Vinod Kumar Mittal, Delhi V. Pr.CIT- 13, New Delhi

ITA 3751/DEL/2018

AI Insights

The case involves Vinod Kumar Mittal, the appellant, who contested a revisional order by the Pr. CIT, Delhi-13, which sought to revise an assessment order for the Assessment Year 2014-15. The original assessment had been completed under Section 143(3) of the Income Tax Act, 1961, where the income was assessed as declared by the assessee. The Pr. CIT's revisional order was based on allegations that the original assessment was erroneous and prejudicial to the interest of the revenue, particularly concerning unverified details of Long Term Capital Gains (LTCG) and unsecured loans. The ITAT, after examining the submissions and evidence, concluded that the Pr. CIT's revisional action was not justified as there was no substantial error in the original assessment that would warrant such intervention.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121637 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-02-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 17-05-2018
• Other Referred Cases: Smt. Sudha Eashwar vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 263; 2; 143(3); 201; 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI YOGESH KUMAR US, JUDICIAL MEMBER I.T.A. No.3751/DEL/2018 Assessment Year 2014-15 Vinod Kumar Mittal, H. No. 18, Pocket-4 & 5, Sector-23, Rohini, Delhi. Vs. Pr.CIT-13, New Delhi TAN/PAN: AAQPM1895D (Appellant) (Respondent) Appellant by: Shri Mayank Patwari, CA Shri Kalrab Mehrotra, Adv. Respondent by: Shri T. Kipgen, CIT-DR Date of hearing: 21 02 2023 Date of pronouncement: 12 05 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he ca pti oned a ppeal has been file d at t he i ns tance o f the assessee agains t the re vi sional ord er of the l d. Pr. C IT , D elhi- 13 (‘Pr. C IT ’ in sho rt ) dat ed 28. 02. 201 8 wher ei n or der p assed b y t he Assessi ng Of ficer (AO ) u nder Secti on 143( 3) of t he I nco me Tax Act , 1961 (t he Act ) dat ed 14. 03. 2016 concerni ng A Y 201 4- 15 was hel d t o be err one ous i n s o f ar a s preju dicial to t he i nterest of t he revenue wit hin t he mea ning of Sect ion 263 of the Act . 2. Br ie fl y sta ted, t he assessee, a in div id ual filed return of inco me a t Rs. 3, 8 2, 800/ - fo r Assess ment Year 2014- 15 in q ues ti on. The assessee i nter ali a decla red i nc ome unde r t he head ‘bus in ess inco me ’, ‘C apt ial G ains ’ a nd ‘I nco me from O the r S ources’ et c. A scr ut iny ass ess me nt w as ca rri ed out unde r Sect ion 143(3) of the I.T.A. No.3751/Del/2018 2 A ct for A Y 2014-15 i n ques t ion w her eb y the t otal i nco me w as als o assessed at Rs. 3, 82, 800/- as returned by the asses see. 3. T he assess ment c arri ed ou t b y t he A ssessing O fficer w as, how e ver sought t o be re vis ed b y the Pr. CIT . A show ca use not ice dated 22.1 2. 2017 w as issued to t his effec t. “S h ow c a us e no t i c e un de r Se c t i o n 2 6 3 o f t h e I nc o m e Ta x A c t f o r A . Y. 2 0 1 4 - 1 5 - r e g . * ** * ** * * * * * ** * Th e A s s e s s m e n t f o r t h e A . Y . 2 0 1 4 - 1 5 i n y o u r c as e w as c o m p le t e d on 1 4. 0 3. 2 0 16 u /s 14 3 ( 3 ) o f I. T . A c t o n t he t o t a l i n c om e o f R s . 3 , 82 , 8 00 / - . I t i s s e e n f r o m t h e r e c o r ds t h a t th e A O . di d n ot m ak e p r o pe r e nq ui r ie s , no r di d i nv e s t i gat e / v e r i f y v a r i ou s d e ta i l s f i l e d an d e v e n o m i t t e d i s s ue s e s pe ci al l y w i t h r e s pe c t s u s p i c i ou s L on g Te r m C a pi t a l G a i n on s h a r e s, r e n de r i ng t h e as s e s s m e n t s o m a d e t o be e r r o ne o u s , so f a r as i t i s pr e j u d i c i a l t o t h e i n t e r e s t o f r e v e n ue . I t h e r e for e i n t e n d t o r e v i s e t h e or de r p a s s e d on 14 . 0 3 . 2 0 16 u/ s 14 3 ( 3 ) o f t he I . T . A c t f o r A . Y. 2 0 1 4 - 1 5. Yo u m ay a t te n d o n 2 6 . 1 2 . 20 1 7 a t 4 : 0 0 P M , i n p e r s o n o r t h r ou g h y o u r A u t ho r i z e d R e pr e s e nt a t iv e a nd s h ow c aus e w h y t h e or d e r u / s . 1 43 (3 ) of t h e I T. A c t d a t e d 1 4. 0 3 . 2016 f o r A Y 2 01 4 - 1 5 s ho ul d n o t b e r e v i s e d. Y o u r s fa i t hf u l l y , P r . C o m m i s s i on e r o f I n c om e T ax - 1 3, N e w D e l hi . ” 4. T he Pr. C IT ev ent uall y se t aside the assess ment orde r fra me d under Secti on 143 (3) a nd di recte d t he A ssess ing Of fi cer to re do the ass ess ment i n t erms of observat ions ma de in revisi onal order. 5. A gg rieve d by the re visi onal o rde r, t he a ssesse e pre fe rre d appea l before t he IT A T seeking to challenge the revis ional orde r. 6. When the matter w as calle d fo r hearin g, the ld. couns el for the asses see ad verted t o t he s oli ta ry sh ow ca use not ice and submit ted tha t t he show c aus e noti ce broadl y alle ges fai lu re o f th e I.T.A. No.3751/Del/2018 3 A ssessi ng O fficer to invest i gate/ ver if y detai ls f iled in resp ect of suspicious transac ti ons r ela ting to Long Te rm C ap ital G ain on sha res rende ring t he assess ment so made to be e rr one ous in so fa r as it is prej udic ial to t he interest o f the reve nue. 6. 1 In this re ga rd, the ld. couns el for the assessee submi t te d t hat the cas e w as sel ecte d f or scrutin y mainl y on the grounds of suspicious t ransac tions of L ong T er m C apit al G ains as wel l as addi ti on t o b uildi ng a mou nt. The ld. counse l a dverted t o the re pl ies and submi t ted t ha t t he s pe ci fic re pl ies w ere placed be for e the A O w ith re ga rd t o t he Lo ng Term Cap ita l G ains of Rs. 22, 22,383/-. T he ass essee i nte r alia f il ed the proof of acquis i tion of sha res, copy of s ha re c er ti ficates, de ma teri alizat ion re quest for m etc and a lso t he rel evant con trac t notes t ow ar ds sal e of s ha re s. Copy of state me nt of demat account a nd cop y of le dger account w e re als o su bmi tted before the A sse ssi ng O ff ice r t o vi ndicate the bona fid es of the t ra ns act ions of shares. T he re fore, the assess ee, on i ts pa rt, has pr ovi ded al l material facts to the A ssessi ng O ff ice r as calle d upon by the A O in t he course of the assess me nt procee di ngs a nd he nce, the on us pla ced upon the assessee st ood dis cha rged and A O di d not s ee any perce pt i ble reas o n which ma y cal l for extended enqui ry. Th e i ncome was assessed acco rdingl y. O n t he other hand, the P r. C IT in the supervisor y proc eedi ngs, has att empt ed t o pla ce imposs ible burde n on the assess ee t o satisf y t he s us pic ion of the Pr.C IT reflecte d i n the revisi onal or de r b y a v er y gener ic obse rva tions w it hout point ing out a ny subs ta nt ive e rror in t he mate ri al pl aced. T he obs erva tio ns o f the Pr. CIT abou t non product ion of de mat account is contrar y t o the contents of re pl y plac ed before the Assessing O fficer. T he ld. counse l next cont ended t hat t he allega ti on of I.T.A. No.3751/Del/2018 4 suspicious tr ansac ti on in penn y s to ck is t otal l y unf ounded. A s submit ted, the t er m ‘Pen n y Stoc k’ has n ot bee n defined und er an y enac t me nt cur re ntl y i n f orce. T he re is no jus ti fia ble reason to att ribute m ala fi des on t he ass esse e me re l y be cause the P r. C IT consi ders a trans a cti on i n pa rticula r stock to b e penn y stock. As fur th er s ta ted, t he tra nsact io ns ha ve been ca rried out t hr ough th e plat fo rm of t he S tock Ex change and th at too in 10000 nu mbe r sha res onl y. T he s hares w ere t ra nsac ted t hro ugh t he int erme di aries / S tock B roke rs d ul y regi ster ed w it h the SEB I. T he Pr. CIT h as gi ve n undue c onsi de ra tions to the s o cal le d abnor mal i nc rease in the pri ce b y w ron gl y i nvoking the pri nc iples o f preponde ranc e of pro bab ili ti es. It i s tr ite that the deg ree or standa rd of pro of re qui red to est abl ish a fa ct ca nno t be de fined preci sel y. The drast ic inc re ase or decrease in t he price of large number o f shares in a giv en ye ar is an or dinar y phe nomenon in the s tock mar ket w her e price dis co ver y happe ns dependi ng on host of unce rtain fact ors bot h i nter nal a nd e xt er na l. T he SE B I is the watch dog for an y man ipulat iv e act ions i n the s t ock ma rke t. The as sessee has ente red into meage r t ra nsact ions of sa le of mere 100 00 s ha res h el d by it and n o ad verse SE BI re port is avai lable i mpl icating the assessee for a ny conce rted or man ip ulat ive ac tion whi ch ma y g ive ri se to an y ki nd of sus pici on of any ficti ons gai ns. A s further asse rte d, the A O in i ts ow n wis dom has t ake n a pla us i ble view in dis charge of h is quasi -j udicia l fu ncti on ba sed o n facts avai la bl e t o hi m. Th e view ta ken b y the A sses sing O ff ic er thus cannot be out ri ght l y r ej ect ed an d branded as errone ous per s e w ith in the sweep of supe rv isor y ju ris diction by i nvoki ng d oct rine of prepon derance of proba bi lit ies. 6. 2 T he l d. coun sel t hus c ontended t hat the Assess ing O f fice r I.T.A. No.3751/Del/2018 5 has tak en a fai r view in the tota l it y of ci rc umstances whic h is not capa ble of cas ual displace ment b y a s et as ide act ion i n t he a bse nce of an y c ogent mate ri al in t he poss ess ion of t he P r.CI T. The P r. CIT has s ough t to disl od ge a quas i-j udic ial action i n a cas ual ma nne r simpl y becaus e in his opin ion a greater inqui ry in the issue was neede d. T he ld. counse l s u bmi tte d tha t expecting an Assessi ng O fficer t o e xami ne each a nd eve r y i te m of inc ome or e xpenditure or ot he r t ransacti ons to the hilt is f ra ught w i th se rious const ra ints and is neit he r feas ible nor des irab le. It w as finall y contend ed t hat qua si -j udi cia l act ion o f Assess ing O ffice r ca nnot be lightl y s t ruck dow n wit hout show ing an y de fi nit e erro r r esult ing in prejudice t o the re ve nue. The A ssessi ng O ffi cer has conclu ded t he is s ue having re ga rd t o the t ot alit y of facts and thus cannot be br an ded as er roneou s in t he name o f al leged inadequac y of i nqui ry. 6. 3 T he ld. c ounsel further conte nds t ha t while t he s how caus e noti ce does not make an y r ef er ence to the additions t o bui l di ng account rece ived, no p re li mi nar y inqui ries w ere ma de by the Pr. CIT himsel f e ven at t he rev isi onal p rocee di ngs. The assess ee w as havi ng no opport unit y to dea l w ith the observati ons of P r. C IT tow ard s inde pende nt ve ri ficat ion of suc h. N otw it hstan di ng a t otal lac k of o pportunit y t o a ddr ess the issue be for e Pr.C IT, the iss ue w as not ove rl ooked b ut a r eas onable in qui ry was made by th e A ssessi ng O fficer in th is re ga rd t oo. In res ponse to que ri es raise d, in t he cou rs e of the assess me nt pr ocee dings, the Assessee had fi led a ll ma teria l particu la rs in respe ct of s uc h increas e i n buil ding ac co unt. It was p ointed out the Pr. C IT has w ro ngl y adopted a fi gure of Rs. 78, 46, 090/ - w hich represents t otal va lue. The i ncrease in buil ding acc ount durin g the year stands at Rs. 14, 40,000/- o nl y. T he Pr. C IT has thus ac te d casua ll y. I.T.A. No.3751/Del/2018 6 There fo re, exer ci se of supe rvis or y j urisd ic tion i s w ho ll y unj us t ifiable on the iss ue wi t hout mak ing re fe re nce to ci rc ums ta nces w hich w ar rants necessi ty o f independ ent ve ri fica tions. T he ld. coun sel th us urged fo r s et tin g as i de th e re vis ional order of t he Pr.C IT i n quest io n an d restorat ion of the assess me nt orde r. 7. T he l d. D R for t he Revenue, on the ot he r hand, re lied up on the re visi onal or de r and con tende d t hat t he Assess ing O ffice r has not exe rcise d t he due di ligence expected of him w hile exa mi ning the iss ues involv ed w hic h the A ssessing O ff icer has fai led t o pe rfo rm. It w as sub mi tte d that t he A O has me rel y accep te d the doc uments placed before hi m wi thout re quis ite e nqu iry thereon. The ld. D R re fer re d t o a nd relie d up on t he dec isi on of the Trib una l i n the c ase of Sm t. Sud ha E ash war vs. IT O in ITA No. 2342/ Chny /2019 or der dated 02. 01. 2020. T he ld. D R accordi ngl y submi tted tha t the rev isi onal c ommiss i one r has ac te d w ithi n four c orner s of law and cons equen tl y revisi ona l ac tion on the ass ess ment or der does not ca ll fo r an y inte rference. 8. We have ca re ful l y c onsi de re d t he rival s ub mi ss ion s and pe rus ed t he revisi ona l o rder passed by the P r. C IT under S ect i on 263 of the Act as well as other mate ri als refer red to and rel ie d upon b y t he respec ti ve pa rties an d ca se laws cit ed. 8. 1 Super viso ry j uris di cti on ve ste d unde r Sect io n 263 of t he A ct enabl es t he concerned P r. C IT/ C IT t o review the r ecords of a n y proceed ings a nd order passe d therei n by t he A O . It e mpowe rs the Revis ional C ommi ssioner c oncer ned to call f or and exa mi ne the reco rds of anothe r pr oceeding under the A ct an d if he cons i de rs that an y order pass ed there in by t he A O is erro neous in so far a s it I.T.A. No.3751/Del/2018 7 is pr ej ud ic ial to t he in te res t of the Reven ue, t he n he ma y (afte r gi vi ng the assess ee a n op port un it y o f be ing hea rd and afte r ma ki ng or c aus ing t o be made suc h i nqu ir y a s he deems nece ssar y), pass s uch orde r ther eon as the c ircums ta nces o f the case jus ti f y, in cl uding the order enh anci ng o r modif yi ng the assess me nt or ca ncell ing the asse ssme nt and di re cting afresh assess me nt. T hus , the revis iona l powe rs confe rred on the Pr. CIT /C IT u nde r s. 263 of the Act are of wi de ampl it ude w ith a view t o ad dress the revenue ris ks which a re obj ec tive l y justi fi able. 8. 2 In the i nst an t cas e, the s ubs ta nt ive issue t hat e merges f or adju dicati on is w hether t he P r. CIT under t he umb re ll a of re vis ionar y pow e rs is en ti t led t o up set the finali ty of assess ment proceed ings bef ore the A sse ssi ng O fficer w he re the Assessi ng O fficer has a l le ge dl y c ommi tte d err or i n p assi ng asses s me nt o rde r w ithout proper ve rificat io n of t he pr opriet y of LT CG t ra nsact ions and unsecured l oans recei ved d uri ng the year. Implicit in the que st ion, i n t he c ontex t of facts a nd ci rc ums ta nces of the cas e, is thus sco pe o f pow ers of rev is iona l commi ss ione r i n th e eve nt of all eg ed i na de qua cy of inqui r y into va rious aspect s of a n i ssue. 8. 3 O n perusa l of the show ca use notic e (SCN ) is sued by th e Revisional C o mmi ssione r p ropos ing to set aside t he assess ment order pa ssed by t he A ssessin g O ffice r unde r Sec tion 143(3 ) o f th e A ct, w e not ic e that t he P r. CIT is es sent iall y diss atis fi ed w it h the degree of enquir y made i n res pect of L ong Te rm Ca pita l G ain (L TCG ) ar isi ng to th e ass essee on sale of s hares of T ur botech Engin ee ri ng L t d. w hich is a llege d t o be a pe nn y stoc k. N o que st ions a re alleged t o have b een raise d b y the Pr. CIT i n the cours e of re visi on al procee di ngs t ow ards ve rac it y of unsec ure d loans ei t he r b y w a y of i ni tia l SCN or in t he course of subs equent I.T.A. No.3751/Del/2018 8 re vis ional procee dings. 8. 4 T o a pprecia te t he iss ues in pers pective, w e notice that speci fi c que ries w ere r ais ed b y t he AO on both counts namel y LT CG aris ing on s ale of share of T urbotec h as w e ll as inre ase in buil ding a ccou nt by the asses see dur ing t he year. The assessee i n co mpli ance of t he inq ui ries s o made by t he Asses si ng O ffic er is sta ted t o have file d the de ta ils and the e vi dence s su ch as the pro of of acquisit ion of s ha res, share certi fi cate s, con trac t not e tow a rds sale of shares and the D e ma t a ccou nt show in g t rans fe r of s hares etc. givin g rise t o L TCG . It is also the ca se of the as sessee t hat sha res we re t rans fe rre d on th e platform of t he s tock exchange throu gh aut ho ri ze d brokers a nd no ad verse re por t of t he SE BI w as confr onted to the assesse e ei th er bef ore t he A ssessin g O fficer or by t he P r. C IT in t he r ev is iona l procee di ngs. T he A ssessi ng O f fi ce r di d not f in d a n y re ason to doubt such documents to l au nch f urt he r ve ri fica tions w hic h the P r. CIT th inks, ought to ha ve been don e. Per ti ne nt ly, t he l aw does n ot necessa ri ly re qui re to st re tc h enquiries a nd verific at ions to t he ext en t w hic h ma y, at t imes, tanta moun t t o oppr essi on a nd hara ss me nt o f a tax paye r. T he A ssessi ng Of fice r, in the in sta nt cas e, has a rr ived at a concl usi on af te r c olle cting r equisi te e vi de nces of e xter na l nature an d in the absence of a ny a dve rs e ma terial p er se, ca me t o a conc lusi on w hich is p la us ible for a r eas onable person i ns truc ted in law . The obj ect of revisi onal pow er is no t to i mping e up on the pow ers of the A ssess ing Of fi ce r to frame t he assess me nt and interfer e ther ew ith i n a ll cases merel y on a ccount of s ome i na dequa cy in ma nner a nd e xtent of e nquir y. 8. 