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TMI Blog2015 (1) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... Initiation of such proceedings u/s 132 cannot be regarded that the order passed u/s 153C has been passed with the approval of the CIT. The power u/s 263 is a part of the Administrative power to be exercised against the assessing officer with the intention that in case an assessing officer passes an order which is erroneous and prejudicial to the interest of the revenue, the CIT can invoke jurisdiction u/s 263. If this power is not given, the section will become redundant and the CIT will not have any administrative control over the order passed by the assessing officer. We therefore do not agree with the ld. AR that the order passed u/s 153C cannot be revised u/s 263. We dismiss this ground. A perusal of the order framed by CIT indicates that the Assessment Order passed by the A.O. was set aside on the ground that the assessee has not offered her taxation the sum of ₹ 6 crores received from Mr. N. Suryanarayan. This, in our considered opinion, cannot be sufficient ground for setting aside the assessment. While making Assessment Order, it is the satisfaction of the A.O. who made the enquiry and it should be a touchstone of the assessment order passed by him, the CIT cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CANNOT BE REVISED. 2.1 The learned CIT erred in exercising revisional jurisdiction under section 263 of the Act to revise an order passed under section 153C of the Act. 2.2 The Appellant submits that on a true and proper construction of the scheme of the Act the order passed under section 153C is not amenable to revisional jurisdiction under section 263 of the Act. 3. CONDITION OF SECTION 263 OF THE ACT NOT SATISFIED: 3.1 The learned CIT erred in exercising jurisdiction under section 263 of the Act in respect of loan transaction with Mr. Suryanarayana amounting to ₹ 6 crores although same was duly examined and accepted in the course of assessment proceedings under section 153C of the Act. 3.2 The learned CIT erred in holding that the order under section 153C of the Act is erroneous and prejudicial to the interest of revenue. 3.3 The learned CIT ought not to have exercised jurisdiction in respect of matters accepted after due application of mind by the assessing officer. 3.4 The learned CIT erred in giving directions u/s 263 of Income Tax Act to the assessing officer by totally ignoring the civil suit filed by Mr. Suryanarayana against the appellant wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue and set aside the same with a direction to the AO to consider the above sum of ₹ 6 crores deposited in the bank account of the Assessee for the A.Y 2008-09 in accordance with law after giving reasonable and proper opportunity to the Assessee. 3. The ld. AR before us contended in respect of limitation i.e. ground no. 1 that the order u/s 143(1) was passed on 20.11.2008. Subsequent thereto, there was a search action in the case of M/s. Goa Golf Club Pvt. Ltd. (GGCPL) and BAPL in January, 2010. In consequence thereof, order u/s 153C r.w.s. 143(3) was passed in the case of Dr. Britto on 16.12.2011. CIT passed the order u/s 263 on 28.3.2014 setting aside the order passed by the AO dt. 16.12.2011. According to the ld. AR, on the date of the search assessment for A.Y 2008-09 was not pending and therefore as per the second proviso to Sec. 153A(1) assessment did not abate. It was also submitted that there is no incriminating documents found in the course of the search with respect to the aforesaid sum of ₹ 6 crores. Statement recorded u/s 132 of the Income Tax Act of the Assessee cannot be said to be incriminating document nor papers of civil suit between the Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were simultaneously carried out by the same AO. The AO who passed the order u/s 153C had before him the bank statement, statement recorded in the course of the search and survey, papers and proceedings of civil suit between the Assessee and N. Suryanarayan. The dates of hearing of the Assessee and BAPL, as evident from the first page of the assessment order, are also the same. The assessment order in case of all the three Assessees' had been passed on the same date by the same AO. In the case of BAPL the AO after considering all the materials on record i.e. bank statement, statement recorded in the course of the search and survey, papers and proceedings of the civil suit between the Assessee and N. Suryanarayan etc. took a conscious decision of adding the sum of ₹ 6 crores in the assessment of BAPL. The assessment order of BAPL shows a detailed discussion on this issue by the AO. The AO has not done protective assessment but has substantively added this amount in the hands of BAPL. In case of centralization of cases, to make an assessment in case of search proceedings, all the assessment orders of the group is to be considered for determining whether the AO has examined a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard on the decisions of the Hon'ble Bombay High Court in the case of Orient Trading Co. Ltd. vs. CIT, 49 ITR 723 (Bom) and CIT vs. Tania Investments P. Ltd., 322 ITR 394 (Bom). 7. The ld. DR on the other hand drew our attention to Sec. 263 in respect of ground no. 1 and contended that it is the order passed u/s 153C which has been set aside by the CIT. Provisions of Sec. 263 has been invoked against order passed u/s 153C not the order passed u/s 143(1). The order passed u/s 153C cannot be dated back to the order passed u/s 143(1). The order u/s 153C since was passed on 16.12.2011, provision of Sec. 263 were invoked within two years i.e. 28.3.2014 from the end of the financial year in which the assessment order was passed. Therefore, the proceedings are not barred by limitation. 8. In respect of ground no. 2 the ld. DR contended that the provisions of Sec. 263 are independent. CIT is not having supervisory jurisdiction in the order passed u/s 153C. The order to be passed u/s 153C does not require prior approval of the CIT. Therefore, this ground has to be dismissed. 9. In respect of ground no. 3 the ld. DR contended that each of the Assessee is an independen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director General or Commissioner authorised by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, the High Court or the Supreme Court. Explanation.-In computing the period of limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous if there is an incorrect assumption of fact or incorrect application of law in the order passed by the Assessing Officer. If the Assessing Officer after making the enquiries and examining the records, taken one of the possible views, it cannot be said that the order passed by the Assessing Officer is erroneous. 14. It is also apparently clear that the power of the CIT are three fold. One, prior to the initiation of the proceedings u/s 263. Second, at the time of initiation of the proceedings. Third, the final outcome after the initiation of the proceeding. Power of the CIT prior to the initiation includes 'call for and examine the records' of any proceedings under this Act. The word 'record' is very important, because on the basis of the record of the proceedings the CIT will form an opinion that the order passed is erroneous as well as prejudicial to the interest of the Revenue and once he forms an opinion, he has to give an opportunity to the assessee of being heard and after making or causing the enquiry he can pass an order. Moreover the inquiry is conducted once the CIT forms an opinion on the basis of record that the order passed is erroneous and preju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 in the case of the assesse and the proceedings u/s 263 were initiated against the assessee by show cause notice and order u/s 263 was passed on 28.03.2014. The order u/s 263 has been passed within two years from the end of the financial year in which the order u/s 153C was passed. CIT has not invoked the jurisdiction in respect of the intimation issued u/s 143(1) and limitation cannot start from the date when the return was processed u/s 143(1). We therefore, dismiss the ground no.1 taken by the assesse so far it relates to the order passed u/s 263 is barred by limitation. 16. The second contention of the ld. A.R relates to the issue that the order passed u/s 153C cannot be revised u/s 263. We have gone through the provision of section 153C as well as 153D. We noted u/s 153D prior approval of Joint Commissioner is required if the order has to be passed by an assessing officer below the rank of Joint Commissioner. Commissioner has been defined u/s 2(16) while Joint Commissioner has been defined u/s 2(28C). The definition of the Commissioner does not include therein Joint Commissioner. The jurisdiction u/s 263 has to be exercised by the Commissioner not by the Joint Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is a Director is also the same. The assessment order in the case of all the three Assessees were passed on the same date by the same AO. This is also a fact that in case of centralized proceedings especially in search cases, common query letter is issued by the AO. The Assessee also submits common reply. We noted that in the case of Britto Amusement Pvt. Ltd. the AO under para 9 to 9.6 had a detailed discussion in respect of the said sum of ₹ 6 crores which has been credited into the account of the Assessee and ultimately added the said sum on substantive basis in the hands of M/s. Britto Amusement Pvt. Ltd. in the following manner :- 9.1 Mr. N. Suryanarayan paid another sum of ₹ 6 cr to Dr. William Britto which was deposited in the personal account of Dr. Britto. Mr Suryanarayan claimed that this amount was given for an off shore casino project conceived by Dr. Britto. But Dr. Britto did not repay this amount. Mr. N. Suryanarayan filed a civil case for recovery of the amount of ₹ 6 crores. Dr. William Britto filed an affidavit before the court stating that the maount of ₹ 6 crores was given as repayment of gambling debt which Mr. Suryanarayan ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) is prejudicial to the interests of the revenue. If one of them is absent- if the order of the Assessing office is erroneous but is not prejudicial to the revenue - recourse cannot be had to section 263(1). There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the assessing officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interest of the revenue' has to be read in conjunction with an erroneous order passed by the assessing officer. Every loss of revenue as a consequence of the order of the assessing officer cannot be treated as prejudicial to the interests of the revenue. For example, if the assessing officer has adopted one of the courses permissible in law and it has resulte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue are not per se or normally treated as erroneous and prejudicial to the interest of the revenue because the revisionary authority feels and opines that further inquiry/investigation was required or deeper or further scrutiny should be undertaken. 21. If the AO has not discussed the inquiry made by him in the case of each and every Assessee which formed part of the group in respect of which the assessment order has been passed in consequence of the search, we cannot say that order is erroneous as the AO has not made any inquiry into the matter. The Assessee cannot dictate the AO what should he incorporate in the assessment order and how he should draft the assessment order. We find that the Hon'ble Bombay high Court in the case of CIT v Gabriel India Limited 203 ITR 108 has held in this regard as under: - Held, that the Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given a detailed explanation in that regard by a letter in writing. All these were part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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