Rajesh Chandrakant Shah (HUF), Solapur V. Principal Commissioner of Income-tax : 6,

ITA 1028/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4053 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 16-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Keywords: Revision of order; Difference of opinion; Change of opinion
• Section: 44AD; 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE , , , BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1028 /P U N/201 6 / ASSESSMENT YEAR : 20 11 - 12 RAJESH CHANDRAKANT SHAH (HUF), 19B, SIDDHJIN HOUSING SOCIETY, 1A, MURARJI PETH, SOLAPUR 413001 PAN : AAGHR1633C ....... / APPELLANT / V/S. PR. COMMISSIONER OF INCOME TAX - 6, PUNE / RESPONDENT ASSESSEE BY : SHRI VISHNU BHUTADA REVENUE BY : MS. NANDITA KANCHAN / DATE OF HEARING : 1 3 - 11 - 2018 / DATE OF PRONOUNCEMENT : 06 - 02 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF PR. COMMISSIONER OF INCOME TAX - 6, PUNE DATED 24 - 03 - 2014 PASSED U/S. 263 O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR THE ASSESSMENT YEAR 2011 - 12. 2 ITA NO .1028/PUN/2016, A.Y. 2011 - 12 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE IS A BUILDER AND DEVELOPER AND IS CARRYING ITS BUSINESS UNDER THE NAME AND STYLE OF DESHNA CONSTRUCTIONS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011 - 12 ON 27 - 03 - 2013 DECLARING TOTAL INCOME OF RS.1,96,000/ - . THE A SSESSEE RETURNED HIS TOTAL INCOME UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS. CONSEQUENTLY, MANDATORY NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 08 - 08 - 2013. DURING SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PURCHASED PROPERTY WORTH RS.1.29 CRORES ON 25 - 08 - 2010. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF INVESTMENT. THE ASSESSEE FURNISHED DETAILS OF INVESTMENT AND ALSO FILED CONFIRMATION S FROM THE PERSONS (UNSECURED CREDITORS) FROM WHOM IT HAD RECEIVED VARIOUS AMOUNTS FOR INVESTMENT. THE ASSESSING OFFICER AFTER EXAMINING THE SAME ACCEPTED INCOME RETURNED BY THE ASSESSEE. THEREAFTER, THE PR. COMMISSIONER OF INCOME TAX INITIATED PROCEEDIN G U/S. 263 OF THE ACT. THE PR. COMMISSIONER OF INCOME TAX HELD THAT THE ASSESSING OFFICER HAS NOT MADE NECESSARY ENQUIR IES/ INVESTIGATION S REQUIRED TO BE MADE FOR ASCERTAINING GENUINENESS OF TRANSACTION AND THE SUNDRY CREDITORS / UNSECURED LOANS APPEARING IN THE ASSESSEES BOOKS OF ACCOUNT. THE PR. COMMISSIONER OF INCOME TAX FURTHER OBSERVED THAT THE ASSESSEE HAD MADE TOTAL INVESTMENT OF RS.1,35,75,300/ - , OUT OF WHICH THE ASSESSEE FURNISHED DETAILS OF SOURCE OF INVESTMENT OF RS.103.25 LAKHS ONLY. THE ASSESS EE HAS NOT OFFERED ANY EXPLANATION IN RESPECT OF INVESTMENT OF RS.32.50 LAKHS. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY ON ACCOUNT OF LARGE INVESTMENT IN PROPERTY AS COMPARED TO TOTAL INCOME , DESPITE THAT THE ASSESSING OFFICER FAILED TO MAKE NECES SARY ENQUIRY/INVESTIGATION REGARDING THE SOURCE OF 3 ITA NO .1028/PUN/2016, A.Y. 2011 - 12 INVESTMENT FOR PURCHASE OF PROPERTY BY THE ASSESSEE. HENCE, THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3. AGGRIEVED BY THE ORDER PASSED U/S. 263, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDER OF PR. COMMISSIONER OF INCOME TAX BY RAISING FOLLOWING GROUNDS : 1) THE ORDER PASSED BY THE LEARNED PR. CIT IS BAD IN LAW AND HENCE VOID AB INITIO AS THE SAME IS SERVED UPON THE APPELLANT AFTER THE LIMITATION OF TIME PERIOD IS OVER. 2). THE LEARNED PR. CIT HAS ERRED IN CONCLUDING THAT THE AO DID NOT CARRIED OUT ENQUIRY/INVESTIGATION IN RELATION TO UNSECURED LOAN, CREDITORS BALANCE ETC. 3) THE LEARNED PR. CIT HAS ERRED IN CONCLUDING THAT THE VERACITY OF THE ENTRIES APPEARING IN THE CONSTRUCTED BOOKS OF ACCOUNTS (IMPOUNDED U/S 131 DURING SCRUTINY PROCEEDINGS) HAVE NOT BEEN EXAMINED BY THE AO. 4) THE LEARNED PR. CIT HAS ERRED IN CONCLUDING THAT THE ASSE SSMENT ORDER PASSED BY THE AO IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IS ERRONEOUS IN THE NATURE. 5) THE LEARNED PR. CIT HAS ERRED IN CONCLUDING THAT NO ENQUIRY / INVESTIGATION HAS BEEN CARRIED OUT BY THE AO IN REGARD TO THE SOURCE OF THE INVESTMENT IN IMMOVABLE PROPERTY. 6) THE LEARNED PR. CIT HAS ERRED IN IGNORING THE RECORDS OF THE ASSESSMENT PROCEEDINGS WHILE PASSING THE IMPUGNED ORDER. 7) THE IMPUGNED ORDER IS PASSED BY THE LEARNED PR. CIT WITHOUT APPLYING MIND. 8) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APPEAL CHALLENGING THE VALIDITY OF REVISIONAL ORDER. THE SAME IS REPRODUCED AS UNDER : PR. COMMISSIONER OF INCOME TAX - 6 INVOKED REVISION PROCEEDINGS U/S. 263 EXCLUSIVELY BASED ON THE PROPOSAL/SUGGESTION MADE BY THE ASSESSING OFFICER & THEREBY FAILED TO APPLY HIS MIND INDEPENDENTLY WHICH RESULTS THE ENTIRE REVISION PROCEEDINGS ILLEGAL/ILLEGITIMATE AND NEED TO QUASH. 4 ITA NO .1028/PUN/2016, A.Y. 2011 - 12 4. SHR I VISHNU BHUTADA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE PR. COMMISSIONER OF INCOME TAX HAS ERRED IN ASSUMING REVISIONAL JURISDICTION IN THE PRESENT CASE. DURING THE COURSE OF SCRUTINY ASSESSMENT PRO CEEDINGS THE ASSESSING OFFICER ISSUED NOT ICE ALONG WITH DETAILED QUESTIONNAIRE TO THE ASSESSEE ON 06 - 11 - 2013 RAISING SPECIFIC QUERIES WITH REGARD TO INVESTMENTS MADE BY ASSESSEE. THE ASSESSEE VIDE REPLY DATED 18 - 11 - 2013 GAVE DETAIL S OF SOURCE OF INVESTMENT ALONG WITH THE NAMES OF THE PERSONS FRO M WHOM ADVANCES/LOANS WERE TAKEN. THEREAFTER, THE ASSESSING OFFICER AGAIN ON 20 - 12 - 2013 MADE SPECIFIC QUERIES REGARDING PURCHASE OF PROPERTY AT SHUKRAWAR PETH, SOLAPUR VIDE REGISTERED DEED DATED 25 - 08 - 2010 AND THE SOURCE OF INVESTMENT. THE ASSESSEE VIDE REPLY DATED 03 - 01 - 2014 FURNISHED THE REQUISITE INFORMATION ALONG WITH PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR 2010 - 11 AND BALANCE SHEET AS ON 31 - 03 - 2011. THE ASSESSEE GAVE DETAILED INFORMATION REGARDING THE SOURCE OF