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2023 (11) TMI 1105 - AT - Income TaxRevision u/s 263 - adjustment of LTCG twice - As per CIT assessee has wrongly adjusted the long term capital loss twice, once with LTCG and again with STCG in its computation of total income as per the normal provisions of the Act - HELD THAT - Admittedly, it is a fact on record that it occurred due to an inadvertent mistake on the part of the assessee. Further, it is evidently demonstrated that this does not have a bearing on the income-tax liability for the year under consideration. The effect is on the availability of MAT credit in subsequent year for which assessee submitted to make the course correction. Thus, in this context, it is a settled law that scope of section 263 to revise an assessment is different from scope of section 154 to rectify any mistake apparent from record. Provisions of section 263 give jurisdictional power whereas provisions of section 154 gives power of rectification. It will not be correct to say that rectification is equal to revision under the Act. Term erroneous used in the section 263 is to be read relating to jurisdictional error on the part of the Assessing Officer in exercise of his powers vested under the law. It cannot be read as to a mistake which is rectifiable under the provisions of section 154 either suo moto or on the application of the assessee. Rectification u/s 154 can be done suo motto either by Assessing Officer himself or by the assessee on application. In the instant case, all the documents and details related to the impugned transaction were on record. We need to understand if such a mistake can lead to holding the order erroneous for the purpose of assuming jurisdiction u/s. 263 to invoke revisionary proceedings. The matter was open before Ld. AO to take appropriate measures for rectification of mistake apparent from records. Thus we find that on this issue, present case is purely on facts which are verifiable from the records of the assessee, examination and verification of the original computation of income and tax vis- -vis the revised computation of income and tax placed on record. Also considering the judicial precedent in the case of Malabar Industries Ltd 2000 (2) TMI 10 - SUPREME COURT we find that it is case of bonafide mistake committed by the assessee, which effectively does not result into prejudice caused to the revenue in the year under consideration. Liability of tax for the year under consideration is duly discharged by the assessee which has been evidently demonstrated from the two computations placed on record. Accordingly, on this issue raised by the Ld. Pr. CIT in the revisionary proceeding, no action u/s. 263 of the Act is justifiable. DDT on the proposed dividend - Case of assessee is not selected for regular assessment u/s. 143(3) and where no income-tax is payable by the assessee on its total income - CIT has also noted the fact of payment of DDT which is reflected in the Annual Tax Statement in Form No. 26AS but the details of DDT were not quantified in the return furnished by the assessee - HELD THAT - In absence of any regular assessment undertaken of a domestic company u/s. 143(3), if no income-tax is payable on its total income but if domestic company has distributed profits and there is a demand on its distributed profits u/s 115O and 115P, then, for recovery of the same, the assessee is to be held as assessee in default which can happen only by passing an order to that effect is required by invoking the provisions of section 115Q. For this DDT liability, after holding the assessee as an assessee in default , a notice of demand u/s. 156 pursuant to this order would make the assessee liable for the same and the provisions of collection and recovery of tax will follow, accordingly. If we go by the contentions made by the Ld. CIT, DR to accept that provisions relating to DDT liability forms part of the assessment of total income made u/s. 143(3), then, in our considered view, section 115Q is rendered otiose and would not have any occasion for its application. As clearly appears from the scheme of the Act that an order of assessment passed u/s 143(3) is an assessment of total income of the assessee which is separate and distinct from any other order. DDT liability is distinct and separate from the liability to pay income-tax on the total income of an assessee which is created by charging section 4. Revision of an order u/s. 263 pre-supposes existence of an order. In view of the above discussion, levy of interest u/s. 115P and any liability of DDT u/s. 115O does not arise out of conduct of assessment proceedings and making an assessment of total income u/s. 143(3), therefore, Ld. Pr. CIT could not have invoked revisionary proceedings to direct the ld. AO for imposing DDT liability on the assessee in reference to assessment order passed u/s. 143(3). There is no separate order in existence, fastening the assessee with DDT liability by holding it as an assessee in default , contemplated u/s. 115Q. Thus, in absence of the same, in our view, Ld. Pr. CIT is not justified in invoking the revisionary proceeding u/s. 263 and passing an order thereon. Thus, even on this issue, we hold that passing of revisionary order u/s. 263 is not justifiable. Appeal of the assessee is allowed.
Issues Involved:
1. Assumption of jurisdiction by the Ld. Pr. CIT for invoking the revisionary proceeding u/s. 263 of the Act. 2. Dividend Distribution Tax (DDT) on proposed dividend. 3. Understatement of Short Term Capital Gain (STCG). Summary: Issue 1: Assumption of Jurisdiction by Ld. Pr. CIT for Invoking Revisionary Proceedings u/s. 263 The assessee challenged the jurisdiction of the Ld. Pr. CIT in invoking the revisionary proceedings u/s. 263 of the Act. The tribunal noted that the power of revision can be exercised by the Ld. Pr. CIT only if the order passed by the AO is erroneous and prejudicial to the interest of the revenue. The tribunal referred to the judicial precedence set by the Hon'ble Supreme Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC), which established the twin conditions for invoking section 263. Issue 2: Dividend Distribution Tax (DDT) on Proposed Dividend The Ld. Pr. CIT raised an issue regarding the short payment of DDT on the proposed dividend of Rs. 90,00,000/-. The assessee argued that the revision of an order u/s. 263 presupposes the existence of an order, and no such order was passed u/s. 115P imposing interest for short payment of DDT. The tribunal agreed with the assessee, noting that DDT liability is separate from the assessment of total income u/s. 143(3) and requires a separate order. The tribunal concluded that the Ld. Pr. CIT could not invoke revisionary proceedings u/s. 263 without an existing order imposing DDT liability. Issue 3: Understatement of Short Term Capital Gain (STCG) The Ld. Pr. CIT noted an understatement of STCG amounting to Rs. 13,07,100/- due to the assessee's inadvertent mistake of adjusting Long Term Capital Loss (LTCL) twice. The assessee demonstrated that this mistake did not result in additional tax liability for the year under consideration, as the total tax payable remained the same. The tribunal found that this was a case of a bona fide mistake, and the assessment order was not prejudicial to the interest of the revenue. The tribunal held that the Ld. Pr. CIT's invocation of section 263 was not justified in this context. Conclusion: The tribunal quashed the impugned order passed by the Ld. Pr. CIT on both issues, holding that the revisionary proceedings u/s. 263 were not justified. The appeal of the assessee was allowed.
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