Sunil Kumar, Rohtak V. PCIT, Rohtak

ITA 3560/DEL/2019

AI Insights

The case involves an appeal by Sunil Kumar against the revisionary order of the Principal Commissioner of Income Tax, Rohtak, which sought to set aside the original assessment order for the assessment year 2009-10. The original assessment had been completed under Sections 143(3) and 147 of the Income Tax Act, determining the total income of the assessee significantly higher than the returned income. The revisionary authority alleged that the assessing officer failed to conduct necessary inquiries regarding a cash purchase of land, which was prejudicial to the interests of the revenue. The Tribunal found that the revisionary order was based on a fundamental error in the appreciation of facts, as the assessee had not purchased any land but had only received an advance for a sale agreement, which was later returned.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121560 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-10-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 201; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.3560/DEL/2019 Assessment Year 2009-10 Sunil Kumar, H.No. 921/21, Prem Nagar, Jail Road, Rohtak Haryana. Vs. Principal Commissioner of Income Tax, Rohtak TAN/PAN: ATWPK1908N (Appellant) (Respondent) Appellant by: Shri Navin Gupta, Adv. Respondent by: Shri T. James Singson, CIT-DR Date of hearing: 10 10 2023 Date of pronouncement: 16 10 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he ca p ti on ed a p p e al b y t h e a ss e s se e i s d ir e ct e d a ga in st t he re v i s i o n a l or d e r p a ss e d b y t he P ri nc i pa l Co m m i s si o ne r o f I n c o me Ta x , R o h t a k ( P r. C I T ) da te d 26 . 0 3. 2 01 9 w h er eb y t h e ass e s s me n t or d e r p as se d b y t h e A ss es si n g O f fi ce r da t ed 28 . 1 2. 201 6 un de r S ec t i on 1 43 (3 ) r . w . 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S e ct i o n 1 4 7 sh o u l d no t b e se t as i d e o r mo di fi e d. It w a s a l l eg e d by t he P r. CI T t ha t e x a mi na t i o n o f reco r ds r e v e a l e d t ha t th e r e -a ss e s s me nt o r de r s o p a s s ed i s e rr o n e o us i n s o fa r a s pr e j u d i c i a l t o th e i n t er e s t o f t h e R e v en ue f or t h e r ea s o n s t h a t A sse s si n g O f fi c e r ha s fa i l e d to c o n d uc t i n qu i r y / ex a m i na t i o n t ow a r ds p ur c h a se o f l a n d i n c as h a mo un t i n g t o R s. 25 l a k h s. T he sh o w c a us e no ti c e r e fe rr ed ab ov e i s re pr o du ce d h e r eu nd er : “ 1 . I n t h i s r e g a rd , i t i s t o i n f o r m y o u t h a t o r i g i na l a s s e s s m e n t i n y o u r c a s e w a s c o m p l e t e d a t a n i n c o m e o f R s . 3 , 7 3 , 5 3 0 / - a s a g a i n s t r e t u r n e d i n c o m e o f R s . 2 , 2 2 ,5 3 0 / - b y t h e t h e n A O v i d e o r d e r pa s s e d u / s . 1 4 3 ( 3 ) / 1 4 7 o n 2 8 .1 2 . 2 0 1 6 f o r t h e a b o v e m e n t i o n e d a s s e s s m e n t y ea r . 2 . T h e a s s e s s m e n t o f y o u r c a s e f o r t h e A Y 2 0 0 9 - 1 0 wa s m a d e u / s . 1 4 3 ( 3 ) / 1 4 7 . D u r i n g t h e c o u r s e o f e x a m i n a t i o n o f t h e d e t a i l s f u r n i s h e d b y y o u , i t i s n o t i c e d t h a t y o u a r e d o in g t h e j o b o f p ro p e r t y d e a l e r a n d p u r c h a s e d a g r i c u l t u r a l L a n d f o r R s .2 5 , 0 0 ,0 0 0 / - i n ca s h o n 1 .1 1 . 2 0 1 8 a n d r e t u r n e d t h e s a m e a m o u n t i n c a s h o n 0 3 . 0 2 . 2 0 1 9 . S i nc e y o u d e a l s i n s a l e a n d p u r c h a s e o f p ro p e r t y , i t i s u s u a l b u s i n e s s o f yo u r a n d t h u s y o u c a n n o t m a k e p u r c h a s e o f e x c e e d i n g R s . 2 0 , 0 0 0 / - i n ca s h . T h e p u r c h a s e i n c a sh o f l a n d a m o u n t i n g t o R s . 2 5 , 0 0 , 0 0 0 / - n e e d s t o be a d d e d b a c k t o y o u r t a x a b l e i n c o m e . T h e A . O . s e e m s t o n o t v e r i f i e d a n d m a d e e n q u i ry a b o u t s u c h f a c t r e s u l t i n g t h e r e b y r e v e n u e l o s s t o t h e g o ve r n m e n t . 3 . Y o u a r e , t h e r e f o r e , g i v e n a n o p p o r t u n i t y o f b e i ng h e a r d a n d r e q u e s t e d t o a t t e n d m y o f f i c e a t R o o m N o . 1 0 1 , A a y a k a r B h a w a n, O p p o s i t e M a n sa ro v a r P a r k , R o h t a k o n 2 0 -0 3 - 2 0 1 9 a t 1 1 . 3 0 a . m . t o s h o w c a u s e a s t o w h y a n a p p ro p r ia t e o rd e r u n d e r s e c t i o n 2 6 3 o f t he I n c o m e Ta x A c t , 1 9 6 1 n o t b e p a s s e d s e t t i n g a s i d e / m o d i f y i n g t h e o r d er u / s 1 4 3 ( 3 ) p a s s e d in y o u r c a s e f o r t h e a s se s s m e n t y e a r 2 0 0 9 -1 0 . I n c a s e y o u d o n o t w i s h t o a v a i l t h e o p p o r tu n i t y o f b e i n g h e a r d i n p e r s o n o r th r o u g h a u t h o r i z e d r e p r e s e n t a t i v e i n s u p p o r t o f y o u r c l a i m , y o u m a y s en d y o u r w r i t t e n r e p l y s o a s t o r e a c h t h i s o f f i c e o n o r b e f o r e t h e s t i p u l at e d d a t e , w h i c h w i l l b e d u l y c o n s i d e r e d b e f o r e a n y su c h o rd e r i s p a s s e d . I n c a s e o f f a i l u r e , t h e d e c i s i o n w o u l d b e t a k e n o n m e r i t s . ” 3. I n r es p o ns e , t he a s se s se e f i le d a r e pl y a n d s ub mi t t e d th at t he sh o w c a us e no ti c e i ssu ed s ee k i n g t o re vi s e t h e re -as se ss m e nt o r d e r i s pr e m i se d on fu n d a m e nt a l e r r o r i n a p p re c ia t i o n o f fac t s c o rr e c t l y . It w as su b m i t t e d be f o re th e P r . CIT t ha t w h i l e t h e s how c a us e n ot i ce re fe r s t o a l l e g e d p u rc ha se o f a g ri c u l t ura l l a nd i n c as h , t he a sse ss ee I.T.A. No.3560/Del/2019 3 ha s n e v e r p urc h a s e d a n y la nd . Th e a s se ss e e h as r a ther ob t a i n e d a dv a n c e f or sa le o f an c e s t ra l l a n d w hi c h w a s ev e n t ua ll y r e t u rn e d a s t he d e a l c o ul d no t ma t er i a l i z e . T he r e pl y o f t h e asse ss e e be fo re t he P r. CI T i s r ep r od uc e d he r e u n d e r: “ F u r t h e r t o y o u r q u e r y r e g a r d i n g p u r c h a s e o f a g r i c ul t u r e l a n d f o r R s . 2 5 . 0 0 L a k h s , i t i s h e r e b y c l a r i f i e d t h a t n o a g r i c u lt u r e l a n d w a s e v e r p u r c h a s e d b y t h e a s s e s s e e d u r i n g t h e r e l e v a n t p r e v io u s y e a r . T h e w h o l e a g r e e m e n t h a s b e e n m i s u n d e r s t o o d a n d h a s b e e n t u r n ed u p s i d e d o w n b y t h e l e a r n e d d e p a r t m e n t a l a u d i t o r . T h e a g r e e m e n t w a s n o t f o r p u r c h a s e b u t f o r s a l e o f a n c e s t r a l a g r i c u l t u r e l a n d s i t u a t e d a t V i l l a g e K h a n d a K h e r i , d i s t r i c t H i s s a r . T h e a s s e s s e e a l o n g w i t h h i s m o t h e r S m t . R a j b a la a n d h i s b ro t h e r L a t e S h . D i n e s h j o i n t l y i n h e r i t e d pa r e n t a l a g r i c u l t u r e l a n d o f a r o u n d 9 . 5 0 A c r e s . T h e a g r e e m e n t w a s d o n e fo r s a l e o f p a r t o f t h i s a n c e s t r a l a g r i c u l t u r e l a n d a n d t h e a m o u n t o f Rs . 2 5 .0 0 L a k h s w a s r e c e i v e d a s a n a d v a n c e a g a i n s t t h e s a l e a g r e e m e n t of t h i s v e r y p i e c e o f a n c e s t r a l . " L a t e r o n t h e d e a l w e n t s o u r a n d t h e a d va n c e r e c e i v e d w a s r e t u r n e d b y t h e a s s e ss e e t o t h e i n t e n d e d p u r c h a s e r . Th e c o p y o f s a l e a g r e e m e n t , c o p y o f c o n f i r m a t i o n o f a c c o u n t s f r o m t he i n t e n d e d b u y e r a n d J a m d b a n d i o f t h e a n c e s t r a l a g r i c u l t u r e l a n d d e p i c t in g s h a r e o f t h e a s s e s s e e , h i s m o t h e r S m t . R a j a b a l a a n d h i s b r o t h e r L a t e S h . D i n e s h w a s p ro d u c e d t o t h e a s s e s s i n g o f f i c e r a t t h e t i m e o f s cr u t i n y p r o c e e d i n g s a n d w e r e a c c e p t e d . T h e sa m e d o c u m e n t s a r e r e p r o d u c e d h er e a s w e l l f o r y o u r r e a d y r e f e r e n c e . T h e sa l e o f a n c e s t r a l a g r i c u l t u r e l a n d h a v i n g j o i n t o w n e r s h i p o f o t h e r f a m i l y m e m b e r s c a n n o t b e t r e a t e d a s sa l e o f s t o c k in t r a d e . F u r t h e r i n v o k i n g o f s e c . 4 0 A ( 3 ) i s n o t v a l i d a t a l l a s s e c ti o n 4 0 ( 3 ) i s a p p l i c a b l e o n c a s h p u r c h a s e o f b u s i n e s s g o o d s w h e r e i n i n t h i s c a s e t h e r e i s n o p u r c h a s e b u t a g r e e m e n t f o r s a l e o f a g r i c u l t u r e l a n d. I , t h e r e f o r e w o u l d r e q u e s t y o u r g o o d s e l f n o t t o a d d t h e a m o u n t o f R s .2 5 . 0 0 L a k h s t o t h e t a x a b l e I n c o m e . ” 4. T he P r. CI T h o w ev er he l d t h a t th e r e - as se ss m e nt or de r d at e d 28 . 1 2. 2 0 1 6 i s e r r o n e ou s i n so f ar a s p r ej u d i ci a l t o t h e i n te r es t o f t he Re ve n u e a n d c on se q ue nt ly se t as i d e t he r e- a s ses s m e nt o r de r w i t h a di r e c t i o n t o m a k e f re sh a ss e s s m e n t a ft e r m a k i ng p r op e r i nq u i r i es / i nv e st i g a t io n s. 5. A g gri e v e d b y t he r ev i si o n a l o r de r o f t he P r. C I T u nd e r S e c t i o n 26 3 , th e a s se s se e p r e fe r r e d a p pe a l b e f o r e t h e T ri buna l. 6. T he l d. c o u n se l for t he a ss es s ee re i t e r a t e d t h e su b m i s si o n s ma de b e for e t h e P r. C IT a nd p oi n t e d o ut t h a t t h e w h ol e p r oc e e d i n g s I.T.A. No.3560/Del/2019 4 un d e r S ec t i o n 2 6 3 i s ba s e d o n e r ro n e ou s a s su m p t i on o f f a c t s a n d S ec t i on 4 0A (3 ) a p pl i c a b l e t o c as h p ur c h a se s o f b us in e ss g o o ds , i s a pp a r e n t l y n o t a pp l i c ab le si n c e t h e r e i s n o p ur c h a se b u t an M O U w as p re pa re d fo r sa le o f a g r i c u l t u r a l l a nd. T he l d . c ou ns e l su b m i t t e d t ha t w ro ng a s se rt i on s w e r e a d mi t t e d ly m a de i n a ud it e nq u i r y su b se q u e n t t o r e - a ss e s s me n t o r d e r by t h e r e p re se n t at i ve o f t h e a ss es se e , ou t o f i n a d ve rt e n c e a n d fa ct u a l m i s t a k e. T he c u r re nt ve r si on o f t h e a s se s se e t o w ar ds p r o po sed s a l e o f l an d i n an y ca se i s ba c ke d by d o c u m e n ta r y ev id en c e s a n d a me re e rro r i n re pr ese nt a t io n de h o r s t h e fa c ts o n r ec or d, ca r ri es n o w e i gh t i n th e e y e s o f l aw . S uc h a s se r t io ns d i s re g a r d i ng t he fa c t s is n o t d e c i si ve i n d e t e r m in in g t he i ss u e a nd t h e a s se s se e i s e n t i t l ed t o d e m on st r at e t h e co rre c t f a ct s w hi c h t h e a ss e s se e ha s d o n e i n t he i ns t an t c a s e . T he ld . c o un se l t h u s su b mi t t e d t ha t no p re j ud i c e w a s c a u se d t o t h e Re ve nue p e r se w hi le fr a m i ng t he re - as se ss m e n t o r d er a n d t h e re fo re , t h e r e v i s i o na r y p ow e r e xe rc is e d un d e r S ec t i on 2 63 i s ou t s i d e t he sa nc t io n o f l a w . 7. T he l d . D R fo r t he R e v e n ue , o n th e o t he r h a n d , he a vi l y r e l i e d up o n a re pl y d a t e d 1 4 t h Ju ne , 2 0 1 8 a ft er t h e c l o s u re o f t he a ss es s m e n t i n r e s p o n se t o a u d i t qu er y w h er e in t h e rep re s e nt at i v e o f t he a s se sse e h as st a te d i n un eq ui vo ca l te r m s t h a t ass e ss e e pa i d a dv a n c e i n c a s h o f R s. 2 5 l a kh s fo r p ur c h as e o f ag r ic u l tu ra l l an d du r i n g th e F i n a n c i a l Y e a r 2 00 9- 10. T he l d. C I T -D R th u s s u b m i t t e d t ha t in t h e w a k e o f s u c h a s se rt i o ns, t h e P r . C IT w a s j ust i fi e d i n se t t i ng a si d e t h e e rr o n e o u s re -a ss e s s m en t o r d e r fr ame d w i th ou t e nq u i r y t o t he p r e j u d i c e o f th e R e v e n u e . 8. W e h a ve c a re f u l l y co n si de re d t h e r iv al sub mi s si on s. 9. T he P r. CI T i n t h e p re s e n t c a s e h a s p ur p or te d t o a ct i n ex e r c i se o f p o w e r u n d e r S e c t i o n 2 63 on t h e g r o u n d t ha t re - asse ss m e n t o r de r a cc e p t i n g t he c a s h a dv an ce i n a c o m m er c i a l a n d b usin e ss t ra ns a c t io n I.T.A. No.3560/Del/2019 5 i s w i t h ou t pr o pe r i nq u i r y ha vi ng r e g a r d t o t h e pr ovi s i o n s o f S e c t i o n 40 A ( 3) o f t h e A c t a nd t h e r e f or e e r ro n e ou s i n s o fa r a s pr e j u d i c i a l t o t he i nt e r e s t o f t h e Re ve n u e. T h e a sse s s ee h a s st r o ngl y c o nt e st ed t he sh o w c a us e no ti c e i ss u e d i n t h e i m p u g ne d re vi si on ary p r oc ee d i n g s a nd a s se rt ed th a t a n e rr o n e o u s r e p l y i n a p os t r e -as se ss me nt pr o c e e d i n g s b e for e t he A s ses si n g O f fi c er by i t s el f, i s n o t c a p a b l e o f de t er mi ni n g t he is s u e . 9. 1 W e o b s er ve t h a t t h e as se ss e e h a s po i n t e d ou t t he c or r e c t f a c t s be fo r e t h e P r . CI T w i th o ut a ny s h i e l d. I n t he c i rc u mst a nc es w h er e t he ge n e s i s o f a c ti on un d er S e c t i on 26 3 i s b a s ed o n a co rr e sp on d e n c e a ft er t h e r e -a ss e s s m e n t or de r ha s be e n fr a me d , a m ini ma l i n q ui r y b y t he P r. CI T w a s in cu mb e n t b e fo r e se tt i ng a s i d e t h e re - a ss e s s me n t or d e r a nd p r ov i d i n g a ny di re c ti on t o t h e A s ses si n g O ff ic e r . 9. 2 I n t e r m s o f E x p l an a t i on -I t o S e c t i o n 2 63 o f t he A c t , a n i nd e p e n d e n t a nd a ne w p r o ce e d i n g s se t s i n mo t i on o n r e c e i p t o f ne w ma t e r i a l (c o m mu ni c at i o n t o A s s es si n g O f fi c er p o s t re - ass e s s m e n t ) c o mi n g o n re c or d po st a s se s s me nt a n d he n c e t he r e s po n si b i l i t y o f re v i s i o n a r y a ut ho ri t y t ow a r d s o b s er v a nc e o f pr i n c i pl e s o f na t u r al j us t i c e , i n s uc h s i t u a ti o n, w ou l d b e a ki n t o t h a t of A ss es si n g O ff ic e r. Th e P r . C I T c a n n ot m e r e l y s e t a s i d e t h e a s se ss me nt on t h e b a si s o f a ne w fa c t ( a l b ei t i nc or re ct ) c o mi n g on r e co rd w i t ho ut ex er t in g hi m se l f a n d pr ov i de so me b a s i s t o di s l o d g e th e r e s po n se o f t h e a ss es se e o n s u c h n e w m a t e r i a l . T h e P r . C I T , un d er the c i r c u m st a n c e s, i s u n de r b ou n d e n du t y to t a ke i n t o a c c o u n t t h e p e r spe c t i v e o f t h e a ss es se e on su c h fr e s h m at e ri a l a nd i s r e qu i r e d t o pa ss a s p e a k in g or d e r t he r e o n . T h e P r . CIT t hu s is n ot e x pe c t e d to sit s o le l y i n t he c ap ac i t y o f r e v i s i o na r y a ut h o ri t y qu a t h e n e w fa c t c o m in g t o t he l ig ht p o s t a s se s s me nt / re -a sse ss me n t or d er b u t i s requ i r e d t o as su me t he t a s k o f A s se ss i ng O f fi c er i n t a n d e m a n d d i s c h a rg e qu a si j ud i c i al fu n c t i o n s i n a r e a so na b l e ma n n e r . I.T.A. No.3560/Del/2019 6 9. 3 T he P r . C IT , i n t he i ns t a nt c as e , ha s f ai l e d t o d o so. T h e r e i s no t e v e n a n i o ta o f a ny d i sc u s si o n a s t o ho w r e p l y o f t h e a ss e s se e i s w it h o ut a ny s ub st a nc e p a r ti c ul a r l y w h en t h e a s se ssee ha s fu r n i s he d e vi de nc es t o c o r ro b or a te h i s ve r s io n be fo r e t h e P r.CI T. 9. 4 I n p a r a g ra ph 3 o f t he re vi si on ar y or de r, t h e P r. C I T h a s a br u p t l y o bs e r v e d t h at t h e r e - a s se s s me nt or d e r is er r o ne o u s in s o fa r a s i t is pr e j u d i c i a l t o t he i nt e r e s t o f th e R e v e n ue “ i n v i e w o f fo l l ow i n g o b s e r va t i on s” b u t ho w e v e r n o o b se rv a t i o ns t h e re a f t er ha s be e n fo un d t o be m a d e . T hu s, fi n d in gs o f P r. CI T s u ff e r f ro m a pp a r e n t e r ro r a n d in c o mp le t e n e s s. T he P r. CI T ha s su mm a r i l y s et a si d e t h e r e - ass e s s m e n t o rd er an d s hi f te d t he re sp on si bi l i t y o n t he A sse s si n g O ff ic e r t o ex a m i n e or ve r i f y t h e fa c t s. Th e op por t u ni t y c on t e mp la t e d un d e r S ec t i on 2 6 3 i s t h u s re nd e r e d i l lu so ry a nd me re l y a n e mp ty fo r m a l i t y re s u l t i ng i n mi s c a rri a g e o f j us ti c e i n c on t r a v e n t i on o f e x pr e ss i nt e n d m e n t o f pr o vi si on o f S e c t i on 26 3 o f t he A ct . 10 . L o o ki ng f ro m a n y an g l e , t he d i re ct i o n s t o w a r ds ve ri fi c at i on o f i mp u gn e d tr an sa ct i on s w i t h o u t ob se r v an c e o f na t u ra l j u st ic e an d w it h o ut s pe a ki ng o r de r o n t he p oi nt ba se d o n so m e de g r e e o f i n qu ir y by Pr . CI T h i m se l f , ar e u ns u s ta i na bl e i n l aw a nd de se r ve s t o b e qu a sh ed . 11 . I n t h e re s ul t , th e a p p e a l o f th e a s se ss e e i s a ll o w ed . Order pronounced in the open court on 16/ 10/ 20 23 Sd/- Sd/- [KUL BHARAT] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /09/2023 Prabhat