M/s Prosperous Buildcon Pvt. Ltd., New Delhi V. Pr.CIT, New Delhi

ITA 2648/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3583 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 12-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMITA TRIPATHY
• Assessee Lawyers: AJAY VOHRA SR ADV GAURAV JAIN
• Keywords: Principle of natural justice; Reason to believe; Reassessment proceedings
• Section: 40A(3); 147; 148; 6; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2648/DEL/2016 ASSES SMENT YEAR : 2006-07 PROSPEROUS BUILDCON PVT. LTD., VS PR. CIT, 17-B, MGF HOUSE, DELHI-7, ASAF ALI ROAD, NEW DELHI. NEW DELHI. (PAN: AADCP4389H) (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI AJAY VOHRA, SR. ADV., GAURAV JAIN, ADV. RESPONDENT BY : SMT. PRAMITA TRIPATHY, CIT DR O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST ORDER DATED 01/03/2016 PASSED UNDER SECTION 263 OF THE INCOME T AX ACT, 1961 (HEREINAFTER CALLED THE ACT) PASSED BY THE LD. PRINCIPAL COMMI SSIONER OF INCOME TAX 7, NEW DELHI FOR ASSESSMENT YEAR 2006 07. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS ORIGINALLY FILED ON 30/11/2006 DECLARING INCOME AT NIL. THE RE TURN WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT ON 06/09/2007. SUBSEQUEN TLY, THE AO, AFTER RECORDING THE REASONS AND TAKING THE NECESSARY APPROVAL, ISSU ED NOTICE UNDER SECTION 148 I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 2 OF THE ACT ON 26/03/2013. THE REASSESSMENT PROCEEDI NGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATIO N WING ABOUT HUGE CASH DRAWINGS AND DEPOSITS IN THE BANK ACCOUNTS OF THE A SSESSEE. THIS INFORMATION WAS RECEIVED CONSEQUENT TO SEARCH CONDUCTED UPON EM AAR MGF GROUP OF COMPANIES. THE REASSESSMENT PROCEEDINGS WERE COMPLE TED UNDER SECTION 147 READ WITH SECTION 143 (3) OF THE ACT ON 18 TH OF MARCH 2014 WHEREIN NO ADDITIONS/DISALLOWANCES WERE MADE AND THE REASSESSM ENT WAS COMPLETED AT NIL INCOME. 2.1 SUBSEQUENTLY, THE LD. PR. COMMISSIONER OF INCOM E TAX ISSUED SHOW CAUSE NOTICE UNDER SECTION 263 OF THE INCOME TAX AC T ON 06/01/2016 ON THE GROUND THAT DURING THE COURSE OF REASSESSMENT PROCE EDINGS, THE ASSESSEE COMPANY HAD ADMITTED TO THE FACT THAT HUGE CASH DRA WINGS TO THE TUNE OF RS. 35.70 CRORES WAS MADE FOR THE PURPOSE OF PURCHASE O F LAND BY THE ASSESSEE COMPANY. THE LD. PR. CIT FURTHER NOTED THAT NO ADVE RSE VIEW WAS TAKEN BY THE AO IN THE REASSESSMENT PROCEEDINGS VIS-A-VIS SECTIO N 40A(3) OF THE ACT. THE LD. PR. CIT RECORDED THAT THE FACT THAT CASH PAYMENTS W ERE MADE WAS UNCONTROVERTED BUT NO DISALLOWANCE WAS MADE BY THE AO UNDER SECTION 40A(3) OF THE ACT AND, THEREFORE, THE ORDER OF THE AO WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE REL EVANT PORTION OF THE SHOW CAUSE NOTICE READS AS UNDER FROM THE REASONS RECORDED FOR REOPENING OF ASSESSM ENT AND ALSO FROM THE DETAILS ON RECORD, IT IS NOTICED THAT AN AMOUNT OF RS. 35.70 C RORES WAS WITHDRAWN BY THE ASSESSEE I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 3 IN CASH FROM ITS BANK ACCOUNT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED THAT THE CASH WITHDRAWAL WAS UTILISED FOR PURCHASE OF LAND, WHICH WAS SHOWN IN THE CLOSING STOCK OF THE COMPANY. THUS, IT IS SE EN THAT THE ASSESSEE ITSELF HAS TREATED THE LAND AS PART OF INVENTORY AND DEBITED THE SAME IN THE PROFIT AND LOSS ACCOUNT. THE CASH UTILISED FOR THE PURPOSE OF PURCHASE OF INVENT ORY IS DIRECTLY HIT BY THE PROVISIONS OF SECTION 40A (3) OF THE INCOME TAX ACT. NON-APPLICAT ION OF THE PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT RENDERS THE ASSESSMENT ORDER ERRONEOUS IN AS MUCH AS IT MAKES THE SAME PREJUDICIAL TO THE INTEREST OF THE R EVENUE AND THEREFORE THE SAME SEEMS AMENDABLE TO REVISION IN TERMS OF THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT. 2.2 IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSES SEE SUBMITTED THAT THE PROVISIONS OF SECTION 40A (3) WERE NOT APPLICABLE I N THE INSTANT CASE AS NO EXPENDITURE HAD BEEN CLAIMED BY THE ASSESSEE. THE A SSESSEE ALSO SUBMITTED THAT WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAD TAKEN O NE POSSIBLE VIEW WITH WHICH THE LD. PR. CIT DOES NOT AGREE, THE SAME CANN OT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF REV ENUE. 2.3 HOWEVER THE LD. PR. COMMISSIONER OF INCOME TAX WAS OF THE VIEW THAT IT WAS WRONG ON THE PART OF THE ASSESSEE TO CONTEND TH AT PURCHASE WAS NOT EXPENDITURE AND NO EXPENDITURE HAD BEEN CLAIMED BY THE ASSESSEE. THE LD. PR. CIT FURTHER NOTED THAT PURCHASE WAS DEFINITELY EXPE NDITURE AS SALES WAS AN ITEM OF INCOME. THE LD. PR. CIT ALSO NOTED THAT THE EXPENDITURE ON ACCOUNT OF PURCHASE OF LAND GETS SET OFF AGAINST INCOME ARISIN G FROM SALE OF LAND AND BECAUSE THERE WAS NO SALE IN THE RELEVANT YEAR, THE ENTIRE VALUE OF PURCHASE AT THE END OF THE YEAR WAS REFLECTED AS CLOSING STOCK OF INVENTORY. THE LD. PR. CIT FURTHER NOTED THAT IF THIS CONTENTION OF THE ASSESS EE WAS ACCEPTED, ALL THE REAL ESTATE COMPANIES WOULD PURCHASE LAND IN CASH AND ES CAPE FROM THE RIGOURS OF I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 4 SECTION 40A(3) OF THE ACT. THEREAFTER, THE LD. PR. CIT HELD THAT THE REASSESSMENT ORDER PASSED BY THE AO UNDER SECTION 147/143(3) WAS ERRONEOUS INSOFAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND THE LD. PR. CIT DIRECTED THE AO TO PASS AN APPROPRIATE ORDER AFTER MAKING THE FR ESH ASSESSMENT WHEREIN AN ADDITION OF RS. 35.70 CRORES WAS MADE. 2.4 AGGRIEVED, THE ASSESSEE HAS NOW APPROACHED THE ITAT AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL 1. THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX, D ELHI - 7, NEW DELHI (HEREINAFTER REFERRED TO AS 'LEARNED CIT') HAS ERRE D ON THE FACT AND CIRCUMSTANCES OF CASE AND LAW BY SETTING ASIDE THE REASSESSMENT P ROCEEDINGS COMPLETED U/S 147 OF THE ACT. APPELLANT CONTENDS THAT THE INITIATION OF PROCEEDI NGS U/S 263 OFTHE ACT (DATED 01.03.2016) IS ILLEGAL, BAD IN LAW AND VOID AB INIT IO AND IS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. GROUND NO. 2: THE LEARNED CIT HAS FAILED TO APPRECIATE THAT NEITH ER THE REASSESSMENT ORDER COULD BE REGARDED AS ERRONEOUS IN LAW NOR COULD BE SAID T O BE PREJUDICIAL TO THE INTEREST OF REVENUE. SINCE THE ORDER OF THE LEARNED CIT IS BAD IN LAW, T HE APPELLANT CONTENDS THAT YOUR HONOR MAY GRANT A STAY AGAINST THE ORDER U/S 263 AN D THE CONSEQUENTIAL PROCEEDINGS TILL THE DISPOSAL OF PRESENT APPEAL. GROUND NO. 3: THE LEARNED CIT HAS FAILED TO APPRECIATE THAT BEFOR E MAKING THE IMPUGNED ORDER U/S 263 OF THE ACT, VALID AND PROPER OPPORTUNITY WA S NOT PROVIDED TO THE APPELLANT AND AS SUCH, NO VALID ORDER COULD HAVE BEEN MADE. T HE OPPORTUNITY PROVIDED WAS HIGHLY ILLUSORY AND COULD NOT BE REGARDED AS VALID AND PROPER. I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 5 GROUND NO. 4: THE LEARNED CIT HAS COMPLETELY BRUSHED ASIDE THE RE PLY FURNISHED BY THE APPELLANT AND HAS CANCELLED THE ORDER U/S 147 OF THE ACT, WHI CH IS NOT SUSTAINABLE IN LAW. GROUND NO. 5: THE LEARNED CIT ERRED ON THE FACT AND CIRCUMSTANCES OF CASE AND LAW IN RECONSIDERING THE MATTER WHICH HAS BEEN ALREADY DIS CUSSED AND SCRUTINIZED AT STRETCH BY THE ASSESSING OFFICER IN THE COURSE OF R EASSESSMENT ORDER U/S 147 OF THE ACT. GROUND NO. 6: THE LEARNED CIT HAS NOT CONSIDERED THE RELEVANT CON DITION FOR INITIATION OF PROCEEDINGS U/S 263 OF THE ACT. THE APPELLANT CONTENDS THAT SINCE THE ASSESSING OFF ICER HAS COMPLETELY VERIFIED THE FACTS IN THE REASSESSMENT ORDER U/S 147 OF THE ACT. THE SAID ORDER CANNOT BE HELD AS ERRONEOUS AND THE SAME CANNOT BE CONSIDERED U/S 263 OF THE ACT. GROUND NO. 7: THE LEARNED CIT HAS ERRED ON FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW BY DIRECTING THE ASSESSING OFFICER TO PASS AN APPROPRI ATE ORDER WHEREIN AN ADDITION OF RS. 35.70 CRORES ON ACCOUNT OF DISALLOWANCE U/S 40A (3) OF THE ACT IS DIRECTED. GROUND NO. 8 : THE LEARNED CIT HAS GROSSLY ERRED IN THE INTERPRETA TION OF SECTION 40A(3) OF THE ACT WHEREIN DISALLOWANCE IS PROPOSED FOR ANY CASH E XPENDITURE OF ABOVE RS. 20,000. APPELLANT CONTENDS THAT THE PROVISIONS OF SECTION 4 0A(3) CAN BE IMPOSED ONLY IF AN ASSESSEE HAS CLAIMED DEDUCTION FOR AN EXPENDITURE. SINCE THE APPELLANT HAS NOT CLAIMED ANY DEDUCTION FOR LAND PURCHASED DURING THE YEAR, THE QUESTION OF DISALLOWANCE SHALL NOT ARISE. 3. THE LD. SR. ADVOCATE SUBMITTED THAT THE ONLY ISS UE INVOLVED IN THIS APPEAL WAS WHETHER THE LD. PR. CIT WAS JUSTIFIED IN MAKING AN ORDER UNDER I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 6 SECTION 263 OF THE ACT AND DIRECTING THE AO TO DISA LLOW THE ALLEGED EXPENDITURE OF RS. 35.70 CRORES UNDER SECTION 40A(3) OF THE ACT AND TO DETERMINE THE INCOME ACCORDINGLY. IT WAS SUBMITTED THAT THE IMPUGNED ACT ION WAS CONTRARY TO THE FACTS OF THE CASE AS THE AMOUNT OF RS. 35.70 CRORES REPRESENTED PAYMENTS MADE FOR PURCHASE OF LAND BUT NO DEDUCTION FOR SUCH EXPE NDITURE WAS CLAIMED DURING THE YEAR. THE LD. SENIOR ADVOCATE FURTHER SUBMITTED THAT THE LD. PR. CIT HAD DISREGARDED THE FACT THAT THE DISALLOWANCE UNDER SE CTION 40A (3) OF THE ACT COULD BE MADE ONLY IF SUCH EXPENSES WERE CLAIMED AS A DEDUCTION IN THE YEAR UNDER CONSIDERATION. THE LD. SR. ADVOCATE FURTHER S UBMITTED THAT THE AO HAD COMPLETELY VERIFIED THE FACTS IN THE REASSESSMENT P ROCEEDINGS AND, THEREFORE, THE SAID ORDER CANNOT BE HELD AS ERRONEOUS. THE LD. SR. ADVOCATE REITERATED THE FACT THAT THE PROVISIONS OF SECTION 40A(3) COULD BE INVO KED ONLY IF THE ASSESSEE HAD CLAIMED DEDUCTION IN RESPECT OF AN EXPENDITURE AND SINCE THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION FOR THE LAND PURCHASED DURING THE YEAR, THE QUESTION OF DISALLOWANCE COULD NOT ARISE. 3.1 THE LD. SR. ADVOCATE PLACED RELIANCE ON THE JUD GMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIE S LTD VERSUS CIT REPORTED IN 336 ITR 136 (DELHI) FOR THE PROPOSITION THAT EXP LANATION 3 TO SECTION 147 WAS NOT APPLICABLE WHERE NO DISALLOWANCE HAD BEEN MADE IN THE REASSESSMENT ORDER ON THE ISSUE RAISED IN THE REASONS RECORDED. THE LD . SR. ADVOCATE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 7 VERSUS SOFTWARE CONSULTANTS REPORTED IN 341 ITR 240 (DELHI ) FOR THE PROPOSITION THAT JURISDICTION UNDER SECTION 263 CANNOT BE EXERC ISED QUA ISSUES WHICH WERE BEYOND THE SCOPE OF JURISDICTION OF THE AO WHILE PA SSING THE ORDERS SOUGHT TO BE REVISED. IT WAS PRAYED THAT THE ORDER PASSED UND ER SECTION 263 BE QUASHED. 4. IN RESPONSE, THE LD. CIT DR READ OUT EXTENSIVELY FROM THE ORDER PASSED UNDER SECTION 263 OF THE ACT AND SUBMITTED THAT THE REVISION BY THE LD. PR. CIT WAS JUSTIFIED IN LAW. SHE SUBMITTED THAT ALTHOUGH T HE ASSESSEE HAD NOT CLAIMED PURCHASES AS EXPENDITURE IN THE YEAR UNDER CONSIDER ATION, THE SAME WOULD HAVE BEEN CLAIMED AS EXPENSE IN THE SUCCEEDING YEARS AND AS SUCH THERE WAS A CLEAR VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF TH E ACT BY THE ASSESSEE. THE LD. CIT DR ALSO PLACED RELIANCE ON AN ORDER OF THE ITAT JODHPUR BENCH IN THE CASE OF VAISHALI BUILDERS AND COLONISERS VERSUS ACIT REPORTED IN 138 ITD 227 WHEREIN THE ITAT JODHPUR BENCH HAD HELD THAT SINCE THE ASSESSEE WAS DEALING IN REAL ESTATE AND THE LAND PURCHASED WAS STOCK IN TRADE, THE PAYMENT MADE FOR PURCHASE OF LAND WAS EXPENDITURE IN THE BUSINESS OF THE ASSESSEE AND ATTRACTED THE PROVISIONS OF SECTION 40A (3) OF THE ACT. THE L D. CIT DR PRAYED THAT THE ORDER PASSED UNDER SECTION 263 OF THE ACT BE UPHELD . 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. THE FACTS OF THE CASE ARE UNDISPUTED. IT IS UNDISPUTED THAT THE ASSESSEE HAD NOT CLAIMED ANY EXPENDITURE TOWARDS PU RCHASE OF LAND DURING THE YEAR UNDER CONSIDERATION. IT ALSO UNDISPUTED THAT T HE ASSESSEES CASE WAS I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 8 REOPENED UNDER SECTION 147 OF THE ACT ONLY ON THE G ROUND THAT ASSESSEE HAD MADE HUGE CASH WITHDRAWALS AND HUGE CASH DEPOSITS I N ITS BANK ACCOUNTS DURING THE YEAR UNDER CONSIDERATION. THE OF REASON S RECORDED FOR REOPENING DATED 22/03/2013 MENTIONED THAT THE ASSESSMENT PROC EEDINGS WERE INITIATED BECAUSE THE ASSESSEE HAD MADE HUGE CASH WITHDRAWAL AMOUNTING TO RS. 35.70 CRORES AND CASH DEPOSITS AMOUNTING TO RS. 16.80 CRO RES AND THAT THE SOURCES OF CASH DEPOSITS NEED TO BE VERIFIED. THE REASONS FURT HER MENTION THAT THE AO HAD REASON TO BELIEVE THAT AN AMOUNT OF RS. 16.80 CRORE S HAD ESCAPED FROM THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WHICH W AS CHARGEABLE TO TAX. HOWEVER, THE FACT REMAINS THAT NO ADDITION WAS MADE ON THIS ISSUE AND THE REASSESSMENT WAS COMPLETED AT NIL INCOME. IT IS A LSO UNDISPUTED THAT VIOLATION OF PROVISIONS OF SECTION 40A (3) WAS NOT THE SUBJEC T MATTER OF THE RE-ASSESSMENT PROCEEDINGS. HOWEVER, THE PR. LD. COMMISSIONER OF I NCOME TAX SET ASIDE THE ORDER PASSED UNDER SECTION 147/143 (3) OF THE ACT A ND DIRECTED THE AO TO MAKE AN ADDITION ON ACCOUNT OF VIOLATION OF THE PROVISIO NS OF SECTION 40 A (3) OF THE ACT ALTHOUGH THE SAME WAS NOT THE SUBJECT MATTER OF REOPENING AND REASSESSMENT. 5.1 THERE ARE NUMEROUS JUDGMENTS WHEREIN THE HONBL E COURTS HAVE HELD THAT IF NO ADDITIONS WERE MADE IN RESPECT OF REASON S RECORDED, IT WAS NOT OPEN TO THE AO TO MAKE ADDITION ON SOME OTHER GROUND. TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VERSUS JET AIRWAYS INDIA LTD REPORTED IN 331 ITR 236 I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 9 (BOMBAY) HAS OBSERVED THAT IF AN ASSESSMENT HAS BEE N REOPENED BY RECORDING REASONS AND ULTIMATELY IN THE REASSESSMENT PROCEEDI NGS IF IT WAS FOUND THAT NO INCOME HAS ESCAPED ASSESSMENT IN RESPECT OF SUCH RE ASONS RECORDED, THEN THE AO CANNOT TAKE UP ANY OTHER ISSUE FOR EXAMINATION. THE HONBLE BOMBAY HIGH COURT CONSIDERED THE EXPLANATION AS APPENDED TO SEC TION 147 OF THE FINANCE ACT, 2009 AND OBSERVED THAT IF THE ADDITION WAS MAD E ON THE INCOME FOR WHICH THE AO HAD RECORDED THE REASONS ABOUT ITS ESCAPEMEN T, ONLY THEN OTHER ISSUES CAN BE LOOKED INTO. THE HONBLE HIGH COURT FURTHER EMPHASISED THAT ONCE, AFTER THE ISSUANCE OF A NOTICE UNDER SECTION 148, THE AO ACCEPTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE INCOME, WHICH HE HAD INITIALLY RECORDED REASON TO BELIEVE ABOUT ITS ESCAPEMENT, BUT ON ASSESSMENT HE FOUND IT AS A MATTER OF FACT, THAT NO SUCH INCOME HAS ESCAPED, THEN IT IS NOT OPE N TO HIM TO INDEPENDENTLY ASSESS SOME OTHER INCOME AND IF HE INTENDS TO DO SO , A FRESH NOTICE UNDER SECTION 148 WOULD BE NECESSARY. 5.2 THIS JUDGMENT OF THE HONBLE BOMBAY HIGH COURT HAS BEEN FOLLOWED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD VERSUS CIT REPORTED IN 336 ITR 136 (DELHI). IT FLOWS FROM THIS THAT IF THE AO WAS NOT IN A POSITION TO EXAMINE THAT ISSUE, THEN IN OUR OPINI ON, THE LD. PR. CIT WOULD ALSO NOT BEEN A POSITION TO TAKE COGNIZANCE OF THE ISSUE UNDER SECTION 263 OF THE ACT. IN OTHER WORDS, EVEN IF, IT IS UPHELD THAT THE REAS SESSMENT UNDER SECTION 147 OF THE ACT WAS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE, THEN ALSO I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 10 ON REVIVAL OF SUCH ISSUE, THE AO HAS TO FIRST SEE W HETHER ANY ADDITION COULD BE POSSIBLE ON THE ESCAPEMENT OF INCOME FOR WHICH HE H AS RECORDED THE REASONS. IF IT IS ESTABLISHED ON RECORD THAT THERE IS NO ESCAPE MENT OF INCOME FOR WHICH THE REASONS WERE RECORDED, THEN IN VIEW OF THE TWO JUDG MENTS, AS AFORESAID, NO OTHER ISSUE COULD BE EXAMINED BY THE AO. SIMILAR VI EW WAS HELD BY THE HONBLE DELHI HIGH COURT IN CIT (EXEMPTIONS) VERSUS MONARCH EDUCATIONAL SOCIETY REPORTED IN 387 ITR 416 (DELHI), ORIENTAL BANK OF C OMMERCE VERSUS ADDITIONAL CIT REPORTED IN 272 CTR 56 (DELHI) AND CIT VERSUS CHEIL COMMUNICATIONS INDIA PRIVATE LIMITED REPORTED IN 354 ITR 549 (DELH I). 5.3 THUS, WE ARE OF THE CONSIDERED OPINION THE LD. PR. CIT COULD NOT HAVE SOUGHT TO REVISE AN ORDER PASSED UNDER SECTION 147 READ WITH 143 (3) OF THE ACT ON AN ISSUE WHICH WAS NOT A SUBJECT MATTER OF THE R EASSESSMENT PROCEEDINGS UNDER SECTION 147 IN THE FIRST PLACE AND THE OF ASS UMPTION OF JURISDICTION UNDER SECTION 263 OF THE ACT LOSES ITS VALIDITY ON THIS C OUNT ITSELF. 5.4 FURTHER, THE FACT OF THE MATTER REMAINS THAT TH E ASSESSEE HAD NOT CLAIMED ANY EXPENDITURE TOWARDS PURCHASE OF LAND DURING THE YEAR UNDER CONSIDERATION AND, THEREFORE, THE PROVISIONS OF SECTION 40A (3) O F THE ACT COULD NOT HAVE BEEN LEGALLY INVOKED AS THEY COME INTO PLAY ONLY WHEN AN AMOUNT, WHICH HAS BEEN CLAIMED AS AN EXPENDITURE, HAS BEEN PAID IN CASH. I T IS OUR CONSIDERED OPINION THAT THE LD. PR. COMMISSIONER OF INCOME TAX WAS ALS O NOT JUSTIFIED IN SETTING ASIDE THE RE-ASSESSMENT ORDER AND DIRECTING THE FRA MING OF AN ASSESSMENT BY I.T.A. NO. 2648/DEL/2016 ASSESSMENT YEAR 2006-07 11 APPLYING PROVISIONS OF SECTION 40A (3) OF THE ACT I N A SITUATION WHEN THE PROVISION COULD NOT BE INVOKED AND THE SAME WOULD B E CONTRARY TO THE PROVISIONS OF LAW, IF SO INVOKED. IT IS OUR CONSIDE RED OPINION THAT THE LD. PR. CIT DOES NOT HAVE THE POWER TO DIRECT THE AO TO DO SOME THING WHICH THE ACT ITSELF DOES NOT PERMIT. THE INVOCATION OF JURISDICTION UND ER SECTION 263 OF THE ACT LOSES ITS VALIDITY ON THIS COUNT ALSO. 5.5 ACCORDINGLY, WE HOLD THAT THE LD. PR. COMMISSIO NER OF INCOME TAX HAD NO JURISDICTION OR POWER TO INVOKE PROVISIONS OF SE CTION 263 OF THE ACT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND WE DEEM IT FIT TO QUASH THE ORDER PASSED UNDER SECTION 263 OF THE ACT. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1.11. 2017. SD/- SD/- (PRASHANT MAHARISHI) (SUDHA NSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 1.11.2017 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR