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TMI Blog2020 (2) TMI 1229X X X X Extracts X X X X X X X X Extracts X X X X ..... uly disclosed the facts of transfer of business in Schedule-N of its financial statements. The computation of capital gain on slump sale was placed on record. The assessee had bifurcated the Balance Sheet reflecting financial position before transfer of business and subsequent to transfer of business. The copy of Business Transfer Agreement was also submitted to Ld. AO vide submissions dated 21/12/2016. Upon perusal of the same, we find that all the issues connected with transfer of business were under due consideration of Ld.AO during regular assessment proceedings. Another aspect to be noted is that as per the provisions of Sec. 271E, no satisfaction is required to be recorded in the quantum assessment order before levying penalty u/s 271E. Therefore, we are unable to accept the validity of revisional jurisdiction on this point. Claim of interest on TDS and customs penalty - AR asserted that the case of the assessee was selected under limited scrutiny which was never converted into full scrutiny. The issue of TDS and custom penalty were none of the reasons for which the case was selected for limited scrutiny assessment. The Ld. AR drew attention to the CBDT Instruction No.7/2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed as held in Gabriel India Ltd. However, the expression "prejudicial to the interest of the revenue", as held by the Supreme Court in the Malabar Industrial Co. Ltd.'s case, is not an expression of art and is not defined in the Act and, therefore, must be understood in its ordinary meaning. It is of wide import and is not confined to the loss of tax as held in various judicial pronouncements. At the same time, the words "prejudicial to the interest of the revenue", as observed in Dawjee Dadabhoy and Co. vs. S.P. Jain, (1957) 311 ITR 872 (Calcutta), can only mean that "the orders of assessment challenged are such as are not in accordance with law, in consequence whereof the lawful revenue due to the State has not been realized or cannot be realized." Thus, the Commissioner's exercise of revisional jurisdiction under the provisions of Section 263 cannot be based on whims or caprice. It is trite law that it is a quasi-judicial power hedged in with limitation and not an unbridled and unchartered arbitrary power. The exercise of the power is limited to cases where the Commissioner on examining the records comes to the conclusion that the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. x x x x There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. 1.5 The Hon'ble Supreme Court in CIT V/s Amitabh Bachchan (69 Taxmann.com 170 11/05/2016) held that the power of appeal and revision is contained in Chapter XX of the Act which includes section 263 that confers suo motu power of revision in the Commissioner. The different shades of power conferred on different authorities under the Act has to be exercised within the areas specifically delineated by the Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the details supplied. 1.7 As an extension of the principle that there must be material to justify the Commissioner's finding that the order of the assessment was erroneous insofar as it was prejudicial to the interest of the revenue. The Hon'ble Delhi High Court in Pr.CIT V/s Delhi Airport Metro Express Pvt. Ltd. (398 ITR 8 05/09/2017) has held that for the purposes of exercising jurisdiction u/s 263, the conclusion that the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue, has to be preceded by some minimal inquiry. In fact, if the Principal Commissioner of Income-tax is of the view that the Assessing Officer did not undertake any inquiry, it becomes incumbent on the Principal Commissioner of Income-tax to conduct such inquiry. By the same logic, exercise of revisional jurisdiction merely at the instance of Ld. AO, without due application of mind by revisional authority, would not fulfil the jurisdictional requirement of Sec. 263 since it was clearly to be brought on record that the twin conditions i.e. erroneous and prejudicial to the interest of the revenue, were conjointly present in the given factual matrix. 1.8 An Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KS7553E and Sleek International Private Limited PAN AECS1836K wherein it have been agreed to sell, sign and transfer the Target business as a Going concern along with all Assets & liabilities by way of Slump Sale at Lump sum Consideration of ₹ 61,17,00,000 without values being assigned to the individual assets and liabilities in accordance with the provisions of applicable law including but not limited to the provisions of Income Tax Act,.1961 3. The Learned Pr. Commissioner of Income tax - 32, erred in setting aside the Order of Jt. Commissioner of Income tax (AO)-32(3) with respect to disallowing the interest on late payment of TDS ₹ 2,73,425/- and Custom Interest Penalty ₹ 83,860/- and the same deserves to be deleted as the expenditure are related to Business purpose. 4. The Learned Pr. Commissioner of Income tax - 32, erred in setting aside the Order of Jt. Commissioner of Income tax (AO)-32(3) with respect to Dividend Income of ₹ 40,63,486/- not reckon with holding any such Investments through which such huge dividend income which could have been earned. Further the Learned Pr. Commissioner of Income tax - 32, also erred in setting aside the Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned to the individual assets & liabilities. 2.3 Subsequently, Ld. Pr.CIT-32, Mumbai, after receipt of proposal sent by Ld. ACIT, issued show-cause notice (SCN) u/s 263 to the assessee on 05/11/2018 which was later on revised on 18/03/2019 & 27/03/2019. The first notice issued on 05/11/2018 is merely the repetition of earlier notice issued on 12/09/2018. In the notice, it was stated that during the year, the assessee repaid loan/deposit amounting to ₹ 3,51,63,562/- otherwise than by an account payee cheque/draft in contravention of Section 269T and therefore, the penalty should have been imposed u/s 271E. Hence, by invoking Explanation-2 to Sec. 263, the quantum order was proposed to be revised u/s 263. In the said notice, the amount of penalty imposable was erroneously referred to as ₹ 5.50 Lacs which was sought to be rectified in similar notice issued on 18/03/2019. 2.4 Thereafter, a revised SCN was issued on 27/03/2019 in which more points were raised and revision u/s 263 was proposed on account of the fact that i) interest on late payment of TDS for ₹ 2.73 Lacs was not allowable; ii) Custom interest penalty of ₹ 0.83 Lacs not allowable; iii) Issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent. Regarding issue of Dividend Stripping u/s 94(7) and bonus stripping u/s 94(8), it was observed that relevant details / documents were not produced during the course of assessment proceedings and therefore, detailed investigation and proper appreciation of facts was not carried out at the time of scrutiny assessment. In the backdrop of aforesaid observations, the quantum assessment order, on the stated issues, was set aside and Ld.AO was directed to redo the assessment after providing opportunity of hearing to the assessee. Aggrieved as aforesaid, the assessee is under appeal before us. 3. We have carefully heard the rival submissions, perused relevant material on record including submissions made by the assessee before lower authorities during assessment proceedings as well as during revisional proceedings. We have also deliberated on the judicial pronouncements as cited by both the representatives. 4. The prime arguments of Ld. AR are multi-folds viz. i) the revision could not be triggered merely at the behest of Assessing Officer; ii) The revisional authority was under an obligation to carry out minimal inquiry so as to form an opinion that the order was erroneous as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions dated 21/12/2016. Upon perusal of the same, we find that all the issues connected with transfer of business were under due consideration of Ld.AO during regular assessment proceedings. Another aspect to be noted is that as per the provisions of Sec. 271E, no satisfaction is required to be recorded in the quantum assessment order before levying penalty u/s 271E. Therefore, we are unable to accept the validity of revisional jurisdiction on this point. 7. The second issue raised in the impugned order is with respect to assessee's claim of interest on TDS and customs penalty. The Ld. AR asserted that the case of the assessee was selected under limited scrutiny which was never converted into full scrutiny. The issue of TDS and custom penalty were none of the reasons for which the case was selected for limited scrutiny assessment. The Ld. AR drew attention to the CBDT Instruction No.7/2014 dated 26/09/2014 which provide that in case of scrutiny cases selected under CASS, the scope of inquiry should be limited to verification of particular aspects only. We have duly considered the same. The perusal of documents on record would reveal that this issue was never raised by Ld.AO and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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