M/s. VPA Civilcon (P) Ltd., Indore V. Pr. CIT-2, Indore

ITA 864/Ind/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5790 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 10-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Prejudicial to interest; Set aside
• Section: 68; 263; 143(3); 143(2)

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ - इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE - BENCH [Conducted through Virtual Court] [Ahmedabad-Indore] BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND T.R. SENTHIL KUMAR, JUDICIAL MEMBER आयकर अपील सं./ ITA No.864/Ind/2019 नधा रण वष /Asstt. Year: 2015-2016 M/s.VPA Civilcon P.Ltd. 103, Laxmi Tower 576, MG Road, Indore PAN : AAECV 8828 J Vs. Pr.CIT-2 Indore (MP) अपीलाथ / (Appellant) यथ / (Respondent) Assessee by : Shri C.P. Rawka and Shri Venus Rawka, CAs. Revenue by : Shri P.K. Mitra, CIT-DR स ु नवाई क तार ख/Date of Hearing : 15/03/2022 घोषणा क तार ख /Date of Pronouncement: 30/03/2022 आदेश/O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal filed by the assessee is against order dated 22.5.2017 passed by Ld.Pr.Commissioner of Income-tax-2, Indore [for short “Ld.Pr.CIT] by invoking section 263 of the Income Tax Act, 1961 ("the Act" for short) relating to the assessment year 2015-16. 2. Brief facts of the case is that the assessee is a private limited company engaged in the business of real estate and other ancillary activities. For the Asstt.Year 2015-16, the assessee filed its return ITA No.864/Ind/2019 2 of income on 1.10.2015 declaring a income of rs.15,220/-. The case was selected for compulsory limited scrutiny assessment under CASS and notice under section 143(2) was issued on various dates. After considering written submissions of the assessee, the AO accepted the returned income, and assessed the same as total income of the assessee. This assessment order was taken for revision under section 263 by the ld.Pr.CIT-2, Indore by observing that the AO passed assessment without making required examination, investigation which has resulted the assessment order as an erroneous one and was also prejudicial to the interest of the revenue. Therefore, a notice under section 263 was issued on 11.7.2018 to the assessee. In response thereof, the assessee vide his reply dated 24.11.2018 submitted as follows: “Reference is invited to para 2 of the notice u/s 263 dated 11-07- 2018, particularly the second line in which it has been noted by your good self that 'it appears that the order dated 28/06/2017 for A.Y. 2015-16 is erroneous as also prejudicial to the interest of revenue. The word 'appear' in the above phraseology clearly shows that it is distinct and different from the word 'consider' which is the requirement of law for section 263(1). Obviously it goes to show that due consideration has not been given by .your good self but have recorded the suspicion which is not permissible under the law. For this sole reason the notice u/s 263 is bad in law-ab-initio. For the sake of clarity the co-existence of factors governing section 263 are summarised here in below- I. There should be a proceeding under the act; II. In such proceeding the Assessing Officer must have passed an order; and III. The commissioner should consider that the said order is erroneous and prejudicial to the interest of the revenue [CIT v.Executors of the Estate of late H.H. Rajkuverba Dowager Maharani Saheb of Gondal,(1978) 115 ITR 301,305 (Karn); Jagadhri Electric Supply & Industrial Co. v. CIT, (1987) 166 ITR 143 (Punj); Venkatkrishna Rice Co. v. CIT (1987) 163 ITR 129, 137 (mad); Shivaputrappa Channappa Mungoli v. Ag ITO, (1986)160 ITR 123 (Karn); K.N. Agrawal v. CIT, (1991) 189 ITR 769, 772 (All); Keshrimal Bapulal v. CIT, (2001) 252 ITR 764, 769 (MP); Shy am Sundar Agrawal v. State of Assam, (2003) 131 ITR 70, 72-73hl following Rajendra Singh v. Superitendent of taxes, (1990) 79 STC 10,17 ITA No.864/Ind/2019 3 (Gauh).Also, see Nazarbad Plantations v. State ofKarnataka, (1984) 150 ITR 499 (Karn.). With reference to Para 3 of the notice your honor may appreciate that the case records of the Assessee has not been considered in right perspective and on the totality of content of submission before the Assessing Officer. In the first leg of Para 3, it has been observed by your good self that the Assessee has furnished only confirmation from the seller of land. Thus in your esteemed opinion no enquiry has been conducted and statement of the seller has not been recorded. Your honor may appreciate that the confirmation clearly reflected receipt of part consideration of land and balance being outstanding. Therefore this aspect leaves no scope for action under section 263 as the statute does not empower the revisionary authority to invoke section 263. In the above circumstances it cannot be set that enquiry has not been conducted, just because fishing enquiries has not been made or the director of the seller has not been summoned; it does not mean that enquiry has not been conducted. Since the order has been passed by the Ld. Assessing Officer taking into count all the relevant facts, there is no scope for revision. Reference is invited to Honourable Allahabad High Court Decision in the case of CIT vs. Shamshuddin Manzoor Hague (172 ITR 696) in which it has been held that there was no ground for doubt in the transaction. Similar view has been taken by Honourable Delhi High Court in the case of CIT vs. Mrs Sunita Bachani (184 ITR 121, 123). Reference is further invited to Honourable Delhi High Court Decision in case of CIT vs. Stellar Investments Ltd (192 ITR 287, 288). In view of the forgoing paras and taking into account the nature of transaction, your honor may appreciate that there is no case for revision as the credit entry is on account of balance amount payable.” 3. However, ld.Pr.CIT is not satisfied with the reply filed by the assessee, and set aside the assessment order dated 28.6.2017 to the file of the AO to make further inquiry to ascertain credit-worthiness of lender in respect of loan of Rs.3.6 crores taken during the year, and thereafter pass an order in accordance law. Aggrieved against this 263-order, the assessee is before the Tribunal with the following grounds: “1. That the ld.Pr.CIT erred in passing order u/s.263 without making required examination of facts. ITA No.864/Ind/2019 4 The initiation of proceedings u/s263is totally wrong and illegal. 2. Ld.Pr.CIT erred in holding that he order passed by the AO is erroneous and prejudicial to the interest of revenue. 3. That the ld.Pr.CIT did not paid attention towards the fact that the original assessment u/s.143(3) was completed by AO after considering all the aspects and full facts of the case and therefore leaving no scope for the order to be erroneous and prejudicial to the internet of Revenue. 4. That the order passed by the ld.Pr.cCIT may be kindly quashed.” 4. The ld.counsel for the assessee has taken us through the paper book filed by him particularly page nos.12 to 18, which carries reply filed by the assessee during the course of assessment proceedings before the AO: “Assessee Company has been incorporated during the year, there has been no operations or financial transactions in the relevant year. The company has made investment in immovable fixed asset situated at Khajrana Kanadia Road , Indore worth Rs.6,50,00,000/- Copy of registry already submitted with you. The land was purchased from Gurukripa Essence Real Estate Private Limited. The initial amount of Rs. 2,47,80,000/- was being paid on 25.10.2014 which is debited from the bank account. The balance amount of consideration was outstanding at the end of the year as Trade Payables in books of assessee. Copy of confirmation of ledger is also enclosed along. The source of initial consideration was made available from inter corporate loan from Aqua Pumps Infra Ventures Limited. Assessee company borrowed amount Rs. 3,25,00,000/- during the year from the said entity. Confirmation, ITR and Balance sheet is enclosed along. Therefore, source and investments duly explained which is one of the reason to the selection for scrutiny. Another reason for selection in scrutiny was large increase in sundry creditors with respect to turnover, it is again submitted that the trade payable outstanding at the end of the year is in ITA No.864/Ind/2019 5 respect to the purchase of land as Rs. 3,95,70,000/- was remaining to be paid. Copy of confirmation is already enclosed.” 5. Thus, the ld.AR pleaded that as far as land purchase is concerned, copy of agreement and confirmation ledger was also filed before the AO. Similarly for the cooperate loan from Aqua Pumps Infra Ventures Ltd., Mumbai (“APINVL” for short), confirmation, income-tax returns and balance sheet of APINVL were filed before the AO, and after considering the same, the ld.AO was satisfied with the explanation offered by the assessee. Therefore, Pr.CIT was not correct in invoking provisions under section 263 against the assessment order passed under section 143(3) dated 28.6.2017. Therefore, ld.AR pleaded that initiation of proceedings under section 263 itself is bad in law and liable to be quashed. 6. Per contra, the ld.DR submitted that Explanation 2 to section 263 of the Act provides that, in case the AO failed to make proper inquiry relating an assessment and without verifying records pass the assessment, then such order can be revised by invocation of section 263, therefore, the ld.Pr.CIT was correct in making the provisions of section 263 and there is no error in the impugned order, which deserves to be sustained in law. 7. We have given our thoughtful consideration. A perusal of the reply field by the assessee before the AO makes it very clear that the purchases of the land situated at Khajrana Kanadia Road, Indore for Rs.6.50 crores wherein copy of agreement also submitted to the AO. The initial amount of Rs.2,47,80,000/- was paid on 25.10.2014 which also debited in the bank account. The balance amount of consideration was outstanding at the end of the year as trade liability in the books of accounts of the assessee, and the copy of the confirmation of ledger was also submitted before the AO. So after ITA No.864/Ind/2019 6 going through the above details, the ld.AO has satisfied with the explanation offered by the assessee, and accordingly, held not to make any disallowance or addition on this count. As regards amount of Rs.3.25 crores borrowed from APINVL, the assessee filed before the AO confirmation letters, income-tax returns and the balance of APINVL and the source of the investment was also explained by the assessee before the ld.AO. As the AO did not find any discrepancy in the details produced by the assessee, the AO did not make any addition on this issue. However, as can be seen from the 263-order, the ld.Pr.CIT observed that the AO has come to belief that he has not made inquiry of the details, and therefore invocation of section 263 is warranted. After going through 263-order, it can be seen that 263-proceedings has been initiated merely because of difference of opinion between ld.Pr.CIT and the AO. This issue is covered by the judgment of Gujarat High Court in the case of CIT Vs. Arvind jewelers, 290 ITR 689 (Guj) holding as follows: “Revision—Erroneous and prejudicial order—Lack of proper enquiry—CIT has not stated that no investigation has been carried out by the AO before granting registration to the assessee-firm—In fact, there is no whisper in the entire order of the CIT that the order granting registration was erroneous in any manner—Even otherwise, the finding of fact recorded by the Tribunal that the AO had made proper investigation before granting registration has not been shown to be incorrect in any manner whatsoever—Fact that the CIT did not agree with the view of the AO, by itself, cannot constitute a valid reason for exercise of jurisdiction under s. 263.” 8. Further in the case of Reliance Communication Ltd. Vs. CIT reported 76 taxmann.com 226 (SC), the Hon’ble Supreme Court after dealing with similar situation, dismissed the SLIP filed by the Revenue. The head-note of this case law reads as under: Section 68, read with section 263, of the Income-tax Act, 1961 - Cash credits (FCCBs) - Assessee raised funds by way of FCCBs during year ITA No.864/Ind/2019 7 under consideration - Assessing Officer completed assessment accepting income declared by assessee - Commissioner noticed that no investigation was carried out by Assessing Officer to establish name and address, genuineness and creditworthiness of actual subscribers to FCCBs in terms of section 68 - He thus passed a revisional order setting aside assessment - Tribunal noted that Assessing Officer had made detailed enquiries about aforesaid aspect and mere fact that he did not make any reference to said issue in assessment order, could not make said order erroneous and prejudicial to interest of revenues - High Court by impugned order held that finding recorded by Tribunal being a finding of fact, no substantial question of law arose therefrom - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [Para 11] [In favour of assessee] 9. Following ratio of the above judgments, we are of the considered opinion that ld.Pr.CIT has not made a case for invocation of provisions section 263 of the Act for holding that the order passed by the ld.AO as erroneous one and also prejudicial to the interest of the revenue. The ld.Pr.CIT has not verified assessment record, namely, reply filed by the assessee before the AO including confirmation letter, ITR and balance sheet of the third parties. Therefore, the ld.Pr.CIT has erred in invoking provisions of section 263 and the same is liable to be quashed. Thus, we allow this ground of appeal, and quash order of the ld.Pr.CIT passed under section 263 of the Act, and restore the original assessment order passed by the AO under section 143(3) of the Act. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 30 th March, 2022. Sd/- Sd/- (MANISH BORAD) ACCOUNTANT MEMBER (T.R. SENTHIL KUMAR) JUDICIAL MEMBER Indore, Dated 30/03/2022 ITA No.864/Ind/2019 8 आदेश क त'ल(प अ)े(षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु +त / Concerned CIT 4. आयकर आय ु +त(अपील) / The CIT(A) 5. (वभागीय त न ध, आयकर अपील य अ धकरण / DR, ITAT, 6. गाड फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, / ITAT, 1. Date of dictation : 15-3-2022 2. Date on which the typed draft is placed before the Dictating Member. : 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 7. Date on which the file goes to the Bench Clerk. : 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order :