5 A s rega rds additi ons t o bul ding acc ount, th e case of ass essee are tw o f ol d ( i) no oppor tu ni t y w as given to ass essee in c lea r I.T.A. No.3751/Del/2018 9 vi ol at ion of ma ndate o f o pportu ni ty e xpre ssl y pr ovide d u nde r Sect ion 263 of the Act a nd t hus this i ssue cou ld n ot be rake d up at the firs t place ( ii ) the increase in capital is only Rs. 14. 40 l akh as agains t 78. 46 lakh al leged b y the P r. CIT . T he Pr. C IT w as acted casuall y. A ll prima r y detai ls w ere d ul y provided as cal le d fo r. 8. 6 In the absence o f any pe rc ep ti bl e error in the action of the A ssessi ng O ff ice r pointe d out i n the revisi onal order, the explana tio n o ffe re d on be hal f of t he assessee appe ars p lausi bl e. The A ssess ing O ffic er, in the in sta nt ca se, has s pec ific al l y examined both the issu es ra ise d b y t he Pr. CIT albe it not proba bl y in the manner i n w hic h t he P r.C I T w ou ld have lik ed but t his canno t be the s acrosanc t grou nd f or ass umption of j uris di ct ion under Sec tio n 263 of the A ct. The As sessing O ff ic er d id ra ise the que st ions on poi nts in iss ue and t he re appears to be ac tive appl icati on of mi nd b y t he A ss essing O ffic er a lt ho ugh, d id not meet t he expec ta tion of t he Pr. C IT . 8. 7 U nder the c ircu ms tances, one ca nnot poss i bl y say t hat the A ssessi ng O ffice r ha d s leepw a lked on t he iss ues i nvolve d. N oticea bl y, t he Pr . CIT himself has no t e ntered into a ny mi nimal inqui ry on t he iss ues hi mse lf, if so cons id ered e xpedient and there is not ev en pr im a fac ie d emonst ra tion of fa lla c y i n t he ac ti on of the A ssessi ng Of fice r w hi ch render ed t he order e rr oneous a nd w hich al so s imul taneous l y caus ed prejud ice t o t he revenu e. Merel y becaus e the expectat io ns of the Re vis io nal Co mmis si oner are pur porte dl y no t met, i t shoul d not, in our opinion, nece ssaril y trigge r revis i ona l act ion under Secti on 263 of t he A ct in e ver y case. 8. 8 O n a broade r reck oning of the pec ul iar facts of the cas e, we I.T.A. No.3751/Del/2018 10 concu r w it h the ple a raised o n behal f of the ass essee that all eg at ions in t he revi si onal or der a re not j ust ifie d and t he re is no s yst emat ic e ffor t on t he part of the Pr. CIT to support the all eg at ions. A reference made on behal f of the Reven ue in the case of Su dha E ashwar (s upr a) is go ve rne d by its ow n s et of fa cts. T he appl icabil it y of Section 263 w as not the subj ect matte r of cont rove rs y therein. The order of c o-o rdi na te Bench does not tend to remove the fet t ers pla ced on t he scope o f Sec tion 26 3 u nder consi derati on i n th e prese nt case. Some inadeq uac y w i ll not rende r each and eve r y orde r e rrone ous o n t he to uchsto ne of S ect ion 263 of t he A ct w here t he e xtent of inqui ry has bee n quest i oned b y the Revisional Com mi ssio ner. The iss ue requi res to b e looked in the context and s et ting of fa cts i n eac h cas e. We do not f ind an y ove rr iding reas ons subs is ti ng in th e facts of present cas e. We thus fi nd that the foundati on i n the exercis e of revi si onal j urisdiction is mi ssi ng i n the pres ent ca se. 9. Resul tant l y, t he i mpugne d or der of the P r.C IT passed unde r Sect ion 263 of t he A ct is set asi de a nd canc el led and t he o rde r of the A ssess ing O f fi cer under Section 143(3 ) is r est ore d. 10. In the res ul t, the appeal of t he asses see is allow e d. Order pronounced in the open Court on 12/05/2023. Sd/- Sd/- [YOGESH KUMAR US] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /05/2023 prabhat