PUSHPA SINGH, PATNA V. PR. CIT( CENTAL), PATNA

ITA 12/PAT/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6549 (ITAT-PATNA)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 13-03-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Revision of order; Depreciation; Opportunity of being heard; Earning of tax free income; Bad and doubtful debts; Corroborative evidences; Accommodation entries; Capital Gains
• Section: 147; 68; 148; 263; 132; 143(3); 153A; 143(2); 139(1); 113; 13

Judgement Text

ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘PATNA’ BENCH, KOLKATA [VIRTUAL COURT HEARING AT KOLKATA] Before Shri Rajpal Yadav, Vice-President (KZ) & Shri Rajesh Kumar, Accountant Member I.T.A. No. 12/PAT/2022 Assessment Year: 2012-2013 P u s h p a S i n g h , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A p p e l l a n t P a n c h w a t i N e p a l K o t h i , B o r i n g R o a d , P a t n a - 8 0 0 0 0 1 , B i h a r [ P A N : A N L P S 6 6 7 2 A ] - V s . - P r i n c i p a l C o m m i s s i o n e r o f I n c o m e T a x ( C e n t r a l ) , . . . .. . . . . . . . . . . . . . . R e s p o n d e n t C e n t r a l R e v e n u e B u i l d i n g , B i r c h a n d P a t e l M a r g , P a t n a - 8 0 0 0 0 1 , B i h a r Appearances by: Shri S.K. Tulsiyan, Advocate, appeared on behalf of the assessee Shri Saumyajit Dasgupta, CIT, appeared on behalf of the Revenue Date of concluding the hearing : May 19, 2022 Date of pronouncing the order : June 16, 2022 O R D E R Per Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Principal Commissioner of Income Tax (Central), Patna dated 18.02.2022 passed under section 263 of the Income Tax Act in assessment year 2012-13. 2. The assessee has taken six grounds of appeal. However, her grievances revolve around a single issue namely ld. Principal CIT (Central) has erred in taking cognizance under section 263 of the Income Tax Act. His order is barred by limitation and is not sustainable. In other ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 2 grounds, the assessee has raised peripheral arguments for challenging this order. 3. Brief facts of the case as emerges out from the record are that a search and seizure operation was carried out on the premises of the assessee under section 132 of the Income Tax Act on 08.01.2015. In order to give logical end to the search proceedings under section 132, a notice under section 153A dated 29.06.2015 was issued and served upon the assessee. In response to this notice, return was filed on 27.07.2012 and copy of the return has been placed on page no. 2 of the paper book. Thereafter notice under section 143(2) was issued and served upon the assessee. The ld. Assessing Officer has passed the assessment order under section 153A read with section 143(3) on 28.12.2016, copy of the assessment order is placed on page no. 21 of the paper book. This assessment order was reopened by recording the reasons and the copy of the reason is available on page no. 35 of the paper book, which reads as under:- “Government of India Office of the Assistant Commissioner of Income Tax, Central Circle-1, 6 Floor, C.R.(Annexe) Building, B.C., Patel Path, Patna F. No. ACIT/CC-l/Pat/Notice u.s. 147/2019-20/ Dated : 10.05.2019 To Smt. Pushpa Singh, r - W/o Shri Binay Kumar Singh, Panchwati, Nepali Kothi, Boring Road, Patna. PAN-ANLPS6672A Sir, Sub:- Issue of reason recorded for reopening u/s 148 for A.Y. 2012- 13 with copy of the satisfaction of the Pr. CIT(Central), Patna- reg. Ref: Your letter dated 19.04.2019. Please refer to the above. As per your request, the reason recorded with copy of the satisfaction of the Pr. CIT (Central), Patna is being forwarded to you. Details of reason is as under:- “Information was received that during the course of enquiry in the case of M/s DLS Export Pvt. Ltd. and related parties regarding several inter-bank transfers it was found that the assessee had been the beneficiary for an amount of Rs 67 60 941/- in respect of large inter-bank cash / cheque / RTGS /NEFT transactions without any logical basis which involved accommodation entries by different entry operators through shell / paper ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 3 companies like Chitraksh Vintrade Pvt. Ltd Sukalyan Infratowers Pvt Ltd., Peacock Vintrade Pvt. Ltd. etc. Hence, I consider the case to be fit for issuing notice u/s 148 of the I.T. Act, 1961, if approved. Yours faithfully, Sd/- (Amab Mukherjee) Assistant Commissioner of Income Tax Central Circle-1. Patna” Ld. Assessing Officer thereafter passed an assessment order under section 147 read with section 143(3) on 26.12.2019. The ld. Assessing Officer did not make any addition on the issue for which it was reopened. It is a very brief assessment order and we deem it appropriate to reproduce this assessment order as under:- “INCOME TAX DEPARTMENT, PATNA 1. Name and address of the assessee Smt. Pushpa Singh, W/o. Shri Binay Kumar Singh, Panchwati nepali Kothi, Boring Road, Patna 2. PAN ANLPS6672A 3. Assessment year 2012-13 4. Ward/Circle Central Circle-1, Patna 5. Status Individual 6. Previous year 2011-12 7. Date of order 26.12.2019 8. Section/sub-section of the order 143(3)/147 of the Income Tax Act, 1961 ASSESSMENT ORDER Information was received that during the course of enquiry in the case of M/s DLS Export Pvt. Ltd. and related parties regarding several inter-bank transfer, it was found that the assessee had been the beneficiary. Hence, the case was reopened u/s 147 and notice u/s 148 of the Income-tax Act, 1961 was issued on 29/03/2019 with prior approval made from higher authorities. The assessee filed return of income u/s 148, disclosing amount of Rs. 2,36,130/- on 23/04/2019, the assessee also filed written submission and requesting that copy / certified copy of reasons recorded may be issued along with the copy of satisfaction. A letter was issued to the assessee along with reason recorded for reopening u/s 148 of the Income Tax Act, 1961 for A.Y. 2012-13 with copy of the satisfaction on 10/05/2019. Notice u/s 143(2) of the Income-tax Act, 1961 was issued on 10/05/2019 requesting for compliance on 04/06/2019. The assessee raised an objection vide their letter dated 10/06/2019 claiming that they have no transaction with the above mentioned parties. ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 4 During the course of hearing, the Authorised representative (A/R) of the assessee Shri Subodh Kumar Goel F.C.A appeared and produce books of account, bank statement in original. The same was verified and no transaction with M/s Chitraksh Vintrade Pvt. Ltd., Sukalyan Infratowers Pvt. Ltd. and Peacock Vintrade Pvt. Ltd. was found. Documents produced by the A/R of the assessee during assessment proceedings, reply and other documents filed by the A/R of the assessee were perused and examined. Hence, assessed u/s 143(3)/147 of the Income-tax Act, 1961 on the total income of Rs.2,36,130/- (as per earlier order passed on 28/12/2016). Charge interest as per provision of chapter-XVII of the Income-tax Act, 1961 (u/s 234A, 234B, 234C). Issue demand notice, penalty notice u/s 271(l)(c) etc. Sd/- (Atanu Malik) Assistant Commissioner of Income-Tax Central Circle - 1, Patna” 4. Ld. Principal CIT perused the assessment record and formed an opinion that re-assessment order passed by the ld. Assessing Officer is erroneous as much as prejudicial to the interest of the Revenue. Therefore, action under section 263 is required to be taken against the assessee. He issued a show-cause notice under section 263 of the Income Tax Act and copy of the notice available on page no. 44 to 46 of the paper book. We take note of this notice as under:- “GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT PCIT (Central), Patna To, PUSHPA SINGH PANCHWATI NEPALI KOTHI, , BORING ROAD,PATNA PATNA 800001 , Bihar India PAN/TAN ANLPS6672A AY: 2012-13 DIN & Notice No. ITBA/REV/F/REV1/2021- 22/1037980477(1) Dated: 27/12/2021 NOTICE FOR THE HEARING M/s/Mr/Ms Subject: Notice for Hearing in respect of Revision proceedings u/s 263 of the THE INCOME TAX ACT, 1961 - Assessment Year 2012-13. In this regard, a hearing in the matter is fixed on 12/01/2022 at 11:15 AM. You are requested to attend in person or through an authorized representative to submit your representation, if any alongwith supporting documents/information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office, on or before the said due date, ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 5 then your personal attendance is not required. You also have the option to file your submission from the e-filing portal using the link: incometaxindiaefiling.gov.in Please refer to the above. The re-assessment order for A.Y. 2012-13 in your case was passed by the ACIT, Central Circle-1, Patna u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 on 26.12.2019 at Rs.2,36,130/- as the assessed income for the year. In the above case information was received during the course of inquiry in the case of M/s DLS Export Pvt. Ltd. and related parties regarding several inter-bank transfer, it was found that the assessee- Smt. Puspa Singh (PAN- ANLPS6672A) for the A.Y. 2012-13 had been the beneficiary of an amount of Rs. 67,60,941/- in respect of large inter-bank cash/cheque/RTGS/NEFT transactions without any logical basis which involved accommodation entries by different entry operators through shell/paper companies like Chitraksh Vintrade Pvt. Ltd., Sukalyan Infratowers Pvt. Ltd., Peacock Vintrade Pvt. Ltd. etc. Subsequently, the case of Puspa Singh (PAN- ANLPS6672A) for the A.Y. 2012-13 was submitted to the Pr. CIT(Central), Patna for obtaining approval for issuance notice u/s 148 of the Income Tax Act, 1961. After obtaining approval of the Pr. CIT(Central), Patna, Notice u/s 148 of the Income Tax Act, 1961 was issued to the assessee. During the re-assessment proceedings, reason for re-opening of assessment was sought and communicated to the assessee. Thereafter, the assessee e-filed return of income u/s 148 on 23.04.2019 showing return of income of Rs. 2,36,130/-. Earlier the assessee had e-filed return of income u/s 139(1) on 27.07.2012 showing return of income of Rs. 2,36,130/-. During the assessment proceedings, the assessee raised an objection and claimedthat they do not find any credit entry in their bank account in the name of M/s DLS Exports Pvt. Ltd. and related parties like ChitrakshVintrade Pvt. Ltd., Sukalyanlnfratowers Pvt. Ltd., Peacock Vintrade Pvt. Ltd. for Rs. 67,60,941/-. The assessing officer completed the assessment u/s 143(3) read with 147 of Income Tax Act, 1961 without verifying the transaction. On perusal of the case records it is seen that the assessee had claimed in his Income Tax Return in ITR-2 an amount of Rs. 67,50,080/- as exempt income for Long Term Capital Gains from the transactions on which security transaction tax was paid. However, on perusal of assessment record it is evident that no enquiry/verification from stock exchange, broker, purchaser, depository / depository participant/demat account/bank in respect of this exempt income has been done. The assessing officer accepted the claim of the assessee without making enquiry/verification in the above matters and also no effort was made by the assessing officer to verify the facts of assessee being beneficiary of amount of Rs. 67,60,941/- and the claim of exempt income from the LTCG amounting to Rs. 67,50,080/-. ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 6 The assessing officer failed to carry out necessary inquiry/verification on the issue to reach to a logical, factual conclusion which he was duty bound to perform as an assessing officer. The above inaction on the part of the assessing officer clearly makes the order passed by the assessing officer on 26.12.2019 erroneous so far as interest of revenue is concerned, as above issues involving substantial ramification of revenue was erroneously concluded without inquiry/verification. Thus, the above omission on the part of the assessing officer is hit by explanation 2(a) of the Section 263 of the Income Tax Act, 1961 as the order of the assessing officer was passed without making inquiries or verification which should have been made. In Connection with the above, you are hereby given an opportunity of being heard in your case before the undersigned on 12/01/2022 at 11:45 A.M. at Central Revenue Building, 3 rd Floor, Birchand Patel Marg, Patna - 800001. You may attend the hearing either personally or through your Authorized Representative and file your submissions, if any, with regard to the aforesaid issues along with corroborative evidences. Your submission may include:- (a) Narration of all credit & debit entries in the bank accounts for F.Y. 2011- 12 to support the argument that it did not found any credit entry in the bank account in the names of any entities based in Kolkata including M/s DLS Exports Pvt. Ltd. and related parties like ChitrakshVintrade Pvt. Ltd., Sukalyan lnfratowers Pvt. Ltd., Peacock Vintrade Pvt. Ltd. (b) The working of Long Term Capital Gain amounting to Rs. 67,50,080/- showing purchase, sale of scrips and related financial transactions. This is also to show-cause as to why the action u/s 263 of I.T. Act should not be initiated in your case for enhancement or modification of the assessment, or cancellation of the assessment, and direction to the Assessing Officer for a fresh assessment in your case for the assessment year 2012-13. You may alternatively file your written submission through speed post or email, by the date mentioned above, which will be treated as compliance to the show cause. It may please be noted that your non-compliance in any manner shall lead the undersigned to decide your case on merit with regard to the proposed action u/s 263 of the Income Tax Act, 1961 without any further reference to you. Sd/- SANJEEV SHARMA , PCIT (Central), Patna” The ld. Principal CIT thereafter conducted an enquiry and passed the impugned order whereby he has set aside the re-assessment order dated 26.12.2019 and directed the ld. Assessing Officer to pass a fresh assessment order considering all the issues raised in the show-cause notice. ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 7 5. The ld. counsel for the assessee while impugning the order of the ld. Principal CIT contended that it is time-barred. He contended that a search action under section 132 of the Income Tax Act was carried out upon the assessee on 08.01.2015. In consequence of this search, assessment was framed under section 153A read with section 143(3) on 28.12.2016. Thereafter the assessment was re-opened by issuance of a notice under section 148 and re-assessment has been framed on 26.12.2019. The ld. Principal CIT found an error in the original assessment order but taking action under section 263 of the Income Tax Act by computing the limitation from the re-assessment order dated 26.12.2019 and, therefore, it is time-barred. In support of his contention, he relied upon the following decisions:- Sl. No. Particulars Highlighted page no. Page no. of paper book 1. Decision of the Hon’ble Supreme Court in the case of CIT –vs.- Alagendrn Finance Limited reported in 293 ITR 1 3, 4, 6 1-6 2. Decision of the Hon’ble Mumbai High Court in the case of Ashoka Buildcon Ltd. –vs.- ACIT reported in 325 ITR 574. 12-13 7-14 3. Decision of the Hon’ble ITAT, Hydrabad Bench in the case of GVK Industries – vs.- ACIT 20-21,23 15-24 4. Decision of the Hon’ble ITAT, Mumbai Bench in the case of Royal Western Turf Club –vs.- PCIT reported in 92 ITR 624 31 25-40 5. Decision of the Hon’ble Bombay High Court in the case of CIT –vs.- Jet Airways (I) Ltd. reported in 331 ITR 236 43-44 41-46 6. List of dates 47 ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 8 6. On the other hand, ld. CIT (D.R.) made reference to the discussion of the ld. Principal CIT on page nos. 6 & 7 of the impugned order. 7. We have heard the ld. Representatives and with their assistance gone through the record carefully. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act, deserves to be taken against the assessee or not, it is pertinent to take note of this section. It reads as under:- “263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, 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.- 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 ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 9 Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized 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 examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.” ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 10 8. A bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon’ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 11 (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law. (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 12 simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO 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 AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 9. Apart from the above principles, we deem it appropriate to make reference to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sun Beam Auto reported in 227 CTR 113 and Gee Vee Enterprises Ltd vs. Addl. Commissioner of Income Tax (99 ITR 375). In the case of Sun Beam Auto, the Hon'ble High Court has pointed out a distinction between lack of inquiry and inadequate inquiry. If there is a lack of enquiry, then the assessment order can be branded as erroneous. The following observations of the Hon'ble Delhi High Court are worth to note: “12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 13 while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, 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 Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of “lack of inquiry”, that such a course of action would be open”. 10. In the case of Gee Vee Enterprise vs. Commissioner of Income Tax reported in 99 ITR page 375, the Hon’ble court has expounded the approach of ld. Assessing Officer while passing assessment order. The observation of the Hon’ble court on pages 386 of journal read as under:- “... it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income- tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 14 The reason is obvious. The position and function of the Income- tax Officer is very diffident from that of a civil court. The statement made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only on adjudicator but also an investigator. He cannot remain passive in the face of the return which is apparently in order but called for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry... It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would made such an inquiry prudent that the word ‘erroneous’ in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct.” 11. In the light of the above, let us examine the facts and circumstances of the case. A perusal of the reasons recorded for reopening, it would reveal that assessment was reopened for the reason that the assessee is a beneficiary of credit entry amounting to Rs.67,60,941/- from M/s. DLS Export Pvt. Limited and related parties like Chitraksh Vintrade Pvt. Limited, Sukalyan Infratowers Pvt. Limited, Peacock Vintrade Pvt. Limited. In response to the notice for reopening of assessment issued under section 148, the assessee has contended that she did not receive any amount from these concerns during the financial year 2011-12 and the assessee annexed the copy of the Bank statement. Ld. Assessing Officer has gone through the record and thereafter accepted the stand of the assessee. He did not make any addition to the income of the assessee ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 15 and accepted the assessed income as per earlier assessment order dated 28.12.2016. 12. Ld. Principal CIT sought to find an error in the reassessment order for the purpose of exercising the power under section 263. In his opinion, the ld. Assessing Officer should have examined the issue taken up in 263 proceedings, i.e. whether the assessee’s claim of long-term capital gain amounting to Rs.65,50,080/- is admissible to her or not. It is pertinent to observe that ld. counsel for the assessee at the time of hearing on the strength of the following decisions- (i) CIT –vs.- Jet Airways (I) Limited reported in 331 ITR 236 (Bombay High Court); (ii) Ranbaxi Laboratories Limited reported in 336 ITR page 136 (Delhi High Court); (iii) Md. Juned reported in 353 ITR 172 (Gujarat High Court)-, contended that in a reassessment order, if no addition is being made on an item for which the assessment was reopened, then, any other item exhibiting escaped income found during reassessment proceeding cannot be added. He contended that once no addition was made by the ld. Assessing Officer on the issue for which assessment was reopened, then, his order cannot be termed as erroneous for not verifying any other issue in the reassessment proceedings. In other words, the view taken by the ld. Pr. CIT was that even if no addition was made under section 68 of the Income Tax Act qua the credit entries from DLS export and others for which assessment was reopened, then also, the ld. Assessing Officer should have examined the claim of exempt income under the head “long- term capital gain”. Thus according to the ld. counsel, there was no jurisdiction with the ld. Assessing Officer on new item of income in view of these decisions of the Hon’ble High Courts and, therefore, his order cannot be termed as erroneous by the ld. Principal CIT. ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 16 13. It was also submitted before us that under the garb of revising the reassessment order, ld. Principal CIT is finding fault in the original order dated 28.12.2016. The ld. CIT(DR) was of the view that original order passed under section 153A/143(3) would merge in the reassessment order. 14. On the other hand, it was contended by the ld. counsel for the assessee that Hon’ble Supreme Court has considered this aspect in the case of CIT –vs.- Alagendrn Finance Limited reported in 293 ITR 1. 15. In this judgment of the Hon’ble Supreme Court, the facts are that the assessee-company was incorporated under the Indian Companies Act, 1956. It had filed its returns for A.Y. 1994-95 to 1996-97. The assessments for these three years were completed on 27.02.1997, 12.05.1997 and 30.03.1998 respectively. In the said orders of assessment, the assessee’s claim under the head “Lease Equalisation Fund” made in the return of income was accepted. Thereafter assessments were reopened and the re-assessment orders were passed on 28.03.2002. Under the re-assessments, three issues were examined:- (i) the expenses claimed for share issue; (ii) bad and doubtful debts; (iii) excess depreciation on gas cylinders and goods containers. 16. Ld. Commissioner thereafter sought to revise the assessment order. The stand of the assessee was that this action under section 263 is time- barred because the action sought to be taken is from the time limit of the re-assessment order. The revisionary order under section 263 of the Act was passed on 29.03.2004. This was passed on an issue of lease equalisation fund. The stand of the assessee was that this issue attained finality in the original assessment order, which attained finality upto 30.03.1998 and any action under section 263 on 29.03.2004 is barred by limitation. In this factual background, Hon’ble Supreme Court has ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 17 examined this issue and the observations made in paragraphs no. 7, 10 and 15 of the judgment are worth to note, which read as under:- “7. A bare perusal of the order passed by the Commissioner of income Tax would clearly demonstrate that only that part of order of assessment which related to lease equalisation fund was found to be prejudicial to the interest of the Revenue. The proceedings for reassessment have nothing to do with the said head of income. Doctrine of merger, therefore, would not apply in a case of this nature”. “10. There may not be any doubt or dispute that once an order of assessment is reopened, the previous underassessment will be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject matter of reassessment is distinct and different, the entire proceeding of assessment would be deemed to have been reopened”. “15. We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income Tax exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalization fund which being not the subject of the reassessment proceedings, the period of limitation provided for under sub-section (2) of section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revisional jurisdiction having, thus, been invoked by the Commissioner of Income Tax beyond the period of limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity”. 17. The Hon’ble Supreme Court was of the view that an item of income or head of income which has attained finality in the regular assessment order and which is not subject matter of reassessment order, then limitation for taking action on that item which is not subject matter of reassessment would be counted from the original assessment order. In ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 18 other words, those issues, which are not subject matter of the reassessment, would not merge in the reassessment order. 18. On due consideration of the above facts, we find that the assessment was reopened for an issue whether credit entries available in the Bank account of the assessee against the name of the concerns mentioned in the reasons is to be added or not. The assessee has explained that she does not have any credit entry against the names of these companies and, therefore, no addition can be made on the basis of her reply. No addition was made. If no addition was made in a reassessment order on the issue for which it was reopened, then any other addition could not be made. This has been propounded unanimously by three Hon’ble High Courts, i.e. Hon’ble Bombay, Delhi and Gujarat. The Hon’ble High Courts were construing the expression “and also” implied in section 147 to mean that any other income could be added if addition is being made on the item for which assessment was reopened. Therefore, an error under section 263 could be pointed out in the reassessment order on the issue on which it was reopened. If ld. Commissioner was of the view that once the assessment order was reopened then ld. Assessing Officer was required, not only to examine the item for which it was reopened, but any item which exhibits escapement of income and since ld. Assessing Officer failed to examine the other item which in the opinion of ld. Commissioner as escaped income and, therefore, he termed the reassessment order as erroneous is patently contrary to the decision of the Hon’ble three High Courts. Thus the reassessment order cannot be termed erroneous for not examination of other issues than the one it was reopened. As far as original assessment order is concerned, i.e. the order dated 28.12.2016 passed under section 153A/143(3), the action under section 263 is time barred in view of the Hon’ble Supreme Court decision in the case of CIT – vs.- Alagendra Finance Limited reported in 293 ITR page 1. ITA No. 12/PAT/2022 A.Y. 2012-2013 Pushpa Singh, Patna 19 19. In view of the above, we are of the view that the impugned order is not sustainable. It is quashed. 20. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 16/06/2022. Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kol k a ta, the 1 6 t h day of J un e , 2 02 2 Copies to : (1) P u s h p a S i n g h , P a n c h w a t i N e p a l K o t h i , B o r i n g R o a d , P a t n a - 8 0 0 0 0 1 , B i h a r ( 2 ) P r i n c i p a l C o m m i s s i o n e r o f I n c o m e T a x ( C e n t r a l) , C e n t r a l R e v e n u e B u i l d i n g , B i r c h a n d P a t e l M a r g , P a t n a - 8 0 0 0 0 1 , B i h a r (3) Commissioner of Income Tax, Kolkata, (4) The Departmental Representative (5) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.