Jalinder Tatyasaheb Deshmukh, Beed V. Commissioner of Income-tax,

ITA 2679/PUN/2016

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4149 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 27-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Revision of order; Opportunity of being heard; Set aside
• Section: 263; 69C; 143(3)

Judgement Text

आयकर अपीलीय अिधकरण “ए” Ɋायपीठ पुणे मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No.2679/PUN/2016 िनधाᭅरणवषᭅ / Assessment Year : 2009-10 Shri JalinderTatyasaheb Deshmukh, Anusaya Construction Company, Vidyanagar Parli Vaijnath, Dist. Beed – 431515. PAN: ADWPD 6423 H Vs The Commissioner of Income Tax, Aurangabad. Appellant/ Assessee Respondent /Revenue Assessee by None. Revenue by Shri Shivraj B Moray – DR Date of hearing 04/05/2022 Date of pronouncement 23/06/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax, Aurangabad for the A.Y.2009-10 dated 24.03.2014.The Assessee has raised the following grounds of appeal: “1) On the facts and circumstances of the case and in law the Ld. CIT-Aurangabad was not justified in passing the Revisionary Order under S. 263 of the Act when the original assessment order passed by the A. 0. cannot be branded as erroneous as well as prejudicial to the interests of revenue since the perusal of the said assessment reveals that the full investigation was made calling for the entire information needed for framing the assessment. The Revisionary order is not sustainable in law. It be quashed. ITA No.2679/PUN/2016 for A.Y. 2009-10 Shri JalinderTatyasaheb Deshmukh(A) 2 2. On the facts and circumstances of the case and in law the A. 0. made the original assessment u/s 143(3) of the Act dt. 09-09- 2011 after full application of mind the way the I. T. Act, 1961 requires. The A. O. had considered the entire information submitted by the assessee as mentioned in the assessment order that "in the course of assessment proceedings various details were called for and verified bank account extracts, confirmation of debtors and creditors. On verification of the details filed in the course of assessment proceedings the returned income is accepted." The Ld. CIT failed to apply his mind to the facts of the case. The action taken under S. 263 is unwarranted. It be quashed. 3. On the facts and circumstances of the case and in law the Ld. CIT has not passed any conclusive orders under S. 263 of the Act. The Ld. CIT directed the A. 0. to verify the issues which were already verified by the A.O. The action under S. 263, therefore, was unwarranted. It be quashed. 4. On the facts and circumstances of the case and in law the appeal against the order under S. 263 delayed. The assessee was prevented by sufficient cause for not filing the appeal within the limitation. The separate application for condonation of delay supported by sworn affidavit will be filed. In view of this it is prayed to admit the appeal for adjudication after condoning the delay. 5. The appellant craves to leave, add/amend or alter any of the above grounds of appeal.” 2. At the time of hearing of the appeal, none appeared on behalf of the appellant assessee. ITA No.2679/PUN/2016 for A.Y. 2009-10 Shri JalinderTatyasaheb Deshmukh(A) 3 2.1 It is observed that on following occasions, none had appeared for hearing on-behalf of the appellant assessee. Date of hearing Appearnace 07/12/20 None appeared on behalf of assessee 03/02/21 None appeared on behalf of assessee 25/03/21 None appeared on behalf of assessee 19/05/21 None appeared on behalf of assessee 06/07/21 None appeared on behalf of assessee 18/08/21 None appeared on behalf of assessee 05/10/21 M.K.Kulkarni appeared but case adjourned 23/12/21 None appeared on behalf of assessee 11/03/22 None appeared on behalf of assessee 12/04/22 None appeared on behalf of assessee 04/05/22 None appeared on behalf of assessee 2.2 Therefore, we left with no option except to decide the case after hearing the submissions of learned Departmental Representative (DR) for the Revenue and on the basis of material available on record. 3. Brief facts of the case are that the assessee is a partner in Anusaya Construction deriving income from Interest and share of profit. For the A.Y. 2009-10, assessee filed return of Income on 18.05.2009 showing total income of Rs.8,96,490/-. The ITO completed scrutiny assessment u/s 143(3) of the Act accepting returned income. The Commissioner of Income Tax had passed an order under section 263 after giving opportunity to the assessee. The assessee has filed an appeal against the said Order u/s.263 of the Act. 3. We have heard the Ld.Departmental Representative(ld.DR) for the Revenue and perused the records. In this case, the ITA No.2679/PUN/2016 for A.Y. 2009-10 Shri JalinderTatyasaheb Deshmukh(A) 4 Ld.Commissioner of Income Tax observed that the assessee had introduced capital of Rs.7,00,000/- in cash, in the firm i.e. Anusaya Construction. The ld.CIT also observed that there were no sufficient withdrawal of cash, nor any other source of cash to explain the cash introduced in the capital account. Theld.CIT has further mentioned that the assessee failed to provide details of withdrawal made by the assessee from the so-called loan. The ld.CIT also observed that there were cash deposits of Rs.18,16,000/- on various dates in the Bank Account No.50310010006617 of IDBI Bank Ltd. Therefore, the ld.CIT was of the opinion that the assessment order was prejudicial and erroneous. The ld.CIT after hearing the Assessee, arrived at the conclusion that the assessment order was erroneous and prejudicial to the interest of the Revenue. Therefore, he directed the Assessing Officer(AO) to verify these issues. 3.1. To invoke the jurisdiction u/s 263 of the Act, the Learned Commissioner of Income tax has to prove only two things that the assessment is erroneous and prejudicial to the interest of the Revenue. There is no dispute on the fact that the assessee has introduced cash of Rs.7,00,000/- as capital in the firm. Prima facie, enough cash was not available with the assessee to introduce as capital. The Assessing Officer had not verified it. During the hearing before the ld.CIT, the assessee submitted that he had taken Loan of Rs.20,61,250/- from Life Insurance Corporation of India. ITA No.2679/PUN/2016 for A.Y. 2009-10 Shri JalinderTatyasaheb Deshmukh(A) 5 However, the ld.CIT observed that the explanation submitted by the assessee was not acceptable. 3.2 We agree with the ld.CIT, that the explanation of the assessee that he had obtained Loan from LIC and then Rs.7,00,000/- had been introduced in cash as Capital in the firm, is not acceptable. Because, the LIC disburses Loan through banking channel, then why a prudent man will withdraw the amount of Rs.7,00,000/- in cash and introduce it as Capital in the firm? If the assessee wanted to introduce the impugned Rs.7,00,000/-, then he could have directly issued a cheque. Therefore, we agree with the ld.CIT that the explanation is not acceptable. Hence, the ld.CIT was right in holding that the assessment was erroneous and prejudicial. Similarly, the Assessing Officer has not verified the cash deposits in the impugned bank account. 3.3 The Hon’ble Bomba High Court in the case of PCIT vs. Zuari Maroc Phosphates Ltd., [2021] 126 taxmann.com 170 (Bombay) has observed as under: “In several decisions, it has been held that it is incumbent on the AO to investigate the facts stated in the return when the circumstance would make such an inquiry prudent and when the word 'erroneous' in Section 263 includes failure to make an inquiry, the order becomes erroneous when such an inquiry had been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. Duggal & Co. v. CIT [1994] 77 Taxman 331/[1996] 220 ITR 456 ITA No.2679/PUN/2016 for A.Y. 2009-10 Shri JalinderTatyasaheb Deshmukh(A) 6 (Delhi); CIT v. Pushpa Devi [1986] 29 Taxman 377/[1987] 164 ITR 639 (Pat.) and CIT v. Pushpa Devi [1988] 40 Taxman 375/173 ITR 445 (Pat.). 28. In Amitabh Bachchan case (supra), the assessee had initially claimed additional expenses of 30% of the gross professional receipts (Rs. 3.17 Crores). The AO required the assessee to file requisite details. At that stage, the assessee resisted furnishing details by submitting that such details related to his security and any disclosure might be detrimental to his security. Then, by letter dated 13-3-2004, the assessee, asserted that his claim was allowable but since it will not be feasible to substantiate the same, such claim may be treated as withdrawn. Thereafter, a show-cause notice was issued to the assessee under section 69C of the said Act as to why these additional expenses claimed not to be treated as an unexplained expenditure. Such withdrawal was accepted by the AO and the proceedings under section 69C were ordered to be closed. The CIT, in such circumstances, exercised revisional jurisdiction under section 263 of the said Act but the High Court, set aside the Commissioner's order on the basis that the view taken by the AO was a possible view and revisional jurisdiction ought not to have been exercised merely because there was another possible view of the matter. 29. The Hon'ble Supreme Court set aside the High Court's order by holding that there was nothing wrong in the exercise of revisional powers particularly because the CIT felt that the matter needed further investigation. Such investigation was necessary because initially, the assessee had himself made such a claim but thereafter sought to withdraw the same without any substantiation. The Hon'ble Supreme Court held that making a claim which would prima facie disclose that the expenses in respect of which deduction has been claimed had been incurred and thereafter abandoning/withdrawing the same gives rise to the necessity of ITA No.2679/PUN/2016 for A.Y. 2009-10 Shri JalinderTatyasaheb Deshmukh(A) 7 further inquiry in the interest of the Revenue. The notice under section 69C of the said Act could not have been simply dropped on the ground that the claim has been withdrawn. The Hon'ble Supreme Court then held that the CIT was perfectly justified in exercising its revisional jurisdiction and such exercise ought not to have been interfered with by the High Court. 30. In the present case as well, taking into consideration the reasoning of the CIT, we feel that the ITAT was not justified in interfering with the CIT's order, since, the twin conditions prescribed under section 263 of the said Act were fulfilled. Besides, the CIT, by the impugned order, had quite fairly, granted the assessee an opportunity of being heard whilst directing the AO to verify the claim of the assessee in respect of the allowability of the expenditure and carry forward of the loss of Rs. 1,78,57,950/- in accordance with law. In similar circumstances the Hon'ble Supreme Court, in the case of Daniel Merchants P. Ltd. (supra), upheld that order of the Commissioner which had directed the AO to carry a thorough and detailed inquiry. 31. For all the aforesaid reasons we set aside the ITAT's order dated 11-2-2015 and answer the substantial questions of law as framed, in favour of the Revenue and against the assessee. However, we make it clear that the observations in this Judgment and Order need not influence the AO in making a fresh order after giving the assessee a reasonable opportunity of being heard. The AO will have to decide the matter on its own merits and in accordance with the law.” 4. Therefore, we are of the opinion that the ld.CIT(A) has rightly invoked the jurisdiction u/s.263 of the Act. Accordingly, we uphold the order u/s 263 of the Act, and grounds of appeal raised by the assessee are dismissed. ITA No.2679/PUN/2016 for A.Y. 2009-10 Shri JalinderTatyasaheb Deshmukh(A) 8 5. In the result, appeal of the Assessee is Dismissed. Order pronounced in the open Court on 23 rd June, 2022. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 23 rd June, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकरअपीलीयअिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ITAT, Pune.