9911796707
TMI Blog2004 (6) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer and the Ld. CIT or that the certificate of the assessee is not correct. Thus, the contention of the Ld. Counsel for the assessee that these documents were considered by the Assessing Officer cannot be rejected. It is a settled legal position that power u/s 263 of the I.T. Act cannot be exercised only to reconsider the material already considered by the Assessing Officer. It is clear from the record, that if it is found that the assessee had placed entire relevant material and the Assessing Officer on examination of such material decided and allowed the claim of the assessee it cannot be said that the order of the Assessing Officer is erroneous or prejudicial to the interest of the Revenue merely because in the order elaborate discussion is not made on certain points. In the case of CIT v. Arvind Jewellers [ 2002 (7) TMI 50 - GUJARAT HIGH COURT] , it was held that since material was there on record and the said material was considered by the ITO, the mere fact that a different view can be taken should not be the basis for an action u/s 263 of the Act. Thus, I am unable to uphold the finding of the learned CIT that the order of assessment passed in this case is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed under section 143(1)(a) of the Income-tax Act on 9-2-2000. Thereafter, the case was selected for scrutiny and notices under section 143(2) were issued. The Assessing Officer directed the assessee to file details which were filed. The Assessing Officer examined the details relating to computation of house property income and disallowed deduction of ₹ 18,737 claimed by the assessee on account of payment to insurance company. The Assessing Officer also examined other details relating to the claim of the assessee for deduction under section 80HHC etc. and completed the assessment under section 143(3) vide order dated 26-3-2002. The Assessing Officer determined taxable income of the assessee at ₹ 4,83,379. 5. The CIT examined the assessment records and found that the assessment order was erroneous and prejudicial to the interest of the Revenue in respect of the following issues :- (i) The assessee claimed 10 gifts totalling ₹ 7.14 crores donated to 10 persons who were not related to the assessee and had also no business connection with them. These gifts have been accepted without verification of source of gifts made or genuineness of the gifts made under the give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Bishan Sarup Ram Kishan. (ix) In the balance sheet of M/s. R.K. Agency, royalty on unclaimed prizes was shown at ₹ 1.36 crores but no details were filed on record as to the nature of royalty unclaimed or its taxability thereof. (x) While working out deduction under section 80HHC, no details were filed that the export proceeds were received within the prescribed time. 6. According to him, these issues were not considered at the time of assessment. Hence, he issued a show-cause notice dated 6-11-2003. On various dates, the assessee submitted adjournment applications. The case was adjourned for 21-11-2003 but again the assessee submitted an application for adjournment for this date also. The learned CIT did not allow any further opportunity to the assessee on the ground that sufficient opportunity has already been granted to him. The learned CIT thereafter proceeded to decide the matter on merits and cancelled the assessment order by observing as under :- 3. As discussed herein above, there is sufficient material on record to show that the assessment order passed by the Assessing Officer under consideration is not only erroneous but also prejudicial to the interest of revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uns into 107 pages. According to him, all these documents were filed before the Assessing Officer on his directions and related to various issues involved in the case of the assessee. To substantiate this point, he pointed out that as per the certificate given on the paper book, all these documents were before the Assessing Officer and also before the learned CIT who examined the assessment record. According to the learned counsel, the Assessing Officer examined each aspect and each item of income and expenditure including the genuineness of gifts and the allowability of exemption under section 80HHC. He made reference to page 58A of the paper book which is trading account for the year ending 31st March, 1999 and by making reference to the particulars of purchase of soyabean account and rice account as well as to the packing material account, he justified the loss incurred by the assessee. Likewise, he made reference to page 59 which is profit and loss account of the firm M/s. Bishan Sarup Ram Kishan for the year ending 31st March, 1999. In the similar way, he also made reference to various other documents including the bank reconciliation, details of fixed deposits, list of sundry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 (MP). 5. CIT v. Govindram Seksaria Charity Trust [1984] 145 ITR 253 3 (MP). 6. J.P. Srivastava Sons Kanpur Ltd. v. CIT [1978] 111 ITR 326 , 328 (All.). 7. Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 , 87 (SC). 8. CIT v. Seshasayee Paper Board Ltd. [2000] 242 ITR 490 , 500 (Mad.). 9. CIT v. Trustees of Anupam Charitable Trust [1987] 167 ITR 129 (Raj.). 10. CIT v. Goyal Private Family Specific Trust [1988] 171 ITR 698 , 701 (All.). 11. Russell Properties (P.) Ltd. v. Addl. CIT [1977] 109 ITR 229 , 249 (Cal.). 12. Rayon Silk Mills Ltd. v. CIT [1996] 221 ITR 155 , 161 (Guj.). 13. CIT v. Kanda Rice Mills [1989] 178 ITR 446 , 449 (Punj. Har.). 14. CIT v. Shakti Shippers [2000] 160 CTR 111 (sic). 15. CIT v. Gabriel India Ltd. [1993] 203 ITR 108 , 117 (Bom.). 16. CIT v. Kashinath Co. [1988] 170 ITR 28 , 30 (All.). 17. Garden Silk Mills Ltd. v. CIT [1996] 221 ITR 861 , 865 (Guj.). 18. Usha Martin Industries Ltd. v. Dy. CIT [2003] 86 ITD 261 (Cal.). 11. I have carefully considered the entire material on record. On going through various documents filed in the paper book, it is found that the assessee has furnished all the required and relevant details. The position of ten items wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the claim of the assessee cannot be treated to be prejudicial to the interest of the Revenue. c. Claim of 4,363 Kgs. of rice in the trading account - On going through page 58A of the paper book, it is noted that there is a reduction in the claim of expenditure. The amount of ₹ 1,35,70,018 has been reduced from the purchase cost. Thus, it is a credit to the account and, therefore, this aspect cannot be treated to be prejudicial to the interest of the Revenue. d. Import licence - The details of the sale licences are available at page 92 of the paper book. The assessee made total sale of ₹ 155.01 crores. It is contended that during the course of assessment, the assessee filed complete details of export invoices, shipping bills, bank certificates of realization and licence obtained etc. These details are available in the paper book and in particular at page 101 of the paper book. e. Payment of interest - In paragraph 4 page 1 of the assessment order, this issue has been discussed by the Assessing Officer. The Assessing Officer has separately worked out the interest received by the assessee at ₹ 1,18,036. On perusal of the assessment order, it is found that the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of pages 48 to 50 of the paper book which are certificates of receipt of foreign exchange and computation of deduction under section 80HHC and on perusal of the assessment order, it is found that the Assessing Officer has examined and considered the claim of the assessee and has adjudicated the same. 12. In view of the above, it is found that various items in relation to which the CIT has alleged that Assessing Officer has not examined them properly, the assessee had in fact furnished full details and as observed in the assessment order, detailed discussions were made with regard to these items. 13. It may be pointed out that in the computation of income, the assessee claimed exemption allowable under section 80HHC at ₹ 8,31,066 and after examining the details, the Assessing Officer has allowed the rebate only at ₹ 7,34,030 which shows that the amount was considerably reduced by him. Had he not examined the issue thoroughly, he could not have made the calculation as has been done by him. Hence, the allegation of C.I.T. is not found to be substantiated. 14. Thus, on examination of the material contained in the paper book, it cannot be said that the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the assessee which was that the ITO made specific queries in the course of assessment proceedings and, therefore, section 263 had no application to the facts of the case. Against the order of CIT, an appeal was filed before the Tribunal which held that the order passed by the CIT under section 263 was not tenable in law. In reference, the Hon'ble High Court observed as under:- The power of suo motu revision under sub-section (1) of section 263 of the Income-tax Act, 1961, is in the nature of supervisory jurisdiction and can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise the power of revision under this sub-section, viz., (i) the order should be erroneous; and (ii) by virtue of the order being erroneous prejudice must have been caused to the interests of the Revenue. An order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of CIT v. Trustees of Anupam Charitable Trust [1987] 167 ITR 129 (Raj.), the trust was granted exemption in assessment year 1971-72 and 1975-76. The assessee-trust had acquired a sole selling agency from sugar factory and the right to receive commission was settled on the Trust. The income of the trust was used for charitable purposes. The CIT acting in revision set aside the order granting exemption by observing that the expression sugar rate difference occurred in the return of the assessee relating to assessment year 1971-72 indicated that it was income from speculative business. He also held that no investigation was made by the ITO into the aspect whether the sole selling agency continued after the year 1969. The Tribunal set aside the order of revision. In reference, the Hon'ble Rajasthan High Court held that the error envisaged by section 263 was not one depended on possibility or guess work but it should be for error either of fact or of law. 19. It was also observed that the order of the Assessing Officer may be brief and cryptic but that by itself is not the reason to brand the assessment order as erroneous and prejudicial to the interest of the Revenue. It was fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TTJ 956 by the Calcutta Bench of ITAT and following the decision in the case of CIT v. Shakti Charities [2000] 244 ITR 226 (Mad.) and after making reference to various authorities, the Bench has made the following observations:- 11. During the course of hearing of the appeal, the learned Departmental Representative placed reliance on the decision of the Madhya Pradesh High Court in the case of Kohinoor Tobacco Product (P.) Ltd. (supra) and the decision of the Orissa High Court in the case of Uma Shankar Rice Mill (supra). In regard to the case of Kohinoor Tobacco Products (P.) Ltd. (supra), we observe that the Assessing Officer completed the assessment without making any enquiry at all to ascertain as to whether the income received from letting out of the properties was assessable as income from business or as income from house property. The Assessing Officer completed the assessment merely by accepting the assessee's claim that such income was assessable as income from business and thereby allowed excessive deductions towards repairs and also depreciation. The above facts clearly establishes that the assessment completed by the Assessing Officer was made without making any en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue, or where two views are possible and the ITO has taken one view to which the CIT does not agree, it cannot be treated as erroneous or prejudicial to the interest of the Revenue unless the view taken by the ITO is unsustainable in law. The Madras High Court in the case of CIT v. Sakthi Charities (2000) 168 CTR (Mad.) 107 : (2000) 244 ITR 226 (Mad.) confirmed the order of the Tribunal in holding that the assessment order did not call for any interference under section 263 from the CIT when the Tribunal found that the ITO had considered all relevant materials on record and when the CIT in his order did not indicate that the enquiry undertaken by the ITO fell short of the required that was expected by him in considering the question of grant of exemption - Therefore, we are of the considered view that the order passed by the learned CIT in setting aside the assessment with the direction to the Assessing Officer to complete the assessment de novo after making all the relevant enquiries and investigation is not sustainable and the same is liable to be quashed. Not only this, we observe that the Assessing Officer while making the assessment by order dated 27-3-2002, under section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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