Appeal details
Counselvise Citation
[2023] 100 COUNSELVISE.COM (IT) 9223 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-07-2023
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
26-06-2023
Assessment Year
2018-2019
Appeal Filed On
01-03-2023
Judgement Text
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 102/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2018-19 Dinesh Kumar Chaurasia M/s Ambika Properties, Near Hemu Circle, Tonk cuke Vs. PCIT (Central), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABAPC 0810 D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Mahendra Gargieya (Adv.) jktLo dh vksj ls@ Revenue by : Sh. Ajey Malik (CIT) lquokbZ dh rkjh[k@ Date of Hearing : 27/06/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 17/07/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the Principle Commissioner of Income Tax, Jaipur dated 29.12.2022 [ here in after ld. PCIT ] for assessment year 2018-19 which in turn arise from the order dated 24.09.2021 passed under section 143(3) of the Income Tax Act, 1961 [ here in after to as Act ] by ACIT, Central Circle-03, Jaipur. 2. In this appeal, the assessee has raised following grounds: - 2 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT “1. The Ld. Pr. CIT, Jaipur seriously erred in law as well as on the facts of the case in invoking the provisions of S. 263 of the Act and therefore, the impugned order dated 29.12.2022 u/s 263 of the Act kindly be quashed. 2.1 The Id. Pr. CIT, Jaipur seriously erred in law as well as on the facts of the case in assuming jurisdiction u/s 263 of the Act by wrongly and incorrectly holding that the subjected assessment order passed u/s 143(3) dated 24.09.2021, was without conducting necessary investigation and enquiries irt. loans and creditors accounts squared up during the year. The assumption of jurisdiction u/s 263 being contrary to the provisions of law and facts on record, hence, the proceedings initiated u/s 263 of the Act and the impugned order dated 29.12.2022 deserves to be quashed. 2.2 The Id. Pr. CIT, Jaipur erred in law as well as on the facts of the case in wrongly setting aside the assessment order dated 24.09.2021 despite there being complete application of mind by the AO on the subjected issues and it was nothing but a case of change of opinion, based on which, assumption of jurisdiction u/s 263 is not permissible. The impugned order dt. 29.12.2022 therefore, lacks valid jurisdiction u/s 263 of the Act and hence, the same kindly be quashed. 3. The appellant prays your honor indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.” 3. At the outset of hearing, the Bench observed that there is delay of 03 days in filing of the appeal by the assessee for which the ld. AR of the assessee filed an application for condonation of delay with following prayers: “The humble assessee most respectfully begs to submit as under: 1. That in the aforesaid matter, the ld. PCIT , Jaipur passed the impugned order on dated 29.12.2022, which was received on dated 29.12.2022 by the AR of the assessee. Accordingly, the appeal was to be filed on/before 27.02.2023 however, the same has been filed on dated 02.03.2023. Thus, delay of 2 days has occurred. 3 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT 2. Reasonable Cause exist In this connection, it is humbly submitted that the appeal papers were duly prepared by the counsel of the assessee and were sent to the local counsel Shri Akash Jain (FCA). Unfortunately however,Shri Akash proceeded an outstation journey during the relevant period and the papers could not be forwarded to the assessee .As soon as Shri Akash came back , he immediately got the paper signed and sent it to the counsel at Jaipur and accordingly the appeal was filed . B for due due to wide spread of pandemic COVID-19, there was a delay in signing and submission of appeal before the Hon’ble ITAT. The trustee being old aged person restricted their movement to safeguard themselves. This has contributed minor delay of 15 days in filing of the appeal. 3. That in support of the aforesaid facts, affidavit of the of assessee is enclosed with this application and marked as “Annexure – A”. 4. That the applicant is a layman not very conversant with the complex tax laws and because of the circumstances stated above, the delay so caused was beyond her control but was bonafide and unintended. The assessee was not going to gain any benefit because of the delayed finding and her conduct was not contumacious. 5. Supporting Case Laws: It is submitted that the Hon'ble Supreme Court in the case of Collector, Land & Acquisition v. Mst. Katiji & Others (1987) 167 ITR 471 (SC) has advocated for a very liberal approach while considering a case for condonation of delay. The following observations of the Hon'ble Court are notable: "The legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression sufficient cause' employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub serves the ends of justice-that being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But, the message does not appear to have percolated down to all the other Courts in the hierarchy." Prayer: It is, therefore, humbly prayed that this application may kindly be allowed by condoning the delay, taking a sympathetic view, in the interest of justice. Any other order, which this Hon’ble ITAT deems fit and proper, be also passed in favour of applicant assessee.” 4. During the course of hearing, the ld. DR not objected to assessee’s application for condonation of delay and prayed that 4 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT Court may decide the issue as deem fit in the interest of justice as delay is of three days only. 5. We have heard the contention of the parties and perused the materials available on record. The prayer by the assessee for condonation of delay of three days has merit and we concur with the submission of the assessee. Thus the delay of three days in filing the appeal by the assessee is condoned in view of the decision of Hon’ble Supreme Court in the case of Collector, land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC) as the assessee is prevented by sufficient cause. 6. Succinctly, the fact as culled out from the records is that in this case, original return of income was e-filed on 31.08.2018 for the A.Y 2018-19 declaring total income of Rs. 5,33,820/-. Further, the assessee filed his revised ITR on 25.03.2019 for A.Y 2018-19 declaring total income of Rs.26,32,700/-. The case was selected for compulsory scrutiny as a survey proceedings was carried out at the business premises of the assessee on 29.10.2018 and the assessee surrendered his additional income for A.Y 5 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT 2018-19. Accordingly notice u/s 143(2) was issued on 25.09.2019 which was duly served upon the assessee. Further, notice u/s 142(1) was issued on 03.02.2021 along with questionnaire. In compliance to these notices, the assessee filed submission which was examined. Relevant details have been filed which are placed on record. The assessee engaged in the dealing of property and having commission & brokerage income during the year under consideration. After examination of the details and verification of facts, returned income of assessee was accepted. 7. On culmination of the assessment proceeding the ld. PCIT has called for the assessment records and on examination of the record the ld. PCIT has observed that Sundry Creditors of Rs. 29.46 lakhs are appearing in the balance sheet, without any corresponding purchase transaction in current year. During the course of assessment proceeding assessee submitted confirmations of various persons who have advanced money to assessee on dates which are not mentioned in the confirmation filed. The mode of giving amount and dates is not appearing on the confirmations so filed. All the confirmations are similar nature and without having any dates and the mode of giving the money to the assessee. Further the ld. PCIT has observed that assessee not having maintained books of account as owned 6 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT up in the statement recorded was also not discussed and therefore, PCIT is of the view that the assessment order passed by the assessing officer is erroneous in so far as the same is prejudicial to the interest of revenue. The assessee was given opportunity of being heard and finally the ld PCIT has passed the order u/s. 263 by observing as under: “10. I have studied the facts at hand and the material available on record. From the matrix of facts and events, it is noted that the appropriate inquiries/verifications of loans through which amounts have been introduced have not been examined by the AO while passing the assessment order. This lack of inquiry and consequent non-deriving of reasoned inference by the Assessing Officer has prima facie caused prejudice to the interests of the revenue. Accordingly, I hereby set aside the assessment carried out u/s 143(3) of the Income Tax Act, 1961, vide assessment order dated 02.07.2021 for the A.Y 2019- 20 and direct a fresh assessment to be made in accordance with provisions of law. Adequate opportunity of being heard should be given to the assessee.” 8. Feeling dissatisfied with the order of the PCIT, assessee has preferred this present appeal on the grounds as reiterated here in above. To support the grounds so raised by the ld. AR of the assessee has reliance on the written submission, which is extracted in below; “ Brief General Facts: The Assessee is engaged in business of real estate earning income from the purchase and sale of properties and also earning from commission brokerage in the name of M/s Ambika Properties, near Hemu circle, Tonk. Initially the assessee filed Return of Income for AY 2018-19 on 31.08.2018 at Rs.5,33,820/-. Later on a survey was conducted u/s 133A at the business premises of the assessee on 29.10.2018. Further, the assessee filed revised Return of Income on 25.03.2019 at Rs.26,32,700/- (i.e., showing additional income of Rs.20,98,880/-) Thereafter the case was selected for compulsory scrutiny where under, various notices were issued which were duly replied by the assessee time to time. 7 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT However, feeling satisfied, the AO vide the subjected assessment order dated 24.09.2022 held that: “2. The case was selected for compulsory scrutiny as a survey proceedings was carried out at the business premises of the assessee on 29.10.2018 and the assessee surrendered his additional income for A.Y. 2018-19. Accordingly notice u/s 143(2) was issued on 25.09.2019 which was duly served upon the assessee. Further, notice u/s 142(1) was issued on 03.02.2021 along with questionnaire. In compliance to these notices, the assessee filed submission which was examined. Relevant details have been filed which are placed on record.” Later on, through the captioned show cause notice (herein after referred to as the “SCN”) dated 12.08.2022, it is proposed to invoke revisional proceedings u/s 263 of the Act on the ground that captioned assessment order dated 24.09.2022 passed by the AO is erroneous in so far as prejudicial to the interest of Revenue because the AO did not verify/examine the issues which he ought to have made , stating that: “4. On examination of assessment records, it is noted that sundry creditors of Rs. 29.46 lakhs are appearing in the balance sheet, without any corresponding purchase/ transactions in current year. During the course of assessment proceeding, you have submitted confirmations of various persons who have supposedly advanced money to you on different dates, without interest. The same are still outstanding. However, the mode of giving amount to you and dates etc. are not appearing on various confirmations. All the confirmations appear to be of similar nature without having dates and the mode of giving such amounts. Furthermore, the fact of not having maintained books of accounts by the assessee, as owned up in statement recorded, was also not discussed or inquired or satisfactorily examined in the assessment proceedings.” The assessee in response, filed detailed written submission dated 21.12.2022 . The ld. CIT, however feeling dissatisfied, rejected the contentions and held the assessment order erroneous and prejudicial to the interest of revenue, in the following words: “6. The reply of the taxpayer has been studied. The crux of assessee’s counter is on procedural aspects largely towards revision u/s 263 of the Income-tax Act, 1961, rather than on merits of the matter. Even on procedural aspects, the assessee’s counter is weak as detailed subsequently in this order. 7. The assessee in his written reply (filed during the assessment proceedings) dated 26.02.2021, has furnished a list of 10 creditors (persons) along with their 8 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT confirmations, who had supposedly advanced money to the assessee. This list consists of names & addresses of the creditors, along with loan amounts against each creditor, aggregating to Rs. 29,46,500/-. On examination of the confirmations attached with reply dated 26.02.2021, it is noticed that all these confirmations are in most cases is same without having details such as mode of payment i.e. in cash or in cheque and without date and without relevant supporting evidence establishing creditworthiness of the lender. Even, in confirmation of Om Prakash Gupta (mentioned at S.No. 1 of the above referred list and supposedly advanced money of Rs. 7,50,000/-) PAN number is not mentioned. 8. The above facts make it clear that the details of creditors provided by the assessee are either incomplete, or are without satisfactory supporting documents. It is noted that in accepting the loan amounts as genuine the Assessing Officer has not satisfactorily examined the main issue of the case. 9. Here, in this case, the AO has not made satisfactory enquiries with regard to amounts shown to have been received as loans. The action of the Assessing Officer suffers from lack of necessary investigation and enquiries, making the assessment order erroneous in so far as the same is prejudicial to the interests of revenue. The issues as detailed above have remained unexamined by the AO. 10. I have studied the facts at hand and the material available on record. From the matrix of facts and events, it is noted that the appropriate inquiries / verifications of loans through which amounts have been introduced have not been examined by the AO while passing the assessment order. This lack of inquiry and consequent non deriving of reasoned inference by the Assessing Officer has prima facie caused prejudice to the interests of the revenue. Accordingly, I hereby set aside the assessment carried out u/s 143(3) of the Income-tax Act, 1961, vide assessment order dated 02.07.2021 for the A.Y. 2019-20 and direct a fresh assessment to be made in accordance with provisions of law. Adequate opportunity of being heard should be given to the assessee.” Thus, the only condition involved is w.r.t. the loose taken as stated in balance sheet shown Rs. 29,46,500/- and the crux of the allegations/conclusions made are: a) Liability of Rs. 29,46,500/- lakhs are shown in the balance sheet under the head Sundry Creditors without any corresponding purchase/transactions in current year. b) Books not maintained by the assessee, this fact has not been discussed or inquired or satisfactorily examined in the assessment proceedings. The ld. CIT, has not repeated the above allegations in the impugned order 9 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT c) Confirmations submitted by the assessee in his written reply in most cases is same without having details such as mode of payment i.e. in cash or in cheque and without date and without relevant supporting evidence establishing creditworthiness of the lender. d) The appropriate inquiries / verifications of loans have not been made by the AO. This lack of inquiry and consequent non deriving of reasoned inference by the Assessing Officer has prima facie caused prejudice to the interests of the revenue. However, the impugned order passed u/s 263 is completely beyond the scope of S. 263 of the Act on various grounds, as discussed herein below. Hence this appeal. Submissions: 1. Legal Position on S. 263 Judicial Guideline: Before proceeding, we may submit as regards the judicial guideline, in the light of which, the facts of this case are to be appreciated. 1.1 The pre-requisites to the exercise of jurisdiction by the Commissioner u/s 263, is that the order of the Assessing Officer is established to be erroneous in so far as it is prejudicial to the interest of the Revenue. The Commissioner has to be satisfied of twin conditions, namely (i) The order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If any one of them is absent i.e. if the assessment order is not erroneous but it is prejudicial to the Revenue, S. 263 cannot be invoked. This provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous as also prejudicial to revenue’s interest, that the provision will be attracted. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the revenue' has to be read in conjunction with an erroneous order passed by the AO. Every loss of Revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. Kindly refer Malabar Industrial Co. Ltd. v/s CIT (2000) 243 ITR 83 (SC). 10 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT 1.2 Also kindly refer CIT v/s Max India Ltd. (2007) 295 ITR 282 (SC) wherein it is held that: "The phrase "prejudicial to the interests of the Revenue" in S. 263 of the Income Tax Act, 1961, has to be read in conjunction with the expression "erroneous" order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when the Assessing Officer adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the Assessing Officer is unsustainable in law." Ratio of these cases fully apply on the facts of the present case in principle. 2. Due verification and examination made: At the outset, it is submitted that the AO acting as a quasi-jurisdictional authority, after making a detailed enquiry and examination of the relevant facts and material available on record to the extent the AO was supposed to make in law, keeping in mind the principles and guidelines settled by the Hon’ble Courts for application of S.68 , has taken a possible view and completed the subjected assessment. 2.1 In the present case jurisdiction u/s 263 of the Act is on the ground that the while completing assessment proceedings the AO did not verify/examine the sundry creditors balances appearing in the audited financials of the assessee for the year under consideration. The observation and allegation made in the show cause notice u/s 263 that the sundry creditors of Rs.29.46 lakhs in the balance sheet is without any corresponding purchase/transaction, it is submitted that such observation is not correct in as much as the AO raised specific query vide notice dated 03.02.2021 u/s 142(1) of the IT Act (PB 20-23) w.r.t. the issue as under: “4. Please furnish confirmations of creditors/squared up accounts along with evidence of identity, genuineness and creditworthiness of the creditors, raised during the year. Please furnish copy of the concerned bank account, balance sheet, capital account, and ITR of the concerned persons as evidence. Please note that in absence of evidences, those amounts shall be treated as your income u/s 68 of the Act.” Thus, evidently the AO has asked the assessee to supply all the necessary details and the assessee in response to the above notices, filed detailed written 11 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT submission dated 26.02.2021 (PB 16-19) submitting confirmatory affidavits of creditors (PB 6-15) .The reply of the assessee is as under: “4- Confirmations of creditors as affidavit on 50/- non judicial stamp paper named below is being submitted. These creditors are old creditors no new creditors during the year.” Since, there was no creditor this year, assessee was not required to file balance sheet. 2.2 Selection of the case under compulsory scrutiny being a survey case: Moreover, the very fact of selection of the case under compulsory scrutiny based documents and material found during survey, followed by the issuance of the notices u/s 142(1) along with questionnaire which was duly replied by the assessee. In the response of the same, the assessee filed complete documents w.r.t. queries raised along with affidavits in confirmations, ITRs, Computation, bank account details etc. which was required by the AO time to time through the A/R, and the same were duly verified and examined by the AO. This has fully established that the AO was fully alive to the issue in hand from all angles, whether it is factual or legal aspect involved. 2.3 There apart admittedly, there were other relevant and crucial facts viz: 2.3.1 That very pertinently, all the creditors are coming since preceding year/s (2011- 2017) as evident from the confirmative affidavits (PB 6-15) and also from the earlier year/s balance sheets uploaded with the ROI of respective years (b/s as on 31.03.2017 & 31.03.2018 enclosed with this w.s.). This implies that the identity, genuineness and creditworthiness of all the subjected creditors already stood established but even was accepted by the department in the assessment of preceding years. Pertinently, those assessments have not been disturbed so far by the time of the passing of the subjected Assessment Order. Hence, those assessments held good and has all the binding value upon the parties. Once, the same creditors are continuing in the subjected year, there is no reason of finding fault in the approach of the AO. In fact, the AO even could have relied upon this fact alone and no further inquiry is normally felt necessary in such cases, yet in this case AO proceeded one step ahead and asked the assessee to file confirmations etc. The Ld. CIT by expecting the AO to doubt the existence of the debtors this year, wanted the AO to revisit/review the correctness of the earlier assessments orders, whereas the AO was estopped • That, all the amounts were received through bank transfers only. There are no cash receipts.(PB 17 Pr. 9) 12 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT • That, the date/year of receipt is duly mentioned in the affidavits and ledger accounts. • That, most of the creditors are regular IT assessee and their respective PAN are available in some of the affidavits. Shri Om Prakash Gupta, despite request, refused to provide PAN. • That, in some of the cases, the amounts taken were repaid in later years. • That, the identity and capacity of creditor and genuineness of transaction were fully proved. • That, these facts were admittedly available on record before the AO showing his complete application of mind and a reasonable basis of reaching satisfaction by a quasi-judicial authority. Thus, the AO did all what he was supposed to do under law. 3.1 AO acted as per Judicial Guidelines: This all the more holds good when binding decisions of the Hon’ble jurisdictional High Court in various cases (infra) have propounded the principle in the context of S. 68 of the Act being only the examination of the identity of the shareholder concerned his/her the confirmation of the fact of providing/ transferring subjected amount to the assesse but the AO is not legally bound to examine source of source, once the immediate source is available. His duty is confined only to discharge the initial burden lay upon him. In absence of any contrary evidence available on record, the AO also was not supposed nor he could have visualized anything wrong to disturb his conclusion. 3.2 Following decisions of Hon’ble Rajasthan High Court which are directly relevant for the purpose. 3.2.1 Kindly refer Labhchand Bohra V/s ITO (2008) 8 DTR 44 (Raj.) (DPB 1-4) held that: “Cash credit- burden of proof- identity of the creditors established and the confirmed the credit. This discharged the burden of appellant to prove genuineness. However, capacity of the lender to advancement money to appellant was not a matter which the appellant could be required to establish and that would amount to calling upon him to establish the source of source. Hence addition cannot be sustained.” 3.2.2 In Aravalli Trading Co. v/s ITO (2008) 8 DTR 199 (Raj) .) (DPB 12-16) held that: 13 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT “Once the existence of the creditors is proved and such persons own the credits which are found in the books of the appellant, the appellant’s onus stand discharged and the latter is not further required to prove the sources from which the creditors could have acquired the money deposited with him and, therefore the addition u/s 68 cannot be sustained in the absence of anything to establish that the sources of the creditors deposits flew from the appellant itself.” Thus, in view of the above binding judicial guideline, the AO was not obliged still to ask the assessee to provide source of source under the pretense of examination of the creditworthiness of the creditor and to make addition. There is nothing in record to show that such discretion was not properly exercised. 3.3 Discretion conferred- Judiciously exercised: The provisions of S.68 of the Act use the word ‘may’ which indicate that the AO is not always obliged to make addition in each and every case even though there are no sufficient grounds or may be against the human probabilities. Hence, discretion conferred upon the AO has to be exercised judiciously as held in CIT vs Smt. P.K. Noorjahan (1999) 237 ITR 0570 (SC): “As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under s. 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts a circumstances of the particular case. In the instant case, the Tribunal has held that the discretion had not been properly exercised by the ITO and the AAC in taking into account the circumstances in which the assessee was placed and the Tribunal has found that the sources of investments could not be treated as income of the assessee. The High Court has agreed with the said view of the Tribunal. There is no error in the said finding recorded by the Tribunal. There is thus no merit in these appeals and the same are accordingly 14 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT dismissed. — CIT vs. Smt. P.K. Noorjahan (1980) 15 CTR (Ker) 138: (1980) 123 ITR 3 (Ker):42R.1622, affirmed.” 3.4 Normally, in absence of any contrary material the averments made in the affidavits should be accepted. Ref : Mehta Parikh & Co. v. CIT (1956) 30 ITR 181 (SC). In this case no such material is referred even by the CIT. 3.5 A pertinent fact having a direct bearing cannot be lost sight off / ignored that a survey was carried out during the course of which some papers were impounded and that the AO made detailed inquiries seeking clarifications on each aspect, duly submitted by the assessee. Even substantial additional income of Rs. 21 lakhs app. as admitted by the assessee was duly declared in the revised ROI. Thus, there could not have been a further possibility in absence of any strong. (PB 18 Pg 8 Pr. 4 of S 263 Order) 4. If no accounts S .68 cannot be applied: Above submissions have been made assuming S.68 was applicable as per ld. CIT however, the law is well settled that for invoking of S.68, the subjected amount must be found credited in the accounts regularly maintained. 4.1 In CIT vs. P. Mohan Kala (2007) 291 ITR 278 (SC) held “The question is what is the nature and scope of S. 68 of the Act? When and in what circumstances Sec. 68 of the Act would come into play? That a bare reading of S. 68 suggests that there has to be credit of amounts in the books maintained by assessee; some credit has to be of during the previous year ---” 4.2 In ANAND RAM RAITANI vs. CIT (1997) 139 CTR 0235 (GAU) Held: The AO before invoking the power under s. 68 must be satisfied that there are books of account maintained by the assessee and the cash credit is recorded in the said books of account and if the assessee fails to satisfy the AO, the said sum so credited has to be charged to income-tax as the income of the assessee of that previous year. The existence of books of account is a condition precedent for invoking of the power. Discharging of burden is a subsequent condition. If the first point is not fulfilled the question of burden of proof does not arise. The books of account of the firm are not the books of account as contemplated under s. 68. A partnership firm is a separate entity and may be the assessee was a partner of the said firm, but that does not mean that these books of account were maintained by the assessee in his individual capacity. Such books have to be the books of the assessee himself and not of any other assessee. A partnership firm is an assessable entity distinct from the individual partner. The books of account of a partnership cannot be treated as those of the individual partner. In the facts and in the circumstances, s. 68 had no application at all to this case.—Smt. Shanta Devi 15 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT vs. CIT (1988) 68 CTR (P&H) 52 : (1988) 171 ITR 532 (P&H) : TC 42R.1125 concurred with In this case it is admitted that no accounts were maintained hence, there was no question of invoking of S.68.Consequwntly the CIT was legally wrong to find error on this aspect. Though he has not mentioned S.68 but the purport was the same. The CIT alleged that even though the assessee denied maintenance of books of accounts, this fact was not discussed /enquired / satisfactorily examined in the assessment order. Factually it is wrong to say so in as much as the AO vide a SCN date 11.06.2021 raised a specific query vide para 1, which was duly replied by the assessee also vide its letter dated 17.09.2021 (PB 24-26) which is reproduced hereunder: “1. Note regarding loose papers: 1.1 Firstly, the assessee does not maintain regular books of accounts as stated in his statement also recorded during survey. Hence, it is not possible to get verified each entry from the books of accounts.” But the CIT ignored this pertinent fact and legal position. 5. Not a case of complete/total lack of inquiry: The CIT himself admits in the Impugned Order that the AO did make enquiry on the issue in hand. The law is well settled that the Assessment order cannot be held to be erroneous simply on the allegation of inadequate enquiry unless there is an established case of total lack of enquiry. Kindly refer CIT vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del) (wherein Delhi High Court was considering the aspect, when there is no proper or full verification, and it was held that: “One has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between “lack of inquiry” and “inadequate inquiry”. If there was any inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of “lack of inquiry” that such a course of action would be open.” In another case of Narain Singla v. PCIT [2015] 62 taxmann.com 255 (Chandigarh - Trib.) it was held that when AO was fully aware of matter, he had appraised evidences filed by assessee and then had formed a view to accept same, Commissioner was unjustified in invoking jurisdiction under section 263. Whether if 16 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT there was an enquiry, even inadequate, that would not, by itself, give occasion to Commissioner to pass order under section 263, merely because he has a different opinion in matter; it is only in case of 'lack of inquiry' that such a cause of action can be open. However, the ld. CIT is completely silent on this aspect. 6. S.263 Explanation not invoked: Interestingly, the ld. CIT did not invoke Explanation to S.263 which is normally interpreted / taken support by the invoking of S.263 in absence of which, the ld. CIT could not have at all complained of lack of inquiry or not making proper inquiries . Otherwise also he has not suggested what further inquiries could and should have been made in the admitted facts and circumstances of the present case. 7.NO lack of inquiry / No wrong inference: Thus, a circumspect view of all the above submissions on factual and legal aspects and the judicial guideline has fully established that the AO has acted completely in accordance with the law and what he was supposed to do i.r.t. the issue in hand. Supporting Case laws: 7.1 In CIT v/s Rajasthan Financial Corporation (1996) 134 CTR 145 (Raj) held that: “Once Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the Assessing Offer allowed the claim being satisfied with the explanation of assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order not make an elaborate discussion in that regard.” 7.2 In ANNU AGROTECH ( P) LTD. Vs PCIT,(2021) 214 TTJ (Jp)1118 (DPB 5-11 ) Revision—Erroneous and prejudicial order—Lack of proper enquiry—Case of the assessee was selected for scrutiny under limited scrutiny for enquiry as to whether the funds received in the form of share premium are from disclosed sources— Assessee's Authorised Representative produced books of account including cash book, ledger, subsidiary records and various other details as required, which were duly examined—AO made all the inquiries, sought clarifications on all the relevant aspects to the extent he was supposed looking to the nature of the issue involved, the past accepted history of the case and the evidences and material already available together with the material provided during the assessment proceedings— Entire details of each shareholder i.e., balance sheet, income declared, transactions done with the assessee-company as also his creditworthiness/financial capacity was duly verified by the AO—CIT has not 17 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT doubted the ownership of the respective shareholdings by the three shareholders—Thus, the level of the proof required in a normal case of cash credit under s. 68 could not have been applied though the AO did whatever he was supposed in the law to satisfy the requirement of s. 68—There was no evidence, information or anything else indicating that more enquiries were warranted—It was not the case of the CIT that there was a complete/total lack of inquiry—Law is well settled that the assessment order cannot be held to be erroneous simply on the allegation of inadequate enquiry—Reason for selection of the case for scrutiny does not speak of s. 56(2)(viib)—Therefore, the AO could not have made enquiries on this aspect—Even otherwise, the assessee also submitted a report of the expert under r. 11UA which fully justified charging premium @ Rs. 50 per share— Hence, the AO was justified in not applying s. 56(2)(viib)—Moreover, once all the details were made available before the CIT, he should have decided the issues instead of setting aside to the AO—Therefore, the order passed by the Principal CIT under s. 263 is quashed. 7.3 In [2016] 76 taxmann.com 226 (SC) CIT v. Reliance Communication Ltd (DPB 17 ) Held: IT : SLP dismissed against High Court's ruling that where assessee raised funds by way of FCCBs and Assessing Officer made detailed enquiries about genuineness and creditworthiness of actual subscribers to such FCCBs in terms of section 68, mere fact that AO did not make any reference to said issue in assessment order, would not entitle Commissioner to pass a revisional order 8.Adverse Observations and Objections by the Ld. CIT: The other objections are nothing more than a suspicion, particularly when the CIT did not deny that these were old creditors and no fresh /new amount was taken this year. Also The revisionary power can be exercised only when there is an error of law or of facts in the subjected order, which must be “prejudicial to the revenue. However, in this case neither there was an error nor any prejudice caused to the revenue, hence, the CIT cannot invoke jurisdiction under S. 263 of the Act. In view of the above legal and factual position, the proposed action is completely beyond the scope of S.263 of the Act and therefore, deserves to be dropped. The objections in the aforesaid paras make are that the details of creditors provided by the assessee are either incomplete, or are without satisfactory supporting documents. It is noted that in accepting the loan amounts as genuine the Assessing Officer has not satisfactorily examined the main issue of the case. Thus, the AO evidently acted completely in accordance with law, duly and fully applying his mind by calling for all the relevant details and the has taken a possible 18 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT view particularly in absence of any contrary material or anything raising his suspicion.” 8.1 The ld. AR of the assessee in addition to the written submission vehemently argued that the assessee has submitted all the details of the credit appearing in the balance sheet and the same is already appearing the balance sheet placed on record. The assessee has already surrendered the amount and same is disclosed. The confirmations related to Sundry creditors were filed and placed on record. The facts that in the assessment proceeding all confirmation were filed were placed before the PCIT also. There is no money received in cash, the money received through and the same is reflected in the bank account of the assessee. The AO has already verified the details and now the PCIT cannot review each and every order of the ld. AO. As regards the creditors confirmation he relied on the judgment as stated in the written submission and submitted that the ld. AO has made the inquiry and taken a plausible view of the matter and therefore, he opposed the order of the ld. PCIT. 9. The ld DR is heard who has relied on the findings of the PCIT and stated the order of the PCIT is well reasoned order. Considering the reply and confirmation of the assessee he submitted that the ld. AO has not seen 19 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT that in the confirmation no details of the date of money given, no details how the same is paid and moreover the purpose is also not clearly mentioned. Not only that the assessee on the one side stating that the amount is of the nature of the unsecured loan whereas the same is shown as sundry creditors in the balance sheet and for the same confirmation were filed. The unsecured loan cannot be shown as sundry creditors. The terminology used are of the different purpose and therefore, he submitted that the ld. PCIT rightly hold the order of the ld. AO as prejudicial to the interest of the revenue. 10. We have heard the rival contentions and perused the material placed on record and also gone through the decisions relied upon by the rival parties. On examination of assessment order and the order u/s 263 of the Act, the bench noted that the assessee in his written reply filed during the assessment proceedings dated 26.02.2021 has furnished lists of 10 sundry creditors along with confirmation who advanced money to the assessee. These consist of names and addresses along with loan amounts against each creditor. On examination of the confirmation attached with reply so filed ld. PCIT, he noticed that all these confirmations are in most cases are similar content, without having details of such as mode of payment and 20 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT supporting evidence to establish credit worthiness of each lender. The bench also examined from the paper book filed by the assessee that in the balance sheet filed by the assessee, this amount is shown as Sundry Creditors whereas, the confirmation speaks for the loan given. It appears that whether these persons are sundry creditors or in fact unsecured loans. The confirmations and list of the sundry creditors filed are contradictory with the facts placed on record. Either these creditors are unsecured loan or sundry creditors, the impact has to be examined and it has very well effect on the assessment of income of the assessee and these this basic error is neither considered by the ld. AO nor clarified by the assessee before the ld. AO as well as before the proceeding conducted by the ld. PCIT u/s. 263 of the Act. As it is not clear that whether the confirmations filed are correct or the balance sheet filed by the assessee is correct. The parties either sundry creditors or unsecured loan provider and impact of the both is to be seen as the sundry credit appearing in the balance either on account of providing goods or services whereas the unsecured loan provider gives money to the assessee. Thus, we are of the considered view that the assessee is failed to established these vital facts before the lower authorities. Therefore, in the light of these facts and circumstances, we see no infirmity in the order of ld. PCIT holding that the order of the Assessing Officer is prejudicial to the 21 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT interest of revenue and the same is erroneous on account of the fact that neither the assessee came with clean hand and has furnished the details and also the Assessing Officer has not looked into the veracity of the submissions so filed which itself contradictory from the details and submission placed on record, so as to whether these creditors are loan creditors or creditor on account of purchases or expenses. Therefore, we are of the considered view that the order passed by the Assessing Officer is erroneous and rightly held by ld. PCIT as prejudicial and erroneous in the interest of the revenue and therefore, the appeal filed by assessee is dismissed. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 17/07/2023. Sd/- Sd/- ¼ lanhi xkslkbZ ½ ¼ jkBkSM deys’k t;arHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 17/07/2023 *Ganesh Kumar vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Dinesh Kumar Chaurasia, Tonk 2. izR;FkhZ@ The Respondent- PCIT (Central), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 22 ITA No. 102/JP/2023 Dinesh Kumar Chaurasia vs. PCIT 6. xkMZ QkbZy@ Guard File (ITA No. 102/JP/2023) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar
AI Insights
The case involves Dinesh Kumar Chaurasia, who appealed against the order of the PCIT, Jaipur, which set aside the assessment order for the assessment year 2018-19. The original assessment was completed under section 143(3) of the Income Tax Act, 1961, accepting the returned income. However, the PCIT later invoked section 263, finding the assessment order to be erroneous as it did not adequately investigate the loans and creditors accounts, which were significant in the assessee's financial statements. The Tribunal's decision to dismiss the appeal was based on the lack of sufficient inquiry by the AO and the presence of similar confirmations for loans without detailed scrutiny.
