as well. Considering these facts also, the AO should have examined the genuineness of loan transactions towards acquisition of the property by making independent enquiries. In view of these facts the order of the AO was certainly erroneous and prejudicial to the interest of revenue. He further submitted that no compliance was made by the assessee before the Ld. Pr. CIT in spite of numerous opportunities provided by him. The Ld. CIT.DR submitted that the decisions relied upon by the Ld. Senior Counsel were distinct on facts and he strongly supported the order of the Ld. Pr. CIT. 7. We have carefully considered the rival submissions. The moot question to be decided in this case is whether the order of the A.O. was erroneous and prejudicial to the interest of revenue and whether the assumption of jurisdiction by the Ld. PCIT u/s 263 of the Act was correct. In this context it will be relevant to reproduce the provisions of Section 263 of the Act, which is as under: Revision of orders prejudicial to revenue. 263. (1) The 99 [Principal Chief Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f revenue if the order is passed without making inquiries or verifications which should have been made or where the order is passed allowing any relief without enquiring into the claim. We have to, therefore, examine as to whether this condition was fulfilled in this case and whether the assumption of jurisdiction by the Ld. PCIT u/s 263 of the Act was correct. 9. It is found that the case was selected for scrutiny to verify the large investment in property made by the assessee as compared to the total income as disclosed by him. It appears from the various notices issued in the course of assessment that the AO did make enquiries in respect of investment in the property. It is found from the copy of the sale deed brought on record that the assessee had purchased agricultural land admeasuring 8361 sq. meters for total consideration of Rs. 9.30 Crores. As per the sale deed dated 19.02.2015, the consideration of Rs. 9.30 Crores was paid by the assessee in the following manner: Sr. No. Amount (Rs.) Particulars 1 30,000/- By confirming Party No.1 to seller by cash at the time of execution of agreement to sale (banakhat) 2 30,000/- By confirming Party No.2 to seller by cash at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cheques were cleared, has been brought on record. It is found that none of the 12 cheques were cleared from the account of the assessee prior to the date of sale deed i.e. 19.02.2015. In essence, the property was transferred in the name of the assessee without receiving any payment from the assesse (except adjustment of Rs. 90,000/- from the 3 confirming parties). It was quite unusual that the sale deed was executed and the property was transferred in the name of the assessee without encashment of any of the cheques issued by the assessee and this fact should have raised the suspicion of the AO to verify the matter further. It is further noticed from the bank statement that the three cheques for Rs. 24,70,000/- each bearing Nos. 000091, 000092 000093, all dated 13.02.2015, which were drawn in the name of the seller, was appearing in the bank statement as encashed on 16.03.2015 with the narration PAY CASH-SELF . Thus, it was evident from the bank statement that these cheques were not encashed by the seller of the property but the cash was withdrawn by the assessee himself. This fact also should have been taken note by the AO to make further enquiry in the matter. No enquiry was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing u/s 263 of the Act. 13. The decisions relied upon by the Ld. Sr. Counsel are all found different on facts and not applicable to the peculiar facts of this case. It was held by the Hon ble Jurisdictional High Court in the case of CIT vs. Kamal Galani (supra) that once the Assessing Officer carried out detailed inquiries, it was not open for the Commissioner to reopen the issue on mere apprehension and surmises. As already discussed earlier there was no proper enquiry made in this case by the AO. One has to see from the records as to whether there was application of mind by the AO and we don t find any such application of mind by the AO in this case. The other decisions in the case of Ranchhod Jivabhai Nakhava (supra) and Jas Infra Space Pvt. Ltd (supra) are on the issue of genuineness and creditworthiness of the loan transactions which is not the issue involved in this case. It is a trite law and a well settled position that non application of mind or wrong assumption of facts or incorrect application of law by the A.O. will make the order erroneous and pre-judicial to the interest of revenue. Therefore, we do not find anything wrong with the assumption of jurisdiction u/s 263 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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