2022 (4) TMI 1312 - AT - Income Tax

Revision u/s 263 - assessment proceedings u/s 153A - exemption of income u/s 10(38) - HELD THAT - We are unable to discern from the record that the Assessing Officer had subjected to the claim of the appellant for exemption u/s 10(38) and took a plausible view nor could the appellant demonstrate with evidence before us. Therefore, in the present case non-examination of the claim by the Assessing Officer renders the assessment order erroneous and prejudicial to the interests of the Revenue. Accordingly, we uphold the order of revision passed by the ld. CIT (Central) u/s 263 of the Act. Thus, we do not find any merit in the grounds of appeal no.1 to 8 raised by the assessee herein. Assessing Officer had no jurisdiction to pass the assessment order, as no opportunity was offered by the Commissioner of Income Tax- II, Nashik while passing the order u/s 127 - It is trite law that an assessee is barred from raising contention that no opportunity was given to the assessee while transferring the jurisdiction of the case u/s 127 from Jalgaon to Nashik as the order of the transfer of case u/s 127 was within the knowledge of the assessee during the course of assessment proceedings and still the assessee had chosen not to participate in the matter of jurisdiction of the Assessing Officer to whom the case has been transferred. The assessee cannot be allowed latter to challenge the jurisdiction of the Assessing Officer as held by the Hon ble Supreme Court in the case of Pannalal Binjraj vs. Union of India 1956 (12) TMI 1 - SUPREME COURT AND SHIVABHAI KHODABHAI PATEL VERSUS COMMISSIONER OF INCOME-TAX 1999 (12) TMI 31 - GUJARAT HIGH COURT - the objection raised by the assessee challenging the transfer of jurisdiction of the case does not stand the test of the law. Thus, this contention is devoid of any merit and, accordingly, we dismiss the same. Assessment u/s 153A - contention raised by the appellant that the information received from the Investigation Wing of the Department does not form part of the incriminating material, therefore, non-consideration of such incriminating material at the time of framing the assessment u/s 143(3) does not give jurisdiction to the Commissioner to exercise the power of revision, this contention has also no legs to stand for the reason that undisputedly the assessment was made pursuant to notice u/s 153A are abated with regular assessment proceedings and any information which had come to knowledge and possession of the Assessing Officer should be considered at the time of framing of assessment. The case laws relied upon have no application to the facts of the present case or those cases are in relation to unabated regular assessment proceedings. Thus, we do not find any merit in this contention raised during the course of hearing before us. Thus, the grounds of appeal raised by the assessee stand dismissed.

Summary

Issues Involved:
1. Legality and validity of the order passed under section 263 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer due to transfer of jurisdiction without proper opportunity.
3. Examination of transactions with M/s. Religare Securities Ltd. and the genuineness of the transactions.
4. Relevance of incriminating material and information received from the Investigation Wing.

Detailed Analysis:

1. Legality and Validity of the Order Passed Under Section 263:
The appellants challenged the order passed under section 263 of the Income Tax Act, 1961, arguing that it was "illegal, invalid and bad-in-law." The Commissioner of Income Tax (Central), Nagpur, invoked section 263 on the grounds that the assessment order was deficient, specifically pointing out that the Assessing Officer (AO) failed to verify the genuineness of transactions with M/s. Religare Securities Ltd. The Tribunal upheld the CIT's order, stating that the power of revision under section 263 is valid if the assessment order is found to be "erroneous and prejudicial to the interests of revenue." The Tribunal cited the Supreme Court's decisions in Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC) and CIT vs. Max India Ltd., 295 ITR 282 (SC), emphasizing that non-enquiry by the AO renders the assessment order erroneous.

2. Jurisdiction of the Assessing Officer:
The appellant contended that the AO had no jurisdiction to pass the assessment order as the transfer of jurisdiction from Jalgaon to Nashik was done without giving proper opportunity to the assessee. The Tribunal dismissed this contention, stating that the issue of jurisdiction cannot be agitated in revision proceedings under section 263. The Tribunal referred to the Punjab & Haryana High Court's decision in Jaswinder Kaur Koover vs. CIT, 295 ITR 80 (P&H), and held that the appropriate remedy for challenging the transfer of jurisdiction lies elsewhere, such as through independent proceedings or a writ petition.

3. Examination of Transactions with M/s. Religare Securities Ltd.:
The CIT (Central) observed that the AO failed to verify the transactions with M/s. Religare Securities Ltd. during the assessment proceedings, despite receiving information from the Investigation Wing. The appellant argued that the AO had called for details and was satisfied with the explanation provided. However, the Tribunal found no evidence that the AO had subjected the claim to thorough examination. The Tribunal cited the Bombay High Court's decision in CIT vs. Ballarpur Industries Ltd., 85 taxmann.com 10 (Bom.), which held that non-enquiry by the AO justifies the exercise of jurisdiction under section 263.

4. Relevance of Incriminating Material and Information from the Investigation Wing:
The appellant argued that the information received from the Investigation Wing did not form part of the incriminating material, and thus, the revision proceedings under section 263 were not maintainable. The Tribunal dismissed this argument, stating that any information or material received during the assessment proceedings should be considered by the AO. The Tribunal emphasized that non-consideration of such information renders the assessment order erroneous and prejudicial to the interests of revenue.

Conclusion:
The Tribunal upheld the CIT's order under section 263, finding that the AO's failure to verify the transactions with M/s. Religare Securities Ltd. and consider the information from the Investigation Wing rendered the assessment order erroneous and prejudicial to the interests of revenue. The appeals were dismissed, and the Tribunal emphasized that issues related to jurisdiction and incriminating material should be addressed through appropriate legal channels and not in revision proceedings under section 263.