Itxa/1740/2017 Of Principal Commissioner Of Income Tax-31 Mumbai v. Rakesh Kumar Agarwal

Digitallysigned byShalikram P.ShalikramBoreyP. BoreyDate:2020.01.2715:58:20+0530 Borey 11itxa-1740-17.doc spb/ IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1740 OF 2017 Principal Commissioner of Income Tax-31,Bandra, Mumbai -51 ... Appellant. V/s. Mr. Rakesh Kumar Agarwal ...Respondent. --- Mr. Arvind Pinto, Advocate for the Appellant. --- CORAM : UJJAL BHUYAN AND MILIND N. JADHAV,JJ. DATE : JANUARY 22, 2020. PC : 1Heard Mr. Arvind Pinto, learned standingcounsel Revenue for the Appellant. 2This Appeal has been preferred by theRevenue under section 260-A of the Income Tax Act,1961, assailing the legality and correctness of the orderof the Income Tax Appellate Tribunal, Mumbai Bench“D”, Mumbai (Tribunal) dated 18.05.2016 passed inIncome Tax Appeal No.2881/M/2015 for the assessmentyear 2010-11. 1/8 spb/ 11itxa-1740-17.doc 3Short point for consideration in this Appeal iswhether the Commissioner of Income Tax was justifiedin invoking his revisional jurisdiction under section 263of the Income Tax Act, 1961 (briefly, “the Act”hereinafter). Tribunal held the same to be not justifiedand restored the initial assessment order of theAssessing OfÏcer. Hence, this Appeal. 4The Appeal has been preferred on thefollowing three questions of law; stated to be substantialquestions of law : (A)Whether in law and on the facts of theinstant case, was the Tribunal justified incoming to a finding that the CIT was preventedfrom assuming jurisdiction under Section 263 ofthe Act, when the CIT in paragraph 4 of the orderhas held that the AO has failed to conduct aproper enquiry; as per Explanation 2 to Section263 ?. (B)Whether in law and on the facts of theinstant case, the Tribunal was in error in comingto the finding that the issue relating to the saleprice of land was not validly raised by the CIT;whereas the examination of the said issue, by the 2/8 11itxa-1740-17.doc directions of the CIT was to be done by the AO;in the context of the sale to a sister concern ?. (C)Whether in law and on the facts of theinstant case, was the Tribunal justified inconcluding that the directions of the CIT to theAO to treat the amount of Rs. 6.85 lakhs waserroneous; since unexplained money is assessedunder Section 69A and not as income from othersources ?. 5Respondent is an assessee under the Act andsubject to assessment jurisdiction of the AssessingOfÏcer. Respondent is a builder and sells plots of landon short term as well as on long term basis. For theassessment year under consideration, Respondent filedreturn of income showing total income ofRs.7,47,25,768.00. During the assessment proceedingunder section 143 (3) of the Act, the Assessing OfÏcerinquired into the accounts of the assessee andanalyzed the various claims made by the assessee. Bythe order dated 08.03.2013 the assessmentproceedings were concluded by determining the totalassessed income of the Respondent at Rs.7,66,68,582.00. 3/8 spb/ 6 However, Commissioner of Income Tax invokedjurisdiction under section 263 of the Act and in hisorder dated 16.03.2015 he recorded that the followingdiscrepancies were noted from the assessment recordand the assessment order : (i)The AO did not verify the reasons for salesof land at low rates during the A.Y. 2011-12 ascompared to the A.Y. 2010-11. The rate duringthe A.Y.2020-11 is shown at Rs.3000/- per sq.mtr. While the same is shown at Rs.2000/- persq.mtr. and Rs. 1674.39 per square meter forthe A. Y. 2011-12. Hence, there was apparentpossibility that sale rates were contrived. Noenquiry was done on this issue. (ii)The AO did not bring to tax unaccountedcash of Rs.6,85,000/- found during survey. (iii)The AO also failed to verify theapplicability of section 45(2). 6 However, Commissioner of Income Tax invokedjurisdiction under section 263 of the Act and in hisorder dated 16.03.2015 he recorded that the followingdiscrepancies were noted from the assessment recordand the assessment order : (i)The AO did not verify the reasons for salesof land at low rates during the A.Y. 2011-12 ascompared to the A.Y. 2010-11. The rate duringthe A.Y.2020-11 is shown at Rs.3000/- per sq.mtr. While the same is shown at Rs.2000/- persq.mtr. and Rs. 1674.39 per square meter forthe A. Y. 2011-12. Hence, there was apparentpossibility that sale rates were contrived. Noenquiry was done on this issue. (ii)The AO did not bring to tax unaccountedcash of Rs.6,85,000/- found during survey. (iii)The AO also failed to verify theapplicability of section 45(2). 7Taking the view that the assessment orderwas erroneous inasmuch as it was prejudicial to theinterest of revenue, Commissioner of Income Tax set 4/8 spb/ 11itxa-1740-17.doc aside the assessment order under section 263 of theAct and directed the Assessing OfÏcer to pass freshorder in the light of the discussions made in the orderpassed under section 263. 8Aggrieved by the above, Respondentpreferred appeal before the Tribunal, which wasregistered as I.T.A. No. 2881/M/2015. By the orderdated 18.05.2016 Tribunal took the view that theCommissioner of Income Tax was not justified ininvoking jurisdiction under section 263 of the Act andset aside the said order, allowing the appeal of theRespondent. 9Out of three issues, the Tribunal held thatthe first issue did not result in any revenue loss andtherefore, assumption of jurisdiction under section 263of the Act was not justified. 10On the second issue relating to non-disclosure of unaccounted cash of Rs. 6,85,000/-,Tribunal held in paragraph 10 as under : “10.Regarding the CIT’s allegationregarding non-disclosure of additional incomeof Rs. 6,85,000/- the case of the assessee isthat the said amount was already disclosed 5/8 in the return of income filed by the assessee.Bringing our attention to 7-11 of the paperbook, which constitutes letter dated for4/12/2012 by the assessee is to the AssessingOfÏcer [JCIT 24 (1)], Mumbai, Ld. Counsel forthe assessee mentioned that the said letterwas furnished during assessment proceedingsfor the assessment year 2010-11 on 4.12.2012.Bringing our attention to item 1 of the saidletter, Ld. Counsel submitted that there is areference to the amount of Rs. 6.85 lakhs, theexcess cash found during the survey action.Further, reading from the contents on page42 (statement of total taxable income), Ld.Counsel submitted that same figure of Rs.6.85 lakhs can be seen mentioned against‘miscellaneous income’. The said sum of Rs.6.85 lakhs is part of the gross total amount ofRs. 7,83,17,777/-. At the end of theassessment, the said amount was taxed bythe Assessing OfÏcer under head ‘income fromother sources’. The same is evident on page43 of the PB, where the amount of Rs. 6.85 isincluded in the gross total amount of Rs.22,41,062.12. After hearing both the partieson this issue and on perusal of the saiddocuments placed before us in light of writtensubmissions made by the parties in thedispute, we are of the opinion that the CITinvalidly assumed jurisdiction under section263 of the Act on this issue. Accordingly, theorder of the AO cannot be considered erroneousinsofar as prejudicial to the interest of the 6/8 spb/ 11itxa-1740-17.doc revenue. Therefore, findings of the CIT in thisregard stand reversed.”. 6/8 spb/ 11itxa-1740-17.doc revenue. Therefore, findings of the CIT in thisregard stand reversed.”. 10.1.From the above, it is seen that the assesseehad disclosed in his return of income the aforesaidamount of Rs. 6.85 lakhs. At the end of the assessment,the said amount was taxed by the Assessing OfÏcerunder the head of “income from other sources”.Therefore, it was held by the Tribunal that theCommissioner of the Income Tax was not justified intreating the said amount as part of undisclosed incomeand assuming jurisdiction under section 263 when itwas disclosed and assessed. 11On the third issue, as regards applicability ofsection 45 (2), Tribunal noticed that Commissioner ofIncome Tax had accepted applicability of the saidprovision and therefore, it was held that there is noerror in the order of the Assessing OfÏcer. 12Tribunal further held that inquiry wasmade by the Assessing OfÏcer into disclosures madeduring the course of the assessment proceedings bythe assessee. When the issue was enquired into by theAssessing OfÏcer, the Commissioner ought not to haveinvoked jurisdiction under section 263 of the Act. 7/8 spb/ 11itxa-1740-17.doc 13On a thorough consideration of the matterand considering the provisions of section 263 of the Act,we are of the view that the impugned order passed bythe Tribunal does not suffer from any error or infirmityto warrant interference. No question of law, muchlessany substantial question of law, arises from the saidorder. 14There is no merit in this Appeal. Appeal isaccordingly, dismissed. No cost. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) ….. 8/8