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TMI Blog2024 (10) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... Pr. CIT being erroneous and prejudicial to the interest of revenue. 2.1 The learned Pr. CIT has failed to appreciate that the proceeding u/s 147 of the Act had been initiated on 30.03.2021, on the basis of an alleged information that, there were huge credit during the FY 2015-16 of Rs. 95,44,00,462/- and that it had received 4,00,99,000 shares from Feldon Developers Pvt. Ltd. and from Information TV Private Limited' and from 'INX News Private Limited and it was on the basis of such information the learned AO had formed a belief that there was a tax evasion in the form of purchase of shares; as such the learned AO had framed assessment on the basis of such information when he found there had been no escapement of any income. The scope of initiation of proceedings was thus limited. 3. That the learned Pr. CIT has thus erred in holding the order to be erroneous on a ground which was non-existent when the order of assessment had been framed on 30.03.2022. 4. That the learned Pr. CIT however in her notice issued u/s 263 of the Income Tax Act, has held the order of assessment being erroneous and prejudicial to interest of revenue on a ground, that the learned AO had not mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(1) of the Act accepting the returned income. Later on, the case was reopened under section 148 of the Act on 30.03.2021. The reopened assessment was completed accepting the returned income vide order dated 30.03.2022 passed under section 143(3)/148 of the Act. Later on, the Ld. PCIT found the re-assessment order erroneous and prejudicial to the revenue; therefore, he invoked the provisions of section 263 of the Act and directed the Assessing Officer (hereinafter, the 'AO') to pass a fresh assessment order, as per the provisions of the Act after affording due opportunities of being heard to the assessee. 4. The Ld. Sr. Counsel argued the case vehemently. Broadly, he built his case on four contentions. Firstly, he contended that the PCIT had acted without jurisdiction by holding the assessment order dated 24.03.2022 passed under section 147 r.w.s. 144B of the Act determining the income of Rs. 99,98,81,950/- as erroneous and prejudicial to the interest of revenue. Factually, the returned income was accepted in the order dated 30.03.2022 passed under section 147 r.w.s. 144B of the Act. Thus, it was contended that the jurisdictional facts had been completely incorrectly as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if the Assessing Officer had failed to carry out-necessary verification and required enquiries in respect of the share application money, as no addition has been made on account of the reasons for reopening, which were recorded before issue of notice under section 148 of the Act. It has been held that the Assessing Officer could not have made an addition on account of the share application money as no addition has been made on account of FDRs of Rs. 20 lakhs. The Tribunal has noticed and recorded that in the reasons for reopening it was mentioned that the assessee had made investment in the form of FDRs of Rs. 20 lakhs but in the assessment order passed under section 147/143(3) of the Act it has been held that the respondent-assessee had been able to show and establish the genuineness of and capacity to make the said investment." 4.2 It was further contended that the order dated 30.03.2022 passed under section 147 r.w.s. 144B of the Act was not tenable in the eyes of the law as the reasoning on which the case was reopened did not result any addition. The returned income was accepted as such in the order dated 30.03.2022 passed under section 147 r.w.s. 144B of the Act. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.03.2022 passed under section 147 r.w.s. 144B of the Act could be challenged at this stage also. 4.5 The Ld. Sr. Counsel placed reliance on the following decisions: - 1. Bharati Airtel 37 taxmann.com 218 (Delhi) 2. Indra Industries 95 taxmann.com 103 (Madras) 3. Ashoka Buildcon Ltd. 325 ITR 574 (Bom) 4. Software Consultants 341 ITR 240 (Delhi) 5. Prospectus Buildcon Pvt. Ltd. 463 ITR 132 (Delhi) 6. Usha Martin Ventures Ltd. 150 taxmann.com 491 (Cal) 7. Ranbaxy Laboratories Ltd. 336 ITR 136 8. Westlife Development Ltd. 88 taxmann.com 439 (Mum ITAT) 9. H M Das Tandon HUF 91 taxmann.com 199 (Alld ITAT) 10. Gabriel India Ltd. 203 ITR 108 (Bom) 11. ParamaountPropbuild Pvt. Ltd. 161 taxmann.com 85 (Delhi) 12. Shakti Charities 244 ITR 226 13. Kiran Singh & Others 1 SCR 117 14. Vikas Polymers 341 ITR 537 ..... 5. The Ld. CIT-DR submitted that the Ld. Sr. Counsel had purposefully mentioned the first notice issued under section 263 of the Act which contained some factual errors and deliberately avoided mentioning the revised notice issued under section 263 of the Act containing complete & correct factual details as mentioned in the order dated 30.03.2022 pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was valid order and the AO had all the power to investigate and make addition in the returned income other than the issue(s) emerged from the reasoning of reopening of the case. However, in this case the AO did not complete the assessment after proper investigations as emerged from the notice issued under section 263 of the Act; therefore, the Ld. PCIT was competent and legally bound to hold the order erroneous and prejudicial to the interest of revenue as the AO required to examine all aspects of the ITR after reopening of the case, under legal obligation, had failed to examine the issue highlighted by the Ld. PCIT in the order under section 263 of the Act; therefore, the order dated 30.03.2022 passed under section 147 r.w.s. 144B of the Act was rightly held erroneous and prejudicial to the interest of revenue to the extent of issues raised in the show cause notice issued under section 263 of the Act. To buttress his contentions, the Ld. CIT-DR placed emphasis on explanation-2(d) of section 263 of the Act and submitted that an assessment order passed without making the requisite inquiries or verifications shall be deemed to be erroneous and prejudicial to the interest of revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring 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." 7. The case was not picked up for scrutiny after filing of the original ITR. Later on, the case was reopened under section 147 of the Act and consequential assessment was completed accepting the returned income as such. In response to the notice under section 263 of the Act, the appellant/assessee had categorically admitted (please refer para-3 of the impugned order) that the AO had enquired the issues raised in the show-cause notice as pointed out by the Ld. PCIT and thereafter the AO did not draw any adverse inference after due investigations. Even the reopened assessment order merely speaks about accepting of the original return of income. No categorical justification has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itial notice dated 04.01.2024 issued under section 263 of the Act, which got revised/rectified in the subsequent notice dated 18.03.2024. It shows that the revised show case notice issued under section 263 of the Act reflected correct facts and figures and was issued after due diligence and application of mind by the Ld. PCIT. Thus, the appellant/assessee has been provided an opportunity to response to a valid notice dated 18.03.2024 and no prejudice has been caused to the appellant/assessee on account of inadvertent error crept in notice dated 04.01.2024. The said revision/rectification of the show-cause notice speaks volume about the application of mind. Only a person, after applying her/his mind, revises/rectifies herself/himself. Thus, we do not find any merit, on this score, in the contention/argument of the Ld. Sr. Counsel. 10. The next contention raised by the Ld. Sr. Counsel is that the order dated 30.03.2022 passed under section 147 r.w.s. 144B of the Act is not a valid order, therefore, the same cannot be revised after two years under section 263 of the Act. Against this order dated 30.03.2022, the appellant/assessee has not sought for any remedy nor has it challenged th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning or not. 12. The order dated 30.03.2022 passed under section 147 r.w.s. 144B of the Act is a valid order as per law even if no addition has been made in respect of any issue including issue relating to reasons for reopening. Here, the AO has failed to carry out such task and failed to inquire into the issues highlighted by the Ld. PCIT during the course of reopened assessment proceedings. The decisions in the cases of BSES Rajdhani Power Ltd. (supra), Mehak Finvest P. Ltd. (supra)and Surya Jyoti Software Pvt. Ltd. (I.T.A. No.2158/DEL/2017) are squarely applicable here. Considering the facts in entirety and above discussions, we are of the considered view that when the AO has failed to carry out requisite inquiry and verification as in this case, the order passed under section 147 r.w.s. 144B of the Act in this case has become erroneous and prejudicial to the interest of the Revenue. The case laws relied upon by the Ld. Sr. Counsel are found distinguishable on the facts and not relevant for the case in hands. Building of a case emphasizing part of the decisions and observations therein cannot be justified without appreciating the bare facts in entirety of each decision. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave completed the assessment by virtue of Section 120(4)(b). The assessee could have raised objection to jurisdiction only within a month. In the case of Abhishek Jain 94 taxmann.com 355, the Hon'ble Delhi High Court has held that in terms of section 124(3)(b) jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from date on which he was served with a notice for reopening assessment under section 148 of the Act. Our attention was also drawn to the decision of the ITAT Chandigarh in the case of Punjab Urban Development Authority, Mohali (2014] 42 taxmann.com 160 (Chandigarh - Trib.) wherein the Tribunal has held that once a notice under section 143(2) of the Act is issued by a particular officer and if assessee wishes to object to such jurisdiction then objection has to be raised in terms of section 124(3)(a) within 30 days of issue of such notice and, in absence of such objection, assessee cannot challenge jurisdiction later on. 16. In view of the foregoing discussions, we are of the considered opinion that the order of the Ld. PCIT is in accordance with the ratio laid down by Hon'ble Jurisdictional High Court cited above b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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