2016 (12) TMI 352 - HC - Income Tax

Revision u/s 263 - erroneous order or not - assessment of income - the subject amount of Rupees Six crores was credited to the personal account of the assessee - Held that - There is a categorical finding of the learned Tribunal that the subject amount of Rupees Six crores has been credited into the bank account of the respondent represents the income of M/s. Britto Amusement Pvt. Ltd. and has to be added in its hands. The learned Tribunal also noted that the assessment were centralized and the same Assessing Officer has taken a view and accepted the stand taken by the said Company that such amount were to be assessed in the hands of the private company. Taking note of the said observations of the learned Tribunal and the findings of facts which have not been assailed by the learned counsel for the appellant and as the subject amount admittedly has been assessed in the name of the said Private Limited Company, the question of interfering in the impugned order passed by the learned Tribunal would not at all be justified. The substantial question of law proposed by the appellant as such would not arise in the present appeal taking note of the findings of the learned Tribunal

Summary

Issues involved:
Challenge to order passed by Income Tax Appellate Tribunal on grounds of erroneous interference, exercise of Revisional jurisdiction by Commissioner, substantial questions of law for consideration, assessment of Rupees Six crores in personal account of assessee, findings of Tribunal, jurisdiction under Section 263, prejudicial to revenue, setting aside assessment order, substitution of views, legality of orders.

Detailed Analysis:

1. Erroneous interference by Tribunal:
The Revenue challenged the order passed by the Income Tax Appellate Tribunal, contending that the Tribunal erroneously interfered with the order passed by the CIT (Appeals). The appellant argued that there was sufficient material to suggest that Rupees Six crores were credited to the personal account of the assessee. The Commissioner exercised Revisional jurisdiction due to lack of proper investigation by the Assessing Officer regarding the source of the amount. The appellant claimed that the Tribunal's interference was unwarranted, citing contradictory stands taken by the respondent in a civil court case related to the subject amount.

2. Response by Respondent:
The respondent's counsel argued that a mere erroneous approach by the Assessing Officer does not justify the exercise of Revisional jurisdiction by the Commissioner. It was pointed out that the Tribunal found the Rupees Six crores to be assessed in the hands of a private company floated by the respondent, based on banking transactions. The respondent contended that no substantial questions of law arose for consideration.

3. Tribunal's Findings:
The Tribunal noted that the Assessing Officer had thoroughly investigated the receipt of Rupees Six crores and concluded that it should be added to the income of the private company, not the assessee. The Tribunal emphasized the centralized nature of assessments and the common query letter issued to related entities. It was established that the undisclosed income of Rupees Six crores was brought to tax for the relevant assessment year in the hands of the private company.

4. Jurisdiction under Section 263:
The Tribunal referred to the Malabar Industrial Co. Ltd. case to explain the prerequisites for the Commissioner to exercise jurisdiction under Section 263. It emphasized that the order must be both erroneous and prejudicial to the revenue. The Tribunal highlighted that every loss of revenue does not qualify as prejudicial, and the provision cannot correct every mistake made by the Assessing Officer.

5. Setting aside Assessment Order:
The Tribunal's order was challenged on the grounds that the CIT set aside the assessment due to the non-offering of taxation on the Rupees Six crores received. The Tribunal held that the CIT cannot substitute his view for that of the Assessing Officer unless the latter's view is unsustainable in law. The Tribunal found the CIT's order illegal and without jurisdiction.

6. Conclusion:
The High Court upheld the Tribunal's findings, noting that the subject amount was properly assessed in the name of the private company. The Court rejected the appeal, stating that the findings of fact by the Tribunal could not be re-evaluated. The substantial question of law proposed by the appellant did not arise based on the Tribunal's conclusions.