Om Prakash Mangal, Jodhpur V. Pr. CIT-1, Jodhpur

ITA 48/JODH/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8920 (ITAT-JODHPUR)
• Duration Of Justice: 6 month(s) 22 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: 31-10-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 12-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Revision of order; Principle of natural justice; Assessment record
• Section: 263; 2; 143(3); 54F; 142(1); 2(A)

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 No. 48/Jodh/2022 (ASSESSMENT YEAR- 2017-18) Om Prakash Mangal 16B, Mahaveer Colony Ratanada Jodhpur Vs Pr. CIT-1, Jodhpur (Appellant) (Respondent) PAN NO. ACOPM 6094 L Assessee By Shri Rajendra Jain (Adv.) Revenue By Smt. Alka Rajvanshi Jain, CIT-DR Date of hearing 01/11/2022 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 order dated 27-03-2022 passed by Ld PCIT-1, Jodhpur and it relates to the assessment year 2017-18. The assessee is challenging the validity of revision order passed by Ld PCIT. 2. The facts relating to the case are stated in brief. The original assessment of the assessee of the year under consideration was completed 2 ITA No. 48/Jodh/2022 Om Prakash Mangal vs. Pr.CIT by the assessing officer u/s 143(3) of the Act on 26.08.2019. It is pertinent to note that the assessment was completed by the AO through E proceedings. After considering the replies filed by the assessee, the AO completed the assessment accepting the income returned by the assessee. Upon examination of assessment records, the Ld PCIT took the view that the assessment order is erroneous and prejudicial to the interests of revenue on the following issues:- (a) The assessee has claimed deduction u/s 54F of the Act, but the details of purchase/investment in property and construction expenses were not submitted. (b) The assessee has received gift of Rs.3,50,000/-, but the sources of the same were not submitted. (c) The assessee has availed loans of Rs.60.50 lakhs from various, but the genuineness and credit worthiness of the same were not submitted. Accordingly, the Ld PCIT initiated revision proceedings u/s 263 of the Act. The Ld PCIT took the view tht the assessing officer has not asked for details on the above said issues, i.e., he has not enquired about the above said issues. Accordingly, he took the view that the assessing officer has passed the order without making enquiries or verification which should have been made. Accordingly, by invoking Explanation 2(a) to sec. 263 of 3 ITA No. 48/Jodh/2022 Om Prakash Mangal vs. Pr.CIT the Act, the Ld PCIT took the view that the assessment order is erroneous and prejudicial to the interests of revenue. In support of his decision, the Ld PCIT relied upon various case laws. Accordingly, he set aside the assessment order with the direction to the assessing officer to carry out necessary enquiries and take correct decision as per law. The assessee is aggrieved by the revision order so passed by Ld PCIT. 3. The Ld A.R submitted that the Ld PCIT has not properly examined the assessment record at all. He submitted that the PCIT has arrived at erroneous conclusion that the assessing officer has not properly examined the above said three issues. He submitted that the assessing officer has conducted proper enquiries with regard to the above said three issues by raising specific queries in the notices issued u/s 142(1) of the Act and the assessee has also duly furnished the replies. He submitted the assessment was completed under e-proceedings and hence the notices issued u/s 142(1) by the AO and the replies filed by the assessee are very much available in the income tax portal. He submitted that the Ld PCIT has not examined all these details and has made scathing observations about the assessment proceedings, which was otherwise conducted properly. The Ld A.R invited our attention to the notices issued by the AO and the replies furnished by the assessee. The Ld A.R also placed his reliance on the 4 ITA No. 48/Jodh/2022 Om Prakash Mangal vs. Pr.CIT decision rendered by Hon’ble Rajasthan High Court in the case of Laxmi Narayan vs. CIT (402 ITR 117)(Raj). Accordingly, the Ld A.R submitted that the Explanation 2 to sec. 263 of the Act is not applicable to the facts of the present case. 4. The Ld D.R, on the contrary, submitted that the Ld PCIT has taken the view that the AO has not conducted proper enquiries with regard to the above said three issues and accordingly initiated revision proceedings. The Ld D.R placed her reliance on the revision order passed by Ld PCIT. 5. We heard rival contentions and perused the record. The scope of revision proceedings initiated under section 263 of the Act was examined by Hon'ble Bombay High Court, in the case of Grasim Industries Ltd. V CIT (321 ITR 92) by taking into account the law laid down by the Hon'ble Supreme Court. The relevant observations are extracted below: Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary, 5 ITA No. 48/Jodh/2022 Om Prakash Mangal vs. Pr.CIT enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by the Commissioner to be “erroneous in so far as it is prejudicial to the interests of the Revenue”. This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision “cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer” and “it is only when an order is erroneous that the section will be attracted”. The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression “prejudicial to the interests of the Revenue”, the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote) : 6 ITA No. 48/Jodh/2022 Om Prakash Mangal vs. Pr.CIT “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.” The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282.” The principles laid down by the courts are that the Learned CIT cannot invoke his powers of revision under section 263 if the Assessing Officer has conducted enquiries and applied his mind and has taken a possible view of the matter. If there was any enquiry and a possible view is taken, it would not give occasion to the Commissioner to pass orders under section 263 of 7 ITA No. 48/Jodh/2022 Om Prakash Mangal vs. Pr.CIT the Act, merely because he has a different opinion in the matter. The consideration of the Commissioner as to whether an order is erroneous in so far it is prejudicial to the interests of Revenue must be based on materials on 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. The Commissioner cannot initiate proceedings with a view to start fishing and roving enquiries in matters or orders which are already concluded. 6. We shall now examine the facts prevailing in the present case. The AO has issued a notice dated 03-01-2019 u/s 142(1) of the Act to the assessee, wherein he, inter alia, raised queries on (i) documents in support of deduction and exemption claimed. (ii) Confirmations of unsecured loans creditors taken during the year (iii) copy of capital account for AY 2017-18, 2016-17. The Ld A.R submitted that the assessee has furnished relevant details to the assessing officer viz., details of construction expenses, copy of gift deed, confirmation from various creditors. All the details so furnished are given in the paper book at pages 21 to 57. Thereafter, the AO has issued another notice dated 09-07-2019 and 22-07-2019 u/s 142(1) of the Act, 8 ITA No. 48/Jodh/2022 Om Prakash Mangal vs. Pr.CIT wherein also identical details were called for. The Ld A.R submitted that the assessee has uploaded the relevant details in the e-portal. The response to notice with ID 100016110015 is furnished at page 58B of the paper book. According to Ld A.R, the assessee has furnished all the details relating to the above said three issues to the assessing officer and they are very much available in the e-portal of the department. We notice that the Ld PCIT has not considered these documents at all before arriving at the conclusion that the AO has not conducted proper enquiries. We have also perused the various case laws cited by Ld PCIT and notice that they lay down the principles governing the proceedings u/s 263 of the Act. 7. On a perusal of the various details furnished by the assessee to the assessing officer, we notice that the assessee has furnished necessary details before the AO with regard to the above said three issues. Accordingly, we are of the view that the AO has conducted enquiries in proper manner and that there was proper application of mind on the part of the AO in respect of all the three issues and that he has taken a possible view in respect of the same. Accordingly, we are of the view that the impugned revision order passed by Ld PCIT is not sustainable in law on all the three issues. Accordingly we quash the impugned revision order passed by Ld PCIT. 9 ITA No. 48/Jodh/2022 Om Prakash Mangal vs. Pr.CIT 8. In the result, the appeal filed by the assessee is 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) 5. The DR 6. Guard File Assistant Registrar Jodhpur Bench