Smt. Shruti Rahul Mane, Sangli V. Principal Commissioner of Income-tax : 1,

ITA 1056/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1915 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-09-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 19-05-2016
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1056 /PUN/201 6 / ASSESSMENT YEAR : 20 1 0 - 11 SMT. SHRUTI RAHUL MANE, 1154/1155, SUMDHA PRASAD APARTMENT, NEAR RAJARAMBAPU BANK, GAON BHAG, SANGLI 416416 PAN : BMVPM7313Q ....... / APPELLANT / V/S. THE PRINCIPAL COMMISSIONER OF INCOME TAX : 1 , KOLHAPUR / RESPONDENT ASSESSEE BY : SHRI C. H. NANIWADEKAR REVENUE BY : MRS. KESANG V. SHERPA / DATE OF HEARING : 1 6 - 04 - 2019 / DATE OF PRONOUNCEMENT : 27 - 06 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF PR. COMMISSIONER OF INCOME TAX - 1, KOLHAPUR DATED 10 - 03 - 2016 FOR THE ASSESSMENT YEAR 2010 - 11 PASSED U/S. 263 O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2 ITA NO .1056/PUN/2016, A.Y. 2010 - 11 2. SHRI C.H. NANIWADEKAR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE PURCHASED AGRICULTURAL LAND ADMEASURING 2.26 R AT SANGLI ON 11 - 10 - 2010 VIDE PURCHASE DEED NO. 3661/10 FOR CONSIDERATION OF RS.36 LAKHS. NO RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. ON THE BASIS OF AIR INFORMATION, T HE ASSESSING OFFICER ISSUED NOTICE U/S. 148 ON 06 - 06 - 2012 TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED RETURN OF INCOME ON 22.02.2013 DEC LARING TOTAL INCOME OF RS.12/ - FROM OTHER SOURCE AND RS.2,00,000/ - FROM AGRICULTUR E. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO EXPLAIN SOURCE OF FUNDS FOR PURCHASE OF LAND. THE ASSESSEE EXPLAINED THAT FOR PURCHASE OF LAND SHE BORROWED MONEY FROM FOUR PERSONS . ALL THE FOUR PERSONS WERE CLOSELY RELATED TO THE ASSESSEE. THE HAND LOANS WERE TAKEN FROM : I . ROHIT ASHOK MANE, BROTHER IN LAW RS.5,01,600/ - ; II . RAHUL ASHOK MANE, HUSBAND RS.15,00,000/ - ; III . SWAPNIL SURESH SAWANT, BROTHER RS.4,00,000/ - ; AND IV . SU RESH SHANKAR SAWANT, FATHER RS.11,00,000/ - . THE ASSESSING OFFICER ISSUED NOTICE U/S. 142(1) OF THE ACT ON 28 - 06 - 2013 ALONG WITH THE QUESTIONNAIRE. A SPECIFIC QUERY WAS RAISED IN THE QUESTIONNAIRE SEEKING DETAILS OF EXPENDITURE MADE AND INCOME EARNED FRO M AGRICULTURAL ACTIVITIES, INFORMATION REGARDING BANK ACCOUNTS, DETAILS OF DEPOSITS/LOANS ETC. FURTHER, THE ASSESSING OFFICER RAISED SPECIFIC QUERIES IN RESPECT OF LOANS TAKEN BY THE ASSESSEE FROM ROHIT ASHOK MANE, RAHUL ASHOK MANE, SWAPNIL SURESH SAWANT AND SURESH SHANKAR SAWANT . THE ASSESSEE FURNISHED THE DETAILS AND MODE OF LOAN TAKEN FROM AFORESAID 3 ITA NO .1056/PUN/2016, A.Y. 2010 - 11 RELATED PERSONS FOR PURCHASE OF AGRICULTURAL LAND. THE ASSESSING OFFICER IN PARA 2 OF THE ASSESSMENT ORDER HAS REPRODUCED THE DETAILS FURNISHED BY THE ASS ESSEE IN RESPECT OF THE SOURCE AND MODE OF LOAN OF EACH OF THE LENDERS. THE ASSESSING OFFICER ISSUED SUMMONS U/S. 131 OF THE ACT TO THE LENDERS AND RECORDED THEIR STATEMENTS. AFTER EXAMINING THE ENTIRE TRAIL OF SOURCE OF FUNDS THE ASSESSING OFFICER WAS SATISFIED AND ACCEPTED THE CONTENTION S OF ASSESSEE . HENCE, NO ADDITION WAS MADE IN THE INCOME RETURNED. THE LD. AR PLACED ON RECORD COPY OF THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S. 142(1) OF THE ACT AND THE QUESTIONNAIRE ISSUED ALONG WITH THE SAID NOTICE . THE LD. AR SUBMITTED THAT IT IS A WELL SETTLED LAW THAT WHERE ENQUIRIES HAVE BEEN CONDUCTED BY THE ASSESSING OFFICER, THE PR. COMMISSIONER OF INCOME TAX CANNOT INVOKE REVISIONAL JURISDICTION MERELY FOR THE REASON THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS PREJUDICIAL TO THE INTEREST OF REVENUE. A PERUSAL OF IMPUGNED ORDER CLEARLY SHOWS THAT THE PR. COMMISSIONER OF INCOME TAX WANTS TO SUBSTITUTE OPINION OF THE ASSESSING OFFICER WITH HIS OPINION. THUS, IT IS A CASE OF CHANGE OF OPINION RATHER THAN ERRONEOUS ORDER OF ASSESSING OFFICER . 3. ON THE OTHER HAND MRS. KESANG V. SHERPA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. DR SUBMITTED THAT A PERUSAL OF STATEMENTS OF ASSESSEE AND THE LENDERS WOULD SHOW C ONTRADICTIONS. THE ASSESSING OFFICER HAS FAILED TO CONDUCT PROPER ENQUIRIES QUA THE SOURCE OF FUNDING FOR PURCHASE OF AGRICULTURAL LAND BY THE ASSESSEE. HENCE, THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD. DR FURT HER SUBMITTED THAT THE PROVISIONS OF 4 ITA NO .1056/PUN/2016, A.Y. 2010 - 11 SECTION 263 HAVE BEEN AMENDED BY THE FINANCE ACT, 2015 W.E.F. 01 - 06 - 2015. THE IMPUGNED ORDER HAS BEEN PASSED BY THE PR. COMMISSIONER OF INCOME TAX AFTER THE AMENDMENT OF SECTION 263 OF THE ACT. HENCE, EXPLANATION (2) INSERTED BY VIRTUE OF AFORESAID AMENDMENT WOULD APPLY IN THE CASE OF ASSESSEE . AFTER THE AMENDMENT , IF IN THE OPINION OF PR. COMMISSIONER OF INCOME TAX OR COMMISSIONER OF INCOME TAX THE ORDER PASSED BY THE ASSESSING OFFICER IS WITHOUT PROPER ENQUIRIES / VERIFICATIONS , THE ORDER SHALL BE DEEM TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4. CONTROVERTING THE SUBMISSIONS ADVANCED BY DR, THE LD. AR SUBMITTED THAT IN THE FIRST PLACE THE ASSESSING OFFICER HAS MADE PROPER ENQUIRIES AND VERIFICA TIONS QUA THE TRANSACTION OF PURCHASE OF AGRICULTURAL LAND AND HAND LOANS TAKEN BY ASSESSEE TO FINANCE THE SAID PURCHASE. SECONDLY, THE AMENDMENT TO SECTION 263 WOULD NOT APPLY TO THE ASSESSMENT YEAR UNDER APPEAL. THE AMENDMENT IS PROSPECTIVE IN NATURE A ND WOULD BE EFFECTIVE FROM 01 - 06 - 2015. THE DATE OF PASSING OF ORDER U/S. 263 IS NOT RELEVANT. THE RELEVANT FACTOR IS THE ASSESSMENT YEAR. IN SUPPORT OF HIS CONTENTIONS THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS : I . RELIANCE MONEY INFRASTRUCTURE LTD. VS. PR. COMMISSIONER OF INCOME TAX IN ITA NO. 3259/MUM/2017 FOR ASSESSMENT YEAR 2012 - 13 DECIDED ON 06 - 10 - 2017; II . M/S. ARUN KUMAR GARG HUF VS. PR. COMMISSIONER OF INCOME TAX IN ITA NO. 3391/DEL/2018 FOR ASSESSMENT YEAR 2014 - 15 DECIDED ON 08 - 01 - 2019. 5 ITA NO .1056/PUN/2016, A.Y. 2010 - 11 5 . W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. IT IS A WELL SETTLED LAW THAT THE PR. COMMISSIONER OF INCOME TAX/COMMISSIONER OF INCOME TAX CAN NOT INVOKE REVISIONAL JURISDICTION U/S. 263 UNLESS TWIN CONDITIONS OF ERRONEOUS ORDER AND PREJUDICIAL TO THE INTEREST OF REVENUE ARE SATISFIED. BOTH THESE CONDITIONS HAVE TO BE READ TOGETHER. IT IS ALSO A WELL SETTLED LAW THAT WHERE THE ENQUIRIES HAVE BEEN MADE BY THE ASSESSING OFFICER EVE N THOUGH THEY ARE INADEQUATE , T HE PROVISIONS OF SECTION 263 CANNOT BE INVOKED. L ACK OF ENQUIRY AND INADEQUATE ENQUIRIES ARE ON DIFFERENT PEDESTAL. THE REVISIONAL JURISDICTION CAN CERTAINLY BE INVOKED WHERE THE ASSESSING OFFICER HAS FAILED TO CONDUCT ENQU IRIES/VERIFICATIONS AT ALL. 6. IN THE INSTANT CASE A PERUSAL OF ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER HAD ISSUED QUESTIONNAIRE ALONG WITH THE NOTICE U/S. 142 TO THE ASSESSEE ON 28 - 06 - 2013. THE ASSESSEE HAS REPLIED TO THE QUESTIONNAIRE GIV ING DETAILS OF PERSONS AND THE SOURCE OF HAND LOANS ADVANCED BY THEM TO THE ASSESSEE FOR PURCHASE OF LAND. SUBSTANTIAL LOANS HAVE BEEN GIVEN TO THE ASSESSEE THROUGH CHEQUE. THE DETAILS OF THE LOANS ARE DULY RECORDED IN THE ASSESSMENT ORDER. THE ASSESSIN G OFFICER HAS ISSUED SUMMONS U/S. 131 TO SHRI SWAPNIL SURESH SAWANT ONE OF THE LENDERS OF THE ASSESSEE AND RECORDED HIS STATEMENT ON OATH. ALL THE LENDERS ARE CLOSELY RELATED TO THE ASSESSEE AND HAVE SUPPORTED THE ASSESSEE BY FILING CONFIRMATIONS AND AFFI DAVITS. THE ASSESSING OFFICER AFTER CONDUCTING ENQUIRIES CAME TO THE CONCLUSION THAT THE SOURCE OF INVESTMENT IN LAND HAS BEEN DULY E XPLAINED BY THE ASSESSEE AND HENCE , NO ADDITION WAS MADE. THE ORDER OF ASSESSING OFFICER MAY BE PREJUDICIAL TO THE INTEREST 6 ITA NO .1056/PUN/2016, A.Y. 2010 - 11 OF REVENUE BUT THE SAME IS NOT ERRONEOUS AS THE ASSESSING OFFICER HAS TAKEN A POSSIBLE VIEW AFTER CONDUCTING PRUDENT ENQUIRIES AND EXAMINING THE DOCUMENTS ON RECORD. 7. IN SO FAR AS THE CONTENTION OF THE DEPARTMENT THAT SINCE THE IMPUGNED ORDER HAS BEEN PASSED AFTER THE AMENDMENT, THEREFORE, AMENDED PROVISIONS OF SECTION 263 WOULD APPLY, WE DO NOT FIND FAVOUR WITH THIS CONTENTION. THE AMENDMENT TO SECTION 263 BY TH E FINANCE ACT, 2015 IS EFFECTIVE FROM 01 - 06 - 2015 AND DOES NOT OPERATE RETROSPECTIVE LY . THUS, THE AMENDED PROVISIONS OF SECTION 263 WOULD HAVE NO BEARING ON THE ASSESSMENT YEAR UNDER APPEAL I.E. ASSESSMENT YEAR 2010 - 11 . MERELY FOR THE REASON THAT THE ORDE R U/S. 263 HAS BEEN PASSED AFTER THE AMENDMENT WOULD NOT BRING THE ASSESSMENT YEAR 2010 - 11 WITHIN THE AMBIT OF AMENDED PROVISIONS OF SECTION 263 OF THE ACT. 8. THE MUMBAI BENCH OF TRIBUNAL IN THE CASE OF RELIANCE MONEY INFRASTRUCTURE LTD. VS. PR. COMMISS IONER OF INCOME TAX (SUPRA) WHILE DEALING WITH THE ISSUE ON RETROSPECTIVE APPLICABILITY OF SECTION 263 IN TURN HAS RELIED ON THE TRIBUNAL DECISION IN THE CASE OF NARAYAN TATU RANE V/S. INCOME TAX OFFICER, WARD 27(1)(1), MUMBAI REPORTED IN (2016) 70 TAXMANN.COM 227 (MUM), AND HAS HELD THE PROVISIONS OF SECTION 263 AMENDED BY FINANCE ACT, 2015 DOES NOT OPERATE RETROSPECTIVELY. SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI BENCH OF TRIBUNAL IN THE CASE O F M/S. ARUN KUMAR GARG HUF VS. PR. COMM ISSIONER OF INCOME TAX (SUPRA). 7 ITA NO .1056/PUN/2016, A.Y. 2010 - 11 9. THUS, IN VIEW OF THE FACTS OF THE CASE AND DECISIONS DISCUSSED ABOVE , WE HOLD THAT THE PR. COMMISSIONER OF INCOME TAX EXCEEDED HIS JURISDICTION IN INVOKING REVISIONAL POWERS. THE AS SESSING OFFICER HAS PASSED THE ASSESSMENT ORDER AFTER CONDUCTING REASONABLE ENQUIRIES. HENCE, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 27 TH DAY OF JUNE, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 27 TH JUNE, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE PR. COMMISSIONER OF INCOME TAX - 1, KOLHAPUR 4 . , , , / DR, ITAT, B BENCH, PUNE. 5 . / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE