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TMI Blog2024 (11) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer. We observe that the issue regarding alleged bogus accommodation entry had been examined both during the course of original assessment proceedings (refer original assessment order passed dated 23- 12-2016 u/s 143(3) of the Act) and again during the course of 147 proceedings (refer notice under section 147 of the Act dated 04-02-2022) wherein the issue for consideration was whether the assessee had made transactions as fictitious loan (entry operator beneficiaries) of Jignesh Shah -Therefore, it is seen that evidently the same issue has been again raised by the Principal CIT, when this issue had earlier been examined by the assessing officer of both during the course of original assessment proceedings and also in the course of 147 proceedings, and after thorough examination, no addition was made on this issue in the hands of the assessee. It is well settled law that recourse cannot be made to 263 proceedings, only with a view to enhance the scope of assessment / reassessment proceedings. Department has at various stages of proceedings (both during the course of regular assessment under section 143 (3) as well as under section 147 of the Act) have examined this issue and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Principal Commissioner of Income Tax, (in short Ld. PCIT ), Ahmedabad-1, Ahmedabad vide order dated 13.03.2024 for Assessment Year 2014-15. 2. The Assessee has taken the following grounds of appeal:- 1. The learned Pr. C.I.T. has erred in passing Order u/s. 263 without jurisdiction and appropriate powers available under the Act It is submitted that the order passed u/s. 263 is bad in law and void ab initio. 2. The learned Pr. C.I.T. has erred in invoking the provisions of Section 263 of the Income Tax Act on the ground that order passed by the A.O. u/s 147 rws 144B of the Act for A.Y. 2014-15 is erroneous and prejudicial to the interest of revenue. It is submitted that the order passed by the learned A.O. is neither erroneous nor prejudicial to the interest of revenue. On facts and circumstances of the case, the order passed by Pr. C.I.T, u/s 263 of the Act is completely incorrect both on facts and in law and the same be quashed and set accordingly. 3. The learned Pr. C.I.T. has erred in holding that the Assessing Officer has not verified the issue of accommodation entries amounting to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O has after detailed verification and after application of mind passed order u/s 143(3) dated 23/12/2016 accepting returned income as assessed income. Thus in any event, the invoking provisions of Section 263 of the Act by Pr. CIT in case of Appellant is not at all justifiable and is invalid in eyes of law. The same be held now. 7. The order passed by the learned Pr. C.I.T. is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 8. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing. 3. The brief facts of the case are that a return of income for the Assessment Year 2014-15 was filed on September 29, 2014, declaring a total income of ₹ 12,25,450/-. Order under section 147 read with section 144B of the Income-tax Act, 1961 (Act), was passed on March 22, 2022 accepting the income as per the original assessment order under section 143(3) of the Act dated December 26, 2016, at the figure of ₹ 12,25,450/-. However, the Principal CIT upon reviewing the records, observed that the assessee had obtained accommodation entries of a sum of ₹ 47,50,000/- from an entry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before us that the order u/s 263 of the Act does not satisfy the twin conditions required for invoking section 263 viz. that the assessment order must be both erroneous and prejudicial to the interests of the revenue. The Ld. Counsel for the assessee submitted that there is no error in the order passed under section 147 of the Act, as it was issued after thorough verification of details and submissions by the assessee, and after due application of mind by the Assessing Officer. The case was reopened and order u/s 147 of the Act was passed on the basis of information available to the A.O. at that time, and therefore, the order cannot be deemed erroneous under the meaning of section 263. The Ld. Counsel for the assessee relied on several judicial decisions to support this contention. The Ld. Counsel for the assessee further submitted that this is not a case where the A.O. failed to conduct an inquiry, as provided in Explanation 2 of Section 263, which was inserted with effect from June 1, 2015. The A.O. clearly made due inquiry based on the recorded reasons, and took into consideration the detailed reply filed by the assessee, and thereafter passed the order without making any addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of assessment proceedings, and after specifically inquiring into the aspect of bogus long-term capital gain on sale of shares of Safal Herbs Ltd, assessed the total income, without making any addition is and accepting the return of income as filed by the assessee. Therefore, evidently, the issue regarding accommodation entry regarding sale of shares of Safal herbs Ltd was to be enquired the course of original assessment proceedings and no additions were made by the assessing officer. Thereafter, the case of the assessee was reopened under section 147 of the Act and from a perusal of reasons recorded , the case of the assessee was reopened on the basis that the assessee had made transactions as fictitious loan (entry operator beneficiaries) of Jignesh Shah for a sum of ₹ 47,50,000/-. In the order passed under section 147 of the Act, the assessing officer observed that notice under section 148 had been issued upon the assessee on the basis of information that the assessee has entered into transactions as fictitious loan entry operator beneficiary amounting to ₹ 47,50,000/- of Jignesh Shah. In the reassessment proceedings, the assessee raised a specific obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on this issue in the hands of the assessee. It is well settled law that recourse cannot be made to 263 proceedings, only with a view to enhance the scope of assessment / reassessment proceedings. It is evident from the facts placed on record that the issue regarding accommodation entry has been examined in detail both during the course of assessment as well as reassessment proceedings under section 147 of the Act, and again the Principal CIT has initiated proceedings under section 263 of the Act, to enquire into the same issue by observing that there was lack of enquiry on the part of the assessing officer. In our considered view, the Department has at various stages of proceedings (both during the course of regular assessment under section 143 (3) as well as under section 147 of the Act) have examined this issue and therefore, the contention of the principal CIT that there was lack of adequate enquiry, cannot be accepted. In the case of Sir Ratan Tata Trust v. DCIT 122taxmann.com273 (Mumbai - Trib.), the ITAT held that if receipt of some inputs at last minute from a third party cannot result in an extension of time for completion of assessment under section 143(3) directly, it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 in the case of Narayan Tatu Rane v. ITO [2016] 70 taxmann.com 227 to hold that the said Explanation cannot be said to have overridden the law as interpreted by the Hon'ble Delhi High Court, according to which the Ld. PCIT has to conduct an enquiry and verification to establish and show that the assessment order is unsustainable in law . The Tribunal has further held that the intention of the legislature could not have been to enable the ld. PCIT to find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law , since such an interpretation will lead to unending litigation and there would not be any point of finality in the legal proceedings. The opinion of the Ld. PCIT referred to in section 263 of the Act has to be understood as legal and judicious opinion and not arbitrary opinion. The law interpreted by the Hon'ble courts makes it clear that Ld. PCIT before holding the order of the Ld. A.O as erroneous in so far as prejudicial to the interest of revenue should have to conduct necessary enquiries or verification in order to show that the findings given by Ld. A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer should have adopted the said formula/method. The aforesaid reasoning cannot be accepted and does not show or establish that the assessment order was erroneous. In view of the aforesaid reasoning, the question of law is answered in favour of respondent assessee and against the Revenue and the appeal is accordingly dismissed. No costs. 8. Thirdly, we observe that the principal CIT has given a specific finding that once the proceeding under section 147 of the Act have been initiated to verify information regarding accommodation entry, then the assessing officer was duty bound to verify the information and make addition on account of accommodation entry. However, in our considered view, Principal CIT has erred in facts and in law in giving attention to the assessing officer to make an addition in the hands of the assessee. Firstly, we observe that the 263 order has not pointed out to any specific infirmity/lack of enquiry by the assessing officer and has also not pointed out as to how the order passed under section 147 of the Act is erroneous and prejudicial to the interest of revenue and secondly, in the 260 order, the principal CIT has given a specific direction/finding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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