Income Tax Appellate Tribunal - Chandigarh
Rupinderdeep Singh, Ludhiana vs Assessee on 15 January, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'A' CHANDIGARH
BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND
MS. SUSHMA CHOWLA, JUDICIAL MEMBER
ITA No. 421 to 423/CHD/2012
Assessment Year: 2006-07, 2007-08 & 2008-09
Bassera Realtors (P) Ltd., Vs The CIT (Central),
Ludhiana Ludhiana
PAN No. AACCB7360D
ITA No. 424 to 426/CHD/2012
Assessment Years: 2006-07, 2007-08 & 2008-09
Shri Suresh Kumar Khanna, Vs The CIT (Central),
Ludhiana Ludhiana
PAN No. AHAPK0939M
ITA No. 427 & 428/CHD/2012
Assessment Years: 2007-08 & 2008-09
Shri Rupinderdeep Singh, Vs The CIT (Central),
Ludhiana Ludhiana
PAN No. AFIPS3714E
&
ITA No. 429 & 430/CHD/2012
Assessment Years: 2007-08 & 2008-09
Shri Deepak Chauhan, Vs The CIT (Central),
Ludhiana Ludhiana
PAN No. AFIPS3714E
(Appellant) (Respondent)
Date of hearing : 15.01.2014
Date of Pronouncement : 30.01.2014
Appellant By : Shri V.K. Tulsian
Respondent By : Shri Manjit Singh
2
ORDER
PER BENCH The appeals filed by the different assessees relating to different assessment years are directed against the separate orders all dated 22.02.2012 of Ld. C IT(Central), Ludhiana.
2. Both parties pointed out that in case of Basera Realtors P Ltd, the appeal for assessment year 2008-09 in ITA No. 423/Chd/2012 which is detailed one be taken for hearing, therefore, the same was taken for detailed hearing.
3. In this appeal, the assessee has raised the following grounds:-
1. Whether the Ld. CIT was justified to invoke his power u/s 263 just based on the Ld. AO's letter and treating the letter, even without apprising himself of the record, as the order as 'erroneous and prejudicial' to the interest of the Revenue.
2. Whether the Ld. CIT was justified to assume jurisdiction u/s 263 particularly when the assessment was completed u/s 153 A/C read with Sec. 143(3) based upon the seized / impounded material and based upon the disclosure statement.
3. Whether the Ld. CIT was justified to review the assessment / for further verification under the garb of section 263 on the ground of lack of enquiry / when the Ld. AO took a fair and reasonable view on the seized / impounded document / papers and appraisal report etc.
4. Whether the Ld. CIT was justified by exercising the power and passing the order u/s 263 on the premise that seized / impounded documents were not properly examined from the angle of investment and violation of section 40(A)3 3 despite the fact that the same were very much examined as appears from the Assessment Order / and various submissions.
4. In addition to above, the assessee has moved an application dt 22.6.2013 for admission of following additional ground:-
Whether the Ld. CIT(A) was justified by assuming jurisdiction u/s 263 in setting aside the assessment order u/s 263 without any firm and final finding.
5. Both the parties were heard for admission of this additional ground.
6. After considering the rival submissions, we find that no separate dispute has been projected in this ground and it is in fact one of the argument for not sustaining the order passed u/s 263 and therefore, this ground is not being admitted for separate adjudication. However, we endorse that this issue would be considered as part of the argument.
7. Though various grounds have been raised, the onl y dispute is whether Revisionary order passed u/s 263 has been passed validl y or not and, therefore, we adjudicate all grounds together.
8. After hearing both the parties we find that in this case a search was conducted in the premises of Shri Suresh Kumar Khanna, Shri Rupinderdeep Singh and Shri Deepak Chauhan. During the search, incriminating documents showing sales / purchases of properties were found. Simultaneousl y, a survey u/s 133A was also carried out by Investigation Wing of the Department at the business premises of the assessee company i.e. Basera Realtors P. Ltd. During survey also certain incriminating documents were found and impounded. Most of the documents found during search and survey related to the assessee company. 4 During the search in the residential premises of Shri Deepak Chauhan who is brother in law of Shri Suresh Kumar Khanna, Director of the company and was also employee of the assessee company stated that documents found in his place actuall y belonged to the assessee company M/s Basera Realtors P. Ltd. and pointed out that this fact has already been admitted by Shri Suresh Kumar Khanna who in his statement u/s 132(4) on 21.2.2008 admitted that documents were found during search at the residential premises of Shri Deepak Chauhan also belong to the company and ultimatel y a sum of Rs. 8.5 crores was surrendered as income. Further, a letter on the same date was given which was signed by all the directors of the company confirming the surrender of Rs. 8.5 crores. Again on 24.3.2008 i.e. after a month, offer of surrender of Rs. 8.5 crores was confirmed. A notice u/s 153C was issued to the company and in response, return declaring income of Rs. 3,37,85,728/- was furnished. During the assessment proceedings, the assessee appeared on various dates and some information was filed and it seems that case was discussed with the Assessing Officer. Then, there was change in the incumbent in March 2009 and the new officer noted that information filed by the assessee was incomplete as the complete explanation of the assessee company was not available on each and every documents seized / impounded during search / survey operation and, therefore, fresh notice u/s 143(2) read with section 142(1) was issued on 16.6.2009. Later on, again various adjournments were sought and some information was filed but generall y there was non cooperation, therefore, ultimatel y the Assessing Officer went on to make an assessment u/s 144. The assessment was completed on 30.12.2009 by making the following observations in para 16 of the assessment order.
"16. From the facts adduced above, it is evident that the document seized / impounded remained unexplained and unverifiable and as such the transactions recorded in these documents are required to be added to the income returned.5
However, to be fair and reasonable, the undersigned is of the view that the assessment at the surrendered amount of Rs. 8,50,00,000/- will meet the end of justice. Therefore the income of the assessee, for the A.Y. 2008-09 under consideration, is assessed at Rs. 8,50,00,000/- as surrendered by the assessee company u/s u/s 132(4) of the I.T. Act during search operation on 21.02.2008 and subsequently, reaffirmed after a period of more than one month on 24.03.2008 as against the returned income of Rs. 3,37,85,728/-. Therefore, the balance amount of Rs. 5,12,14,272/- (8,50,00,000-3,37,85,728) is added to the income returned. Accordingly, an addition of Rs. 5,12,14,272/- is made to the income returned. Penalty proceedings u/s 271(1)(C) for furnishing inaccurate particulars of income thereby resulting in concealment of income are initiated."
9. Later on, the Assessing Officer sent a proposal to the Commissioner Income Tax (Central ) Ludhiana through Additional Commissioner of I.Tax, Central Range, Ludhiana for initiating action u/s 263 on 10.1.2012. Through this proposal, Assessing Officer gave a brief history of the search, various documents found and various explanations given by the assessee and how the same were not complete and he also pointed out that how order was erroneous. This proposal was sent to the Ld. Commissioner by Addl. Commissioner, Central Circle on 11.1.2012. The Ld. Commissioner after examining the same issued a show cause noticed dated 13.1.2012. More or less this notice is copy of the proposal sent by Assessing Officer. Before the Ld. Commissioner certain replies along with explanations were furnished but he was not satisfied and observed that Assessing Officer has not conducted proper enquiries and therefore, assessment was erroneous and prejudicial to the interest of Revenue. Ultimatel y, the assessment was set aside and Assessing Officer was directed to complete the assessment de novo after proper examination of various documents and making proper enquiries vide para 20 of his order which is as under:- 6
20. In view of the above discussion and also for the reasons discussed in show-cause notice dated 13.01.2012, it is apparent that A.O. has not properly appreciated the facts of the case and committed a grievous error in not only not conducting proper inquiries with regard to the entries made in the seized documents but also in not making the addition and therefore assessment order dated 30.12.2009 for A.Y. 2008-09 is held to be erroneous and same is also prejudicial to the interest of revenue. In view of above discussion, assessment made by the A.O. vide order dated 30.12.2009 passed u/s 143(3) r.w.s; 153C/153A is set aside with the directions to make fresh assessment de-novo after properly examining and appreciating the seized material and conducting proper enquiry and after affording and opportunity of being heard to the assessee.
