TMI Blog2021 (5) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... n making the overwhelming evidence forming part of records. As in case GITESH TIKMANI, GIRISH TIKMANI [ 2019 (9) TMI 1177 - ITAT KOLKATA] , CIT vs. Ratan ITA No. 105/2016, M/s. Classic Growers Ltd. [ 2013 (2) TMI 825 - CALCUTTA HIGH COURT] , CIT vs. Lakshmangarh Estate Trading Co. Ltd. [ 2013 (10) TMI 1037 - CALCUTTA HIGH COURT] , CIT vs. Bhagwati Prasad Agarwal [ 2009 (4) TMI 138 - CALCUTTA HIGH COURT] have accepted genuineness of similar LTCG. Since the issue is covered by all the foregoing decisions of hon'ble jurisdictional high court, we observe that the Assessing Officer had rightly treated the assessee's foregoing LTCG derived from sale of shares to be genuine. Thus we hold that PCIT's exercise of revision jurisdiction merely on suspicious circumstances by invoking in sec. 263 Explanation (supra) with effect from 01.06.2015 is not sustaining. We therefore reverse the PCIT's order under challenge and restore the impugned assessment framed by the Assessing Officer - Decided in favour of assessee. - ITA No. 233/Kol/2019 - - - Dated:- 30-4-2021 - J. Sudhakar Reddy, Member (A) And Aby T. Varkey, Member (J) For the Appellant : S.M. Surana, Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act, looked erroneous, insofar as, it was prejudicial to the interest of the revenue. The ld. Pr. CIT extracted the show cause notice a page 2 3 of his order. The assessee filed his replies to the show cause notice. Thereafter, the ld. Pr. CIT gave his views and also stated the modus operandi in such cases from pages 3 to 12 of his order. In these pages, he has made a number of general statements and made general observations and also referred to some case-law. Finally, at para 5.12.2 5.12.3, he observed as follows:- 5.12.2. Thus, in the instant case, it can be summarised that the aforesaid twin conditions of rendering an assessment erroneous in so far it is prejudicial to the interests of the revenue are met since: (a) During the assessment proceedings, the Assessing Officer did not conduct extensive/necessary enquiries regarding the issue of transfer of shares of Kailash Auto; (b) The Assessing Officer whatsoever, in the original assessment order accepted the return of income filed by the assessee, more particularly on the issue of gain/loss on sale of shares in Kailash; 5.13. The assessee in his submission had referred to various ITAT judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the decision of the ITAT 'C' Bench in the case of Gitesh Tikmany M/s. Gitsh Tikmani, HUF vs. ITO in ITA No. 01-04/Kol/2019, order dt. 20/09/2019 and by decision of ITAT 'A' Bench in the case of Usha Devi Modi vs. ITO in ITA No. 874/Kol/2019, order dt. 12/01/2021. 6. The ld. D/R, on the other hand, supported the order of the ld. Pr. CIT and submitted that the Assessing Officer ignored the input received from the investigation wing that the transactions of purchase and sales were suspicious and that the assessee has shown long term capital gains, which is a suspicious claim. He relied on the order of the ld. Pr. CIT u/s. 263 of the Act and submitted that extensive enquiries were not made by the Assessing Officer as required by him and hence the order is erroneous insofar as it is prejudicial to the interest of the revenue. On a query from the Bench, he agreed that the issue is covered in favour of the assessee by certain decisions of the Tribunal. Nevertheless, he relied on the decision cited by the ld. Pr. CIT in his order passed u/s. 263 of the Act, and prayed that the order of the ld. Pr. CIT, be upheld as the enquiries as required were not done by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 ITA Nos. 01-05 13-15/Kol/2019 A.Y. 2014-15 Tikmani, HUF Vs. ITO Wed-28(4) Kol. Page 14 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 co-ordinate bench's decision in case of M/s. Saregama India Ltd. vs. CIT-1, Kolkata ITA No. 1254/Kol/2014 decided on 20.09.2017 has reiterated the following settled principles in case of sec. 263 revision jurisdiction:- 11. Now we shall discuss the propositions of law as laid down by various courts on the issue of revisionary jurisdiction of the Commissioner of Income Tax u/s. 263 of the Act. The Hon'ble Andhra Pradesh High Court in the case of Spectra Shares and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Supreme Court rejected the said contention and held that when the Commissioner passed his order disagreeing with the view of the Assessing Officer, there were two views on the word profits in that section; that the said section was amended eleven times; that different views existed on the day when the Commissioner passed his order; that the mechanics of the section had become so complicated over the years that two views were inherently possible; and therefore, the subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 lesser tax than what was just, has been imposed. In that case, the Delhi High Court held that the Commissioner in the exercise of revisional power could not have objected to the finding of the Assessing Officer that expenditure on tools and dies by the assessee, a manufacturer of Car parts, is revenue expenditure where the said claim was allowed by the latter on being satisfied with the explanation of the assessee and where the same accounting practice followed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 (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 examination by him and to take into consideration even those events which arose subsequent to the order of assessment. 30. In Rampyari Devi Saraogi (Supra), the Commissioner in exercise of revisional powers cancelled assessee's assessment for the years 1952-1953 to 1960-61 because he found that the income tax officer was not justified in accepting the initial capital, the gift received and sale of jewellery, the income from business etc., without any enquiry or evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder 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 of each and every disallowance, deduction, etc., it is incumbent upon the 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 Officer called for interference and revision. e) The Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted f) Whether there was application of mind before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, he commits an error and the word erroneous includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under s. 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missible. 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 Assessing Officer is erroneous. COMMISSIONER OF INCOME TAX vs. J. L. MORRISON (INDIA) LTD. 366 ITR As regard the submission on behalf of the Revenue that power under Section 263 of the Act can be exercised even in a case where the issue is debatable, it was held that the case of CIT vs. M.M. Khambhatwala was not applicable. The observation that the Commissioner can exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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; Hindustan 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 different view could be taken, were not enough to say that the order of the AO was erroneous or prejudicial to the interest of the Revenue. The jurisdiction could be exercised if the CIT was satisfied that the basis for exercise of jurisdiction existed. No rigid rule could be laid down about the situation when the jurisdiction can be exercised. Whether satisfaction of the CIT for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 ITA Nos. 01-05 13-15/Kol/2019 A.Y. 2014-15 Tikmani, HUF Vs. ITO Wed-28(4) Kol. Page 21 490 (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 AO. On this premise, though it is observed that there was no application of mind on the part of the AO and the AO has not recorded any reasons to justify the omission to consider the said facts, the CIT does not take the said order to its logical conclusion which was the prime duty of the CIT in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 opinion that there was no such income or he was nurturing an impression that income on this account as shown was lesser? There is no such indication in the order. The CIT also does not at all state as to what was the reason for doubting the income offered by the assessee. Even if it is found that part of such income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 the clinching fact that although the PCIT's detailed discussion extracted in the preceding paragraphs has sought to make out a case of artificial price rigging between the assessee, promoters entry operators of the entity in light of Ministry of Finance's letter dated 24.07.2015 figures, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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