INVESTMENTS. THE LD. AR POINTE D THAT ALL THE COMMUNICATION BETWEEN THE ASSESSEE AND ASSESSING OFFICER ON VARIOUS DATES DURING ASSESSMENT PROCEEDINGS ARE AT PAGES 24 TO 73 OF THE PAPER BOOK. THE LD. AR FURTHER POINTED THAT THE ASSESSEE HAD SUMMONED THE CREDITORS AND THEIR STATEMENTS WE RE RECORDED U/S. 131 OF THE ACT. ALL THE CREDITORS SUPPORTED THE ASSESSEE AND CONFIRMED THAT THE AMOUNTS HAVE BEEN PAID BY THEM. THE STATEMENTS OF UNSECURED CREDITORS I.E. MRS. ABOLI P. SHAH, MR. VEER KUMAR J. SHAH, MR. DEEPAK KUMAR J. SHAH, MR. AJIT KUM AR J. SHAH, MRS. RESHMA R. SHAH AND MR. SANTOSH KUMAR J. SHAH ARE AT PAGES 74 TO 86 OF THE PAPER BOOK. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER AFTER EXAMINING THE CREDITORS AND DOCUMENTS FURNISHED BY ASSESSEE MADE NO ADDITION IN THE INCOME RETURNE D. IT IS NOT A CASE WHERE NO ENQUIRIES WERE CONDUCTED BY THE ASSESSING OFFICER. THE DOCUMENTS AS REQUIRED BY THE ASSESSING OFFICER WERE FURNISHED AND NECESSARY ENQUIRIES WERE MADE BY 5 ITA NO .1028/PUN/2016, A.Y. 2011 - 12 ASSESSING OFFICER. AS POINTED EARLIER THE STATEMENTS OF UNSECURED CRED ITORS WERE ALSO RECORDED, THUS THERE IS NO QUESTION OF LACK OF ENQUIRY OR INADEQUATE ENQUIRY BY THE ASSESSING OFFICER. 4.1 THE LD. AR CONTENDED THAT THE PRESENT REVISION PROCEEDINGS ARE BAD IN LAW AS THE PR. COMMISSIONER OF INCOME TAX WITHOUT APPLYING HIS INDEPENDENT MIND INITIATED THE PROCEEDINGS U/S. 263 ON THE PROPOSAL INITIATED BY THE ASSESSING OFFICER. THE LD. AR REFERRE D TO THE PROPOSAL FOR REVISION OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 2011 - 12 AT PAGES 118 AND 119 OF THE PAPER BOOK. THE LD. AR POINTED THAT THE ASSESSING OFFICER PROPOSED REVISION OF ORDER U/S. 263 CITING PAUCITY OF TIME DURING ASSESSMENT FOR NOT DEEPL Y SCRUTINIZ ING THE CASE. WHEREAS, IT IS A CLEAR CASE OF CHANGE OF OPINION BY ASSESSING OFFICER. THE LD. AR SUBMITTED THAT THE PR. COMMISSIONER OF INCOME TAX MERELY ON PROPOSAL MADE BY THE ASSESSING OFFICER CANNOT ASSUME JURISDICTION U/S. 263 OF THE ACT. TO SUPPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS : I . COMMISSIONER OF INCOME TAX VS. GABRIEL INDIA LTD., 71 TAXMAN 585 (BOM); II . SPAN OVERSEAS LTD. VS. COMMISSIONER OF INCOME TAX IN ITA NO. 1223/PN/2013 FOR ASSESSMENT YEAR 200 8 - 09 DECIDED ON 21 - 12 - 2015; III . SMALL WONDER INDUSTRIES VS. COMMISSIONER OF INCOME TAX IN ITA NO. 2464/MUM/2013 FOR ASSESSMENT YEAR 2009 - 10 DECIDED ON 24 - 02 - 2017; IV . GEHNA JEWELLERS P. LTD. VS. PRINCIPAL COMMISSIONER OF INCOME TAX IN ITA NO. 3530/MUM/2017 FOR ASSESSMENT YEAR 2012 - 13 DECIDED ON 22 - 11 - 2017. 6 ITA NO .1028/PUN/2016, A.Y. 2011 - 12 5. ON THE OTHER HAND MS. NANDITA KANCHAN REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF PR. COMM ISSIONER OF INCOME TAX. THE LD. DR SUBMITTED THAT THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS FOR THE REASON THAT THERE WAS LARGE INVESTMENT IN PROPERTY AS COMPARED TO TOTAL INCOME. HOWEVER, THE ASSESSING OFFICER FAILED TO MAKE PROPER ENQ UIRIES DURING SCRUTINY ASSESSMENT PROCEEDINGS AND ACCEPTED THE CLAIM OF ASSESSEE WITHOUT VERIFICATION . IT IS A CLEAR CASE OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. THE LD. DR FURTHER CONTENDED THAT THE PR. COMMISSIONER OF INCOME TAX WHILE ISSU ING NOTICE U/S. 263 AND THEREAFTER WHILE PASSING REVISION ORDER HAS APPLIED HIS INDEPENDENT MIND FOR INVOKING REVISIONAL JURISDICTION. 6. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE ASSESSEE HAS ASSAILED THE ORDER OF PR. COMMISSIONER OF INCOME TAX ON MERITS AS WELL AS ON WRONG ASSUMPTION OF REVISIONAL JURISDICTION U/S. 263 OF THE ACT. 7. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS PRIMARILY FOR THE REA SON OF LARGE INVESTMENT IN PROPERTY AS COMPARED TO TOTAL INCOME. THE ASSESSEE HAD PURCHASED PROPERTY WORTH RS.1.29 CRORES DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL. THE EXAMINATION OF DOCUMENTS ON RECORD REVEAL THAT THE ASSESSING OFFIC ER ISSUED NOTICE U/S. 14 2( 1 ) AND QUESTIONNAIRE TO THE ASSESSEE ON 06 - 11 - 2013 , INTER ALIA SEEKING DETAILS OF THE SOURCE OF INVESTMENTS. THEREAFTER, THE ASSESSEE VIDE REPLY DATED 18 - 11 - 2013 FURNISHED THE INFORMATION AND DOCUMENTS AS SOUGHT BY THE ASSESSING OFFICER. THEREAFTER, THE ASSESSING OFFICER RAISED FURTHER QUERIES REGARDING THE INVESTMENT VIDE COMMUNICATION DATED 11 - 12 - 2013. THE ASSESSEE REPLIED TO THE SAID QUERIES ON 20 - 12 - 7 ITA NO .1028/PUN/2016, A.Y. 2011 - 12 2013 . THEREAFTER, THE ASSESSING OFFICER RAISED FURTHER SPECIFIC QUERIES REG ARDING PURCHASE OF PROPERTY AND SOUGHT DETAILED EXPLANATION OF THE INVESTMENTS MADE. THE COPY OF THE SAID COMMUNICATION FROM ASSESSING OFFICER DATED 20 - 12 - 2013 IS AT PAGES 25 TO 27 OF THE PAPER BOOK. THE ASSESSEE VIDE COMMUNICATION DATED 03 - 01 - 2014 (AT P AGES 31 TO 34 OF THE PAPER BOOK) GAVE DETAILED REPLY TO EACH OF THE QUERIES RAISED BY THE ASSESSING OFFICER WITH RESPECT TO PURCHASE OF LAND, SOURCE OF INVESTMENTS, ETC. A PERUSAL OF THE DOCUMENTS ON RECORD FURTHER REVEAL THAT THE ASSESSING OFFICER HAD SU MMONED UNSECURED CREDITORS U/S. 131 OF THE ACT AND RECORDED THEIR STATEMENTS. THE CREDITORS APPEARED BEFORE THE ASSESSING OFFICER AND ADMITTED TO HAVE ADVANCED MONEY FOR THE PURCHASE OF PROPERTY BY THE ASSESSEE. THE ASSESSING OFFICER IN THE ASSESSMENT OR DER ACCEPTED THE SOURCE OF INVESTMENTS FURNISHED BY THE ASSESSEE. 8. THE DOCUMENTS ON RECORD CLEARLY ESTABLISH THAT THE ASSESSING OFFICER HAD MADE NECESSARY ENQUIRIES TO TRACK THE SOURCE OF INVESTMENTS MADE BY THE ASSESSEE FOR PURCHASING THE PROPERTY. THE LD. AR HAS POINTED THAT THE PROVISIONS OF SECTION 263 HAVE BEEN INVOKED BY THE PR. COMMISSIONER OF INCOME TAX ON THE PROPOSAL ADVANCED BY THE ASSESSING OFFICER. THE LD. AR REFERRED TO THE DOCUMENT OF PROPOSAL FOR REVISION OF ORDER U/S. 263 AT PAGES 11 8 AND 119 OF THE PAPER BOOK. A CLOSE READING OF THE SAID PROPOSAL DOCUMENT SHOWS THAT THE REASON FOR INITIATING PROPOSAL FOR INVOKING REVISIONAL JURISDICTION U/S. 263 IS PAUCITY OF TIME IN DEEPLY SCRUTINY THE CASE BY ASSESSING OFFICER. THE RELEVANT EXTRA CT OF THE PROPOSAL INDICATING ABOVE REASONS READS AS UNDER : THE A O HAS REJECTED THE STAND OF THE ASSESSEE REGARDING THE FILING OF RETURN U/S. 44AD OF THE I.T. ACT, 1961. HOWEVER, DUE TO PAUCITY OF TIME THE AO COULD NOT DEEPLY SCRUTINIZE THE CASE AND HAS MADE A OFFICE NOTE THAT IN CASE IT APPEARS THE ORDER IS ERRONEOUS TO THE REVENUE, NECESSARY PROPOSAL U/S. 8 ITA NO .1028/PUN/2016, A.Y. 2011 - 12 263 OF THE I.T. ACT, 1961 WILL BE SUBMITTED TO THE CIT - IV, PUNE THROUGH THE JCIT, R - 2, SOLAPUR. 9 . WHEREAS, THE DOCUMENTS ON RECORD CLEARLY RE VEAL THAT THE ASSESSING OFFICER HAD APPLIED HIS MIND AND HAS MADE ENQUIRIES/INVESTIGATION WITH RESPECT TO THE SOURCE OF INVESTMENTS. THE ASSESSING OFFICER RECORDED THE STATEMENT S OF UNSECURE CREDITORS . N O DISCREPANCIES IN THE STATEMENTS MADE BY THE UNSECURED CREDITORS AND THE EXPLANATION FURNISHED BY THE ASSESSEE WERE POINTED BY THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT . IT IS EVIDENTLY A CASE OF CHANGE OF OPINION BY THE ASSESSING OFFICER WHICH THE ASSESSING OFFICER SUCCESSFULLY SUBSTITUTED BY INITIATING PROPOSAL FOR INVOKING PROVISIONS OF SECTION 263 OF THE ACT. 10. IT IS A WELL SETTLED LAW THAT FOR INVOKING THE PROVISIONS OF SECTION 263 THE COMMISSIONER OF INCOME TAX HAS TO APPLY HIS INDEPENDENT MIND AFTER EXAMINING THE RECORDS AND HAS TO FORM HIS INDEPENDENT OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE REVENUE. THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED MERELY ON ASKING OF ASSESSING OFFICER OR PROPOSAL S INITIATED BY THE ASSESSING OFFICER TO SUBSTITUTE HIS ORIGINAL OPINION. IN THE INSTANT CASE, WE FIND THAT THE ASSESSING OFFICER INITIATED PROPOSAL FOR INVOKING THE PROVISIONS OF SECTION 263 MERELY ON THE CHANGE OF OPINION TAKING THE SHELTER OF PAUCITY OF TIME FOR CONDUCTING ENQUIRIES IN ASS ESSMENT PROCEEDINGS. THE PROVISIONS OF SECTION 263 CANNOT BE ALLOWED TO BE MISUSE D BY THE ASSESSING OFFICER TO SUPER IMPOSE THEIR OPINION DIFFERENT FROM THE ONE TAKEN AT THE TIME OF ASSESSMENT PROCEEDINGS. 9 ITA NO .1028/PUN/2016, A.Y. 2011 - 12 11. WE FIND MERIT IN THE SUBMISSIONS OF ASSESS EE. AS IS EVIDENT FROM THE DOCUMENTS ON RECORD WE INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT HAVE BEEN INVO KED IN BLATANT ABUSE TO REVISIONAL JURISDICTION. CONSEQUENTLY, THE IMPUGNED ORDER IS QUASHED AND THE APPEAL OF ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 06 TH DAY OF FEBRUARY, 2019. SD/ - SD/ - ( / ANIL CHATURVEDI ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 06 TH FEBRUARY, 2019. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE PR. COMMISSIONER OF INCOME TAX - 6, PUNE 4 . , , , / DR, ITAT, B BENCH, PUNE. 5 . / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE