Vishnu Goyal, Jodhpur V. Pr. CIT, Central, Jaipur

ITA 46/JODH/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8922 (ITAT-JODHPUR)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-11-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 10-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Revision of order; Assessment record
• Section: 263; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA Nos. 46 & 47/Jodh/2022 (ASSESSMENT YEARS- 2012-13 & 2013-14) Vishnu Goyal 113 Golf Course, Jodhpur Vs Pr. Commissioner of Income Tax, Central, Jaipur (Appellant) (Respondent) PAN NO. AAPPG 4513 K Assessee By Shri Amit Kothari (CA) Revenue By Smt. Alka Rajvanshi Jain, CIT-DR Date of hearing 02/11/2022 Date of Pronouncement 04/11/2022 O R D E R PER: B.R. BASKARAN, AM The assessee has filed this appeal challenging the revision orders dated 29-03-2022 passed by Ld PCIT (Central), Jaipur and they relate to the assessment years 2012-13 and 2013-14. The assessee is challenging the valildity of revision orders passed by Ld PCIT for both the years. Since both the appeals were heard together, they are being disposed of by this common order, for the sake of convenience. 2 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur 2. The facts relating to the case are stated in brief. The assessee was subjected to search 0n 14-03-2018. Consequent to the search operations, the AO completed the assessments of both the years under consideration u/s 143(3) r.w.s 153A of the Act on 20.12.2019. (In the assessment order, the AO has mentioned the section as 143(3) r.w.s 153B(1)(a) of the Act). The Ld PCIT, upon examination of assessment records both the years, took the view that the assessing officer has not conducted proper enquiries/verification while passing the assessment orders. Accordingly, he initiated revision proceedings u/s 263 of the Act. 3. We shall first take up the revision order passed for AY 2012-13. The Ld PCIT issued show cause notice u/s 263 of the Act on the following issues:- (a) Sale of property located at K No.3737, 3644 Ranisagar, Tehsil Masuda having stamp duty value of Rs.5,36,359 /- (b) Sale of property located at K No.3771, 3642, Ranisagar, Tehsil Masuda having stamp duty value of Rs.6,69,517/-. (c) Unsecured loan of Rs.1,68,55,255/- The Ld PCIT took the view that the sale of properties mentioned in (a) and (b) above have not been reported by the assessee in his return of income. With regard to unsecured loan mentioned in (c) above, the Ld PCIT took 3 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur the view that the assessee has furnished list of five creditors and other details as confirmation/ITR /Bank statements are not found on record. 4. Before Ld PCIT, the assessee submitted the following:- (a) With regard to sale of two properties, it was submitted that the said properties belonged to a partnership firm named “Ritu Goods Carrier”, in which the assessee was one of the partners. The sale of properties were duly recorded in the books of the partnership firm and the relevant details were furnished during the course of assessment of the above said partnership firm. (b) With regard to unsecured loans, it was submitted that the assessment of AY 2012-13 falls under the category of unabated assessment u/s 153A of the Act and no incriminating material relating to sundry creditors was found during the course of search. Relying on the decision rendered by Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (2016)(380 ITR 573)(Delhi), it was submitted that, in case of unabated assessments, the assessment should be confined only to the material found during the course of search. On merits, it was submitted that the assessee had taken new loans from five parties only and all other loans were old balances. It was submitted that all the five parties are assessed to income 4 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur tax. Accordingly, it was submitted that this issue was examined by the AO on merits. 5. The Ld A.R submitted that, in order to verify the submissions made by the assessee, the Ld PCIT called for a remand report from the assessing officer in respect of above said submissions and the AO has also furnished remand report confirming the submissions made by the assessee. However, copy of the said remand report was not produced before us and hence we are unable to appreciate the same. The Ld PCIT has only mentioned that he has studied the report of the assessing officer and he also did not discuss about the contents of the remand report. 6. After considering the reply and the remand report of the AO, the Ld PCIT made following confusing observations:- “....I have examined the facts as obtaining and the assessing officers report. I find that in these revision proceedings, these facts have not been examined. I also note that the taxpayer’s averments cannot also be denied outright. The taxpayer’s averments may also be correct. However, all these require examination by the assessing officer. 5 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur Accordingly, in exercise of powers conferred upon me as per provisions of section 263 of the IT Act 1961, I direct the assessing officer to examine the issue as detailed in the show cause notice, and pass assessment order accordingly....” The assessee is aggrieved by the order so passed by Ld PCIT. 7. We heard rival contentions and perused the record. It is settled position of law that the revision proceedings u/s 263 of the Act can be initiated by the Ld PCIT if he is of the view that the assessment order is erroneous in so far as it is prejudicial to the interests of revenue. It is also settled proposition of law that both the conditions should be satisfied in order to initiate revision proceedings, i.e., the order is not only erroneous, but it should also be prejudicial to the interests of revenue. Merely because, the Ld PCIT has initiated revision proceedings, he cannot set aside the assessment order for doing assessment de-nova on the issues on which the revision proceeding was initiated. This view gets support from the decision rendered by Hon’ble Delhi High Court in the case of CIT vs. Nagesh Knitwears (P) Ltd (2012)(345 ITR 135/210), wherein it was held as under:- “Thus, in cases of wrong opinion or finding on merits, the Commissioner of Income tax has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under section 263 is passed. In such cases, 6 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur the order of the Assessing Officer will be erroneous because the order is not sustainable in law and the said finding must be recorded. The commissioner of income tax cannot remand the matter to the assessing officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the Commissioner of Income tax must give and record a finding that the order/enquiry made is erroneous. This can happen if an enquiry and verification is conducted by the Commissioner of Income tax and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in law. In some cases possibly though rarely, the Commissioner of Income tax can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the Assessing officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under section 263 of the Act. In such matters, to remand the matter/issue to the Assessing officer would imply and mean the Commissioner of Income tax has not examined and decided whether or not the order is erroneous but has directed the Assessing officer to decide the aspect/question....” 7 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur The law interpreted by the Hon’ble Delhi High Court makes it clear that the Ld PCIT, before holding an order to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the assessing officer is erroneous and further the Ld PCIT should have shown that the view taken by the AO is unsustainable in law. 8. In the instant case, the Ld PCIT has initiated the revision proceedings on the impression that the assessee has not disclosed the sale transactions of two properties. It was shown by the assessee that the properties belonged to a partnership firm, in which he is a partner. It was also shown that relevant sale transactions have been duly disclosed in the returns of income filed by the partnership firm, which has also been accepted by the assessing officer of the partnership firm. It is well settled proposition of law that the tax can be levied in right hands only as held by Hon’ble Supreme Court in the case of ITO vs. Ch Atchiah (1996 AIR 883)(218 ITR 239)(SC), wherein it was held by the Hon’ble Apex Court that the AO can, and he must, tax the right person and the right person alone. Here right person means the person who is liable to be taxed according to law, which respect to a particular income. Since the two properties referred by Ld PCIT belonged to the partnership firm, the profit on sale of those properties cannot be assessed in the hands of the assessee. When there is no 8 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur revenue leakage in the hands of the assessee, the impugned assessment order cannot be termed as erroneous and prejudicial to the interests of revenue in respect of this issue. 9. The next issue dealt with by Ld PCIT relates to the unsecured loan of Rs.1.68 crores. We notice that the impugned assessment order has been passed u/s 143(3) r.w.s 153A of the Act and the instant assessment year falls under the category of unabated assessment. It has been held by Hon’ble Delhi High Court in the case of Kabul Chawla (supra) that the addition in case of unabated assessment years could be made only on the basis of incriminating material, if any, found during the course of search. It is the submission of the assessee that no incriminating material relating to sundry creditors was found. In that case, the AO could not have made any addition out of unsecured creditors. When the AO is disabled to make any addition, in our view, the Ld PCIT also cannot probe on that issue. However, on merits, the assessee has submitted that it has taken fresh loan from five parties only during the year under consideration. Other loans are brought forward from earlier year. It is submitted that the assessee has furnished the details of five parties along with their confirmation letters, which also contained PAN number. Leaving aside the question as to whether the enquiry so made by the AO on merits in respect 9 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur of sundry creditors is adequate or not, we are of the view that the revision order passed by Ld PCIT on this issue is liable to be quashed on the basis of legal proposition discussed above. Accordingly, we hold that the impugned revision order is not sustainable on this issue also. 10. Accordingly, when the assessment order was not established to be erroneous by Ld PCIT, there is no scope for sustaining the same. We have earlier noticed that the Ld PCIT has confused himself and directed the AO to verify the transactions, without establishing that the assessment order is erroneous and prejudicial to the interests of revenue, which is not warranted at all. Accordingly, we are of the view that the impugned revision order passed by Ld PCIT could not be sustained. Accordingly, we quash the impugned revision order passed by Ld PCIT for AY 2012-13. 11. We shall now take up the appeal filed for AY 2013-14. The only issue on which the Ld PCIT has initiated revision proceeding relate to the claim for deduction of cost of improvement made in the land sold by the assessee by way of construction of compound wall. The assessee had sold a land and while computing capital gain, he claimed cost of improvement of land, which consisted of construction cost of compound wall amounting to 10 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur Rs.5,70,500/-. It was the case of Ld PCIT that the AO has not examined this claim. 12. Before Ld PCIT, the assessee contended that the claim of compound wall expenses was duly examined by the AO by considering various details furnished by the assessee. Hence Ld PCIT called for a remand report from the AO, who also confirmed that the relevant details were furnished during the course of assessment. After considering the reply and the remand report of the AO, the Ld PCIT made following confusing observations in this year also:- “....I have examined the facts as obtaining and the assessing officers report. I find that in these revision proceedings, these facts have not been examined. I also note that the taxpayer’s averments cannot also be denied outright. The taxpayer’s averments may also be correct. However, all these require examination by the assessing officer. Further, from the assessing officers report dated 15.02.2022, it appears that the details were actually before the assessing officer. Accordingly, in exercise of powers conferred upon me as per provisions of section 263 of the IT Act 1961, I direct the assessing officer to examine the issue as detailed in the show cause notice, and pass assessment order accordingly....” 11 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur 13. We notice that the Ld PCIT could not state how the assessment order is erroneous and prejudicial to the interests of revenue with regard to the claim of compound wall expenses. In the absence of such a finding, the assessment order cannot be held to be erroneous and hence there is no scope for proceeding further with the proceeding initiated by Ld PCIT u/s 263 of the Act. However, we notice that the Ld PCIT has proceeded further and directed the AO to verify the claim, which is not warranted at all. Accordingly, we are of the view that the impugned revision order passed by Ld PCIT could not be sustained. Accordingly, we quash the impugned revision order passed by Ld PCIT for AY 2013-14 also. 14. In the result, both the appeals filed by the assessee are allowed. Order pronounced in the open Court on 4 th November, 2022. Sd/- Sd/- (SANDEEP GOSAIN) (B. R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 04/11/2022 *Ganesh Kr Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 12 ITA Nos. 46 & 47/Jodh/2022 Vishnu Goyal, Jodhpur vs. PCIT, Central, Jaipur 5. The DR 6. Guard File Assistant Registrar Jodhpur Bench