Principal Commissioner of Income-tax-31, Mumbai-51 v. Rakesh Kumar Agarwal
[Citation -2020-LL-0122-92]

Citation 2020-LL-0122-92
Appellant Name Principal Commissioner of Income-tax-31, Mumbai-51
Respondent Name Rakesh Kumar Agarwal
Court HIGH COURT OF BOMBAY
Relevant Act Income-tax
Date of Order 22/01/2020
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags prejudicial to the interest of revenue • revisional jurisdiction • undisclosed income • unexplained money • unaccounted cash
Bot Summary: 4 The Appeal has been preferred on the following three questions of law; stated to be substantial questions of law : Whether in law and on the facts of the instant case, was the Tribunal justified in coming to a finding that the CIT was prevented from assuming jurisdiction under Section 263 of the Act, when the CIT in paragraph 4 of the order has held that the AO has failed to conduct a proper enquiry; as per Explanation 2 to Section 263. Whether in law and on the facts of the instant case, was the Tribunal justified in concluding that the directions of the CIT to the AO to treat the amount of Rs. 6.85 lakhs was erroneous; since unexplained money is assessed under Section 69A and not as income from other sources. For the assessment year under consideration, Respondent filed return of income showing total income of Rs.7,47,25,768. Borey 3/8 spb/ 11itxa-1740-17.doc 6 However, Commissioner of Income Tax invoked jurisdiction under section 263 of the Act and in his order dated 16.03.2015 he recorded that the following discrepancies were noted from the assessment record and the assessment order : The AO did not verify the reasons for sales of land at low rates during the A.Y. 2011-12 as compared to the A.Y. 2010-11. 7 Taking the view that the assessment order was erroneous inasmuch as it was prejudicial to the interest of revenue, Commissioner of Income Tax set Borey 4/8 spb/ 11itxa-1740-17.doc aside the assessment order under section 263 of the Act and directed the Assessing Officer to pass fresh order in the light of the discussions made in the order passed under section 263. At the end of the assessment, the said amount was taxed by the Assessing Officer under head income from other sources. At the end of the assessment, the said amount was taxed by the Assessing Officer under the head of income from other sources.


spb/ 11itxa-1740-17.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY 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 Appellant. --- CORAM : UJJAL BHUYAN AND MILIND N. JADHAV,JJ. DATE : JANUARY 22, 2020. PC : 1 Heard Mr. Arvind Pinto, learned standing counsel Revenue for Appellant. 2 This Appeal has been preferred by Revenue under section 260-A of Income Tax Act, 1961, assailing legality and correctness of order of Income Tax Appellate Tribunal, Mumbai Bench D , Mumbai (Tribunal) dated 18.05.2016 passed in Income Tax Appeal No.2881/M/2015 for assessment Digitally signed by Shalikram P. year 2010-11. Shalikram Borey P. Borey Date: 2020.01.27 15:58:20 +0530 Borey 1/8 spb/ 11itxa-1740-17.doc 3 Short point for consideration in this Appeal is whether Commissioner of Income Tax was justified in invoking his revisional jurisdiction under section 263 of Income Tax Act, 1961 (briefly, Act hereinafter). Tribunal held same to be not justified and restored initial assessment order of Assessing Officer. Hence, this Appeal. 4 Appeal has been preferred on following three questions of law; stated to be substantial questions of law : (A) Whether in law and on facts of instant case, was Tribunal justified in coming to finding that CIT was prevented from assuming jurisdiction under Section 263 of Act, when CIT in paragraph 4 of order has held that AO has failed to conduct proper enquiry; as per Explanation 2 to Section 263 ?. (B) Whether in law and on facts of instant case, Tribunal was in error in coming to finding that issue relating to sale price of land was not validly raised by CIT; whereas examination of said issue, by Borey 2/8 spb/ 11itxa-1740-17.doc directions of CIT was to be done by AO; in context of sale to sister concern ?. (C) Whether in law and on facts of instant case, was Tribunal justified in concluding that directions of CIT to AO to treat amount of Rs. 6.85 lakhs was erroneous; since unexplained money is assessed under Section 69A and not as income from other sources ?. 5 Respondent is assessee under Act and subject to assessment jurisdiction of Assessing Officer. Respondent is builder and sells plots of land on short term as well as on long term basis. For assessment year under consideration, Respondent filed return of income showing total income of Rs.7,47,25,768.00. During assessment proceeding under section 143 (3) of Act, Assessing Officer inquired into accounts of assessee and analyzed various claims made by assessee. By order dated 08.03.2013 assessment proceedings were concluded by determining total assessed income of Respondent at Rs. 7,66,68,582.00. Borey 3/8 spb/ 11itxa-1740-17.doc 6 However, Commissioner of Income Tax invoked jurisdiction under section 263 of Act and in his order dated 16.03.2015 he recorded that following discrepancies were noted from assessment record and assessment order : (i) AO did not verify reasons for sales of land at low rates during A.Y. 2011-12 as compared to A.Y. 2010-11. rate during A.Y.2020-11 is shown at Rs.3000/- per sq. mtr. While same is shown at Rs.2000/- per sq.mtr. and Rs. 1674.39 per square meter for A. Y. 2011-12. Hence, there was apparent possibility that sale rates were contrived. No enquiry was done on this issue. (ii) AO did not bring to tax unaccounted cash of Rs.6,85,000/- found during survey. (iii) AO also failed to verify applicability of section 45(2). 7 Taking view that assessment order was erroneous inasmuch as it was prejudicial to interest of revenue, Commissioner of Income Tax set Borey 4/8 spb/ 11itxa-1740-17.doc aside assessment order under section 263 of Act and directed Assessing Officer to pass fresh order in light of discussions made in order passed under section 263. 8 Aggrieved by above, Respondent preferred appeal before Tribunal, which was registered as I.T.A. No. 2881/M/2015. By order dated 18.05.2016 Tribunal took view that Commissioner of Income Tax was not justified in invoking jurisdiction under section 263 of Act and set aside said order, allowing appeal of Respondent. 9 Out of three issues, Tribunal held that first issue did not result in any revenue loss and therefore, assumption of jurisdiction under section 263 of Act was not justified. 10 On second issue relating to non- disclosure of unaccounted cash of Rs. 6,85,000/-, Tribunal held in paragraph 10 as under : 10. Regarding CIT s allegation regarding non-disclosure of additional income of Rs. 6,85,000/- case of assessee is that said amount was already disclosed Borey 5/8 spb/ 11itxa-1740-17.doc in return of income filed by assessee. Bringing our attention to 7-11 of paper book, which constitutes letter dated for 4/12/2012 by assessee is to Assessing Officer [JCIT 24 (1)], Mumbai, Ld. Counsel for assessee mentioned that said letter was furnished during assessment proceedings for assessment year 2010-11 on 4.12.2012. Bringing our attention to item 1 of said letter, Ld. Counsel submitted that there is reference to amount of Rs. 6.85 lakhs, excess cash found during survey action. Further, reading from contents on page 42 (statement of total taxable income), Ld. Counsel submitted that same figure of Rs. 6.85 lakhs can be seen mentioned against miscellaneous income . said sum of Rs. 6.85 lakhs is part of gross total amount of Rs. 7,83,17,777/-. At end of assessment, said amount was taxed by Assessing Officer under head income from other sources . same is evident on page 43 of PB, where amount of Rs. 6.85 is included in gross total amount of Rs. 22,41,062.12. After hearing both parties on this issue and on perusal of said documents placed before us in light of written submissions made by parties in dispute, we are of opinion that CIT invalidly assumed jurisdiction under section 263 of Act on this issue. Accordingly, order of AO cannot be considered erroneous insofar as prejudicial to interest of Borey 6/8 spb/ 11itxa-1740-17.doc revenue. Therefore, findings of CIT in this regard stand reversed. . 10.1. From above, it is seen that assessee had disclosed in his return of income aforesaid amount of Rs. 6.85 lakhs. At end of assessment, said amount was taxed by Assessing Officer under head of income from other sources . Therefore, it was held by Tribunal that Commissioner of Income Tax was not justified in treating said amount as part of undisclosed income and assuming jurisdiction under section 263 when it was disclosed and assessed. 11 On third issue, as regards applicability of section 45 (2), Tribunal noticed that Commissioner of Income Tax had accepted applicability of said provision and therefore, it was held that there is no error in order of Assessing Officer. 12 Tribunal further held that inquiry was made by Assessing Officer into disclosures made during course of assessment proceedings by assessee. When issue was enquired into by Assessing Officer, Commissioner ought not to have invoked jurisdiction under section 263 of Act. Borey 7/8 spb/ 11itxa-1740-17.doc 13 On thorough consideration of matter and considering provisions of section 263 of Act, we are of view that impugned order passed by Tribunal does not suffer from any error or infirmity to warrant interference. No question of law, muchless any substantial question of law, arises from said order. 14 There is no merit in this Appeal. Appeal is accordingly, dismissed. No cost. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) .. Borey 8/8 Principal Commissioner of Income-tax-31, Mumbai-51 v. Rakesh Kumar Agarwal
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