Shri Ishwar Vasantlal Sakla, Pune V. CIT-V, Pune

ITA 879/PUN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1131 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-08-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 17-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS HARSHVARDHINI BUTY
• Assessee Lawyers: S N DOSHI
• Keywords: Opportunity of being heard; Additional evidence; Competent authority; Revised return; Reason to believe
• Section: 143(3); 142(1); 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM . / ITA NOS.879 TO 881/PN/2013 ' ( ( / ASSESSMENT YEARS: 2003-04 TO 2005-06 SHRI ISHWAR VASANTLAL SAKLA, S.NO.171, PLOT NO.17, CHINCHWADGAON, HAVELI, PUNE 411033 PAN: ACOPS8096E . APPELLANT VS. THE COMMISSIONER OF INCOME TAX V, PUNE. . RESPONDENT / APPELLANT BY : SHRI S.N. DOSHI / RESPONDENT BY : MRS. HARSHVARDHINI BUTY DATE OF HEARING : 27.08.2015 / DATE OF PRONOUNCEMENT: 16.09.2015 ) / ORDER PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED THREE APPEALS PREFERRED BY THE ASSESS EE RELEVANT TO ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 ARE A GAINST A COMMON ORDER DATED 14.02.2013 PASSED UNDER SECTION 263 OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT) BY THE COMMISSIONER OF INCOME TAXV, PUN E (IN SHORT THE CIT). AS THE ISSUE INVOLVED IS COMM ON IN ALL THE THREE ASSESSMENT ITA NOS.879 TO 881/PN/2013 2 YEARS, THE THREE APPEALS ARE DISPOSED OF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT U NDER SECTION 263 OF THE ACT ON THE GROUND THAT RESPECTIVE ASSESSMENT YEARS WERE FRAMED IN ACCORDANCE WITH LAW AFTER DUE APPLICATION OF MIND AND THEREFORE INV OCATION OF SECTION 263 OF THE ACT DESERVES TO BE QUASHED ESPECIALLY WHEN THE ASSE SSMENT ORDERS ARE NEITHER ERRONEOUS AND NOR PREJUDICIAL TO THE INTEREST OF TH E REVENUE. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT AS PER A IR INFORMATION IN THE CASE OF THE ASSESSEE, IT WAS FOUND BY THE ASSESSING OFFICER (AO) THAT THE ASSESSEE HAD MADE INVESTMENTS IN VARIOUS MUTUAL FUNDS AMOUNTING TO RS.9 LAKHS DURING THE FINANCIAL YEAR 2005-06 RELEVANT TO THE ASSESSMENT Y EAR 2006-07. IN THE COURSE OF ASSESSMENT PROCEEDINGS I.E. A.Y. 2006-07, IT WAS SU BMITTED BY THE ASSESSEE BEFORE THE AO THAT IMPUGNED INVESTMENTS WERE MADE OUT OF U NDISCLOSED INCOME AMOUNTING TO RS. 23,42,000/- SPANNING OVER ASSESSME NT YEAR 2003-04 TO 2007-08. THE ASSESSEE FILED REVISED RETURN FOR THE AY 2007-0 8. FOR AY 2003-04 TO 2005- 06, THE REVISED COMPUTATION OF INCOME GIVING THE DE TAILS OF UNDISCLOSED INCOME FOR EACH ASSESSMENT YEAR WAS FILED SEPARATELY BEFOR E THE AO. HOWEVER, NO REVISED RETURN WAS FILED BY THE ASSESSEE FOR THESE YEARS CO NCERNING PRESENT APPEAL. IN THE REVISED COMPUTATION OF INCOME FILED DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE FOLLOWING UNDISCLOSED INCOMES ARE SHOWN FOR THE VARIOUS ASSESSMENT YEARS WHICH HAS ESCAPED ASSESSMENT :- A.Y. INCOME DISCLOSED IN THE REVISED RETURN ON AMOUNT ACCOUNT OF 2003-04 LAND AGENCY COMMISSION/SUNDRY INCOME 1,35,070/- AGRICULTURAL INCOME 1,30,370/ - 2004-05 LAND AGENCY COMMISSION/SUNDRY INCOME 2,34,160/- AGRICULTURAL INCOME 1,34,630 / - 2005-06 LAND AGENCY COMMISSION/SUNDRY INCOME 3,50,230/- AGR ICULTURAL INCOME 1,37,160/ - 4. IN THE LIGHT OF THE REVISED COMPUTATIONS FILED F OR THE ABOVE REFERRED ASSESSMENT YEARS, NOTICES UNDER SECTION 148 OF THE ACT WERE ISSUED BY THE AO SEEKING TO REOPEN THE ASSESSMENTS TO INCLUDE THE ES CAPED INCOME. AS A COROLLARY, NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED FOR ASSESSMENTS ITA NOS.879 TO 881/PN/2013 3 THEREOF. THE ASSESSEE FILED THE RETURN OF INCOME P URSUANT TO THE AFORESAID STATUTORY NOTICES AND, INTER-ALIA , DECLARED AFORESAID UNDISCLOSED INCOME AS PROPOSED IN THE REVISED COMPUTATIONS. THE TAX AND INTEREST ON INCOM E RETURNED PURSUANT TO NOTICES UNDER S. 148/ 147 WERE ALSO STATED TO BE PAID AS PE R LAW. THE ASSESSING OFFICER TOOK NOTICE OF THE FACT THAT THE TOTAL INCOME INCLU DED AGRICULTURAL INCOME IN VARIOUS ASSESSMENT YEARS AS TABULATED ABOVE AND PAS SED ASSESSMENT ORDERS UNDER SECTION 143(3) R.W.S. 147/148 OF THE ACT FOR ALL TH ESE YEARS BROADLY ACCEPTING THE RETURNS FILED PURSUANT TO NOTICE UNDER S. 147. THE LD. CIT HOWEVER, DECLINE TO AGREE WITH THE IMPUGNED ORDERS PASSED UNDER SECTION 143(3) R.W.S. 148 OF THE ACT FOR ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 A ND ACCORDINGLY ISSUED 3 SEPARATE SHOW-CAUSE NOTICES DATED 08.02.2012 UNDER SECTION 263 OF THE ACT FOR ALL THESE THREE YEARS. 5. THE CONTENTS OF THE SHOW-CAUSE NOTICES FOR IMPUG NED ASSESSMENT YEARS ARE SIMILAR AND THE SAME IS EXTRACTED BELOW FOR READY R EFERENCE:- (I) THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRU TINY UNDER THE COMPUTER AIDED SELECTION SCHEME (CASS) FOR A.Y. 2006-07. THE ITS D ETAILS (REASON FOR SELECTION OF CASE UNDER CASS) REVEALED THAT THE ASSESSEE HAD PURCHASE D UNITS OF MUTUAL FUNDS AMOUNTING TO RS. 9 LAKHS DURING A.Y. 2006-07. WHILE VERIFYING THE DETAILS DURING THE A.Y. 2006-07, IT WAS FOUND THAT THE ASSESSEE HAD TWO UNDISCLOSED BANK ACCOUNTS IN UTI BANK, ONE IN HIS NAME AND OTHER IN THE NAME OF HIS WIFE BUT STAT ED THAT ALL THE FINANCIAL TRANSACTIONS IN THE WIFE'S ACCOUNT PERTAINED TO THE ASSESSEE. ON VERIFICATION OF THE BANK ACCOUNTS, THE AO NOTICED THAT THERE WERE CASH DEPOS ITS TOTALLING TO RS.23,42,000/- IN THE A.Y. 2006-07 IN BOTH THESE BANK ACCOUNTS. THE AO V IDE ORDER U/S 143(3) DATED 13.12.2008 PROCEEDED TO MADE ADDITION OF RS.23,42,0 00/- TREATING THE UNDISCLOSED CASH DEPOSITS AS INCOME AND ALSO ASSESSED INTEREST INCOM E OF RS. 48,530/-. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR CONCEALMEN T OF INCOME WERE INITIATED. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE AMOU NT OF CASH DEPOSITS TOTALLING TO RS. 23,42,000/- REPRESENTED INCOME EARNED OVER MANY YEARS. (II) AFTER THE ABOVE UNDISCLOSED BANK ACCOUNTS CAME INTO LIGHT, THE ASSESSEE SUBMITTED ON 1.12.2008 THAT THE INVESTMENT IN MUTUA L FUNDS AND LAND ETC. HAS BEEN MADE OUT OF UNDISCLOSED INCOME EARNED DURI NG F.Y. 2002-03 TO 2005-06. HE HAS FURTHER STATED THAT REVISED COMPUTA TION OF INCOME HAS BEEN PREPARED FOR F.Y. 2002-03 TO 2005-06 AND DUE T AXES HAVE BEEN PAID ON THE REVISED INCOME COMPUTED BUT THESE REVISED RE TURNS HAVE NOT BEEN FILED AS THOSE WOULD NOT BE ACCEPTED. HE HOWEVER FI LED REVISED RETURN OF INCOME FOR A.Y. 2007-08 ON 1.12.2008 WHICH WAS WITH IN TIME. (III) THE ASSESSEE HAS VIDE LETTER DATED 8.12.08 FU RTHER STATED THAT HE HAS NOT DISCLOSED INCOME FROM BUSINESS OF LAND COMMISSION A GENCY AND RENDERING OF SUNDRY SERVICES AND AGRICULTURAL INCOME IN THE O RIGINAL RETURNS FILED FOR THE ABOVE YEARS. ITA NOS.879 TO 881/PN/2013 4 (IV) IN THE REVISED COMPUTATION OF INCOME FILED DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE FOLLOWING INCOMES ARE SH OWN WHICH WERE NOT SHOWN IN THE ORIGINAL RETURN FILED. A.Y. INCOME DISCLOSED IN THE REVISED RETURN ON AMOUNT ACCOUNT OF 2003-04 LAND AGENCY COMMISSION/SUNDRY INCOME 1,35 ,070/- AGRICULTURAL INCOME 1,30,370/ - 2004-05 LAND AGENCY COMMISSION/SUNDRY INCOME 2,34 ,160/- AGRICULTURA L INCOME 1,34,630 / - 2005-06 LAND AGENCY COMMISSION/SUNDRY INCOME 3,50 ,230/- AGRICULTURAL INCOME 1,37,160/ - 2006 - 07 LAND AGENCY COMMISSION/SUNDRY INCOME 3,89,872/ - AGRICULTURAL INCOME 1,39,920/- (V) THE CIT(A) VIDE ORDER DATED 15.2.10 CONFIRMED T HE ORDER OF THE A.O. FOR THE A.Y. 2006-07. THE ASSESSEE HAS PAID THE ENTIRE AMOU NT OF DEMAND CREATED. THE AO ALSO LEVIED PENALTY U/S 271(1)(C) OF AN AMOUNT OF RS.8,0 7,040/- VIDE ORDER DATED 28.3.2011. THE ASSESSEE FILED AN APPEAL AGAINST THE PENALTY IM POSED U/S 271(1)(C) BEFORE THE CIT(A). (VI) THE ASSESSMENT WAS COMPLETED U/S 143(3) RWS 14 8 ON 20.12.10 BY THE SUCCESSOR INCOME TAX OFFICER, WHO HAS ACCEPTED THE RETURN FIL ED IN RESPONSE TO NOTICE U/S 148. THE UNDISCLOSED INCOME CLAIMED BY THE ASSESSEE FOR THE RESPECTIVE ASSESSMENT YEARS WERE ACCEPTED BY THE AO WITHOUT ANY VERIFICATION BEING B Y THE ASSESSEE. (VII) AS REGARDS THE LAND AGENCY COMMISSION, THE AO HAS FAILED TO VERIFY AS TO FROM WHOM IT WAS RECEIVED AND WHETHER TDS HAS BEEN DEDUC TED ON THE SAME OR NOT. (VIII) THE AO HAS ALSO ACCEPTED THE AGRICULTURAL IN COME WITHOUT ANY VERIFICATION WHATSOEVER, THEREBY ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT FOR THE PERIOD PERTAIN ING TO A.Y. 2006-07 WAS FROM UNDISCLOSED INCOME EARNED DURING A.Y. 2003-04 TO 20 05-06 FOR WHICH NO REVISED RETURNS OF INCOME WERE FILED BY THE ASSESSEE WITHIN THE TIME ALLOWED BY THE ACT. THE ASSESSEE HAD NEVER SHOWN ANY AGRICULTURAL INCOME FO R ANY OF THESE YEARS INCLUDING A.Y. 2006-07 (ORIGINAL RETURN) A.Y. AMT OF AGRICULTURAL INCOME DISCLOSED BY THE AS SESSEE 2003-04 1,30,370/- 2004-05 1,34,630/- 2005-06 1,37,160/- (IX) FURTHER, THE ASSESSEE HAS ALSO BEEN ALLOWED TH E BASIC EXEMPTION LIMIT FOR EACH OF THESE 3 YEARS WITHOUT THERE BEING ANY PROOF THAT TH E LAND AGENCY COMMISSION HAS IN FACT EARNED DURING THE ABOVE 3 YEARS. 6. THE ASSESSEE STAUNCHLY OBJECTED TO THE ACTION PR OPOSED TO BE TAKEN UNDER SECTION 263 OF THE ACT BY CLAIMING THAT THE ASSESSM ENT ORDERS PASSED BY THE ASSESSING OFFICER ARE NEITHER ERRONEOUS NOR PREJUDI CIAL TO THE INTEREST OF THE REVENUE. ITA NOS.879 TO 881/PN/2013 5 7. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE SUBMITTED THAT THE ASSESSEE HAS ACTED IN COMPLIANCE WITH THE STATUTORY NOTICES AND DISCLOSED THE INCOME ALLEGED TO HAVE ESCAPED FOR ALL THESE YEARS WHILE FILING THE RETURN PURSUANT TO NOTICE UNDER SECTION 147/148 OF THE ACT AS DIREC TED. SUCH RETURN FILED BY FOLLOWING DUE PROCESS OF LAW CANNOT BE OBLITERATED UNDER SECTION 263 OF THE ACT. THE CIT IS EMPOWERED TO MODIFY SUCH ASSESSMENT SUIT ABLY BUT CANNOT DIRECT CANCELLATION OF THE INCOME ASSESSED PURSUANT TO S UCH RETURN ALTOGETHER. HE STRESSED THAT INCOME OFFERED BY THE ASSESSEE CANNOT BE REDUCED UNDER SECTION 263 OF THE ACT UNDER ANY CIRCUMSTANCE. THE ACCEPTANCE OF INCOME BY AO OFFERED BY THE ASSESSEE BY WAY OF RETURN PURSUANT TO NOTICE UN DER SECTION 147 CANNOT BE TERMED AS PREJUDICIAL TO THE INTEREST OF THE REVENU E WHEN THE REVENUE ITSELF ALLEGES ESCAPEMENT OF INCOME IN THE NOTICE ISSUED U NDER SECTION 147/148 OF THE ACT. HE RELIED UPON SEVERAL JUDICIAL DECISIONS INC LUDING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIAL IN DIA LTD. REPORTED IN 203 ITR 108 (BOM) AND THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SMT. MINALBEN PARIKH REPORTED IN 215 ITR 81 (GUJ) F OR THE PROPOSITION THAT THE SUBJECT-MATTER OF 263 CAN BE SAID TO BE ERRONEOUS W HEN IT IS NOT IN ACCORDANCE WITH LAW AND PREJUDICE HAS CAUSED TO INTERESTS OF T HE REVENUE. THE ORDER WHICH IS SUBJECT-MATTER OF REVISION UNDER SECTION 263 MUST B E ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS T HE CANCELLATION OF THE REASSESSMENT ALTOGETHER AS DIRECTED BY THE CIT AS P ER HIS ORDER UNDER SECTION 263 OF THE ACT, WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND NOT OTHERWISE. THE PLEA OF LACK OF ENQUIRY HAS NO APPLICATION IN THE FACTS OF THE CASE AS THE INCOME ALREADY BELIEVED TO HAVE ESCAPED ASSESSMENT HAS BEEN BROUGHT TO TAXATION BY FOLLOWING STATUTORY PROCESS FOR WHICH NO ENQUIRY WAS NECESSARY. THE ENQUIRY WAS PLAUSIBLE ONLY FOR ASSESSMENT OF OTHER INCOME, IF ANY, WHICH COMES TO THE NOTICE OF THE AO DURING THE COURSE OF ASSESSMENT. 8. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE COMMISSIONER AND IN FU RTHERANCE SUBMITTED THAT THE CASH DEPOSIT OF RS.23,42,000/- RELATES TO ASSESSMEN T YEAR 2006-07 AND IT HAS BEEN RIGHTLY ASSESSED IN THAT YEAR BY THE THEN AO TURNIN G AWAY THE REVISED COMPUTATIONS. THE ASSESSEE IN A BID TO PROVE THE SO URCE THEREOF HAS TRIED TO ITA NOS.879 TO 881/PN/2013 6 CLANDESTINELY DECLARE THE INCOME IN THE PRECEDING A SSESSMENT YEARS IN QUESTION. THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY WHAT SOEVER ON THE SOURCE AND NATURE OF INCOME DECLARED IN THESE THREE ASSESSMENT YEARS AND ACCEPTED THE RETURN FILED IN STEREOTYPED MANNER. THE LD. DR WHILE LEND ING SUPPORT TO THE ORDER OF CIT CONTENDED THAT THE REASSESSMENT ORDERS FOR IMPU GNED ASSESSMENT YEARS HAVE BEEN RIGHTLY CANCELLED SINCE THE UNDISCLOSED INCOME RELATES TO ASSESSMENT YEAR 2006-07. THE ACTION OF THE SUBSEQUENT ASSESSING OF FICER IN ASSESSING THE UNDISCLOSED INCOME PERTAINING TO ASSESSMENT YEAR 20 06-07 WHICH WERE INTER ALIA SPREAD BY THE ASSESSEE IN ASSESSMENT YEARS 2003-04 TO 2005-06 IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 9. WE HAVE OBJECTIVELY AND DISPASSIONATELY CONSIDER ED THE FACTS OF THE CASE, ORDERS OF THE AUTHORITIES BELOW FOR ALL THESE IMPUG NED APPEALS, RIVAL SUBMISSIONS AND CASE LAWS CITED. 9.1 THE PRIMARY ISSUE INVOLVED IS WHETHER THE UNDIS CLOSED INCOME OUT OF WHICH INVESTMENTS IN MUTUAL FUNDS WERE STATED TO HAVE BEE N MADE AS PER AIR INFORMATION RELATES TO A.Y. 2006-07 AS ASSESSED BY THE AO OR SPANS OVER AY 2003-04 TO 2004-05 ALSO AS CLAIMED BY THE ASSESSEE FIRST BY WAY OF REVISED COMPUTATION AND THEREAFTER BY FILING RETURN OF INCO ME PURSUANT TO NOTICE U/S 148 OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT SOURCE OF THESE CASH DEPOSITS ARE OUT OF ACCUMULATED CASH EARNED IN DIFFERENT ASSESSMENT YEA RS STARTING FROM ASSESSMENT YEAR 2003-04 OUT OF UNDISCLOSED AGRICULTURAL INCOME , UNDISCLOSED LAND DEALINGS AND OTHER RECEIPTS FROM FRIENDS AND RELATIVES, ETC. . THOUGH THE ASSESSEE FILED REVISED COMPUTATION FOR THE ASSESSMENT YEARS 2003-0 4 TO 2005-06 BUT THE SAME WERE NOT FOUND TO BE ACCEPTABLE BY THE THEN ASSESSI NG OFFICER AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) IN ASSESSMENT YE AR 2006-07, WHEREIN ENTIRE DEPOSITS REFLECTED IN THE BANK ACCOUNT IN THAT ASSE SSMENT YEAR WAS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THAT YEAR. H OWEVER, THE NOTICE U/S 148 WERE ISSUED AND ASSESSMENTS WERE FRAMED UNDER S. 14 3(3) R.W.S 147 OF THE ACT. THE CIT HAS OBJECTED TO THESE ASSESSMENTS FOR AY 20 03-04 TO 2005-06 ON THE GROUND THAT THE SUBSEQUENT ASSESSING OFFICER HAS MI S-APPRECIATED THE FACTS AND SIMPLY ACCEPTED THE RETURNED INCOME WITHOUT ANY VER IFICATION OF THE AVERMENTS ITA NOS.879 TO 881/PN/2013 7 THEREIN. THE LD. CIT ALSO INTER ALIA MADE REFERENCE TO THE ORDER OF THE PUNE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA N O.647/PN/2010 RELATING TO ASSESSMENT YEAR 2006-07, ORDER DATED 05.10.2011, WH EREIN THE TRIBUNAL TOOK COGNIZANCE OF THE COPIES OF THE IMPUGNED RE-ASSESSM ENT ORDERS FOR ASSESSMENT YEARS 2003-04 TO 2005-06 AS ADDITIONAL EVIDENCE AND SET-ASIDE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER ON ACCOUNT OF THE SE ASSESSMENT ORDERS WHICH WERE PASSED SUBSEQUENT IN TIME HAVING A DIRECT BEARING ON THE ISSUE. THE CIT IN ITS ORDER UNDER S. 263 OBSERVED THAT THE TRIBUNAL HAD T O SET-ASIDE THE MATTER RELEVANT TO A.Y. 2006-07 BACK TO THE FILE OF THE ASSESSING O FFICER FOR RE-CONSIDERATION SINCE THIS ASSESSMENT ORDER INCLUDED UNDISCLOSED IN COME WHICH IS ALSO STATED TO BE INCLUDED IN IMPUGNED THREE ASSESSMENT YEARS. THERE FORE, THE ITAT SET ASIDE THE MATTER FOR A.Y. 2006-07 TO RE-EXAMINE THE ISSUE AFR ESH IN VIEW OF THE REASSESSMENT ORDERS. 9.2 THE SUBSTANTIVE CASE OF THE CIT IS THAT THE UND ISCLOSED INCOME RELATES TO THE ASSESSMENT YEAR 2006-07 AND ACCORDINGLY ASSESSED CO RRECTLY IN THAT YEAR AND EXPLANATION OF THE ASSESSEE THAT THE SOURCE OF CASH DEPOSITS HAVE BEEN EARNED IN THE PRECEEDING YEARS I.E. ASSESSMENT YEARS 2003-04 TO 2005-06 IS WITHOUT ANY CREDIBLE EVIDENCE AND THUS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE IN THE FACTS OF THE CASE. HE SIMULTANEOUSLY ALLEGE D THAT THE ASSESSING OFFICER HAS ACTED IN NONCHALANT MANNER IN COMPLETING THE ASSESS MENT WITHOUT APPLICATION OF MIND. 9.3 IN ESSENCE, THE OBJECTION OF THE CIT IS TWO-FOL D. ONE, THE INCOME RELATES TO ASSESSMENT YEAR 2006-07 AND OUGHT NOT TO HAVE BEEN ASSESSED IN ASSESSMENT YEARS 2003-04 TO 2005-06 AND SECONDLY, THE REQUISITE VERI FICATION OF RELEVANT FACTS HAVE NOT BEEN CARRIED OUT IN IMPUGNED ASSESSMENT YEARS. 10. SECTION 263 OF THE ACT EMPOWERS THE COMMISSIONE R TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEO US IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY AFTER GIVIN G THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE DEEMS ITA NOS.879 TO 881/PN/2013 8 NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTA NCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING AND MODIFYING THE ASSE SSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. 10.1 THUS, THE CIT HAS TO SATISFY HIMSELF THAT THE TWIN CONDITIONS I.E. (A) THE ASSESSMENT ORDER SOUGHT TO BE REVISED IS ERRONEOUS; AND, (B) IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, COEXISTS. THUS, BOTH THE C ONDITIONS ARE CUMULATIVE AND NOT ALTERNATIVE. IF IT FOUND THAT THE ASSESSMENT ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE OR IF IT IS NOT ERRONEO US BUT STILL PREJUDICIAL TO THE INTEREST OF THE REVENUE RECOURSE CANNOT BE MADE TO SECTION 263(1) OF THE ACT. 10.2 THE CIT, IN THE PRESENT CASE HAS PURPORTED TO ACT IN EXERCISE OF THIS POWER UNDER SECTION 263 OF THE ACT ON THE GROUND THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY HE CANCELLED THE AFORESAID RE-ASSESSMENT ORDERS. 11. THE FACTS, AS WE SEE, ARE VERY SIMPLE. THE RET URNS FOR THE ASSESSMENT YEARS 2003-04 TO 2005-06 IN QUESTION WERE ADMITTEDLY FILE D PURSUANT TO STATUTORY NOTICE UNDER SECTION 147/148 R.W.S. 142(1)/143(2) OF THE A CT. THE REASONS FOR ISSUING THE STATUTORY NOTICE UNDER SECTION 148 OF THE ACT FOR A LL THESE THREE IMPUGNED ASSESSMENT YEARS AS ADVERTED TO US IN PAGE 16 TO 17 OF THE PAPER BOOK FILED BY THE ASSESSEE, CLEARLY DEMONSTRATE THAT THE ASSESSING OF FICER HAS STATED IN UNEQUIVOCAL TERMS THAT THE ASSESSEE HAS CERTAIN UNDISCLOSED INC OME WHICH GRANTED HIM JURISDICTION TO REOPEN THE ASSESSMENT BY INVOKING J URISDICTION UNDER SECTION 147 OF THE ACT. 12. THE UNDISCLOSED INCOME AS TABULATED IN THE NOTI CE IS REPRODUCED BELOW :- A.Y. INCOME FROM LAND AGENCY AGRICULTURAL INCOME BANK INTEREST TOTAL UNDISCLOSED INCOME 2003-04 RS.1,35,070/- RS.1,30,370/- RS.18,893/- RS.2,84,333/- 2004-05 RS.2,34,160/- RS.1,34,630/- RS.29,374/- RS.3,98,164/- 2005-06 RS.3,50,230/- RS.1,37,160/- RS.48,489/- RS.5,35,879/- ITA NOS.879 TO 881/PN/2013 9 13. THE AFORESAID NOTICES WERE ISSUED WITH THE CONC URRENCE AND APPROVAL OF THE JT. COMMISSIONER OF INCOME TAX PURPORTEDLY UNDER SE CTION 151 OF THE ACT EXCEPT FOR THE ASSESSMENT YEAR 2005-06 WHERE APPROVAL UNDE R SECTION 151 WAS NOT STATUTORILY REQUIRED. 14. NEEDLESS TO SAY, IT IS THE EXCLUSIVE DOMAIN OF THE ASSESSING OFFICER WHO ALONE IS EMPOWERED TO ASSUME THE JURISDICTION UNDER SECTION 147 OF THE ACT WHEN HE HAS REASON TO BELIEVE THAT THE CHARGEABLE INCOME HAS ESCAPED ASSESSMENT ETC. TO ELABORATE, THE JURISDICTION UNDER SECTION 147 OF THE ACT IS VESTED WITH THE ASSESSING OFFICER ONLY AND CANNOT BE EXERCISED EVEN BY THE SUPERIOR AUTHORITY INCLUDING THE COMMISSIONER OF INCOME TAX. THE SECTI ON OF COURSE, HAS INBUILT SALUTARY SAFEGUARDS TO ENSURE THAT A CASE IS REOPEN ED ONLY ON LEGITIMATE GROUNDS. THE SUPERIOR AUTHORITY CAN MONITOR THE ISSUANCE OF NOTICE AS PER S. 151 OF THE ACT. IT IS PERTINENT HERE TO NOTE THAT THE PROCEDURE FOL LOWED WHILE ISSUING THE NOTICE UNDER SECTION 148 IS NOT IN IMPUGNED IN THE PRESENT CASE. IT IS AN ADMITTED POSITION THAT THE STATUTORY NOTICES UNDER S. 148 HAVE NOT BE EN QUASHED OR SET ASIDE BY ANY COMPETENT AUTHORITY OR COURT IN ANY PROCEEDINGS. 15. IN THIS BACKGROUND, WE APPRECIATE THAT ONCE A V ALID STATUTORY NOTICE IS ISSUED BY THE ASSESSING OFFICER UNDER S. 148 DIRECTING THE ASSESSEE TO FILE THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR, THE ONLY C OURSE OPEN TO THE ASSESSEE IS TO COMPLY WITH IT WHEN THE VALIDITY OF THE NOTICE ITSE LF IS NOT IN QUESTION. WHEN THE ASSESSEE PURSUANT THERETO FILES THE RETURN OF INCOM E DISCLOSING THE INCOME PERTAINING TO THAT YEAR, A VALID AND ADMISSIBLE RET URN COMES INTO EXISTENCE. THE APPLICATION OF MIND BY THE AO FOR ALLEGING ESCAPEME NT OF CERTAIN INCOME BEFORE ISSUING STATUTORY NOTICE UNDER SECTION 147 OF THE A CT IS A PRE-CONDITION AND THEREFORE IMPLICIT IN THE SCHEME OF ACT. THE APPLIC ATION OF MIND WHICH IS SIN QUA NON FOR FORMATION OF BELIEF REGARDING ESCAPEMENT OF INCOME HAS TO BE THAT OF AO ALONE. SECTION 147 ENJOINS UPON THE AO TO ISSUE NOT ICE BASED ON OBJECTIVE FACTS TO ALLEGE ESCAPEMENT OF INCOME. THE INCOME WHICH HAS B EEN FOUND TO HAVE ESCAPED ASSESSMENT BASED ON CONSIDERATION OF OBJECTIVE FACT S AND RELEVANT MATERIAL ENABLING THE ASSESSING OFFICER TO INVOKE SECTION 14 7 OF THE ACT HAS ADMITTEDLY BEEN DECLARED AND DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. THE ITA NOS.879 TO 881/PN/2013 10 GRIEVANCE OF THE REVENUE ABOUT ALLEGED ESCAPEMENT O F INCOME AS RECORDED UNDER S. 148(2) HAS THUS BEEN MET BY DISCLOSING THE IMPUG NED INCOME UNDER SECTION 147. THEREFORE, THE REVENUE NOW CANNOT SAY THAT TH E INCOME DECLARED IN ASSESSMENT YEARS 2003-04 TO 2005-06 ARE NONEST AND A NULLITY. THE LAW DOES NOT PERMIT A PERSON TO BOTH APPROBATE AND REPROBATE. 16. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS . SUN ENGINEERING WORKS PVT. LTD. REPORTED IN (1992) 198 ITR 297 (SC) HELD THAT OBJECT AND PURPOSE IN PROCEEDINGS UNDER SECTION 147 ARE BENEFIT OF THE RE VENUE ALONE AND NOT AN ASSESSEE. THE CASE CANNOT BE REOPENED TO GRANT ANY BENEFIT TO THE ASSESSEE. THE PREJUDICE TO THE ASSESSEE IS THEREFORE IMPLICIT AS WELL AS EXPLICIT AT THE STAGE OF ISSUANCE OF NOTICE ITSELF WHEN THE ASSESSING OFFICE R BELIEVES THAT THE CHARGEABLE INCOME HAS ESCAPED ASSESSMENT FOR A GIVEN ASSESSMEN T YEAR AND WHICH INCOME IS THEREAFTER DISCLOSED BY WAY OF FILING THE RETURN IN PURSUANCE TO THE NOTICE, THE GRIEVANCE OF THE REVENUE CEASES TO EXIST. THEREFOR E, TO THE EXTENT OF ESCAPED INCOME DECLARED BY THE ASSESSEE AS ALLEGED IN THE R EASONS RECORDED PRIOR TO ISSUE OF NOTICE UNDER SECTION 147, IT IS NOT INCUMBENT UP ON THE AO TO EMBARK INTO ANY ENQUIRY OR INVESTIGATION. NO PURPOSE WOULD BE SERVE D TO DOING SO. THEREFORE LACK OF ENQUIRY OR INADEQUACY THEREOF IN THE COURSE OF R E-ASSESSMENT FOR AN INCOME FOR WHICH ESCAPED ASSESSMENT HAS BEEN ALLEGED BASED ON OBJECTIVE FACTS IS NOT NECESSARY WHEN THE UNDISCLOSED INCOME ITSELF HAS BE EN DECLARED IN CONSEQUENCE TO THE ADVANTAGE OF REVENUE. THE CAUSE OF ACTION TO TH E EXTENT OF ALLEGATION OF ESCAPEMENT OF INCOME THUS CEASES TO EXIST. IT IS NO T THE CASE OF THE CIT IN THE PRESENT CASE THAT THE ESCAPEMENT WAS FOR A LARGER S UM THAN WHAT HAS BEEN ASSESSED IN THESE YEARS. BY COMING FORWARD AND DECLARING THE INCOME IN THE RETURN FILED PURSUANT TO NOTICE UNDER S. 148, THE ALLEGED ERROR IN UNDERSTATEMENT OF INCOME STANDS CURED FOR THE RELEVANT ASSESSMENT YEAR. THE INTEREST OF REVENUE THUS STANDS PROTECTED IN SO FAR AS THAT YEAR IS CONCERNED. THER EFORE, IN OUR CONSIDERED VIEW, THE ACTION OF THE ASSESSING OFFICER IN ACCEPTING TH E ESCAPED INCOME DECLARED BY THE ASSESSEE, TO THE ADVANTAGE OF REVENUE CANNOT BE FAULTED IN PROCEEDINGS UNDER S. 263. ITA NOS.879 TO 881/PN/2013 11 17. IN THE FACTS OF THE GIVEN CASE, WHAT CAN PROBAB LY BE ERRONEOUS IS THE VERY BASIS OF FILING OF RETURN OF INCOME AND ASSESSMENT THEREOF I.E. THE ISSUANCE OF NOTICE UNDER SECTION 147 OF THE ACT AT ALL. THE FIL ING OF RETURN AND ASSESSMENT THEREOF IS CONSEQUENTIAL. THE CIT HAS NOT IMPUGNED THE ACT OF ISSUANCE OF NOTICE. THE NOTICE UNDER S. 148 / 147 SURVIVES AND HAS NOT BEEN VACATED. THE COMMISSIONER UNDER 263 HAS SOUGHT TO IMPUGN THE ASS ESSMENT ORDERS PURSUANT TO AN UN-ASSAILED NOTICE UNDER SECTION 147 OF THE ACT WHERE THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT HAS BEEN ACCEPTED AS DECLAR ED FOLLOWING THE PROCESS OF LAW. THE AFORESAID REASSESSMENT ORDERS ASSESSING T HE INCOME ALLEGEDLY ESCAPED PURSUANT TO STATUTORY NOTICES CAN NEITHER BE SAID E RRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 18. WE SHALL NEXT DEAL WITH THE PLEA OF THE REVENUE THAT BY ACCEPTING THE INCOME IN THE EARLIER YEARS ERRONEOUSLY, THE INTERE ST OF THE REVENUE IS JEOPARDIZED. IT IS TRITE THAT EVERY ASSESSMENT YEAR IS INDEPENDE NT AND APPLICATION OF S. 263 SHOULD BE ORDINARILY WEIGHED QUA THE ORDER PERTAINING TO THAT YEAR. PARADOXICALLY, THE ACTION OF LD. CIT UNDER S. 263 IN BARE CANCELLA TION OF RE-ASSESSMENT ORDERS FOR A.Y. 2003-04, 2004-05 & A.Y. 2005-06 WITHOUT ANY CO NSEQUENTIAL DIRECTIONS IN THIS REGARD OPERATES AGAINST THE INTEREST OF REVENU E QUA THOSE RESPECTIVE YEARS. AS OBSERVED, THE INCOME HAVING BEEN DECLARED AND ASSES SED CANNOT BE SAID TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THAT YEAR IN THE ABSENCE OF ALLEGATION THAT THE ESCAPED INCOME IS HIGHER THEN WHAT HAS BEE N ASSESSED. THE CASE OF THE COMMISSIONER IS EXACTLY OPPOSITE. HE SEEKS TO HOLD THAT THE INCOME ASSESSED BY THE ASSESSING OFFICER UNDER 147 PROCEEDINGS ARE NOT ASSESSABLE IN THESE THREE ASSESSMENT YEARS AT ALL. THE CIT HAS NOT BROUGHT ON RECORD AS TO HOW A BARE CANCELLATION OF IMPUGNED REASSESSMENT ORDERS WHICH ARE IMPLIEDLY PASSED FOR THE BENEFIT OF REVENUE WILL HELP THE CAUSE OF THE REVEN UE. WE DO NOT FIND ANY RATIONALLY WHATSOEVER IN SUCH APPROACH. 19. THE ASSESSEE HAS RELIED UPON SEVERAL JUDICIAL P RONOUNCEMENTS NARRATING AND RESTATING THE SETTLED LEGAL POSITION CONCERNING SEC TION 263 OF THE ACT. WE DO NOT CONSIDER IT PERTINENT TO DWELL UPON THE FACTS AND L AW INVOLVED IN AFORESAID PRONOUNCEMENTS SINCE THE CONCLUSION IS INESCAPABLE IN THE LIGHT OF DISCUSSION ITA NOS.879 TO 881/PN/2013 12 ABOVE THAT THE IMPUGNED REASSESSMENT ORDERS CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 20. ACCORDINGLY, THE ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE COMMISSIONER RELEVANT TO ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 ARE SET-ASIDE AND GROUNDS RAISED BY THE ASSESSEE IS ALL OWED. 21. IN THE RESULT, ALL THE THREE IMPUGNED APPEALS O F THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 16 TH DAY SEPTEMBER, 2015. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER / PUNE ; DATED : 16 TH SEPTEMBER, 2015. SUJEET ) * +,- .-+ / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; & & ' THE CIT-V, PUNE; ()* ++,-, & ,- , / / DR B, ITAT, PUNE; *01 2 / GUARD FILE. )' / BY ORDER ( + // TRUE COPY // 345 +6 ,7 / SR. PRIVATE SECRETARY & ,- , ITAT, PUNE