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TMI Blog2014 (1) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT on this issue shall fail – The order was set aside on this issue. Peak fund Deficiency - Held that:- For A.Y. 2008-09 - The amount of deficiency assessed by the AO was ₹ 12,48,040 for this year, whereas the Ld CIT has worked out the deficiency at ₹ 20,85,111 - There is difference between the two figures, which needs to be reconciled. For A.Y. 2007-08 - The Ld CIT has worked out the peak fund deficiency at ₹ 37,92,295/-, where as the AO has made addition to the extent of about ₹ 20.00 lakhs - The reasons for the difference were not spotted by both Ld CIT and the assessee - The excess portion of the cash outflow requires examination at the end of the AO - The order of Ld CIT was justified on this issue to the extent of items of cash outflow, which were not considered by the AO - The issue was restored to AO with a direction that the AO should examine the above said issue in both the years independently without being influenced by the observations or workings made by the Ld CIT. - I.T.A. Nos. 144&145/Coch/2012 - - - Dated:- 3-1-2014 - Shri N. R. S. Ganesan, JM And B. R. Baskaran, AM,JJ. For the Petitioner : Shri T. M. Sreedharan, Sr. Adv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss venture carried on by the assessee and also to re-work the peak credits based on specific investments and outgo and also to re-work the deficit in cash arising from the transactions. Aggrieved, the assessee has filed these appeals before us. 4. The Ld. Counsel for the assessee submitted that the assessee did not carry on the business activity of purchase and sale of immovable properties as presumed by Ld CIT. Hence, the assessee offered the profit arising from sale of immovable properties under the head "short term capital gain". The Ld. AR further submitted that the Ld. CIT has reached conclusions on the basis of presumptions only and he has not brought any material on record to substantiate his views. The Ld. AR further submitted that in order to invoke the revision proceedings u/s. 263 of the Act, two conditions specified in that section have to be cumulatively satisfied, i.e., the assessment order should not only be erroneous but it should also be prejudicial to the interests of the revenue. It is well settled that even if one of the conditions are not satisfied, then there is no jurisdiction to initiate revision proceedings u/s 263 of the Act. The Ld Counsel placed relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has accepted the assessment order and did not file any appeal. Hence, the question of merger of the issue does not arise in assessment year 2008-09. 6. Before going into the merits of the issue, we would like to discuss about the legal position with regard to the power of Learned CIT to invoke revision proceedings under section 263 of the Act. The scope of revision proceedings initiated under section 263 of the Act was considered by Hon'ble Bombay High Court, in the case of Grasim Industries Ltd. V CIT (321 ITR 92) by taking into account the law laid down by the Hon'ble Supreme Court. The relevant observations are extracted below: Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary, enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the income tax officer is erroneous but is not prejudicial to the interests of Revenue of if it is not erroneous but it is prejudicial to the Revenue - recourse cannot be had to section 263(1) of the Act." 6.2 It is also pertinent to note that the power to revise the order shall extent only on such matters which were not considered and decided in any appeal, as per the provisions of clause (c) to Explanation below sec. 263(1) of the Act. 7. Keeping in mind above cited the propositions laid down by the Hon'ble Supreme Court and also the provisions of the Act, we shall examine the issues contested before us. In the assessment year 2007-08, two issues were considered by Ld CIT viz., assessment of gains arising on sale of immovable properties and the determination of peak fund deficiency, which resulted in under assessment. With regard to the first issue, the Ld A.R has pointed out that the rate of tax is one and same, if the gain arising on sale of immovable properties is assessed either under the head "Income from business" or under the head "Income from short term capital gains". Accordingly, it was contended that no prejudice is caused to the revenue in assessing the g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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