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TMI Blog2019 (1) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... ere submitted during the course of assessment proceedings which were accepted by Ld. AO with due application of mind and therefore, proceedings u/s 263 were bad. We find that no discussion, whatsoever, on this aspect has been made in the assessment order. Nothing on record suggest that AO, during assessment proceedings, made further investigation, to verify the genuineness of the purchases made by the assessee from the aforesaid entity. This being the case, the submissions made by Ld. AR, in this regard, could not be accepted. The Ld. AR has relied on the case of Raja Bahadur Motilal (P) Ltd Vs ITO [1990 (3) TMI 60 - BOMBAY HIGH COURT] for the same. However, we find that this decision has been rendered in the context of reassessment proceedings u/s 147 and therefore, do not apply to the case in hand. No opportunity of being heard was provided to the assessee in violation of principle of natural justice - Held that:- We find that a show-cause notice was issued to the assessee and the same was duly replied to by the assessee wherein the assessee agitated the proposed proceedings and demanded further details from Ld. Pr.CIT without demonstrating as to how the figures were not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er u/s.263 of the Income Tax Act, 1961, dated 22/03/2018, setting aside the assessment order dated 28/03/2016 u/s. 153A passed by DCIT-CC-4(1), Mumbai, holding that the said assessment order is erroneous and prejudicial to the interest of revenue, in as much as, according to the Id. Pr. CIT, the assessee has made purchases from M/s. Utkantha Trading Pvt. Ltd. [PAN: AAACU6984E] to the tune of ₹ 2,11,87,420/- and M/s. Realstone Exports Ltd. [PAN: AACCR8504K] to the tune of ₹ 12,47,51,521/- during the previous year 2008-09, relevant to assessment year 2009-10 who were allegedly indulging in providing accommodations entry/bogus bills etc., without considering assessee's request for providing details/information/documents related to the above mentioned purchase transactions which was unearthed during the survey proceedings and on the basis of which the Id. Pr, CIT has come to such conclusion, which is without any basis and factually and legally incorrect and therefore it is not a good/valid reason for invoking the provisions of section 263 of the Income Tax Act, 1961 and the order passed thereunder is therefore, illegal, unreasonable, arbitrary, unjustified, irrational, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntha Trading Co. was not correct / not matching. Keeping in view the said submissions, Ld. Pr. CIT directed the Ld. AO to conduct a detailed and thorough inquiry and pass a fresh order with regard to stated accommodation entries for ₹ 1459.38 Lacs. Finally, finding the assessment order erroneous and prejudicial to the interest of the revenue within the meaning of Section 263 read with Explanation-2, the same was set aside with a direction to Ld. AO to reframe the same afresh after conducting necessary inquiries. Aggrieved by aforesaid directions, the assessee is under appeal before us. 3. The Ld. Authorized Representative for Assessee [AR], Shri R.S.Samria, by drawing our attention to the documents placed in the paper-book, assailed the revisional jurisdiction which has been controverted by Ld. CIT-DR, Shri H.N.Singh. 4.1 We have carefully heard the rival contentions and perused relevant material on record including documents placed in the paper-book and judicial pronouncements cited before us. Our observation, findings and adjudication are given in the succeeding paragraphs. 4.2 At the outset, it is noted that the assessee was subjected to survey proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ybase Multitrade P Ltd, only issued Tax Invoices without any sale/ purchase. The payment was received through the banks and after retaining the commission the payments were made. The assessee company had made the purchases from the above entry providers during AY 2009-10 to 2012-13 as was seen from cross check of the records of the entry providers made available to audit. The details were as under: Purchased from AY PAN Amount of Purchases M/s Utkantha Trading P Ltd 2009-10 AAACU6984E 48956100 M/s Utkantha Trading P. Ltd 2010-11 AAACU6984E 21187420 M/s Utkantha Trading P Ltd 2011-12 AAACU6984E 60501530 M/s Realstone Exports Ltd 2010-11 AACCR8504K 124751521 M/s Realstone Exports Ltd 2012-13 AACCR8504K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63. To answer the same, we straightaway rely on the judgment of Hon ble Apex Court rendered in CIT Vs. Shree Manjunathesware Packing Products Camphor Works [231 ITR 53 / 96 Taxman 1] wherein the Hon ble Apex Court had the occasion to consider the meaning of the expression record for the purpose of Section 263. The Hon ble court, after considering the legislative history of amendment to Section 263 and catena of judicial pronouncements, held as under: - 7. Earlier section 263(1) did not contain any Explanation. It enables the Commissioner to call for and examine the record of any proceeding under the Act and pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment, if he considers that any order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue. By the Taxation Laws (Amendment) Act, 1984, an Explanation was added to section 263(1) for removal of certain doubts but it is not necessary to refer to that Explanation as it related to the meaning of the expression 'order passed by the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28. Under the existing provisions of section 263 of the Income-tax Act and corresponding provisions of the Wealth-tax Act and the Gift-tax Act, the Commissioner of Income-tax is empowered to call for and examine the record of any proceeding and if he considers that the orders passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of revenue, he may pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the same or directing a fresh assessment. By the Finance Act, 1988, an Explanation was substituted with effect from 1st June, 1988, to the relevant sections of the Income-tax Act, Wealth-tax Act and Gift-tax Act to clarify that the term 'record' would include all records relating to any proceeding available at the time of examination by the Commissioner. Further, it was also clarified that the Commissioner is competent to revise an order of assessment passed by the Assessing Officer on all matters except those which have been considered and decided in an appeal. The above Explanation was incorporated in the Finance Act, 1988, to clarify this legal posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence cannot form part of the record of the proceeding of the ITO at the time he passes the order and, accordingly, it cannot be taken into consideration by the Commissioner for the purposes of invoking his jurisdiction under this section, for h e is not an appellate authority under this section and exercise only revisional jurisdiction and, hence, he can only take into consideration the record as it stood before the ITO and the materials in such record for the purposes of ascertaining whether the order in question was erroneous and prejudicial to the interests of the revenue. In other words, any material which comes into existence later on cannot form part of the record of the ITO for the purposes of invoking the Commissioner's power under section 263( 1) of the Act. And it is only after the proceeding is lawfully initiated by the Commissioner on the basis of the record of the ITO that the Commissioner can take into account any material which may come into existence later on in view of the expression 'after making or causing to be made such enquiry as he deems necessary' used in the second limb of this section. (p. 452) The Calcutta High Court interpreted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the department was academic because the Tribunal had not passed its order entirely on the meaning of the expression 'record' and the other reasoning on which the decision of the Tribunal was based was a factual one and was equally fatal to the cause of revenue. This decision is, therefore, of not any help at all. 12. She further submitted that in a matter arising under the Wealth-tax Act, Gujarat High Court had also taken the same view and the depart-ment's special leave petition Nos. 8511-13 of 1984 CWT v. Rajshree S. Parekh [1991] 191 ITR (St.) 76 - though were heard after the said two amendments, this Court dismissed them summarily and, thus, the view taken by the Gujarat High Court was upheld. In that case, the WTO had assessed the assessee's property as per the approved valuer's report. The Commissioner in suo motu revision directed valuation in accordance with the departmental valuer's report. The Tribunal allowed the assessee's appeal against the order passed by the Commissioner and also rejected the department's reference application. The High Court also rejected the reference application made by the department. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rring to the definition of the word 'record' contained in the Explanation to section 263(1). 14. It, therefore, cannot be said, as contended by the learned counsel for the respondent, that the correct and settled legal position, with respect to the meaning of the word 'record' till 1-6-1988, was that it meant the record which was available to the ITO at the time of passing of the assessment order. Further, we do not think that such a narrow interpretation of the word 'record' was justified, in view of the object of the provision and the nature and scope of the power conferred upon the Commissioner. The revisional power conferred on the Commissioner under section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act. It empowers the Commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for consideration was 'whether on the facts and in the circumstances of the case, the order of assessment passed by the ITO under section 143(3) read with section 144B on 31-7- 1978 had merged with that of the Commissioner (Appeals) dated (sic) in respect of the three items in dispute so as to exclude the jurisdiction of the Commissioner under section 263 ?' Thus, the amendment made in clause (c) was held applicable to the orders passed before 1-6-1988. 16. In South India Steel Rolling Mills v. CIT 1997 (9) SCC 728, the Commissioner in exercise of his power under section 263 had withdrawn the development rebate granted for the years 1962-63, 1963- 64, 1967-68 and 1968-69 on the ground that since the partnership stood dissolved on 3-3-1968 on the death of one of the two partners, before the expiry of eight years the assessee-firm was not entitled to the benefit of the development rebate under section 33(1)(a) of the Act. The said order passed by the Commissioner was challenged before the Tribunal but the assessee's appeal had failed. At its instance, the following question was referred to the Madras High Court: Whether, on the facts and in the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Vallabhdas Vithaldas [56 Taxman.com 300]. Drawing strength for these decisions, we have no hesitation in holding that all the information / documents available with Ld. Pr.CIT at the time of invocation of revisional jurisdiction u/s 263 could form the basis to trigger the jurisdiction u/s 263. 4.3 In the above backdrop, proceeding further, we find that the assessee, during the course of assessment proceedings, had supplied the party-wise details of purchases and a copy of the same has been placed in the paper-book. Upon perusal of the same, it could be gathered that the during impugned AY, the assessee had not made any purchase from M/s Realstone Exports Limited as wrongly noted by Ld. Pr.CIT. The said fact is also evidenced from the information provided by Audit wing extracted in para 4.3 wherein we find that the purchases from this entity are stated to be made during AY 2010-11 and not in 2009-10. Therefore, the assessment order, at least to that extent could not be termed as erroneous and prejudicial to the interest of the revenue from any angle and therefore, jurisdiction u/s 263, in this regard, could not be held to be valid. We order so. 4.4 Regarding purc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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