10. Before us, Ld. Counsel for the assessee narrated the facts and pointed out that in this case the Assessing Officer had sent a proposal for passing of Revisionary Order u/s 263 to the Commissioner through Addl. CIT. The careful reading of the proposal would show that Assessing Officer wants to review his own order which is not possible. In this regard he referred to page 4 of the proposal and pointed out that Assessing Officer has noted the facts and in case Assessing Officer has committed a mistake he has no authorit y to review his own order. He also pointed out that assessee has filed an appeal against the assessment before the C IT(A) who asked for a remand report and Assessing Officer has sent his report vide letter dated 25.8.2011, copy of which is available at pages 168 to 171 of the paper book. Reading of this letter would clearl y show that whatever stand the Assessing Officer has taken before the CIT(A), he has taken a contrary stand before the Commissioner, in the proposal which further fortifies the argument that the Assessing Officer wants to review his order which is not permissible under the law He particularl y referred to various comments at page 171 wherein Assessing Officer has stated that matter 7 was still under investigation which clearl y shows that all the papers were available before the Assessing Officer at the time of assessment. In any case, once the similar issue is pending before the Appellate Authorit y then the Commissioner would not have any jurisdiction to pass a Revisionary Order on the similar issue u/s 263 of the Act. In this regard he relied on the decision of Hon'ble Delhi High Court in the case of Aerens Infrastructure and Technology Ltd v C IT 271 ITR 15(Delhi)
11. The Ld. Counsel pointed out that in this case the Commissioner has not examined the full records before issuing the show cause notice. In fact, in this case assessment records and seized material record consisted of six volumes whereas in the letter dated 11.1.2012 written by the Addl. Commissioner, reference is made onl y to four volumes, which were forwarded to the Commissioner, which means some of the material has not been examined by the Commissioner. In fact Commissioner has been dictated by the Assessing Officer to initiate a proposal for Revision of the order which is not possible. He admitted that though it was possible for Assessing Officer to send a proposal for revision but submitted that Commissioner cannot be dictated by the Assessing Officer to revise the order on particular lines. He contended that reading of the show cause notice would show that it is a verbatim copy of the proposal which was sent by Assessing Officer which clearly shows that the Commissioner had not called for / examined the record and thus had not applied his mind before issuing the notice, therefore, order passed by him is not sustainable under the law. He referred to the decision of Koltaka Bench of ITAT in the case of J. Thomas & Co Pvt. Ltd in ITA No. 570/Kol./2012 for assessment year 2007-08, copy of which is filed at pages 1 to 7 of the paper book dealing with the case laws. In this case it is clearl y observed that if Commissioner has borrowed onl y form Revenue Audit objection on the basis of which Revisionary proceedings were initiated and, therefore, Commissioner did 8 not formed his own opinion and such Revisionary Order was not sustainable. In this regard he also referred to the decision of ITAT Jaipur Bench in the case of Shri Rajiv Arora Vs CIT-III, 131 ITD 58 (JP) wherein similar observation was made. He also referred to the decision of Hon'ble Punjab & Haryana High Court in the case of Hari Iron Trading Company v CIT, 263 ITR 437 (P&H) wherein it was clearl y held that before initiating the proceedings u/s 263, Commissioner must call for records and after examination and obtaining satisfaction, issue show cause notice. In the case before us, no satisfaction has been recorded and in this regard he relied on the decision of Hon'ble Supreme Court in the case of PVS Beedis (P) Ltd 237 ITR 13. He also referred to another decision of Chandigarh Bench of the Tribunal in the case of Jaswinder Singh Vs C IT ITA No. 690/Chd/2010 (2012) / 150 TTJ (Chd)(UO)33 wherein it was observed that before issuing notice, the Commissioner should call for the records and examine the same and record the satisfaction and then issue the show cause notice. He also referred to the decision of Hon'ble Madras High Court in the case of Madura Coats Ltd, Madurai v Collector of Central Excise, Madurai & Others 1979 (4) E.L.T. (J16)(Mad.) wherein it was observed that Department while issuing show cause notice should examine the facts properly and should not behave in a parrot like fashion. He also referred to the decision of Hon'ble Supreme Court in the case C IT Vs Shri Manjunath Eeshware Packing Products and Camphor Works 231 ITR 53 (SC) wherein the meaning of word 'record' was explained and it was held that if the Assessing Officer sends a proposal to Commissioner against his own order which is in the nature of dictation to Commissioner then the revision is not possible and if order is based on such lines the same is not maintainable. He also relied on the following decisions:-
i. Apollo Tyres Ltd v ACIT ITAT Cochin Bench in ITA No. 774 (Coch) of 1995 ii. Empee Breweries Lt d v DCIT, ITAT Chennai Bench [2011] 48 SOT 104 (Chennai) iii. Hindustan Lever Ltd v C IT {2011] 335 ITR 108 (Cal.) 9 iv. Mrs Khatiza S. Oomerbhoy v ITO 100 ITD 173 (Mum)
12. He again referred to the proposal and pointed out that Addl. Commissioner of I. Tax has written a letter dated 11.1.2012 on the basis of which the Commissioner has given directions to issue notice which becomes clear from his noting on this letter itself on 12.1.2012. This itself shows that Commissioner has not applied his mind because it is not possible to examine the assessment records and voluminous seized material in one day. In this regard he relied on the decision of Hon'ble Delhi High Court in the case of DLF Commercial Projects Corporation Vs AC IT , 212 Taxman 43 (Del.) The Ld. counsel submitted that once assessment was completed on the basis of seized material and under control of CIT, then no revision of the same was possible. Reliance was placed on 196 ITR 188 (SC). He also referred to the para 16 of the assessment order and submitted that in this case during the search assessee has surrendered a sum of Rs. 8.5 crores but the return was filed for Rs. 3,37,85,728/-. The Assessing Officer has ultimately assessed the income at Rs. 8.5 crores which means that Assessing Officer has taken one of the possible view and, therefore, the assessment order cannot be called erroneous and prejudicial to the interest of Revenue. In this regard he relied on the decision of Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd v CIT 243 ITR 83 (SC) and CIT Vs Max India Ltd. 295 ITR 282 (SC).
13. The Ld. Counsel also submitted that Commissioner has not recorded any satisfaction in the show cause notice that the order is erroneous and prejudicial to the interest of Revenue. The order onl y talks of the under assessment of income. In any case, in the order passed by the Commissioner, no specific finding has been given to show that assessment order is erroneous and prejudicial to the Revenue.
10
14. He also referred to letter dated 23.3.2009, copy of which is available from pages 80 to 84 of the paper book. He particularl y invited our attention to page 83 in which explanation was given how practicall y the surrendered income of Rs. 8.5 crores was offered in various hands. He also referred to the letter addressed by the Assessing Officer to Addl. Commissioner of I.Tax, Range-3 (at page 131), which shows that papers were filed in case of Rupinder Singh also and that is why the Assessing Officer has taken the pain to give information to the Addl. Commissioner for taking further action which clearl y shows that various replies were filed by the assessee. He also referred to pages 86 to 88 of the paper book which is copy of the letter dated 22.12.2009 in which it was clarified how some shares of propert y in the concerned papers found during the search did not belong to the assessee.
15. The Ld. counsel had relied on letter dated 3.12.2013 which contained modified anal ysis of various documents filed by him through which according to him the assessee has explained to the Assessing Officer the nature of transactions contained in these documents and how some of them did not belong to assessee. We have considered this letter also. He also relied on letter dated 6.11.2013 through which copy of the assessment order has been filed in the case of Shri Harinder Singh. He pointed out that during assessment proceedings, the Assessing Officer was clearl y informed that in many properties, Shri Harinder Singh was holding 50% share and that is why a sum of Rs. 2,98,39,000/- was offered in his hands on account of documents found during search. We have considered these papers also. Through letter dated 19.2.2013, the Ld. Counsel of the assessee has sought to distinguish decisions relied on by the Commissioner in his order. We have considered these observations also.
16. The Ld. Counsel while concluding the arguments submitted that documents have been filed and explained during the assessment proceedings in 11 the case of assessee company and other directors. It was further pointed out that no reasons have been recorded by the Commissioner hence no proceedings u/s 263 of the Act were possible. In this regard, he relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs New Delhi Television Ltd 360 ITR 44 (Delhi) and particularl y referred to the observations at page 59 of this order
17. On the other hand, Ld. DR submitted that perusal of the assessment order would clearl y show that assessee was not cooperating in the assessment proceedings. In this regard he referred to copies of noting sheets filed at pages 5 to 9 of the departmental paper book. The assessee was filing some informations up to March, 2009 but when the incumbent Assessing Officer got transferred and new Assessing Officer came then assessee hardl y made any appearance and no proper information was filed. In this regard he carried us through various parts of the assessment order. He pointed out that in this case a search was conducted in the premises of Shri Suresh Kumar Khanna who is director of the assessee company. Various documents showing purchase of various properties were found. Simultaneousl y, a search was conducted in the premises of one Shri Deepak Chauhan, who is brother-in-law of Shri Suresh Kumar Khanna amd various documents were found at his residence also and he clearl y stated that these documents belongs to Basera Realtors Pvt Ltd. This fact was admitted b y Shri Suresh Kumar Khanna. Ultimately on 21.2.2008, Shri Suresh Kumar Khanna admitted the fact of the incriminating documents and offered to declare a sum of Rs. 8.5 crores in financial year 2007-08. This was further confirmed by a letter dated 21.2.2008 in which all the directors have signed and offer of surrender of Rs. 8.5 crores was reiterated. Again, the statement of Shri Suresh Kumar Khanna was recorded on 24.3.2008 in which he again confirmed the fact of surrender of Rs. 8.5 crores. Despite this surrender, the return was filed onl y for Rs. 3,37,85,728/-. This shows that assessee was not cooperating with the 12 Department. When the return was filed onl y for Rs. 3.37 cores, the Assessing Officer should have been more vigilant to verify various documents and completed the assessment accordingl y which has not been done perhaps the Assessing Officer was conscious of this fact and may be this was because of non appearance of the assessee and that is why he sent a proposal for revision of the order to the concerned Commissioner through Addl. Commissioner. In this background, it was submitted that first of all there is no bar on sending of the proposal by the Assessing Officer for revision of the order and in this regard, he relied on the decision of Hon'ble Allahabad High Court in the case of CIT Vs Bhagat Shyam & Co. 188 ITR 608 (All.) in the case of Jagdish Kumar Gulati v CIT (269 ITR 71) therefore, the Assessing Officer has full power to send a proposal to the Commissioner for revision of the order.
18. He further submitted that it is not correct that show cause notice is verbatim copy of the proposal sent by the Assessing Officer. No doubt, the reference to the notice and non-appearance by the assessee has been copied from the proposal. Similarl y, the relevant portion of the statement of Shri Suresh Kumar Khanna regarding disclosure and the letter written by all four directors is also a copy. Similarly, documents found during the search as well as details of payments made in cash have also been copied but the Commissioner could not deviate from the factual matrix. The Ld. Commissioner has very clearl y in para 6, 7 & 8 of the show cause notice given the reasons why the order is erroneous and prejudicial to the interest of Revenue. Further, this has to be examined in the light of the conduct of the assessee by not appearing before the Assessing Officer particularl y after change of incumbent officer in March 2009. In this regard he referred to the decision of Hon'ble Patna High Court in the case of CIT v Smt. Rita Keshri 242 CTR 318 (Patna) wherein the Hon'ble High Court passed strictures against the assessee while upholding the revisionary order u/s 263 of the Act and in this regard he particularl y referred to para 11 of the 13 judgment. He referred to the assessment order passed by Assessing Officer and pointed out that assessee has not appeared on various dates and did not file relevant information. At the same time, whatever information was filed has not been examined by the Assessing Officer and it is a simple case of no enquir y which itself would make the assessment order erroneous and prejudicial to the interest of Revenue and in this regard he relied on the decisions cited by Ld. Commissioner. He also strongl y relied on the decision of Hon'ble Delhi High Court in the case of Gee Vee Enterprises v Addl. Commissioner of Income Tax 99 ITR 375 (Delhi). There is no force in the submissions that Assessing Officer has taken one of the possible view merely because Assessing Officer has made assessment at the surrendered amount. When assessee has not honoured the surrender, then the Assessing Officer was dut y bound to examine all the documents and then reach to proper assessable income. He submitted that if income is assessed at surrendered amount without inquiry such order would be treated as erroneous and prejudicial to the interest of Revenue and in this regard he relied on the decision of Hon'ble Allahabad High Court in the case of Smt. Lajja Wati Singhal v CIT 226 ITR 527 (All.).
19. The Ld. DR pointed out that there is no force in the submissions that assessee company alongwith others has already surrendered more or less the same amount which was declared during the search. This fact was stated before the Commissioner vide letter dated 5.7.2011 which is available in assessee's paper book at pages 164 to 167, wherein the details of income declared / surrendered has been given. In this regard, he referred to the details given in the Revenue's paper book at pages 2 & 3 which is details of returned income and assessed income of assessee company and its directors. This clearl y shows that assessee has never offered for taxation the amount surrendered. In fact, assessee has filed onl y return for Rs. 3.37 crores in assessment year 2007-08. In case of Shri Dinesh Chauhan, Shri Upidner Singh and Shri Suresh Kumar 14 Khanna, returns were field for normal income and as far as return of Shri Harinder Singh is concerned, the amount of Rs. 298.39 lakhs is the income assessed by Assessing Officer on account of suppressed documents and the return of income was onl y Rs. 1,50,0000/-. When this difference was noticed b y the Bench, the same was put to the Ld. Counsel of the assessee who tried to explain it but the reply was evasive. He simpl y submitted that returns have been filed for six years and if income for six years was counted then the same would reach this figures. We shall deal with the same while giving our findings. Similarl y, Ld. DR referred to some other documents referred to by the Ld. Counsel and submitted that these documents do not explain how they do not belong to the company or belong to somebody else.
20. He further submitted that the Ld. Counsel had submitted that he has already explained that how notice was complete verbatim copy of the proposal. Even if it is presumed that the notice was copy of the proposal, the Ld. Commissioner has given detailed findings and therefore, it cannot be said that Commissioner had not applied his mind. In this regard, he referred to page 14 of the order passed u/s 263 whereby Ld. Commissioner has given the detailed findings from pages 14 to 34 and has relied on various decisions at pages 31 to
34. The reading of the pages clearl y shows that Commissioner has after detailed examination of the records reached the conclusion that assessment order was erroneous and prejudicial to the interest of Revenue.
21. We have considered the rival submissions carefull y in the light of material on record as well as the paper book filed by both the parties and also the judgments relied upon by both the parties. Before we proceed further it is pertinent to note that this case was heard on various dates and the Ld. Counsel had made repetitive arguments on various dates. He had also relied on certain judgments under Sales Tax laws or other laws (not reported in ITRs) for which 15 copies were not available with him, therefore, we had clearl y told the Ld. Counsel that in the absence of copies of the judgments, such judgments could not be considered because Tribunal library does not have those books. Even in the paper book dealing with the citations, voluminous judgments were relied upon and therefore, we asked him to point out the judgments which are relevant to the case and whatever judgments were pointed out have been considered above while recording his submissions. Further, during the course of hearing it was noticed that paper book No.1 contained many documents which were not available in the records of the Revenue. Ld. counsel had sought sometime to verify this and later on vide letter dated 15.1.2014 he has sought to withdraw the paper book and replaced the same with modified paper book which was filed on 11.10.2013 and, therefore, this paper book has been considered by us.
22. M/s Basera Realtors (P) Ltd is a Company incorporated on 15.9.2005 and is engaged in the business of real estate. The company had following directors.
1. Shri Suresh Khanna
2. Shri Rupinderdeep Singh
3. Shri Sahibit Singh
4. Shri Jai Inder Singh
23. A search was conducted at the residential premises of Shri Suresh Kumar and Shri Rupinderdeep Singh, directors of the company on 21.2.2008. A search was also conducted in the residential premises of one Shri Deepak Chauhan who is brother-in-law of Shri Suresh Khanna, Director and was also an employee of the company. A survey was also conducted in the premises of the assessee company. During the search / suravey, various incriminating documents were found with those persons. In the statement recorded Shri Suresh Khanna clearl y stated that all the documents belong to the company and he offered to surrender 16 a sum of Rs. 8.5 crores in the hands of the assessee company for financial year 2007-08. The relevant answers to the questions in this respect are as under:-
"Q. 16. Your Passport and some documents in a bag are found by another search party from the residence of Sh. Deepak Chauhan, # K-6 South City Ludhiana. You are requested to explain the reason of these documents being there ?
Ans. I can explain this only after going through the documents in that bag.
Q. During the course of search and seizure operation at the residence of Sh. Deepak Chauhan K-6, South City, certain documents in you name have been found and seized. The documents in the form of diaries and registers, agreements have been found which contains a details of cash payments made by you or other directors of M/s Basera Group and payment received by you in cash from different parties. I am showing you that annexure and panchnama A-1 to A-35 found and seized fro the residence of Sh. Deepak Chauhan.
Ans: I have gone through the above Annexure A-1 to A-35 and state that these annexures contains that the details of both accounted as well as uncounted transactions made by me or other Group Members of Basera Group. At the time it is difficult to reconcile all the papers. However, I have consulted my counsel Sh. Anil Khanna CA and other Directors and to avail the opportunity u/s 132 (4) of the I.T. Act, 1961 voluntarily disclosed an additional income of Rs. 850 lakhs for the financial year 2007-08. This disclosure is over and above our normal income and is in the hands of our company M/s Basera Realtors Pvt. Ltd. Ludhiana, 10 Canal View, South City, Ludhiana. This disclosure is being made on behalf of my company and is subject to no penal action."17
Further, a letter dated 21.2.2008 was also given by the company which was signed by all the directors of the company confirming the amount of surrender. The letter reads as under:-
"(ii) Letter dated 21.02.2008 signed by S/Sh. Suresh Kumar Khanna, Sh. Rupinderdeep Singh, Sahibjit Singh & Jai Inder Singh Application for Disclosure of additional income for F.Y. 2006-07, 2007-08 under Sec 132(4) of Income Tax Act, 1961 (2006-07 and 2007-08):
Today a search under Sec 132 of Income Tax Act, 1961 is conducted at our various premises (offices & residences ) which is still going on during course of search & survey at our various offices, residences, certain loose papers have been found. To Purchase peace of mind and to avoid litigation we hereby offer to disclose an additional income of Rs. 850 lacs (Rs. Eight Crore & Fifty Lac) only for the financial year 2006-07 & 2007-08 in addition to our normal income in the hands of our co. M/s Basera Realtors Pvt. Ltd. 10 Canal View South City Ludhiana. This offer of disclosure has been made subject to no penalty. This disclosure has been made without pressure and is voluntarily.
Thanking You Yours faithfully For Basera Realtors (P) Ltd.
Sd/- Sd/- Sd/- Sd/-
Suresh Kumar Jai Inder Singh Rupinderdeep Singh Sahibjit Singh
(iii) Statement dated 24.03.2008
Q. I am conducting the operation of sealed premises u/s
132(3) today at your house premises, have you say anything more ?
18Ans. No I have already given a surrender letter of Rs. 8.5 Crore, wherein I had disclosed additional income for F/Y 2006-07 & 2007-08 in the hands of M/s Basera Realtors Pvt. Ltd. Ludhiana, which I again confirm to a correct & without any pressure I will deposit the due taxes within the prescribed time."
This was confirmed in the statement recorded on 24.3.3008. Thereafter, a notice u/s 143(2) was issued and assessee company filed a return declaring income of Rs. 3,37,85,728/-. The assessee company attended some of the assessment proceedings and filed certain papers before 25.3.2009. The case was discussed by the then Assessing Officer with the assessee but order was not finalized. On that date, the incumbent Assessing Officer was transferred and new officer took the charge. On perusal of the records, he noticed that complete information and details were not available, therefore, fresh notice was issued u/s 143(2) on 16.6.2009, 18.9.2009 and 26.10.2009. It has been observed by the Assessing Officer in para 2 of the assessment order that assessee is not cooperating and has not filed complete information; therefore, he has proceed to finalize the assessment u/s 144. The Revenue has filed before us copies of various noting sheets during the assessment proceedings and noting sheets starting from 16.6.2009 till 30.12.2009 reads as under:-
"16.06.2009 Notice u/s 143(2) and 142(1) alongwith questionnaire for 25.06.2009 issued.
25.06.2009 None attended. Issue fresh notice 18.06.2009 Notice u/s 143(2) and 142(1) alongwith questionnaire for 29.09.2009 issued.
29.09.2009 Letter for adjournment. The period for compliance of Notice u/s 142(1) is extended to 09.10.2009 09.10.2009 Letter for adjournment. The period for compliance of Notice u/s 142(1) is extended to 21.10.2009.
26.10.2009 None attended. Notice u/s 143(2) and 142(1) alongwith show case notice and detailed examination note as per seized documents as per Annexure-C issued for 03.11.2009 19 01.11.2009 Due to training at Shimla on 03.11.2009, the case can't be taken up. The case is accordingl y adjourned to 06.11.2009 and informed Sh. Asim Atrey, CA on his mobile phone No. 98723-44556 at 10.07 AM.
09.11.2009 Present Sh. Asim Atrey, CA and sought extension of time for compliance of notices. The period for compliance of notice is extended to 13.11.09.
13.11.2009 Present Sh. Asim Atrey, CA and sought extension of time for compliance of notices. The period for compliance of notices is extended to 19.11.2009.
19.11.2009 Notice u/s 142(1) alongwith penalt y notice u/s 271(1)(b) for 24.11.2009 issued.
24.11.2009 Assessee's request for inspection of files received. Asked to have inspection.
03.12.2009 Repl y to the notices not received though the inspection of files already completed on 27.11.2009. Shown cause notice for 04.12.2009 issued.
08.12.2009 Notice u/s 143(2)/142(1) alongwith show cause notice for 11.12.2009 issued as no compliance to earlier notices received.
11.12.2009 Present Sh. Hari Om Arora, Advocate alongwith Sh. Gurpreet Singh, Advocate and Sh. Asim Attrey, CA on behalf of assessee. Repl y dated 04.12.2009/11.12.2009 filed. Case discussed.
During assessment proceedings, it is stated that the letters and the discussion referred to in the letter dated 11.12.2009 pertains to those letter and discussion held with m y predecessor. List of stock inventory also supplied for comments and reconciliation, if any. Asked to furnish following details/documents, if deem fit on the following points/issue:
i) Comments on stock inventory, a copy of which supplied.
ii) Comments w.r.t. the statement of Sh. Jai Inder Singh.
iii). To furnish a copy each for the A.Y. 2006-07, 2007-08 and 2008-09 of cash book/ledger/journal etc. for reconciliation of documents on reportedl y recorded in the books of a/cs.
iv) Any other supporting document/classification w.r.t seized material which the assessee intended to file in support of seized material.
v) Pen drive was seized which was operated upon in March 2009 a copy of which were also supplied to the assessee and retained by this office. In case the assessee intend to operate the pen drive again, his consent and produce the two witnesses for operation with prior intimation so that it is operated before the next date of hearing.20
The case is finall y adjourned to 15.12.2009 as desired when the proceedings will be closed be being a limitation matter. 15.12.2009 Present Sh. Asim Attrey, CA. Part repl y filed. Books of a/c not produced. Asked to file remaining information supported with documentary evidence so that the submissions made could be verified. Adjourned to 17.12.2009.
This is consolidated repl y in respect of all the three years of assessment pending. The assessee also submitted a consolidated assets and liabilities statement for these years of the coy but it is accompanied with supporting documents. Asked to furnish documentary evidence in support of accretion to assets and liabilities. Also asked to furnish supportive evidence of earlier repl y dated 11.12.2009 running into 32 pages filed. Adjourned to 17.12.2009.
18.12.2009 None attended. Notice u/s 142(1) alongwith show cause notice for 22.12.2009 issued.
22.12.2009 Repl y to the show cause notice dated 18.12.2009 received and placed on record.
30.12.2009 Order u/s 153C/143(3)/Penalt y notice u/s 271(1)(c) issued. FBT order also issued."
24. The above clearl y shows that on most of the dates the assessee applied for adjournments and very little information was submitted that is why the Assessing Officer was forced to frame the assessment u/s 144. After narrating the sequence of events how information was not filed and whatever was filed was not complete, the Assessing Officer made following observation in para 16 of his order.
"16. From the facts adduced above, it is evident that the document seized / impounded remained unexplained and unverifiable and as such the transactions recorded in these documents are required to be added to the income returned. However, to be fair and reasonable, the undersigned is of the view that the assessment at the surrendered amount of Rs. 8,50,00,000/- will meet the end of justice. Therefore the income of the assessee, for the A.Y. 2008-09 under consideration, is assessed at Rs. 8,50,00,000/- as surrendered by the assessee company u/s u/s 132(4) of the I.T. Act during search operation on 21.02.2008 and subsequently, reaffirmed after a period of more than one 21 month on 24.03.2008 as against the returned income of Rs. 3,37,85,728/-. Therefore, the balance amount of Rs. 5,12,14,272/- (8,50,00,000-3,37,85,728) is added to the income returned. Accordingly, an addition of Rs. 5,12,14,272/- is made to the income returned. Penalty proceedings u/s 271(1)(C) for furnishing inaccurate particulars of income thereby resulting in concealment of income are initiated."
Later on, Assessing Officer sent a proposal to the Commissioner vide his letter dated DC IT CC-1/ Ldh/263/11-12 dated 10.1.2012 for initiating action u/s 263 through the Addl. Commissioner. The Addl. Commissioner put up this proposal before the Commissioner vide his letter No. Addl.CIT(C) Ldh/11-12/703 dated 11.1.2012. The Ld. Commissioner has made the following remarks on this letter itself.
"DCIT HQ proposal with assessment records examined - put up show cause notice as directed"
Sd/-
Dated 12.01.2012 In respect of these issues, the main contention of the assessee is that Commissioner has not examined the records. He has not applied his mind before issuance of notice and has not recorded any satisfaction. It was not possible to examine voluminous records in such short time because proposal was put up on 11.1.2012 and notice was directed to be issued on 12.1.2012. First of all, we would like to point out that there is no bar in section 263 to show that proposal cannot be put for revision by Assessing Officer himself. The Revenue in this respect relied on the decision of Hon'ble Allahabad High Court in the case of C IT v Bhagat Shayam & Company (supra). In this case, the Head Note reads as under:-
"There is no bar to the Income-tax Officer bringing materials to the notice of the Commissioner of Income-tax for initiation 22 of revision proceedings. But the Commissioner must apply his mind to the material placed before him and satisfy himself that it is a case where he ought to exercise his revisional power:
25. Similarl y, in the case of Jagdish Kumar Gulati v C IT (supra), which was also relied on by the Revenue the Head Note reads as under:-
"The revisional power of the Commissioner under section 263 of the Income-tax Act, 1961, is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceedings under the Act. It empowers the Commissioner to make or cause to be made such inquiry as he deems necessary in order to find out if any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. After examining he records and after making or causing to be made an inquiry if he considers the order to be erroneous he can pass the order thereon as the circumstances of the case justify, i.e., enhance the assessment or modify the assessment, cancel the assessment and direct a fresh assessment. There is no statutory bar in making an office note. There is also no statutory bar on the Commissioner relying on the office note under section 263"
Reading of these decisions clearl y shows that there is no bar on the proposal sent by the Assessing Officer for revision of the order. This has to be particularl y seen in the context of the conduct of the assessee which clearl y shows that assessee did not full y cooperated in the assessment proceedings as observed earlier. Further, the Hon'ble Patna High Court in the case of CIT v Rita Keshri (supra) where search was conducted in the premises of the assessee but assessee did not cooperated in the assessment proceedings and ultimatel y assessment was completed on whatever information was available and these orders were ultimatel y held to be erroneous and prejudicial to the interest of Revenue. The Tribunal quashed these revisionary orders. The following observations were made from para 7 to 11, which are as under:- 23
"7. We have perused the materials on record and considered the submissions of the learned counsel for the parties. The three items in the returns of the two assesses are in question, and have been discussed in detail in the orders of the authorities under the Act. Those are with respect to different bank accounts, their investment in shop nos. 203 and 204, and their investment in the A.C. market. It appears that thee was a search and seizure in the business premises of the assesses on 15 t h Dec., 2004, and in January 2005. Large mass of incriminating materials was seized and was taken into account by the learned AO. It is manifest from a perusal of the assessment orders that the two assesses assumed an abnormally defiant approach, and refused to disclose information called for by the learned AO in spite of repeated notices and calls. It is evident on a perusal of the four assessment orders that the learned AO felt exasperated and helpless in the matter and passed orders of assessment under severe constraints. The orders of assessment create a clear impression in our minds that the assesses are extremely dishonest persons who have no respect for the laws of the land, the established procedure, and the authorities charged with the duties under the Act.
8. Sec. 263 of the Act is headed "Revision of orders prejudicial to Revenu", and confers suo motu powers of revision on the learned CIT to take steps for annulment, modification, cancellation etc. of an order of assessment under the circumstances indicated therein. The four orders of assessment in question attracted the attention of the learned CIT who rightly invoked the power under s.263 of the Act and, in his elaborate discussion n his two revisional orders dealing with the two assesses for the four periods in question, noticed vital flaws in the orders of assessment entirely attributable to the extremely dishonest and defiant approach of the assesses. The learned CIT in his elaborate, lucid, and eloquent order has pointed out vital flaws in the orders of assessment, and has observed that the vital materials could not be taken into account because of the assesses refusal to 24 cooperate. We entirely agree with the discussion in the order of the learned CIT.
9. We feel extremely unhappy with the mode and manner in which the learned Tribunal has dealt with the order and has, by a very perfunctory approach, set aside the orders of the learned CIT. It has taken into account the materials which were noticed by the learned AO, but has refused to take into account the vital materials or aspects of the matter pointed out by the learned CIT which were not considered by the learned AO. In other words, the learned Tribunal has failed to attach due importance to the vital omissions indicated by the learned CIT. In such a situation, the two judgments relied on by the learned counsel for the assesses are inapplicable to the facts and circumstances of the present case. The issues are indeed not concluded by findings of facts.
10. There is yet another aspect of the matter. The superior Court of quasi-judicial authority should normally act with restraint while setting aside the impugned order with a view to remit the matter to the same authority or the Court, because such an order or remand sets at naught the entire effort made till then to resolve the dispute. The function of the appellate Court is to rectify the errors and the mistakes committed in the impugned order. An order of remand can be passed under limited circumstances so that no injustice is done to any side. It is equally well-settled that the superior Court or quasi-judicial authority does not normally interfere with an order of remand where the parties will have adequate and reasonable opportunity to present their cases. In the present case, the learned CIT remitted the matter for valid reasons discussed in detail in his orders, and the learned Tribunal erred in interfering with the same for unconvincing reasons and perfunctory approach. In the present situation, the learned CIT could not have rectified the errors in the orders of the learned AO because entire materials were not on record due to the uncooperative approach of the assesses.25
As indicated above, the learned CIT had pointed out vital omissions in the assessment orders which could be taken care of only after receiving full factual material on record, and has rightly set aside the orders of assessment which are to the prejudice of the Revenue, and with which we entirely agree.
11. As indicated hereinabove, the learned AO has made detailed reference to the defiant and extremely uncooperative attitude adopted by he assesses, which speaks of a very dishonest approach. It is impossible for this Court to countenance such an approach which is inspired by complete lack of respect for the established laws of the land, and the prescribed procedure. In that view of the matter, the Director General of Investigation, Bihar, and / or the Chief CIT, Bihar, Patna, would be well advised to keep the entire group under constant surveillance so that the Revenue does not suffer, and the Courts are not burdened with unwanted matters."
26. As observed by Hon'ble Allahabad High Court in the case of Bhagat Shyam & Company (supra), there is no bar if the proposal is sent by Assessing Officer but the Commissioner is dut y bound to examine the records before issuing of show cause notice. Admittedl y in the case before us, the assessment records along with some seized material were brought to the notice of the Ld. Commissioner on 11.1.2012 and he examined the same and directed to put up a show cause notice which we have already reproduced above. The objection of the Ld. counsel was that in short span of 24 hours the parts of records are not examined and even total record which consisted of six volumes whereas reference has been made to four volumes, we may note that in our opinion at the stage of issuing of show cause notice, what is required is preliminary satisfaction of the Commissioner that the relevant assessment order is erroneous. A details investigation has to be made when the order is passed. Section 263 of the Act reads as under;-
26
"Section 263 (1) The Commissioner may 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 erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment."
27. The provision clearly shows that there is no mandate for recording of satisfaction but what is required is that if the Commissioner considers that order is erroneous in so far as the same is prejudicial to the interest of Revenue, then a show cause notice can be issued. The bare perusal of the assessment order shows that it is a case of no enquiry which itself would make the assessment order erroneous and prejudicial to the interest of Revenue and perhaps nothing else was required to be examined at this stage. However, since the Commissioner has clearl y appended a note that proposal with the assessment records was examined, we have to presume that the Ld. Commissioner was after going through the assessment records and whatever material was made available before him, he was satisfied that the order was erroneous and prejudicial to the interest of Revenue. The Ld. Counsel for the assessee had in this regard relied on the decision of Hon'ble Delhi High Court in the case of DLF Commercial Projects Corporation v AC IT (supra). We have perused that decision carefull y. In that case, the question was whether the Special Audit was rightl y ordered to be conducted. In that case the Assessing Officer issued a notice on 21.11.2011 that why a Special Audit u/s 144 (2A) of the Income Tax Act should not be ordered in response to which on 24.11.2011, the assessee filed a repl y containing 21 pages (excluding annexures) contending that assessee has also replied to the queries regarding complexit y of the accounts. Next day, the 27 Assessing Officer changed his mind and wrote a letter to Commissioner seeking approval for grant of Special Audit who in turn granted the approval on the same day. This order regarding conduct of the Special Audit was quashed by the Hon'ble Delhi High Court in a writ petition by observing that in 24 hours possibl y the Chief Commissioner could not have gone through the complexit y of the accounts, therefore, clearl y in that case the Chief Commissioner was required to go through the accounts and reach a conclusion whether such accounts were reall y complex calling for a special Audit which cannot be done in 24 hours. In the case before us, the Ld. Commissioner was required to examine the assessment order and assessment records which he has already examined and as observed earlier it is a case of no enquiry, it was eas y to reach a conclusion at least at the stage of issue of show cause notice that assessment order was erroneous and prejudicial to the interest of Revenue. Therefore, in our opinion, the decision in the case of DLF Commercial Projects Corporation vs ACIT (supra) cannot be of any help of the case of the assessee.
28. The next thrust of the contention is that Ld. Commissioner has issued a show cause notice which is a verbatim copy of the proposal given by the Assessing Officer which has been done without examination and any application of his mind. As observed earlier at the stage of issuance of notice, detailed examination is not required. What is required is prima facie satisfaction on the part of the Commissioner that a particular assessment order is erroneous and prejudicial to the interest of Revenue. We find that it is not totall y correct that show cause notice is totall y verbatim copy of the proposal. The first two paras of the show cause notice are not there in the proposal. Similarl y paras 6, 7 & 8 of the notice are also not there in the proposal. Rest of the parts seems to be verbatim copy of the proposal but here again it has to be seen that these parts basicall y contain all the contents of the statements recorded during the search, copy of the letter of surrender by the company, details of various documents 28 found during the search. Now these facts have been brought to the notice of the Assessing Officer by way of proposal but even they were examined otherwise the Ld. Commissioner has to quote these documents in the same language in which they are prepared. As far as the Commissioner is concerned, before giving the direction of putting up a notice, he had recorded his satisfaction on the letter given by Addl. Commissioner itself which we have already reproduced above. Paras 6, 7 and 8 of the show cause notice reads as under:-
"6. From the discussion made above, it is seen that while making assessment in your case for A.Y. 2008-09, entire seized material and various other issues have not been properly examined and appreciated and no proper inquiries have been conducted leading to under assessment.
7. From the facts discussed above, it is also noticed that in many cases, date/period on which the properties mentioned in the above agreements were required to be registered had already expired even before the date of search consequent to which final payments as were agreed upon in the aforesaid agreements have been made by you source of which should have also been examined at the time of assessment, which has not been done.
8. In view of the above, I propose to revise the above assessment order u/s 263 of the Act and you are hereby given an opportunity to explain as to why your income should not be enhanced and / or the above assessment order should not be modified / set aside with the directions to the A.O. to make the fresh assessment de-novo after conducting proper inquiries and considering the entire seized material and other relevant issues arising in this case. Your case has been fixed for hearing before the undersigned on 20.01.2012 at 11.30 29 A.M. in my chamber situated at C.R. Building, Dandi Swami Chowk, Civil Lines, Ludhiana."
29. Reading of the above paras clearl y shows that all the documents which were found during the search were not examined by Assessing Officer during assessment proceedings. This clearl y shows that Ld. Commissioner came to the conclusion that assessment order was erroneous and prejudicial to the interest of Revenue. In this regard, the Ld. Counsel has relied on various decisions and we shall now examine the same.
30. First case relied is in case decided by Calcutta Bench of the Tribunal in case of J. Thomas Pvt Ltd (Supra). In this case it was noted by the Tribunal that following notice was sent by concerned Ld. Commissioner "O F F I C E O F TH E CO MM IS S IO N E R O F IN C OM E TA X , KO LK AT A- I I, K OL K AT A AAYA K AR B HA WA N, 3 R D F LO OR, P - 7 , CH O WRI NG HEE S QA RE , K OL K AT A - 7 0 0 0 6 9 No . CI T- I I / Ko l /U /S .2 6 3 / C- 1 2 /2 0 1 1 - 1 2 /9 4 2 4 Da rt ed 1 0 .2 .2 0 1 2 To Th e P r in cip a l Of fic e r M/ s J. Th o ma s & C o . Pv t L td Ni lh a t Ho u se 1 1 , R. N. Mu kh e r jee Ro a d Ko l ka ra - 7 0 0 0 0 1 S u b : No t ic ie u / s 2 6 3 o f th e I n co me - ta x Act, 1 9 6 1 in yo u r ca s e fo r A s se ss me n t Yea r 2 0 0 7 - 0 8 fixa tio n o f h ea r in g - ma t te r reg a rd in g I h a ve ca ll ed fo r a n exa min ed th e a s se s sm en t r e co rd in yo u r ca s e fo r As se s smen t Yea r 2 0 0 7 - 0 8 . I t a p p ea r s th a t th e o rd e r p a s sed b y th e A s se s sin g o f fi ce r i s e r ro n eo u s in so fa r a s it is p re ju d ic ia l to th e in t er e st o f R even u e.
Yo u a r e r eq u e st ed t o a p p ea r b e fo r e m e eith er p e r so n a lly or th ro u g h a u th o r iz ed rep re sen ta t ive in th i s re g rd o n 2 1 .2 .2 0 1 2 a t 2 .0 0 p .m.
S d /-
Co mm i ss io n e r o f I n co me Ta x, Ko lka ta - I I , Ko lka k ta "
The assessee filed certain replies before the Ld. Commissioner who did not agree with the same and ultimatel y passed the order u/s 263. On these facts the Tribunal observed that show cause notice shows that there was no reason 30 whatsoever shown in the notice that how the assessment order was erroneous and prejudicial to the interest of the Revenue. It was also observed that though in the impugned order the Ld. Commissioner does mention few points borrowed from the Revenue audit objections on the basis of which revisionary proceedings were initiated but it was a case which shows that the Ld. Commissioner had not formed his own opinion.
31. From the above, it becomes clear that the Ld. Commissioner has not given any reasons in the show cause notice why the order was erroneous and prejudicial to the interest of the Revenue. In the case before us, the Ld. Commissioner has clearl y set out the reasons why the assessment order was erroneous and prejudicial to the interest of the Revenue vide para 6, 7 & 8 which have been already reproduced. We further find that in case before us the issue was discussed in detail by the Ld. Commissioner while recording his finding in para 3 to 19 where he has discussed various documents in detail.
Therefore, in our opinion, the decision of J. Thomas Pvt Ltd (Supra) is of no help.
32. Next decision relied on by the Ld. Counsel for the assessee is that of Jaipur Bench of the Tribunal in case of Rajiv Arora Vs. C IT (supra). In that case also there was a change of incumbent Assessing officer in mid of the assessment proceedings and new Assessing officer has sent the proposal for revisionary assessment order. The Tribunal has recorded a finding that the detailed replies were filed before the Ld. Commissioner but the same has not been considered. At para 11 of the order it is observed as under:
"The provisions of section 263 itself provided that the CIT may examine the record. However, in the present case, the CIT has not applied his mind but the matter was referred by 31 the Assessing officer through Addl Commissioner for initiating proceedings u/s 263."
On the basis of above observations as well as the fact that the Ld. Commissioner has not considered the repl y given by the assessee, revisionary order passed u/s 263 was quashed. We have already shown above that the Ld. Commissioner has dul y examined the record and has applied his mind by recording detailed finding running into 20 pages from page 14 to 34 of his order. Therefore even this case is of no help to the assessee.
33. Next decision relied on is that of Hon'ble Punjab and Haryana High Court in case of Hari Iron Trading Co. (supra) for the proposition that before initiating the proceedings u/s 263 the Ld. Commissioner must call for the record and after examining the same record his satisfaction and then issue the notice. There is no quarrel with the proposition. However, we have already shown in the above noted paras how at the time of issue of notice the Ld. Commissioner has seen the records and then applied his mind to the extent it was required and recorded his satisfaction on the note put up by Addl Commissioner and notice was issued thereafter. Therefore clearl y the facts in case before us are totall y different and ratio of this decision is not applicable.
34. The Ld. Counsel for the assessee had also relied on the decision of Hon'ble Supreme Court in case of C IT Vs. PVS Beedies Pvt Ltd, 237 ITR 13. This case was relied for the proposition that if the Assessing officer is not authorized to act under compulsion then how senior officers of the Department like Ld. Commissioner is expected to act under the compulsion of the Assessing officer. We are afraid this is totall y misplaced. In the case of PVS Beedies Pvt Ltd (supra), the short issue was involved whether reopening is possible on the basis of audit objection and the Hon'ble Supreme Court held that if internal audit part y raises an objection pointing to wrong fact then reopening is possible. 32 The judgment is very short and we are reproducing the whole judgment in this order:
"These cases relate to the assessment years 1974-75 and 1975-76.The relevant accounting year ended on March 31,1974 and March 31,1975, respectively. Originally, the assessment was completed on June 21,1977. There were various other proceedings which ended in the Tribunal. The Tribunal after considering all the aspects of the cases remanded the cases back to the Income-tax Officer for passing a fresh order in accordance with law. One of the points raised before the Income-tax Officer was that of justification for reopening of the assessment. It was pointed out that reopening has been done on the basis of the report made by the audit department. The contention which found favour with the Tribunal was that reopening under section 147(b) is not permissible on the basis of a report given by the audit department. This view was also taken by the High Court.
We have considered the matter. It appears that the reopening was done because in the original assessment donations made to a body known as P.V.S. Memorial Charitable Trust was held by the Income-tax Officer to be eligible for deduction under section 80G. But subsequently it was pointed out by the internal audit party that the recognition which had been granted to the P.V.S Memorial Charitable Trust had expired on September 22,1972. That means it had expired before April 1,1973. Therefore, in the relevant years of account this trust was not a recognized charitable trust. In that view of the matter, the donation to P.V.S. Memorial Charitable Trust did not qualify for deduction under section 80G as a donation made to a recognized charity.
We are of the view that both the Tribunal and the High Court were in error in holding that the information given by the internal audit party could not be treated as information within the meaning of section 147(b) of the Income-tax Act.33
The audit party has merely pointed out a fact which has been overlooked by the Income-tax Officer in the assessment. The fact that the recognition granted to this charitable trust had expired on September 22, 1972, was not noticed by the Income-tax Officer. This is not a case of information on a question of law. The dispute as to whether reopening is permissible after the audit party expresses an opinion on a question of law is now being considered by a larger Bench of this court. There can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law. In view of that we hold that reopening of the case under section 147(b) in the facts of this case was on the basis of factual information given by the internal audit party and was valid in law. The judgment under appeal is set aside to this extent.
The above clearl y show that there are no observation as mentioned by the Ld. Counsel for the assessee and we fail to understand why this case was cited before us.
35. Next case relied on is the decision of this Bench of the Tribunal in case of Jaswinder Singh Vs. CIT (supra). In that case the assessee was having income from own trucks and hired trucks and filed return of income. No books of accounts were produced, therefore assessment was completed u/s 144 and income was estimated. From the perusal of the assessment order the Ld. Commissioner noted that the assessee has not applied the provisions of section 40(a)(ia) for deduction of tax from some parties. The expenditure of loading and unloading was not properl y examined and therefore the order was erroneous. The assessee filed appeal against this revisionary order passed u/s 263 before the Tribunal. The Tribunal quashed the order by observing that in no case revisionary order can be passed on the basis of audit objection. Further merel y 34 an assessment order cannot be called erroneous merel y because in the opinion of the Ld. Commissioner percentage adopted by the Assessing officer was on lower side. The facts of this case are totall y different from the facts in the case before us and we fail to understand what assistance can be derived from this case.
36. Next case relied on is in case of Madura Coats Ltd. Madurai Vs. Collector of Central Excise, Madurai & Others (supra). This case was relied for the proposition that the facts should be properl y examined before issuance of the notice. In fact this case has been relied on for following observation by the Court:
"The Department will issue show cause notice and examine the facts properly and should not behave in a parrot pick fashion"
We have no quarrel with this observation but we have shown in above paras how the Ld. Commissioner has examined the record and after being satisfied had issued the show cause notice.
37. Next case relied is the decision of Hon'ble Supreme Court in case of C IT V. Shree Manjunathesware Packing Products and Camphor Works, 231 ITR 53 S.C). This case was relied on for the proposition that after the Assessing officer's proposal which is a mere direction in this case then such proposal is not tenable because the Assessing officer wants to review his order. However, the facts in that case are totall y different. In that case the assessee had constructed a Cinema Theatre and in the return filed had shown cost of construction at Rs. 20,28,498/- (Rs. 23,78,242 minus Rs. 3,49,644 for electric portion) .The ITO sent the issue of cost of construction to the DVO for determining the correct cost of construction of the Theatre. The VO expressed his inabilit y to give his valuation report by March 31, 1980 by which date the assessment was to be completed The ITO, therefore without waiting for this report passed an the assessment order accepting the value shown by the 35 assessee. The VO later on submitted his report on 16.12.1980 in which the cost of construction was determined at Rs. 34,58,600/-. On these facts the Ld. Commissioner issued a show cause notice u/s 263 that the assessment order is erroneous and prejudicial to the interest of the Revenue. It was mainl y contended that the report was not available to the Assessing officer at the time of completion of assessment and therefore same would not constitute the record which can be examined by the Ld. Commissioner and in this regard reliance was placed on the decision of Hon'ble Calcutta High Court in case of Ganga Properties Vs. ITO, 118 ITR 447. The Hon'ble Supreme Court considered the provisions of the Act and judgment of Hon'ble High Court. Ultimatel y it was observed at page 62-63 of the report as under:
"It, therefore, cannot be said, as contended by learned counsel for the respondent, that the correct and settled legal position, with respect to the meaning of the word "record"
till June 1 ,1988, was that it meant the record which was available to the Income-tax Officer at the time of passing of the assessment order. Further, we do not think that such a narrow interpretation of the word "record" was justified, in view of the object of the provision and the nature and scope of the power conferred upon the Commissioner. The revisional power conferred on the Commissioner under section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the act. It empowers the Commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come into possession of new material and he would be entitled to take that new material into account. If the material, which was not available to the Income-tax Officer 36 when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration by him.
Moreover, in view of the clear words used in clause(b) of the Explanation to section 263(1), it has to be held that while calling for and examining the record of any proceeding under section 263(1) it is and it was open to the Commissioner not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination.
From the above it becomes clear that the issue involved before the Court was totall y different from the issue before us. Rather the Hon'ble Supreme Court has expanded the meaning of the record and has also categoricall y held revisionary powers conferred on the Commissioner are of wide amplitude and enables the Commissioner to examine the record and further empowers the Commissioner to make such enquiries as he deems necessary to find out if any order passed by the Assessing officer is erroneous in so far as it is prejudicial to the interest of the Revenue. In our opinion, this case is rather against the assessee.
38. We have also perused the decision of Hon'ble Cacutta High Court in case of Hindustan Lever Ltd. Vs. C IT (supra). In that case while making assessment u/s 143(3) for Assessment Year 1995-96. the Assessing officer allowed cess paid on Green Tea Leave to the Govt. as business expenditure. Subsequentl y a proposal u/s 263 had been sent by the concerned Assessing officer to the Commissioner of Income-tax Department on the ground that while completing assessment of above mentioned order, the Assessing officer had allowed cess of Green Tea Leave paid to the Govt by the assessee-company as business expenditure by ignoring the fact that Hon'ble Gauhati High Court in case of 37 Jorehaut Group Ltd Vs. Agricultural ITO (Supra) wherein it was held that cess paid to the Govt was not deductible. On the basis of this proposal the Ld. Commissioner issued a show cause notice and later on after considering the submissions of the assessee directed the Assessing officer to add expenditure of cess paid by the assessee to the income of the assessee. On these facts Hon'ble High Court observed cess paid to the Green Tea Leave was already held to be allowable business expenditure by the Division Bench of the same Court in cas e of AFT Industries Ltd. Vs. CIT, and therefore revisionary order passed u/s 263 was quashed. Again we are reall y surprised in what sense this case can help the case of the assessee.
39. We have also considered the decision of :
I Apollo Tyres Ltd Vs. AC IT
II Empee Breweries Ltd
III Mrs. Khatiza S. Oomerbhoy Vs. ITO
40. We have carefull y perused the judgment and find that same are distinguishable on facts and these decisions have nothing common with the case of the assessee and for the sake of brevit y not discussing the facts of these cases. The Ld. counsel of the assessee had also relied on the decision of Hon'ble Supreme Court in the case of Bajaj Tempo Limited Vs CIT 196 ITR 192 (SC). In that case the issue was whether the assessee was entitled to deduction u/s 15C of the Indian Income Tax Act, 1922 despite starting a new business in the building which was previousl y used for the old unit. Ultimatel y, the Hon'ble Supreme Court observed that exemption provisions under the Act should be liberall y construed. We fail to understand what proposition this judgment was cited for and further find that it is of no assistance to the assessee.
38
41. The next major contention was that Assessing Officer has on the one hand justified his order before the C IT(A) through various remand reports particularl y the remand report dated 25.8.2011, copy of which is placed at pages 168 to 171 and on the other hand has taken a contrary view by making a proposal before the Commissioner suggesting that assessment was not properl y done. In fact the Assessing Officer wants to review his order. We have examined the proposal and the remand report carefull y and do not find any force in the contention of Ld. Counsel for the assessee. Through various remand reports, the Assessing Officer is trying to justify why the assessment was completed u/s 144 and how some of the submissions like part of the investment amounting to Rs. 50 lakhs which is owned by U Like Promoters (P) Ltd as a new plea, therefore, the Assessing Officer is onl y giving comments onl y on the questions raised by the C IT(A) in the appellate proceedings. Whereas in the proposal, the Assessing Officer has pointed out before Commissioner how search was conducted, various documents which were found during the search and how the assessee has not cooperated? After that he has noted in para 5.2 as under:-
"5.2 During the F.Y. 2007-08 relevant to the A.Y. 2008-09, there was an investment of Rs. 6,81,06,129/- and the assessee's share @ 100% out of that total investment comes to Rs. 6,81,06,129/-. The source of investment of Rs. 6,81,06,129/- as per the agreements for the purchase of above properties was not fully disclosed to the department. During assessment proceedings, the assessee was asked to furnish details of the immovable properties purchased / sold / constructed together with source thereof alongwith advances received or paid against such properties. Though no details of the properties purchased / sold during the year were furnished but some of the details of such properties purchased were furnished as per his letters dated nil received on 06.03.09, 09.03.09,20.03.09 etc. As per these letters, the assessee informed that the invested has been 39 made out of the sale proceeds of land. It is further stated that an amount of Rs. 89,48,200/- was paid by the other partner having 50% share out of its own funds. The assessee company through its director Sh. Suresh Khanna also filed an affidavit certifying therein that the 50% share of investment has been made by the other partner. However, no source of investment by the other partner having 50% share was explained. Further, as stated supra, the payment of investment was made in cash in contravention of the provisions of section 40A(3) of the I.T. Act and as such, necessary disallowance were called for. This shows that the income of Rs. 6,81,06,129/- has apparently been under assessed. In view of these facts, the order of assessment dated 30.12.09 is not only erroneous but also prejudicial to the interest of revenue. Therefore, the matter is referred to your goodself for initiating necessary remedial action within the meaning of sec. 263 of the I.T. Act."
42. The above clearl y shows that Assessing Officer is of the view that issue regarding section 40A(3) i.e. issue of cash payment and certain investments could not be examined because of the non-cooperation of the assessee. These are two different issues and cannot be linked. No doubt, the Assessing Officer has no power to review his own order but as discussed earlier he had definitel y power to put up a proposal for revision and this position was admitted even by the Ld. Counsel for the assessee. Therefore, we find no force in these submissions.
43. The next contention given by the Ld. Counsel for the assessee is that Assessing Officer has ultimatel y accepted the surrendered amount meaning thereby by that Assessing Officer has taken one of the possible view and, therefore, order cannot be called erroneous. The careful perusal of the assessment order clearl y shows that Assessing Officer has not examined the various documents found during the search and has simpl y assessed the income 40 at Rs. 8.5 crores which was surrendered amount. The Assessing Officer should have examined all the documents particularl y because the assessee has not filed the return for surrendered amount of Rs. 8.5 crores. In fact, the assessee had returned onl y income of Rs. 3.37 crores. Therefore, Assessing Officer should have been more then careful and should have examined all the documents found during the search regarding purchase of properties and then determine income which has not been done. In any case, mere acceptance of the surrendered income without inquiry would make the order erroneous and prejudicial to the interest of Revenue. The Hon'ble Allahabad High Court in the case of Smt. Lalla Wati Singhal v CIT 226 ITR 327 (supra), which was relied by Revenue has taken the same view. The head note reads as under:-
"If certain amounts are not taxable in the hands of the assessee and if they are surrendered by the assessee for being taxed, then the orders passed by the assessing authority will be prejudicial to the interests of the Revenue.
One may surrender a given income with an ulterior motive. The duty of the assessing authority in such a case is to make a full inquiry and satisfy himself that the income surrendered was, in fact, earned by the assessee.
No doubt Hon'ble Supreme Court in the case of Malabar Industrial Corporation Ltd (supra), has held that if the Assessing Officer has taken one of the possible legal view, then order cannot be held to be erroneous and prejudicial to the interest of Revenue. This was reiterated by the Hon'ble Apex Court in the case of C IT v Max India Ltd (supra) but in the case of Max India Ltd (supra) the facts were regarding allowabilit y of deduction u/s 80HHC of the Act. The meaning of profits in section 80HHC was open to two interpretations which were amended later on by 2005 amendment and therefore, the Court observed that since Assessing Officer has taken one of the possible view, the order cannot be called erroneous and prejudicial to the interest of Revenue. But in the case 41 before us, the issue is totall y different. The Assessing Officer could not have accepted the income of Rs. 8.5 crores particularl y when the assessee itself has not honoured the offer of surrender and filed return onl y for Rs. 3.37 cores, the Assessing Officer was dut y bound to examine all the documents and then he should have determined the income accordingl y. In this regard, reference may be made to the decision relied upon by the Revenue in the case of Gee Vee Enterprises (supra). In that case the Hon'ble Delhi High Court has shown the reason why Assessing Officer was dut y bound to make enquiry. The following para at page 376 is relevant.
"It is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by he assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very different from that of a civil court. The statements made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Office is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct."42
Since Assessing Officer has failed to make any inquiry, therefore, we are of the opinion that it cannot be said that Assessing Officer has taken one to the possible view.
44. The next contention made by the Ld. Counsel for the assessee is that if the matter is pending before the Appellate Authorit y, then such order cannot be revised. The Ld. counsel had raised strong reliance on the decision of Hon'ble Delhi High Court in the case of Aerens Infrastructure and Technology Ltd v CIT (supra). In this case, block assessment u/s 158BC was made and assessee had filed appeal in respect of various additions. Later on, the Commissioner passed an order u/s 263 with regard to the same block assessment order. An appeal was filed before the Hon'ble High Court and reliance was placed on the decision of Hon'ble Madras High Court in the case of CWT v Sampathmal Chordia, Executor to the Estate of Late Neni Kavur Bai 256 ITR 440 (Mad.) to show that show cause notice itself would be without jurisdiction. The Hon'ble High Court did not accept this by observing as under:-
"We feel that the decision of the Madras High Court would not be of any help to the petitioner. In the said decision, the revision had been held to be invalid as the subject-matter of the revision was the same as that of the pending appeal. Therefore, it does not hold that in all cases, and, particularly where the issues in the revision are different from those in the appeal, proceedings under section 263 would be invalid during the pendency of an appeal. Mr. Bajpai, who appears for the petitioner, submits that apart from the Madras High Court decision he also relies on other grounds. All these grounds are available to him and he can incorporate the same in his reply to the impugned show cause notice. The Commissioner, after taking notice of the objections, shall pass an order in accordance with law. Our interference at 43 this stage is not called for. The writ petition is disposed of. However, it is made clear that we have not expressed any opinion on the merits of the case.
45. In our opinion, this decision is against the assessee and not in favour of the assessee. In any case, the issue regarding passing of a revisionary order against the various issues which are pending before the Appellate Authorit y had been adjudicated by Hon'ble Supreme Court in the case of C IT Vs Shri Arbuda Mills Ltd 321 ITR 50 (SC) where the whole position has been clarified. In that case assessment was completed u/s 143(3) read with section 144B on 31.3.1978 in respect of assessment year 1975-76. In the assessment, net business loss was computed at Rs. 3,61,086/- and income under the head 'Capital Gain' was determined at Rs. 38,874/-. The ITO had made certain additions and disallowances while computing the loss and accepted the income above and had also accepted the following claims:-
(i) Deduction of a sum of Rs. 23,82,621 by way of provision for gratuity ;
(ii) Depreciation on Rs. 4,21,000 which was paid by the assessee to United Textile Industries as consideration for transfer of installed property of 17,480 spindles and 400 looms of Old Manek Chowk Mills ;
(iii) Loss on account of difference in exchange rate which was referable to the purchase of machinery, etc., as revenue expenditure. For the purposes of the present matter, it is only these three items of claim which are relevant.
46. In the appeal filed by the assessee various additions except for the above three items were challenged. The Commissioner passed revisionary order u/s 263 in respect of these three items. It was contended before the Hon'ble 44 Supreme Court that's since appeal is pending, therefore, assessment order was not available for revision. The Hon'ble Supreme Court observed as under:-
"We may refer to the amendment made in section 263 of the Income tax Act by the Finance Act, 1989, with retrospective effect from June 1, 1988. The relevant part thereof for the present case is as under :
"Explanation.--For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,--. . .
(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after June 1, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal."
The consequence of the said amendment made with retrospective effect is that the powers under section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid three items, the powers of the Commissioner under section 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. This is sufficient to answer the question which has been referred.
The question referred is, therefore, answered in the negative, in favour of the Revenue and against the assessee."
From the above, it becomes clear that onl y those matters which have been appealed against are not available for revision. The matters which have not been appealed are clearl y available for Revision u/s 263. In the case before us, since the Assessing Officer has not made enquiries in respect of the documents 45 found regarding purchase of properties and, therefore, the whole order would be available for revision. In fact, the revisionary powers have been exercised by the Ld. Commissioner for making additions u/s 40A(3) and some more additions on account of investments made in properties detected during the search for which no enquiry has been made and those matters have not been appealed by the assessee. Therefore, we find no force in this contention and reject the same.
47. The Ld. counsel also tried to explain how assessee has already honoured the surrendered amount and in this regard he had referred to pages 83 of the submissions before the Assessing Officer which is part of the submissions before the Assessing Officer. In fact, further details is available at page 167 which is part of the letter submitted before the C IT(A). The details of which reads as under;-
1. In the hands of Company 337.63
2. In the hands of Directors
a) Sh. Suresh Khanna 78.30
b) Sh. Rupinderdeep Singh 48.30
c) Sh. Deepak Chouhan 6.50 Sub Total 470.73
3. Investment owned by U Like Promoters (P) Ltd. 50.00
4. Share of Sh. Harinder Singh 298.39 819.12 Repetition of documents 30.88 Total 850.00 In contrast, the Revenue gave the following details at pages 2 & 3 of its paper book.
Bank details of Basera Realtors Group BASERA REALTORS (P)LTD.
Particulars A.Y. 2008-09 A.Y. 2007-08 A.Y. 2006-07
Income Declared 8.50 Cr. NIL* NIL
During Search
Income Shown in 3.37 Cr. NIL* NIL
Return of Income
46
Income Assessed by 8.50 Cr. NIL Accepted NIL Accepted
A.O.
REMARKS Addition of 5.12 Cr. *Although stated in
for the sole reason letter dated 21.02.2008
that assessee had that 8.50 Cr. Is for two
surrendered 8.50 Cr. years no bifurcation
u/s 132(4) during given nor shown in
search. return of income.
DEEPAK CHAUHAN
Particulars A.Y. 2008-09 A.Y. 2007-08
Income Declared NIL NIL
During Search
Income Shown in 3,01,800/- 2,66,800/-
Return of Income
Income Assessed by 4,01,800/- 3,46,800/-
A.O.
REMARKS *Addition of 1,00,000/- on * Addition of 80,000/- on a/c of low
a/c of low household household withdrawals.
withdrawals.
RUPINDERDEEP SINGH
Particulars A.Y. 2008-09 A.Y. 2007-08
Income Declared During NIL NIL
Search
Income Shown in Return of 4,73,412/- 5,79,978/-
Income
Income Assessed by A.O. 5,89,410/- 6,93,980/-
REMARKS *Addition of * Addition of 1,14,000/- on a/c of
1,16,000/- on a/c of low household withdrawals.
low household
withdrawals.
SURESH KUMAR KHANNA
Particulars A.Y. 2008-09 A.Y. 2007-08 A.Y. 2006-07
Income Declared NIL NIL NIL
During Search
Income Shown in 11,24,450/- 4,21,315/- 26,81,837/-
Return of Income
Income Assessed by 17,10,620/- 7,12,440/- 29,75,840/-
A.O.
REMARKS *Addition of *Addition of 93,121/- *Addition of
2,98,855/- on a/c of on a/c of disallowance 2,94,000/- on a/c
unexplained jewellery of business loss. of low
found during search. * Addition of household
*Addition of 1,98,000/- on a/c of withdrawals.
2,76,000/- on a/c of low household
low household withdrawal.
withdrawals.
48. The careful reading of the above two tables show that the contention of the assessee is not correct because in the case of the Company, return was filed 47 onl y for Rs. 3.37 crores. It has been submitted that in the hands of Shri Suresh Kumar Khanna, surrender has been made for Rs. 78.30 lakhs whereas Revenue has clearl y showed that he has filed a return for Rs. 26,81,837/- for assessment year 2006-07 which consisted income of Rs. 27,06,542/- from share trading commission income and Rs. 10,000/- as income from other sources. This was assessed at Rs. 29,75,837/- which included addition of Rs. 2,94,000/- on account of low withdrawals. Further, in assessment year 2007-08, Revenue had clearl y showed that he had filed a return of Rs. 4,21,315/- for assessment year 2007-08 which consisted of business income of Rs. 2,12,229/-, long term capital gains from sale of land at Rs. 2,81,443/- and income from other sources at Rs. 1,392/-. This income was assessed at Rs. 7,12,440/-. The two additions amounting to Rs. 93,121/- is on account of disallowance of expenditure and Rs. 1,98,000/- is on account of low withdrawals. For assessment year 2008-09, the return was filed for Rs. 11,24,450/- which consisted of Rs. 4,50,000/- as salary income, Rs. 1,00,000/-as business commission income and Rs. 5,64,450/- as income from sale of capital asset and Rs. 10,000/- as income form other sources. This was assessed at Rs. 17,10,624/- by including some bank interest amounting to Rs. 11,289/- which was not included by the assessee and Rs. 2,98,885/- on account of unaccounted jewellery and Rs. 2,76,000/- on account of low house hold withdrawals. From these figures it become absolutel y clear that none of the items pertain to surrendered income and, therefore, it cannot be said that a sum of Rs. 78,30,000/- was surrendered in the hands of Shri Suresh Khanna. The Ld. counsel was confronted with this variation and specific question was posed to him as to how he justified the figure of Rs. 78,30,000/- shown as surrendered income. He gave evasive repl y and submitted that this would be part of income of six years, however, no document is available in this regard. Similar is the situation with Shri Rupinderdeep Singh and Shri Deepak Chauhan. As far as the case of Shri Harinder Singh is concerned, the Ld. Counsel for the assessee has filed copy of the assessment order in case of Shri Harinder Singh vide letter 48 dated 6.11.2013. The assessment order clearl y shows that assessee had declared income from business. In this case the sum of Rs. 2,98,39,000/- has been added by way of addition and same did not form part of the returned income. Therefore, this is wrong to say that assessee has offered the surrendered income in various hands.
49. Through last contention that assessee has submitted various details before the Assessing Officer and Commissioner which have not been examined by the Commissioner and, therefore, the revisionary order has been passed without application of mind. We find no force in this contention. Firstl y, the Ld. Counsel could not point out that which details have been filed which have not been considered. In fact, some details have been filed before us vide letter dated 3.12.2013, which reads as under:-
Annexure Reply to Reply to AO Date of Square Yard and Situation, shares in with Pg.No. CIT as Agreement rate, valve property, and one as per appears property considered Proposal and in PB several way.
SCN Pg.No.
A-1(R-2)61- 14-15 PB No. 49 & in 16.10.06 12 Bigha @ Rs. Village Jhande only
63 Deepak 1.35 cr. Per acre 1/3 share in the
Chauhan ITA hands of Deepak
No. Chauhan
429&430/12 PB
No. 120
A-1(R-2)39- 16 PB No. 48 para 05.10.05 4 Bigha, 8 Bigha, Village Jhande only
43 3 and also in 16 Bigha @ Rs. ½ share in the
Deepak 47.80 lacs hands of the
Chauhan in his company
PB No. 120
A-1(R-2) 16-17 in Deepak 10.11.07 3367 sq. yds. Village Jhande
31-36 Chauhan in his
PB No. 119
A-1 (R-2) 15 PB No. 48 - 49 30.11.04 4840 sq. yds. Village Mandiali
48-50 & in Deepak pertain to some
Chauhan ITA other person
No. 429 &
430/12 PB No.
120
A-1 (R-2) 17-18 PB No. 48 para 07.11.06 2550 sq. yds. 1/3 share of suresh
18-20 2 and also in Valued at Rs. kumar while 100%
Deepak in his 3.05cr. considered
PB No. 119
49
A-1 (R-2) 4- 18-19 PB No. 48 para 12.06.06 333 Bigha @ Rs. Village Jhande
9 1 and also in 81 lacs per acre
Deepak PB No.
119
A-1(R-2) 1- 19 In Deepak PB 577 sq. yds. @ Situated at
2 119,129 Rs. 10700 per sq. Ludhiana and
yd. Suresh was only
acting as a PoA of
the seller family as
appears from
agreement itself.
A-2(R-2)20- 19-20 PB No. 49 para 15.11.07 600 sq. yd. @ Rs. At Ayali. A trading
25 2 6400 per sq. yd. profit has been
shown
A-3(R-2) 20 In Deepak PB 12.12.07 250 sq. yd. @ Rs. Third party papers
30-33 120 8100 per sq. yd. for commission
business
A-3 (R-2) 20 PB No. 49 & in 19.07.07 4000 sq. yd. @ At Jhande. Profit
27-29 Deepak PB No. 2850 per sq. yd. taken in declared
120 income
A-3 (R-2) 20-21 PB No. 49 para 14.12.08 540 sq. yd. on Subsequent
13-18 3 Plot No. F - 118 agreement
at Ludhiana cancelled
A-3)R-2) 1- 21 Does not belong 08.02.08 200 sq. yd @ Rs. Plot No. M-28.
6 to assessee 9000 per sq. yd. Third party
agreement no
connection
A-5 (R-2) 1- 21-22 PB No. 49-50 455 sq. yd. E-50. Trading & 4 para 4 Profit in declared income A-9 (R-2) 5 22 Pb. No. 49 & in 600 sq. yd. @ Rs. F- 157 Ayali Deepak PB No. 9600 per sq. yd. Trading & Profit in 121 declared income `A-9 (R-2) 22 PB No. 50 para 08.03.07 1475 sq. yd. @ ½ share in Deepak 16-21 5 & Deepak PB Rs. 9800/- sq. yd. and sold at profit No. 121 and part of declared income A-12(R-2) PB No. 50 para 500 sq. yd. @ Rs. Only trading 16-21 7 1 txn. & in 13000/- per sq. Deepak PB No. yd.
23 122
A-12 (R-2) PB No. 50 10.01.08 500 sq. yd. @ Rs.
11-15 Para.7 & in 14750/-
Deepak PB No.
122
A-13(R-2) 23-24 256.66 sq. yd.
44-49
A-13 (R-2) 24 21.08.07 256.66 sq.yd. @ B-56 Ayali Kalan
26-27 Rs. 7470
A-13(R-2) 24-25 PB No. 50-51 07.11.07 256.66 sq. yd. @
14-19 para. 8 8100/-
A-15 (R- 25 PB No. 51 para. 01.01.08 500 sq. yds. @ E-X85 at Ayalli
2)34-39 9 & in Deepak 7500/- per sq.yd. trading profit
PB No. 122 shown
A-19 (R- 25 PB No. 51 para 19.02.08 200 sq. yds@ M-135
2)2-7 10 2500/- per sq. yd.
A-22 (R-2) 26 In Deepak PB GPA plot no. M-135
50
1-3, 17-20 No. 126
A-23 (R-2) 26 In Deepak PB 700 sq. yd. @ Sold at profit
15-20 No. 126 7200/- per sq. yd. declared in income
Rs. 350000/-
A-24(R-2) 26-27 In Deepak PB Unsigned 600 sq. yd. @ At EX-85 at Ayali
30-32 No. 126 agreement 9600/- Kalan.
dt.
25.04.07
From the above, nobody can make out any reconciliation. It is not clear which propert y belong to which person. To a specific query by the Bench, the counsel could not give any reconciliation in this respect, therefore, it become clear that these documents are not clear before us then how the Assessing Officer could have understood anything but at the same time the Assessing Officer has not examined these documents, which makes the assessment order erroneous .
50. It is wrong to say that Commissioner has not examined anything. The perusal of the Revisionary order clearly shows that Ld. Commissioner has recorded his finding at para 3 to 20 which runs into 20 pages from pages 14 to
34. The Ld. Commissioner has examined various documents found during the search and has also gone through the submissions. For the sake of brevit y, we are reproducing his anal ysis in respect of some of the documents which are as under:-
"5. As far as investment in the properties and profits thereon is concerned, the same are discussed below:
Annexure No. A-1(R-2), Page No. 61-63:
These documents which are photocopy of an agreement dated 16.10.2006 between some persons and Sh. Deepak Chauhan pertain to the property measuing 12 Bighe @ Rs. 1.35 Cr. Per acre for which a biana of Rs. 15 Lac and Rs. 5 lac (total Rs. 20 lac) have been paid and further balance would be paid at the time of registry i.e. 30.07.2007. In respect of the above property, AR has submitted that this agreement was owned by assessee company and the payment made was out of the advances received from the buyers.51
These details are claimed to have been filed before A.O. Regarding provisions u/s 40A(3). AR has submitted that cash payments are exempt u/r 6DD(g) as on date of payment village Jhande where the land is situated and the seller is the resident was not served by any Bank. The veracity of this claim has not been examined by the A.O. As per above agreement, total advance of Rs. 20 lac has been paid in the period falling in A.Y. 2007-08, source of which has not been explained and A.O. has also not taken cognizance of the above advance of Rs. 20 lac. Otherwise also investment in 12 Bighe of land i.e. 3 Acres of land @ Rs. 1.35 per acre comes to Rs. 4.05 Cr. Which according to the above agreement was to be registered on 30.07.2007 relevant to A.Y. 2008-09. Neither any addition on account of investment of Rs. 4.05 Cr. Of the above property has been made in A.Y. 2008-09 nor any inquiries from different quarters including the Registrar of properties / Tehsildar and sellers have been made by the A.O. in this regard. Further, payment of Rs. 26 lac made on 14.05.2007 as noted on the backside of the above document, has not been examined by the A.O. Annexure No. A-1(R-2), Page No. 48-50:
These documents are photocopy of an agreement dated 30.11.2004. AR has submitted that buyer persons were agents of M/s U-LIKE Promoters(P) Ltd., New Delhi and the payments so made an the deal has been owned by the New Delhi Company vide their letter dated 06.03.2009 written and submitted to ACIT, Central Circle-I, Ludhiana and as such there was neither any investment nor infringement of provisions of section 40A(3). No doubt a letter dated 06.03.2009 from M/s U-LIKE Promoters(P) Ltd. has been filed at page 95 of the reply dated 08.02.2012 filed in the course of proceedings u/s 263 for A.Y. 2008-09 from which the property in question has been admitted as being purchased by M/s U-LIKE Promoters(P) Ltd. but fact of assessee's interest in the same has not been examined by the A.O. Assessee company is a business venture company and is not doing charity and therefore even it is admitted that above property was being purchased by M/s U-LIKE Promoters (P) Ltd., assessee would be having some 52 interest in the form of earning some income by way of commission and in any other manner which has not been examined by the A.O. Assessee has not explained his interest and icome from the aforesaid transactions made through M/s U-LIKE Promoters (P) Ltd. nor A.O. has examined the issue specially when above agreement is between various persons on the one hand and Sh.
Sahibjit Singh (director of the assessee company ) and others on the other hand.
Annexure No. A-1 (R-2), Page No. 39-43 According to these documents which are an agreement-cum- registry dated 05.10.2005 for land measuring 4B-8B-16B @ Rs. 47,80,000/- between Smt. Harjinder Kaur and others and Sh. Sahibjit Singh (half share) and Sh. Harinder Singh (half share) for which a biana of Rs. 13,26,000/- has been paid and balance would be paid at the time of registry i.e. 25.03.2007. In this regard, AR has submitted that this agreement / deal was owned by assessee company and the payment was made out of the advances received from the buyers. Initial investment was made out of share application money contributed by the promoters / directors of company. AR has submitted the copy of statement of purchase and sale of land and other development expenses in Annexure-6 of the above reply. AR has also stated that village Jhande where the land is situated was not served with any bank and payments made in cash are exempt under rule 6DD(g) and therefore provisions of section 40A(3) are not applicable. The veracity of this claim has not been examined by the A.O. As far as AR's submission that payment has been made out of advances received from the buyers, same is not verifiable as no evidence has been filed even before the A.O. Even otherwise, AR has admitted in para 4 of the reply filed before the undersigned that transactions regarding sale and purchase of land at Village Jhande and for other out of books trading commission income, assessee had compiled a net income figure which was incorporated in the regular books of accounts on a net basis and admittedly no item-wise details have been provided by the Auditors in the Audit Report. From the above, it is evident that assessee is not in a 53 position to explain the source of advance and investment made in the above properties which falls in the period relevant not only to A.Y. 2008-09; the year under consideration but also to A.Y. 2006- 07 and A.Y. 2007-08. A.O. has not examined this aspect. In respect of disallowances made u/s 40A(3), A.O. has not verified the correctness and genuineness of the assessee's claim whether aforesaid Village was not served by any bank or whether provisions of section 40A(3) were applicable. Further, as per notings given on backside of above document, payment of Rs. 50 lac has also been made on 27.02.2006 totalling Rs. 90 lac which has also not been examined. Similarly, the payments of Rs. 20,43,800/- and Rs. 15,43,782/- in the names of Sh. Bhupinder Sigh S/o Sh. Harbans Singh and Sh. Balwinder Singh S/o Sh. Harbans Singh respectively on 27.06.2006 as noted on the bakside of the above document, have also not been examined."
51. We are not reproducing the anal ysis done by Ld. Commissioner in respect of all the documents for the sake of brevity but the reading of the anal ysis of the above three documents clearl y shows that Ld. Commissioner has pointed out what are the different facets which have not been examined by the Assessing Officer.
52. The Ld. Commissioner had also relied on the plethora of case laws to support his order. The Ld. counsel had filed a letter dated 19.2.2013 in which these case laws have been distinguished. We are not discussing these case laws because it is trite law that if proper enquiry has not been made then the assessment order passed by him has to be considered erroneous and prejudicial to the interest of Revenue. We have aready referred to the decision of Hon'ble Delhi High Court in the case of Gee Vee Enterprises (supra). In this case, it is clearl y held that if proper enquiries are not made then the assessment order would be erroneous and reliance was placed by the Court on the decision of Hon'ble Supreme Court in the case of Smt. Tara Devi Aggarwal v C IT 88 ITR 323 (SC). The Head not reads as under:-
54
"Where an assessee is assessed on an income voluntarily returned, it is not prejudicial to the interests of the revenue only if it is found that the assessment was made on the basis that the income had been earned by the assessee which was assessable. Where an income has not been earned and is not assessable, merely because the assessee wants it to be assessed in his or her hands in order to assist some one else who would have been assessed to a larger amount, an assessment so made will be erroneous and prejudicial to the revenue and the Commissioner has jurisdiction under section 33B of the Indian Income-tax Act, 1922, to cancel the assessment and proceedings for assessment may be initiated under the provisions of the Act against some other assessee who according to the income-tax authorities would be liable for the income thereof."
53. In view of the above discussion, it becomes totall y clear that Assessing Officer has not made proper enquiries and therefore, assessment order is erroneous and prejudicial to the interest of Revenue which has been correctl y revised by the Ld. Commissioner by passing an order u/s 263. Accordingl y we uphold the same. In the result, the appeal is dismissed.
54. ITA Nos. 421 & 422/CHD/2012 :
Since the facts and contentions of both the parties are identical to the facts in ITA No. 423/Chd/2012 which we have adjudicated above, and following the above order, we uphold the Revisionary order in these two appeals also. In the result, appeals are dismissed.
55. ITA Nos. 424 to 426/Chd/2012, 427 & 428/Chd/2012 and 429 & 430/Chd/2012:
In all these appeals, both the parties made identical contentions which were raised in ITA No. 423/Chd/2012. Further, Ld. Counsel for the assessee submitted that if a document had been considered in the hands of a director, 55 then the same cannot be considered in the hands of company or vice-versa because that would amount to duplication and lead to double taxation. Further, the perusal of assessment order in all these cases clearl y shows that all the documents found and their implications have not been examined in the hands of the directors. Therefore, in our opinion, these orders are rightl y held to be erroneous and prejudicial to the interest of Revenue and we have no hesitation in upholding the Revisionary Order passed by Ld. Commissioner in these cases.
In the result, these appeals are also dismissed.
56. In the result, all the appeals of the assessees in ITA Nos. 421/Chd/2012 to 430/Chd/2013 are dismissed.
Order Pronounced in the Open Court on 30.10.2014 Sd/- Sd/-
(SUSHMA CHOWLA) (T.R.SOOD)
JUDICIAL MEMBER ACCOUNTANT MEMER
Dated : 30 t h January, 2014
Rkk/Sk/Ag
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
By order
Assistant Registrar,
ITAT, Chandigarh
56