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2022 (11) TMI 134 - AT - Income TaxRevision u/s 263 by CIT - Whether PCIT erred in exceeding his jurisdiction in passing the order u/s 263 ignoring that an order passed u/s 143(3) r/w sec. 153D cannot be revised without revising the approval of the Addl. CIT - additions on account of unexplained investment and on unexplained expenditure? - HELD THAT - As decided in case of Kapil Mehta 2021 (10) TMI 671 - ITAT DELHI orders of search and seizure passed u/s 153A or u/s 153C of the Act are required to be passed after prior approval of the Joint Commissioner except as provided u/s 154BA(12). Therefore, if the argument of the Ld. AR is to be accepted then in such cases where the assessment has been framed under Section 153A or Section 153C, the same will go out of the ambit of the provisions of Section 263 of the Act and such a view is directly contrary to the decision of the Hon ble Supreme Court in T .N .Civil Corporation 2003 (1) TMI 7 - SUPREME COURT , Osho Forging Ltd. 2018 (5) TMI 161 - PUNJAB AND HARYANA HIGH COURT and in NIIT Ltd. Vs. Union of India 2009 (12) TMI 927 - DELHI HIGH COURT Power of the Commissioner u/s 263 of the Act is in the nature of supervisory jurisdiction. This power is granted to correct an error, which is prejudicial to the interest of the Revenue in the order of the Assessing Officer, even if it is approved by the Joint Commissioner, who is also falling below the rank of the Pr. Commissioner. If the argument of the ld. AR is accepted then the supervisory authority of the Pr. Commissioner granted under the Act is hampered. On provisions of Section 263 of the Act give unfettered right to the CIT to revise any order passed by the Assessing Officer. Whatever was to be excluded by the law has already been provided under that Section and the only exception are the issues decided and considered in the appellate orders. Therefore, the reasoning of the arguments advanced by the Ld. AR on this line also fails and we dismiss the same. Validity of order passed u/s 263 - We find that this is quite contradictory on the part of the ld. Pr.CIT. In one part of the order, he is computing the addition which should have been done in the hands of the assessee. Thereafter, he is stating that there is lack of further enquiry and hence he is invoking the provisions of section 263 and directing the AO to make proper enquiry. In our considered opinion, such contradictory order is not legally sustainable. We note that in the case of Kapurchand Shrimal 1981 (8) TMI 2 - SUPREME COURT Hon ble Supreme Court has held that it is the duty of appellate authority to correct the errors in the orders of the authorities below and remand the matter back to them with or without direction unless prohibited by law. In the present case, we find that the above said ratio is fully applicable and the order passed by the CIT is contradictory in itself. Hence, we remit the issue back to the file of Pr.CIT to consider the issue afresh after giving an appropriate opportunity of being heard to the assessee and in the light of our observation hereinabove. Appeal filed by the assessee is partly allowed for statistical purposes.
Issues Involved:
1. Legality and jurisdiction of the order passed under section 263 of the Income-tax Act, 1961. 2. Erroneous and prejudicial nature of the assessment order due to lack of verification and enquiries by the Assessing Officer (AO). 3. Contradictory nature of the Principal Commissioner of Income Tax (Pr.CIT)'s order. Issue-wise Detailed Analysis: 1. Legality and Jurisdiction of the Order Passed Under Section 263: The assessee argued that the order passed by the Pr.CIT under section 263 is illegal and beyond jurisdiction because it was done without revising the approval of the Addl. CIT. The ITAT referenced the decision in the case of Kapil Mehta, where it was established that the powers granted to the Pr.CIT or CIT under section 263 are not limited by the approval of the Addl. CIT. The ITAT emphasized that the Pr.CIT has supervisory jurisdiction to revise any order passed by the AO, even if it was approved by a lower authority such as the Addl. CIT. The ITAT cited the Hon'ble Supreme Court's decision in T.N. Civil Supplies Corpn. Ltd vs. CIT, which clarified that orders passed by the AO, even under the direction of a superior authority, can be revised under section 263. Consequently, the ITAT dismissed the assessee's argument and upheld the jurisdiction of the Pr.CIT. 2. Erroneous and Prejudicial Nature of the Assessment Order: The Pr.CIT invoked clause (a) of Explanation 2 to section 263, asserting that the AO failed to conduct necessary verification and enquiries, rendering the assessment order erroneous and prejudicial to the interest of the Revenue. Specific issues highlighted included: - The difference between the stamp duty value of land purchased by firms M/s Gupta Sons and M/s Agarwal Sons and the actual sales consideration, which was assessable under section 56(2)(vii)(b) of the Act. - A variation of Rs.1,49,000/- between the return filed under section 139(1) and section 153A, which was due to a claim of deduction under section 80C for tuition fees. The Pr.CIT noted that the AO did not properly verify these aspects, leading to an erroneous assessment. The ITAT acknowledged the Pr.CIT's observation that the AO's failure to conduct necessary enquiries justified the invocation of section 263. 3. Contradictory Nature of the Pr.CIT's Order: The ITAT found the Pr.CIT's order contradictory because, on one hand, the Pr.CIT computed the addition that should have been made, and on the other hand, directed the AO to make proper enquiries. The ITAT referenced the Hon'ble Supreme Court's decision in Kapurchand Shrimal vs. CIT, which held that it is the duty of the appellate authority to correct errors and remand the matter if necessary. The ITAT concluded that the contradictory nature of the Pr.CIT's order made it legally unsustainable. Therefore, the ITAT remitted the issue back to the Pr.CIT for fresh consideration after providing an appropriate opportunity to the assessee. Conclusion: The ITAT partially allowed the appeal for statistical purposes, directing the Pr.CIT to reconsider the issue afresh. The decision applies mutatis mutandis to both appeals, and both appeals were partly allowed for statistical purposes. The order was pronounced in the open court on November 1, 2022.
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