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TMI Blog2025 (2) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... ars the so called Loan is outstanding and the Lender has not received any Interest. This itself is outside the human probability and explains that the entire transaction is non-genuine.
Thus, we are of the opinion that the Assessment Order was erroneous and prejudicial to the interest of revenue hence we uphold the Order u/s 263.
CIT was right in holding that the assessment order is erroneous and prejudicial as at the time of Assessment AO had not carried out inquiries to prove Genuineness of loan and creditworthiness of lender. Also, we have perused the so called details filed by the Assessee after the Assessment Proceedings, we are of the opinion that even after the Assessment Proceedings, during 263 proceedings, the Assessee has failed to prove the genuineness of the transaction. - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITAT Pune 1290/PUN/2017 * DG Housing Project Ltd - Delhi High Court - 20 taxmann.com 587 * Nirav Modi-Bombay High Court - 71 taxmann.com 272 * Gabriel India Ltd-Bombay High Court - 71 Taxman 585 * Reward Construction P Lid - ITAT Pune ITA No. 1224 PUN/2017 * Vikas Polymers - Delhi High Court-194 Taxman 57 Submission of ld.DR : 3. Mr.Ajay Kumar Keshari - ld.Commissioner of Income tax Ld.Departmental Representative(ld.DR) for the Revenue filed a written submission. 3.1 Submission of ld.DR for the Revenue is reproduced here under : "The case laws relied upon in this instant case, along with the issues and their gist, are attached herewith. It is important to mention that the factual matrix of this case is covered by the case laws cited in the attachment, particularly on the issues of improper/inadequate enquiry, non-application of mind by the Assessing Officer, and the failure to explain the source and genuineness of transactions as well as the creditworthiness during the assessment proceedings or proceedings under Section 263 of the Act. The bank statements do not demonstrate the capacity of the lenders. Furthermore, cash deposits have been found to have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the Loan Sanction Letter of LIC explains that it is a Home Loan and LIC disburses Home Loan directly to the Builder or the person from home is purchased. Ld.DR also submitted that on record there is no evidence that LIC has disbursed the Loan. Ld.DR relied on Hon'ble Supreme Court decision in Sumati Dayal to submit that person borrowing money at 8.5% interest and giving it interest free is beyond Human Probability; hence the entire story of the assessee is sham. 3.2 Ld.DR submitted that at the time of assessment no documents were submitted before the AO, hence Pr.CIT was right in invoking 263. Findings & Analysis : 4. We have heard both the parties and perused the records. In this case Assessee e-filed return of income on 31.10.2018 declaring total income at NIL and loss of Rs. 1,92,91,031/-. The case of the Assessee was selected for Scrutiny. In the Assessment Order the Assessing Officer has recorded that Assessee failed to comply notice dated 21/12/2020, 19/01/2021. Then another letter was issued to assessee asking it to file the details called for. On 02/04/2021 Assessee filed only Bank Account details, Copy of bank Pass book, name & address of directors, Copy of financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information under section 133(6) of the Act and assessee filed all details regarding the Loan. Ld.AR for the Assessee pleaded that thus, all the details were filed before the Assessing Officer, hence, proceedings under section 263 of the Act, were bad in law. 4.6 However, it is an accepted fact that during the Assessment Proceedings, the Assessee had not filed basic documents like Loan Confirmations, copy of return of Income of the Lender. The onus was on assessee to prove Genuineness of Loans and creditworthiness of lender. Nothing was filed during assessment proceedings to prove genuineness of loan and creditworthiness of lender. It is also an admitted fact that Mr.Prakash had not filed any Return of Income for AY 2018-19. It is an admitted fact that Mr.Praksah was not having the funds to lend money to the assessee. It has been claimed by the Ld.AR that Mr.Praksah was provided Interest Free Loan by Nilesh Kande Group. However, even before us the Ld.AR has not specifically stated what is Nilesh Kande Group? Is it a Firm, company? Also, it has been pleaded by Ld.AR that so called Nilesh Kanade group obtained Loan from some Financial Institutes. We specifically asked Ld.AR that ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, 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 1.-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 Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal, we asked the Ld.AR has the Loan been Repaid? The Ld.AR submitted that the Loan has not yet been repaid. Thus admittedly even after so many years the so called Loan is outstanding and the Lender has not received any Interest. This itself is outside the human probability and explains that the entire transaction is non-genuine. 4.13 In these facts and circumstances, we are of the opinion that the Assessment Order was erroneous and prejudicial to the interest of revenue hence we uphold the Order under section 263 of the Act. 4.14 Ld.AR took a plea that details were filed subsequent to the assessment proceedings before the Assessing Officer, hence Pr.CIT should not have invoked proceedings under section 263 of the Act. We do not agree to this plea of the Ld.AR. First the so called details submitted after the completion of Assessment Proceedings i.e. after passing the Assessment Order, itself shows that the required details were not filed during assessment proceedings. Therefore, the ld.Pr.CIT was right in holding that the assessment order is erroneous and prejudicial as at the time of Assessment AO had not carried out inquiries to prove Genuineness of loan and creditworthiness o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Bachchan 384 ITR 200 (SC) where in Hon'ble Supreme Court in Para 11 held as under : Quote, "11. It may be that in a given case and in most cases it is so done a notice proposing the revisional exercise is given to the assessee indicating therein broadly or even specifically the grounds on which the exercise is felt necessary. But there is nothing in the section (Section 263) to raise the said notice to the status of a mandatory show cause notice affecting the initiation of the exercise in the absence thereof or to require the C.I.T. to confine himself to the terms of the notice and foreclosing consideration of any other issue or question of fact. This is not the purport of Section 263 " Unquote. 4.18 Thus, Hon'ble Supreme Court has specifically explained that there is nothing in the section 263 of the Act to raise the notice to the level of statutory notice. Only condition is that assessee should get opportunity to explain. In the case of the Assessee, the ld.Pr.CIT has elaborately recorded the assessee's submission which explains that assessee had sufficient opportunity to explain the impugned issue. Therefore, the plea of the Ld.AR is dismissed. 4.19 Assessee has also relie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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