Radhika Construction, Surat V. Pr. Commissioner of Income Tax (Central), Surat

ITA 88/SRT/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3019 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 20-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment; Unexplained expenditure; Revision of order; Document seized; Opportunity of being heard; Principle of natural justice; Period of limitation; Initiation of penalty proceedings; Time period of passing order; Bogus loan; Documents seized; Bogus
• Section: 6; 263; 40A(3); 143(3); 142(1); 133A; 40(a)(ia); 195; 271D; 271E; 143(2); 207; 192; 139(1); 64; 44AB; 13; 22; 153C; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NOS.88, 89& 64/SRT/2021 A.Y: 2015-16 TO 2017-18 (H EARING IN VIRTUAL COURT) M/S. RADHIKA CONSTRUCTION, RADHIKA HOMES, BLOCK NO.213, TP NO. 62, DINDOLI, FP NO. 17, SURAT. PAN: AAQFR 7674 F VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL, SURAT. APPLICANT /ASSESSEE RESPONDENT/ REVENUE ASSESSEE BY SHRI RASESH SHAH CA REVENUE BY SHRI RITESH MISHRA CIT - DR DATE OF HEARING 15.09.2021 DATE OF PRONOUNCEMENT 11.10.2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THESE THREE APPEALS BY ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF LD. PRINCIPAL COMMISSIONER OF INCOME TAX [LD. PR.CIT, CENTRAL, SURAT PASSED UNDER SECTION 263 OF THE ACT DATED 22.03.2021, FOR THE ASSESSMENT YEAR (AY) 2015-16& 2016-17 AND DATED 25.03.2021 FOR AY 2017-18. IN ALL APPEALS, THE ASSESSEE HAS RAISED COMMON GROUNDS OF APPEAL, THE LD PCIT REVISED ASSESSMENT ORDER ON CERTAIN COMMON ISSUES EXCEPT VARIATIONS OF FIGURES, THEREFORE, WITH THE CONSENT OF PARTIES, ALL APPEALS WERE CLUBBED, HEARD AND ARE DECIDED BY A CONSOLIDATED ORDER TO AVOID THE CONFLICTING ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 2 DECISION. THE ASSESSEE IN ALL APPEALS HAVE RAISED FOLLOWING GROUNDS OF APPEAL (IDENTICAL IN FIRST TWO YEARS AND IN THIRD YEAR ONLY GR NO. 1, 3 & 4): 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED PR.CIT HAS ERRED IN PASSING THE ORDER U/S. 263, ALTHOUGH THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S 153C OF THE I. T. ACT, 1961 WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED PR CIT HAS ERRED IN PASSING EX-PARTE ORDER UNDER SECTION 263 WITHOUT PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE. IT WAS PRACTICALLY IMPOSSIBLE TO FILE REPLY IN BULK CASES OF GROUP IN SHORT TIME WHEN THE PROCEEDINGS U/S 263 WAS INITIATED AT THE FAG END OF LIMITATION PERIOD IN THE MONTH OF MARCH, 2021. THE FIRST NOTICE U/S 263 WAS ISSUED ONLY ON 08.03.2021. 3. IT IS THEREFORE PRAYED THAT ABOVE ORDER PASSED BY PR. CIT U/S. 263 MAY PLEASE BE QUASHED OR MODIFIED AS YOUR HONOURS DEEM IT PROPER. 4. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM. THERE IS FOUR PARTNERS IN FIRM NAMELY ASHOK NARSHIBHAI PATEL, KAMLESH BABUBHAI BHESANIYA, NAVINBHAI GORDHANBHAI TOPIA AND RAMESHKUMAR GORDHBHAI KATHERIA EACH HAVING SHARE OF 25%. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECTS. A SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CARRIED OUT ON ASSESSEES BUSINESS PREMISES. A SEARCH AND SURVEY ACTION WAS CARRIED OUT IN SRK GROUP, SURAT ON 19.07.2016. THE ASSESSEE IS PART OF SRK GROUP. DURING THE COURSE OF SEARCH AND SURVEY PROCEEDINGS CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 3 SEIZED. DURING THE SEARCH, CERTAIN ENTRIES PERTAINING TO THE ASSESSEE WERE ALSO FOUND. CONSEQUENT UPON, NOTICE UNDER SECTION 153C DATED 29.11.2018 WAS ISSUED ON ASSESSEE FIRM FOR VARIOUS ASSESSMENT YEARS INCLUDING FOR THE SUBJECT ASSESSMENT YEAR. IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2015-16 & 2016-17 ON 07.12.2018. THE ASSESSING OFFICER (AO) RECORDED THAT NOTICE UNDER SECTION 142(1) ALONG WITH DETAILED QUESTIONNAIRES WERE ISSUED TO ASSESSEE ON 03.12.2018 WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE THERETO, THE ASSESSEE FILED DETAILED REPLY. THE ASSESSEE ALSO FURNISHED RELEVANT DETAILS AND INFORMATION AS REQUIRED BY THE AO. THE AO AFTER PROVIDING ADEQUATE OPPORTUNITY AND HEARING THE SUBMISSION OF THE ASSESSEE ACCEPTED THE RETURN OF INCOME FILED BY ASSESSEE. THE AO PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S 153C OF THE ACT AFTER OBTAINING PRIOR APPROVAL OF JOINT COMMISSIONER OF INCOME TAX (LD. JCIT) CENTRAL RANGE PASSED THE ASSESSMENT ORDER ACCORDINGLY ON 29.12.2018. 3. SO FAR AS AY 2017-18, IS CONCERNED THE ASSESSEE FILED RETURN OF INCOME UNDER SECTION 139(1) ON 31.03.2018 DECLARING NIL INCOME. THE CASE WAS SELECTED FOR SCRUTINY. THE AO RECORDED THAT NOTICE UNDER SECTION 143(2) AND 142(1) WAS SERVED ON THE ASSESSEE. THE ASSESSEE ALSO FURNISHED RELEVANT DETAILS AND INFORMATION AS REQUIRED BY THE AO. THE AO AFTER PROVIDING ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 4 ADEQUATE OPPORTUNITY AND HEARING THE SUBMISSION OF THE ASSESSEE ACCEPTED THE RETURN OF INCOME FILED BY ASSESSEE. THE AO PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) ON 29.12.2018. 4. SUBSEQUENTLY, THE ASSESSMENT ORDER IN ALL THREE ASSESSMENT YEARS WERE REVISED BY LD. PCIT BY EXERCISING HIS POWER UNDER SECTION 263 VIDE ORDER DATED 22.03.2021IN AY 2015-16 & 2016-17 AND ON 25.03.2021 IN AY 2017- 18. THE LD. PCIT BEFORE PASSING THE ORDER UNDER SECTION 263 OF THE ACT, ISSUED SEPARATE SHOW CAUSE NOTICES UNDER SECTION 263 OF THE ACT DATED 08.03.2021. IN THE SHOW CAUSE NOTICE, THE LD. PCIT IDENTIFIED FOLLOWING COMMON ISSUES; (I) NON-VERIFICATION OF CASH LOAN RECEIVED ( IN AY 2015-16, 2016-17 & 2017-18), (II) NON-VERIFICATION OF CASH PAID ( IN AY 2015-16, 2016-17 & 2017-18), (III) UNDERSTATEMENT OF INCOME OF THE PROJECT ( IN AY 2015-16, 2016-17 & 2017-18), (IV) NON-INITIATION OF PENALTY UNDER SECTION 271D OF THE ACT ( IN AY 2015-16, 2016-17 & 2017-18), (V) NON-VERIFICATION OF UNSECURED LOAN ( IN AY 2015-16, 2016-17 & 2017-18) (VI) NON-VERIFICATION OF CLAIM OF EXPENSES AND LIABILITY ( IN AY 2015-16, 2016-17 & 2017-18), (VII) NON-MENTIONING REFERENCE OF SEIZED DOCUMENT/EVIDENCE IN THE SATISFACTION NOTE UNDER SECTION 153C OF THE ACT (IN AY 2015-16, 2016-17), (VIII) NON-DISALLOWANCE UNDER SECTION 40A(3) ( IN AY 2015-16, 2016-17 & 2017-18), ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 5 (IX) NON VERIFICATION OF CASS (IN AY 207-18 ONLY) 5. THE LD. PCIT RECORDED THAT THE ASSESSEE WAS GIVEN OPPORTUNITY OF BEING HEARD ON 12.03.2021 AND ON 18.03.2021, HOWEVER, THE ASSESSEE NEITHER ATTENDED THE HEARING NOR FILED WRITTEN SUBMISSION IN RESPECT OF PROPOSED REVISIONS PROCEEDINGS UNDER SECTION 263. THE LD PCIT, ACCORDINGLY PRESUMED THAT THE ASSESSEE HAS NOTHING TO SAY IN THE MATTER AND HE DECIDED TO PASS ORDER ON THE BASIS OF MATERIAL AVAILABLE ON RECORD IN AY 2015-16 & 2016-17. HOWEVER, IN AY 2017-18 THE ASSESSEE FILED REPLY TO THE SHOW CAUSE NOTICE, VIDE ITS REPLY DATED 23.03.2021. 6. THE LD. PCIT AFTER CONSIDERING THE RECORD OF ASSESSMENT HELD THAT IN THE SEARCH AND SURVEY OF SRK GROUP AND IT RELATED PARTIES, OF WHICH THE ASSESSEE IS ALSO PART, HAS RESULTED IN TO IMPOUNDING OF DOCUMENTS/ BOOKS OF ACCOUNTS AND EVIDENCE RELATED WITH EVIDENCE OF UNDISCLOSED RECEIPT AND EXPENSES IN RESPECT OF PROJECT RADHIKA HOMES. THE LD. PCIT ALSO HELD THAT AO WHILE RECORDING SATISFACTION FOR INITIATING ASSESSMENT PROCEEDINGS SHOWN NO REFERENCE OF SEIZED DOCUMENT/EVIDENCE. FOR INITIATION OF ACTION UNDER SECTION 153C, IN CASE OF PERSON OTHER THAN THE PERSON SEARCH UNDER SECTION 132(1), THERE SHOULD BE SEIZURE OF ASSET OR DOCUMENTS PERTAINING TO SUCH PERSON IN THE COURSE OF SEARCH. ALL THE DOCUMENTS REFERRED TO AO WERE IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDINGS, THUS, THE ASSESSMENT ORDER PASSED ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 6 UNDER SECTION 143(3) R.W.S 153C SUFFER FROM LACK OF APPLICATION OF MIND AND VOID-AB-INITIO DESERVED TO BE ANNULLED. THE LD.PCIT HELD THAT ASSESSMENT ORDER TO BE ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY ANNULLED THE SAME DIRECTING THE AO TO TAKE NECESSARY ACTION FOR FRESH ASSESSMENT KEEPING IN VIEW THE ISSUE OF LIMITATION. AGGRIEVED BY THE ORDER OF THE LD. PCIT, THE ASSESSEE HAS AVAILED PRESENT APPEAL BEFORE THIS TRIBUNAL. 7. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE (LD.AR) OF THE ASSESSEE AND LEARNED COMMISSIONER OF INCOME TAX - DEPARTMENTAL REPRESENTATIVE (CIT-DR) FOR THE REVENUE AND HAVE GONE THROUGH THE REVISIONS ORDER PASSED BY LD PCIT AND THE ASSESSMENT ORDERS PASSED BY AO IN ALL THREE ASSESSMENT YEARS. THE LD AR FOR THE ASSESSEE SUBMITS THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECT. A SEARCH AND SURVEY ACTION WAS CARRIED OUT BY THE REVENUE ON ASSESSEE AND ITS GROUP ON 19.07.2016. ON THE BUSINESS PREMISES OF ASSESSEE, ONLY SURVEY TOOK PLACE. DURING THE COURSE OF SEARCH PROCEEDINGS IN ASSESSEE GROUP, CERTAIN INCRIMINATING MATERIAL IN THE FORM OF PAPERS AND DOCUMENTS WERE FOUND. THE ASSESSEE AND ITS GROUP I.E. RADHIKA CONSTRUCTION, RADHIKA CORPORATION, RADHIKA INFRASTRUCTURE, AMRUTSAROVAR AND SHYAM TEXTILE PARK ALL ARE ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 7 ENGAGED IN CONSTRUCTION AND DEVELOPMENT OF VARIOUS PROJECTS. ON THE BASIS OF MATERIAL FOUND IN THE COURSE OF SEARCH AND SURVEY ACTION, THE ASSESSEE PREPARED BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS SO PREPARED WERE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BEFORE ISSUING THE NOTICE UNDER SECTION 153C OF THE ACT, THE ASSESSEE MADE DISCLOSURE UNDER INCOME DISCLOSURE SCHEME (IDS) 2016. THE LD AR FOR THE ASSESSEE FILED THE FOLLOWING BIFURCATION OF AMOUNT DISCLOSED IN IDS; NAME OF FIRMS DISCLOSER AMOUNT AYS RADHIKA CONSTRUCTION RS. 3.50 CRORE 2015-16 RS. 53 LAKHS 2016-17 TOTAL (1) RS. 4.03 CRORE AMRUT SAROVAR RS. 2.05 CRORE 2014-15 RS. 1.55 CRORE 2015-16 RS. 1.90 CRORE 2016-17 TOTAL (2) RS. 5.50 CRORE SATYAM TEXTILE PARK RS. 5.00 CRORE 2016-17 TOTAL (3) RS. 5.00 CRORE RADHIKA CORPORATION RS. 1.00 CRORE 2016-17 TOTAL (4) RS. 1.00 CRORE RADHIKA INFRASTRUCTURE RS. 1.70 CRORE 2015-16 RS. 1.80 CRORE 2016-17 TOTAL (5) RS. 3.50 CRORE VALLABHAI B. PAGHDAL RS. 60 LAKHS 2012-13 TOTAL (6) RS. 1.20 CRORE TOTAL (1+2+3+4+5+6) RS. 19.63 CRORE ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 8 8. IN THE IDS, THE ASSESSEE DECLARED INCOME OF RS.3.50 CRORE FOR THE A.Y. 2015- 16 AND RS.53 LAKHS FOR THE A.Y. 2016-17. THUS, THE ASSESSEE DECLARED TOTAL INCOME OF RS.4.03 CRORE FOR THE A.Y. 2015-16 AND 2016-17. THE DISCLOSURE MADE BY ASSESSEE WAS ACCEPTED BY LD. PCIT VIDE FORM NO.4 UNDER RULE 4(5) OF IDS, VIDE RECEIPT NO. 339207970201217 DATED 20.12.2017. THE INCOME DECLARED BY ASSESSEE UNDER IDS WAS ACCEPTED WITHOUT ANY VARIATION OR OBJECTION. 9. THE LD AR FOR THE ASSESSEE SUBMITS THAT THE AO ISSUED NOTICE UNDER SECTION 153C OF THE ACT ON 29.11.2018 REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME FOR THE A.Y. 2011-12 TO 2016-17 WITHIN 5 DAYS OF SERVICE OF NOTICE. IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2015-16 & 206-17 DECLARING NIL INCOME. THE AO THEREAFTER ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT. IN THE NOTICE UNDER SECTION 142(1) DATED 07.12.2018, THE AO REQUIRED VARIOUS DETAILS ON VARIOUS ISSUES. THE LD.AR SUBMITS THAT COPY OF NOTICE UNDER SECTION 142(1) IS FILED ON RECORD. THE ASSESSEE FILED ITS DETAILED REPLY. THE COPY OF DETAILED REPLY FILED BY THE ASSESSEE BEFORE AO IS ALSO PLACED ON RECORD. THE AO AFTER CONSIDERING THE VARIOUS SUBMISSIONS AND EVIDENCE FURNISHED BY THE ASSESSEE PASSED THE ASSESSMENT ORDER AND ACCEPTED THE RETURNED INCOME. THE AO PASSED THE ASSESSMENT ORDER AFTER PROPER APPROVAL OF LD. JCIT AS REQUIRED ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 9 UNDER SECTION 153D OF THE ACT. THESE FACTS ARE CLEARLY ASCERTAINABLE BY THE CONTENTS OF PARA 6 OF THE ASSESSMENT ORDER DATED PASSED UNDER SECTION 143(3) RWS 153C DATED 29.12.2018 OF AY 2015-16 & 2016-17. SIMILARLY FOR AY 2017-18, THE AO PASSED ASSESSMENT ORDER UNDER SECTION 143(3) ON 29.12.2018 AFTER COMPLETE VERIFICATION OF RECORD AND THE EVIDENCES. 10. THE LD AR FOR THE ASSESSEE FURTHER SUBMITS THAT LD. PCIT AT THE FAG END OF LIMITATION PERIOD EXERCISED ITS POWER UNDER SECTION 263 OF THE ACT AND ISSUED SHOW CAUSE NOTICE. THE COPY OF SHOW CAUSE NOTICE IS ALSO PLACED ON RECORD. IN THE SHOW CAUSE NOTICE FOR ALL THREE ASSESSMENT YEARS, THE LD. PCIT BASICALLY IDENTIFIED EIGHT ISSUES. 11. ON THE FIRST & SECOND ISSUES IDENTIFIED BY LD PCIT, WHICH RELATES TO N ON- VERIFICATION OF CASH LOAN RECEIVED AND REPAID ( IN AY 2015-16, 2016-17 & 2017- 18), THE LD AR FOR THE ASSESSEE SUBMITS THAT IN THE SHOW CAUSE NOTICE AND IN THE ORDER UNDER SECTION . 263 RAISED THE ISSUE THAT CASH LOAN RECEIVED IN ALL THESE THREE YEARS WERE NOT VERIFIED BY THE ASSESSING OFFICER. IN FACT, THE VERY ISSUE HAS BEEN RAISED BY THE ASSESSING OFFICER IN THE SHOW CASE NOTICE IN PARA 3 ISSUED ON 07.12.2018 (COPY OF WHICH IS PLACED AT PAGE NO 70 TO 80 OF THE PAPER BOOK) . THE ASSESSING OFFICER IN THE SHOW CAUSE NOTICE HAS TABULATED THE AMOUNT OF ALLEGED CASH LOAN TAKEN BY THE ASSESSEE, MENTIONING THE DATE, AMOUNT, NAME OF THE PARTY AND FINANCIAL YEAR. THE TOTAL OF THIS TABLE HAS ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 10 BEEN MENTIONED BY THE ASSESSING OFFICER AT RS. 16,09,44,705/-. THIS INCLUDES THE AMOUNT OF RS. 7,62,09,970/-. SIMILARLY, THE DETAILS OF ALLEGED CASH LOAN REPAID OF RS. 3,06,83,700/- WERE TABULATED BY THE ASSESSING OFFICER IN THE SHOW CAUSE NOTICE AS PER ANNEXURE AF-3 AND ACCORDINGLY, THE AMOUNT OF RS. 14,89,60,365/- WAS MENTIONED AS TOTAL OF VARIOUS ENTRIES WHICH INCLUDES THE AMOUNT OF RS. 3,06,83,700/- FOR A.Y. 2015-16. THE ASSESSEE, FILED A DETAILED REPLY IN RESPONSE TO SHOW CAUSE NOTICE AND THE TRANSACTIONS REFLECTED IN ANNEXURE AF-3 WERE EXPLAINED AT PARA NO 1 (PAGE NO 39 TO 41 OF PAPER BOOK). IT WAS SUBMITTED THAT THESE ARE NOT CASH LOANS BUT AMOUNT RECEIVED BY THE ASSESSEE AS ON MONEY FOR BOOKING. THE LD AR FOR THE ASSESSEE SUBMITS THAT CERTAIN AMOUNT WAS RETURNED TO THE CUSTOMERS ON CANCELLATION OF BOOKING. THE RELEVANT DETAILS WERE PROVIDED IN THE REPLY FIELD IN RESPONSE TO SHOW CAUSE NOTICE. THE ASSESSING OFFICER, AFTER BEING SATISFIED, DID NOT DRAW ANY ADVERSE INFERENCE AND ACCEPTED THE SAME, THUS THE ASSESSING OFFICER TOOK REASONABLE, PLAUSIBLE AND LEGALLY SUSTAINABLE VIEW. 12. ON THE THIRD ISSUE IDENTIFIED BY LD PCIT, WHICH RELATES TO UNDERSTATEMENT OF INCOME OF THE PROJECT ( IN ALL AY 2015-16, 2016-17 & 2017-18), THE LD AR FOR THE ASSESSEE SUBMITS THAT LD PCIT IN THE SHOW CAUSE NOTICE OBSERVED THAT THE ASSESSING OFFICER HAS MERELY ACCEPTED SUBMISSION OF DISCLOSURE MADE IN IDS WITHOUT MAKING ANY EFFORTS TO VERIFY THE SAME AND MAKING ANY CORRELATION ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 11 BETWEEN THE FIGURES AND THE SPECIFIC BOOKING. THE ASSESSEE IN ITS REPLY /SUBMISSION FOR A.Y. 2017-18 BEFORE PCIT STATED THAT HE HAS DULY ACCOUNTED EACH AND EVERY ENTRY IN THE IMPOUNDED MATERIAL AND FURNISHED THE BOOKS OF ACCOUNTS OF ALL THE UNACCOUNTED TRANSACTIONS WHEREIN THE ENTIRE UNACCOUNTED SALE VALUE RECEIVED IN CASH AS ALSO ALL THE UNACCOUNTED CASH EXPENSES HAVE BEEN RECORDED. COPY OF THE REPLY FILED BY THE ASSESSEE IN AY 2017-18 IS PLACED ON RECORD. FURTHER, THE ASSESSEE STATED THAT AN INCOME OF RS. 4,03,00,000/- WHICH IS MUCH IN EXCESS OF THE NET UNACCOUNTED PROFIT EARNED IN CASH FROM THE ENTIRE PROJECT, STANDS DULY OFFERED UNDER IDS AND THE ASSESSING OFFICER HAVING CONSIDERED AND VERIFIED THE SAID FACT, IT CANNOT BE SAID THAT THE ASSESSING HAS NOT MADE ANY INQUIRY OR VERIFICATION. IN SUPPORT OF THE DECLARATION UNDER IDS, THE ASSESSEE HAS GIVEN THE CALCULATION, COPY OF WHICH IS FILED AT PAGE NO 82 OF THE PAPER BOOK. ON PERUSAL OF THIS EXIBIT 2- A, FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT CAN BE SEEN THAT ASSESSEE MADE DECLARATION ON ESTIMATED BASIS OF RS. 4,03,00,000/-BY TAKING 15% OF ESTIMATED UNACCOUNTED BOOKING ADVANCE FOR THE ENTIRE PROJECT, ALTHOUGH THE INCOME AS PER SEIZED MATERIAL WAS COMPUTED AT RS. 1,01,58,131/- ONLY. SUCH WORKING IS IS EXTRACTED BELOW. SR NO. PARTICULARS AY 2015-16 AY 2016-17 TOTAL A INCOME AS PER SEIZED MATERIAL NET PROFIT RS. 98,97,751/- RS. 2,60,380/- RS. 1,01,58,131 /- ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 12 B ASSET AS PER SEIZED MATERIAL -CASH -BANK RS.1,63,52,481/- RS.50,000/- RS.94,77,177/- ------ RS.2,58,29,658/- RS. 50,000/- RS. 1,64,02,481/- RS. 94,77,177/- RS. 2,58,79,658/- C NET PROFIT % UNACCOUNTED BOOKING ADVANCES FOR ENTIRE PROJECT NET PROFIT @ 15% RS.23,28,40,000/ RS.3,49,26,000/- RS.1233345737/- RS.23,69,550/- RS.1,57,97,000/- RS. 3,72,95,550/- D NET PROFIT RESIDENTIAL 258027SQ FT X RS.100/- PER SQ FEET COMMERCIAL 6394 SQ FT X RS.200 PER SQ FEET RS. 2,58,02,700/- RS.12,78,800/- -------------------- RS.2,70,81,500/- HIGHER OF ABC&D RS.3,75,95,374/- INCOME DISCLOSED IN IDS RS. 4,03,00,000/- 13. IT WAS SUBMITTED THAT THE AMOUNT OF RS. 4,30,00,000/- INCLUDES THE DECLARATION OF RS. 3,50,00,000/- FOR A.Y. 2015-16. IN THE SHOW CAUSE NOTICE ISSUED BY THE SAME ASSESSING OFFICER ON 07.12.2018, HE RAISED SPECIFIC ISSUE THAT ASSESSEE COLLECTED AMOUNT IN CASH AGAINST BOOKING RECEIPTS FOR F.Y. 2014-15 TO 2016-17 OF THE SAID NOTICE, THE ASSESSEE FILED SATISFACTORY REPLY STATING THAT THE SAID TRANSACTIONS WERE DULY COVERED IN THE INCOME OFFERED UNDER IDS FOR THE YEAR ENDED 31.03.2016 IN THE FORM OF RECEIVABLES AND PAYABLES AS AT THE YEAR END. ACCORDINGLY, ASSESSING OFFICER HAS DULY CONSIDERED THE ISSUE. THE LD AR FOR THE ASSESSEE SUBMITS THAT THE JURISDICTIONAL GUJARAT HIGH COURT IN VARIOUS DECISION HELD THAT ONLY NET PROFIT OF SUPPRESSED RECEIPTS IS REQUIRED TO BE ESTIMATED AS INCOME. THE RATE OF ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 13 15% IS MOST REASONABLE IN THE CONSTRUCTION PROJECT, PARTICULARLY WHEN IN COURSE OF SEARCH AND SURVEY OPERATION, NO UNEXPLAINED INVESTMENT OR UNEXPLAINED EXPENDITURE WERE DETECTED. THE RELIANCE IS PLACES ON DECISION OF GUJARAT HIGH COURT IN CASE OF ABHISHEK CORPORATION [I.T. REFERENCE NO 15 OF 2003] PRONOUNCED ON 07.11.2014, IN WHICH OTHER DECISION OF THE GUJARAT HIGH COURT WERE CITED. IT IS TO BE NOTED THAT ASSESSEE HAD PAID MORE TAX THAN THE NORMAL RATE UNDER IDS, SO EVEN IN NORMAL ASSESSMENT, THE INCOME ASSESSED WOULD HAVE BEEN LESS THAN THE DECLARATION MADE UNDER IDS. THUS, ASSESSING OFFICER HAS DULY CONSIDERED THE ISSUE AND TOOK REASONABLE, PLAUSIBLE AND LEGALLY SUSTAINABLE VIEW. THEREFORE, THE ASSESSMENT ON THIS ISSUE IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 14. ON FORTH ISSUE IDENTIFIED BY LD PCIT, WHICH RELATES TO RELATES TO NON- INITIATION OF PENALTY UNDER SECTION 271D OF THE ACT (IN ALL THREE AYS). THE LD.AR FOR THE ASSESSEE SUBMITS THAT ASSESSEE MADE DECLARATION UNDER IDS, THE PROVISION OF SECTION 271D OF THE ACT ARE NOT APPLICABLE. ON MERIT OF THE ISSUE, THE LD.AR SUBMITS THAT ASSESSEE DID NOT TAKE ANY LOAN AND THEREFORE, THE PROVISIONS OF SECTION 271D OF THE ACT ARE NOT ATTRACTED OR APPLICABLE. THE AMOUNT INVOLVED WAS BOOKING ADVANCE AND NOT LOAN. THE LD.AR FOR THE ASSESSEE SUBMITS THAT NON-INITIATION OF PENALTY PROCEEDINGS, THE REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT CANNOT BE REVOKED. TO SUPPORT HIS ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 14 SUBMISSIONS, THE LD.AR RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CIT VS. DR. SURESH G. SHAH [2007] 289 ITR 110 (GUJ) AND CIT VS. PARMANAND N PATEL 287 ITR 3 (GUJ). THUS, THE LD.AR SUBMITS THAT THIS ISSUE OF NON-INITIATION IS OUTSIDE THE SCOPE OF SECTION 263 OF THE INCOME TAX ACT. 15. ON FIFTH ISSUE WHICH RELATES TO UNSECURED LOAN AS IDENTIFIED LD. PCIT (IN ALL THREE AYS). THE LD.AR OF THE ASSESSEE SUBMITS THAT REGARDING THE ISSUE OF NON VERIFICATION UNSECURED LOAN IN ALL THREE SUBJECT ASSESSMENT YEARS AS MENTIONED BY THE PCIT IN THE SHOW CAUSE NOTICE AND REVISION ORDER. THE LD AR FOR THE ASSESSEE SUBMITTED THAT THE ISSUE WAS RAISED IN NOTICE UNDER SECTION. 142(1) ISSUED ON 03.12.2018. IN REPLY TO THIS NOTICE, ASSESSEE VIDE LETTER, COPY OF WHICH IS PLACED AT PAGE 62 TO 64 OF THE PAPER BOOK SUBMITTED THE DETAILS OF UNSECURED LOANS WERE UNDER COMPILATION AND THE SAME WOULD BE FURNISHED SHORTLY. THEREAFTER, ASSESSEE FURNISHED THE DETAILS AS CALLED FOR. THE FINDING OF THE PCIT THAT ASSESSING OFFICER HAS NOT CALLED FOR SUCH DETAILS / CONFIRMATION AND NOR THE ASSESSEE HAS SUBMITTED THE SAME IS WRONG. FURTHER IT IS SUBMITTED THAT IN THE COURSE OF SEARCH AND SURVEY ACTION CONDUCTED IN VARIOUS CASES OF THE GROUP ASSESSEE, NO EVIDENCES WERE FOUND INDICATING THAT ASSESSEE RECEIVED ANY BOGUS LOAN OR ACCOMMODATION ENTRY. ASSESSEE FIELD THE ORIGINAL RETURN OF INCOME ON 22.09.2015 FOR AY 2015-16 AND ON 25.03.2017 FOR AY 2016-17 AND THEREFORE, IT IS A CASE OF UNABATED ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 15 ASSESSMENT AS THE TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAS ALREADY EXPIRED FOR AY 2015-16 & 2016-17, WHEN NOTICE UNDER SECTION 153C WAS ISSUED ON 29.11.2018. ACCORDINGLY, EVEN OTHERWISE NO ADDITION CAN BE MADE FOR THE LOAN REFLECTED IN THE BOOKS OF ACCOUNTS AS PER THE FOLLOWING DECISION OF COURTS. * PCIT VS SAUMYA CONSTRUCTION [ 81 TAXMANN.COM 292] (GUJ HC) * CIT VS GURINDER SINGH BAWA [386 ITR 0483] (BOMBAY HC) * CIT VS CONTINENTAL WAREHOUSING CORP. LTD [58 TAXMANN.COM 78] (BOM) * CIT VS KABUL CHAWLA [ 93 CCH 0210] (DEL HC) * CIT V/S MEETA GUTGUTIA [395 ITR 0296] (DEL HC) * CIT V. LANCY CONSTRUCTIONS [383 ITR 168] (KAR. HC) 16. FOR AY 2017-18, THE LD AR FOR THE ASSESSEE SUBMITS THAT THE TOTAL FIGURE OF RS. 3,19,49,323/- MENTIONED IN THE NOTICE UNDER SECTION 142(1) DATED 07.12.2018 INCLUDES ALLEGED AMOUNT OF LOAN RS. 1,93,03,903 /- AGAINST VARIOUS ENTRIES RELATING TO A.Y. 2017-18 AS PER ANNEXURE AF-2. SIMILARLY THE TOTAL FIGURE OF RS. 5,73,85,425/- MENTIONED IN NOTICE UNDER SECTION 142(1) INCLUDES THE AMOUNT OF ALLEGED CASH LOAN OF RS. 5,22,05,425/- AS MENTIONED IN ANNEXURE AF-2 AGAINST VARIOUS ENTRIES FOR A.Y. 2017-18. THE LD AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE FILED DETAILED EXPLANATION IN RESPONSE TO SHOW CAUSE NOTICE WHICH IS PLACED ON RECORD. IN THIS REPLY, THE ASSESSEE EXPLAINED THAT ANNEXURE AF-2 IS A CASH BOOK AND ANNEXURE AF3 IS THE LEDGER AND THEREFORE, ALL THE ENTRIES IN THE CASH BOOK ARE POSTED IN THE ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 16 LEDGER. THE ASSESSING OFFICER AFTER CONSIDERING THE REPLY OF THE ASSESSEE ACCEPTED THE EXPLANATION OF THE ASSESSEE AND TOOK REASONABLE AND PLAUSIBLE VIEW AND THAT NO REVISION ORDER WAS WARRANTED ON SUCH ISSUES. 17. WITH REGARD TO SIXTH ISSUE IDENTIFIED BY LD. PCIT, WHICH RELATES TO NON VERIFICATION OF CLAIM OF EXPENSES AND LIABILITY (IN ALL THREE AYS), THE LD AR FOR THE ASSESSEE SUBMITS THAT THE ISSUE RAISED BY LD PCIT IN REGARD TO NON VERIFICATION CLAIM OF EXPENSE AND LIABILITY IN HIS SHOW CAUSE NOTICE. THE LD AR FOR THE ASSESSEE SUBMITS THAT BOOKS OF ACCOUNTS OF THE ASSESSEE WERE AUDITED UNDER SECTION 44AB OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED TAX AUDIT REPORT TOGETHER WITH FINANCIAL STATEMENT. ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS PREPARED ON THE BASIS OF SEIZED MATERIAL IN COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER THROUGH NOTICE U/S. 142(1), ISSUED ON 03.12.2018 ASKED THE ASSESSEE TO FURNISH THE DETAILS OF OUTSTANDING SUNDRY CREDITORS WHICH IS FURNISHED BY THE ASSESSEE. FURTHER IN COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE FILED DETAILS OF EXPENSES INCURRED, COPY OF WHICH ARE ALSO FILED ON RECORD. DURING THE SEARCH AND SURVEY ACTION CONDUCTED IN VARIOUS CASES OF GROUP, NO EVIDENCE WAS FOUND INDICATING THAT ASSESSEE DEBITED BOGUS EXPENSES OR CREDITED BOGUS LIABILITY. FURTHER IT IS CASE OF COMPLETED ASSESSMENT FOR AY 2015-16 & 2016-17 AS SUBMITTED EARLIER AND SO NO ADVERSE INFERENCE CAN BE DRAWN FOR ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 17 MATTER DISCLOSED IN THE AUDITED ACCOUNTS AS PER THE DECISIONS OF VARIOUS SUPERIOR COURTS. 18. SO FAR AS AY 2017-18 IS CONCERNED, THE LD AR FOR THE ASSESSEE SUBMITS THAT RETURN OF INCOME WAS NOT FILED PRIOR TO SEARCH AND SURVEY ACTION AS IT WAS CURRENT YEAR OF THE SEARCH AND SURVEY ACTION. ACCORDINGLY, ALL THE MATERIALS FOUND IN THE COURSE OF SEARCH / SURVEY ACTION CONDUCTED IN CASES OF THE GROUP WERE INCORPORATED IN THE AUDITED ACCOUNTS WHILE FILING THE RETURN OF INCOME. THE ASSESSING OFFICER DID NOT FIND ANY DEFECTS IN THE BOOKS OF ACCOUNTS PRODUCED BEFORE HIM. EVEN PCTI ALSO DID NOT POINT OUT ANY IRREGULARITY IN THE AUDITED ACCOUNTS FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE TAX AUDIT REPORTS ALONG WITH FINANCIALS ARE FILED AT PAGE NO. 85 TO 103 OF THE PAPER BOOK. THE AMOUNT RECEIVED AND PAYMENTS MADE IN CASH WERE DULY CONSIDERED IN FORM OF RECEIVABLES AND PAYABLES IN THE ACCOUNTS FOR THE YEAR ENDED ON 31.03.2016. THE ASSESSING OFFICER SPECIFICALLY RAISED THE QUERY IN THE NOTICE ISSUED UNDER SECTION 142(1) REGARDING THE AMOUNT COLLECTED IN CASH OF RS. 71,26,102/- IN F.Y. 2016-17. THE ASSESSING OFFICER, THUS AFTER CONSIDERING THE REPLY AND THE EVIDENCES OF THE ASSESSEE PASSED THE ASSESSMENT ORDER BY TAKING A REASONABLE, LEGALLY SUSTAINABLE AND PLAUSIBLE VIEW. ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 18 19. ON SEVENTH ISSUE WHICH RELATES TO NOT REFERENCE OF THE SEIZED DOCUMENTS AND EVIDENCES IN THE SATISFACTION NOTE UNDER SECTION 153C, IDENTIFIED BY LD PCIT, IN HIS SHOW CAUSE NOTICE (IN AY 2015-16 & 2016-17), THE LD AR FOR THE ASSESSEE SUBMITS THAT SUBMITS THAT EVEN WHEN NO REFERENCE WAS MADE, THE ASSESSING OFFICER VERIFIED ALL THE SEIZED MATERIAL AND AFTER CONSIDERING THE SAME, THE ASSESSMENT ORDER UNDER SECTION 153C OF THE ACT WAS FRAMED UNDER THE SUPERVISION OF LD. JCIT. IN WITHOUT PREJUDICE AND ALTERNATIVE SUBMISSION, THE LD.AR FOR ASSESSEE SUBMITS THAT IF IT BE SO, THE ASSESSMENT FRAMED IS ITSELF INVALID BEING VOID-AB-INITIO. AND IF THE ASSESSMENT IS INVALID AND VOID-AB- INITIO, THE LD. PCIT CANNOT GIVE NEW LEASE OF LIFE TO SUCH ASSESSMENT ORDER, ACCORDINGLY, THE REVISION ORDER PASSED BY LD. PCIT WILL NOT SURVIVE. 20. ON THE EIGHTH ISSUE WHICH RELATES TO DISALLOWANCES UNDER SECTION 40A(3)/ 40(A)(IA) (IN AY 2015-16 & 2016-17) IDENTIFIED BY LD PCIT. THE LD AR FOR THE ASSESSEE SUBMITS THAT WHEN THE INCOME IS ESTIMATED THE PROVISION REGARDING APPLICABILITY OF SECTION 40A(3) AND 40(A)(IA) ARE NOT APPLICABLE. TO SUPPORT HIS SUBMISSION, THE LD.AR RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN PR.CIT VS. JUNED B. MEMON [2018] 95 TAXMANN.COM 20(GUJ). THE LD.AR FOR ASSESSEE FURTHER SUBMITS THAT ONCE INCOME IS DECLARED UNDER IDS, THE PROVISION OF INCOME TAX IS NOT REQUIRED TO BE CONSIDERED AS PER SECTION 195 OF FINANCE ACT, 2016, EXCEPT PROVISION OF ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 19 CHAPTER XV, SECTION 119, 158 AND 189 OF INCOME TAX ACT. THE LD.AR FOR THE ASSESSEE ACCORDINGLY SUBMITS THAT IDENTIFICATION OF THIS ISSUE IS MISPLACED. THUS, THE ASSESSMENT ORDER CANNOT BE GRANTED AS ERRONEOUS AND INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 21. ON THE NINTH ISSUE, IDENTIFIED BY LD PCIT, WHICH RELATES TO NON VERIFICATION OF CASS (IN AY 207-18 ONLY), THE LD AR FOR THE ASSESSEE SUBMITS THAT IN THE NOTICE ISSUED UNDER SECTION 263 THE LD PCIT RAISED THIS ISSUE THAT THE ITEM UNDER THE CASS WERE NOT VERIFIED BY THE ASSESSING OFFICER. THE LD AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSMENT OF THE PRESENT CASE HAS NOT BEEN MADE UNDER CASS BUT THE ASSESSMENT HAS BEEN MADE CONSEQUENT SURVEY HENCE, THE SAID QUERY IS NOT RELEVANT. THE ASSESSEE IS RESPONSE TO THE NOTICE UNDER SECTION 263 MADE EXHAUSTIVE SUBMISSION IN REPLY DATED 23.03.2021 BEFORE PCIT. THE PCIT DIDNT MAKE ANY COMMENT OR DIRECTION ON THIS ISSUE ON ORDER PASSED UNDER SECTION 263. 22. THE LD.AR SUBMITS THAT WHEN THE IDS DECLARATION WAS MADE, NOTICE UNDER SECTION 153C OF THE ACT WAS NOT ISSUED FOR FIRST TWO ASSESSMENT YEARS AND THEREFORE, PROCEEDINGS WERE NOT PENDING. THE IDS DECLARATION WAS ACCEPTED BY LD. PCIT AND THEREFORE, THE AO OR SUPERVISION LD. JCIT COULD NOT REJECT THE IDS DECLARATION. THE IDS DECLARATION WAS NOT MADE BY MISREPRESENTATION OF FACT AND THEREFORE, IT WAS PERFECTLY INVALID. THE CERTIFICATE ISSUED BY THE ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 20 LD. PCIT WAS NOT REVOKED AND THE TAX PAID UNDER IDS WAS NOT REFUNDED. HENCE, IDS CANNOT BE QUESTIONED AT THIS STAGE, WHICH IS OTHERWISE VALID. THE ASSESSEE DECLARED MORE INCOME IN IDS AND PAID MORE TAX THAN THE TAX PAYABLE UNDER NORMAL PROVISION OF THE ACT. 23. THE LD AR FOR THE ASSESSEE SUBMITS THAT THE TRANSACTION REFLECTED IN IMPOUNDED MATERIAL WERE DULY ACCOUNTED ON DAY TO DAY BASIS BY PREPARING BOOKS OF ACCOUNTS AND THE P&L ACCOUNT AND BALANCE SHEET AND ALL LEDGERS WERE FILED BEFORE THE ASSESSING OFFICER. IT IS SUBMITTED THAT THE ENTIRE IMPOUNDED MATERIAL STANDS EXPLAINED AND NO ADVERSE COGNIZANCE CAN BE TAKEN IN RESPECT THEREOF SINCE AN INCOME OF RS. 4.03 CRORE STANDS OFFERED UNDER IDS WHICH IS MUCH ABOVE THE INCOME REFLECTED IN THE IMPOUNDED MATERIAL. 24. THE LD.AR FOR THE ASSESSEE SUBMITS THAT ASSESSMENT IN AY 2015-16 & 2016- 17 CASE IS COMPLETED UNDER SECTION 143(3) R.W.S 153C OF THE ACT AFTER TAKING PRIOR APPROVAL OF LD. JCIT AND NO REVISION OF SUCH ORDER IS PERMISSIBLE AS HAS BEEN HELD BY VARIOUS TRIBUNALS AND HIGHER COURTS. TO SUPPORT HIS SUBMISSION, THE LD.AR RELIED UPON THE DECISION OF TRIBUNAL IN RASIKLAL M. DHARIWAL (HUF) VS. CIT IN ITA NO.1102 TO 1104/PUN/2014DATED 28.12.2016 IN B.U. BHANDARI SCHEMES VERSUS PCIT IN ITA NO.637 TO ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 21 641/PUN/2018 DATED 14.11.2018, VISHWAINFRAWAYS PVT. LTD., VS. CIT IN ITA NO.596, 597 AND 599/PUN/2015 DATED 28.11.2018 AND DECISION OF HONBLE ALLAHABAD HIGH COURT IN CIT VS DR. ASHOK KUMAR IN ITA NO. 192 OF 2000 DATED 06.08.2012. 25. THE LD.AR FOR THE ASSESSEE FURTHER SUBMITS THAT IF THE AO DURING THE COURSE OF ASSESSMENT MADE DETAILED ENQUIRY, THE ASSESSEE GIVEN DETAILED EXPLANATION IN WRITING, ALL THE QUESTIONS AND ANSWERS FURNISHED BY THE ASSESSEE ARE PART ON RECORD OF THE CASE AND CLAIMS OF ASSESSEE ARE ALLOWED BY AO BEING SATISFIED WITH THE EXPLANATION OF ASSESSEE. SUCH ORDER OF THE AO CANNOT BE HELD TO BE ERRONEOUS, SIMPLY BECAUSE IN HIS ORDER, THE AO DID NOT MAKE ELABORATE DISCUSSION. THE LD. PCIT HIMSELF EVEN AFTER INITIATING THE PROCEEDINGS AND CONSIDERING THE SUBMISSION OF ASSESSEE HAVE NOT GIVEN ANY FINDING AS TO HOW THE CLAIMS ARE NOT ALLOWABLE. THE LD. PCIT HAS NOT GIVEN ANY FINDING AS TO WHAT OTHER ENQUIRY WAS REQUIRED TO BE MADE BY THE AO. IF THE ASSESSMENT ORDER IS REVISED IN SUCH AN APPROACH, THERE WOULD NO END FOR SUCH ENQUIRIES. THE LD.AR OF THE ASSESSEE FURTHER SUBMITTED THAT ASSESSEE MADE DECLARATION UNDER IDS WHICH IS MORE THAN THE INCOME THAT CAN BE ACCESSED ON THE BASIS OF IMPOUNDED / SEIZED MATERIALS. THE ASSESSEE WAS ELIGIBLE TO MAKE DECLARATION UNDER IDS AS DECLARATION WAS FILED BEFORE ISSUE OF NOTICE U/S. 153C. BY DECLARING THE INCOME UNDER IDS, THE ASSESSEE IN FACT ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 22 PAID MORE TAX THAN THE TAX PAYABLE AS PER NORMAL PROVISION. THE ASSESSING OFFICER IS NOT COMPETENT TO DISREGARD THE IDS DECLARATION WHICH WAS ACCEPTED BY THE PCIT. IT IS NOT THE CASE OF PCIT THAT ASSESSEE HAS MADE ANY MISREPRESENTATION OF ANY FACTS IN IDS DECLARATION. THE DECLARATION UNDER IDS WAS NEITHER REVOKED NOR THE TAX PAID BY THE ASSESSEE, WAS REFUNDED TO IT. IT IS WELL SETTLED THAT THE WHOLE SUPPRESSED GROSS RECEIPTS CANNOT BE TAXED, ONLY PROFIT ELEMENT EMBEDDED IN SUCH RECEIPTS CAN BE ESTIMATED. ASSESSEE'S DECLARATION AT 15% OF THE GROSS RECEIPTS WAS MOST REASONABLE WHICH WAS ACCEPTED BY THE ASSESSING OFFICER CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE. 26. ALTHOUGH AS PER CIRCULAR NO 25 OF 2016 ISSUED BY CBDT, ASSESSEE IS NOT REQUIRED TO GIVE INFORMATION REGARDING THE SOURCE OF INCOME, ASSESSEE DISCLOSED THE SOURCE OF INCOME AT THE TIME OF ASSESSMENT BY INCORPORATION ALL THE ENTRIES OF IMPOUNDED / SEIZED MATERIALS IN THE BOOKS OF ACCOUNTS. THE ASSESSEE ALSO FILED THE CALCULATION IN SUPPORT OF DECLARATION FILED UNDER IDS AT THE TIME OF FILING THE DECLARATION AS WELL AS IN THE COURSE OF ASSESSMENT PROCEEDING. THE SURVEY AND SEARCH ACTIONS IS ULTIMATE WEAPON WITH THE DEPARTMENT TO UNEARTH THE BLACK MONEY. IN THIS CASE, THE SURVEY ACTIONS WERE CONDUCTED IN CASE OF FIRMS AND SEARCH ACTIONS WERE CONDUCTED IN THE CASE OF THE PARTNERS OF THE FIRMS. EVEN AFTER THESE ACTIONS, THE DISCRETE INQUIRY WAS ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 23 MADE BY THE ASSESSING OFFICER AND THE ASSESSMENTS WERE MADE IN THE GROUP CASES ON THE BASIS OF INCRIMINATING MATERIALS IMPOUNDED / SEIZED IN COURSE OF SEARCH / SURVEY ACTION. IN THE COURSE OF THESE ACTIONS, NO UNEXPLAINED VALUABLES WERE FOUND. ACCORDINGLY, ASSESSMENTS WERE FRAMED CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREFORE, THEY ARE NOT LIABLE FOR REVISION. ACCORDINGLY, IT IS A CASE OF SUFFICIENT AND PROPER INQUIRY MADE BY THE ASSESSING OFFICER. THE LD PCIT DID NOT MAKE ANY INQUIRY ALTHOUGH IN HIS OPINION, THE INQUIRY WAS INSUFFICIENT. ACCORDINGLY, THE PCIT ARRIVED AT SUBJECTIVE SATISFACTION. NEEDLESS TO SAY THE SATISFACTION MUST BE ONE WHICH IS OBJECTIVELY JUSTIFIABLE AND CANNOT BE THE MERE IPSE DIXIT OF THE PCIT. THE ASSESSEE HAS PLACED FOLLOWING DOCUMENTS ON RECORD. NOTICE ISSUED UNDER SECTION 153C DATED 29.11.2018, TAX AUDIT REPORT WITH FINANCIAL STATEMENTS AND DETAILS OF EXPENSES FOR AY 2015-16TO 2017-18, NOTICE ISSUED UNDER SECTION 142(1) DATED 03.12.2018 WITH ITS ANNEXURE, REPLY FILED IN RESPONSE TO NOTICE U/S.142(1) FOR AY 2015-16 TO 2017-18, ALONG WITH ANNEXURE, EXHIBIT SHOWING CALCULATIONS UNDER IDS SCHEME, COPY OF FORM 4 IDS, 2016 FOR AY 2015-16 AND 2016-17, NOTICE ISSUED UNDER SECTION 263 FOR AY 2015-16 , 2016-17 & 2017-18 AND COPIES OF REPLY FILED IN RESPONSE TO NOTICE UNDER SECTION 263 FOR AY 2017-18. 27. TO BUTTRESS HIS ALL SUBMISSIONS, THE LD.AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS: ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 24 SR.NO. PARTICULARS 1. CIT VS. MAX INDIA LTD. [295 ITR 0282 (SC)] 2. MALABAR INDUSTRIES CO. LTD. VS CIT [ 243 ITR 0083] (SC) 3. CIT VS M. MITTAI STAINLESS STEEL PVT LTD [263 ITR 0255] (SC) 4. CIT VS AMIT CORPORATION [81 CCH 0069] (GUJ HC) 5. CIT VS ARVIND JEWELLERS [259 ITR 05021 (GUJ HC) 6. BILAG INDUSTRIES PVT. LTD. VS. CIT(A) [SCA NO. 24128 OF 2005] (GUJ HC) 7. CIT VS. R K CONSTRUCTION CO. [313 ITR 0065] (GUJ HC) 8. CIT VS. NIRMA CHEMICALS WORKS. PVT. LTD. [309 STR 0067] (GUJ HC) 9. RAYON SILK MILLS VS. CIT(A) [221 ITR 0155] (GUJ HC) 10. PCIT VS. SHREEJI PRINTS PVT. LTD. [TAX APPEAL NO. 828 OF 2019] (GUJ) 11. CIT VS. NIRAV MODI [390 ITR 0292 (BOM. HC)] 12. CIT VS GABRIEL INDIA LTD. [203 ITR 108(BOM) 13. MOIL LTD. VS CIT [ 81 TAXMANN.COM 420 (BOM. HC)] 14. CIT VS. FINE JEWELLERY INDIA LTD. [55 TEXMANN.COM 514 ] (BOM HC) 15. ANILKUMAR SHARMA [335 ITR 0083] (DELHI HC) 16. ITO VS. DG HOUSING PROJECTS LIMITED [343 ITR 329](DEI HC)] 17. CIT VS. SUNBEAM AUTO LTD. [189 TAXMAN 0436 (DEL.)] 18. PCIT VS. DELHI AIRPORT METRO EXPRESS PVT. LTD. [ITA NO. 705/2017(DEL 19. CIT V/S. VIKA POLYMERS [341 ITR 537] (DELHI HC) 20. CIT VS GANPAT RAM BISHNOI [296 ITR 0292] (RAJ HC) 21. CIT VS. JAIN CONSTRUCTIONS CO [257 ITR 0336] (RAJ HC) 22. CIT VS. KELVINATOR OF INDIA LTD. [ 256 ITR 1 ](DEI. HC) 23. CIT VS. SR. SURESH G. SHAH [ 289ITR 110 ]( GUJ. HC ) 24. CIT VS. PARMANAND M. PATEL [ 278 ITR 3 ]( GUJ. HC ) 25. CIT VS. ABHISHEK CORPORATION [ IT REF. NO. 15 OF 2003 ] ( GUJ. HC ) 26. R.SRINIVASAN VS. DCIT [ 29 TAXMANN.COM 279 ]( MAD. HC) 27. VISHWAINFRAWAYSPVT. LTD VS. CIT [ ITA 596,597 & 599/PUN/2015 ] 28. SREEALANKAR VS. PCIT [ ITA NO. 108/CTK/2018 ] ( CTK TRIH.) ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 25 29. JRD TATA TRUST T VS. DCST [ 122 TAXMANN.COM 275 ] (MUM. TRIB.) 30. NARAYAN TATURANE V/S ITO [2016] 70 TAXMANN.COM 227 (MUM) (TRIB) 31. INDUS BEST HOSPITALITY & REALTORS PVT LTD. VS. PCIT [ITA NO. 3125/MUM/2017] (MUM TRIB) 32. SHANTI KRUPA ESTATE PVT. LTD. VS. AC IT - [1252/AHD/2015] (AHDTRIB) 33. PLASTIC CONCERN VS. ACIT (1998) 61 TTJ 0087 (KOL. TRIB.) 34 ACIT VS. SUBHODH MENON [2019] 103 TAXMANN.COM 15 (MUM TRIB.) 28. ON THE OTHER HAND, THE LD. CIT-DR FOR THE REVENUE SUPPORTED THE ORDER OF LD. PCIT. THE LD. CIT-DR SUBMITS THAT IN THE SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT, THE LD. PCIT HAS ELABORATELY DISCUSSED THE NON-EXAMINATION OF VARIOUS ISSUES. IN PARA 5 OF THIS SHOW CAUSE NOTICE, THE LD. PCIT CLEARLY HELD THAT INSPITE OF HAVING RELEVANT EVIDENCE ON RECORD AND CALLING FOR EXPLANATION IN DETAILED QUESTIONNAIRE, THE AO HAS NOT MADE ANY FURTHER EFFORT TO VERIFY THE SAME OR CARRIED OUT NECESSARY ENQUIRIES THEREOF AND ACCEPTED THE SUBMISSION ON THE ISSUES IDENTIFIED BY LD. PCIT. THE AO ACCEPTED THE EXPLANATION OF ASSESSEE ELABORATELY DISCUSSING THE ISSUE. FAILURE ON THE PART OF AO TO CARRY OUT PROPER VERIFICATION ON THE VARIOUS ISSUES, WHICH WERE TAKEN FOR ENQUIRIES AT THE INITIAL STAGE BY AO HIMSELF, SHOWN LACK OF APPLICATION OF MIND OR PROPER APPRECIATION OF FACTS. IT WAS THE DUTY OF THE AO TO ASCERTAIN ALL THE FACTS ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE AO IN NOT CARRYING OUT FURTHER VERIFICATION OR ENQUIRIES TO ASSESS TOTAL INCOME OF THE ASSESSEE AS EVIDENT FROM THE INCRIMINATING MATERIAL AND TO ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 26 VERIFY IF IT HAS ANY CO-RELATION WITH THE DISCLOSURE MADE IN THE IDS AS CLAIMED BY ASSESSEE. FAILURE ON THE PART OF AO TO CARRY OUT SUCH ENQUIRIES AS DISCUSSED SHOWN THAT ASSESSMENT ORDER PASSED BY AO IS ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. CIT-DR FOR THE REVENUE SUBMITS THAT THE TWIN CONDITION AS ENUNCIATED IN SECTION 263 ARE FULFILLED IN THE PRESENT CASE. THE LD. CIT-DR FOR THE REVENUE PRAYED FOR UPHOLDING THE ORDER OF LD. PCIT. 29. IN REJOINDER SUBMISSION, THE LD.AR OF THE ASSESSEE SUBMITS THAT ON CAREFUL PERUSAL OF SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT ISSUED BY THE LD. PCIT, IT IS CLEARLY DISCERNIBLE THAT THE LD. PCIT IDENTIFIED ISSUES ONLY ON THE BASIS NOTICE ISSUED BY AO UNDER SECTION 142(1) OF THE ACT. NO NEW ISSUES ARE IDENTIFIED BY LD. PCIT. THE LD. PCIT HAS NOT MADE ANY ENQUIRY OF HIS OWN BEFORE HOLDING THAT ASSESSMENT ORDER IS ERRONEOUS OR ERRONEOUS AND INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON ANY OF THE ISSUE. THE LD. PCIT HAS NOT SPECIFIED AS TO WHAT KIND OF INFORMATION OR FURTHER DETAILS OR QUESTIONNAIRE OR EFFORT WAS REQUIRED TO BE MADE BY AO. THE AO BEFORE ACCEPTING THE SUBMISSION OF ASSESSEE OBTAINED PRIOR APPROVAL OF RANGE HEAD. THE APPROVAL GRANTED BY RANGE HEAD IS IN ACCORDANCE WITH LAW. NO DEFICIENCY IS POINTED OUT BY LD.PCIT IN THE APPROVAL GRANTED BY RANGE HEAD. IN ABSENCE OF ANY FINDING AS TO HOW THE ORDER ON PARTICULAR ISSUE IS ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 27 ERRONEOUS, THE REVISION ORDER UNDER SECTION 263 OF THE ACT IS NOT ALLOWABLE. THE LD.AR OF THE ASSESSEE REITERATED THAT IF THE VALIDITY OF APPROVAL GRANTED BY RANGE HEAD IS NOT DISPUTED BY LD. PCIT, THEN IT WOULD NOT BE JUSTIFIED IN INTERFERING IN THE APPROVAL GRANTED BY RANGE HEAD FOR FRAMING ASSESSMENT ORDER; THEREFORE, THERE IS NO REASON FOR SETTING ASIDE THE ASSESSMENT ORDER FOR THE SUBJECT ASSESSMENT YEARS. 30. WE HAVE CONSIDERED RIVAL SUBMISSION OF THE PARTIES AND HAVE GONE THROUGH THE ORDER OF AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE DOCUMENTS FILED BY THE ASSESSEE ON RECORD. FURTHER WE HAVE DELIBERATED ON THE VARIOUS CASE LAWS FILED ON BEHALF OF THE ASSESSEE. WE HAVE NOTED THAT THE ASSESSEE IN AY 2015- 16 & 2016-17 THE ASSESSEE HAS RAISED GROUND OF APPEAL VIDE GROUND NO.2 THAT NO REASONABLE OPPORTUNITY OF HEARING WAS GIVEN BY LD PCIT. DURING THE HEARING NO SPECIFIC SUBMISSION WAS MADE, THEREFORE, THIS GROUND OF APPEAL IS TREATED AS NOT PRESSED HENCE DISMISSED. IN THE RESULT, THE GROUND NO. 2 IS APPEAL FOR AY 2015-16 & 2016-17 IS DISMISSED AS NOT PRESSED. 31. BEFORE ADVERTING TO THE FACTS OF THE CASE LET US REFERRED CERTAIN LEADING CASE LAWS ON THE SCOPE OF REVISIONARY JURISDICTION OF LD. PCIT. THE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 832 HELD THAT A BARE READING OF SECTION 263 OF THE INCOME-TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF THE JURISDICTION BY THE ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 28 COMMISSIONER SUO-MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, ( I ) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND ( II ) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. * THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER; IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME-TAX OFFICER, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 29 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. (* UNDERLINE BY US) 32. THE HONBLE BOMBAY HIGH COURT IN CIT VS GABRIEL INDIA LTD (233 ITR 108 BOM /71 TAXMAN 585) HELD THAT THE POWER OF SUO MOTU REVISION UNDER SUB- SECTION (1) OF SECTION 263 IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION UNDER THIS SUB-SECTION, VIZ., (I) THE ORDER IS ERRONEOUS; AND (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTLY AS TO WHEN AN ORDER CAN BE SAID TO BE ERRONEOUS. ONE FINDS THAT THE EXPRESSIONS 'ERRONEOUS', 'ERRONEOUS ASSESSMENT' AND 'ERRONEOUS JUDGMENT' HAVE BEEN DEFINED IN BLACK'S LAW DICTIONARY. ACCORDING TO THE DEFINITION, 'ERRONEOUS' MEANS 'INVOLVING ERROR; DEVIATING FROM THE LAW'. 'ERRONEOUS ASSESSMENT' REFERS TO AN ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 30 ASSESSMENT THAT DEVIATES FROM THE LAW AND IS, THEREFORE, INVALID, AND IS A DEFECT THAT IS JURISDICTIONAL IN ITS NATURE, AND DOES NOT REFER TO THE JUDGMENT OF THE ASSESSING OFFICER IN FIXING THE AMOUNT OF VALUATION OF THE PROPERTY. SIMILARLY, 'ERRONEOUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE AND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF LAW, OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIPLES. THE HONBLE COURT FURTHER HELD THAT FROM THE ABOVE SAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN ASSESSING OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ITO, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WHERE THE ITO WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 31 THE ONE DETERMINED BY THE ITO. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE ITO HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUOMOTU REVISION BECAUSE THE FIRST REQUIREMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY, IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT-MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. THEREFORE, IN ORDER TO EXERCISE POWER UNDER SECTION 263(1) THERE MUST BE MATERIAL BEFORE THE COMMISSIONER TO CONSIDER THAT THE ORDER PASSED BY THE ITO WAS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 32 THE REVENUE AND THAT IT MUST BE AN ORDER WHICH IS NOT IN ACCORDANCE WITH THE LAW OR WHICH HAS BEEN PASSED BY THE ITO WITHOUT MAKING ANY ENQUIRY IN UNDUE HASTE. AN ORDER CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF IT IS NOT IN ACCORDANCE WITH THE LAW IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALIZED OR CANNOT BE REALIZED. THERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE COMMISSIONER TO SATISFY HIM PRIMA FACIE THAT THE AFORESAID TWO REQUISITES ARE PRESENT. IF NOT, HE HAS NO AUTHORITY TO INITIATE PROCEEDINGS FOR REVISION. EXERCISE OF POWER OF SUO MOTU REVISION UNDER SUCH CIRCUMSTANCES WILL AMOUNT TO ARBITRARY EXERCISE OF POWER. IT IS WELL-SETTLED THAT WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH POWER MUST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY IS CHALLENGED BEFORE THE COURT, IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER THE RELEVANT OBJECTIVES WERE AVAILABLE FROM THE RECORDS CALLED FOR AND EXAMINED BY SUCH AUTHORITY. THE DECISION OF THE ITO COULD NOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. MOREOVER, THE COMMISSIONER HIMSELF, EVEN AFTER INITIATING PROCEEDINGS FOR REVISION AND HEARING THE ASSESSEE, COULD NOT SAY THAT THE ALLOWANCE OF THE ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 33 CLAIM OF THE ASSESSEE WAS ERRONEOUS, HE SIMPLY ASKED THE ITO TO RE-EXAMINE THE MATTER, WHICH WAS NOT PERMISSIBLE. 33. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS ARVIND JEWELLERS (259 ITR 502), WHILE RELYING ON THE DECISION OF HONBLE APEX COURT HAS TAKEN A VIEW THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT SECTION WILL BE ATTRACTED AND INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. THE SUPREME COURT HAS ALSO MADE IT CLEAR THAT THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER AND THAT 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. IT WAS FURTHER EMPHATICALLY STATED THAT WHEN AN ITO ADOPTS ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO 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 ITO IS UNSUSTAINABLE IN LAW. ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 34 34. THE HON'BLE JURISDICTIONAL HIGH COURT IN ARYAN ARCADE LTD., VS PCIT (2019) 412 ITR 277 (GUJARAT) HELD THAT MERELY BECAUSE COMMISSIONER HELD A DIFFERENT BELIEF THAT WOULD NOT PERMIT HIM TO TAKE THE ORDER IN REVISION, IT IF FURTHER HELD THAT WHEN ASSESSING OFFICER MADE FULL ENQUIRY, HE MADE UP HIS MIND, THE NOTICE OF REVISION IS NOT VALID. ( EMPHASIS ADDED BY US ). FURTHER, HON'BLE MADRAS HIGH COURT IN CIT VS MEPCO INDUSTRIES LTD., (2007) 207 CTR 462 (MADRAS) HELD THAT WHEN TWO VIEWS ARE POSSIBLE ON AN ISSUE AND IT IS NOT THE CASE OF THE COMMISSIONER THAT THE VIEW TAKEN BY ASSESSING OFFICER IS NOT PERMISSIBLE IN LAW, COMMISSIONER CANNOT INVOKE HIS JURISDICTION UNDER SECTION 263 OF THE ACT. ( EMPHASIS ADDED BY US) 16. THE HONBLE DELHI HIGH COURT IN CIT VS VIKAS POLYMERS (341 ITR 537 DELHI) HELD THAT IT IS A PRE-REQUISITE THAT THE COMMISSIONER MUST GIVE REASONS TO JUSTIFY THE EXERCISE OF SUO MOTU REVISIONAL POWERS BY HIM TO REOPEN A CONCLUDED ASSESSMENT. A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE WILL NOT SUFFICE. THE EXERCISE OF THE POWER BEING QUASI-JUDICIAL IN NATURE, THE REASONS MUST BE SUCH AS TO SHOW THAT THE ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR CANCELLATION OF THE ASSESSMENT OR DIRECTIONS ISSUED FOR A FRESH ASSESSMENT WERE CALLED FOR, AND MUST IRRESISTIBLY LEAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME-TAX OFFICER WAS NOT ONLY ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 35 ERRONEOUS BUT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WHILE THE INCOME-TAX OFFICER IS NOT CALLED UPON TO WRITE AN ELABORATE JUDGMENT GIVING DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUOMOTU REVISIONAL POWERS UNLESS SUPPORTED BY ADEQUATE REASONS FOR DOING SO*. IT WAS FURTHER HELD THAT APPLYING THE AFORESAID LAW TO THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE EXERCISE OF REVISIONAL POWER BY THE COMMISSIONER IN THE INSTANT CASE WAS UNCALLED FOR AND UNJUSTIFIED. IT WAS MORE IN THE NATURE OF ROVING AND FISHING ENQUIRY. THE COMMISSIONER HAS PROCEEDED ON THE ASSUMPTION THAT NO SUCH INFORMATION, AS WAS FURNISHED TO HIM, WAS FURNISHED AT THE TIME OF ASSESSMENT. THE COMMISSIONER HAS MENTIONED THAT THE INCOME-TAX OFFICER HAS NOT EXAMINED THE CASH CREDITS OF THE PARTNERS OR DEPOSITS OF CHIT FUND. ASSUMING THIS TO BE SO (THOUGH THERE DOES NOT APPEAR TO BE ANY JUSTIFICATION FOR THE AFORESAID OBSERVATION), THIS MAY MAKE THE ORDER ERRONEOUS, BUT HOW IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS NOT BEEN STATED BY THE COMMISSIONER AS HE DID NOT DEAL WITH THE EXPLANATION GIVEN BY THE ASSESSEE IN THE COURSE OF SECTION 263 PROCEEDINGS. (*UNDERLINE BY US) 35. NOW ADVERTING TO THE FACTS OF THE PRESENT CASE. WE FIND THE THERE IS NO DISPUTE THAT THE AO WHILE PASSING THE ASSESSMENT ORDER ACCEPTED THE CLAIMS ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 36 OF THE ASSESSEE IN NON- SPEAKING ORDER. IT IS NOT THE CASE OF LD PCIT THAT THE AO IS NOT AUTHORISED (EMPOWERED) TO ACCEPTED THE RETURN OF INCOME IN NON- SPEAKING ORDER. WE HAVE SEEN THAT THE AO WHILE PASSING THE ASSESSMENT ORDER RECORDED THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE VIDE VARIOUS ORDER SHEET ENTRIES HAVE FURNISHED THE RELEVANT DETAILS AND INFORMATION CALLED FOR. AFTER AFFORDING AMPLE AND ADEQUATE OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE, ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED ON THE BASIS OF THE SUBMISSIONS AND DETAILS COLLECTED AND IN CONSEQUENCE UPON THE CONCLUSION OF PROCEEDING AND HEARING OF EVIDENCES, ASSESSMENT IS MADE BY THIS ORDER. A PERUSAL OF SHOW CAUSE NOTICE UNDER SECTION 263 DATED 08.03.2021, CLEARLY DEMONSTRATE THAT THE LD PCIT IDENTIFIED ALL THE ISSUES WHICH WERE THE SUBJECT MATTER OF THE NOTICE UNDER SECTION 142(1)AND THE QUESTIONNAIRE ATTACHED THERETO, WERE ISSUED BY THE ASSESSING OFFICER, EXCEPT THE ISSUE OF INITIATION OF PENALTY 271D/ 271E . THE LD PCIT IN HIS SHOW CAUSE NOTICE (SCN) UNDER SECTION 263 HAS ACCEPTED THAT THE AO MADE DETAILED QUESTIONNAIRE DATED 03.12.2018. AND ON PERUSAL RECORD AND DETAILS /EVIDENCES AVAILABLE ON RECORD, THE PCIT NOTED THAT AO HAS NOT MADE FURTHER INQUIRY. THUS, THE LD. PCIT HAS NOT MADE A CASE THAT THERE WAS NO ENQUIRY OR LACK OF INQUIRY RATHER RECORDED THAT THE AO CALLED DETAILED INQUIRY. WE FIND THAT THE LD. PCIT HAS NOT SPECIFIED THAT WHAT KIND OF FURTHER INQUIRY WAS ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 37 REQUIRED, WHEN THE INCOME DISCLOSED IN IDS WAS DULY ACCEPTED BY HIGHER AUTHORITY. AND THE ACCEPTANCE OF IDS WAS NEVER QUESTIONED BY BOARD OR OTHER SUPERIOR AUTHORITY THEN PCIT. IT IS THE AO WHO HAS TO TAKE A CONSCIOUS DECISION IF ANY FURTHER INQUIRY IS REQUIRED OR NOT. FURTHERMORE, THE ASSESSMENT ORDER WAS DULY APPROVED BY THE LD JCIT. THERE IN NOT FINDING OF LD PCIT THAT THE APPROVAL GRANTED BY THE JCIT IS NOT PROPER OR NON- APPLICATION OF PROPER PROCEDURE. 36. WE FIND THAT IN THE CASE IN HAND THE AO HAS MADE REQUIRED INQUIRY AND CAME TO A POSSIBLE CONCLUSION IN ALLOWING THE CLAIMS TO THE ASSESSEE. SO FAR AS NON INITIATION OF PENALTY UNDER SECTION 271D/ 271E IS CONCERNED, WE FIND THAT HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS SURESH G. SHAH [289 ITR 110 (GUJ)] AND CIT VS PARMANAND M. PATEL [287 ITR 3 (GUJ)] IT WAS HELD THAT CIT CANNOT EXERCISE HIS JURISDICTION UNDER SECTION 263 FOR THE PURPOSE OF INITIATION OF PENALTY PROCEEDINGS. OTHER ALSO WE FIND THAT THE ASSESSEE HAS SPECIFICALLY IN ITS REPLY TO THE SCN TO THE LD PCIT HAS STATED THAT THE CASH WAS RECEIVED ONLY AGAINST THE BOOKING AND NO LOAN OR SUCH TRANSACTION WAS UNDERTAKEN BY THEM. THE LD PCIT FAILED TO SPECIFY THE TRANSACTION ON WHICH INITIATION OF PENALTY EITHER UNDER SECTION 271D OR 271E WAS WARRANTED. AND ON THE ISSUES OF VALIDITY OF DISCLOSER IN IDS, THE LD PCIT HAS NOT SPECIFIED THAT WHILE MAKING DECLARATION THE ASSESSEE MADE ANY ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 38 MISREPRESENTATION OF ANY FACTS. ONCE THE IDS IN ALL CASES WERE ACCEPTED BY LD. PCIT, THE AO OR THE RANGE HEAD NO AUTHORITY TO RELOOK OR POWER TO REVOKE OR TO EXAMINE ITS VALIDITY. WE FURTHER FIND THAT THE LD PCIT WHILE DIRECTING THE AO HAS NOT HIMSELF REVOKED THE IDS NOR DIRECTED TO REFUND THE PAYMENT OF TAX TO THE ASSESSEE. FURTHER, WE FIND THAT IN THE IDS THE ASSESSEE HAS PAID MORE TAX TO THE REVENUE THEN THE RATE OF NORMAL TAX, SO THERE IS NO LOSS OF REVENUE. 37. WE FURTHER FIND THAT THE AO WHILE PASSING THE ASSESSMENT ORDER IN ALL YEARS HAVE MADE INQUIRY AND TOOK REASONABLE, PLAUSIBLE AND LEGALLY SUSTAINABLE VIEW. THE HONBLE DELHI HIGH COURT IN CIT VS KELVINATOR OF INDIA LTD (SUPRA) HELD THAT IF THE AO HAS ADOPTED ONE OF THE COURSE PERMISSIBLE IN LAW, WHICH RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEW IS POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS VIEW TAKEN BY THE AO IS NOT SUSTAINABLE IN LAW. AT THE COST OF REPETITION, WE MAY NOTE THAT THE LD PCIT NEITHER IN HIS SHOW CAUSE NOTICE NOR IN ULTIMATE / FINAL ORDER HAS HELD THAT THE ORDER PASSED BY THE AO IS UNSUSTAINABLE IN LAW. SO FAR AS NON- VERIFICATION OF CASS (ONLY ISSUE IN AY 207-18 ONLY), WE FIND THAT THE LD PCIT RAISED THIS ISSUE THAT THE ITEM UNDER THE CASS WERE NOT VERIFIED BY THE ASSESSING OFFICER. WE FIND THAT THE ASSESSMENT OF THIS YEAR (AY2017-2018) ITA NO. 88,89 & 64/SRT/2021 RADHIKA CONSTRUCTION (AY 2015-16 TO 2017-18) 39 THE ASSESSMENT HAS NOT BEEN MADE HAS BEEN MADE CONSEQUENT OF SURVEY AND NOT UNDER CASS HENCE, THE SAID IDENTIFICATION OF SUCH ISSUE IS NOT MISPLACED. 38. IN VIEW OF THE AFORESAID DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT THE LD PCIT WAS NOT JUSTIFIED IN SUBJECTING THE ASSESSMENT ORDER FOR ALL THREE YEARS TO REVISION PROCEEDINGS BY TAKING VIEW THAT THE AO HAS NOT MADE FURTHER INQUIRY, THEREFORE WE QUASH THE REVISION ORDER (S) IN ALL THREE ASSESSMENT YEARS. IN THE RESULT THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ALL THREE ASSESSMENT YEARS ARE ALLOWED. 39. IN THE RESULT THE APPEAL FOR AY 2015-16, 2016-17 IS PARTLY ALLOWED AND APPEAL FOR AY 2017-18 ARE ALLOWED. NO ORDER AS TO COST. ORDER ANNOUNCED ON 11 OCTOBER 2021 BY PLACING THE RESULT ON THE NOTICE BOARD. AS SD/- SD/- (DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 11/10/2021 / SGR* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE BY ORDER / / TRUE COPY / / SR. PVT. SECRETARY, ITAT, SURAT