Smt. Mamta Sharma, Bargarh V. Principal CIT (Central) , Visakhapatnam

ITA 33/CTK/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6631 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 14-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Revision of order; Assessment record; Set aside
• Section: 263; 143(3); 119; 22; 153C

Judgement Text

P a g e1 | 28 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRICHANDRA MOHAN GARG, JUDICIAL MEMBER AND MANISH BORAD, ACCOUNTANT MEMBER ITA No.33/CTK/2 020 Assessment Year :2012-13 Smt. Mamta Sharma, Ward No.10, Near Govt. Bus Stand, Dist: Baragarh Vs. Pr. CIT(Central), Visakhapatnam PAN/GIR No.agvps 4382 G (Appellant) .. ( Respondent) Assessee by : Shri P.K.Mishra, AR Revenue by : Shri M.K.Gautam, CIT (DR) Date of Hearing : 21/10/ 2021 Date of Pronouncement :10/12/2021 O R D E R Per Bench This is an appeal filed by the assessee against the order u/s 263 of the Act of the Pr. CIT(A), Visakhapatnam dated 11.3.2019 for the assessment year 2012-13. 2. The appeal is barred by limitation by 301 days. The assessee has filed condonation application supported by medical documents of Christian Medical College, Vellore and affidavit sworn by the assessee. In the petition, it is stated that against the order passed by ld Pr. CIT dated 11.3.2019, the assessee had filed appeal on 13.1.2020, causing delay of I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e2 | 28 301 days. It is stated that the delay was caused to the fact that Miss Shivani Sharma, daughter of the assessee was suffering from Hodgkin Lymphoma and under regular treatment in Christian Medical College and Hospital, Vellore and, therefore, the assessee almost remained out of Bargarh to take care of her daughter. In support of the above contention, ld A.R. has filed medical certificates of Vellore Hospital that the assessee was at Vellore and was unable to contact the Counsel to take steps for filing of the appeal before the Tribunal. 3. Ld A.R. of the assessee reiterated the contentions made in the condonation petition and argued that the delay may be condoned and appeal be taken up for adjudication. Ld CIT DR opposed the condonation petition. 4. After hearing the rival submissions and perusing the medical certificates and affidavit furnished by the assessee, we are satisfied that the assessee was prevented by sufficient cause for not filing the appeal within the stipulated period causing delay of 301 days. We, therefore, condone the delay and admit the appeal for adjudication. 5. The assessee has raised the revised corrected grounds of appeal, which read as under; “1. For that, impugned order passed U/s.263 of the Act is without jurisdiction and without the authority of law, as the conditions for initiation of 263 proceedings are not fulfilled, as such, the impugned I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e3 | 28 order passed U/s.263 of the Act being not sustainable in the eye of law, hence is liable to be quashed in the interest of justice. 2. For that, the learned Principal Commissioner of income Tax (Central), Visakhapatnam has committed gross error of law as well as in fact in revising the Assessment order, particularly when, the impugned Assessment order is non-existent and got merged with the order passed by CIT(A) much before issuance of show cause notice, as such, the impugned order passed U/s.263 of the Act is not sustainable in the eye of law, hence needs to be quashed in the interest of justice. 3. That the learned Principal Commissioner has committed gross error of law in revising the impugned Assessment order on the issue of non addition of interest income, particularly when, there is no interest income earned during the year, as such, the impugned order so passed being not sustainable in the eye of law is liable to be quashed in the interest of justice. 4. For that, the learned Principal Commissioner has committed gross error of law in revising the impugned Assessment order on the issue of non examination of receipt of subsidy amount of Rs.10,77,000.00, particularly when, said subsidy was received in Assessment year: 2014-15 and not in this year. As such, the impugned order so passed U/s.263 of the Act is not sustainable in the eye of law. 5. For that, the learned Principal Commissioner has committed gross error of law as well as of fact in giving a contrary finding that, the issue of unsecured loan was not verified by the A.O during Assessment, particularly when, there is categorically findings of the A.O on this issue and the learned A.O has examined all details while completing Assessment, therefore the impugned revision being based on wrong assumption of fact is not sustainable in the eye of law.” 6. Facts in brief are that the assessee is an individual. A search and seizure operation u/s.132 of the Act was conducted on 21.8.2013 in the business and residential premises of Maharaja Group of case. Accordingly, proceedings u/s.153C of the Act was initiated in the case of the assessee. The assessee filed her return of income disclosing total income at I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e4 | 28 Rs.5,36,640/-. The Assessing Officer completed the assessment u/s.153C r.w.s 143(3) of the Act on 27.6.2016 on a total income of Rs.23,51,260/- as against the admitted income of Rs.5,36,640/-. 7. Thereafter, the ld Pr CIT, Visakhapatnam examined the records of the assesse for the assessment year 2012-13 and noticed that the assessment u/s.153C r.w. section 143(3) has been passed, without examination with regard to the following issues, which prima facie erroneous and prejudicial to the interests of the revenue: i) Interest on F.D. of Rs.22,40,000 ii) Nature of receipt of subsidy amount of Rs.10,77,000 iii) Unsecured loans. 8. The Pr. CIT issued a notice u/s.263(1) of the Act dated 18.1.2019 to the assessee to show cause as to why the assessment so framed u/s.153C/143(3) of the Act should not be revised as per the provisions of section 263 of the Act to bring to tax the income arising out of the above two issues. In response to notice issued by ld. Pr. CIT, the assessee submitted the explanations on 11.2.2019. After considering the submissions of the assessee, ld. Pr. CIT passed order 11.3.2019 u/s.263 of the Act, inter alia, stating that the information was not available on assessment record at the time of passing assessment order and summarized the issues as under: “1. Int. on F.D. of Rs./22,40,000/-. The assessee submitted that the fixed deposit of Rs.22,40,000 was made on 28.3.2012 in United Bank I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e5 | 28 of India, Bargarh. Interest on such fixed deposit was first credited by the Bank on 3.4.2012 amounting to Rs.2,252.04 and further on 2.7.2012 amounting to Rs.34,569/-. Since these credits are occurred in the next financial year 2012-13, the assessee has duly reflected the said interest in her account in the F.Y. 2012-13 relevant to A.Y. 2013-14. 2. Subsidy amount of rs.10,77,000/-. The assessee vide his explanation submitted that the amount of Rs.10,77,000 is the subsidy allowed by NABARD towards capital investment subsidy scheme for the construction of rural godown awarded for encouraging establishment of godown in rural area. She submitted that this amount was credited to the bank term loan account and that the nature of subsidy is of capital in nature. 3. Unsecured loans. The assessee vide reply on 11.2.2019 submitted the details of loan availed from family members, relatives and others. Details such as name and complete postal address, relationship, date of loan and amount, rate of interest, mode of receipt, bank statement, amount of loan if any repaid during the year, date and amount of repayment, mode of repayment of loan, balance of loan as on the year end. The above information was not available on record. 9. Accordingly, Ld. Pr. CIT observed that these particulars furnished by the assessee were not available at the time of passing the assessment order. Hence, the assessment completed u/s.153C r.w.s 143(3) of the Act is erroneous and prejudicial to the interest of the revenue. He, therefore, set aside the assessment order and directed the AO to verify the above mentioned issues and its tax implication and pass an order after giving an opportunity to the assessee. 10. Ld A.R. of the assessee submitted that in the case of the assessee, the mandatory requirement for initiation of proceedings u/s.263 is absent. The ld Pr. CIT failed to justify how the assessment order became erroneous I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e6 | 28 and prejudicial to the interests of the revenue. He submitted that while setting the assessment order, Ld. Pr. CIT has raised three issues, on the basis of which, show cause notice was issued, particularly, when none of the issues are competent enough to sustain the revision proceedings. 11. In regard to first issue, ld A.R, submitted that, the ld Pr. CIT has committed gross error of law as well as in fact in ignoring the facts and evidences produced before him. Ld AR referred to paper book page 66 & 67, which contained the bank statements and 26AS statement of the assessee, from which, it is absolutely clear that, the FD was made on 28.03.2012 and for two days bank has not credited any interest during this financial year. Bank has credited interest on 03.04.2012 i.e., for the Assessment year: 2013-14 and the Assessee has disclosed it in her return of income and paid tax on this interest income for the Assessment year: 2013- 14. Even though, necessary evidences were produced and assessment record for Asst.year: 2013-14 was well available with the Pr. CIT for 263 proceeding but he rejected the submission of the Assessee on the ground that, the information was not available on the Assessment record for Assessment year: 2012-13 and therefore, it is not clear whether the Assessing officer verified the same. He submitted that when from the bank statements available with the Assessing officer, it is absolutely clear that, the FD was made on 28.03.2012 and no interest was credited for remaining two days, it is not understood, what more information the Assessing officer I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e7 | 28 should gather and when from the Assessment record of Assessment year: 2013-14, it is absolutely clear that, interest was credited and taxed in Assessment year 2013-14, there is no loss of revenue. Therefore, the impugned Assessment order on this issue cannot be held as erroneous and prejudicial to the interest of revenue. 12. With regard to second issue, ld A.R. submitted that assets pledged in the Bank for loan are of Balance sheet items, Gouri Shankar rural godown against which loan availed was mortgaged/pledged before the Bank, all details regarding investments made in Gouri Shankar Rural Godownwere verified by the A.O and consequential addition has been made against which Assessee preferred Appeal and addition made under this head was deleted by the CIT(A) much prior to the date of Revision order passed. He submitted that when the matter has been examined by the AO and the ld CIT(A), in the revision order, ld Pr. CIT raised new issue of subsidy received and set aside the Assessment on this issue by holding that A.O has not verified subsidy issue, without issuing any notice or without bringing it to the knowledge of the Assessee, particularly when, said subsidy was received on 06.08.2013 i.e. in Assessment year:2014-15 and not in this Assessment year. Further receipt of subsidy may reduce the value of capital assets and has no revenue implication. He submitted that the receipt does not belong to the impugned Assessment year,therefore, without issuing any notice to the Assessee and without bringing it to the knowledge of the I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e8 | 28 Assessee, no revision order can be passed on a new issue. Further when on the issue on which show cause notice was issued got merged with the order passed by the Appellate Authority, there is statutory bar for initiation of Revision proceeding u/s.263 of the Act, as such, impugned revision proceeding is without jurisdiction on this issue and hence, the impugned Assessment order cannot be held as erroneous and prejudicial to the interest of revenue. 13. As regards to third issue, ld A.R. submitted that the learned Principal CIT has committed gross error in issuing show cause notice by observing that, this issue was not examined /verified by the A.O. It may be submitted here thatthe learned A.O. in paragraph No.3 at page No.2 of the Assessment order has categorically observed that, said rural godown was constructed by Smt. Sharma out of loan taken from United Bank of India, Bargarh and income earned, past savings, loans and advances from friends and relatives through account payee cheques, all are assessed to income tax, Bargarh. Further, detailed list of unsecured loans along with loan confirmation letters were produced. Further, all are subjected to Assessment U/S.153C before the same Assessing Officer for this Assessment year, therefore, the learned Pr. CIT should not have held that, A.O. has not verified it. 14. Ld A.R. referred to paragraph No.5.1.3 of the revision order, wherein, it is observed that, vide reply dated 11.02.2019, the Assessee I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e9 | 28 submitted details of loans availed from family members, relatives and others. On perusal of record, it is found that, the information was not available from the Assessment record of the Assessee and not examined by Assessing officer for Assessment year 2012-13. Therefore, it is not clear whether the Assessing officer has verified the same. That, when, all the friends and relatives from whom Assessee availed unsecured loans were subjected to Assessment for this Assessment year either U/S.153A or u/s.l53C of the Act before the same Assessing Officer and their bank details, IT particulars and information regarding loan to the Assessee were well available in their respective files, the A.O. after due cross-verification of this unsecured loan from respective loans has accepted it and it is well within the knowledge of the learned Principal CIT that, the entire groups and related cases were assessed by the ssame Assessing officer for this Assessment year. There was no necessity of calling for further information from the Assessee. Further, when the additions made on this pertinent issue was subject matter of appeal before the CIT(A) and the learned CIT(A) while examining the disallowances, out of the investment made in Gouri Shankar Rural Godown has examined the receipts of unsecured loan, the Assessment order got merged with the CIT(A) order, therefore, once the Assessment order got merged with the appellate order and the very pertinent issue was already adjudicated upon by the CIT(A), there is statutory bar for initiation of 263 proceeding on this issue. As such, the I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e10 | 28 impugned order passed by the learned Principal CIT is not sustainable in the eye of law, hence liable to be quashed in the interest of justice.. Ld A.R. submitted that the A.O. while examining the issue of investment disallowed Rs.11,40,000.00 out of personal investment, therefore, it cannot be said that the AO has not verified the same. 15. Ld A.,R. submitted that the Pr. CIT has simply held that it is not clear that whether the Assessing officer has verified these three issues or not, but in none of the issues, he could be able to give any substantial reason justifying the loss of revenue and prejudice caused to the Revenue. Further it is not a case of law of inquiry or inadequate inquiry, therefore the impugned exercise of power u/s.263 of the Act by the Principal CIT is without the authority of law and not sustainable. 16. Ld A.R. referred to the decision of Hon'ble Delhi High Court in the case of ITO -vs- DG Housing Projects Ltd., reported in 20 taxman.com 587, wherein, it is held that without making necessary inquiry and without coming to the conclusion that, the order of assessment was erroneous and prejudicial, the learned Principal Commissioner cannot simply set aside the assessment order for further verification by the A.O. 17. Replying to above, ld CIT DR supported the order of the Ld. Pr. CIT. Further, he placed written submissions before the Bench, which reads as under: i.) During the course of original assessment proceedings, the ld. AR of the appellant had only filed confirmations from the creditors as I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e11 | 28 seen from pages-120 to 135 of the paper book. These were simply placed on record by the A.O. without making any enquiries in this regard. He had not examined the bank statements of the creditors. He had not examined their financial capacity to advance the alleged loans to the appellant. ii.) After the Pr. CIT had set aside the original assessment, the Id. AR of the assessee filed reply dated 11.11.2019 before the A.O. during the set-aside assessment proceedings as evident from the pages-42 to 47 of the paper book, iii.) As regards loan of Rs.1,00,000/- received from Shri Anand Sharma, kindly refer to pages-55 to 56 of paper book. It should be noted that on 09.08.2011, cash of Rs.1,00,000/- was deposited and on the same day, it was advanced as a loan to the appellant through cheque. iv.) As regards loan of Rs.1,00,000/- received from Shri Bhawani Shankar Sharma, kindly refer to page-60 of paper book. It should be noted that on 09.08.2011, cash of Rs.1,00,000/- was deposited and on the same day, it was advanced as a loan to the appellant through cheque. v.) As regards loan of Rs.1,00,000/- received from Shri Deepak Sharma, kindly refer to page-64 of paper book. It should be noted that on 09.08.2011, cash of Rs.1,00,000/- was deposited and on the same day, it was advanced as a loan to the appellant through cheque. vi.) As regards loan of Rs.8,75,000/- received from M/s. Ganapathi Sales, kindly refer to page-67 of paper book. It should be noted that on various dates, cash of Rs.8,75,000/- was deposited and on the same day or next day, it was advanced as loans to the appellant through cheque. vii.) As regards loan of Rs.l,00,000/- received from Smt. Kusum Sharma, kindly refer to page-75 of paper book. It should be noted that on 09.08.2011, cash of Rs.l,00,000/- was deposited and on the same day, it was advanced as a loan to the appellant through cheque. viii.) As regards loan of Rs.40,00,000/- received from Shri Sanjay Sharma, kindly refer to pages-79 to 81 of paper book. It should be noted that on various dates, cash of Rs.40,00,000/- was deposited I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e12 | 28 and on the same day, it was advanced as loans to the appellant through cheque. ix) As regards loan of Rs.l,00,000/- received from Smt. Nirmala Sharma, kindly refer to page-86 of paper book. It should be noted that on 09.08.2011, cash of Rs.l,00,000/- was deposited and on the same day, it was advanced as a loan to the appellant through cheque. x.) As regards loan of Rs.8,00,000/- received from M/s. Om Sai Enterprises, kindly refer to page-89 of paper book. It should be noted that on various dates, cash of Rs.8,00,000/- was deposited and on the same day or next day, it was advanced as loans to the appellant through cheque. xi.) As regards loan of Rs.l,00,000/- received from Shri Prakash Chandra Sharma, kindly refer to page-95 of paper book. It should be noted that on 09.08.2011, cash of Rs.1,00,000/- was deposited and on the same day, it was advanced as a loan to the appellant through cheque. xii.) As regards loan of Rs.1,00,000/- received from Shri Puran Mai Sharma, kindly refer to page-99 of paper book. It should be noted that on 09.08.2011, cash of Rs. 1,00,000/- was deposited and on the same day, it was advanced as a loan to the appellant through cheque. xiii.) As regards loan of Rs.1,00,000/- received from Smt. Radha Sharma, kindly refer to page-103 of paper book. It should be noted that on 09.08.2011, cash of Rs. 1,00,000/- was deposited and on the same day, it was advanced as a loan tothe appellant through cheque. xiv.) As regards loan of Rs. 1,00,000/- received from Smt. Saroj Sharma, kindlyrefer to page-107 of paper book. It should be noted that on 09.08.2011, cash ofRs. 1,00,000/- was deposited and on the same day, it was advanced as a loan tothe appellant through cheque. xv.) As regards loan of Rs.8,25,000/- received from M/s. Triveni Enterprises,kindly refer to page-110 of paper book. It should be noted that on variousdates, cash of Rs.8,25,000/- was deposited and on the same day or next day, itwas advanced as loans to the appellant through cheque. I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e13 | 28 2. It should be appreciated that during the course of set-aside assessment proceedings, the Id. AR of the appellant failed to produce these creditors before the A.O. in spite of the fact that these were friends/close relatives of the appellant. In fact, the Id. AR of the appellant filed affidavits from so called creditors (pages 14 to 41 of paper book) wherein it was alleged that they had advanced loans to appellant out of their own monies i.e. cash on hand. However neither cash book was furnished nor sources of cash on hand were explained. 3. From the above chain of events, it is clear that the A.O. had not made any enquiry at the time of completion of original assessment order U/S.153C of the Act. 4. Reliance is also placed on the following decisions: a) Hon'ble Madhya Pradesh High Court in the case of Nagal Garment Industries (P.) Ltd. vs. CIT (113 taxmann.com 4) (para-12) b) Hon'ble Rajasthan High Court in the case of Renu Gupta vs. CIT (301 ITR 45) c) Hon'ble Madhya Pradesh High Court in the case of CIT vs, Deepak Kumar Garg (299 ITR 435) (para-4) d) Hon'ble Supreme Court in the case of Rampyari Devi Saraogi (67 ITR 84) The A.O. was required to examine the issue in the proper perspective and he could not be perfunctory in his approach. Reliance is placed on the decision of Hon'ble Delhi High Court in the course of CIT vs. Ashok Logani (11 taxmann.com 208) (para-11 &12). It was held that the AO had failed to conduct any enquiry in this regard and therefore the assessment was not only erroneous but also prejudicial to the interests of Revenue. Reliance is also placed on the decision of Hon'ble Delhi High Court in the case of Gee Vee Enterprises vs. CIT (99 ITR 375) wherein it was held that the ITO is not only an adjudicator but also an investigator. He can't be passive and required to make an enquiry when the circumstances provoke an enquiry. Further if the assessment order is passed without application of mind then such an order shall be erroneous. In the case of Renu Gupta vs. CIT (301 ITR 45), the A.O. had simply the submissions of the assessee on record without causing any enquiry. In such circumstances, it was held by Hon'ble Rajasthan High Court that the A.O. had passed the assessment in a routine I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e14 | 28 manner without applying his mind and hence the CIT was justified in exercising revision u/s.263 of the Act. Similar view was held by Hon'ble Madhya Pradesh High Court in the case of CIT vs. Deepak Kumar Garg (299 ITR 435) (para-4) wherein it was held that issuing a questionnaire and placing submissions on record is a case of no enquiry. If the Authorized representative of the assessee still emphasizes that the AO had made an enquiry for sake of an argument then it is only a semblance of enquiry and that too in a very slipshod manner and the AO had agreed to the version of the assessee without proper enquiry. Thus the exercise of revision by the CIT u/s.263 was held to be valid. 5. As regards doctrine of merger, it is submitted that the A.O. had not disallowed the unsecured loans while completing the assessment order u/s. 153C of the Act. He had made an addition of Rs.l 1,40,920/- on account of unexplained/undisclosed investment in Gouri Shankar Rural Godown. The Valuation Officer had estimated the cost of construction at Rs.l,54,40,920/-. As against this, the appellant had taken term loan of Rs.99,00,000/- from United Bank of India and unsecured loans of Rs.44,00,000/- from relatives and friends totaling to Rs.l,43,00,000/-. The difference of Rs.11,40, 920/- was treated as unexplained investment by the appellant. In the present case, the subject matter of the issue sought to be revised u/s.263 is different and hence theory of merger shall not apply. Without prejudice to the above, reliance is placed on the decision of Hon'ble Delhi High Court in the case of BSES Rajdhani Power Ltd. vs. Pr. CIT (88 taxmann.com 25) (para-15 & 16). Reference is also placed on the decision of Hon'ble Kolkata ITAT in the case of J K Tyre& Industries Ltd. vs. CIT (19 taxmann.com 277). In para-7, the Hon'ble Kolkata ITAT held that doctrine of merger comes into play when an issue has been adjudicated by the CIT(A). But when the issue is pending before CIT(A), the jurisdiction of Pr. CIT is not" curtailed. In the present case, the Pr. CIT had passed the order u/s. 263 on 27.06.2016 when the appeal before the CIT(A) was still pending. The order of CIT(A) was passed subsequently on 27.09.2017. Hence theory of merger shall not apply.” 18. Ld. Counsel has also placed reliance on various decisions including the decision of Hon‟ble Delhi High Court in the case of Vikas Polymers [2010] 194 Taxman 57 (Delhi) and submitted that the ld. Pr.CIT must give reasons to justify exercise of suo motu revisional powers by him to reopen I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e15 | 28 a concluded assessment and exercise of power being quasi judicial in nature and reasons must be such as to show that enhancement or modification of assessment or cancellation of assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to conclusion that order of AO was not only erroneous but was also prejudicial to the interest of revenue. 19. Further, placing reliance on the decision of Hon‟ble Allahabad High Court in the case of Meerut Roller Flour Mills (P.) Ltd [2019] 110 taxmann.com 170 (Allahabad), ld. Counsel of the assessee submitted that where the Commissioner passed a revisional order under section 263 of the Act directing the AO to examine matter relating to unsecured loans obtained by the assessee, in view of the fact that in course of scrutiny assessment, the AO had already made detailed enquiries in respect of loan received by assessee, impugned revisional order deserved to be set aside. 20. Further placing reliance on the judgment of the Hon‟ble Madras High court in the case of Virtusa Consulting Services (P) Ltd. [2021] 128 taxmann.com 22 (Madras) and in the case of Smt. Renuka Philip [2019] 101 taxmann.com 119 (Madras), ld. Counsel submitted that the Hon‟ble Madras High Court in the case of Virtusa Consulting Services (P) Ltd. (supra) has held that where AO after conducting an enquiry, calling for documents and records from assessee and after considering such documents submitted by the assessee and discussing case with the assessee, allowed claim of I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e16 | 28 assessee for deduction u/s.10A of the Act after making certain reduction in amount of deduction as claimed by the assessee, impugned invocation of section 263 of the Act was unjustified. It was also submitted by the ld. Counsel that the Hon‟ble Madras High Court further in the case of Smt. Renuka Philip (supra) has held that larger issue was pending before the Commissioner (Appeals), Commissioner could not exercise power u/s.263 of the Act against the order of Assessing Officer on account of statutory bar. It was also the contention of ld. AR that the provision of Section 263 of the Act empowers the ld. Pr.CIT to revise only orders passed by the AO and not by the ld. CIT(A) and, thus, the present impugned order is not sustainable in the eyes of law. 21. Drawing our attention to the decision of ITAT Kolkata „C‟ Bench in the case of Hill Queen Investment (P) Ltd. Vs. Pr.CIT [2021] 127 taxmann.com 682 (Kolkata Tribunal), ld. AR of the assessee submitted that where the AO had called for and verified the details and documents in connection with the issue in question and after examining the same had taken possible view that the transactions were genuine, revision of assessment order u/s.263 of the Act by the Commissioner on the same issue being bad in law, deserved to be quashed and set aside. 22. On contrary, ld. CIT-DR placed reliance on various judgements including the order of Kolkata Bench of the Tribunal in the case of J.K.Tyre & Industries Ltd. (supra), submitted that merely if an issue is pending I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e17 | 28 consideration before the CIT(A), the Commissioner „s jurisdiction u/s.263 of the Act does not curtailed qua the assessment order. Ld. CIT-DR also submitted that the doctrine of merger applies when any order is passed by the appellate authority such as CIT(A). It was also the contention of ld. CIT- DR that the AO has not made any enquiry on the issue of unsecured loan and the subject matter of appeal before the CIT(A) was not unsecured loan but it was unexplained investment for construction of godown. Drawing our attention to para 7 of the order in the case of J.K.Tyre & Industries Ltd. (supra), ld. CIT-DR submitted that the doctrine of merger comes into play when an issue is considered and decided by the ld. CIT(Appeals), however, merely if an issue is pending consideration before ld. CIT(Appeals), ld. CIT‟s jurisdiction does not get curtailed qua assessment order. Ld.CIT-DR also drew our attention towards pages 5 to 6 of the order of Pr.CIT and submitted that all the required pre-condition for invoking revisionary power u/s.263 of the Act has been complied with and, therefore, the impugned order of ld. Pr.CIT cannot be disturbed in any manner and, thus, the same cannot be held as bad in law and unsustainable. 23. Placing rejoinder to the above contentions of ld. CIT-DR, it was submitted by the ld counsel for the assessee that the Pr.CIT has raised query in the show cause notice issued u/s.263 of the Act with regard to investment in construction of godown and the assessee is continuously explaining that in the construction of godown the assessee has raised I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e18 | 28 unsecured loan from its relatives and all unsecured loan creditors are relatives of the assessee which were also under the jurisdiction of the same AO and their assessment records were also lying before the AO and after examining the same, the AO has allowed the claim of the assessee with regard to the claim of unsecured loan and the ld. Pr.CIT cannot change the character of issue by using a different head i.e. unexplained investment in the construction of godown for revisiting and re-deciding the issue of unsecured loan which was decided by the AO after due and proper verification. Ld. Counsel vehemently pointed out that the AO has examined all the facts of unsecured creditors which was also under his jurisdiction and thereafter passed assessment order u/s.143(3) r.w.s.153C of the Act. Therefore, the assessment order cannot be alleged as erroneous and prejudicial to the interest of revenue. 24. Ld. Counsel further pointed out that against the impugned assessment order dated 27.06.2016, the assessee preferred an appeal before the ld. CIT(A), i.e. ITA No.369/2016-17 (for A.Y.2012-2013), which was partly allowed on merits vide order dated 26.09.2017. Ld. Counsel also submitted that the ld. Pr.CIT has issued notice u/s.263 of the Act on 18.01.2019 and has passed impugned order on 11.03.2019 by ignoring the fact that the ld. First Appellate Authority has allowed the ground of assessee on merits by way of order dated 27.09.2017, therefore, he has no jurisdiction to revise the order u/s.263 of the Act. Ld. Counsel of the I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e19 | 28 assessee also pointed out that in case of J.K.Tyre & Industries Ltd. (supra), Kolkata Bench of the Tribunal has held that merely if an issue is pending consideration before the ld. CIT(Appeals), ld. CIT‟s jurisdiction does not get curtailed qua assessment order but in the present case the issue was not pending before the CIT(A) and the appeal was already decided on merits in favour of the assessee by passing order on 27.09.2017, whereas the ld. Pr.CIT invoked revisionary powers u/s.263 of the Act subsequently and passed the impugned order on 11.03.2019, therefore, the proposition in the case of J.K.Tyre & Industries Ltd. (supra)does not apply to the present facts of the case. 25. On careful consideration of the above rival submissions, first of all, we may point out that undisputedly rather admittedly the first appeal of the assessee against the impugned assessment order dated 27.06.2016 was partly allowed on merits by ld. CIT(A) by passing the order dated 27.09.2017 and the ld. Pr.CIT issued notice u/s.263 of the Act on 18.01.2019 and passed the impugned order on 11.03.2019. At the time of issuing notice on 18.01.2019 the appeal of the assessee was not pending before the ld. CIT(A) but the same was adjudicated and partly allowed on merits in favour of the assessee thereby dismissing the legal ground of the assessee. 26. In the case of J.K.Tyre & Industries Ltd. (supra), the coordinate bench of the Tribunal held that if an issue is pending for consideration I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e20 | 28 before the CIT(A), then Commissioner‟s jurisdiction u/s.263 of the Act does not get curtailed qua assessment order. In the present case, the issue was not pending but the first appeal was decided partly in favour of the assessee before issuing notice u/s.263 of the Act, therefore, we respectfully hold that benefit of the proposition rendered by the Kolkata Bench of the Tribunal in the case of J.K.Tyre & Industries Ltd. (supra) is not available for the revenue in the present facts of the case. 27. At this juncture, we may also point out that as per sub-clause(c) of Explanation 1 to sub-section 1 of Section263 of the Act, powers of ld. Pr.CIT shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. From the copies of the appellate orders dated 26.09.2017 available at paper book Page Nos.80- 92 and copy of show cause notice issued u/s.263 of the Act dated 18.01.2019 (assessee‟s paper book page Nos.93 & 94), it is clear that the ld. Pr.CIT in para 2 has agitated two issues viz. income from undisclosed source towards investment made in land and unexplained investment made in the construction of Gouri Shankar Godown. From the copy of the first appellate order at para 2, it is clearly discernible that both the issues were raised by the assessee before the ld. CIT(A) as ground Nos.3 & 4, which were adjudicated by the ld. Pr.CIT in para Nos.4.5 to 6.6. On careful perusal reading of these paras of the first appellate order, we observe that the ground No.1 pertaining to unexplained investment made in the construction I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e21 | 28 of Gouri Shankar Godown has been decided in favour of the assessee directing the AO to delete the addition of Rs.11,40,920/-, whereas ground No.4 has been dismissed confirming the addition of Rs.6,73,700/-. 28. In para 3.1, the ld. PR.CIT has picked up three issues viz. (i) interest on fixed deposit of Rs.22,40,000/- was not brought to tax by the AO, (ii) the nature of receipt of subsidy amount of Rs.10,77,000 was not examined and (iii) unsecured loans not examined by the AO. 29. We are in agreement with the arguments of the ld. Counsel of the assessee that fixed deposits were made on 28.03.2012 in the United Bank of India, Bargarh and interest for two days on such fixed deposit was first credited by the Bank on 03.04.2012 amounting to Rs.2,252.04 and further on 02.07.2012 amounting to Rs.34,569/-. Since these credits are occurred in the next financial year 2012-2013, the assessee has duly reflected the said interest in her account in F.Y.2012-2013 relevant to A.Y.2013-2014 and offered the same for taxation. Ld. Pr.CIT has directed the AO to verify the same but when the facts are already on record then we are unable to understand the need of invoking revisonary powers u/s.263 of the Act by the Pr.CIT on this pity issue where no revenue loss as revealed by the factual matrix of the issue. 30. So far as the issue of nature of receipt of subsidy amount of Rs.10,77,000/- is concerned, in para 5.1.2, the ld. Pr.CIT himself noted that the assessee submitted that the amount of subsidy was credited to Bank I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e22 | 28 from the loan account and that the nature subsidy is of capital in nature, these facts have already been mentioned by the assessee in the reply to show cause notice u/s.263 of the Act in para 5 which reveals that the subsidy amount of Rs.10,77,000/- was received during the next financial year 2013-2014 on 6.8.2013 during FY 2013-14 relevant to A.Y.2014-2015 and credited to loan A/c of assessee on 06.11.2013, which is not with the present assessment year under consideration. In para 5 of reply, the assessee has categorically stated that the bank has sanctioned the loan which the AO has accepted it, which is clearly evident from the assessment order itself, therefore, the AO cannot be said to have not examined all the details before accepting the bank loan. Copy of the certificate issued by the United Bank of India, dated 07.02.2019, which was also furnished before the ld. Pr.CIT along with reply, clearly reveals that the subsidy was sanctioned on 26.03.2012 but the same was received on 06.08.2013 and credited to loan account on 06.11.2013. Therefore, first of all, from the facts available before the ld. Pr.CIT, it is clear that the subsidy was capital receipt and secondly, the same was received during the financial year 2013- 2014 pertaining to assessment year 2014-2015, therefore, it is an impractical expectation of the ld. Pr.CIT from the AO that the AO should have made verification/enquiries on this issue. 31. On the third issue, from para 5.1.3 of the impugned order of ld. Pr.CIT, we observe that the ld. Pr.CIT after receiving the reply of the I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e23 | 28 assessee dated 11.02.2019 supported by details of loan availed from family members, relatives and others, other details such as name and complete postal address, relationship, date of loan and amount, rate of interest, mode of receipt, bank statement, amount of loan if any repaid during the year, date and amount of repayment, mode of repayment of loan, balance of loan as on the year end, etc. But the ld. Pr.CIT simply observed that the information was not available on assessment record of the assessee and not examined by the AO for A.Y.2012-2013 and, therefore, the Pr.CIT held that it is not clear as to whether the AO verified the same. In view of the reply of the assessee filed before the AO available at pages 17 to 23 of the assessee‟s paper book, it is clear that these details were submitted before the AO by the assessee in a tabular form, wherein the names, address, PAN No., relation, date of loan, rate of interest, mode of receipt, bank statement, amount of loan, if any repaid during the year, date and amount of repayment, mode of repayment of loan and balance of loan as on the year end, has clearly been stated and, therefore, it cannot be presumed that the AO has not verified the details made available to him by the assessee during the assessment proceedings on issue of unsecured loan. 32. The assessee has submitted copies of the assessment orders passed by the same AO in the case of loan creditors, namely, Shri Puranmal Sharma, Shri Prakash Chandra Sharma, Shri Bhawani Shankar Sharma, Smt. Nirmala Sharma, Smt. Kusum Sharma, Smt. Radha Sharma, Shri Deepak I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e24 | 28 Sharma, Smt. Saroj Sharma, Shri Anand Sharma, Shri Sanjay Sharma for the same assessment years and on perusal of the copies of these assessment orders, we are satisfied with the contention of the assessee that almost all loan creditors were assessed to tax before the same AO and their assessment records were before him and after verification of all details, the AO has allowed the claim of the assessee towards unsecured loans, therefore, we hold that the AO has made adequate and sufficient enquiry during the assessment proceedings before passing the impugned assessment order on the issue of unsecured loan obtained by the assessee towards construction of Gouri Shankar Godown. 33. On careful reading of the impugned order u/s.263 of the Act, we clearly observe that the ld. Pr.CIT while passing the order u/s.263 of the Act in all issues has simply observe that it is not clear as to whether the AO has verified these issues or not but he has not given any substantial reason and basis to establish the loss of revenue and prejudice caused to the revenue which may make the assessment order erroneous and prejudicial to the interest of revenue. In our considered opinion, the case law relied on by the ld. CITDR in the case of J.K.Tyre & Industries Ltd. (supra) has no application in the present facts of the case. 34. In the case of CIT Vs. Vikas Polymers [2010] 194 Taxman 57 (Delhi), the Hon‟ble Delhi High Court has held that it is a prerequisite that Commissioner must give reasons to justify exercise of suo motu revisional I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e25 | 28 powers by him to reopen a concluded assessment and exercise of power being quasi judicial in nature, reasons must be such as to show that enhancement or modification of assessment or cancellation of assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to conclusion that order of Assessing Officer was not only erroneous but was also prejudicial to interest of revenue. In the present case, on careful reading of the impugned order passed by the ld. Pr.CIT u/s.263 of the Act, we are unable to see any such sustainable findings that the assessment order was erroneous and prejudicial to the interest of revenue enabling the ld. Pr.CIT to direct the AO to make reassessment order on the issues. 35. In the case of ITO Vs. D.G.Housing Projects Ltd. [2012] 20 taxmann.com 587 (Delhi), the Hon‟ble Delhi High Court has held that where Commission had doubts about valuation and sale consideration received in computation of capital loss but he had not examined said aspect himself, order of remit could not be passed by Commissioner asking Assessing Officer to decide whether order was erroneous. In the present case, despite of details of factual matrix, the Pr.CIT in its impugned order has directed the AO to verify the issues and its tax implications. It is a precondition that for invoking revisonary powers u/s.263 of the Act the Pr.CIT should have held that the order was erroneous or prejudicial to the interest of revenue but in the present case, the ld. Pr.CIT has directed the AO to verify the tax I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e26 | 28 implications or to verify as to whether there was any revenue loss, then the order cannot be held as sustainable. 36. In the case of Meerut Roller Flour Mills (P.) Ltd. Vs. CIT [2019] 110 taxmann.com 170 (Allahabad), the Hon‟ble Allahabad High Court held that where Commissioner passed a revisional order under section 263 of the Act directing the Assessing Officer to examine matter relating to unsecured loans obtained by assessee, in view of fact that in course of scrutiny assessment, Assessing Officer had already made detailed enquiries in respect of loan received by assessee, impugned revisional order deserved to be set aside. In the present case, we have noted above that the AO has made adequate and sufficient enquiry on the issue of unsecured creditors and almost all the creditors were assessed to tax before the same AO and their assessment records were before him, therefore, it cannot be held that the AO has not made any enquiry on this issue. Consequently, we are compelled to hold that the impugned order of the Pr.CIT is not sustainable on this count. 37. The Hon‟ble Madras High Court in the case of Smt. Renuka Philip Vs. ITO [2019] 101 taxmann.com 119 (Madras) has held that since larger issue was pending before Commissioner (Appeals), Commissioner could not invoke jurisdiction under section 263 against said order of Assessing Officer on account of statutory bar. In the present case, we observe that the ld. I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e27 | 28 CIT(A) has decided the appeal of the assessee on 27.09.2017 and the Pr.CIT proceeded to pass impugned re visional order u/s.263 of the Act, dated 11.03.2019 by issuing notice u/s.263 of the Act on 18.01.2019. Therefore, the impugned order is hit by sub-clause (c) of Explanation 1 to sub-section (1) of Section 263 of the Act and, thus, bad in law and not sustainable. 38. The case laws relied on by the ld. CIT-DR as mentioned in para 4 of the written submission are pertaining to a situation when the AO has failed to make enquiry on the issue indicated by the ld. Pr.CIT but in the present case, as has been discussed above, there was enquiry by the AO and he took a plausible view, thus, revisional proceeding u/s.263 of the Act cannot be invoked in such a situation. Reliance is placed on the decision of ITAT Kolkata Bench in the case of Hill Queen Investment (P) Ltd. (supra). Therefore, in the facts and circumstances of the present case, the case laws relied on by the ld. CIT-DR having distinct factual matrix, are of no help for the revenue. 39. Furthermore, it is a peculiar situation of the present case that when the ld. Pr.CIT issued notice u/s.263 of the Act on 18.01.2019, the ld. CIT(A) has decided the appeal of the assessee much earlier on 27.9.2017 considering the addition and gave partial relief on merits. Thus, on this count also as per sub-clause (c) of Explanation 1 to sub-section (1) to I T A N o . 3 3 / C T K / 2 0 2 0 A s s e s s m e n t Y e a r : 2 0 1 2-13 P a g e28 | 28 Section 263 of the Act, the revisonary order u/s.263 of the Act cannot be exercised and the same is dismissed. 40. In view of the foregoing discussion, we are compelled to hold that the impugned revisionary order passed by the ld. Pr.CIT u/s.263 of the Act is not sustainable, hence, we quash the same along with the subsequent consequential orders made thereunder. 41. In the result, appeal of the assessee is allowed. Order pronounced in pursuance with Rule 34(4) of ITAT Rules, 1963 on 10/12/2021, at Cuttack. Sd/- Sd/- (Manish Borad) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 10/12/2021 B.K.Parida, SPS (OS)/PKM Sr.PS Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : Smt. Mamta Sharma, Ward No.10, Near Govt. Bus Stand, Dist: Baragarh 2. The Respondent. Pr. CIT(Central), Visakhapatnam 3. DR, ITAT, Cuttack 4. Guard file. //True Copy//