Hansa Anil Bakeri, Ahmedabad V. The Pr. CIT, Ahmedabad-1, Ahmedabad

ITA 262/AHD/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4971 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-10-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 18-04-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEASSESSEEBEFOREUSFILEDPAPERBOOKRUNNINGFROMTO

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’D’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And MsMADHUMITAROY,JUDICIALMEMBER आयकरअपीलसं./ITANo.262/AHD/2023 धििाधरणवरध / Asstt.Year:2018-2019 HansaAnilBakeri, “Sanskrut”, 1 st Floor,OldHighCourtRoad, Navrangpura, Ahmedabad-380009. PAN:ACJPB0653P Vs. PrincipalCommissionerof Income-tax,Ahmedabad-1, Ahmedabad. (Applicant)(Respondent) Assesseeby:ShriDeepakShah,A.R Revenueby:Dr.DarsiSumanRatnam,CIT.D.R सुिवाईकीतारीख /DateofHearing:05/10/2023 घोरणाकीतारीख /DateofPronouncement:30/11/2023 आदेश /ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedPrincipalCommissionerofIncometax,Ahmedabad-1, arisinginthematterofassessmentorderpassedunders.263oftheIncomeTax Act,1961(here-in-afterreferredtoas"theAct")relevanttotheAssessmentYear 2018-2019. ITAno.262/AHD/2023 A.Y.2018-19 2 2.TheonlyissueraisedbytheassesseeisthatthelearnedPCITerredin holdingtheassessmentorderframedundersection143(3)oftheActas erroneousinsofarprejudicialtotheinterestsoftherevenue. 3.Thenecessaryfactsarethattheassesseeintheyearclaimedhuge amountsofdeductionunderchapterVI-AoftheAct.Accordingly,theassessee wasselectedforlimitedscrutinyforverificationofdeductionclaimedunder chapterVI-AoftheAct.TheAO,afterconsideringthesubmissionoftheassessee acceptedtheclaimoftheassesseeintheassessmentorderdated04-January- 2021. 4.ThelearnedPCITonperusalofassessmentrecordfoundthattheassessee hasgivendonationto“RastriyaSamajwadiParty”forRs.25Lakhsandclaimed thesameasdeductionundersection80GGoftheAct.Thebankaccountofthe assesseewascreditedforRs.25Lakhjustbeforethetransferringoftheamount asdonationtoimpugnedparty.ThelearnedPCITfurtherfoundthatthesearch proceedingswereconductedatthesaidpoliticalpartydated2 nd February2021 whereinitwasrevealedthatthepartywasinvolvedindonationscam.TheAO,at thetimeofassessmentfailedtoenquireandexaminethesourceofRs.25Lakh. AssuchtheAOfailedtomaketheproperverificationorthecrossverificationof theissueofdonationtothepoliticalparty. 4.1ThelearnedPCITwasoftheviewthattheorderpassedbytheAOwithout properinquiryisdeemedtobeerroneousinsofarprejudicialtotheinterestofthe RevenuedespitethefactthattheAOmayhavemadesomeinquiry.Thelearned PCITinthisregardreferredtheprovisionofexplanation2tosection263ofthe ActandfinallysetasidetheorderoftheAOaserroneousinsofarprejudicialtothe interestoftherevenuewithdirectionformakingthefreshassessmentrelatingto theissueofdonation. ITAno.262/AHD/2023 A.Y.2018-19 3 5.BeingaggrievedbytheorderofthelearnedPCIT,theassesseeisinappeal beforeus. 6.Thelearnedfortheassesseebeforeusfiledpaperbookrunningfrom1to 29andcontendedthatassesseewasselectedforscrutinytoverifythe genuinenessofdeductionclaimedunderchapterVI-AoftheAct.Duringthe assessmentproceedingstheclaimwasdulyexplained,andthenecessary supportingdocumentwasprovided.Assuchinrespectclaimofdeductionunder section80GGoftheActforRs.25Lakhsdonationreceipt,ledgercopy,bank statementandnotificationoftheelectioncommissionofIndiarecognizingthe impugnedpartyapoliticalpartywerefurnishedbeforetheAO.TheAO,after verificationofthesedocumentaryevidenceacceptedtheclaimoftheassessee. HencetheorderoftheAOcannotbeheldaserroneous. 7.Ontheotherhand,thelearnedDRvehementlysupportedtheorderofthe learnedPCIT. 8.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Theissueinthepresentcaserelateswhetherthe assessmentorderhasbeenpassedbyLd.AOwithoutmakinginquiriesor verificationwithrespecttothedonationtopoliticalpartyclaimedasdeduction undersection80GGoftheActasdiscussedaboveandhencetheassessmentis erroneousinsofarprejudicialtotheinterestoftheRevenueandthusrequiring revisionbyPr.CITu/s263oftheAct. 8.1AninquirymadebytheAssessingOfficer,consideredinadequatebythe CommissionerofIncomeTax,cannotmaketheorderoftheAssessingOfficer erroneous.Inourview,theordercanbeerroneousiftheAssessingOfficerfailsto applythelawrightlyonthefactsofthecase.Asfarasadequacyofinquiryis considered,thereisnolawwhichprovidestheextentofinquiriestobemadeby ITAno.262/AHD/2023 A.Y.2018-19 4 theAssessingOfficer.ItisAssessingOfficer’sprerogativetomakeinquirytothe extenthefeelsproper.TheCommissionerofIncomeTaxbyinvokingrevisionary powersundersection263oftheActcannotimposehisownunderstandingofthe extentofinquiry.TherewerenumberofjudgmentsbyvariousHon’bleHigh Courtsinthisregard. 8.2DelhiHighCourtinthecaseofCITVs.SunbeamAuto332ITR167 (Del.),madeadistinctionbetweenlackofinquiryandinadequateinquiry.The Hon’blecourtheldthatwheretheAOhasmadeinquirypriortothecompletionof assessment,thesamecannotbesetasideu/s263oftheActonthegroundof inadequateinquiry.TherelevantobservationofHon’bleDelhiHighCourtreadsas under: “12......TherearejudgmentsgalorelayingdowntheprinciplethattheAssessing Officerintheassessmentorderisnotrequiredtogivedetailedreasoninrespectof eachandeveryitemofdeduction,etc.Therefore,onehastoseefromtherecordasto whethertherewasapplicationofmindbeforeallowingtheexpenditureinquestionas revenueexpenditure.Learnedcounselfortheassesseeisrightinhissubmissionthat onehastokeepinmindthedistinctionbetween“lackofinquiry”and“inadequate inquiry”.Iftherewasanyinquiry,eveninadequate,thatwouldnotbyitself,give occasiontotheCommissionertopassordersundersection263oftheAct,merely becausehehasdifferentopinioninthematter.Itisonlyincasesof“lackofinquiry”, thatsuchacourseofactionwouldbeopen.——— Fromtheaforesaiddefinitionsitisclearthatanordercannotbetermedaserroneous unlessitisnotinaccordancewithlaw.IfanIncome-taxOfficeractinginaccordance withlawmakesacertainassessment,thesamecannotbebrandedaserroneousbythe Commissionersimplybecause,accordingtohim,theordershouldhavebeenwritten moreelaborately.Thissectiondoesnotvisualiseacaseofsubstitutionofthejudgment oftheCommissionerforthatoftheIncome-taxOfficer,whopassedtheorderunless thedecisionisheldtobeerroneous.CasesmaybevisualisedwheretheIncome-tax Officerwhilemakinganassessmentexaminestheaccounts,makesenquiries,applies hismindtothefactsandcircumstancesofthecaseanddeterminestheincomeeither byacceptingtheaccountsorbymakingsomeestimatehimself.TheCommissioner, onperusaloftherecords,maybeoftheopinionthattheestimatemadeby theofficerconcernedwasonthelowersideandlefttotheCommissionerhe wouldhaveestimatedtheincomeatafigurehigherthantheonedetermined bytheIncome-taxOfficer.ThatwouldnotvesttheCommissionerwithpower tore-examinetheaccountsanddeterminetheincomehimselfatahigher figure.ItisbecausetheIncome-taxOfficerhasexercisedthequasi-judicialpower vestedinhiminaccordancewithlawandarrivedatconclusionandsuchaconclusion cannotbetermedtobeerroneoussimplybecausetheCommissionerdoesnotfeel satisfiedwiththeconclusion.Theremustbesomeprimafaciematerialonrecordto showthattaxwhichwaslawfullyexigiblehasnotbeenimposedorthatbythe applicationoftherelevantstatuteonanincorrectorincompleteinterpretationalesser taxthanwhatwasjusthasbeenimposed. ITAno.262/AHD/2023 A.Y.2018-19 5 15.Thus,eventheCommissionerconcededthepositionthattheAssessing Officermadetheinquiries,elicitedrepliesandthereafterpassedthe assessmentorder.ThegrievanceoftheCommissionerwasthattheAssessing Officershouldhavemadefurtherinquiresratherthanacceptingthe explanation.Therefore,itcannotbesaidthatitisacaseof‘lackofinquiry’.” 8.3TheHon’bleBombayHighCourtincaseofGabrielIndiaLtd.[1993] 203ITR108(Bom),discussedthelawonthisaspectinlengthinthefollowing manner: “TheconsiderationoftheCommissionerastowhetheranorderiserroneousinsofar asitisprejudicialtotheinterestsoftheRevenue,mustbebasedonmaterialsonthe recordoftheproceedingscalledforbyhim.Iftherearenomaterialsonrecordonthe basisofwhichitcanbesaidthattheCommissioneractinginareasonablemanner couldhavecometosuchaconclusion,theveryinitiationofproceedingsbyhimwillbe illegalandwithoutjurisdiction.TheCommissionercannotinitiateproceedings withaviewtostartingfishingandrovingenquiriesinmattersororders whicharealreadyconcluded.Suchactionwillbeagainstthewell-accepted policyoflawthattheremustbeapointoffinalityinalllegalproceedings, thatstaleissuesshouldnotbereactivatedbeyondaparticularstageandthat lapseoftimemustinducereposeinandsetatrestjudicialandquasi-judicial controversiesasitmustinotherspheresofhumanactivity. 8.4TheMumbaiITATinthecaseofSh.NarayanTatuRaneVs.ITO,I.T.A. No.2690/2691/Mum/2016,dt.06.05.2016examinedthescopeofenquiry underExplanation2(a)tosection263inthefollowingwords:- “20.Furtherclause(a)ofExplanationstatesthatanordershallbedeemedtobe erroneous,ifithasbeenpassedwithoutmakingenquiriesorverification,whichshould havebeenmade.Inourconsideredview,thisprovisonshallapply,iftheorderhasbeen passedwithoutmakingenquiriesorverificationwhichareasonableandprudentofficer shallhavecarriedoutinsuchcases,whichmeansthattheopinionformedbyLdPr.CIT cannotbetakenasfinalone,withoutscrutinisingthenatureofenquiryorverification carriedoutbytheAOvis-à-visitsreasonablenessinthefactsandcircumstancesofthe case.Hence,inourconsideredview,whatisrelevantforclause(a)of Explanation2tosec.263iswhethertheAOhaspassedtheorderaftercarrying ourenquiriesorverification,whichareasonableandprudentofficerwouldhave carriedoutornot.ItdoesnotauthoriseorgiveunfetteredpowerstotheLdPr. CITtoreviseeachandeveryorder,ifinhisopinion,thesamehasbeenpassed withoutmakingenquiriesorverificationwhichshouldhavebeenmade.Inour view,itistheresponsibilityoftheLdPr.CITtoshowthattheenquiriesor verificationconductedbytheAOwasnotinaccordancewiththeenquriesor verificationthatwouldhavebeencarriedoutbyaprudentofficer.Hence,inour view,thequestionastowhethertheamendmentbroughtinbywayofExplanation2(a) shallhaveretrospectiveorprospectiveapplicationshallnotberelevant.” ITAno.262/AHD/2023 A.Y.2018-19 6 8.5TheHon’bleSupremeCourtinrecentcaseofPrincipalCommissionerof Income-tax2v.ShreeGayatriAssociates*[2019]106taxmann.com31 (SC),heldthatwherePr.CITpassedarevisedorderaftermakingadditionto assessee'sincomeundersection69Ainrespectofon-moneyreceipts,however, saidorderwassetasidebyTribunalholdingthatAOhadmadedetailedenquiries inrespectofsuchon-moneyreceiptsandsaidviewwasalsoconfirmedbyHigh Court,SLPfiledagainstdecisionofHighCourtwasliabletobedismissed.The factsofthiscasewerethatpursuanttosearchproceedings,assesseefiledits returndeclaringcertainunaccountedincome.TheAssessingOfficercompleted assessmentbymakingadditionofsaidamounttoassessee'sincome.ThePrincipal Commissionerpassedarevisedorderundersection263oftheActongroundthat AssessingOfficerhadfailedtocarryoutproperinquirieswithrespecttoassessee's onmoneyreceipt.Inappeal,theTribunaltookaviewthatAssessingOfficerhad carriedoutdetailedinquirieswhichincludedassessee'son-moneytransactionsand Tribunal,thus,setasidetherevisedorderpassedbyCommissioner.TheHon’ble HighCourtupheldTribunal'sorder.TheHon’bleSupremeCourtwhiledismissing theSLPfiledbytheDepartmentheldasunder:- “WehaveheardlearnedcounselfortheRevenueandperusedthedocumentsonrecord. Inparticular,theTribunalhasintheimpugnedjudgmentreferredtothedetailed correspondencebetweenAssessingOfficerandtheassesseeduringthecourseof assessmentproceedingstocometoaconclusionthattheAssessingOfficerhadcarried outdetailedinquirieswhichincludesassessee'son-moneytransactions.Itwason accountofthesefindingsthattheTribunalwaspromptedtoreversetheorderof revision.Noquestionoflawarises.TaxAppealisdismissed” 8.6TheSupremeCourtintheanotherrecentcaseofPrincipal CommissionerofIncome-tax-2,Meerutv.CanaraBankSecurities Ltd[2020]114taxmann.com545(SC),dismissedtheRevenue’sSLPholding that263proceedingsareinvalidwhenAOhadmadeenquiriesandtakena plausibleviewinlaw,withthefollowingobservations: “Havingheardlearnedcounselforthepartiesandhavingperusedthedocumentson record,weseenoreasontointerferewiththeviewoftheTribunal.Thequestion whethertheincomeshouldbetaxedasbusinessincomeorasarisingfromtheother sourcewasadebatableissue.TheAssessingOfficerhastakenaplausibleview.More importantly,iftheCommissionerwasoftheopinionthatontheavailablefactsfrom recorditcouldbeconclusivelyheldthatincomearosefromothersources,hecouldand oughttohavesoheldintheorderofrevision.Therewassimplynonecessitytoremand ITAno.262/AHD/2023 A.Y.2018-19 7 theproceedingstotheAssessingOfficerwhennofurtherinquirieswerecalledforor directed” 8.7Fromananalysisoftheabovejudicialprecedents,theprinciplewhich emergesisthatthephrase'prejudicialtotheinterestsoftherevenue'hastobe readinconjunctionwithanerroneousorderpassedbytheAssessingOfficer. EverylossofrevenueasaconsequenceofanorderoftheAssessingOfficer cannotbetreatedasprejudicialtotheinterestsoftherevenue,forexample,when anAssessingOfficeradoptsoneofthecoursepermissibleinlawandithas resultedinlossofrevenue;orwheretwoviewsarepossibleandtheAssessing OfficerhastakenoneviewwithwhichtheCommissionerofIncome-taxdoesnot agree,itcannotbetreatedasanerroneousordercausingprejudicetothe interestsoftheRevenueunlesstheviewtakenbytheAssessingOfficeris unsustainableinlaw,ortheAOhascompletelyomittedtomakeanyenquiry altogetherortheorderdemonstratesnon-applicationofmind. 8.8Nowinthefactsbeforeus,inthecaseoftheassesseetheAOduringthe courseofassessmentproceedings,madeenquiriesonissueofdeductionclaimed underchapterVI-AoftheActafterconsiderationofwrittensubmissionsand supportingdocumentfiledbytheassesseeplacedonrecord,andthenframedthe assessmentundersection143(3)acceptingthegenuinenessofsuchclaimof deduction.Thisfactcanbeverifiedfromthenoticeundersection142(2)ofthe ActbytheAOandsubmissioninreplyoftheassesseeagainstsuchnotice. i.Replydated07-01-2020 1.InmyincometaxreturnIhaveclaimedfollowingdeductionunderchapterVI-A Under Section Amount 80C1,50,000/- 80D21,438/- 80GGC25,00,000/- 80TTA9,086/- ITAno.262/AHD/2023 A.Y.2018-19 8 8.9DuringtheyearIhavedepositedRs.1,50,000/-inmyPublicProvident FundandhasclaimedexemptionU/s80C.ForyourverificationcopyofmyPPF Passbookisenclosedherewith. 8.10DuringtheyearIhavepaidmediclaimpremiumtoTheNewIndia AssuranceCo.Ltd.oRs.22,998/-andhasclaimeddeductionU/s80D.Foryour verificationcopyofmybanstatementisenclosedherewithinwhichitshowsdebit ofRs.22,998/.on22^rSeptember,2017 8.11DuringtheyearIhavedonatedRs.25,00,000/-topoliticalpartyRashtriya SamajwapartyandhasclaimeddeductionU/s80GGC.Foryourverificationcopy ofdonatireceipt,Donationledgeraccountfrommybooksandbankstatementis enclosedherewinwhichitshowsdebitofRs.25,00,000/-6thOctober,2017 8.12FromtheaboveitisrevealeditisnotthecasethattheAOhasnotmade anyenquiry.IndeedthePr.CITinitiatedproceedingsundersection263oftheAct onthegroundthattheAOhasnotmadeenquiriesorverificationwhichshould havebeenmadeinrespectofdonationtothepoliticalparty.Itisnotthecaseof thePr.CITthattheLd.AOdidnotapplyhismindtotheissueonhandorhehad omittedtomakeenquiriesaltogether.Intheinstantsetoffacts,theAOhadmade enquiriesandafterconsiderationofmaterialplacedonrecordacceptedthe genuinenessoftheclaimoftheassessee. 8.13Atthisjuncture,itisalsoimportanttonotethatthelearnedPCITreferred thesearchproceedingcarriedoutatthepremisesofthepoliticalpartywhereit wasdiscoveredthatsaidpartyinvolvedindonationscam.However,wenotethat thesearchproceedingwascarriedoutason2 nd February2021whereasthe assessmentorderincaseoftheassesseewaspassedason4 th January2021i.e. beforethesearchproceeding.Therefore,inthegivenfactsitwasnotpossiblefor theAOtoconsiderthefindingofsearch.Thefactofthepartybeinginvolvedin ITAno.262/AHD/2023 A.Y.2018-19 9 anyscamwasnotbeforetheAO.Hence,theformedhisopinionbasedonthe materialavailablebeforehimwhichinourconsideredopinioncannotbesaidas erroneousinsofarprejudicialtotheinterestoftherevenue. 8.14Inviewoftheaboveandafterconsideringthefactsintotality,weholdthat thereisnoerrorintheassessmentframedbytheAOundersection143(3) causingprejudicetotheinterestofrevenue.Thus,therevisionalorderpassedby thelearnedPCITisnotsustainableandthereforewequashthesame.Hencethe groundofappealoftheassesseeisallowed. 9.Intheresult,theappealfiledbytheassesseeisallowed. OrderpronouncedintheCourton30/11/2023atAhmedabad. Sd/-Sd/- (MADHUMITAROY)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated30/11/2023 Manish