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2021 (1) TMI 1072 - AT - Income TaxRevision u/s 263 - deemed dividend u/s 2(22) - HELD THAT - Provisions of section 2(22)(e) of the Act apply on the date of taking the loan and as mentioned elsewhere, on the date of acceptance of ICD of ₹ 50 lakhs from Eicher Ltd. Eicher Ltd was a listed company at BSE and NSE. Therefore, it can safely be concluded that on the date of the said loan, the lender company was a company in which public were substantially interested which make the transaction outside the purview of section 2(22)(e). Assessing Officer, while framing assessment u/s 143(3) of the Act has taken a possible view. Therefore, the ld. CIT cannot impose his view upon the Assessing Officer on wrong appreciation of facts. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. We find the Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar 2010 (2) TMI 75 - DELHI HIGH COURT has held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion. - Decided in favour of assessee.
Issues Involved:
1. Assumption of jurisdiction under Section 263 of the Income Tax Act, 1961. 2. Whether the assessment order dated 05.11.2009 was erroneous and prejudicial to the interest of the Revenue. 3. Applicability of Section 2(22)(e) of the Income Tax Act, 1961 regarding deemed dividend. Issue-wise Detailed Analysis: 1. Assumption of Jurisdiction under Section 263 of the Income Tax Act, 1961: The appellant challenged the assumption of jurisdiction by the CIT under Section 263 of the Income Tax Act, 1961. The CIT issued a notice dated 25.08.2010, proposing to revise the assessment order dated 05.11.2009. The CIT contended that the assessment order was erroneous and prejudicial to the interest of the Revenue due to non-application of Section 2(22)(e) regarding a sum of ?50 lakhs received from Eicher Ltd. The Tribunal concluded that the CIT proceeded on a wrong assumption of facts, as the Assessing Officer had already considered the issue during the original assessment proceedings. 2. Whether the Assessment Order Dated 05.11.2009 was Erroneous and Prejudicial to the Interest of the Revenue: The Tribunal examined whether the assessment order dated 05.11.2009 was erroneous and prejudicial to the interest of the Revenue. The Tribunal referred to the Supreme Court's decision in Malabar Industrial Co. Ltd., 243 ITR 83, which established that both conditions must be satisfied for the CIT to exercise jurisdiction under Section 263: the order must be erroneous and prejudicial to the Revenue. The Tribunal also cited the Bombay High Court's decision in Gabriel India Ltd, 203 ITR 108, emphasizing that an order cannot be termed erroneous unless it is not in accordance with law. The Tribunal found that the Assessing Officer had made inquiries, considered the appellant's replies, and taken a possible view. Therefore, the CIT could not impose his view on the Assessing Officer. 3. Applicability of Section 2(22)(e) of the Income Tax Act, 1961 Regarding Deemed Dividend: The appellant argued that the provisions of Section 2(22)(e) were not applicable to the ?50 lakhs received from Eicher Ltd. The Tribunal noted that Eicher Ltd was a listed company on the Bombay Stock Exchange and National Stock Exchange at the time of the transaction, and it was registered as a Non-Banking Financial Company (NBFC) with the Reserve Bank of India. The Tribunal concluded that the transaction was outside the purview of Section 2(22)(e) because the lender company was a company in which the public was substantially interested. The Tribunal also referred to the Supreme Court's decision in Max India Ltd, 295 ITR 282, which held that where two views are possible, the CIT cannot exercise revisional powers under Section 263. Conclusion: The Tribunal set aside the order of the CIT dated 31.10.2011 and restored the assessment order dated 05.11.2009. The Tribunal held that the Assessing Officer had taken a possible view, and the CIT could not impose his view based on a wrong appreciation of facts. The appeal of the assessee was allowed. The order was pronounced in the open court on 25.01.2021.
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