SHRI DIGVIJAY JUNEJA PROP., ABOHAR V. PRINCIPAL COMMISSIONER OF INCOME TAX , BATHINDA

ITA 380/ASR/2019

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0460 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 21-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Revision of order
• Section: 263; 143(3); 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 380/Asr/2019 Assessment Year: 2014-15 Sh. Digvijay Juneja Prop. M/s Maa Bhagwati Motors, R/o H. No. 1786, Landmark Street, ST. No.13-14, Ward No. 7, Abohar [PAN: AQYPJ 1885C] Vs. Pr. Commissioner of Income Tax, Bathinda (Appellant) (Respondent) Appellant by : Sh. Sudhir Sehgal Respondent by: Sh. Rajinder Kaur, CIT DR Date of Hearing: 05.05.2022 Date of Pronouncement: 05.07.2022 ORDER Per Anikesh Banerjee, JM: The instant appeal was filed by the assessee against the order passed by the Ld. Pr. Commissioner of Income Tax, Civil Station, Bathinda [in brevity the PCIT], bearing Appeal No. PCIT/BTI/Tech/2018-19/3820 dated 28.03.2019 u/s 263 of the Income Tax Act, 1961 [in brevity the Act], in respect of Assessment Year 2014-15. 2. The assessee has raised the following grounds of appeal: ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 2 “1. That the worthy Pr. CIT, Bathinda has erred in holding that the assessment as framed by the Assessing Officer vide order, dated 23.05.2016 is erroneous and prejudicial to the interest of revenue and thereby cancelling the earlier assessment as made vide order, dated 23.05.2016 and directing the Assessing Officer to decide the matter afresh. 2. That the Pr. CIT has failed to appreciate the fact that the assessment, dated 23.05.2016 was completed after due application of mind by the Assessing Officer concerned and, therefore, setting aside the same is not in order. 3. That the detailed reply as filed before the worthy Pr. CIT, Btahinda has not been considered properly. 4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.” 3. Brief fact of the case is that the assessment was completed u/s 143(3) of the Act on dated 25.03.2016. The Ld. Pr. CIT issued notice for recalling the assessment order u/s 263 of the Act. Accordingly, the Ld. Pr. CIT issued notice and asked for the documents. The Ld. counsel of the assessee in grievance placed that the issue was already verified by the Assessing Officer during assessment stage. There is no absence of any verification on which the assessment called erroneous. The Ld. Pr. CIT passed the order accordingly. The impugned order was challenged before us. 4. The Ld. counsel of the assessee, Mr. Sudhir Sehgal, Adv. vehemently argued and placed that the Ld. Pr. CIT issued notice for re-verification related to (i) introduced capital of Rs. 19,77,648/-, (ii) addition in the fixed assets at Rs. ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 3 28,08,622/-, (iii) unsecured loan of Rs.16,42,250/- and (iv) Showroom rent at Rs.5,03,458/- in the name of Sh. Ashu Juneja. Mr. Sehgal filed a paper book from page no. 1 to 91 which is kept in the record. As per the argument the said issue was already covered by the Ld. Assessing Officer [in brevity the AO]. Ld Counsel filed the notice u/s 142(1) duly issued by Ld. AO which is in APB from page nos. 18 to 20. The said documents were in requisition during the assessment proceedings in point no. 7 and 17 of notice u/s 142(1) duly issued by the ld AO. Ld. Counsel took our attention in assessment order para 1 which is extracted as follows: “Return of income for the assessment year 2014-15 declaring an income at Rs. 5,60,890/- was filed by the assessee on 11.11.2014. The case was selected for scrutiny through CASS under the head “Low income shown by large contractors” and “Mismatch in amount paid to related persons u/s 40A(2)(b) reported in Audit Report and ITR”. Notice u/s 143(2) of Income-tax Act, 1961 was issued on 19.09.2015 anti served on 22.09.2015. Notices u/s 142(1) of the Income-tax Act. 1961 along with questionnaire was issued on 10.05.2016. In response to said notices, Sh. R.K. Ahuja CA counsel for the assessee attended the proceedings from time to time. Written Variations in response to the queries raised were furnished by the assessee and the -Denis of the case were discussed with the counsel of the assessee.” In this para it is clearly mentioned that the notice u/s 142(1) of the Act was issued and which is discussed accordingly. The assessee filed the detailed submissions before the Ld. AO in relation to notice u/s 142(1) dated 22.09.2015 which is paper book page nos. 21 to 91 related introduction of capital & others and loan was ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 4 explained before the Assessing Officer and before the Ld. Pr. CIT both. The capital amount of the assessee was also verified in the assessment order in page no. 2. As per the ld. Counsel, there was not point left untouched by the Ld. AO. So, he argued that the particular assessment order cannot be said erroneous. 5. Mr. Sehgal relied on the order of the Coordinate Benches of ITAT (i) M/s Venus Taxpin Ltd. v. PCIT in ITA No. 793/Chd/2017 dated 12.12.2017 (ii) M/s Ambey Construtech P. Ltd. v. PCIT in ITA Nos. 209 & 344/Asr’/2017 & 2019 dated 24.08.2021 (iii) Surinder Pal Singh in ITA No. 57/CHD/2021 dated 31.01.2022 (iv) Sanjay Jain & Others in ITA No. 140/CHD/2021 dated 23.03.2022. 6. The Ld. CIT-DR relied on the order of the PCIT. As per the Ld. CIT-DR, Smt. Rajinder Kaur, there is no specific query from the end of the Ld. Assessing Officer. She relied on page no. 3 of the order of 263 which is extracted as follows: “6.1. The assesses had introduced capital of Rs. 19,77,648/-. As per tire assessment record and the reply of the assessee, the assessee had started business during the year under reference. However, the AO did not examine the genuineness of opening balance of Rs. 19,65,618/- which was a necessary inquiry and without which a very important aspect of assessment proceedings is incomplete. Mere availability of copy of capital account does not mean that the issue stands examined by the AO. 6.2. Regarding addition in fixed assets at Rs. 28,08,622/-, AO did not bring on record any bill/ voucher or even the detail of .fixed assets purchased by the assessee. In a new business the detail of assets purchased and the account from where the amounts were transferred were necessary inquiries. ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 5 6.3. Regarding unsecured loan of Rs.16,42,250/- in the name of Sh. Ashu Juneja, assessee's contention is that copy of account was furnished and all persons were having PANs. Copy of account is not a sufficient ground to show creditworthiness or genuineness of a transaction. Simple confirmation and PAN do not prove creditworthiness or genuineness of the transaction and at the most it can establish the identity of an individual. AO did not make any inquiry in this regard.” 7. We have given our thoughtful consideration to the rival submissions. The sole issue that arises for our adjudication in the facts of the instant case is as to whether the learned PCIT has rightly exercised his revision jurisdiction vested u/s.263 of the Act of not? There is no dispute that the learned Assessing Officer has accepted the Assessee’s documents & transactions. As per his discussions in the assessment order, he had verified all necessary facts during the course of scrutiny. This fact very much emerges from the body of the assessment order where the Assessee’s had discussed in detail The respectful observation of Hon’ble Andhra Pradesh High Court in the case of Spectra Shares and Scrips Pvt. Ltd. V CIT (AP) 354 ITR 35 had considered a number of judgments on this issue of exercise of jurisdiction u/s 263 of the Act by the Principal Commissioner of Income Tax and culled the principles laid down in the judgments as below: “24. In Malabar Industrial Co. Ltd. ( 2 Supra), the Supreme Court held that a bare reading of Sec.263 makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suomotu under it, is the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 6 revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent – if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue – recourse cannot be had to Sec.263 (1) of the Act. It also held at pg-88 as follows: "The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. Rampyari devi Saraogi v. CIT (1968) 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal V. CIT (1973) 88 ITR 323 (SC)". 25. In Max India Ltd. (3 Supra), reiterated the view in Malabar Industrial Co.Ltd. (2 Supra) and observed that every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law. On the facts of that case, Sec.80HHC(3) as it then stood was interpreted by the Assessing Officer but the Revenue contended that in view of the 2005 Amendment which is clarificatory and retrospective in nature, the view of the Assessing Officer was unsustainable in law and the Commissioner was correct in invoking Sec.263. But the Supreme Court rejected the said contention and held that when the Commissioner passed his order disagreeing with the view of the Assessing Officer, there were two views on the word "profits" in that section; that the said section was amended eleven times; that different views existed on the day when the Commissioner passed his order; that the mechanics of the section had become so complicated over the years that two views were inherently possible; and therefore, the subsequent amendment in 2005 even though retrospective will not attract the provision of Sec.263. 26. In Vikas Polymers (4 Supra), the Delhi High Court held that the power of suomotu revision exercisable by the Commissioner under the provisions of Sec.263 is supervisory in nature; that an "erroneous judgment" means one which is not in accordance with law; ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 7 that if an Income Tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as "erroneous" by the Commissioner simply because, according to him, the order should have been written differently or more elaborately; that the section does not visualize the substitution of the judgment of the Commissioner for that of the Income Tax Officer, who passed the order unless the decision is not in accordance with the law; that to invoke suomotu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. 27. In Sunbeam Auto Ltd.( 5 Supra), the Delhi High Court held that the Assessing Officer in the assessment order is not required to give a detailed reason in respect of each and every item of deduction, etc.; that whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. In that case, the Delhi High Court held that the Commissioner in the exercise of revisional power could not have objected to the finding of the Assessing Officer that expenditure on tools and dies by the assessee, a manufacturer of Car parts, is revenue expenditure where the said claim was allowed by the latter on being satisfied with the explanation of the assessee and where the same accounting practice followed by the assessee for number of years with the approval of the Income Tax Authorities. It held that the Assessing Officer had called for explanation on the very item from the assessee and ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 8 the assessee had furnished its explanation. Merely because the Assessing Officer in his order did not make an elaborate discussion in that regard, his order cannot be termed as erroneous. The opinion of the Assessing Officer is one of the possible views and there was no material before the Commissioner to vary that opinion and ask for fresh inquiry. 28. In Gabriel India Ltd. (6 Supra), the Bombay High Court held that a consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. It held that the Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new versions which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted; that to do so is to divide one argument into two and multiply the litigation. It held that cases may be visualized where the Income Tax Officer while making an assessment examines the accounts, makes inquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the account or by making some estimate himself; that the Commissioner, on perusal of the record, may be of the opinion that the estimate made by the Officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income Tax Officer; but that would not vest the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure; there must be material available on the record called for by the Commissioner to satisfy him prima facie that the order is both erroneous and prejudicial to the interests of the Revenue. Otherwise, it would amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re- examination and fresh inquiry in matters which have already been concluded under law. 29. In M.S. Raju(15 Supra), this Court has held that the power of the Commissioner under Sec.263 (1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment. 30. In Rampyari Devi Saraogi (21 Supra), the Commissioner in exercise of revisional powers cancelled assessee’s assessment for the years 1952-1953 to 1960-61 because he found that the income tax officer was not justified in accepting the initial capital, the gift ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 9 received and sale of jewellery, the income from business etc., without any enquiry or evidence whatsoever . He directed the income tax officer to do fresh assessment after making proper enquiry and investigation in regard to the jurisdiction. The assessee complained before the Supreme Court that no fair or reasonable opportunity was given to her. The Supreme Court held that there was ample material to show that the income tax officer made the assessments in undue hurry; that he had passed a short stereo typed assessment order for each assessment year; that on the face of the record, the orders were pre-judicial to the interest of the Revenue; and no prejudice was caused to the assessee on account of failure of the Commissioner to indicate the results of the enquiry made by him, as she would have a full opportunity for showing to the income tax officer whether he had jurisdiction or not and whether the income tax assessed in the assessment years which were originally passed were correct or not" 31. From the above decisions, the following principles as to exercise of jurisdiction by the Commissioner u/s.263 of the Act can be culled out: a) The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue – recourse cannot be had to Sec.263 (1) of the Act. b) Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. c) To invoke suomotu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 10 not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. e) The Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted f) Whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully eligible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. g) The power of the Commissioner under Sec.263 (1) is not Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment.” Whether, the learned Assessing Officer, after taking all the documents in hand had completed the assessment of the Assessee. Ld Assessing Officer accepted the relevant transactions of assessee. It is made clear that we have dealt with the instance of the learned Assessing Officer himself for having accepted the transactions after examining the relevant facts of the case. The requisition was also made in notice U/s 142(1) of the Act, issued by the ld AO. We therefore do not deem it appropriate to restore the very issue back to him for yet another round of ITA No. 380/Asr/2019 Digvijay Juneja v.Pr.CIT 11 assessment. The Assessee’s sole substantive grievance in I.T.A. No.380/Asr/2019 is accepted. 8. In the result, the appeal of the Assessees in I.T.A No. 380/Asr/2019 is allowed. Order pronounced in the open court on 05.07.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order