Himanshu Kukreja, Dehradun V. The Pricipal Commissioner of Income Tax , Dehradun

ITA 11/DDN/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6080 (ITAT-DEHRADUN)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 18-04-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, DEHRADUN Before Sh. R. K. Panda, Accountant Member & Sh. Anubhav Sharma, Judicial Member ITA No. 11/DDN/2021 : Asstt. Year : 2016-17 & SA No. 02/DDN/2021 : Asstt. Year : 2016-17 Himanshu Kukreja, C/o Matta Garg & Co., CA, 15, Astley Hall, Dehradun-248001 Vs PCIT, Dehradun (APPELLANT) (RESPONDENT) PAN No. AHIPK9462F Assessee by : Sh. S. K. Matta, CA Revenue by : Sh. N. S. Jangpangi, CIT DR Date of Hearing: 23.03.2022 Date of Pronouncement: 25.03.2022 ORDER Per R. K. Panda, Accountant Member: This appeal filed by the assessee is directed against the order dated 02.11.2018 passed u/s 263 of the Income Tax Act, 1961 by the ld. PCIT, Dehradun relating to A.Y. 2016-17. 2. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 31.12.2016 showing total income of Rs.10,02,000/-. The assessee has shown income from running Hostel. The case was selected under limited scrutiny to examine the issue whether investment and income relating to properties are duly disclosed. Accordingly, notice u/s 143(2) of the I.T. Act was served on the assessee through e- filing portal on 18.09.2017. The AO also issued notice u/s ITA No. 11/DDN/2021 & SA No. 02/DDN/2021 Himanshu Kukreja 2 142(1) of the I.T. Act alongwith a questionnaire dated 09.02.2018 and 19.07.2018 which were duly served on the assessee. After considering the reply filed by the assessee, the AO completed the assessment accepting the returned income of Rs.10,02,000/-. 3. Subsequently, the ld. PCIT perused the record and noted that the order passed by the AO is erroneous and prejudicial to the interest of the revenue, since, the AO has not examined the issue during the assessment proceedings. The AO has not called for the bank account from which the payments of Rs.8,64,15,000/- were made to the seller, Sh. Madan Pal Singh to verify whether the payments were made by the assessee from his individual bank account or from the bank account of Kulwant Kaur Kukreja Educational Society. The claim of the assessee that the land was purchased on behalf of the society was not correctly examined by the AO during the assessment proceedings. The AO has also not examined the violation of the provisions of Section 13(1)(c) of the I.T. Act which prohibits any trust/society from diverting its income directly or indirectly for the benefit of any person referred to in Sub-Section (3). He, therefore, issued a show cause notice asking the assessee to explain as to why the order passed by the AO should not be revised u/s 263 of the I.T. Act, since, the order is erroneous and prejudicial to the interest of the revenue. Rejecting the various explanation given by the assessee and relying on various decisions, the ld. PCIT cancelled the Assessment Order passed by the AO with a direction to pass a fresh Assessment Order after due verification and after affording proper ITA No. 11/DDN/2021 & SA No. 02/DDN/2021 Himanshu Kukreja 3 opportunity of being heard to the assessee by recording the following reasons: “4. The assessee’s submission has been carefully examined. It is noticed that the assessee has not provided any justification against violation of the provision of section 13(1) of I.T. Act which prohibits any trust/society from diverting its income directly or indirectly for the benefit of any person referred to in Sub-Section(3). Further, the assessee has not submitted the bank statements of either himself or the society to specify the nature of transaction made for the purchase of property and the source thereof. Moreover, the assessee has neither submitted any document stating that the property has been subsequently transferred to the society nor any statement of the current ownership of the property and status thereof in support of his claim that the property belongs to the society. During the assessment proceedings, the A.O. had not enquired into or called for any documentary evidence relevant to the above issues. 5. After careful consideration of the facts and circumstances of the case, I hold that the assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 dated 18.07.2017 is erroneous and also prejudicial to the interest of revenue in view of the facts narrated in para-2 hereinbefore. Accordingly, the assessment order dated 18.07.2018 is cancelled with the direction to the Assessing Officer to pass a fresh assessment order after due verification and after affording proper opportunity of being heard to the assessee.” 4. Aggrieved with such order of ld. PCIT, the assessee filed appeal before the Tribunal by raising the following grounds: “1. Reasonable opportunity of being heard was not allowed. ITA No. 11/DDN/2021 & SA No. 02/DDN/2021 Himanshu Kukreja 4 2. The learned Principal Commissioner of Income Tax has erred in canceling the original assessment order dated 02.11.2018 as the same is neither erroneous nor prejudicial to the interest of revenue. 3. The learned Principal Commissioner of Income Tax has erred in directing the Assessing Officer to pass a fresh assessment order. 4. The order passed u/s 263 is arbitrary, against the provisions of law and facts of the case. 5. Any other ground arising at the time of or before hearing of appeal.” 5. The ld. Counsel for the assessee submitted that the AO during the course of assessment proceedings has asked for the details of purchase of the property and the assessee vide submission dated 03.07.2018 has filed a certificate from Kulwant Kaur Kukreja Educational Society confirming the purchase of property in the name of Sh. Himanshu Kukreja. He submitted that the balance sheet and schedule of fixed assets of the society was filed before the AO which show that the land in question was appearing in the schedule of fixed assets of the society. He submitted that during the course of assessment proceedings, the assessee has explained verbally regarding the purchase of property in the name of assessee individual but the payments were made from the bank account of the society. He further submitted that another part of the property was purchased in the name of Sh. Praveen Kukreja and the order has been passed u/s 143(3) on 29.03.2018, copy of which is placed at page nos. 35 & 36 of the paper book. He submitted that the said order has attained finality and no action u/s 147/263 of the I.T. Act has been taken. Referring to the ITA No. 11/DDN/2021 & SA No. 02/DDN/2021 Himanshu Kukreja 5 Assessment Order passed u/s 143(3) of the I.T. Act in the case of Kulwant Kaur Kukreja Educational Society, copy of which is placed at page nos. 33 & 34 of the paper book, he submitted that here also no action u/s 147/263 of the I.T. Act has been taken and the property though purchased in the name of Sh. Himanshu Kukreja and Sh. Praveen Kukreja appears in the balance sheet of the society and the payments have been made from the bank account of the society. He accordingly submitted that there is absolutely no error in the order of the AO and it is not prejudicial to the interest of the revenue and therefore, the order of the ld. PCIT cancelling the Assessment Order by invoking the provisions of Section 263 of the I.T. Act should be set aside. 6. The ld. DR, on the other hand, while relying on the order of ld. PCIT submitted that the case was selected for limited scrutiny for the purpose of verification of large investment in the property. However, the AO has not even called for the bank account from which such huge funds to the tune of Rs.8,64,15,000/- was paid to the seller. The AO has not at all examined the issue for which the case was selected for limited scrutiny. He submitted that if the provisions of Section 263 of the I.T. Act cannot be invoked in such type of cases then the provisions will become otiose. He accordingly submitted that the grounds raised by the assessee should be dismissed. 7. We have considered the rival arguments made by both the sides, perused the orders of the AO and ld. PCIT and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find that the case of ITA No. 11/DDN/2021 & SA No. 02/DDN/2021 Himanshu Kukreja 6 the assessee was selected under limited scrutiny to examine the issue as to whether investments and income relating to properties are duly disclosed. A perusal of the reply given by the assessee during the course of assessment proceedings show that the assessee has purchased two properties, the details of which are as under: Date Purchase Price (Rs.) 24.06.2015 4,73,00,000/- 24.06.2015 3,50,00,000/- 8. However, it is surprising to note that neither the AO has called for the bank account from which such huge amounts of more than Rs.8 crores has been paid to the seller nor the assessee has filed any document before us that he has filed the bank account before the AO from which the payments were made. The submissions of ld. Counsel for the assessee that he has verbally explained the issue to the AO during the course of assessment proceedings cannot be accepted as proper inquiry by the AO during the course of assessment proceedings in absence of any query raised by the AO to this effect. So far as, the arguments of the ld. Counsel for the assessee that the Assessment Order in the case of Kulwant Kaur Kukreja Educational Society was passed u/s 143(3) of the I.T. Act and no action u/s 147/263 of the I.T. Act has been taken is concerned, we find the said order is dated 27.12.2018 i.e. after the passing the order of the assessee on 02.11.2018. In our opinion, when the case was selected for limited scrutiny for the purpose of verification of investment in properties and the AO failed to examine the issue for which the case was selected by not asking for the bank account, the source, the applicability of ITA No. 11/DDN/2021 & SA No. 02/DDN/2021 Himanshu Kukreja 7 provisions of Section 13(1)(c) of the I.T. Act etc. therefore, the order passed by the AO without examining the basic details in our opinion, makes the order erroneous as well as prejudicial to the interest of the revenue. We, therefore, uphold the order of the ld. PCIT in cancelling the assessment under the provisions of Section 263 of the I.T. Act with a direction to the AO to pass the fresh Assessment Order after due verification and after affording proper opportunity of being heard to the assessee. Accordingly, the grounds raised by the assessee are dismissed. SA No. 02/DDN/2021: 9. Since, we have decided the appeal, the Stay Application filed by the assessee becomes infructuous and accordingly, the same is dismissed. 10. In the result, the appeal as well the Stay Application filed by the assessee are dismissed. Order Pronounced in the Open Court on 25/03/2022. Sd/- Sd/- (Anubhav Sharma) (R. K. Panda) Judicial Member Accountant Member Dated: 25/03/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR