Income Tax Appellate Tribunal - Chandigarh
Smt. Ruchi Singla, Mandi Gobindgarh vs Principal Commissioner Of Income Tax, ... on 18 April, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.429/Chd/2015
(Assessment Year : 2006-07)
Smt.Radha Aggarwal Vs. The Principal CIT (Central),
W/o Sh.Parshotam Aggarwal Ludhiana.
Prop. M/s R.P. Steel Industries,
# 378, Sector 3-C,
Mandi Gobindgarh.
PAN: ABFPA2163G
ITA No.424/Chd/2015
(Assessment Year : 2006-07)
Smt.Ruchi Singla Vs. The Principal CIT (Central),
W/o Sh.Ashish Singla Ludhiana.
379, Sector 3-C,
Mandi Gobindgarh.
PAN: ADFPJ1791D
And
ITA No.431/Chd/2015
(Assessment Year : 2006-07)
Sh.Manish Singla Vs. The Principal CIT (Central),
C/o M/s Narain & Company Ludhiana.
#379, Sector 3-C,
Mandi Gobindgarh.
PAN: AYIPS0436J
(Appellant) (Respondent)
Appellant by : Shri Sudhir Sehgal
Respondent by : Shri Sushil Kumar, CIT DR
Date of hearing : 22.02.2017
Date of Pronouncement : 18.04.2017
O R D E R
PER ANNAPURNA GUPTA, A.M. :
All the above three appeals filed by the different assessees are directed against the separate orders passed 2 by the learned Pr. Commissioner of Income Tax (Central), Ludhiana, u/s 263 of the Income Tax Act,1961, each dated 26.2.2015 and relating to assessment years 2006-07.
2. Since the issue involved in all the above three appeals is common, they were heard together and are being disposed off by this common order. For the sake of convenience we shall be dealing with the case of the assessee in ITA No.429/2015.
ITA No.429/Chd/2015 (Smt.Radha Aggarwal):
3. Briefly stated, the facts of the case are that the original return in this case was fled on 16.8.2012 declaring income at Rs.8,03,140/-. The assessment was completed u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 (in short 'the Act') vide order dated 25.3.2013 determining the total income at Rs.11,53,142/-. Thereafter the Ld. Principal CIT(Central), Ludhiana issued show cause notice u/s 263 of the Act dated 8.1.2015, which is reproduced in the impugned order, in which the Ld.Principal CIT noted that the assessee had purchased 3150 shares of M/s Pragati Nirman Pvt. Ltd. for a consideration of Rs.1,22,85,000/- @ Rs.3900/- per share. The Ld.Principal CIT noted that search u/s 132 of the Act was carried out on 30.10.2006 on the following group of cases:
1) Narain & Company group of cases
2) Rajinder Puri group of cases
3
3) Gulati group of cases
4) H.S. Chadha group of cases
5) VTC group of cases
4. The Ld.Principal CIT pointed out that during the course of search certain documents were found and seized at the residence of Shri Surinder Gulati, one of the original shareholders of M/s Pragati Nirman Pvt. Ltd. and thereby one of the sellers of the shares, which showed that the actual sale price of each share was Rs.6554/- as against the accounted sale price of Rs.3900 per share. The Ld.Principal CIT on the basis of the above found that the assessee had paid extra consideration of Rs.2650/- per share for the purchase of 3150 share of M/s Pragati Nirman Pvt. Ltd. He further found that no addition on account of the same was made by the Assessing Officer. The assessment order was, therefore, found to be erroneous in so far as prejudicial to the interest of the Revenue. In response to the notice, the assessee submitted reply vide his letter dated 4.2.2015, which is reproduced at para 2 of the impugned order, in which the assessee submitted that the documents on the basis of which the purchase price of the shares was worked out at Rs.6554/- were not connected to the assessee, nor any amount having been paid or received by the assessee mentioned in the same. The assessee submitted that it had not purchased any shares from Shri Surinder Kumar Gulati and had in fact purchased the shares from Shri 4 Narain Dass Shah of Varanasi. The details of purchase of shares made by the assessee alongwith affidavit of Shri Narain Dass Shah were submitted. The assessee also contended that even otherwise the additions on account of the alleged higher sale price fetched by Shri Surinder Kumar Gulati had been deleted by the Commissioner of Income Tax, Gurgaon. The assessee also submitted that no document was found from the possession of the assessee and the same documents were found from the residence of Shri Surinder Kumar Gulati which were not incriminating in nature against the assessee. The Ld.Principal CIT, however, did not accept the contention of the assessee and noted that the submissions made in the impugned case were identical to that in the case of M/s Gopal Castings (P) Ltd. for assessment year 2006-07 except for the fact that the assessee had claimed to have purchased shares from Shri Narain Dass Shah of Varanasi. The Ld.Principal CIT held that this fact made no difference since the very low rate of shares purchased could not be said to be genuine rate in view of the evidence of higher rate per share found in the course of search. Thereafter the Ld.Principal CIT relied upon his order passed in the case of M/s Gopal Castings (P) Ltd. for assessment year 2006-07 in proceedings initiated u/s 263 of the Act and for the reasons discussed in the said order, held the order passed by the Assessing Officer in the present case also as erroneous in so far as it was prejudicial to the interest of the Revenue. The 5 Ld.Principal CIT set aside the order of the Assessing Officer with the direction to make fresh assessment de- novo after properly examining the facts of the case and relevant legal provisions and conducting proper enquiry.
5. The assessee is in appeal before us challenging the aforesaid order passed u/s 263 of the Act. During the course of hearing before us, the Ld. counsel for the assessee at the outset pointed out that the order passed u/s 263 of the Act in the case of M/s Gopal Castings (P) Ltd., which had been heavily relied upon by the Ld.Principal CIT in the present case had been set side by the I.T.A.T. in its order passed in ITA No.430/Chd/2015 dated 29.4.2016. The Ld. counsel for the assessee further pleaded that proper enquiries relating to the issue of shares purchased of M/s Pragati Nirman Pvt. Ltd. had been made during the course of assessment proceedings. The Ld. counsel for the assessee drew our attention to the certified copies of order sheet entries made in the case of the assessee for the impugned year i.e. assessment year 2006-07 and specifically pointed out to the order sheet entry dated 20.2.2013 asking for the details of the shares purchased of M/s Pragati Nirman Pvt. Ltd. The relevant order sheet entry is reproduced hereunder:
"20.02.2013 Present S h . J e e wa n Bansal, CA, produced books of account and test checked. T h e a s s e s s e e wa s a s k e d t o f ile the detail of share purchase of M/s 6 Pragati Nirman Pvt. Ltd. The case is adjourned to 07.03.2013.
6. The Ld. counsel for the assessee thereafter drew our attention to the reply filed by the assessee in this regard vide its letter dated 7.3.2013 and pointed out that all details pertaining to the shares purchased had been filed to the Assessing Officer and further the assessee had also submitted as to why the share price of Rs.6554 per share be not applied in the present case. The relevant reply of the assessee is reproduced hereunder:
"I have purchased 3150 Shares of Pragati Nirman Private Limited from Sh.Narayan Dass Shah Ck 19/17 Chowk varanasi for consideration of Rs.l2285000/-paid vide DD through Oreintal Bank of Commerce Chandigarh on 14/02/2006 @ Rs.3900/-per share. The source of the same was provided during the course of assessment.
3150 Shares of Pragati Nirman Private Limited was purchased by the applicant form the above said person @ Rs.3900/-per share and the payment was made by the account payee draft. The source of the investment and the proof for the purchase of shares was provided during the course of assessment and the same was verified by your good self.
2.As regards to treat the share price at Rs.6554/-per share, we submit as under:
Duirng the assessment proceedings your good self confront the documents Found during the search operation form the residence of Sh Surinder Gulati and the statement given by Sh Surinder Gulati.
On perusal of the documents found from the residence of Surinder Gulati, it is very clear that the applicant name is not mentioned anywhere in the documents to prove the receipt of consideration in cash from the applicant. It is pertinent to mention that the in the statement of Sh Surinder Gulati he clearly admit that he sold the shares of Pragati Nirman Private Limited at Rs.3900/-per share and no extra consideration was received. On the basis of documents found from the third party premises, in which the applicant name is not mentioned any where, no adverse inference can be taken in this regard."7
7. The Ld. counsel for the assessee pointed out that it is evident from the above that all necessary enquiries relating to the transaction of shares purchased of M/s Pragati Nirman Pvt. Ltd. were made during assessment proceedings and Assessing Officer being satisfied with the reply filed by the assessee in this regard had formed a reasonable opinion and made no addition on account of the same. The Ld. counsel for the assessee stated that it is evident from the above that the Assessing Officer had duly applied his mind on the issue and had formed an opinion. The Ld. counsel for the assessee contended that in such circumstances it could not be said that there was any error in the order of the Assessing Officer so as to initiate revisionery proceedings u/s 263 of the Act. The Ld. counsel for the assessee relied upon the order of the ITAT in the case of DCIT Vs. Shri Narain Singla & Others in ITA No.127/Chd/2014 dated 15.2.2016 in this regard. Further the Ld. counsel for the assessee contended that the issue of higher sale price of the shares of M/s Pragati Nirman Pvt. Ltd. had been settled by the I.T.A.T. in the case of DCIT Vs. Shri Ashish Singla in ITA No.129/Chd/2014 vide order dated 15.2.2016 wherein identical addition made in the hands of the assessee on account of alleged higher purchase price paid was deleted by the I.T.A.T. The Ld. counsel for the assessee stated that since the issue of alleged higher sale price of shares of M/s Pragati Nirman Pvt. Ltd. has also been settled by the I.T.A.T., the Ld.Principal CIT could not have taken 8 this as the basis for invoking the revisionery proceedings u/s 263 of the Act. In support of its submissions, the Ld. counsel for the assessee relied upon the order of the I.T.A.T., Chandigarh Bench in the case of M/s Lakshmi Energy & Foods Ltd. Vs. CIT in ITA No.329/Chd/2015 dated 18.4.2016.
8. The Ld. DR, on the other hand, relied upon the order of the Ld.Principal CIT.
9. We have considered the rival submissions. We find that the primary basis for holding the assessment order passed in the present case as erroneous u/s 263 is that as per the Ld.Principal CIT the assessing officer had not considered the issue of purchase of 3150 shares of M/s Pragati Nirman Pvt. Ltd. by the assessee @ 3900/- per share in the light of documents found during the course of search at the premises of one Shri Surinder Kumar Gulati which showed that the shares of M/s Pragati Nirman Pvt. Ltd. were sold @ Rs.6554/- per share. Having heard and considered the arguments made before us, we hold that the jurisdiction assumed u/s 263 by the Ld.Principal CIT in the present case is illegal. Firstly, we find that the Ld.Principal CIT had assumed jurisdiction u/s 263 and passed the impugned order relying heavily on the reasonings given in the case of M/s Gopal Castings (P) Ltd. on identical set of facts and circumstances. The said order in the case of M/s Gopal Casings (P) Ltd. as has been pointed out to us by the Ld. counsel for the 9 assessee has been set aside by the I.T.A.T. in the order passed in ITA No.430/Chd/2015 dated 29.4.2016. In the said order the I.T.A.T. held the proceedings u/s 263 to be unjustified and unreasonable because all the seized material which formed the basis of the addition made was found by the I.T.A.T. to have been duly considered by the Assessing Officer. It was further found by the I.T.A.T. that no evidence was found against so as to connect with the addition on merits. The I.T.A.T. also found that the addition made on account of difference in purchase price of M/s Pragati Nirman Pvt. Ltd. made in the case of Shri Ashish Singha & Others had been deleted by the Tribunal vide its order dated 15.2.2016 and, therefore, there was no justification thereafter for making addition by the Ld.Principal CIT on identical issue. The relevant findings of the I.T.A.T. in the case of M/s Gopal Castings (P) Ltd. in which the order passed in the case of Shri Parshotam Aggarwal Vs. Principal CIT in ITA No.428/Chd/2015 has been followed are as under:
"12. Considering the f acts of the case in the light o f t h e a b o v e o r d e r , i t i s c l e a r t h a t wh e n m a t t e r i n issue has been considered in appeal and decided b y t h e a p p e l l a t e a u t h o r i t y , s a m e wo u l d n o t b e subject matter of proceedings under section 263 of the Act. All the original seized material have alre ady been considered by the Assessing Off icer and the ld. CIT(Appeals), there wa s no jus tif ication to initiate the proceedings under section 263 af t e r passing of the a s s e s s me n t order and the appellate order. Further, no 10 e v i d e n c e wa s f o u n d a g a i n s t a s s e s s e e t o c o n n e c t w i t h t h e a d d i t i o n o n me r i t . Theref ore, the issue is covered in f avour of the assessee by order of IT AT Chandigarh Bench in the case of M/s R.P. Impor t & Export Pvt. Ltd. and there is no jus tif ication for the ld. Pr. CIT to initiate proceedings under section 263 of the Act.
13. W e m a y a l s o n o t e h e r e t h a t wh e n a d d i t i o n s o n me r i t h a v e b e e n m a d e o n t h e i d e n t i c a l i s s u e i n the cases of Shri Ashish Singla and others and ld. C IT ( A p p e a l s ) deleted on me r i t , revenue p r e f e r r e d a p p e a l s t i t l e d a s D C IT V s A s h i s h S i n g l a & O t h e r s i n IT A 1 2 9 / 2 0 1 4 f o r s a m e a s s e s s me n t year 2006-07, the Tribunal vide order dated 15.02.2016 dismissed the departmental appeal holding no justif ication f or mak ing addition on identical issue. The f indings of the Tribunal in this case in para 10-11 are reproduced as under :
"10.We have heard rival submissions. It is not i n d i s p u t e t h a t s e i z e d p a p e r s we r e f o u n d a n d recovered during the course of search in the case of Shri Surinder Gulati. T h e s e d o c u me n t s we r e u s e d a g a i n s t S h r i S u r i n d e r G u l a t i i n h i s a s s e s s me n t a n d a l l t h e s e s e i z e d p a p e r s h a v e b e e n me n t i o n e d i n t h e a s s e s s me n t o r d e r o f S h r i Surinder Gulati dated 28.02.2013 f or a s s e s s me n t y e a r 2 0 0 6 - 0 7 . T h e s t a t e me n t o f S h r i S u r i n d e r G u l a t i a t t h e t i m e o f s e a r c h wa s r e c o r d e d u n d e r s e c t i o n 1 3 2 ( 4 ) o f t h e I n c o me T ax Act wh i c h is also reproduced in his a s s e s s me n t o r d e r a s a b o v e . The seized paper a l o n g wi t h s m a l l b l u e d i a r y m a r k e d ' R a y mo n d ' we r e conf ronted to him in wh i c h he has ad mitted that diary wa s wr i t t e n in his h a n d wr i t i n g a n d b e l o n g s t o h i m. He has also 11 explained the abbreviations contained in the seized paper but none of the abbreviations we r e h a v i n g a n y l i n k o r c o n n e c t i o n wi t h t h e assessee. I n a n s we r t o o n e o f t h e q u e s t i o n , wh i l e ref erring to the seized paper, he has explained that these are estimates and the actual f act remained that he has received money @ Rs. 3900/- per share. Shri Surinder Gulati did not make any allegation against the assessee in respect of shares purchased by the assessee. The seized paper as ref erred in his a s s e s s me n t order have been reproduced in wh i c h , o n c e r t a i n s h a r e s t h e v a l u e h a v e b e e n s h o wn @ 3 9 0 0 / - a s we l l a s i n a n o t h e r p a p e r , t h e s a me r a t e i s me n t i o n e d a g a i n s t t h e t o t a l shares of 3258 and in the third seized paper, total sale proceeds of 3258 shares have been considered by Assessing Off icer in a sum of Rs. 2.13 Crores. This sale consideration wa s div ided by 3258 shares and Assessing Off icer concluded the value of each share at Rs. 6554/-. H o we v e r , a l l t h e a b o v e m a t e r i a l o n r e c o r d i . e . s t a t e me n t o f S h r i S u r i n d e r G u l a t i and the seized paper did not make any allegation ag ain st the assessee of purchase of shares at Rs.6554/-. I t wa s a p r e s u m p t i o n o f the Assessing Off icer that wh e n one of the transactions is conducted by Shri Surinder Gulati for a sum of Rs. 6554/- then p r e s u m p t i o n wo u l d b e t h a t o t h e r s h a r e s h a v e also been transf erred at the same value.
H o we v e r , it is we l l settled law that p r e s u m p t i o n , wh a t - s o - e v e r m a y b e s t r o n g b u t s a me c a n n o t t a k e p l a c e o f p r o o f . It is also ad mitted f act that assessee did not have any t r a n s a c t i o n wi t h S h r i S u r i n d e r G u l a t i o r a n y o f his f amily me m b e r s . The assessee had 12 purchased shares f rom Chadha f amily and even in search in the case of Chadha f amily, no m a t e r i a l o r d o c u me n t wa s f o u n d m a k i n g a n y allegation against the assessee.
10(i) It is interesting to note that wh e n addition is made by the Assessing Off icer in the case of Shri Surinder Gulati based on the s a me s e i z e d m a t e r i a l b y t a k i n g t h e s a m e v a l u e of the share at Rs. 6554/-, Shri Surinder Gulati pref erred appeal bef ore ld. C IT ( A p p e a l s ) , Central, Gurgaon and the entire addition, on the basis of the same seized material have been deleted vide order dated 25.03.2014. Copies of the s a me a s s e s s me n t order and appellate order in the case of Shri Surinder Gulati have been placed on record. The ld. DR ad mitted that since tax effect was lo w in the case of Shri Surinder Gulati, theref ore, no d e p a r t me n t a l a p p e a l h a v e b e e n f i l e d b e f o r e t h e Tribunal. It, theref ore, stands concluded that the addition made on the basis of the same seized material f ound f rom the residence of Shri Surinder Gulati wa s not reliable and wo u l d n o t l e a d t o a n y a d d i t i o n e v e n i n t h e c a s e o f S h r i S u r i n d e r G u l a t i f r o m wh o s e p o s s e s s i o n , s e i z e d p a p e r s we r e f o u n d a n d r e c o v e r e d . It is n o t e x p l a i n e d d u r i n g t h e c o u r s e o f a r g u me n t s how the s a me seized papers containing no allegation against the assessee are admissible in evidence against the assessee. Where there is no incriminating evidence available against the assessee on record, the above addition f or enhancing value of the asset could not be made on suspicion and surmises. T he presu mp tion under section 132(4A) is, theref ore, not a v a i l a b l e wh e n t h e s e i z e d p a p e r i s r e c o v e r e d 13 from the third party and not f rom the assessee. W e a r e f o r t i f i e d i n o u r v i e w b y o r d e r o f IT A T A h me d a b a d Bench in the case of Akshay P u s h p v a n d a n V s D C IT ( s u p r a ) . Once the seized p a p e r s we r e n o t f o u n d r e l i a b l e i n t h e c a s e o f Shri Surinder Gulati from wh o s e possession s a me we r e r e c o v e r e d , t h e r e i s n o t h i n g l e f t f o r consideration against the assessee.
10(ii) The assessee in addition to the a b o v e a l s o e x p l a i n e d t h a t wh e n s t a t e m e n t o f S h r i S u r i n d e r G u l a t i wa s a l s o r e c o r d e d i n t h e case of Shri Madan Gulati, he has not supported the case of the revenue in his statement. He has also explained in the s t a t e m e n t t h a t R s . 8 0 l a c s wa s s u r r e n d e r e d o n account of dealing wi t h the Varanasi party wh i c h has also no connection wi t h the assessee. The assessee also f iled Prof it & Loss Account of the PNPL to sho w that there was very little prof it in their case and that p r o p e r t y wa s l e a s e - h o l d h e l d b y t h e m a n d t h a t re-valuation of the shares s h o ws the lesser amount as against the purchase consideration d e c l a r e d b y a s s e s s e e wo u l d c l e a r l y s u p p o r t t h e c a s e o f t h e a s s e s s e e t h a t a d d i t i o n wa s m a d e a g a i n s t h i m wi t h o u t a n y b a s i s . The assessee also cited a comparable case of Jagat Theater i n wh i c h t h e v a l u e p e r s h a r e wa s l e s s e r a n d t h e s a l e c o n s i d e r a t i o n wa s a l s o l e s s e r . T h e s e evidences and material on record also support the f indings of the ld. C IT ( A p p e a l s ) that a d d i t i o n wa s m a d e me r e l y o n p r e s u m p t i o n a n d without any basis. Since no d o c u me n t or m a t e r i a l wa s f o u n d d u r i n g t h e s e a r c h a g a i n s t the assessee to prove that assessee paid any a m o u n t o v e r a n d a b o v e wh a t i s p a i d t h r o u g h 14 the banking channel, wo u l d clearly indicate that Assessing Off icer, without any jus tif ication made the addition against the assessee. T h e l d . D R , h o we v e r , r e l i e d u p o n decision of the Hon'ble Punjab & Haryana High Court in the case of Joginder Lal (supra). In this case, the assessee purchased a plot vide registered Sale Deed f or consideration of Rs. 3.70 lacs and during the survey conducted under section 133A, vendors declared sale consideration of the said plot at Rs. 38 lacs. In the case of Hiren Vasant Lal Shah (supra) pursuant to the search at the assessee's p r e m i s e s , c e r t a i n d o c u me n t s w e r e f o u n d a n d o n e o f t h e s a i d d o c u me n t c o n t a i n e d wo r k i n g o f interest @ 3% on the total sum of Rs. 3 lacs. H o we v e r , in the case of the assessee, no d o c u me n t or material wa s found during the c o u r s e o f s e a r c h a g a i n s t t h e a s s e s s e e wh e n t h e search wa s conducted in the case of Shri Surinder Gulati or in the case of the assessee. Theref ore, both decisions are distinguishable on f ac t s . The decision in the case of R.P. Vashisht (supra) relied upon by ld. DR is also not applicable to this case.
11. Considering the totality of the f acts and c i r c u ms t a n c e s i n t h e l i g h t o f t h e f i n d i n g s o f l d . C I T ( A p p e a l s ) , p a r t i c u l a r l y wh e n t h e a d d i t i o n s have been deleted in the case of Shri Surinder Gulati and the matter has reached f inality, nothing survive in f avour of the revenue to make any addition against the assessee. In the absence of any evidence on record against t h e a s s e s s e e , we a r e n o t i n c l i n e d t o i n t e r f e r e with the order of the ld. CIT(Appeals) for deleting the addition. No error have been 15 p o i n t e d o u t i n t h e o r d e r o f t h e l d . C IT ( A p p e a l s ) . The contention of ld. DR have no f orce that wh e n o n e t r a n s a c t i o n i s c o n d u c t e d a t t h e s a m e rate, the same rate should be applied in other cases. I n v i e w o f t h e a b o v e , we d o n o t f i n d any merit in the d e p a r t me n t a l appeal. The s a me i s a c c o r d i n g l y d i s m i s s e d . "
13(i) F o l l o wi n g t h e f i n d i n g s o f t h e T r i b u n a l i n the cases of Shri Ashish Singla (supra), there wo u l d be no ju stif ication to proceed wi t h the proceedings under section 263 of the Act and no p u r p o s e wo u l d s e r v e t o u p h o l d t h e o r d e r o f l d . P r . C I T u n d e r s e c t i o n 2 6 3 o f t h e I n c o me T a x A c t , p a r t i c u l a r l y wh e n t h e d e p a r t m e n t a l a p p e a l i n t h e case of the assessee has already been dismissed by the Tribunal conf irming deletion of additions o n me r i t b y t h e l d . C IT ( A p p e a l s ) .
14. Considering the above discussion and in the l i g h t o f v a r i o u s o r d e r s r e f e r r e d t o a b o v e , we a r e of the vie w that proceedings under section 263 a r e c l e a r l y b e y o n d t h e c o m p e t e n c e o f l d . P r . C IT and wh o l e proceedings are unjustif ied and unreasonable, theref ore, the impugned order c o u l d n o t b e s u s t a i n e d i n l a w. We, accordingly, set aside the impugned order under section 263 of the Act and quash the same."
10. The facts in the present case admittedly are identical to that in the case of M/s Gopal Castings (P) Ltd. (supra). The error in the assessment order in the present case is on account of non consideration of the difference in purchase price of shares of M/s Pragati Nirman Pvt. Ltd. which as per the Ld.Principal CIT were @ 16 Rs.6554 per share based on certain documents found at the premises of Shri Surinder Kumar Gulati who was searched, instead of Rs.3900/- per share shown by the assessee, which in turn warranted addition to be made on account of unaccounted investments. In the present case also, as demonstrated above by the Ld. counsel for the assessee, enquiry relating to the purchase price of the shares were made during assessment proceedings and due reply filed by the assessee. A perusal of the reply filed by the assessee, as reproduced above, shows that he had also explained why the price of Rs.6554/-, based on the documents seized from the premises of Shri Surinder Kumar Gulati, be not substituted. Therefore, it is clear from the above that the issue had been duly enquired into during assessment proceedings. The Assessing Officer had applied his mind on the issue and thereafter formed an opinion making no addition of the same.Further we find that the issue relating to the price of the shares of Pragati Nirman had been settled by the ITAT in the case of Ashish Singla(supra) wherein addition made on account of alleged higher price fetched was deleted. Therefore the view formed by the AO was in consonance with that of the ITAT. There was therefore, we hold, no justification for the Ld.Principal CIT to initiate proceedings u/s 263 as there was no error in the assessment order as held by the I.T.A.T. in the case of M/s Gopal Castings (P) Ltd. (supra) and in the case of Shri Narain Singla & Others. The relevant findings of the I.T.A.T. in the case of Shri Narain 17 Singla & Others at paras 11 to 16 of the order are as under:
11. No w on the legal ity of assu mption of j u r i s d i c t i o n b y t h e C IT ( A ) u / s 2 6 3 o f t h e A c t , a n order can be revised under section 263 of the Act b y t h e l e a r n e d C o m m i s s i o n e r o f I n c o me T a x o n l y if it satisf ies the t wi n conditions of being e r r o n e o u s a s we l l a s p r e j u d i c i a l t o t h e i n t e r e s t s of Revenue. I n t h e p r e s e n t c a s e , we f i n d n o e r r o r in the order of the Assessing Of f icer. Our vie w g e t s s t r e n g t h e n b y t h e j u d g me n t o f t h e H o n ' b l e Apex Court in the case of Malabar Industrial Co. L t d . V s . C IT ( 2 0 0 0 ) 2 4 3 IT R 8 3 ( S C ) , wh e r e i n i t was held as under :
"When an Inco me T ax Off icer ado pted one of the courses permissible in law and it has resulted in loss of revenue or wh e r e t wo v i e ws are possible and the I n c o me T ax O f f i c e r h a s t a k e n o n e v i e w wi t h wh i c h t h e Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue unless the vie w taken by the I n c o me T ax Off icer is u n s u s t a i n a b l e i n l a w. "
"12. The said vie w has also been held in a j u d g me n t o f t h e H o n ' b l e J u r i s d i c t i o n a l P u n j a b & Haryana High Court in the case of C IT V s . I n d o German Fabs, ITA No.248 of 2012, dated 24th D e c e mb e r , 2 0 1 4 , i n t h e f o l l o wi n g wo r d s :
" S e c t i o n 2 6 3 o f t h e A c t c o n f e r s p o we r t o e x a m i n e a n a s s e s s me n t o r d e r s o a s t o a s c e r t a i n wh e t h e r i t i s e r r o n e o u s a n d prejudicial to the interest of the revenue but does not conf er jurisdiction upon the CIT to substitute his opinion f or the opinion of the A s s e s s i n g O f f i c e r . T h e wo r d s p r e j u d i c i a l a n d 18 erroneous have to be read in conjunction and theref ore, it is not each and every error i n a n a s s e s s me n t t h a t i n v i t e s e x e r c i s e o f p o we r s u n d e r S e c t i o n 2 6 3 o f t h e A c t , b u t only orders that are erroneous and prejudicial to the interest of the revenue."
12. O n e s i t u a t i o n i n s u c h a b a c k g r o u n d o f f ac t s , f o r C IT t o a s s u m e j u r i s d i c t i o n u / s 2 6 3 i s t h a t i n case, on an appraisal of such enquiry, the A s s e s s i n g o f f i c e r t a k e s a v i e w wh i c h i s n o t i n a c c o r d a n c e wi t h l a w. P r e s e n t i s n o t a c a s e wh e r e s o me t h i n g a s p r e s c r i b e d u n d e r t h e l a w h a s n o t been done by the Assessing off icer. Another s i t u a t i o n i n wh i c h C IT c a n a s s u me j u r i s d i c t i o n u / s 2 6 3 i s t h a t h e b r i n g s o n r e c o r d s o me t h i n g t o disprove the f inding arrived at by the Assessing off icer. i.e. in such cases, wh e r e though apparently nothing illegal has been done by the A s s e s s i n g o f f i c e r , C IT h a s t o c o m e t o a c o n c l u s i o n himself and decides that the order is erroneous by conducting necessary enquiry, if required bef ore he passes the order u/s 263. In the present case, no such f inding has been recorded by CIT and the matter is restored to the Assessing of f icer to make f urther enquiry/investigation. In this context, our vie w get strengthened by the judgment of Hon'ble Delhi H i g h C o u r t i n t h e c a s e o f IT O V s . D . G . Housing Projects Ltd (2012) 343 IT R 329 (Delhi.), wh e r e i n i t h a s b e e n h e l d t h a t t h e m a t t e r c a n n o t be remitted to the Assessing off icer f or f resh adjudication by the CIT wi t h o u t recording a f inding th at the order of the Assessing off icer is erroneous.
14. The learned Commissioner of I n c o me T ax can also invoke jurisdiction under section 2 6 3 o f t h e A c t i n a s i t u a t i o n wh e n t h e r e i s a l a c k 19 of enquiry. If there is an inquiry, h o we v e r , inadequate it may be, it does not give jurisdiction to the learned Commissioner of I n c o me T ax under section 263 of the Act to substitute his opinion. In the present case CIT himself has quoted the reply of the assessee in his show cause. Though it may not be proper in his opinion. In case of diff erence of opinion, the learned Commissioner of I n c o me T ax cannot invoke the jurisdiction under section 263 of the Act. This vie w also get supported by the l a n d m a r k j u d g m e n t o f t h e H o n ' b l e B o mb a y H i g h Court in the case of Gabriel India Ltd. (1993) 2 0 3 IT R 1 0 8 ( B o m ) .
15. I t i s a m a t t e r o f f ac t t h a t t h e A s s e s s i n g off icer being an adjudicating officer has to f orm a n o p i n i o n o n t h e b a s i s o f e v i d e n c e , wh i c h h e h a s duly done. I f t h e L d . C IT o n t h e s a m e s e t o f e v i d e n c e f o r ms a n o p i n i o n , i t b e i n g a q u e s t i o n o f f act, does not given him jurisdiction to revise the s a me u / s 2 6 3 o f t h e A c t . T h i s i s c e r t a i n l y a c a s e o f d i f f e r e n c e o f o p i n i o n b e t we e n A s s e s s i n g o f f i c e r a n d C IT . T h e o n l y c o n t e n t i o n o f t h e C IT s e e ms that the Assessing off icer should have made f u r t h e r e n q u i r e s / i n v e s t i g a t i o n , wh i c h h e h a s n o t done. H o we v e r , for assuming jurisdiction u/s 263, one has to keep in mind the distinction b e t we e n l a c k o f i n q u i r y a n d i n a d e q u a t e e n q u i r y . I f t h e r e wa s a n e n q u i r y , e v e n i n a d e q u a t e , t h a t wo u l d n o t b y i t s e l f g i v e o c c a s i o n t o t h e C IT t o p a s s o r d e r u / s 2 6 3 , me r e l y b e c a u s e h e h a s a dif f erent opin ion in the matter. It is only in case of 'lack of inquiry' that such a cause of action could be o pen. Assessing off icer called f or action, assessee replied to the Assessing off icer, Assessing off icer acce pted and even in the off ice 20 note me a n t f o r internal purposes he me n t i o n s that the assessee has substantiated the j e we l l e r y s e i z e d . I n v i e w o f t h e s e e v i d e n c e s , t h i s is not a case of lack of inquiry either.
16. I n v i e w o f t h e a b o v e a n a l y s i s , we d o n o t f ind any error in the order of Assessing off icer. H e n c e , we s e t a s i d e t h e o r d e r o f L d . C IT m a d e u/s 263 of the Act as the order of the Assessing off icer is not f ound to be erroneous."
11. Further as held in the case of M/s Gopal Castings (P) Ltd. also, the addition on merit made on identical issue in the case of Shri Ashish Singla & Others has been deleted by the I.T.A.T. in ITA No.129/Chd/2014 for the same assessment year. In such circumstances, where it was settled that there was no basis for substituting the purchase price of the shares of Pragati Nirman at Rs.6154/- least of all on the basis of documents found during search from the premises of Shri Surinder Gulati, there would be no jurisdiction with the learned Commissioner of Income Tax to proceed with the provision u/s 263 of the Act and no purpose would serve to uphold the order of the Ld.Principal CIT u/s 263 of the Act. The I.T.A.T., Chandigarh Bench in M/s Lakshmi Energy & Foods Ltd. Vs. CIT Central in ITA No.329/Chd/2015 vide order dated 18.4.2016 has held that when particular issue has been decided by the I.T.A.T. in favour of the assessee, the same is binding on all lower authorities and the Assessing Officer having taken the same view as that of the I.T.A.T. the order of the 21 Assessing Officer cannot be tinkered with by the Commissioner u/s 263 of the Act. The relevant findings at paras 10 and 11 of the order are as under:
"10. For invoking jurisdiction under section 263 of the Act, twin conditions of the order being e r r o n e o u s a s we l l a s p r e j u d i c i a l t o t h e i n t e r e s t o f t h e R e v e n u e a r e t o b e s a t i s f i e d s i mu l t a n e o u s l y . We are unable to understand that once the particular issues have been decided in f avour of the assessee by the I.T .A.T ., even if in earl ier a s s e s s me n t years, how the Commissioner of I n c o me T a x c a n i n f e r t h a t t h e s a m e v i e w h a v i n g been taken by the Assessing Off icer in s u b s e q u e n t a s s e s s me n t y e a r , i s erroneous. This is totally against the principles of judicial discipline and binding precedent. It is the spirit of law that the vie w taken by a higher authority i s b i n d i n g o n a l l t h e l o we r a u t h o r i t i e s . Vie w taken by I.T.A.T. is binding on Assessing Off icer as we l l as CIT (Appeals) and even on Commissioner of I n c o me T ax, assuming jurisdiction under section 263 of the Act. Even if at the time of passing the order, the Assessing Off icer did not have the benef it of the order of the I.T.A.T. in earlier years, the Commissioner of I n c o me T a x , wh i l e a s s u m i n g j u r i s d i c t i o n u n d e r section 263 had the benef it of the same.
Theref ore, the order wa s binding on C o m m i s s i o n e r o f I n c o me T a x .
11. Since the issues have been settled by t h e I . T . A . T . a n d t h e s a me v i e w h a s b e e n t a k e n b y the Assessing Off icer, now in the garb of proceedings under section 263 of the Act, the C o m m i s s i o n e r o f I n c o me T a x c a n n o t t i n k e r wi t h her act stating that the same does not 22 commensurate with the f indings given by the A s s e s s i n g O f f i c e r a n d C IT ( A p p e a l s ) i n e a r l i e r years. In this order of the Commissioner of I n c o me T ax, we do not f ind even an iota of evidence and observe that the Commiss ioner of I n c o me T a x h a s n o t b e e n a b l e t o b r i n g o n r e c o r d a n y o f t h e i n f e r e n c e s d r a wn b y t h e A s s e s s i n g Off icer, wh i c h is not as per the vie w of the I . T . A . T . g i v e n i n e a r l i e r a s s e s s me n t y e a r s . In v i e w o f t h i s , we d o n o t f i n d a n y e r r o r i n t h e o r d e r of the Assessing Off icer, not to talk about th e prejudice to the interest of the revenue. T h e r e f o r e , i n o u r v i e w, t h e j u r i s d i c t i o n a s s u me d b y t h e C o m m i s s i o n e r o f I n c o me T a x u n d e r s e c t i o n 2 6 3 o f t h e A c t i s n o t a s p e r l a w. "
12. In view of the above and in the light of various orders referred to above, we are of the view that the proceedings u/s 263 of the Act are clearly beyond competence of the Ld.Principal CIT and whole proceedings are unjustified and unreasonable. We, therefore, set aside the impugned order u/s 263 of the Act.
13. The appeal of the assessee is also in the above terms.
ITA No.424/Chd/2015(Smt.Ruchi Singla):
& ITA No.431/Chd/2015(Shri Manish Singla):
14. I t i s r e l e v a nt t o o b s e r v e h e r e t ha t t h e f a c t s a nd c i r c u m s t an c e s of t h e s e t w o a p pe a l s a r e si m i l ar t o t h a t of Smt.Radha A g ga r w a l in I TA N o . 4 2 9 / C hd / 2 0 15 and the f i n d i n g s g i v en i n I TA N o . 4 2 9/ Ch d / 2 0 1 5 s h al l a p p l y t o t h e s e a p pe a l s al so w i t h eq u a l fo r ce .
23
15. B o t h t h e se a p p ea l s o f t he a s s e sse e s a r e al l o w e d i n t h e a b o v e t e r m s.
16. In the result, all the appeals of the assessees are allowed.
Order pronounced in the open court.
Sd/- Sd/-
(BHAVNESH SAINI) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 18 t h April, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh