Income Tax Appellate Tribunal - Chandigarh
M/S Ridhi Industries Pvt. Ltd., Mandi ... vs Ito, W-2, Mandi Gobindgarh on 25 November, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, "बी " च डीगढ़
I N T H E I NC OM E T A X A P PEL L A TE T RI B U N AL
D I VI SI O N B E NC H , ' B ' CH A N DI G A R H
ी संजय गग , या यक सद य एवं ीमती अ नपण ू ा ग'ु ता, लेखा सद य
B E F OR E S HR I S A N J A Y GA R G, J U D I C I A L M E MB E R A N D
M s . A N N A P U R N A G U P T A , A C CO U N T A N T M E MB E R
आयकर अपील सं./ ITA Nos. 777 & 778/ C H D / 2 0 1 9
नधा रण वष / Assessment Years : 2010-11 & 2011-12
M/s Ridhi Industries Private बनाम The ITO, Ward-2,
Limited, Mandi Gobindgarh,
H.No. 44,Sector 4-C,
Shastri Nagar,
]Mandi Gobindgarh
थायी लेखा सं./PAN NO: AAACH9435M
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Rajeev Dutta, CA
राज व क ओर से/ Revenue by : Shri Manoj Mishra, CIT DR
सन
ु वाई क तार%ख/Date of Hearing : 25.11. 2019
उदघोषणा क तार%ख/Date of Pronouncement : 25.11.2019
आदे श/Order
Per Sanjay Garg, Judicial Member:
The present appeals have been preferred by the assessee for different assessment years against the separate orders dated 31.01.2019 of the Principal Commissioner of Income Tax, Patiala [hereinafter referred to as 'PCIT']. ] agitating the action of the PCIT in passing the impugned orders u/s 263 of the I.T. Act exercising his revision jurisdiction and thereby setting aside the orders of the Assessing Officer.
ITA Nos. 777 & 778/Chd/2019- M/s Ridhi Industries Private Limited, Patiala 2
2. Since the facts and issue involved in both the appeals are identical, hence, these have been heard together and are being disposed of by this common order.
ITA No. 777/Chd/2019, is taken as a lead case for narration of facts.
At the outset, the Ld. Counsel for the assessee has invited our attention to the impugned order of the Ld. PCIT to submit that the Ld. PCIT has exercised his revision jurisdiction u/s 263 of the Act on the ground that the Assessing Officer had not conducted the enquiries to verify the source of Rs. 3 crores advanced by the company to M/s Mirage Infra Ltd. The Ld. counsel in this respect has invited our attention to the copy of the assessment order dated 29.12.2017 passed u/s 143(3) read with section 148 of the Act to submit that the assessment was reopened by the Assessing Officer for examination of this sole issue i.e. for examination of source of amount of Rs. 3 crores advanced by the assessee to M/s Mirage Infra Ltd.
The Ld. Counsel has further invited our attention to the observation made by the Assessing Officer, wherein, he has mentioned that the assessee attended the assessment proceedings from time to time. Necessary details were submitted and the evidences as called for were filed by the assessee which were examined and the Assessing Officer accepted the reply and explanation of the assessee. Further, the Ld. ITA Nos. 777 & 778/Chd/2019- M/s Ridhi Industries Private Limited, Patiala 3 Counsel for the assessee has invited our attention to para 3 of the impugned order wherein the assessee has given detailed reply in response to the show cause notice to the Ld. PCIT as to why the revision jurisdiction be not exercised u/s 263 of the Act in the case of the assessee. The reply of the assessee for the sake of ready reference is reproduced as under:-
"3. In response to the aforesaid notice dated 22.03.2018, the assessee filed reply. The relevant submissions of the reply are as under:-
"2. The assessment for the year was framed u/s 143(3)/153C vide order dated 26.03.2014 after making an addition of Rs. 11,03,000/-. The said addition has been deleted by the Hon'ble ITAT, Chandigarh vide order dt. 31.10.2017, copy enclosed for reference.
The assessment in this case was re-opened u/s 148 vide notice dt. 29.03.2017. The facts recorded in the reasons for re- opening were totally irrelevant. The reliance by the Ld. A.O. for re-opening was misconceived as there was not even an iota of evidence that the funds of M/s Miraj Infra Ltd were routed through the assessee company. In fact the funds were initially received from M/s Bhawani Industries (P) Ltd., which was also subject to search and the assessment in their case for A.Y. 2011-12 was also framed u/s 143(3)/153A. Both the assessments i.e. of the assessee and M/s Bhawani Industries (P) Ltd. were framed by the DCIT, Central Circle, Patiala. During the course of assessment proceedings source of credit was clearly explained and relevant documents and evidence of the source of investment was produced before the Ld. A.O., Central Circle.
3. During re-assessment proceedings consequent to re- opening u/s 148, the assessee filed a letter explaining the source of Rs.3.00 crores and mode of further investment. The copy of the letter is enclosed. The assessee has received credit alongwith interest of Rs.13,33,165/- from M/s. Invent Assets Securitization & Reconstruction (P) Ltd., to whom it had given ITA Nos. 777 & 778/Chd/2019- M/s Ridhi Industries Private Limited, Patiala 4 earlier against amount received from M/s Bhawani Industries Private Limited. Copy of account enclosed and advanced money received from that source alongwith Rs.25,00,000/- received from Sh. Bharat Bhushan Goyal for advancing Rs.3,00,00,000/- to M/s Miraj Infra Ltd. The transaction has duly been verified by the DCIT Central Circle, Patiala during the assessment proceedings of the M/s Bhawani Industries Private Limited and M/s Ridhi Industries (P) Ltd. as both centralized, after search in the year 2011, at Patiala. The assessment was framed after due verification with the approval of JCIT, Central Circle, Ludhiana, copy of the order enclosed. The assessment for A. Y. 2010-11 was re-opened by the A.O. Sirhind as stated above, as per the information received by the department. The assessment has been re-framed after examination by the Ld. A.O., where the facts were explained by the assessee and brought to his notice the material already placed on record during original assessment proceeding u/s 143(3) read with section 153C before the DCIT, Central Circle, Patiala. The copies of the relevant documents/statements filed before the A.O. are enclosed for your perusal.
Your honour, Assessment framed can only be cancelled if it is erroneous and prejudicial to the interests of the revenue. In the present case, it is not erroneous as the source of investment is already on record. It is not prejudicial to the interests of the revenue. The assessee has not acted in determent to his owned funds. He has neither earned any income which he has forgone nor has any income accrued to him. No addition of any income could have been made in his hands. When no addition of any income could be made, there is no question of assessment prejudicial to the interest of the revenue. We draw your honour's attention to the following judgments of the jurisdictional High Court in support of our case:-
CIT Vs. R.K. METAL WORKS 112ITR 445(P&H) Held that in passing an order of revision u/s 263 of the Income Tax Act,1961. It is necessary for the Commissioner to State in what manner he considered, that his order of assessing officer was erroneous and prejudicial to the interest to the revenue and the basis for such a conclusion.
ITA Nos. 777 & 778/Chd/2019- M/s Ridhi Industries Private Limited, Patiala 5 Malabar Industries Company Limited Vs. CIT 243 ITR 83(SC) Erroneous and prejudicial- must be read in conjecture with an erroneous order. The order must be both prejudicial and erroneous for CIT to act.
In view of the above explanations and evidence on record, there is nothing on record to even remotely link the holding the source of investment having been from the funds of M/s. Miraj Infra Ltd. It is, therefore, prayed that the proceedings be kindly dropped."
3. A perusal of the above reply submitted by the assessee revealed that the assessee duly explained to the Ld. PCIT that due and proper enquiries were conducted in the case of the assessee. That even the original assessment in the case of the assessee was made u/s 143(3) read with section 153C of the Act vide order dated 26.3.2015, wherein, the addition of Rs. 11,0,3000/- was made by the Assessing Officer. The matter travelled upto the level of the Tribunal and the said addition was deleted by the Tribunal vide order dated 31.10.2017. Subsequent to that, assessment of the assessee was reopened u/s 147 read with section 148 of the Act to enquire specifically the source of credit of Rs. 3 crores made by the assessee to M/s Miraj Infra Limited. The assessee duly explained in the reopened assessment proceedings about the source of the said amount. Further, the assessee also explained before the Ld. PCIT the source of investment and also explained that necessary inquiries were made also in the case during the assessment proceedings of M/s Bhawani Industries Private Limited and M/s Ridhi Industries (P) ITA Nos. 777 & 778/Chd/2019- M/s Ridhi Industries Private Limited, Patiala 6 Ltd. as the case of these two entities were also centralized alongwith the case of the assessee.
4. In view of the above details submitted by the assessee, we find that the Ld. PCIT has not mentioned as to what more or further enquiries were required to be made by the Assessing Officer". What were the discrepancies or doubts in the explanation submitted by the assessee? How the Ld. PCIT found that the order of the Assessing Officer was erroneous or prejudicial to the interest of Revenue from the details submitted by the assessee? It is not the mere whim and wish of the Ld. PCIT to say that the Assessing Officer should make more or further enquiries as per the provisions of the Act. A duty is cast upon the Ld. PCIT to examine the reply of the assessee filed in response to the show cause notice, examine the details furnished by the assessee and then to make or cause to make necessary inquiries and if the Ld. PCIT even then is not satisfied, then he should point out as to on what ground he has reason to believe or he is of the view that the order of the Assessing Officer is erroneous or prejudicial to the interest of the Revenue. It is not the case where the Assessing Officer has not made any enquires, rather, it is a case where the reopening of the assessment was made on that specific issue which was thoroughly examined by the Assessing Officer. Under the circumstances, the Ld. PCIT must point out as to what mistake or error has been committed by the Assessing Officer in verifying / examining the details furnished by the assessee ITA Nos. 777 & 778/Chd/2019- M/s Ridhi Industries Private Limited, Patiala 7 making the order of assessment erroneous as well as prejudicial to the interest of Revenue. None of the ingredients are there in the impugned order of the Ld. PCIT. Merely observing that the Assessing Officer should have made deeper enquiries is not a justified ground for exercise of jurisdiction u/s 263 of the Act. We, therefore, do not find any merit in the action the Ld. PCIT in invoking the revision jurisdiction. The order of the Ld. PCIT u/s 263 of the Act is hereby quashed.
The appeal of the assessee stands allowed.
ITA No. 778/Chd/2019
6. Since the facts and issue involved in this appeal is identical to that has been raised in ITA No. 777/Chd/2019, hence, in view of our findings given above, the order passed by the Ld. PCIT in this appeal u/s 263 of the Act is also quashed.
In the result, both the appeals of the assessee are hereby allowed. Order dictated and pronounced in the Open Court immediately on completion of hearing on 25.11.2019.
Sd/- Sd/-
(अ नपण
ू ा ग'ु ता / ANNAPURNA GUPTA) (संजय गग / SANJAY GARG)
लेखा सद य/ Accountant Member या यक सद य/ Judicial Member
Dated : 25.11.2019
"आर.के."
ITA Nos. 777 & 778/Chd/2019-
M/s Ridhi Industries Private Limited, Patiala 8 आदे श क त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु/त/ CIT
4. आयकर आयु/त (अपील)/ The CIT(A)
5. -वभागीय त न2ध, आयकर अपील%य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar