Vikram Kaswan, Sirsa V. CIT, Hissar

ITA 519/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8398 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Audit objection
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.RANO JAIN, ACCOUNTANT MEMBER ITA NO. 519/CHD/2014 ASSESSMENT YEAR: 2009-10 SHRI VIKRAM KASWAN, VS THE CIT, S/O SHRI PARTAP SINGH KASWAN, HISSAR. SIRSA. PAN: ACSPV4452D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANOJ MISHRA DATE OF HEARING : 16.02.2016 DATE OF PRONOUNCEMENT : 08.03.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. LD. COMMISSIONER OF INCOME TAX, HI SSAR DATED 21.03.2014 UNDER SECTION 263 OF THE INCOME TA X ACT FOR ASSESSMENT YEAR 2009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED RETURN OF INCOME AT RS. 1,29,230/- AND ASSESS MENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 21.07.2011 AT A TOTAL INCOME OF RS. 2 LACS. IT IS NOTED IN THE IMPUGNED ORDER THAT ASSESSING OFFICER HAD COMPL ETED THE ASSESSMENT WITHOUT CARRYING OUT PROPER ENQUIRY/VERIFICATION. THE ASSESSEE WAS MAINTAINING A SAVING BANK ACCOUNT WITH CENTURIAN BANK OF PUNJAB L TD., 2 SIRSA. ON GOING THROUGH THE STATEMENT OF THE ACCOU NT, IT WAS FOUND THAT CASH HAS BEEN DEPOSITED ON 08.07.200 8 IN A SUM OF RS. 5,30,000/- AND ON 10.07.2008 RS. 1,34, 000/- ( RS. 6,64,000/-) IN ORDER TO EXPLAIN THE SOURCE O F THE AFORESAID CASH DEPOSIT, THE ASSESSEE FURNISHED COPY OF THE AGREEMENT DATED 05.07.2008 ACCORDING TO WHICH ASSES SEE AGREED TO SELL HIS PLOT OF LAND FOR RS. 25 LACS AGA INST WHICH AN ADVANCE OF RS.6,50,000/- WAS STATED TO HAVE BEEN RECEIVED IN CASH FROM SHRI RAM SINGH BENIWAL. LATE R ON, THIS AGREEMENT WAS CANCELLED AND ADVANCE WAS RETURN ED. IN THE SAID AGREEMENT, IT IS STATED THAT IF PURCHAS ER WAS UNABLE TO PAY BALANCE AMOUNT AND GET THE REGISTRATI ON DEED EXECUTED BEFORE THE APPOINTED DATE, THE ADVANC E WOULD BE FORFEITED. THE BUYER HAS NOT PAID THE AMO UNT NOR GOT THE REGISTRATION DEED REGISTERED AND LATER ON, AGREEMENT WAS CANCELLED AND AMOUNT WAS REFUNDED. 2(I) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE STATEMENT OF SHRI RAM SINGH BENIWAL WAS RECORDED IN WHICH HE HAS CONFIRMED THE PAYMENT OF RS.6.5 LACS A S ADVANCE AND STATED THAT HE HAD GIVEN HIS CAPITAL TO SOME PARTY FOR PURCHASE OF THE PROPERTY WHICH WAS RECEIV ED BACK. IT WAS, THEREFORE, NOTED THAT ASSESSING OFFI CER HAS CALLED FOR NO DETAILS AS TO WHOM THE ADVANCE HAS BE EN GIVEN, AGAINST WHICH PROPERTY WAS GIVEN AND WHEN TH E ADVANCE WAS TAKEN BACK ETC. THE CREDIT WORTHINESS OF SHRI RAM SINGH BENIWAL IS NOT EXAMINED. THEREFORE, ASSE SSING OFFICER DID NOT MAKE PROPER ENQUIRY INTO THE MATTER , 3 THEREFORE, ASSESSMENT ORDER WAS CONSIDERED TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. NOTICE UNDER SECTION 263 WAS ISSUED ON 05.02.2014 AND EXPLANATION OF THE ASSESSEE WAS CALL ED FOR. THE LD. CIT NOTED THAT STATEMENT OF RAM SINGH BENIW AL WOULD SHOW THAT IT WAS NOT RECORDED UNDER OATH AND IT IS NOT CLEAR BEFORE WHOM THE SAID STATEMENT WAS RECORD ED. THE ASSESSING OFFICER HAS SIGNED THE STATEMENT WITH REMARKS SEEN. THE STATEMENT IS NOT SUBJECTED TO CROSS- EXAMINATION AND PURCHASER HAD INCOME FROM COMMISSIO N, SALE/PURCHASE OF PROPERTY, SOME INTEREST AND AGRICU LTURE INCOME OF RS. 5 LACS. THE LD. COMMISSIONER OF INCO ME TAX, THEREFORE, DOUBTED THAT THERE IS A LACK OF APP LICATION OF MIND ON THE PART OF THE ASSESSING OFFICER AND AS SESSING OFFICER DID NOT MAKE PROPER ENQUIRY WITH REGARD TO RECEIPT OF THE ADVANCE OF RS. 6,50,000/-. THE AGREEMENT IS NOT REGISTERED. THE CRUX OF THE FINDINGS OF THE CIT HA S BEEN THAT THE SOURCE OF RS. 6,50,000/- WAS NOT PROPERLY EXAMINED THEREFORE, THE ASSESSMENT ORDER WAS SET AS IDE AND ASSESSING OFFICER WAS DIRECTED TO MAKE FRESH ASSESSMENT AFTER MAKING NECESSARY AND PROPER ENQUIRIES/INVESTIGATION IN THE LIGHT OF DISCUSSION MADE IN THE IMPUGNED ORDER. 3. THE ASSESSEE IS IN APPEAL CHALLENGING THE IMPUGN ED ORDER UNDER SECTION 263 OF THE ACT. 4. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. PB- 4 37 IS NOTICE UNDER SECTION 263 OF THE ACT DATED 05. 02.2014 IN WHICH THE CIT ASKED FOR THE EXPLANATION OF THE A SSESSEE WITH REGARD TO THE RECEIPT OF ADVANCE OF RS. 6,50,0 00/- AS ADVANCE AGAINST THE PROPERTY. PB-5 IS LETTER OF TH E ASSESSING OFFICER DATED 21.02.2011 SEEKING EXPLANAT ION OF THE ASSESSEE AT ASSESSMENT STAGE INCLUDING FURNISHI NG OF COPIES OF BANK ACCOUNTS MAINTAINED BY ASSESSEE. PB- 6 IS REPLY OF THE ASSESSEE WHEREBY COPIES OF THE BANK AC COUNTS WERE FILED BEFORE ASSESSING OFFICER FOR EXAMINATION . PB-8 AND 9 ARE COPY OF THE CASH BOOK IN WHICH THE ASSESS EE HAS DEBITED A SUM OF RS. 6,50,000/- ON ACCOUNT OF ADVAN CE AGAINST PROPERTY ( RAM SINGH ) PB- 16 AND 17 IS TH E AGREEMENT IN QUESTION DATED 05.07.2008 THROUGH WHIC H ASSESSEE RECEIVED ADVANCE OF RS.6,50,000/- FROM SHR I RAM SINGH. PB-18 IS STATEMENT OF SHRI RAM SINGH, PURCH ASER RECORDED ON 21.07.2011 SIGNED BY THE ASSESSING OFFI CER IN WHICH SHRI RAM SINGH HAS CONFIRMED ENTERING INTO AN AGREEMENT FOR SUM OF RS. 25 LACS FOR PURCHASE OF PR OPERTY AGAINST WHICH HE HAS GIVEN ADVANCE OF RS. 6,50,000/ - TO THE ASSESSEE. IN HIS STATEMENT, HE HAS EXPLAINED H IS INCOME FROM COMMISSION OF SALE AND PURCHASE OF PROP ERTY AND INTEREST ALONGWITH INCOME FROM AGRICULTURAL LAN D. IT IS ALSO EXPLAINED THAT HE HAS SHOWN THE TRANSACTION IN HIS INCOME TAX RETURN AND HE IS ASSESSED TO TAX. PB-22 IS ORDER SHEET RECORDED BY ASSESSING OFFICER. ON 11.07.2011, THE ASSESSING OFFICER ASKED THE ASSESSE E TO PRODUCE SHRI RAM SINGH, PURCHASER OF THE PLOT ON 21.07.2011 AND ORDER-SHEET OF 21.07.2011 RECORDED T HAT 5 ASSESSING OFFICER HAS RECORDED THE STATEMENT OF SHR I RAM SINGH AND CASE WAS DISCUSSED WITH THE COUNSEL FOR ASSESSEE. PB-24 IS THE LETTER OF THE ASSESSING OFF ICER DATED 29.05.2013 I.E. AFTER PASSING OF THE ASSESSME NT ORDER UNDER SECTION 143(3) ON 21.07.2011 WHEREBY ASSESSING OFFICER ASKED FOR THE EXPLANATION OF ASSE SSEE WITH REGARD TO CASH DEPOSITED IN HIS BANK ACCOUNT I N A SUM OF RS. 5,30,000/- AND RS. 1,34,000/- I.E. THE A MOUNT IN QUESTION WHICH WAS RECEIVED OUT OF AGREEMENT TO SELL WHEREBY ADVANCE OF RS. 6,50,000/- WAS RECEIVED BY T HE ASSESSEE. PB-25 IS AUDIT OBJECTION DATED 28.03.201 3 IN WHICH THE AUDIT PARTY RAISED THE SAME OBJECTION WIT H REGARD TO RECEIPT OF THE AMOUNT OF RS. 6,50,000/- T HROUGH AGREEMENT TO SELL IN QUESTION. PB-26 IS REPLY OF T HE ASSESSEE TO THE AUDIT OBJECTION. THEREAFTER, THE N OTICE UNDER SECTION 263 HAVE BEEN ISSUED ON 05.02.2014. 4(I) CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES AND DOCUMENTS AND ORDER-SHEET REFERRE D TO ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER ASKED FOR THE EXPLANATION OF THE ASSESSEE AT ASSESSMENT STAGE WIT H REGARD TO CASH DEPOSITED IN THE BANK ACCOUNT. THE ASSESSEE FURNISHED COPIES OF THE BANK ACCOUNTS FOR PERUSAL OF THE ASSESSING OFFICER ALONGWITH CASH BOOK IN WHI CH CASH WAS SHOWN TO HAVE BEEN RECEIVED AS ADVANCE AGAINST PROPERTY FROM SHRI RAM SINGH. THE AGREEMENT IN QUE STION WAS ALSO PRODUCED BEFORE ASSESSING OFFICER FOR HIS PERUSAL AND THE ASSESSING OFFICER RECORDED STATEMENT OF SHR I RAM 6 SINGH IN WHICH SHRI RAM SINGH HAS CONFIRMED ENTERIN G INTO AGREEMENT TO SELL WITH ASSESSEE AND GIVING ADV ANCE OF RS. 6,50,000/-. IN HIS STATEMENT, HE HAS ALSO EXPL AINED SOURCE OF HIS INCOME. THE ORDER SHEET RECORDED BY ASSESSING OFFICER AT ASSESSMENT STAGE CLEARLY SHOWS THAT ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE SHR I RAM SINGH FOR EXAMINATION AND THE ASSESSING OFFICER REC ORDED FURTHER IN THE ORDER-SHEET THAT STATEMENT OF SHRI R AM SINGH WAS RECORDED. IT IS NOT IN DISPUTE THAT STAT EMENT OF SHRI RAM SINGH HAS INITIALS OF THE ASSESSING OFFICE R EVEN AS PER FINDINGS OF THE CIT. THEREFORE, THERE IS NO QUESTION OF DOUBTING THE STATEMENT OF SHRI RAM SINGH RECORDE D AT ASSESSMENT STAGE. THESE FACTS, THEREFORE, CLEARLY PROVE THAT ASSESSING OFFICER EXAMINED THIS ISSUE IN DETAI L AT ASSESSMENT STAGE AND ACCEPTED EXPLANATION OF THE AS SESSEE WITH REGARD TO ADVANCE FROM SHRI RAM SINGH AND DEPO SIT OF THE CASH IN THE BANK ACCOUNT. THE ASSESSING OFFICE R, THEREFORE, MADE PROPER ENQUIRIES AT ASSESSMENT STAG E. IF THERE WAS ENQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO PASS ORDER UNDER SECTION 263 OF THE ACT MERELY BECAUSE HE HAS A DIFFERENT OP INION IN THE MATTER. IT IS ONLY IN THE CASE OF LACK OF E NQUIRY THAT SUCH A CAUSE OF ACTION COULD BE OPEN. HON'BLE SUPR EME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. VS CIT 243 ITR 83 HELD AS UNDER : EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDI CIAL 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 7 REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH TH E COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. THEREFORE, OBSERVATIONS OF THE CIT ARE WHOLLY INAPP ROPRIATE TO SAY THAT ASSESSMENT ORDER WAS ERRONEOUS IN SO FA R AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORD ER OF CIT THUS, CANNOT BE SUSTAINED IN LAW. WE MAY ALSO NOTE HERE THAT THE AUDIT PARTY HAS RAISED OBJECTION ON 28.03. 2013 ON THE SAME MATTER IN ISSUE WITH REGARD TO CASH DEPOSI T IN THE BANK ACCOUNT OF THE ASSESSEE AND AGREEMENT TO S ELL EXECUTED BY ASSESSEE WITH SHRI RAM SINGH AND RECEIP T OF ADVANCE OF RS. 6,50,000/-. THE ASSESSING OFFICER, ON THE BASIS OF THE AUDIT OBJECTION ASKED FOR THE EXPLANAT ION OF THE ASSESSEE AFTER PASSING OF THE ASSESSMENT ORDER UNDER SECTION 143(3) VIDE LETTER DATED 29.05.2013 (PB-24) . THE ASSESSEE REPLIED TO THE SAID NOTICE (PB-26) AND ON THAT, NOTHING IS EXPLAINED IF ANY ACTION HAVE BEEN TAKEN. THEREFORE, INFERENCE COULD BE DRAWN THAT SUCH AN AU DIT OBJECTION MUST HAVE BEEN DROPPED AGAINST THE ASSESS EE. ONLY AFTER THE ISSUE OF THE AUDIT OBJECTION, THE CI T ISSUED THE NOTICE UNDER SECTION 263 OF THE ACT DATED 05.02 .2014. IT IS, THEREFORE, CLEAR FROM THE FACTS AND CIRCUMST ANCES OF THE CASE THAT CIT MERELY ISSUED NOTICE UNDER SECTIO N 263 OF THE ACT AFTER THE AUDIT OBJECTION RAISED AND WAS NOT THE FURTHER TAKEN ACTION AGAINST THE ASSESSEE. SUCH A COURSE FOR WAS HELD TO BE NOT SUSTAINABLE IN LAW BY HON'BL E PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS 8 SOHANA WOOLLEN MILLS 296 ITR 238 IN WHICH IT WAS HE LD AS UNDER : A REFERENCE TO THE PROVISIONS OF SECTION 263 OF TH E INCOME TAX ACT,1961, SHOWS THAT JURISDICTION THEREU NDER CAN BE EXERCISED IF THE COMMISSIONER FINDS THAT THE ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. A MERE AUDIT OBJECTION AND THE FACT THAT A DIFFERENT VIEW COULD BE TAKEN, ARE NOTENOUGH TO SAY THAT THE ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS OR PREJUDICIAL TO T HE INTERESTS OF THE REVENUE. 5. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT ASSESSING OFFICER PASSED THE ORDER IN ACCORDAN CE WITH LAW AND IF THE CIT DID NOT ACCEPT THE VIEW OF THE A SSESSING OFFICER AND WANTED TO TAKE A DIFFERENT VIEW, WOULD NOT GIVE RISE TO ANY OCCASION TO PROCEED UNDER SECTION 263 O F THE ACT MERELY ON AUDIT OBJECT. WE, ACCORDINGLY, SET A SIDE THE ORDER UNDER SECTION 263 OF THE INCOME TAX ACT AND Q UASH THE SAME. THE ASSESSMENT ORDER PASSED BY THE ASSESS ING OFFICER UNDER SECTION 143(3) DATED 21.07.2011 IS RE STORED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNES H SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH MARCH, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD