TMI Blog2021 (4) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case we hold that the revision of the assessment order u/s 263 of the Act, by the ld. Pr. CIT is bad in law. Hence we quash the order passed by the ld. Pr. CIT u/s. 263 of the Act on 20/03/2020 and allow these grounds of the assessee. - ITA No. 643/Kol/2020 - - - Dated:- 21-4-2021 - Sri J. Sudhakar Reddy, Hon ble Accountant Member And Sri Aby T. Varkey, Hon ble Judicial Member For the Assessee : Shri S.M. Surana, Advocate For the Revenue : Shri Devi Sharan Singh, CIT, D/R ORDER PER J. SUDHAKAR REDDY, AM :- This appeal filed by the assessee is directed against the order of the Learned Principal Commissioner of Income Tax (Appeals) - 2, (hereinafter the ld. CIT(A) ), passed u/s. 263 of the Income Tax Act, 1961 (the Act ), dt. 20/03/2020, for the Assessment Year 2015-16. 2. There is a delay of 223 (two hundred twenty three) days in filing of this appeal by the assessee. After perusing the petition for condonation for delay, we are convinced that the assessee was prevented by sufficient cause in filing the appeal in time. Hence, we condone the delay and admit the appeal. 3. The assessee is a company and filed its return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case and in the light of the aforesaid decisions of Supreme Court, High Court and ITAT, and in accordance with the amendment made to Section 263 of the Act with effect from 01.06.2015, I hold that the impugned assessment order dated 29/12/2017 passed by the A.O. is erroneous in so far as it is prejudicial to the interests of revenue. Therefore, after giving the assessee an opportunity of being heard, the impugned assessment order dated 29/12/2017 is restored back to the AO for making a fresh order adjudicating with the directions given in this order separately. 19. Accordingly, in view of the facts and circumstances of the case as stated above, and also respectfully following the judgments cited above, I am of the considered view that, it is deemed fit and appropriate in the interest of justice to restore the file back to the AO with a direction to the AO to verify the issue as discussed in Para 3 Para 6 above afresh, after giving opportunity to the assessee. Accordingly. I direct the AO to re-assess the income of the assessee for the relevant AY-2015-16 on the issues as discussed supra. Order u/s 263 of the Act is passed accordingly. 4. Aggrieved, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be erroneous, insofar as, it is prejudicial to the interest of the revenue as it was passed allowing relief without enquiring into the facts and without making enquiries or verification which should have been made. He relied on the case-law cited by the ld. Pr. CIT in his order u/s 263 of the Act and submitted that the order be upheld. 7. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 8. The Assessing Officer during the course of assessment proceedings issued notice u/s 142(1) of the Act on 10/01/2017, along with a questionnaire. He directed the assessee to furnish the documents and evidences of sale transactions of shares. The assessee furnished the copies of contract notes and bills issued by M/s. Fairwealth Securities Ltd. in support of the purchase and sale of these shares, copies of which are placed at pages 43 to 75 of the paper book. In fact, this case was selected for scrutiny for verification of these suspicious sale transactions of shares. The Assessing Officer, in his letter dt. 10/11/2017, called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, has come to conclusion that these transactions are genuine transactions as he had not found any adverse evidence to conclude otherwise. 9. On these facts, the issue is whether the ld. Pr. CIT is correct in invoking his powers u/s 263 of the Act. In our considered view, the Assessing Officer has called for and verified all the details and documents in connection to the purchase and sale of the shares in question and after examining the same, has taken a possible view that the transactions are genuine. This is not a case of non verification or no application of mind. This is not an order passed without making enquiries or verification, which should have been made. In fact, a number of decisions of the Tribunal support the view taken by the Assessing Officer on the very same issue on the very same evidences. Hence the Assessing Officer has taken a possible view. 10. This Bench of the Tribunal in the case of Usha Devi Modi vs. ITO in ITA No. 874/Kol/2019; Assessment Year 2014-15, order dt. 12/01/2021, under similar circumstances, has held as follows:- 5. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired details. The ld. PCIT himself said that report of DIT(INV), Kolkata was not before the AO. Thus, the order passed by the AO by taking into account a document or information which is not before him and based on the enquiry and documents before him in a possible view and the assessment order and cannot be held to be erroneous insofar as it is prejudicial to the interest of the revenue. 7, Relying on the decision of M/s Gitsh Tikmani(HUF) Ors. Supra under identical facts and circumstances the ITAT, has held as follows: 8. We have given our thoughtful consideration to rival contentions. The sole issue that arises for our apt adjudication in facts of instant case is as to whether the PCIT has rightly exercised his revision jurisdiction vested u/s 263 or not. There is no dispute that the Assessing Officer accepted the assessee s LTCG as genuine as per his discussion in the assessment order that he had verified all necessary facts during the course of scrutiny. Suffice to say, the same fact very much emerges not only from assessee s detailed paper book running into 98 pages but also from the relevant assessment notings forming part of record (supra). This tribunal s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the same as such will be erroneous and prejudicial to the interests of the Revenue. Rampyaridevi Saraogi v. CIT (1968) 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal V. CIT (1973) 88 ITR 323 (SC) . 25. In Max India Ltd. (3 Supra), reiterated the view in Malabar Industrial Co.Ltd. (2 Supra) and observed that every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law. On the facts of that case, Sec.80HHC(3) as it then stood was interpreted by the Assessing Officer but the Revenue contended that in view of the 2005 Amendment which is clarificatory and retrospective in nature, the view of the Assessing Officer was unsustainable in law and the Commissioner was correct in invoking Sec.263. But the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. 27. In Sunbeam Auto Ltd.( 5 Supra), the Delhi High Court held that the Assessing Officer in the assessment order is not required to give a detailed reason in respect of each and every item of deduction, etc.; that whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g some estimate himself; that the Commissioner, on perusal of the record, may be of the opinion that the estimate made by the Officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income Tax Officer; but that would not vest the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure; there must be material available on the record called for by the Commissioner to satisfy him prima facie that the order is both erroneous and prejudicial to the interests of the Revenue. Otherwise, it would amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re-examination and fresh inquiry in matters which have already been concluded under law. 29. In M.S. Raju (15 Supra), this Court has held that the power of the Commissioner under Sec.263(1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless the view taken by the Income-tax Officer is unsustainable in law. c) To invoke suo motu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect disallowance, deduction, etc., it is incumbent upon the of each and every Commissioner not to exercise his suo motu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi) Revenue does not have any right to appeal to the first appellate authority against an order passed by the Assessing Officer. S. 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression prejudicial to the interest of the Revenue is of wide import and is not confined to merely loss of tax. The term erroneous means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It may be noticed that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to give reasons. The fact, that all requisite papers were summoned and thereafter the matter was heard from time to time coupled with the fact that the view taken by him is not shown by the revenue to be erroneous and was also considered both by the Tribunal as also by us to be a possible view, strengthens the presumption under Clause (e) of Section 114 of the Evidence Act. A prima facie evidence, on the basis of the aforesaid presumption, is thus converted into a conclusive proof of the fact that the order was passed by the assessing officer after due application of mind. Meerut Roller Flour Mills Pvt. Ltd. vs. C.I.T., ITA No. 116 /Coch/ 2012; CIT vs. Infosys Technologies Ltd., 341 ITR 293 (Karnataka); S.N. Mukherjee vs. Union of India, AIR 1990 SC 1984; A. A. Doshi vs. JCIT, 256 ITR 685; Hindusthan Tin Works Ltd. Vs. CIT, 275 ITR 43 (Del), distinguished. (Paras 90-92, 102) COMMISSIONER OF INCOME TAX vs. SOHANA WOOLLEN MILLS 296 ITR 238 (P H HC) A reference to the provisions of s. 263 shows that jurisdiction thereunder can be exercised if the CIT finds that the order of the AO was erroneous and prejudicial to the interest of Revenue. Mere audit objection and merely because a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n brought on record by the CIT which showed that there was any discrepancy or falsity in evidences furnished by the assessee, the order of the AO cannot be set aside for making deep inquiry only on the presumption and assumption that something new may come out. For making a valid order under s. 263 it is essential that the CIT has to record an express finding to the effect that order passed by the AO is erroneous which has caused loss to the Revenue. Furthermore, where acting in accordance with law the AO frames certain assessment order, same cannot be branded as erroneous simply because according to the CIT, the order should be written more elaborately.-Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC), Gee Vee Enterprises vs. Addl. CIT 1975 CTR (Del) 61 : (1975) 99 ITR 375 (Del), CIT vs. Seshasayee Paper Boards Ltd. (2000) 242 ITR 490 (Mad), CWT vs. Prithvi Raj Co. (1991) 98 CTR (Del) 216 : (1993) 199 ITR 424 (Del) and J.P. Srivastava Sons (Kanpur) Ltd. vs. CIT (1978) 111 ITR 326 (All) relied on. (Paras 6 7) In the entire order emphasis laid by the CIT is that in respect of four issues mentioned by him, no queries were raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly held that ordinarily the income is said to have accrued to a person when he acquires the right to income and this should be enforceable right, though actual quantification or receipt may follow in due course. The mere claim to income without any enforceable right cannot be regarded as an accrued income for the purpose of IT Act. (Para 16) Coming to the claim under s. 80HHC, it was totally uncalled for on the part of the CIT to say that the AO did not make requisite inquiries because of the simple reason that the AO had, in fact, declined and rejected this claim of the assessee. If the AO himself disallowed the deduction claimed by the assessee on this account under s. 80HHC, one fails to understand what further inquiries were needed by the AO. (Para 17) Lastly, the observations of the CIT are in respect of the income of ₹ 1.61 crores shown by the assessee on account of variation in exchange rate. The CIT has only observed that in the immediate previous year no such gain was shown and therefore, it needed examination by the AO. However, the moot question would be examination for what purpose ? It is an income shown by the assessee. Whether the CIT was of the op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king rowing enquiries is not a finding of an error. Assessments cannot be set aside for fresh enquiries unless a specific error is pointed out at not making proper enquiry cannot be equated with no enquiry. In view of the above we quash the order passed u/s 263 of the Act and allow the appeal of the assessee. 12. In the result the appeal of the assessee is allowed Keeping in mind the foregoing detailed discussion that an assessment has to be both erroneous as well as prejudicial in interest of the Revenue simultaneously before the same is sought to be revised and it is not permissible for the CIT or the PCIT to exercise his revision jurisdiction in case the Assessing Officer has taken one of the possible view, we proceed to deal with the relevant facts of the case. It has come on record that the Assessing Officer had issued sec. 133(6) letter / notice to the M/s SHCL during the course of scrutiny which stood adequately replied in assessee s favour. Coupled with this, all the relevant factual details in support of the assessee s share purchase document, contract notes, bank statement, (supra) already in the case records. Coupled with this, Learned CIT-DR fails to rebut th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. We respectfully apply the proposition of law laid down in the above case to the case on hand and hold that the order passed u/s 263 of the Act is bad in law. The co-ordinate Bench of ITAT, Kolkata in the case of Shashi Bala Bajaj (supra) applied to the judgment of jurisdictional High Court in the case of CIT vs. Bhagwati Prasad Agarwal judgment dated 29.04.2009 and held that the long term profits and gains received on, the purchase and sale of shares of M/s Surbhi Chemicals and Investment Ltd. though the Stock Exchange is exempted from tax u/s 10(38) of the Act. Thus, the view taken by the AO is plausible view which is supported by judicial decisions on this grounds also the order u/s 263 fails. 9. Thus, respectfully following the decision of the Gitsh Tikmani HUF Ors (supra) we hold that the impugned order passed u/s 263 of the Act dated 12.02.2019 is bad in law and quash the same. 10. In the result, the appeal of the assessee is allowed. 11. Applying the proposition of law laid down in the cases as extracted above to the facts of the case on hand and considering the proposition of law laid down in the case of Manish Kumar Baid Vs. ACIT (supra) and Navn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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