Appeal details
Counselvise Citation
[2019] 118 COUNSELVISE.COM (IT) 6962 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 30 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-01-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2014-2015
Appeal Filed On
09-05-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 3391/DEL/2018 ASSESSMENT YEAR: 2014-15 M/S ARUN KUMAR GARG HUF, VS PR. CI T, G-20/24, SECTOR-7, DELHI-13, ROHINI, NEW DELHI. NEW DELHI-110085 (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI SURESH GUPTA, CA ASSESSEE BY: SMT. APARNA KARAN, C.I.T. DR DATE OF HEARING: 10.10.2018 DATE OF PRONOUNCEMENT: 08.01.2019 ORDER PER SUDHANSHU SRIVASTAVA, J.M.: THIS IS ASSESSEES APPEAL PREFERRED AGAINST THE OR DER DATED 12.03.2018 PASSED U/S 263 OF THE INCOME TAX ACT, 19 61 (HEREINAFTER CALLED 'THE ACT') BY THE LD. PR. C.I.T ., DELHI-13 FOR ASSESSMENT YEAR 2013-14. THE LD. PR.CIT, IN THE IM PUGNED ORDER, HAS HELD THAT THE ASSESSING OFFICER DID NOT CONDUCT INQUIRIES/VERIFICATION THAT HE SHOULD HAVE DONE BEF ORE PASSING THE ORIGINAL ASSESSMENT ORDER U/S 143(3) ON 14.03.2 016. IT HAS BEEN HELD BY THE LD. PR.CIT THAT THE ORIGINAL ASSES SMENT ORDER IS ERRONEOUS INASMUCH AS IT IS PREJUDICIAL TO THE INTE REST OF REVENUE. VIDE THE IMPUGNED ORDER, THE LD. PR. CIT HAS CANCEL LED ORIGINAL ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 2 ASSESSMENT AND HAS DIRECTED THE ASSESSING OFFICER T O MAKE FRESH ASSESSMENT AFTER MAKING PROPER INQUIRIES WITH RESPE CT TO CERTAIN SUSPICIOUS TRANSACTIONS RELATING TO LONG TERM CAPIT AL GAINS ON SHARES. 2.0 BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE T HE RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME AT RS. 5,55 ,100/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND VIDE ORDER DATED 14.03.2016, THE ASSESSING OFFICER ACCEPTED THE RETU RNED INCOME WHICH INCLUDED INCOME FROM LONG TERM CAPITAL GAINS AND INCOME FROM OTHER SOURCES. SUBSEQUENTLY, A SHOW CAUSE NOT ICE WAS ISSUED U/S 263 OF THE ACT ON 19.12.2017 BY THE LD. PR. CIT STATING THAT THE ASSESSING OFFICER DID NOT MAKE PRO PER INQUIRIES NOR HE INVESTIGATED/VERIFIED THE VARIOUS DETAILS FI LED AND EVEN OMITTED ISSUES SPECIALLY WITH RESPECT TO SUSPICIOUS TRANSACTIONS RELATING TO LONG TERM CAPITAL GAIN IN SHARES, RENDE RING THE ASSESSMENT SO MADE TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE ORIGINAL ASSESSMENT ORDER PASSED ON 1 4.03.2016 U/S 143(3) OF THE ACT NOT BE REVISED. IN RESPONSE, THE ASSESSEE SUBMITTED BEFORE THE LD. PR.CIT THAT THE ASSESSEE H AD FILED ALL THE REQUISITE DETAILS AND INFORMATION REGARDING THE NAT URE AND SOURCE ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 3 OF CAPITAL GAINS ALONG WITH DOCUMENTARY EVIDENCES D URING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAD REACHED A CONCLUSION AFTER VE RIFYING AND EXAMINING ALL THE INFORMATION AND DETAILS AND, THER EFORE, THE ACTION OF THE ASSESSING OFFICER COULD NOT BE THE BA SIS FOR INITIATING REVISIONARY PROCEEDINGS U/S 263 OF THE ACT. HOWEVE R, THE LD. PR.CIT WAS OF THE OPINION THAT SINCE THE LAW HAD BE EN AMENDED AND EXPLANATION 2 HAD BEEN INTRODUCED BELOW SECTION 263 WHICH SPECIFIED THAT THE ORDER PASSED BY THE ASSESSING OF FICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE REVENUE IF IN THE OPINION OF THE PR. COMMISSIONER O R THE COMMISSIONER, THE ORDER HAS BEEN PASSED WITHOUT MAK ING ANY INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MA DE BY THE ASSESSING OFFICER. THE LD. PR.CIT WAS OF THE OPINI ON THAT SINCE THE ASSESSING OFFICER HAD NOT CARRIED OUT THE INVESTIGATION/INQUIRY WHICH HE SHOULD HAVE, THE ORD ER IS TO BE DEEMED TO BE ERRONEOUS INASMUCH AS IT IS PREJUDICIA L TO THE INTEREST OF THE REVENUE. THE LD. PR.CIT PROCEEDED TO CANCEL THE ASSESSMENT AND DIRECTED THE ASSESSING OFFICER TO FR AME FRESH ASSESSMENT AFTER CONDUCTING APPROPRIATE INQUIRY. A GGRIEVED BY ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 4 THIS ORDER OF THE LD. PR.CIT, THE ASSESSEE IS NOW I N APPEAL BEFORE THE ITAT. 3.0 THE LD. AR SUBMITTED THAT IT IS NOT THE CASE OF THE LD. PR.CIT THAT NO INQUIRY WAS CONDUCTED BY THE ASSESSI NG OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S. HE DREW OUR ATTENTION TO THE COPY OF NOTICE U/S 143(2) OF T HE ACT DATED 24.09.2015 ISSUED DURING THE COURSE OF ORIGINAL ASS ESSMENT PROCEEDINGS AND ALSO A COPY OF QUESTIONNAIRE DATED 04.04.2015 WHEREIN THE ASSESSING OFFICER HAD REQUIRED THE ASSE SSEE TO SUBMIT DETAILS OF AND SUBSTANTIATE LONG TERM CAPITA L GAIN. OUR ATTENTION WAS ALSO DRAWN TO COPY OF REPLIES SUBMITT ED TO THE ASSESSING OFFICER IN THIS REGARD ALONG WITH COPIES OF LEDGER ACCOUNTS OF THE ASSESSEE IN THE BOOKS OF THE SHARE BROKERS ALONG WITH CONTRACT NOTES AND ALSO COPIES OF PURCHASE BIL LS OF SHARES AND SHARE CERTIFICATES TO SUBSTANTIATE THAT ALL THE TRANSACTIONS WERE GENUINE AND HAD BEEN DULY INQUIRED INTO BY THE ASSESSING OFFICER. IT WAS ALSO SUBMITTED BY THE LD. AR THAT THE LD. PR.CIT HAD NOT MADE ANY INQUIRIES ON HIS OWN BUT HAD DIREC TED THE ASSESSING OFFICER TO CONDUCT INQUIRIES WHICH WAS AG AINST THE LAW LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CA SE OF CIT VS. GOETZE INDIA LTD. REPORTED IN 361 ITR 505 (DEL). I T WAS ALSO ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 5 SUBMITTED THAT THE INSERTION OF EXPLANATION 2 TO SE CTION 263 OF THE ACT WAS PROSPECTIVE IN NATURE AND, THEREFORE, W OULD NOT APPLY IN ASSESSMENT YEAR 2014-15. 4.0 IN RESPONSE, THE LD. CIT DR VEHEMENTLY SUPPORTE D THE ORDER OF THE LD. PR.CIT AND SUBMITTED THAT SINCE THE ASSE SSING OFFICER HAD NOT MADE ANY INQUIRY REGARDING THE LONG TERM CA PITAL GAINS, THE EXERCISE OF REVISIONARY JURISDICTION BY THE LD. PR.CIT WAS JUSTIFIED. THE LD. CIT DR ALSO PLACED RELIANCE ON THE FOLLOWING CASE LAWS TO SUPPORT HER CONTENTION THAT THE ACTION OF THE LD. PR.CIT IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT WAS JUSTIFIED:- 1. MALABAR INDUSTRIAL CO. LTD. VS. CIT SUPREME COURT 2000, 109 TAXMAN 66 2. CIT VS. ASHOK LOGANI, DELHI HIGH COURT, 2011, 11 TAXMANN.COM 208 3. SURYA JYOTI SOFTWARE PVT. LTD. VS. PCIT, ITAT DELH I, 2017, ITA NO. 2158/DEL/2017 4. SURYA FINANCIAL SERVICES LTD. VS. PCIT, ITAT DELHI 2018, 2018-TIOL-74-ITAT-DEL 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE RECORDS PRO DUCED BEFORE US, IT IS VERY MUCH EVIDENT THAT THE ASSESSING OFFI CER HAD MADE ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 6 DETAILED INQUIRIES REGARDING THE ASSESSEES CLAIM O F LONG TERM CAPITAL GAIN AND, THEREAFTER, AFTER CONSIDERING THE REPLY SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER HAD MADE FUR THER INQUIRIES ALSO WHICH IS EVIDENT FROM THE COPY OF QUESTIONNAIR E AS WELL AS THE REPLY THERETO WHICH HAS BEEN PLACED IN THE PAPE R BOOK FILED BY THE ASSESSEE BEFORE US. THUS, IN VIEW OF THE DO CUMENTARY EVIDENCES AS CALLED FOR AND EXAMINED BY THE ASSESSI NG OFFICER, IT IS VERY MUCH EVIDENT THAT THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE ISSUE OF LONG TERM CAPITAL GAINS AND IT WAS ONLY AFTER HAVING BEEN SATISFIED WITH THE CORRECTNESS OF THE C LAIM THAT HE ACCEPTED THE RETURN FILED BY THE ASSESSEE. THEREFO RE, WE CAN SAFELY CONCLUDE THAT PROPER INQUIRIES HAD BEEN MADE BY THE ASSESSING OFFICER WHILE ACCEPTING THE CLAIM OF THE ASSESSEE AND, THEREFORE, THE CONTENTION OF THE LD. PR.CIT THAT NO INQUIRY WAS MADE BY THE ASSESSING OFFICER IS FACTUALLY INCORREC T. IT IS NOT THE CASE WHERE NO INQUIRY HAS BEEN MADE BY THE ASSESSIN G OFFICER. MERELY BECAUSE THE LD. PR. CIT FELT THAT FURTHER IN QUIRY SHOULD HAVE BEEN MADE DOES NOT MAKE THE ORDER OF THE ASSES SING OFFICER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. 5.1 IT IS FURTHER SEEN THAT THE ASSESSEE HAD MADE D ETAILED SUBMISSIONS BEFORE THE LD. PR.CIT IN RESPONSE TO TH E NOTICE U/S ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 7 263 OF THE ACT STATING THAT ALL THE ISSUES RAISED B Y THE LD. PR. CIT HAD BEEN DULY EXAMINED BY THE ASSESSING OFFICER DUR ING THE COURSE OF ASSESSMENT. HOWEVER, THE LD. PR.CIT HAS IGNORED THE REPLIES OF THE ASSESSEE AND HE HAS NOT DISCUSSED AS TO WHY HE DOES NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE . THE LD. PR.CIT HAS MERELY REMITTED THE MATTER BACK TO THE A SSESSING OFFICER WITHOUT MAKING ANY INQUIRY HIMSELF. IT IS APPARENT THAT NO INDEPENDENT INQUIRIES HAVE BEEN MADE BY THE LD. PR.CIT ALTHOUGH IT WAS INCUMBENT UPON HIM TO MAKE SUCH INQ UIRY SO AS TO REACH THE CONCLUSION THAT THE ORDER OF THE ASSES SING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE. 5.2 THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. DELHI AIRPORT METRO EXPRESS PVT. LTD. IN ITA NO.705/2017 HAS CATEGORICALLY HELD THAT FOR THE PURPOSE OF EXERCISI NG JURISDICTION U/S 263 OF THE ACT AND REACHING A CONCLUSION THAT T HE ORDER IS ERRONEOUS IN SO FAR AS BEING PREJUDICIAL TO THE INT EREST OF THE REVENUE, THE CIT HAS TO MAKE SOME MINIMAL INQUIRY A ND WHERE THE CIT IS OF THE VIEW THAT THE ASSESSING OFFICER H AD NOT UNDERTAKEN ANY INQUIRY, IT BECOMES INCUMBENT UPON T HE CIT TO CONDUCT SUCH INQUIRY. WE ARE AFRAID THAT IN THE PR ESENT CASE THE LD. PR.CIT HAS NOT CONDUCTED ANY SUCH INQUIRY. ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 8 5.3 FURTHER, THE HONBLE DELHI HIGH COURT IN THE CA SE OF PR.CIT VS. MODICARE LTD. IN ITA 759/2017 HAS HELD THAT THE EXERCISE OF JURISDICTION U/S 263 OF THE ACT CANNOT BE OUTSOURCE D BY THE LD. PR.CIT TO THE ASSESSING OFFICER AND THEREFORE, THE LD. PR.CIT CANNOT DIRECT THE ASSESSING OFFICER TO PROVIDE DETA ILS OF THE FACTS ON THE BASIS OF WHICH PROCEEDINGS U/S 263 COULD HAV E BEEN INITIATED. 5.4 IN THE PRESENT CASE, IT IS APPARENT THAT THE LD . PR.CIT, UNMINDFUL OF THE INQUIRIES CONDUCTED BY THE ASSESSI NG OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SUBMISSIONS MADE BY THE ASSESSEE IN RESPONSE TO NOT ICE U/S 263 OF THE ACT, HAS MERELY OBSERVED THAT THE ASSESSMENT ORDER WAS PASSED WITHOUT MAKING PROPER INQUIRIES AND IT IS A MATTER OF RECORD THAT THE LD. PR.CIT HAS HIMSELF NOT UNDERTAK EN ANY INQUIRY TO REACH A CONCLUSION THAT THE ORDER IS ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5.5 WE MAY FURTHER ADD THAT THERE IS A DIFFERENCE B ETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY AND IT IS FOR THE ASSESSING OFFICER TO DECIDE THE EXTENT OF INQUIRY TO BE MADE AND IT IS HIS SATISFACTION WHICH IS REQUIRED UNDER THE LAW. THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TA X VS. ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 9 SUNBEAM AUTO LTD REPORTED IN (2010) REPORTED IN 332 ITR 167 (DELHI) HAS HELD THAT IF THERE WAS ANY INQUIRY, EVE N INADEQUATE, THAT WOULD BY ITSELF NOT GIVE OCCASION TO THE COMMI SSIONER TO PASS ORDER U/S 263 OF THE ACT MERELY BECAUSE THE CO MMISSIONER HAD A DIFFERENT OPINION IN THE MATTER. IT IS A SET TLED LAW THAT THE LD. PR.CIT CANNOT PASS THE ORDER U/S 263 ON THE GRO UND THAT THOROUGH INQUIRY SHOULD HAVE BEEN MADE BY THE ASSES SING OFFICER. 5.6 ALTHOUGH, THERE HAS BEEN AN AMENDMENT IN THE PR OVISIONS OF SECTION 263 OF THE ACT BY WHICH EXPLANATION 2 HA S BEEN INSERTED W.E.F. 1.6.2015 BUT THE SAME DOES NOT GIVE UNFETTERED POWERS TO THE COMMISSIONER TO ASSUME JURISDICTION U NDER SECTION 263 TO REVISE EVERY ORDER OF THE ASSESSING OFFICER TO RE-EXAMINE THE ISSUES ALREADY EXAMINED DURING THE COURSE OF AS SESSMENT PROCEEDINGS. THE MUMBAI ITAT BENCH HAS DEALT WITH EXPLANATION 2 AS INSERTED BY FINANCE ACT, 2015 IN T HE CASE OF NARAYAN TATU RANE VS. ITO REPORTED IN (2016) 70 TAX MAN.COM 227 TO HOLD THAT THE SAID EXPLANATION CANNOT BE SAI D TO HAVE OVERRIDDEN THE LIABILITY AS INTERPRETED BY HONBLE DELHI HIGH COURT, ACCORDING TO WHICH THE COMMISSIONER HAS TO C ONDUCT THE INQUIRY AND VERIFICATION TO ESTABLISH AND SHOW THAT THE ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 10 ASSESSMENT ORDER WAS UNSUSTAINABLE IN LAW. THE ITA T MUMBAI BENCH HAS FURTHER HELD THAT THE INTENTION OF THE LE GISLATURE COULD NOT HAVE BEEN TO ENABLE THE CIT TO FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER WITHOUT CONDUCTING ANY INQUIRY OR VERIFICATION IN ORDER TO ESTABLISH THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW, SINCE SUCH AN INTERPRETATION WILL LEAD TO U NENDING LITIGATION AND THERE WOULD NOT BE ANY POINT OF FINA LITY IN THE LEGAL PROCEEDINGS. THE ITAT MUMBAI BENCH OF THE TRIBUNAL WENT ON TO HOLD THAT THE OPINION OF THE COMMISSIONER REFERRED TO IN SECTION 263 OF THE ACT HAS TO BE UNDERSTOOD AS LEGAL AND JU DICIOUS OPINION AND NOT ARBITRARY OPINION. 5.7 WE ALSO NOTE THAT IT HAS BEEN HELD BY THE ITAT MUMBAI BENCH IN THE CASE OF M/S INDUS BEST HOSPITALITY & R EALTORS PVT. LTD. IN ITA NO. 3125/MUM/2017 VIDE ORDER DATED 19.0 1.2018 THAT EXPLANATION 2 TO SECTION 263 OF THE ACT INTROD UCED BY FINANCE ACT, 2015 IS RETROSPECTIVE IN NATURE. SINC E THE YEAR UNDER CONSIDERATION IS AY 2014-15, WE ARE AFRAID TH AT EXPLANATION 2 TO SECTION 263 WILL NOT COME TO THE A ID OF THE DEPARTMENT IN THIS CASE. SIMILAR VIEW HAS BEEN TAK EN BY THE VARIOUS COORDINATE BENCHES OF THE ITAT IN THE FOLLO WING CASES:- ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 11 (A) AV INDUSTRIES V. ACIT [ITA NO. 3469/MU M/2010] DATE D 06.11.2015 (B) METACAPS ENGINEERING AND MAHENDRA CONSTRUCTIONS CO . (JV) V. CIT [ITA NO. 2895/MUM/2014] DATED 11.09.201 7 (C) RELIANCE MONEY INFRASTRUCTURE LTD. V. PCIT [ITA NO . 3259/MUM/2017] DATED 06.10.2017. (D) SHANTIKRUPA ESTATE PVT. LTD. [ITA NO. 1252/AHD/201 5] DATED 09.09.2016 (E) AMIRA PURE FOODS PVT. LTD. V. PCIT [ITA NO. 451/DE L/2017] DATED 29.11.2017. 5.8 ACCORDINGLY, RESPECTFULLY FOLLOWING THE RATIO O F THE VARIOUS JUDGMENTS AS REFERRED TO IN THE PRECEDING PARAGRAPH S, WE HAVE NO HESITATION IN HOLDING THAT THE LD. PR.CIT HAD WRONG LY INVOKED THE REVISIONARY POWERS U/S 263 OF THE ACT AND WE HAVE N O OPTION BUT TO QUASH THE SAME. IT IS SO ORDERED ACCORDINGLY. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JANUARY, 2019. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DATED: 8 TH JANUARY, 2019 GS ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014-15 12 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR DATE OF DICTATION 09.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER
