Income Tax Appellate Tribunal - Chandigarh
Shri Ramesh Mittal, Panchkula vs Cit, Gurgaon on 24 April, 2017
ITA Nos.1009 to 1011/Chd/2014
Shri Ramesh Mittal
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH - NEW DELHI
Before Shri C.M. Garg, Judicial Member
And
Smt. Annapurna Gupta, Accountant Member
ITA Nos. 1009 to1011/Ind/2014
A.Ys. 2005-06 to 2007-08
Ramesh Mittal
Panchkula ::: Appellant
Vs
Commissioner of Income Tax
Central, Gurgaon ::: Respondent
Appellant by Shri Neeraj Jain
Respondent by Shri Sushil Kumar
Date of hearing 25.1.2017
Pronounced on 24.4.2017
O R D E R
PER SHRI C.M. GARG, JM
These appeals have been directed by the assessee against the consolidated order of the learned CIT (Central), Gurgaon, dated 27.3.2014 passed under section 262 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') 1 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal
2. There is a delay of 174 days in filing these appeals and as such these appeals are barred by limitation.
3. Before us, applications for condonation of delay in filing these appeals for the assessment years, under consideration, have been filed on the following common grounds :-
i. The notice u/s 263 was issued by ld. CIT, Central, Gurgaon, on 21/22.01.2014 and order u/s 263 was passed vide order dt. 28.03.2014. The appeal u/s 263 was not filed by the appellant before the Hon'ble ITAT, Chandigarh as the appellant was not aware that the appeal can be filed before the Hon'ble ITAT against the CIT's order u/s 263 of the Act, and also the legal advisor of the appellant did not advice the same.
ii. Now the appellant has changed the Counsel for appearing before the ld. ACIT, Central Circle II, Chandigarh for assessment proceedings in pursuance of order u/s 263 of the IT Act and the counsel has advised that the appeal against the order u/s 263 lies before the Hon'ble ITAT, Chandigarh Bench, Chandigarh.
2 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal On the basis of the above, it was submitted by the learned counsel for the assessee that keeping in view the ignorance on the part of the assessee as also the principle of natural justice, the delay in filing these appeals may be condoned and the appeals may kindly be admitted for hearing.
4. On the other hand, the learned DR strongly opposed the above prayer of the learned counsel for the assessee with the submission that ignorance cannot be a ground for condoning the delay in filing these appeals. He further submitted that there is inordinate delay in filing of these appeals and as such these appeals deserve to be dismissed having been filed beyond the period of limitation.
5. We have carefully considered the arguments of the parties in the wake of the facts brought to our notice. From the impugned order passed u/s 263 of the Act, it is clear that earlier Shri Ashok Mittal was appearing on behalf of the assessee whereas these appeals have been filed on the instructions of Shri Niraj Jain, CA. To this effect, the assessee has filed an affidavit before us which remained unrebutted as there is no counter-affidavit by the Assessing Officer in this regard. We find that an identical issue had arisen in ITA No. 3054/Del/2012 in the case of Daya Ram Mittal, as 3 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal relied upon by the learned AR, wherein vide order dated 6.11.2015 B-Bench of ITAT, Delhi, has condoned the delay by observing as under :-
"3. The assessee has filed an application for condonation of delay of 533 days by stating as under:-
"3. That the documents relating to filling the appeal were given to the counsel who had earlier appeared before CIT (A) on my behalf. I was under a bonafide belief that the appeal has been filed by the counsel. However, subsequently, in and around March, 2012, I received the penalty order U/s 271(1) (c). At that time, I got the knowledge that the quantum appeal has not been filed by the earlier counsel. Thereafter, I collected my records from the old counsel and engaged new counsel and consequently the appeal before Hon'ble Income Tax Appellate Tribunal was filed.
4. The assessee has also filed an affidavit of Sh. N. K. Bansal, the C.A who was noting after the case before the Ld. CIT(A) along him Sh. Himanshu Goel, CA, stating as under:-
"I, Naresh Kumar Bansal S/o Sh. Mani Ram Bansal R/oD-503, Wembley E State, Rosewood city, Sector-49, Gurgoan, Haryana, CA by profession do hereby solemnly declare and affirm as under:-
1. That I have been looking after the income tax matters of Sh. Daya Ram Mittal S/o Sh. Bishamber Dayal Mittal R/o House No.77, Block H- 4/5, Suvidha Kunj Pitampura, New Delhi.
2. That for the A.Y. 2006-07, 1 had been looking after the income tax assessment and appeal matter before CIT(A) along-with C.A. Himanshu Goel. That after the CIT(A) order, due to inadvertence, bonafide omission and communication gap, the further appeal to ITAT could not be filed."
5. The Ld. Assessee's Representative (AR) submitted that the assessee has also filed his affidavit stating that he had given all the necessary papers for filing appeal before Tribunal and he was under bonafide belief that appeal has been filed. He further stated that subsequently around March 2012 he received penalty order u/s 271 (1) (c) of the Act, then he came to know that the appeal against quantum order of the Ld. CIT(A) has not been filed before Ld. CIT(A). Thereafter, he collected his records from his old counsel and engaged new counsel and consequently the appeal before ITAT was filed by 533 days delay. The Ld. A.R 4 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal submitted that in view of the proposition laid down by ITAT, Mumbai in the order dated 7/1/2011 in IT(SS) No. 24/Mum/2009 for A.Y 2002-03 and other related appeal in the case of M/s Gregory & Nicholas vs ACIT, the delay in filing appeal may be condoned.
6. On the other hand, the Ld. DR placing reliance on the order of the ITAT "A" Bench in the case of DCIT V/s M/s Brijwasi Impex Pvt. Ltd. in ITA No. 361/Del/2011 dated 3/9/2014 and submitted that the assessee cannot take shelter of ignorance of law or failure to seek legal advice and these are not sufficient and good causes for condonation of delay. The Ld. DR strongly opposed the prayer of the assessee for condonation of delay.
7. The Ld. AR also placed rejoinder to above contentions of the Ld. DR and submitted that as per ratio of the Hon'ble Apex Court in the case of Collector V/s Mst. Katiji & Ors 1987 AIR 1353 (Supreme Court), the legislature has conferred powers of condonation of delay to enable the court to do substantial justice to parties by disposing matter on merits and to ensure that the cases having merits may not be dismissed at the threshold merelybecause the appeal has been filed beyond prescribed time limit because of non-deliberate delay. The Ld. AR vehemently contended that in the case of Brijmasi Impex (supra), the cause was shown as the "earlier counsel did not properly guide" but no affidavit was filed either by the assessee or by the earlier counsel but in the present case, the assessee and his earlier counsel has filed their respective affidavits supporting this fact that the assessee has given all the necessary papers forfiling appeal before the Tribunal and he was under bonafide belief that appeal has been filed and this fact came to his notice when (the assessee) received penalty order u/s 271 (1) (c) of the Act.
8. On careful consideration of above rival submissions of both the sides, we are of the view that the prayer for condonation of delay falls with the ambit of the ratio of the order of the Tribunal in the case of Gregory& Nicholas V/s ACIT (supra) where in para 8, referring to the order of the ITAT Mumbai in the case of Priyanka Chopra vs ACIT in ITA No. 4045/Mum/2009 dated 10/12/2010, it has been noted that the mistake on the part of the counsel may in certain circumstances be taken into account in dealing in delay.
9. In the present case, the assessee as well as his earlier counsel have filed their affidavits supporting the sufficient cause and no rebuttal have been filed against these affidavits, hence, firstly we note that there is no general proposition that mistake of counsel itself is always a sufficient cause. This question when posed to the courts is always a question whether the explanation and reason for delay was bonafide or was a mere device to cover anulterior purpose such as willful omission or bonafide mistake or deliberatenegligence or an attempt to flout statutory provisions of limitation in an underhand way. At the same time, we cannot ignore that the assessee has to believe and repose faith in their counsel having satisfied his professional requirements and given necessary papers and 5 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal documents along with requisite instructions to his counsel. Thereafter, the litigant may be justified in believing that his counsel would discharge his professional functions and obligations as per his (assessee's) instructions. In these cases, where it is brought on record that the party has done everything within his powers, capacity and ability which is necessary for initiation of legal proceedings or appeal before higher forum, the courts should be liberal in considering the sufficiency of the cause shown by the assessee in support of his prayer for condonation of delay and should be in favour of the assessee.
10. In view of above well settled proposition when we analyze the facts and circumstances of the present case, we note that the assessee and his earlier counsel has deposed on affidavit, which remained unrebuttedby the Revenue, by collectively stating that the assessee handed over all necessary papers/documents which were required for filing an appeal before this Tribunal and subsequently when the assessee received penalty order, he came to know that the counsel has not filed appeal as per his instructions. The counsel of the assessee has also supported this explanation in his unrebutted affidavit by stating that due to inadvertence, bonafide omission and communication gap, further appeal to ITAT could not be filed. In this situation, it can be safely inferred that the assessee made all necessary efforts to file appeal within the prescribed time but the same could not be filed due to bonafide omission and inadvertent mistake of hiscounsel and it would not be justified to dismiss the appeal of the assessee in limine merely because there was delay in filing appeal due to mistake of his counsel. Hence, we reach to a fortified conclusion that the assessee has succeeded in establishing a bonafide sufficient cause which caused delay in filing appeal before Tribunal within the prescribed limitation period and thus we condone the said delay and appeal of the assessee is admitted for hearing on merits."
We, therefore, following the above order of the B-Bench of the Delhi Tribunal, hold that the assessee has succeeded in establishing a bonafide sufficient cause as a result of which delay was caused in filing these appeals before the Tribunal within the limitation period. We, therefore, condone the delay involved in these appeals and admit the same for hearing on merits.
6. Before us, both the parties agreed that all the grounds involved in these appeals are identical. We, therefore, for the sake of 6 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal brevity, reproduced grounds of appeal taken by the assessee in ITA No. 1009/Ind/2014 :-
"1. That the ld. CIT is not justified in not giving the proper opportunity of hearing, which is against the natural justice and the order passed by CIT be quashed.
2. That the ld. CIT is not justified in issuing the notice u/s 263 and also not justified in passing the order u/s 263
3. That the assessment made by ld. A.O. is not erroneous and also not prejudicial to the interest of the revenue and the order passed by ld. CIT u/s 263 is bad in law."
7. Briefly stated, the facts giving rise to this appeal are that a search operation under section 132 of the Income tax Act, 1961 (in short 'Act') was carried out at the residential/business remises of M/s A.P. Shreshtha Colonisers and Mittal Group of cases on 16.1.2009. The assessment orders under section 153A(1)(b) read with section 143(3) of the Act for the assessment years 2005-06 to 2007-08 were passed in the case of the assessee on 25.8.2011. Subsequently, the CIT (Central), Gurgaon, (hereinafter referred to as 'Commissioner') called for the assessment record and noted that during the course of search proceedings in the case of Shri Ashok Mittal certain, documents relating to R.D. Property Consultants were found. These documents were print outs of ledger account and 7 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal trial balance of R.D. Property Consultants for the period from 1.4.2004 to 24.8.2006 pertaining to the period, under consideration, in all the three assessment years. It was also noted that during the assessment proceedings in the case of Shri Ashok Mittal, he denied to have any connection with the seized documents or with R.D. Property Consultants. The learned CIT also observed that in respect of credit entry of Rs.3,19,14,006/- in the name of "Dimple" in the trial balance of R.D. Property Consultant, it was discovered that "Dimple" is alias of Ramesh Mittal, the assessee, whose residence, house no. 515, Sector 16, Panchkula, was also covered during search operation. The address of "Dimple" was given by Shri Ashok Mittal in his written submissions which also happens to be the residential address of the assessee corroborating the statement given by Shri Ashok Mittal in his written submission that "Dimple" is the alias of Shri Ramesh Mittal, the assessee.
8. On the basis of the above facts, the Commissioner issued notice u/s 263 of the Act to the assessee for all the three assessment years on 21.1.2014 fixing the date for hearing on 11.2.2014. Subsequently, the Commissioner passed the impugned order for all the assessment years by holding that the order is 8 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal erroneous and prejudicial to the interest of the revenue and the Commissioner directed the Assessing Officer to re-examine the issue of impugned credit entry by making comprehensive inquiries regarding the constitution and ownership of R.D. Property Consultants as well as enquiries regarding the credit entries appearing in alias name of the assessee in the printouts of the ledger accounts and trial balance of the said concern seized during the search operation from the premises of Shri Ashok Mittal. Finally, the assessment orders for all the three years dated 25.8.2011 were set aside and the assessments for all the three years were restored to the file of the Assessing Officer. Now, the aggrieved assessee is before the Tribunal with the grounds as reproduced hereinabove.
GROUND NO.1
9. We have heard the arguments of both the sides and carefully perused the relevant material placed on record of the Tribunal. The learned AR submitted that the Commissioner was not justified in not giving proper opportunity of hearing to the assessee which is against the principle of natural justice and, therefore, the order passed by the Commissioner be quashed. Replying to the above, the 9 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal learned DR drew our attention to para 4 of the impugned order and submitted that on 11.2.2014 the assessee through his counsel sought adjournment which was allowed for 14.3.2011 and on the date fixed, neither the assessee nor his authorised representative attended the proceedings nor any written submissions or application for adjournment were filed. Therefore, the Commissioner was quite justified in passing the impugned order as the case was going to be barred by limitation on 31.3.2014. The learned DR vehemently contended that when the assessee is not appearing to explain his stand and the case despite proper information regarding the date of hearing then the Commissioner had no option but to decide the case on merits on the basis of material on record, which cannot be said to be violation of principles of natural justice.
10. On careful consideration of the above arguments in the wake of the facts of the case, from para 4 of the impugned order of the Commissioner it is vivid that on 11.2.2014 the assessee through his counsel sought for adjournment which was allowed for 14.3.2011 and on that date of hearing neither the assessee nor his authorised representative attended the proceedings nor any application for 10 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal adjournment or written submissions were filed. Therefore, since the case was going to be time barred on 31.3.2014, the Commissioner was quite correct and justified in proceeding to pass final order on 27.3.2014. In this situation, we decline to accept the contention of the learned AR that the orders have been passed violating the principles of natural justice ex-party and hence, ground no. 1 of the assessee being de void of any merit, is dismissed. GROUND NOs. 2 & 3
11. Apropos these grounds, the learned counsel for the assessee drew our attention to copy of notice dated 21.3.2014 under section 263 of the Act and submitted that the Commissioner himself was not sure whether the issue of credit entry was either not examined by the Assessing Officer or if examined, the conclusion, which naturally flows on the facts and circumstances of the case, has not been drawn. The learned counsel for the assessee further submitted that the impugned order has been passed on the basis of assessment record of Shri Ashok Mittal as the cases of the assessee and Shri Ashok Mittal were centralised with the same Assessing Officer. The learned counsel for the assessee further submitted that during the course of search proceedings in the case of Shri 11 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal Ashok Mittal, documents relating to R.D. Property Consultants were found which were copies of trial balance and ledger accounts available at pages 38 to 62 of the assessee's paper book. The learned AR further elaborated that as per trial balance (page 38) capital accounts of six persons were mentioned including the account in the name of "Dimple". The learned counsel for the assessee further submitted that during the assessment proceedings of Shri Ashok Mittal, the case was referred to special auditor who submitted his report on 25.6.2011 after raising query with regard to papers of R.D. Property Consultants to Shri Ashok Mittal and considering his reply to such query. In the reply filed by Shri Ashok Mittal to the special auditor, he stated that he has no connection with such alleged party, R.D. Property Consultants, and he provided the addresses of the said six persons and the address of "Dimple" was the same as that of Shri Ramesh Mittal i.e. house no. 515, Sector 16, Panchkula.
12. The learned counsel for the assessee further submitted that subsequently Shri Ashok Mittal filed an application before the Income Tax Settlement Commission on 28.3.2011 and alleged papers of R.D. Property Consultants were duly examined in the case 12 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal of Shri Ashok Mittal by the Assessing Officer, special auditor, Income Tax Settlement Commission and the Commissioner. The learned counsel for the assessee further submitted that the Assessing Officer issued summons u/s 131(1) of the Act to 5 persons, namely, R.D. Property Consultants, "Dimple", Rajinder, Rajiv Kumar and Budh Ram. The learned counsel for the assessee further submitted that in the case of Shri Ashok Mittal requisition u/s 142(1) of the Act was issued by the ACIT, Central-II, Chandigarh on 25.7.2011 wherein vide clause (vi) it was specifically asked that as per the provisions of section 269-C, the onus is on Shri Ashok Mittal to explain the entries recorded in these documents. The Assessing Officer further elaborated that since Shri Ashok Mittal has failed to discharge the onus lay upon him, therefore, he was asked to show cause as to why the total cash credits of Rs.3,19,14,006/- appearing in the name of "Dimple", should not be treated as unexplained cash credit under section 68 of the Act. The learned counsel for the assessee vehemently pointed out that from the copy of the said notice available at pages 16 to 19 of the assessee's paper book it is clear that the Assessing Officer applied his mind to the alleged trial balance, etc. during the 13 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal assessment proceedings of Shri Ashok Mittal and raised queries by way of notice u/s 142(1) of the Act during scrutiny assessment proceedings. The learned counsel for the assessee further pointed out that during the course of hearing before the Income Tax Settlement Commission, the Commissioner directed the Assessing Officer to examine 5 persons whose names appeared in the trial balance of R.D. Property Consultants and after verification by the Assessing Officer, no adverse report in this regard has been received by the Commissioner. He drew our attention to assessee's paper book pages 29 to 35 especially para 15.7 and submitted that the Settlement Commission, after considering the report of special auditor, held that the applicant has denied any connection with R.D. Property Consultants or trial balance, etc. Therefore, the alleged credits including the impugned credit in the present case cannot be assessable in the hands of Shri Ashok Mittal u/s 68 of the Act.
13. The learned counsel for the assessee further elaborated the facts regarding examination of the issue by the special auditor and submitted that as per the copy of the relevant papers of special audit report available at pages 6 to 15 of the assessee's paper book 14 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal it is clear that special auditor after thoroughly examining the impugned documents on all the four corners held that in the absence of information such as bank account, PAN, income tax particulars, partnership deed or any other relevant document, they are not in a position to frame their opinion on the constitution of R.D. Property Consultants. The learned counsel for the assessee further drew our attention to para 2 pages 14 and 15 of the assessee's paper book and submitted that after verification and examination of the relevant documents from all angles it was opined by the special auditor that total cash credits of Rs. 8,84,36,200/- in the trial balance are unexplained cash credits chargeable to tax under section 68 of the Act. However, this computation of undisclosed income pertains to R.D. Property Consultants and the same may be assessed in the case of relevant assessee after finding out the constitution of this firm i.e. R.D. Property Consultants.
14. The learned counsel for the assessee strenuously pointed out that the Commissioner during the course of proceedings before the Income Tax Settlement Commission filed the report under rule 9 of Income Tax Settlement Commission (Procedure) Rules, 1997 on 26.3.2012 in which these papers of R.D. Property Consultants had 15 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal been considered. The learned counsel for the assessee further submitted that the Commissioner in his report submitted to the Settlement Commission urged that the total cash credits as appearing in the trial balance/balance sheet should be treated as unexplained cash credit under section 68 of the Act and added back to the total income of the assessee i.e. Shri Ashok Mittal but the Settlement Commission held that no adverse view is taken in the case of Shri Ashok Mittal. The learned counsel for the assessee submitted that when the existence and constitution of R.D. Property Consultants could not be discovered by the Assessing Officer, by the special auditor and by the Commissioner himself then the conclusion drawn by the Assessing Officer cannot be held as erroneous and prejudicial to the interest of the revenue. Therefore, the provisions of section 263 of the Act cannot be invoked in this regard. The learned counsel for the assessee submitted that the Commissioner has not drawn definite conclusion whether these documents were examined or not by the Assessing Officer and if examined, the conclusion which naturally flows, has not been drawn in the absence of the same and he is not justified in holding that the assessment order is erroneous and prejudicial to 16 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal the interest of the revenue. Placing reliance on the decision of the ITAT, Delhi Bench, in the case of Bharati Airtel Limited; 44 CCH 95 (Del Tri) the learned counsel for the assessee submitted that where there is no definite conclusion or opinion of the Commissioner regarding the action of the Assessing Officer then the provisions of section 263 of the Act cannot be invoked.
15. The learned counsel for the assessee further submitted that it has been stated by Shri Ashok Mittal that the name of "Dimple" appearing in the seized ledger account and trial balance, in fact, is alias of Shri Ramesh Mittal and on the basis of such statement, this account was neither properly investigated nor taken into account in computing the total income of the assessee, Shri Ashok Mittal. The learned counsel for the assessee further submitted that nowhere in the special auditor's report and in the order of Settlement Commission it has been stated by Shri Ashok Mittal that the name of "Dimple" appearing in the seized ledger account and trial account is in fact alias of Shri Ramesh Mittal. The learned counsel for the assessee further submitted that the impugned papers viz. trial balance and other documents have duly been examined in the case of Shri Ashok Mittal by the Assessing Officer of the assessee as both 17 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal the Assessing Officer are the same, by the special auditor, by the Commissioner in his report submitted to the Settlement Commission and by the Settlement Commission also separately. Therefore, it cannot be held that the Assessing Officer has not examined the issue properly.
16. On the issue of directions by the Commissioner to the Assessing Officer in the concluding part of the impugned order, the learned counsel for the assessee submitted that from para 6 of the impugned order it is clear that in the opinion of the Commissioner, the said issue has been examined earlier and now it needs to be re- examined. The learned counsel for the assessee submitted that even after passing the impugned order u/s 263 of the Act, the Commissioner was not definite regarding the ownership and constitution of R.D. Property Consultants and for invoking the provisions of section 263 of the Act. He submitted that the error should not depend upon possibility or guess work but should be actually an error which is discernible from the assessment record and the order under revision. The learned counsel for the assessee further submitted that that in the trial balance of R.D. Property Consultants and ledger account of "Dimple" neither in the books of 18 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal R.D. Property Consultants, name of the assessee, Shri Ramesh Mittal has nowhere been mentioned and without any evidence, the assessee cannot be linked with unanimous personality named as "Dimple", that too by an entity whose constitution and existence could not be discovered despite several efforts of the Assessing Officer, special auditor and Settlement Commission.
17. The learned counsel for the assessee submitted that these documents were not found from the assessment record of the assessee but these were part of assessment record of Shri Ashok Mittal and in the case of Shri Ashok Mittal these papers were duly examined and if it is also a part of assessment record of Shri Ramesh Mittal even then it is clear that these documents have already been examined by the same Assessing Officer who is dealing with the cases of Shri Ashok Mittal and Shri Ramesh Mittal i.e. the present assessee. The learned counsel for the assessee submitted that for invoking the provisions of section 263 of the Act, the Commissioner is required to refer to the records of the assessee and the alleged documents which were seized during search and seizure operation from Shri Ashok Mittal which were part of the assessment record of Shri Ashok Mittal and the same cannot be said to be a 19 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal part of the assessment record of the assessee and, therefore, no adverse inference can be drawn against the Assessing Officer as when the documents were not in the record of Shri Ramesh Mittal then the Assessing Officer cannot be expected to examine the same as per the order of the Commissioner. The learned counsel for the assessee further submitted that without prejudice to the above contention, if for the sake of arguments, it is presumed that the documents pertaining to R.D. Property Consultants, which were in the assessment record of Shri Ashok Mittal, could have been considered by the assessee during the assessment proceedings of the present assessee and, therefore, the same were in the ambit of record of the assessee which was called and seized by the Commissioner before invoking the provisions of section 263 of the Act then also if the Assessing Officer, during the assessment proceedings of Shri Ashok Mittal, had thoroughly examined the same by way of appointing special auditor and there was nothing adverse in the special auditor's report, which was also considered by the Settlement Commission then it cannot be alleged that the Assessing Officer did not conduct any inquiry on the alleged documents relating to R.D. Property Consultants. The learned 20 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal counsel for the assessee further submitted that that if alleged documents of R.D. Property Consultants were part of the assessment record of Shri Ashok Mittal then the inquiry conducted by the same Assessing Officer during the assessment proceedings in the case of Shri Ashok Mittal was sufficient and there was no requirement of further inquiry during the assessment proceedings in the case of the present assessee i.e. Shri Ramesh Mittal. The learned counsel for the assessee vehemently contended that the revenue cannot kill the assessee by twin-edged sword by alleging contradictory allegation viz. firstly alleging that there was no inquiry by the Assessing Officer during the assessment proceedings of Shri Ramesh Mittal on the seized documents pertaining to R.D. Property Consultants and secondly by alleging that the inquiries conducted by the Assessing Officer in the case of Shri Ashok Mittal cannot be taken as extended up to the assessment proceedings of Shri Ramesh Mittal especially when the Assessing Officer of Shri Ashok Mittal and Shri Ramesh Mittal was the same. The learned counsel vehemently pointed out that even decision of Hon'ble Bombay High Court date 16.6.2016 in the case of CIT vs. Shri. Nirav Modi in ITA No. 117 of 2014 since reported as (2016) 138 DTR (Bombay) 81, 21 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal decision of Hon'ble High Court in the case of PCIT vs. Harmony Yarns Private Limited dated 21.6.2016 also supports the case of the assessee that if the AO has called for the reply of the assessee who had given elaborate explanation alongwith relevant documentary evidence then this exercise undertaken by the AO in the reassessment proceedings shows endeavours and application of mind by the AO and the satisfaction of the AO on the basis of the documents produced by the assessee and such order of the AO cannot be alleged as erroneous and prejudicial to the interest of the Revenue in absence of making further inquiry by the CIT himself. He also contended that the allegation of inadequate inquiry cannot be made against the AO and order cannot be held as erroneous and prejudicial to the interest of the Revenue. The learned counsel also placed reliance on the decision of Hon'ble jurisdictional High Court of Delhi in the case of DIT vs. Jyoti Foundation reported as 357 ITR 358 (Delhi) and submitted that in cases of wrong opinion or findings on merits by the AO the CIT has to come to a conclusion and himself decide that order is erroneous by conducting necessary inquiry, if required and necessary, before the order under section 263 of the Act is passed. But in the present case, CIT has not 22 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal conducted any such inquiry as per mandate of section 263 of the Act to show the order as having wrong opinion or findings on merits and without conducting any further inquiry by the CIT, order of the AO cannot be alleged as erroneous and prejudicial to the interest of the Revenue. The learned counsel has also placed reliance on the decision of Hon'ble High Court of Delhi in the case of CIT vs. DLF Limited 350 ITR 555 Delhi and submitted that it is not mere prejudice to the Revenue or mere erroneous view which can be revised under section 263 of the Act but there should be the added element of un-sustainability in the order of the AO which clothes the Commissioner with valid jurisdiction to issue notice and proceed to make appropriate orders. The learned counsel also pointed out that the Hon'ble Delhi High Court in the case of ITO v.s D.G. Housing Project Limited reported as 343 ITR 329 [Del], it was held that if there is no finding that order of the AO is erroneous and prejudicial to the interest of Revenue by way of making independent inquiry by the CIT, the revision of such order u/s 263 of the Act on the basis of bald and baseless allegations is not permitted. The learned counsel further submitted that the order of Hon'ble Bombay High Court in the case of Nirav Modi has attained finality as the 23 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal SLP of the department has been dismissed by Hon'ble Supreme Court on 14.12.2016 copy of the said order of the Hon'ble Apex nCourt has also been placed on record.
18. The learned CIT DR replying to the above submissions submitted that from a bare reading of the assessment order dated 25.8.2011 it is clear that the Assessing Officer has not made any examination or inquiry in regard to the documents relating to R.D. Property Consultants which were found during the course of search proceedings in the case of Shri Ashok Mittal. The learned CIT DR further submitted that that these documents were print outs of ledger account and trial balance of R.D. Property Consultants for the period 1.4.2004 to 24.8.2006 pertaining to the assessment years 2005-06 to 2007-08. The learned DR further elaborated that during the assessment proceedings in the case of Shri Ashok Mittal, he has denied to have any connection with the seized documents or with R.D. Property Consultants and in respect of credit entry of Rs.3,19,14,006/- in the trial balance in the name of one "Dimple", it was discovered that "Dimple" is alias of Shri Ramesh Mittal whose residence is house no. 515, Sector 16, Panchkula which was also covered during search operation. The learned DR further submitted 24 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal that the address of "Dimple" as given by Shri Ashok Mittal was the same which was the address of Shri Ramesh Mittal and Shri Ashok Mittal in his written submissions stated that "Dimple" is the alias of Shri Ramesh Mittal i.e. the assessee and on this issue no examination or inquiry was conducted by the assessee. Therefore, it is a case of lack of inquiry and thus the Commissioner was quite correct and justified in holding the assessment order as erroneous and prejudicial to the interest of the revenue. The learned DR vehemently submitted that it was a major issue having substantial bearing on assessment of the income of the assessee for three years. Therefore, the Commissioner was quite correct and justified in invoking the provisions of section 263 of the Act by issuing notice and by passing the impugned order wherein he directed the Assessing Officer to re-examine the issue of the impugned credit entry by making comprehensive inquiry regarding the constitution and ownership of the concern R.D. Property Consultants as well as inquiries regarding credit entires appearing in the alias name of the assessee in the seized documents viz. print outs of ledger account and trial balance of the said concern. The learned CIT DR further submitted that no prejudice has been caused to the assessee if the 25 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal Assessing Officer draws a logical conclusion in respect of the said credit entries separately in respect of each assessment year after providing due opportunity of hearing to the assessee. Therefore, the impugned order may kindly be sustained.
19. Placing rejoinder on the above submissions, the learned counsel for the assessee submitted that as per the decision of the Hon'ble Delhi High court in the case of Jyoti Foundation (supra) when the CIT without conducting any inquiry regarding alleged wrong opinion and findings arrived by the AO on merits directly jumped to a conclusion and himself decide that the order is erroneous then the reversionary power u/s 263 of the Act cannot be invoked and the CIT A is duty bound to conduct necessary inquiry before reversionary order under the said provision is passed. The ld. Counsel vehemently contended that in the present case without making any inquiry such power u/s 263 of the Act has been invoked by the CIT without assuming valid jurisdiction to revise the reassessment order passed u/s 143(3) r.w.s 153A of the Act, therefore impugned order of 26 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal CIT and consequent proceedings in pursuance thereto may kindly be quashed.
20. On careful consideration of the above rival submissions and after respectful and diligent consideration of all the decisions and orders, cited at bar by both the parties, first of all, we note that the CIT issued following show cause notice u/s 263 of the Act on 21.1.2014 (copy at pages 36 and 37 of the assessee's paper book) :-
"The assessment order u/s 153A(1)(b) r.w.s. 143(3) of I.T. Act, 1961 dated 25.08.2011 for A.Y. 2005-06 passed by Assistant Commissioner of Income Tax, Central Circle_II, Chandigarh in your case was examined and it appears that the following issues were either not examined by the Assessing Officer or if examined, the conclusion which naturally flows in the facts and circumstances of the case as well as the available material on records has not been drawn_ From the perusal of assessment records, it transpired that during the course of search proceeding in the case of Sh. Ashok Mittal, certain documents relating to M/s R.D. Property Consultants were found. These are a printout of Ledger A/c and 27 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal Trial Balance of M/s R.D. Property Consultants for the period 01.04.2004 to 24.08.2006 (inclusive of period under consideration). During assessments proceedings in the case of Sh. Ashok Mittal, he has denied to have any connection with the seized document or with M/s R.D. Property Consultant. However, in respect of credit entry of Rs. 3,19,14,006/- in the trial balance in the name of one "Dimple", it was discovered that "Dimple" is an alias of Sh. Ramesh Mittal whose resident, H.No. 515, Sector-16, Panchkula was also covered during search operation. This address of "Dimple" was given by Sh. Ashok Mittal in his written submission which also happens to be your residential address corroborating the statement given by Sh. Ashok Mittal in his written submission that "Dimple" is the alias of Sh. Ramesh Mittal, i.e. yourself.
However, a perusal of the assessment order passed u/s 153A(1)(b)/143(3) dated 25.08.2011 in your case shows that the issue of this credit entry of Rs. 3,19,14,006/- in your alias name "Dimple" as evident from the seized material from the residential premises of Sh. Ashok Mittal as well as his submission during assessment proceedings in his case, has not 28 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal examined during assessment proceedings in your case for A.Y. 2005-06 to 2007-08. Since, it is a major issue having a substantial bearing on assessment of your income for A.Y. 2005-06 to 2007-08, I am satisfied that the order passed by Assistant Commissioner of Income Tax, Central Circle-II, Chandigarh for A.Y. 2005-06 dated 28.05.2011 is erroneous as well as prejudicial to the interest of revenue which requires intervention as provided u/s 263 of the I T Act, 1961.
You are, therefore, being granted an opportunity of being heard u/s 263(1) of I.T. Act, 1961 to present your explanation with regard to the proposed action. Please note that your explanation must be supported by satisfactory documentary evidences corroborating your contentions.
The date of compliance is fixed for 11.02.2014, you may attend my office at Udyog Vihar, Phase-V, Gurgaon wither personally or through a representative duly authorized by you for this purpose."
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21. It is trite that an order can be revised only and only if twin conditions of 'error in the order' and 'prejudice caused to the Revenue' co-exist.
22. The subject of 'revision under section 263' has been vastly examined and analyzed by various Courts including that of Hon'ble Apex Court. The revisional power conferred on the CIT vide section 263 is of vide amplitude. It enables the CIT to call for and examine the records of any proceeding under the Act. It empowers the CIT to make or cause to be made such an inquiry as he deems necessary in order to find out if any order passed by Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The only limitation on his powers is that he must have some material(s) which would enable him to form a prima facie opinion that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. Once he comes to the above conclusion on the basis of the 'material' that the order of the Assessing Officer is erroneous and also prejudicial to the interests of the Revenue, the CIT is empowered to pass an order as the circumstances of the case may warrant. He may pass an order enhancing the assessment or he may modify the 30 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal assessment. He is also empowered to cancel the assessment and direct to frame a fresh assessment. He is empowered to take recourse to any of the three courses indicated in section 263. So, it is clear that the CIT does not have unfettered and unchequered discretion to revise an order. The CIT is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair play with due respect to the principle of audi alteram partem as envisaged in the Constitution of India as well as in section 263. An order can be treated as 'erroneous' if it was passed in utter ignorance or in violation of any law; or passed without taking into consideration all the relevant facts or by taking into consideration irrelevant facts. The 'prejudice' that is contemplated under section 263 is the prejudice to the Income Tax administration as a whole. The revision has to be done for the purpose of setting right distortions and prejudices caused to the Revenue in the above context. The fundamental principles which emerge from the several cases regarding the powers of the CIT under section 263 may be summarized below:
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ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal
(i) The CIT must record satisfaction that the order of the Assessing Officer is erroneous and prejudicial to the interests of the revenue. Both the conditions must be fulfilled.
(ii) Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous, that the section will be attracted.
(iii) An incorrect assumption of facts or an incorrect application of law will suffice for the requirement or order being erroneous.
(iv) If the order is passed without application of mind, such order will fall under the category of erroneous order.
(v) Every loss of revenue cannot be treated as prejudicial to the interest of the revenue and if the Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view under with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under the law.
(vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and 32 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal determines the income, the CIT, while exercising his power under section 263, is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer.
(vii) The Assessing Officer exercise quasi-judicial power vested in him and if he exercise such power in accordance with law and arrives as a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion.
(viii) The CIT, before exercising his jurisdiction under section 263, must have material on record to arrive at a satisfaction.
23. If the Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation alongwith relevant evidence and documents to the AO during the assessment or reassessment proceedings and thereafter the Assessing Officer allowed the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard as per opinion or expectation of the CIT. 33 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal
24. From a careful reading of the impugned notice and the order of the Commissioner passed under section 263 of the Act we observe that the main and sole allegation of the Commissioner for invoking the provisions of section 263 of the Act is that while framing the Assessing Officer while framing the assessment orders for the assessment years 2005-06, 2006-07 and 2007-08 either not examined or if examined, the conclusion which naturally flows on the facts and in the circumstances of the case available on record, has not been drawn by the Assessing Officer . The base of this allegation is that from the assessment record of Shri Ashok Mittal it was transpired that during the course of search proceedings in the case of Shri Ashok Mittal certain documents relating to R.D. Property Consultants were found which were print outs of ledger account and trial balance of the said firm for the period 1.4.0224 to 24.8.2006. The Commissioner further noted that during the assessment proceedings in the case of Shri Ashok Mittal he denied to have any connection with the seized documents or with R.D. Property Consultants. However, in respect of credit entry in the trial balance of R.D. Property Consultants, the name of "Dimple" was shown and it was discovered that "Dimple" is alias of Shri 34 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal Ramesh Mittal who is the present assessee whose residence was house no. 515, Sector 16, Panchkula, which was also covered during search operation in the case of Shri Ashok Mittal group. The Commissioner further noticed that the address of "Dimple" was given by Shri Ashok Mittal in his written submissions which also happens to be residential address of the assessee and further on perusal of the Assessing Officer dated 25.8.2011 passed in the case of the present assessee, he noticed that the issue of impugned credit entry in the alias name of "Dimple" has not been examined by the Assessing Officer. The Commissioner further noticed that it was a major issue having substantial bearing on the assessment order for the three years and thereafter he held that the order is erroneous and prejudicial to the interest of the revenue, which requires intervention u/s 263 of the Act. From the relevant operative part of paras 5 and 6 of the impugned order it is also discernible that after mentioning the facts which were stated in the notice u/s 263 of the Act and without making any inquiry himself, the Commissioner jumped to the conclusion that on the basis of statement of Shri Ashok Mittal the impugned amount of credit entry was neither properly investigated nor taken into account in 35 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal computing the total income of Shri Ashok Mittal. The Commissioner further held that from a perusal of assessment record of the assessee for three years it was also transpired that the issue was not even confronted to the assessee and such an omission to inquire into substantial issue makes the assessment order erroneous and prejudicial to the interest of the revenue, which issue was neither inquired into nor any conclusion was drawn by the Assessing Officer in respect of credit entries in the name of "Dimple" which wa alias of the assessee. The Commissioner without making any inquiry himself proceeded to hold the assessment orders as erroneous and prejudicial to the interest of the revenue and directed the Assessing Officer to re-examine the issue of credit entry by making comprehensive inquiries regarding the constitution and ownership of R.D. Property Consultants as well as inquiries regarding the credit entries appearing the alias name of the assessee in the seized documents pertaining to R.D. Property Consultants.
25. In view of the above=noted facts, we may point out that the scheme of section 263 of the Act provides that the Commissioner may call for and examine the records of any proceedings under this 36 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal Act and if he considers that the order passed therein by the Assessing Officer is erroneous and prejudicial to the interest of the revenue then 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 an order thereon as the circumstances of the case justify including an order of assessment or modifying the assessment or cancelling the assessment and directing a fresh assessment. So far as the question of definition of records is concerned, in our humble understanding, the legislature has used the word "records of any proceedings under this Act"
meaning thereby for the purpose of the present case, the assessment records of Shri Ramesh Mittal i.e. the present assessee and Shri Ashok Mittal were to be considered together by the Commissioner for invoking the provisions of section 263 of the Act. In the present case, it is a peculiar situation that there is no iota of evidence or document in the assessment record of the present assessee Shri Ramesh Mittal and the entire proceedings u/s 263 of the Act are based on the assessment record of Shri Ashok Mittal wherein print outs of trial balance and balance sheet from 1.4.2004 to 24.8.2006 were found during the course of search and seizure 37 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal operation in the case of Shri Ashok Mittal including the present assessee. However, on being asked by the Bench, the learned DR could not assist us as to whether the revenue has taken any action u/s 153-C of the Act against R.D. Property Consultants. Thus, we can safely presume that the department has not taken any action under the relevant provisions of section 153C of the Act against the said entity R.D. Property Consultants in regard to the seized documents belonging or pertaining to that entity.
26. At this juncture, we may point out that admittedly and undisputedly the Assessing Officer of Shri Ashok Mittal and Shri Ramesh Mittal is the same who framed the assessment orders u/s 153A read with section 143(3) of the Act for the entire group including Shri Ashok Mittal and Shri Ramesh Mittal as a result of the outcome of search and seizure operation. We may point out that if the contention of the learned DR is accepted that the Commissioner is validly eligible to see the assessment record of Shri Ashok Mittal and Shri Ramesh Mittal while invoking the provisions of section 263 of the Act then we cannot nignore that the Assessing Officer made inquiries regarding the documents found in the name of R.D. Property Consultants. From pages 1 to 5 38 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal of the assessee's paper book it is clear that the Assessing Officer issued summons under section 131(1) of the Act to 5 persons including R.D. Property Consultants and "Dimple". Further from pages 16 to 19 of the assessee's paper book it is also discernible that the Assessing Officer issued requisition u/s 142(1) of the Act on 25.7.2011 wherein in clause (vi) it was specifically asked from Shri Ashok Mittal that as per provisions of section 292-C of the Act the onus was on the noticee Shri Ashok Mittal to explain the entries recorded in these documents. The Assessing Officer by making the above allegation further stated that since Shri Ashok Mittal has failed to discharge his responsibility, therefore, he was asked to show cause why total cash credits including credit of Rs. 3,19,14,006/- appearing in the name of "Dimple" should not be treated as unexplained cash credit u/s 68 of the Act. Further during the course of hearing before the Income Tax Settlement Commission, the Bench directed the Assessing Officer to examine the aforesaid five persons whose names were appearing in the trial balance of R.D. Property Consultants but no adverse inference was received by the Settlement Commission. In this regard it is 39 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal profitable to refer para 15.7 at page 34 of the assessee's paper book wherein Settlement Commission held as follows :-
"15.7 It is an admitted fact that pages 8 to 71 of Annexure A-3 contained ledger accounts of M/s R.D. Property concerns and page 72 contains the trial balance of the said concern. The Special Auditor cast a balance sheet from the trial balance as per which the total of credits came to Rs.8,84,36,200/- which figure comprises of total capital raised by various persons at Rs. 6,95,22,030/- and Rs.1,89,14,170/- from other creditors. CIT has relied upon section 292(C) of the IT Act as well section 68 to hold that the total credits of Rs.8,84,36,200/- are unexplained cash credits for assessment year 2007-08 and assesable in the hands of the applicant u/s 68 of the IT Act. Applicant has denied any connection with M/s R.D. Properties consultants or the trial balance and has claimed that the total credits of Rs. 8,84,36,200/- are not assessable in the hands of the applicant. The Bench in the course of the hearing directed the A.O. to examine five (5) persons whose names appear in the trial balance of M/s R.D. Properties and after verification by A.O. no 40 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal adverse report in this regard has been received by the Commission. In view of this no adverse conclusion is drawn."
In view of the above observations of the Settlement Commission in the case of Shri Ashok Mittal, we clearly observe that on the directions of Settlement Commission, the special auditor casted a balance sheet from the trial balance and also considered the report of Commissioner placed before the Commission under rule 9 of Settlement Commission Rules. At this juncture, it is also relevant to take note of the special audit report filed under section 142(2A) of the Act in the case of Shri Ashok Mittal (assessee's paper book pages 6 to 15). It is vivid that the special auditor in his report after detailed deliberation submitted the following facts :-
"1. First of all, the assessee has denied the ownership of whole of the documents and trial balance seized which refers to a concern M/s R.D. Property consultants. Further, we also carried out verification of constitution of M/s R.D. Property Consultants. No bank accounts, pan card, Income tax particulars, partnership deed or any other relevant document came to our notice. In the absence of all this information, we are not in a position to frame our opinion on the constitution of M/s. 41 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal R.D. Property Consultants. The undisclosed income on account of documents pertaining to M/s R D Property Consultants may be assessed in the hands of relevant assessee."
27. In view of the above, we have no hesitation to hold that the special auditor reported the Settlement Commission that in the absence of information regarding bank accounts, PAN, income tax particulars, partnership deed or any other relevant document, they were not in a position to frame their opinion on the constitution of R.D. Property Consultants
28. In view of the above, we hold that there was a detailed report of special auditor which clearly shows that in the absence of relevant details regarding the bank accounts, PAN, income tax particulars and constitution of R.D. Property Consultants, the special auditor was not in a position to frame any opinion even regarding the constitution of R.D. Property Consultants and this report was a part of assessment record which was perused by the Commissioner at the time of invoking the provisions of section 263 of the Act. At the cost of repetition we may point out that in para 15.7 the Settlement Commission noted that in the course of hearing the Bench directed the Assessing Officer to examine 5 persons 42 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal whose names appear in the trial balance of R.D. Property Consultants and after verification by the Assessing Officer, no adverse report has been furnished. These observations show that even the Assessing Officer himself conducted inquiry by way of issuing summons under section 131(1) of the Act to 5 persons including R.D. Property Consultants and "Dimple" and again the Assessing Officer on the directions of the Settlement Commission, verified these 5 persons and no adverse report was furnished to the Settlement Commission.
29. We may also point out that during the course of settlement proceedings before the Settlement Commission the Commissioner also filed report under rule 9 of the Settlement Commission (Procedure) Rules, 1997 on 26.3.2012. The copy of the relevant part of the report is available in the assessee's paper book at pages 22 to 28 wherein Commissioner recommended that the total cash credit of rs.8,84,36,200/- including the impugned credit entry in the name of "Dimple" should be treated as unexplained cash credit u/s 68 of the Act and should be added back to the total income of the assessee Shri Ashok Mittal. However, in the case of Shri Ashok Mittal Settlement Commission did not make any addition in this 43 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal regard and this fact has not been controverted by the Commissioner in the impugned order nor by the learned DR during the course of arguments before us.
30. Definitely, as per the ratio of the decision of Hon'ble Supreme Court in the case of Malabar Industrial Company Ltd. Vs. CIT (Supra), as relied upon by the learned Commissioner, in the case of no inquiry or lack of inquiry by the AO the CIT is validly empowered to invoke provision of section 263 of the Act, but for assuming valid jurisdiction the CIT is duty bound to show that there was lack of inquiry or no inquiry by the AO. In the present case the CIT is alleging against the AO the allegations of lack of inquiry by way of expecting from the AO to consider the assessment records of Shri Ashok Mittal wherein the same Assessing Officer has conducted inquiry on the issue and the report of special auditor and the Commissioner which was submitted before the Settlement Commission was also a part of that record wherein even the constitution of R.D. Property Consultants entity could not be discovered despite several efforts and the Settlement Commission dismissed at the threshold the recommendation of the Commissioner requesting to make the addition u/s 68 of the Act pertaining to the impugned credit entries shown in the seized documents in the name of R.D. Property Consultants. In this situation, if the contention of the learned DR is considered that the assessment record of Shri Ashok Mittal and Shri Ramesh Mittal can be perused while invoking the 44 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal provisions of section 263 of the Act in the case of Shri Ramesh Mittal then looking to the inquiries conducted by the Assessing Officer, special auditor and the Settlement Commission wherein the Commissioner himself furnished a report, which was not accepted by the Settlement Commission, the allegation of lack of inquiry against the same Assessing Officer cannot be levelled in the case of the assessee. Secondly, if it is presumed that the assessment record of Shri Ashok Mittal could not be called and perused while invoking the provisions of section 263 of the Act in the case of Shri Ramesh Mittal, then also, when these documents were not part of the assessment record of Shri Ramesh Mittal then the allegation of lack of inquiry on such documents, which were part of assessment record of another entity i.e. Shri Ashok Mittal cannot be alleged against the Assessing Officer. In this situation, we, respectfully hold that the benefit of the ratio of the decision as relied upon by the learned DR including the ratio of the decision of the Hon'ble Apex Court in the case of Malabar Industries Co. Ltd. (supra) is not available in favour of the revenue.
31. In the case of CIT Vs. DLF Ltd [supra], as relied by the ld. Counsel for the assessee, we observe that their Lordships held that it is not mere prejudice to the Revenue nor a mere erroneous view which can be revised under section 263 of the Act. There should be the added element of 'unsustainability' in the order of the AO, which clothes the Commissioner with jurisdiction to issue notice and proceed to make appropriate orders. In the present case, the CIT has made bald allegations without making any enquiry himself to show the 45 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal orders erroneous which are not sustainable. Therefore, ratio of this decision strongly supports the case of the assessee.
32. Now we proceed to consider the ratio of the decision of Hon'ble High Court of Bombay in the case of Nirav Modi [supra], which has been upheld by Hon'ble Supreme Court by dismissing SLP of the Revenue order dated 14.12.2016 [supra] as strongly relied by the. Ld. Counsel of the assessee wherein paras 6 to 10 it was held thus:
"6. It is a settled position in law that powers under Section 263 of the Act can be exercised by the CIT on satisfaction of twin conditions viz. the Assessment Order should be erroneous and prejudicial to the Revenue. By erroneous is meant contrary to law. Thus, this power cannot be exercised unless the CIT is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the Revenue. Thus where there are two possible views and the Assessing Officer has taken one of the possible views, no occasion to exercise powers of Revision, can arise. Nor can Revisional power be exercised for directing a fuller inquiry to find out if the view taken is erroneous, when a view has already been taken after inquiry. This power of Revision can be exercised only where no inquiry as required under the law is done. It is not open to enquire in cases of inadequate inquiry. 46 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal Firstly, the Revenue contends that the exercise of powers under Section 263 of the Act is justified as in this case, as no inquiry in respect of the gifts received during the subject years was done by the Assessing Officer for the Assessment orders for Assessment Years 200708 and 2008-
09. This according to the Revenue is evident from the Assessment Orders dated 31 December, 2009 and 30 th December, 2010 which does not even make a mention of the gifts received much less discuss and/or deal with the same. This issue is no longer res integra as this Court in Idea Cellular Ltd. V. DCIT reported in 301 ITR 407 Has held that if during Assessment proceedings queries were raised and the asessee responded to the same, then even if an Assessment order does not mention the same, it does not mean that the Assessing Officer has not applied his mind to the issues. It would be well nigh impossible for an Assessing Officer to complete all assessments assigned to him under Section 143(3) of the Act if he is required to deal with all issues which arose during the Assessment Proceedings. Thus, the Assessment Order primarily deal with only those issues in respect of which the Assessee has not been able to satisfy him and give reasons for his conclusion. This would enable the Assessee to challenge the same, if aggrieved. In fact the Gujarat High Court in CIT V. Nirma Chemical Works Ltd. reported in 309 ITR 67 has observed that if an assessment order were to incorporate the 47 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal reasons for upholding the claim made by an asseseee, the result would be an epic tome and not an assessment order. In this case, during the assessment proceedings for both the Assessment Years, the Assessing Officer issued a query memos to the assessee, calling upon him to justify the genuineness of the gifts. The RespondentAssessee responded to the same by giving evidence of the communications received from his father and his sister i.e. the donors of the gifts along with the statement of their Bank accounts. On perusal, the Assessing Officer was satisfied about the identities of the donors, the source from where these funds have come and also the creditworthiness/ capacity of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue, cannot be accepted. 8 It is next submitted that the donor had not been examined by the Assessing Officer. It is not in every case that every evidence produced has to be tested by cross examination of the person giving the evidence. It is only in cases where the evidence produced gives rise to suspicion about its veracity that further scrutiny is called for. If there is nothing on record to indicate that the evidence produced is not reliable and the Assessing Officer was satisfied with the same, then it is not open to the CIT to exercise his powers of Revision 48 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal without the CIT recording how and why the order is erroneous due to not examining the donors. Thus, this objection to the impugned order by the Revenue is also not sustainable.
It was next submitted that no enquiry was done by the Assessing Officer to find out whether the donor Mr Deepak Modi (father) had received money from M/s. Chang Jiang as claimed. Nor any inquiry was done to find out whether the sister had in fact earned amounts on account of Foreign Exchange Transactions as claimed by her. We find that this enquiry of a source of source is not the requirement of law. Once the Assessing Officer is satisfied with the explanation offered on inquiry, it is not open to the CIT in exercise of his revsional powers direct that further enquiry has to be done. At the very highest, the case of the Revenue is that this is a case of inadequate inquiry and not of "no enquiry." It is well settled that the jurisdiction under Section 263 of the Act can be exercised by the CIT only when its a case lack of enquiry and not one of inadequate enquiry. This view has been taken by this Court in the matter of CIT v/s. M/s. Shreepati Holdings & Finance Pvt. Ltd., unreported (ITA 1879 of 2013 dated 5 October,2013), by the Delhi High Court in CIT v/s. Vikas Polymers 341 ITR 537 and in DG Housing Projects(supra). In fact the Delhi High Court in DG Housing Projects (supra) while so holding placed reliance upon the decision of this Court in Gabriel (India) Ltd., (supra). It is very important to note that the CIT in his order 49 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal under Section 263 of the Act has recorded the fact that there has been no adequate inquiry. Thus, this is not a case of no inquiry, warranting order under Section 263 of the Act.
Thus, this objection on the part of the Revenue, is also not sustainable.
10 The Revenue placed reliance upon the decision of the Delhi High Court in DG Housing Projects Ltd., (supra) that as the Assessing Officer had not enquired into the source of the source of the gifts received by the Assessee, the Assessment Order is erroneous. The aforesaid decision holds that the power of Revision under Section 263 of the Act would normally be exercised in case of no enquiry and not in cases of inadequate enquiry. However, even in case of inadequate enquiry by the Assessing Officer, the order of the Assessing Officer could be erroneous in two classes of situation. The first class would be where orders passed by the Assessing Officer are exfacie erroneous i.e. a decision rendered ignoring a binding decision in favour of the Revenue or where enquiry is perse mandated on the basis of the record available before the Assessing Officer and that is not done. In the second class of cases, where the order is not exfacie erroneous, then the CIT must himself conduct an enquiry and determine it to be so. The Court held that it is not permissible to the CIT while exercising power under Section 263 of the Act to remit the issue to the Assessing Officer to reexamine the same and find out whether earlier order of Assessment is 50 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal erroneous. It is the CIT who must hold that the order is erroneous, duly supported by reasons. In the present facts, the CIT in exercise of its powers under Section 263 of the Act has merely restored the Assessment to the Assessing Officer to decide whether the gifts were genuine and, if not, then the Assessment could be completed on application of Section 68 of the Act. In this case, the order passed by the Assessing Officer is not perse erroneous and further the CIT has not given any reasons to conclude that the order is erroneous. In fact, he directs the Assessing Officer to find out whether the order is erroneous by making further enquiry. This the decision of the Delhi High Court in DG Housing Projects Ltd., (supra), clearly negates. In the above view, the decision of Delhi High Curt in DG Housing Projects Ltd., (supra) would not assist the Revenue in the present facts."
33. In view of above, it is the dicta of Hon'ble High Court of Bombay, which has been upheld by Hon'ble Supreme Court, wherein it has been held that the AO having raised queries and on perusal of the evidence furnished, he was satisfied with regard to the genuineness of the gifts [as per facts of that case], then revision by the CIT was not valid, therefore, their Lordships held that power of revision u/s 263 of the Act can be exercised where no enquiry as required under the law is done. It was also held that it is not open to enquire in cases of inadequate enquiry. In the present case, as 51 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal we have noted above, if the assessment record of Shri Ashok Mittal is taken into the ambit of the definition of record u/s 263 of the Act then there was sufficient inquiry by the Assessing Officer, by the special auditor and the Commissioner on the directions of Settlement Commission on the issue of documents seized from Shri Ashok Mittal pertaining to R.D. Property Consultants and there was sufficient inquiry in this regard and finally the Settlement Commission dismissed the recommendation of the Commissioner and no addition u/s 68 of the Act has been made by the Settlement Commission in the hands of Shri Ashok Mittal or any other entity. Therefore, in our humble understanding the ratio of the decision of the Hon'ble Apex Court in the case of Nirav Modi (supra) supports the case of the assessee.
34. At this juncture, we also find it appropriate to consider the ratio of the decision of the Hon'ble Delhi High Court of Delhi in the case of Sunbeam Auto Ltd.(supra) wherein it was held that when the AO having made enquiries elicited replies and thereafter allowed the claim of the assessee, then it cannot be said that it is a case of lack of enquiry and therefore, assessment order passed by the AO cannot be revised u/s 263 of the Act. In the present case, on 52 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal the facts and circumstances as noted above in the earlier part of this order, there was sufficient inquiry pertaining to documents seized from Shri Ashok Mittal in the name of R.D. Property Consultants by the Assessing Officer and during the proceedings before the Settlement Commission, special auditor and the Commissioner had submitted their report thereon, therefore, if the assessment record of Shri Ashok Mittal along with the assessment record of the assessee, Shri Ramesh Mittal, is traken together then we are inclined to hold that the Commissioner has not assumed valid jurisdiction to revise the assessment order u/s 263 of the Act and the impugned order is not sustainable in the eyes of law.
35. In the present case, from a careful reading of the impugned order it is clear that the Commissioner has not made any inquiry regarding the existence and constitution of R.D. Property Consultants and on the issue whether the name of "Dimple" is alias of the present assessee Shri Ramesh Mittal. In our humble opinion, if the Commissioner did not agree with the conclusion drawn by the same Assessing Officer who was also dealing with the case of Shri Ashok Mittal and the present assessee then he should have made inquiries himself. From the last operative para 6 of the impugned 53 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal order it is clear that after making the allegations on the basis of assessment record of Shri Ashok Mittal and ignoring the inquiry conducted by the Assessing Officer in that case, the inquiry conducted by the Settlement Commission by way of calling special auditor report and the report from the Commissioner, the Commissioner proceeded to invoke the provisions of section 263 of the Act only on the basis of statement of Shri Ashok Mittal without examining the same himself. As per the ratio of the decision of the Hon'ble Delhi High Court in the case of Jyoti Foundation (supra) as relied upon by the learned counsel for the assessee, wherein it was held that in cases of wrong opinion by the AO the CIT has to come to a conclusion and himself decide that order is erroneous by conducting necessary inquiry, if required and necessary, before the order under section 263 of the Act is passed but in the present case, Commissioner has not conducted any such inquiry as per mandate of section 263 of the Act to show the order of the Assessing Officer is not sustainable and without conducting any further inquiry by the Commissioner, the order of the AO cannot be alleged as erroneous and prejudicial to the interest of the Revenue. At this point it is also profitable to take cognizance of the ratio of 54 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal the decision of the Hon'ble Delhi High Courtr in the case of ITO vs. D.G. Housing Project Limited reported in 343 ITR 329 [Del], it was held that if there is no finding that order of the AO is erroneous and prejudicial to the interest of Revenue by way of making independent inquiry by the CIT, the revision of such order u/s 263 of the Act on the basis of bald and baseless allegations is not permitted.
36. In the present case, the Commissioner invoked the provisions of section 263 of the Act as he was not satisfied with the assessment order passed by the Assessing Officer without making any inquiry himself and dismissing the explanation of the assessee without any reasoning and the Commissioner jumped to the conclusion that the Assessing Officer either failed to carry out any inquiry or the conclusion, which naturally flows on the facts and circumstances of the case, has not been drawn. This allegation in the notice as well as in the impugned order makes it clear that while issuing notice and invoking the provisions of section 263 of the Act even the Commissioner himself was not sure whether it is a case of no inquiry or inadequate inquiry. It is a well accepted proposition that if the Commissioner has ignored the exercise undertaken by the Assessing Officer during the assessment 55 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal proceedings and without making any inquiry, dismissing the explanation of the assessee and jumped to the conclusion, that the Assessing Officer failed to carry out any inquiry, then these findings are not sustainable in the light of the ratio of the decision of the Hon'ble Delhi High Court in the cases of Jyoti Foundation (supra) and D.G. Housing Projects Ltd. (Supra). Thus, we are inclined to hold that the Commissioner has wrongly invoked the provisions of section 263 of the Act for issuing notice and passing the impugned order. Therefore, we are inclined to hold that the notice and the order u/s 263 of the Act are not sustainable as per the mandate of section 263 of the Act and, hence, we quash the same and all the consequential orders, if any passed, in pursuance thereto. Accordingly, ground nos. 2 and 3 of the assessee are allowed.
ITA Nos. 1010 & 1011/Chd/2014 : A.Ys.2006-07 & 2007-08
37. Since at the beginning of the arguments both the parties agreed to the fact that the facts and circumstances of all the three appeals are identical and similar, therefore, our conclusion drawn in ITA No. 1009/Chd/2014 for the assessment year 2005-06 would 56 ITA Nos.1009 to 1011/Chd/2014 Shri Ramesh Mittal apply mutatis mutandis to other two appeals pertaining to the assessment years 2006-07 and 2007-08 and consequently we quash the same and all consequently orders, if any, passed in pursuance thereto.
38. In the result, all the appeals of the assessee stand partly allowed.
Order pronounced in the open Court on 24.04.2017.
Sd/- Sd/-
(ANNAPURNA GUPTA) (C.M. GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 24th April, 2017
Dn/-
57