M/s Mahakali Developers & Resorts (P) Ltd, Patiala V. Pr. CIT, Patiala

ITA 1324/CHANDI/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5085 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 05-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANU MALIK
• Keywords: Revision of order; Opportunity of being heard
• Section: 142(1); 147; 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHB, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.1324/CHD/2017 ASSESSMENT YEAR: 2013-14 M/S MAHAKALI DEVELOPERS & VS. PR. CIT RESORTS(P) LTD. , SCO-50 AAYKAR BHAWAN 1 ST FLOOR, LEELA BHAWAN COMPLEX PATIALA PATIALA-147001 PAN NO. AABCM6353Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ASHOK GOYAL REVENUE BY : SH. MANU MALIK DATE OF HEARING : 21/03/2018 DATE OF PRONOUNCEMENT : 27/03/2018 ORDER PER B.R.R. KUMAR A.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. PR. CIT, PATIALA DT. 20/07/2017. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. THAT LEARNED CIT HAS ERRED IN SETTING ASIDE ORDER O F AO U/S 263 OF THE IT ACT THAT, AO FAILED TO VERIFY/EXAMINE/INVESTIGATE THE G ENUINENESS OF THE UNSECURED LOANS WHEN ADEQUATE ENQUIRIES WERE MADE & ON THAT B ASIS GENUINENESS WAS ACCEPTED. 2. THAT LEARNED CIT HAS ERRED IN SETTING ASIDE ORDER O F AO U/S 263 OF THE IT ACT ON THE GROUND THAT AO DID NOT BOTHER TO MAKE INDEPENDE NT ENQUIRES AS PER PROVISION OF INCOME TAX WITH REGARD TO THE GENUINEN ESS OF THE INVESTMENT WHEN THE SAME WAS VERIFIED & ENQUIRED TO THE SATISFACTIO N OF AO AS PER LAW. 3. THAT LEARNED CIT HAS ERRED IN SETTING ASIDE ORDER O F AO U/S 263 OF THE IT ACT THAT FACTS ARE COVERED BY EXPLANATION 2 TO SEC 263 OF THE IT ACT WHEN ORDER WAS PASSED AFTER ENQUIRES & NOT WITHOUT ENQUIRES AS CLE AR FROM THE PROCEEDINGS. HENCE IT IS PRAYED THAT ORDER PASSED U/S 263 OF THE IT ACT MAY BE DECLARED AS NULL & VOID. 3. THE FIRST ISSUE RELATES TO NON VERIFICATION OF U NSECURED LOANS BY THE ASSESSING OFFICER AS ALLEGED BY THE LD. PR. CIT. 2 4. THE LD. AR BROUGHT TO OUR ATTENTION THE NOTICE O F THE LD. PR. CIT DT. 19/06/2017 WHEREIN THE LD. PR. CIT ALLEGED THAT THE AMOUNTS RECEIVED OF RS. 30.00 LACS FROM M/S SHIVALI MAHAJAN AND RS. 2,50,00 0/- RECEIVED FROM SHRI. VINOD MAHAJAN HAVE NOT BEEN VERIFIED BY THE ASSESSING OFF ICER. 5. THE LD. AR HAS ALSO BROUGHT TO OUR ATTENTION THE NOTICE UNDER SECTION 142(1) ISSUED BY THE ASSESSING OFFICER. WHILE GOING THROUGH THE QUESTIONNAIRE, WE OBSERVE THAT WIDE QUESTION NO. 5 IN THE ANNEXURE-I TO THE NOTICE, THE ASSESSING OFFICER HAS CLEARLY SOUGHT THE DETAILS OF THE UNSE CURED LOANS IN A TABULAR FORM. THE DETAILS CALLED FOR ARE THE LOANS AS ON 31/04/20 12, AS ON 31/03/2013, LOANS SQUARED UP AND TAKEN DURING THE YEAR, INTEREST PAID , TDS DEDUCTED AND MODE OF TRANSACTION. WE ALSO FIND THAT THE ASSESSEE HAS FURNISHED THE RE QUIRED DETAILS OF ADVANCE RECEIVED, TDS DEDUCTED BEFORE THE ASSESSING OFFICER WHICH HAVE BEEN DULY EXAMINED. THE SAME COULD BE DECIPHERED FROM THE CON FIRMATION OF ACCOUNTS OF M/S SHIVALI MAHAJAN WHICH INCLUDES THE AMOUNT RECEI VED AND ALSO THE DETAILS OF THE INTEREST PAID AND THE TDS DEDUCTED. RELEVANT FA IR COPY OF THE BANK STATEMENT HAS ALSO BEEN SUBMITTED BY THE ASSESSEE B EFORE THE ASSESSING OFFICER. SIMILARLY, THE CONFIRMATION OF ACCOUNTS OF SHRI. VI NOD MAHAJAN AND THE DETAILS OF INTEREST PAID, TDS DEDUCTED ALONG WITH THE BANK STA TEMENT ARE FOUND TO BE AVAILABLE ON RECORD. THE LOANS HAVE BEEN DULY EXAMI NED AND RE-EXAMINATION OF THE SAME IN THE PROCEEDING UNDER SECTION 263 CANNO T BE JUSTIFIED. 6. THE SECOND ISSUE RELATES TO NON VERIFICATION OF GENUINENESS OF THE INVESTMENT UNDER THE HEAD BUILDINGS OFFICE SITE. THE LD. PR. CIT HELD THAT THE 3 ASSESSING OFFICER FAILED TO ENQUIRE / VERIFY / INVE STIGATE ABOUT THE COMPLETE DETAILS WITH REGARD TO GENUINENESS OF THE INVESTMEN T. 7. THE LD. AR BROUGHT TO OUR NOTICE QUESTION NO. 17 IN THE ANNEXURE-I TO THE NOTICE, WHICH MENTIONS FURNISH DETAILS AND BILLS A MOUNT EXCEEDING RS. 50,000/- IN RESPECT OF ADDITIONS TO FIXED ASSETS. FURTHER V IDE THE QUESTION NO. 22 THE ASSESSING OFFICER HAS SOUGHT THE DETAILS OF ADDITIO N MADE IN FIXED ASSETS I.E; OFFICE AT SITE AMOUNTING TO RS. 66,10,765/- IT WAS ALSO BROUGHT TO THE NOTICE THAT THE REPLIES GIVEN BY THE ASSESSEE VIDE THE POINT NO . 17 OF THE SUBMISSION MADE BY THE ASSESSEE WHICH READS DETAILS OF ADDITION T O FIXED ASSETS ALONGWITH THE COPIES OF THE BILLS ARE ENCLOSED AND ALSO VIDE POI NT NO. 22 ADDITION TO OFFICE SITE HAS BEEN INCLUDED IN DETAILS AT S.NO. 17 WAS MENTIONED WHICH GOES TO LEAD THAT THE DETAILS HAVE BEEN DULY FURNISHED BY THE AS SESSEE CONTRARY TO THE OBSERVATION OF THE LD. PR. CIT. 8. LD. DR RELIED ON THE ORDER OF THE LD. PR. CIT AN D ALSO JUDGMENT OF HONBLE SUPREME COURT IN THE CASE MALABAR INDUSTRIAL COMPAN Y LTD. VS. CIT REPORTED AT 243 ITR 83 (SC) AND CASE OF GEE VEE ENTERPRISES VS. ADDL. CIT & ORS 99 ITR 375 (DEL) THE HONBLE DELHI HIGH COURT HAVE HELD IN THA T NOT MAKING AN INQUIRY WARRANTED ON THE FACT OF A CASE WILL MAKE THE ASSES SMENT ORDER ERRONEOUS. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE MADRAS H IGH COURT IN THE CASE OF K.A. RAMSWAMY CHETTIAR & ANR VS. CIT 220 ITR 657 (M AD.). MOREOVER, THE FACTS OF THE CASE ARE SQUARELY COVERED BY EXPLANATION 2 OF SEC. 263, WHICH IS INSERTED W.E.F 01/06/2015. IT READS AS UNDER:- FOR THE PURPOSE OF THIS SECTION, IT IS HEREBY DECL ARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS I N SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER:- A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VER IFICATION WHICH SHOULD HAVE BEEN MADE; B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQ UIRING INTO THE CLAIM; 4 C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH AN Y DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISD ICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF ASSESSEE OR ANY OTHER PERSON. WE FIND THAT THIS NOT ACCEPTABLE AS THE ASSESSING O FFICER HAS MADE DUE ENQUIRIES WITH REGARD TO LOANS AS WELL AS FIXED ASSETS. 9. HONBLE HIGH COURT OF BOMBAY IN THE CASE OF COM MISSIONER OF INCOME- TAX VS GABRIEL INDIA LTD. (1993) 203 ITR 108 (BOM) HELD UNDER SIMILAR FACTS AND CIRCUMSTANCES THAT : 2 63. REVISION OF ORDERS PREJUDICIAL TO REVENUE. - (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 INCO ME- TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDI CIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTE R MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIR CUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLIN G THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) - (A) TO REVISE AN ORDER OF REASSESSMENT MADE UNDER SECTION 147 , OR (B) AFTER THE EXPIRY OF TWO YEARS FROM THE DATE OF THE ORDER SOUGHT TO BE REVISED. . . . 9. FROM A READING OF SUB-SECTION (1) OF SECTION 263 , IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION C AN BE EXERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINATI ON OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT , HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE I NCOME-TAX OFFICER IS 'ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. IT IS NOT AN ARBITRARY OR UNCHARTERED POWER. IT CAN BE EXERCISED ONLY ON FULFILMENT OF THE REQUIREMENTS LA ID DOWN IN SUB-SECTION (1). THE CONSIDERATION OF TH E COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF TH E REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD O F THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE N O MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VE RY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION . FROM THE ABOVE DISCUSSION IT IS HEREBY HELD THAT T HE DUE INQUIRIES HAVE BEEN CONDUCTED BY THE ASSESSING OFFICER AND HENCE THE OR DER OF THE LD. PR. CIT CANNOT BE UPHELD AS IT COULD NOT BE PROVED THAT THE ASSESSMEN T ORDER IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE IN THE GIVEN CIRCUMSTAN CES. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (B.R.R.KUM AR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27/03/2018 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR