gagan deep kathuria vs. acit, sriganganagar
TRANSCRIPT
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IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR
BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER.
ITA No. 06/Jodh/2012 (A. Y. 2007-08)
Shri Gagan Deep Kathuria Vs. ACIT P/o M/s Shivam Property Dealer Sriganganagar Khinchi Chowk Sriganganagar PAN No. : AMJPK 6483 G (Appellant) (Respondent) Assessee by : Shri Suresh Ojha Department by : Shri Deepak Sehgal - DR Date of hearing : 14/03/2013. Date of pronouncement : 30/04/2013.
PER HARI OM MARATHA, J.M:-
This appeal of the assessee for A.Y. 2007-08 is directed against
the order of the ld. CIT, Bikaner dated 3.10.2011.
2. Briefly stated, the facts of the case are that assessment was
completed u/s 143(3) of the Income-tax Act, 1961 [hereinafter
referred to as 'the Act', for short] on 30.12.2009 at total income of Rs.
74,75,000/-. Survey proceedings u/s 133A of the Act had been
conducted at the business premises of the assessee on 8.12.2006.
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During survey proceedings, the assessee had made a surrender of Rs.
74 lakhs for A.Y. 2007-08. The assessee is pursuing the business of a
property dealer. The ld. CIT, after calling for records of this A.Y.,
found that it is not only erroneous but also prejudicial to the interest
of the Revenue. Accordingly, he has set aside the assessment order for
making it afresh. Now the assessee has filed this appeal by raising the
following grounds:
1. That the order passed u/s 263 of the Income-tax Act, 1961
by the ld. CIT is bad in law, illegal and against facts.
2. That the ld. CIT erred in passing the order u/s 263 of
the Act even when the matters were properly dealt by the
ACIT at the time of assessment proceedings.
3. That the ld. CIT erred in holding that the assessee has
made total investment of Rs. 132.03 lakhs in various
properties out of his undisclosed income and surrendered
Rs. 72 lakhs only and directing the A.O. to make addition
of Rs. 60.03 lakhs to the total income of the assessee.
4. That the ld. CIT erred in setting aside the case on issue of
verification of new cash creditors introduced during the
year amounting to Rs. 13,50,000/-.
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5. The ld. CIT erred in setting aside the case on account of
allowing telescopic by the A.O. of Rs. 2 lakhs surrendered
during the course of survey.”
3. We have heard the rival submissions and have carefully perused
the entire material on record. It was submitted by the ld. A.R. that
the A.O. has made all the necessary enquiries from the assessee and
has legally passed his order and there is no error in this order as has
been alleged by the ld. CIT. On the other hand, the ld. CIT, DR has
supported the finding of the ld. CIT and has reiterated all the reasons
taken by him to set aside the assessment order for redoing the same.
4. Assessment was completed in this case u/s 143(3) of the Act on
30.12.2009 at a total income of Rs. 74,75,000/- as we have mentioned
earlier. The A.O. has issued notice u/s 142(1) of the Act dated
16.12.2009, a copy of which is enclosed at pages 1 to 4 of the
assessee’s paper book. The assessee submitted its reply regarding Rs.
60,03,000/- and also in respect of other queries raised by the A.O. vide
letter dated 16.12.2009 which are enclosed at pages 6,7 and 9 of
assessee’s paper book. The ld. CIT issued show-cause notice, copy of
which is enclosed at pages 15 & 16 of assessee’s paper book. Relevant
portion of this show cause notice reads as under:
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“1. The A.O. has completed the assessment in a routine
manner without making proper enquiry and investigation
regarding the investment and its source amounting to Rs.
60,03,000/- made by the assessee in the various properties
during the year under consideration. The amount of surrender
of Rs. 72.00 lakhs were made during the course of survey on
account of advance paid for purchase of land situated at 4 ML,
Sriganganagar, which is different that the amount of Rs. 60.03
lakhs invested in other properties. According to the ld. CIT, the
A.O. should have made a separate addition of Rs. 60.03 lakhs.
2. The A.O. has not properly examined and verified the new
creditors/loan of Rs. 13,50,000/- introduced during the year.
3. Details regarding business receipts from property
brokerage of the assessee has not been verified by the A.O. and
the A.O. has not made any enquiry in respect of investment in
residential property situated at 154 G Block Sriganganagar.
5. We have heard both sides in detail. We have also perused
carefully the entire evidences available on record. It is trite that an order
can be revised only and only if twin conditions of ‘error in the order’ and
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‘prejudice caused to the Revenue’ co-exist. The subject of ‘revision under
section 263’ has been vastly examined and analyzed by various Courts
including that of Hon’ble Apex Court. The revisional power conferred on the
CIT vide section 263 is of vide amplitude. It enables the CIT to call for and
examine the records of any proceeding under the Act. It empowers the CIT
to make or cause to be made such an enquiry as he deems necessary in order
to find out if any order passed by Assessing Officer is erroneous in so far as it
is prejudicial to the interests of the Revenue. The only limitation on his
powers is that he must have some material(s) which would enable him to
form a prima facie opinion that the order passed by the Assessing Officer is
erroneous in so far as it is prejudicial to the interest of the Revenue. Once
he comes to the above conclusion on the basis of the ‘material’ that the
order of the Assessing Officer is erroneous and also prejudicial to the
interests of the Revenue, the CIT is empowered to pass an order as the
circumstances of the case may warrant. He may pass an order enhancing
the assessment or he may modify the assessment. He is also empowered to
cancel the assessment and direct to frame a fresh assessment. He is
empowered to take recourse to any of the three courses indicated in section
263. So, it is clear that the CIT does not have unfettered and unchequred
discretion to revise an order. The CIT is required to exercise revisional
power within the bounds of the law and has to satisfy the need of fairness in
administrative action and fair play with due respect to the principle of audi
alteram partem as envisaged in the Constitution of India as well as in
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section 263. An order can be treated as ‘erroneous’ if it was passed in utter
ignorance or in violation of any law; or passed without taking into
consideration all the relevant facts or by taking into consideration irrelevant
facts. The ‘prejudice’ that is contemplated under section 263 is the
prejudice to the Income Tax administration as a whole. The revision has to
be done for the purpose of setting right distortions and prejudices caused to
the Revenue in the above context. The fundamental principles which
emerge from the several cases regarding the powers of the CIT under section
263 may be summarized below:
(i) The CIT must record satisfaction that the order of the
Assessing Officer is erroneous and prejudicial to the interests
of the revenue. Both the conditions must be fulfilled.
(ii) Section 263 cannot be invoked to correct each and every type
of mistake or error committed by the Assessing Officer and it
is only when an order is erroneous, that the section will be
attracted.
(iii) An incorrect assumption of facts or an incorrect application
of law will suffice for the requirement or order being
erroneous.
(iv) If the order is passed without application of mind, such order
will fall under the category of erroneous order.
(v) Every loss of revenue cannot be treated as prejudicial to the
interest of the revenue and if the Assessing Officer has
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adopted one of the courses permissible under law or where
two views are possible and the Assessing Officer has taken
one view under with which the CIT does not agree, it cannot
be treated as an erroneous order, unless the view taken by
the Assessing Officer is unsustainable under the law.
(vi) If while making the assessment, the Assessing Officer examines
the accounts, makes enquiries, applies his mind to the facts
and circumstances of the case and determines the income,
the CIT, while exercising his power under section 263, is not
permitted to substitute his estimate of income in place of the
income estimated by the Assessing Officer.
(vii) The Assessing Officer exercise quasi-judicial power vested in
him and if he exercise such power in accordance with law and
arrives as a conclusion, such conclusion cannot be termed to
be erroneous simply because the CIT does not feel satisfied
with the conclusion.
(viii) The CIT, before exercising his jurisdiction under section 263,
must have material on record to arrive at a satisfaction.
(ix) If the Assessing Officer has made enquiries during the course
of assessment proceedings on the relevant issues and the
assessee has given detailed explanation be a letter in writing
and the Assessing Officer allowed the claim on being satisfied
with the explanation of the assessee, the decision of the
Assessing Officer cannot be held to be erroneous simply
because in his order he does not make an elaborate discussion
in that regard.
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6. Reverting to the facts of this case, we have found from the perusal of
the assessment order that the A.O. has examined in respect of the amount
of Rs. 60.03 lakhs and has specifically raised a query as to why this amount
should not be added in assessee’s income. After considering the assessee’s
reply and the affidavit and after applying his mind, the A.O. has reached to
the conclusion that in the totality of the facts and circumstances of the
case, I find the reply as plausible. He has stated that he applied his mind
and in his opinion there was no point in making this addition separately as it
stood covered in the surrendered income of Rs. 74 lakhs made by the
assessee at the time of survey. Thus, it cannot be said that the A.O. has not
applied his mind to this issue. In view of the legal position on this subject of
revision to be made u/s 263 of the Act as discussed above, the ld. CIT
cannot replace his opinion when the A.O. has taken one of the possible
views after applying his mind to a specific item of income. The assessee had
relied on various decisions in this regard which have also been considered by
the A.O. The Hon'ble Jurisdictional High Court has taken similar view that
when the A.O. takes a decision after going through the material available on
record and after considering the explanation of the assessee, it cannot be
said that he has not applied his mind. In this regard, the following
decisions of the Hon'ble Rajasthan High Court are relevant:
1. CIT Vs. Girdhari Lal 258 ITR 331 [Raj]
2. CIT Vs. Ganpat Ram Vishnoi 296 ITR 292 [Raj]
3. CIT Vs. Shiv Hari Madhusudan 233 ITR 649 [Raj]
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It is settled position of law that when the A.O. adopts one of the permissible
course of law, the ld. CIT does not agree with it, the order cannot be
treated as erroneous in so far as it is prejudicial to the interest of the
Revenue unless the view taken by the A.O. is unsustainable in law. It is well
settled proposition of law as laid down by the Hon'ble Punjab and Haryana
High Court in CIT Vs. Sohara Wollen Mills reported in 296 ITR 278 in which it
has been laid down that mere audit objection and because different view
could be taken are not enough to say that the order of the A.O. is erroneous
in so far as it is prejudicial to the interest of the Revenue. Thus we do not
find this ground to be erroneous as has been claimed by the ld. CIT.
7. Regarding cash creditors, again this matter was properly examined by
the A.O. The assessee filed its reply stating all facts in his letter dated
18.8.2011. The A.O. applied his mind and took a decision. The assessee
also filed affidavit, which was considered by the A.O. The contents of the
affidavit are deemed to be accepted in the absence of cross-examination. In
this regard, decision of this Bench in the case reported in 36 TW 1 is
relevant.
8. Regarding investment in house at 154 G-Block, Sriganganagar, the A.O.
made enquiries. The assessee surrendered Rs. 2 lakhs of brokerage receipt,
which is mentioned in first para at page 9 of the assessment order. Thus, in
view of the aforementioned legal position and the facts of this case, we are
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of the considered opinion that the assessment order is neither erroneous and
when the twin conditions do not co exist, the order cannot be revised.
Accordingly, we set aside the impugned order of the ld. CIT(A) and allow the
appeal of the assessee.
9. In the result, the appeal of the assessee is allowed
Order pronounced in the open court on 30th April 2013.
Sd/- Sd/-
[N.K. Saini] [Hari Om Maratha] Accountant Member Judicial Member Dated : 30th April, 2013. VL Copy to :
1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR
ASSISTANT REGISTRAR